Research published by Centrica plc has identified the opportunity for key sectors in the economy to achieve almost £1 billion of savings on annual energy spend, while delivering an £18.5 billion boost to the country’s overall economic growth.

Published in response to the Government’s Industrial Strategy, the ‘Powering Britain’s Economic Future’ report assesses the potential impact to the nation if three sectors, which represent over a quarter of the UK economy, were to adopt distributed energy solutions including battery storage, onsite power generation, and energy saving devices.

Commissioned by Centrica, a team of independent economists has assessed the scale of the opportunity across the industrial; healthcare; and hospitality, hotel & leisure sectors, setting out the potential energy cost savings of distributed solutions and subsequent potential benefit to the UK economy of additional investment in this equipment. The report, which assumes that solutions would be deployed by 50 per cent of organisations in those sectors, also identifies the opportunity to support thousands of jobs associated with both the delivery of distributed energy solutions and the resultant economic benefit.

Key findings from the report include the opportunity for:

NHS England to make an annual saving of over 20 per cent on the £0.5 billion cost of its energy.
Gross value added across the UK from industry to hit almost £14 billion.
Annual savings of over £300 million across the hospitality, hotel, and leisure sector.

The report has been published by Centrica’s international Distributed Energy and Power unit, which provides energy insight, asset optimisation and energy solutions to large energy users under the Centrica Business Solutions banner.

Jorge Pikunic, Managing Director of Centrica Distributed Energy and Power says: “Energy has been a key driver of productivity over the past 50 years, but it’s clear that more needs to be done in support of improved efficiency and future economic growth.

“This report shines a light on the scale of the opportunity for distributed energy technologies to contribute to the aims of the Government’s Industrial Strategy, reducing public sector costs and creating new opportunities for growth in the UK.

“I believe there is an opportunity to create a new sector for the economy that could offer significant export potential, encompassing energy, technology, innovation and services. The UK can establish itself as a world leader in developing and managing the energy systems of the future. The challenge is to make that a reality.”

Findings

The three sectors represent 27 per cent of Gross Value Added and 31 per cent of employment, and offer the highest potential in terms of deployment of distributed energy solutions.

Sector (Gross value added in 2014) Energy savings Gross value added Jobs supported

(direct, indirect & induced)

Industry (16%) £540m £13.9bn 200,000
Health (6%) £130m £0.9bn 14,000
Hospitality, hotels & leisure (5%) £310m £3.7bn 50,000

Recommendations

The report makes three key recommendations in support of unlocking the potential of distributed energy in the UK as follows:

BEIS to commit to assessing the role distributed energy solutions could play in delivering long term energy cost reductions for the UK and promoting these solutions across Government and public bodies
The Committee on Climate Change to consider if the use of new energy solutions for larger energy users could represent a lower cost route to decarbonisation.
Government to review the incentivisation of businesses to utilise distributed energy solutions and the markets and schemes available to reward flexibility.

Assessment methodology

Assessments have been carried out to calculate the following:

Annual costs savings each sector could realise, based on the energy cost savings of typical users in each sector;
Potential economic benefits to the UK, based on the typical users’ investment costs and energy cost savings, and increases in spending that these would create in the economy.

Assumptions:

We have used best available data from our in house commercial teams to inform the economic calculations;
Economic benefits are calculated by scaling up the data from typical users;
We focus on the gross economic benefits of the technology described;
We do not consider any consequent costs or displacement of resources;
Estimates are based on a 50 per cent take up scenario i.e. 50 per cent of users in each sector take up these technologies;
• Under the Centrica Business Solutions banner, we deliver integrated energy solutions, combining distributed energy technologies and a variety of commercial options to help businesses and other large energy users to improve performance and cost management, strengthen resilience, and create opportunities for growth.

You can view the full report by clicking here. For further information visit www.centrica.com.