It is fair to say that the past two years have been challenging for many businesses, particularly when it comes to energy. The impact of the volatility of the wholesale energy market has been felt by businesses of all sizes, with many facing significant increases in their energy costs.

While the government took steps to support businesses through the crisis, initially through its Energy Bill Relief Scheme (EBRS) and then subsequently with its Energy Bills Discount Scheme (EBDS), which is due to run until March 2024, energy remains a top concern for many businesses.

Indeed, according to our latest Business Energy Tracker report, businesses told us that energy is the top risk that they are facing, and it is now a board-level issue for more than 90% of the large organisations we surveyed.

As a result, managing energy consumption has become increasingly important. This is not only to mitigate the risk posed by the volatile energy market, but to also counter growing concerns about climate change and help the UK achieve its goal of reaching net zero by 2050.

The views represented in the Business Energy Tracker showed us that many businesses understand the commercial, environmental and reputational benefits that investing in net zero measures can bring. However, many also said that responding to the economic challenges of the here and now is their primary focus, so justifying the investment is often not possible during these challenging economic times.

That said, implementing measures that reduce energy demand, and therefore emissions, can make a huge difference to energy invoices. During times when competition for capital investment is high, it pays to have an informed approach to net zero to build the case for investment.

As such, we believe that there are five key actions businesses can take in 2024 to achieve the best results and maximum return on investment.

Green your energy supply

Sourcing energy from ‘greener’ sources has always been considered the logical first step to become more sustainable, as well as protect against the volatility of the wholesale energy market.

However, with the growing need to reduce dependence on fossil fuel power sources, competition for renewable electricity is only set to intensify, with demand already outstripping supply.

Therefore, for those wanting to buy clean energy, there is also the option to source renewable power directly from a third-party generator via a Corporate Power Purchase Agreement (CPPA). This facilitates a one-to-one partnership with a generator, providing a fully-traceable and dependable source of carbon-free power, as well as long-term price certainty.

Get to know your energy data

Understanding exactly where and how you are using energy is crucial to reducing both costs and carbon. For example, a sophisticated energy management system will help you monitor power and gas consumption throughout your organisation, and the related emissions. Depending on the nature of your business, sub-metering can also help to provide more granular detail about specific energy uses, such as machinery, lighting, or temperature control.

Plan your carbon reduction strategy

When you have a greater understanding on how and where your energy is used, and the primary sources for your carbon emissions, you can make an informed decision about your energy management and carbon reduction strategy.

There are tools that can help your business test the potential impact certain measures can have. For example, our Net Zero Calculator is free for any business to analyse their current emissions and how they can reduce carbon, save money and reach net zero goals by adding in sustainability solutions.

Invest in energy efficiency

It goes without saying that the less energy you use, the less you will pay. And, the capital that this ultimately saves in reduced energy costs can be used to finance investment in further energy-saving or low-carbon technologies.

Consider becoming energy self-sufficient

Investing in sustainable on-site generation, such as solar photovoltaic (PV), wind or combined heat and power (CHP) can pay dividends. As well as making an organisation less exposed to the fluctuations of the wholesale energy market, it also helps to reduce carbon emissions, lower energy costs and provide an increased stability of supply. This option is particularly feasible for warehouses or premises with a large roof space or adjacent land.

Is carbon offsetting a viable option?

One tactic we are often asked about is carbon offset purchasing. However, there are concerns about the actual value provided by carbon offsets and the legitimacy of claims made by companies when using them, with many offset schemes facing criticism for "greenwashing" due to poor management or inflated claims.

There are also doubts surrounding carbon offset authenticity which have also prompted calls for guidance, regulation and standards to increase transparency and credibility in the market. While there is a place for carbon offsetting, businesses need more guidance on when it is the most appropriate tactic to use.

Therefore, implementing the measures outlined above that not only reduce emissions but also have a direct impact on the bottom line in terms of lowering energy costs, should always be the first steps to take.

Towards a more sustainable future

In 2024, the role of business in helping the UK achieve its net zero targets will become increasingly important.

The adoption of energy management and carbon reduction strategies that are based on real data can significantly contribute to reducing energy costs and lowering carbon emissions.

However, there is no one-size-fits-all approach when it comes to effectively managing energy consumption. The measures required will vary depending on the location, on-site operations and size of each facility. That is why it pays to work with an expert partner to identify the most effective strategies for reducing energy use and hitting sustainability goals.

By Anthony Ainsworth, Chief Operating Officer at npower Business Solutions