The average business investment in energy efficiency projects has increased more than five-fold since the first three months of the year, a surge which could be attributable to Brexit and fears over increasing equipment costs.
The latest Energy Efficiency Insights tracker, published by EEVS and Bloomberg New Energy Finance, has found that the average cost of energy efficiency projects launched by companies in Q3 totalled circa £256,000. That cost is more than double the £144,000 average recorded in Q2 2016, and more than 400% larger than the Q1 figure of £47,000.
This, the report’s authors Tom Rowlands-Rees and Ian Jeffries have suggested, could be a result of fears over the implications of the UK’s decision to leave the European Union.
“[The increase] could be that the influence of Brexit remains strong this quarter: whether it is that consumer organisations are anticipating some price inflation for efficient products over the coming months, or are uncertain over future energy prices,” the two claimed in their introduction to the report.
Brexit and the fall in the value of the pound have already sparked numerous price increases elsewhere. Apple hiked the prices of its computers recently to reflect the cost of sale in the UK, while Tesco was involved in a public spat with Unilever after the producer said it would be forced to increase the wholesale cost of popular consumer goods.
However another potential explanation could be the recorded moves away from investments in efficient lighting systems. While high-efficiency lighting installs are still being included in around half of projects recorded by the EEVS Insights report, their share has “declined sharply” over the last year.
In contrast, more expensive building energy management systems have grown in popularity and remained the second most popular energy efficiency technology in terms of uptake.
But while average project costs have increased, payback periods have remained steady. The historic average payback period for energy efficiency investments has been between three and five years, and the Q3 2016 average has been recorded at circa four years.
The low cost of finance available presently has too had an impact on the efficiency market, with fewer companies using in-house funding options to pay for investments than previously this year.