Investing in energy efficiency:
The food industry is also feeling the chill from the crisis, says Tom Southall, Executive Director of Cold Chain Federation. The food industry, particularly cold storage, is a significant energy user. For cold storage alone, we estimate that the UK uses approximately 4.1TWh of energy, and at the height of the 2022 crisis, costs tripled to an estimated £1.5bn. Although wholesale costs have gradually reduced, prices remain significantly above pre-2021 levels. For individual businesses, the impact depends on their specific energy contracts with suppliers and customers. Still, high energy costs continue to drive inflation in temperature-controlled products like food and pharmaceuticals.
While in the short term, some businesses (unable to pass cost increases to customers) have struggled to adapt to high energy costs, the outlook for the industry remains strong. Cold chain is a critical service that will always be in demand. It’s continually being fuelled by a growing population, increasing demand for chilled and frozen products, and the need to minimize food waste. We are not, however, expecting energy prices to return to pre-2021 levels anytime soon. Therefore, these sustained higher energy prices will have two key impacts: an increase in costs for temperature-controlled logistics, which ultimately means higher prices for consumers, and a step-change in business investments in energy efficiency measures and generation. We can expect solutions such as solar panels to help businesses become more self-sufficient and resilient to future market volatility.
We also want to highlight the significant potential for cold stores to play a central role in the future net-zero UK energy network, as set out in the government’s own Industrial Decarbonisation Strategy. Cold stores are uniquely placed for various energy management mechanisms, including generating energy and recycling heat from refrigeration to thermal and physical energy storage. Our recent report ‘The Cold Store of 2050: Maximizing Efficiency to Reduce Emissions and Drive UK Energy Transformation’, outlines this vision and is available on the Cold Chain Federation website.