Regulators and Network operators’ point of view
Let’s start by looking into electricity tariffs and the pricing methodology. Electricity tariffs aim to recover costs for operators to distribute and transmit electricity to their customers, including losses in electricity transmission.
Electricity transmission and distribution networks in local and European energy systems follow the same EU regulations and have the same methodology. The tariff methodologies, as per regulations, are expected to incentivize efficiency, market integration, security of supply, investments, research, and innovation for transmission and distribution operators. One important component is the need for tariffs to support system efficiency through price signals to network users.
Since charges related to transmission and distribution networks can constitute a considerable cost for network users, the way how tariffs are set can provide additional incentives (in additional to those given by energy pricing) for network users to adapt their behavior.
Manufacturing industry’s point of view
Common key initiatives within business are growth, profit, sustainability, and compliance.
- Growth will likely demand more electricity distributed/transmitted from the network.
- Profits will be affected by energy distribution and transmission costs as well as energy prices.
- Sustainability will accelerate electrification in operations as well as in society overall. Hence, electricity demand is expected to increase drastically in the next decades.
- Compliance with regulations and directives will need to be measured and audited.
Let’s connect the dots
Distribution and transmission tariffs are set to provide additional incentive for network users, i.e. manufacturing industries, to adapt the behavior regarding electricity demand. There’s also a cost related to causing imbalances in the electricity network, i.e. user-generated power peaks and peak loads, in some countries.
Common business key initiatives are growth, profit, sustainability, and compliance as described above.
If the organization doesn’t fully understand its actual electricity need, it might be a very expensive mistake. This is why 80% of the manufacturing industries end up with too high costs related to electricity distribution and transmission.
How are the top 20% manufacturing companies managing to keep their distribution and transmission cost tight to their need?
The answer is detailed information and energy control throughout the organization. Total control about the actual need for electricity at any given time. If you can understand it, you can control it, and it’s all about continuous improvements.
Work to be done?
What if your organization could disconnect business growth from its electricity demand?
So that your business can lower its distribution and transmission charges.
Your business would for example:
Lower the energy costs per produced goods, as well as increase profitability. It would also contribute to lowering the risk for imbalance in the electricity network, be seen as a more sustainable business and still be compliant with CSRD and EED.
