Staying in control of IGU supply

The Government confirmed it was cutting energy support for business by 85% last month. We report on what it means for IGU supply.

The Government announced on 8 January that it was cutting funding for business through the Energy Bill Relief Scheme by 85% with big ramifications for the window and door industry, and potentially terminal ones for high energy users.

From April, most businesses will receive discounts of only 0.7p per kilowatt-hour off their gas bills and 2p/KWh off their electricity bills.

Energy-intensive industries including glass will be entitled to greater support of up to 4p/KWh on gas and up to 8.9p/KWh for electricity, although this enhanced discount will apply to only 70% of their energy usage.

It’s a huge step down from the support on the pre-existing scheme, which has been in place since October. Running to the end of next month [March] it provides an effective cap on wholesale prices for most businesses of 21.1p/KWh for electricity and 7.5p/KWh for gas.

“The big difference is that the current scheme gives businesses a fixed wholesale price. Companies have been able to plan based on a set of fixed costs,” says Jody Vincent, sales director, Emplas.

“The new scheme is built around a fixed-bill discount, so what business pay will increase or decrease with wholesale energy prices.

“At the start of 2023, they have fallen but companies are still paying historically high prices because those falls haven’t been passed on to business.

“There is also a big risk that wholesale energy prices go up again, so the change from April brings in far greater volatility to energy supply, which has the potential to be even more damaging than inflated prices.”

Jody acknowledges that this is an area of concern for Emplas’ core fabrication business, which in common with the rest of the industry, will see support on energy costs cut to a 0.7p discount per kilowatt-hour for gas and 2p/KWh for electricity from April. Its ramifications are, however, potentially bigger for its IGU business, Padiham Glass.

“Emplas is investment-led, we run new machinery and we’ve invested millions over the last few years in driving increased efficiencies into our business,” Jody says. “That doesn’t mean that we’re immune from energy price increases or volatility in the market but we’re perhaps not going to feel it quite as much as less well invested businesses.

“We have also used our scale to negotiate the best deal possible with energy companies which also supports us in remaining competitive.

“On the IGU side of the business we’re going to have to swallow some potentially bigger bills. We toughen our own glass.

“The investment that we’ve made in Padiham in improving efficiency and product quality in the last 12-months, however, will directly benefit us and our customers this year.”

This includes a more than £1million investment in a new Forel vertical IGU Line, installed at Padiham at the end of last year. Emplas has also opted for Forel’s Art AS flexible spacer applicator.

This automatically applies spacer bar to the edge of the glass sheet with an ultra-high level of accuracy, delivering an instant and far better bond than traditional spacer systems, maximising thermal performance.

The Forel coupling press then simultaneously couples IGUs while filling them with gas ahead of automatic sealing, delivering a highly accurate final seal on units and significantly reducing the likelihood of failure.

“If we control the process we control quality – for me that’s an immediate advantage for our customers,” says Jody. “In the next 12-months and running into 2024, what it also gives our customers is stability in supply. The changes to the Energy Bill Relief Scheme will expose a lot of under-invested businesses.

“We can expect some softening in demand for glass because of tougher trading conditions. Combined with increased exposure to volatility in the energy market and many IGU manufacturers and particularly, single process tougheners could be exposed.

“That has clear implications for installers because it has the potential to expose their own cashflow because they won’t be able to get jobs fitted. Buying glazed products eliminates that risk entirely.”

Emplas supplies a comprehensive range of products from Saint-Gobain. This includes Planitherm Standard, Comfort and Comfort Plus.

Jody argues that against the backdrop of high energy costs, upselling on glass, should create opportunity for installers.

“Products like Comfort Plus deliver a 63% energy efficiency gain. While high energy prices are making it more challenging for business, they are also making end-users far more receptive to messaging on energy efficiency.

“If you have access to the right products, the right glass – and don’t have to worry about the stability of your supply chain – then there are still big areas of opportunity ahead.”