5 minute read
On-site Generation
WHY INSTALLING ON-SITE ENERGY GENERATION MAKES FINANCIAL, ENVIRONMENTAL AND REPUTATIONAL SENSE
Following the publication of the Ten Point Plan and Energy White Paper at the end of 2020, and Industrial Decarbonisation Strategy earlier this year, the focus on reducing emissions from both the public and private sector is growing. However, for many, the challenging commercial environment has resulted in even greater scrutiny on spending. While ‘small’ changes can make a big difference, making the case for larger investments, such as on-site generation, can prove to be more difficult. In our recent report - ‘Plot Your Path to Net Zero: A Focus on Sustainable
On-Site Generation’ - we take a closer look at the important role it can play in helping organisations plot their path to net zero, as well as how they can make the business case for investment. We consulted with more than 50 organisations to gauge whether they have invested in on-site generation, as well as the potential barriers to investment, the benefits of generating their own energy supply, plus some practical steps to get buy-in for a project. Encouragingly, the research showed that, despite the challenging economic environment, many businesses are pressing ahead with their on-site generation plans. Over 50% of our respondents said they had already invested - or were planning to invest - in their own supply. Solar photovoltaic (PV) is, by far, the most popular choice, with 77% of respondents saying they had already invested in solar PV for their business and two thirds (66%) saying they were planning to invest. The next most popular option was combined heat and power (CHP), which was chosen by 38% of respondents, followed by biomass for 23% and wind for 15%.
Similarly, when it comes to investment plans,
CHP was chosen by a third of respondents (33%) and wind by a quarter (24%). That said the businesses we consulted with raised some of the issues they face when it comes to building a case for the investment.
With the majority (65%) saying that they fund any energy efficiency or sustainability initiatives from within the business, the fight for capital expenditure can be tough. As such, the primary barrier is proving the return on investment (ROI) of an on-site asset, closely followed by access to funding. A quarter (24%) also questioned the suitability of on-site generation for their organisation. So, how can energy managers make the business case for an on-site asset?
For us, there are five clear reasons why on-site generation should be a key part of a business’s net zero strategy: 1. IT REDUCES CARBON EMISSIONS
The most effective way to reduce emissions is by switching to a zero-carbon supply. On-site generation options that use 100% renewable sources - such as solar PV or wind - will help a business significantly reduce its carbon footprint.
For example, we worked with a venue on a solar PV asset, that not only provided around 5-10% of its electricity, but also helped to save 130 tonnes of harmful carbon gasses each year. 2. IT LOWERS ENERGY COST
Installing on-site generation technology can make an impact on the bottom line through a reduction in energy costs. As a site will only generate the energy the business needs to use, it will naturally operate in a more efficient way.
There is also the opportunity to avoid noncommodity costs, such as the third-party costs required to maintain and balance the grid, if a business is generating its own electricity. If a business can demonstrate clear savings through installing an on-site asset, then it will make the case for investment much stronger. 3. IT PROTECTS AGAINST
PRICE FLUCTUATIONS
Linked to a reduction in energy costs, onsite generation helps to mitigate against price fluctuations in the market. As well as avoiding non-commodity costs, having an on-site supply helps to protect businesses against wholesale price volatility, meaning it can plan ahead with greater certainty. In short, it puts the business in control of its energy usage, and allows it to unlock flexibility in terms of demand. 4. IT PROVIDES AN INCREASED
STABILITY OF SUPPLY
Hitting net zero emissions by 2050 relies heavily on mass-electrification, putting increased pressure on the central grid. Any loss of energy - no matter how brief - can be costly, particularly to those mission-critical businesses that rely on 24/7 supply.
Installing on-site generation - particularly if combined with battery storage - helps to protect businesses from any downtime by increasing self-sufficiency and minimising the reliance on the grid. 5. IT RESULTS IN AN IMPROVED
REPUTATION AND
SUSTAINABILITY CREDIBILITY
As more and more businesses announce their sustainability plans, there has been a greater focus on so-called ‘greenwashing’ - where a company’s zero-carbon commitments do not stand up to scrutiny - particularly as the public become more climate aware.
In fact, a recent report from the Energy and Climate Intelligence Unit and Oxford Net Zero showed that, while one fifth of the world’s largest companies have net zero targets, only a little over a quarter of those met the report’s ‘robustness’ criteria.
Therefore, installing on-site generation is a clear signal that your business is serious about sustainability, particularly in the eyes of customers and throughout your supply chain.
PLOTTING YOUR PATH TO NET ZERO WITH ON-SITE GENERATION
When it comes to making carbon reduction plans, on-site generation needs to be a key consideration. However, if competition for funding is high, it is important to clearly make the business case for investment, particularly when it comes to demonstrating ROI.
That said, where on-site generation is not an option due to cost barriers, one route to consider is a power purchase agreement (PPA). These can be arranged via a third party funder, who can install and manage the on-site asset - the organisation then buys the energy from the funder, negating the need for up-front investment. Encouragingly, this was a route that the majority of our respondents (73%) were either already taking, or were considering.
Assessing site feasibility is also important. For example, some of the best sites for solar PV are where there is a large south-facing roof space, so large industrial units, manufacturing and process sites, hospitals and retail outlets are ideal.
From solar PV to CHP, there is now a great deal of on-site generation choice for businesses, with more innovative technologies on the horizon. The time to act is now.
To help your business with its on-site generation plans, npower Business Solutions (nBS) has produced two new resources. These reports outline practical steps for both private and public sector organisations. Discover more: npowerbusinesssolutions.com/ roadtonetzero.
