FROM INSTALL TO EXPORT: HOW TO MAKE THE MOST AN ENERGY GENERATION ASSET

With increasing organisational focus on environmental responsibility, and with security of supply and price stability also major concerns, independent – or on-site – generation can provide a credible alternative to centralised power and its fluctuating costs.

The power generated by businesses, either on their premises or in dedicated facilities, already makes up a substantial amount of the UK’s energy supply. According to the government’s Digest of Energy Statistics (DUKES), which was analysed in our recent Future of Energy report, power generation by commercial and industrial facilities accounted for 57 TWh in 2020, representing 18% of the total electricity production in the UK.

Alongside the rise in popularity of onsite generation, the general demand from businesses for renewable, sustainable energy will likely also continue to increase.

Over the past few years, the energy industry has seen a huge amount of choice when it comes to new generation technologies and systems. From ‘deep green’ renewables such as wind, solar photovoltaic (PV) and hydro, to baseload sources of power produced from organic matter such as biomass, businesses now have a wide range of options if they want to move their power supply away from the standard grid supply offering.

So, if you are the owner of an energy generation asset, what is the best way to get your power to corporate buyers?

POWER PURCHASE AGREEMENTS: THE BEST ROUTE TO MARKET?

Power Purchase Agreements

(PPAs) are contracts that agree energy production output and its subsequent purchase. They are made between asset holders who generate renewable power and commercial buyers. In short, they are a valuable route to market for generators to sell their power.

PPAs are also becoming increasingly popular among business energy users as a way of managing energy risk. Our latest Business Energy Tracker report revealed that a third of

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Vish Sharma, Head of Power Purchase Agreements at npower Business Solutions

businesses are planning to use a PPA to hit their sustainability targets, so the market opportunity is growing.

As an established proven method of managing energy sales and risk in generation projects, PPAs encompass all the commercial terms required to deliver a route to market for generation. They include start date, delivery schedules, pricing mechanisms, payment terms and can include renewable certificates such as ROCs and REGOs. They are usually valid for several years and offer pre-set or to be determined prices for energy purchase.

A PPA can cover an existing generation asset or provide assurance and confidence to investors in the financing of new renewable projects. PPAs can therefore be agreed prior to a project becoming fully functional. Typically offering either fixed or flexible pricing arrangements, PPAs can provide an array of different buying and selling structures, depending on your requirements. Working with a partner that provides a bespoke approach should also be at the top of the decision-making process. We know there is no one-size-fits-all approach to meeting the energy requirements of businesses, so it’s important to work with a partner that is technology agnostic. For example, we work with a large variety of generation projects across differing technologies and generation profiles , so end user businesses have as much choice as possible.

Unlocking The Benefits Of Energy Generation

Whether you are an independent generator, or an organisation with a sustainable on-site generation asset, there are several benefits to selling the power you generate.

• Environmental: making the switch to renewable power will help your organisation, other businesses, and the UK, meet our collective sustainability targets.

• Reputational: becoming an independent generator of renewable energy will enhance your reputation among your target audiences.

• Commercial: selling your excess power will provide you with a regular revenue stream to reinvest in additional sustainable technologies. You can also sell your renewable certificates (ROCs and REGOs), which will be used by suppliers to demonstrate that all or part of their energy comes from renewable sources. Whatever your organisation’s motivation, selling your power and renewable certificates provides economic, environmental, and social benefits, and will allow you to contribute to a more sustainable and resilient energy system.

Maximising Your Energy Asset

Over the past few years, the rapid growth in renewable power generation has transformed the energy landscape. As the UK transitions to renewable sources, we are seeing a more agile, innovative, and market-driven energy system. With an increasing number of businesses actively looking for cleaner, greener energy solutions, the role of independent power generators will be crucial to provide sustainable, affordable, and on-demand energy both now and in the future.

If you are at the start of your energy generation journey, npower Business Solutions has produced a new guide to help you get started, which can be downloaded from: https:// npowerbusinesssolutions.com/ resources/how-to-make-the-mostof-an-energy-generation-asset