Since adapting a PPA, Kärcher is generating 45% of its annual energy consumption through Solar PV and has displaced c.70 Tonnes of CO2 per year.
British businesses have a got a problem. As if a pandemic, the ensuing economic slow-down, and dare I say Brexit where not enough to make any CEO want to pull the duvet over his or her head; they are also under enormous pressure from Government, suppliers, customers, and the general public to reduce their environmental impact.
Now the government has ratcheted up the pressure with the announcement of its “green industrial revolution”. Its 10-point plan designed for the North of England, Midlands, Scotland, and Wales has set several avenues to tackle looming climate change challenges. While many are noble (ban combustion engine sales by 2030, promote public transport, plant 30,000 hectares of trees a year), none appear to have support for industry in mind. This is a missed opportunity given private businesses account for 18% of UK GHG emissions.
Thankfully where businesses have a problem, business also has an answer. On-site solar renewable energy generation funded through a Power Purchase Agreement or PPA is an arrangement between a renewable energy provider and a commercial or industrial property owner; and PPA is rapidly becoming the primary funding mechanism for delivering on-site solar. Already we have seen the likes of UBT, Jones Food Company, Newfield Fabrications, Karcher, and Amazon opting for the zero-capital outlay option.
And why not? At a time when any business would be wise to keep any available capital within the business, PPA backed solar delivers significant carbon reductions and financial savings, without any cost.
Capital Free PPA’s account for the purchase, installation and ongoing operational monitoring and maintenance of renewable energy sources. Therefore, businesses receive the benefits of a renewable solution on an ‘all inclusive’ basis.
According to Toby Smith, Technical Director of an innovative asset management and renewable development company based in Bournemouth “PPA’s allow businesses to take advantage of renewable technologies like solar to make immediate savings on energy bills and reduce carbon emissions without any capital outlay”. Companies choosing PPA’s are experiencing reduced energy costs while helping the environment and meeting CSR goals. For instance, in 2019 the renown UK cleaning machine producer Kärcher shifted their focus to energy management by undertaking a PPA with solar developer Zestec. Since then, Kärcher has been generating 45% of its annual energy consumption through Solar PV and has displaced c.70 Tonnes of CO2e per year. Looking at the long-term, Kärcher is forecast to achieve savings of £425,000 over a 25-year lease.
Beyond immediate and long-term financial savings, the image surrounding the adoption of renewable technologies serves as a powerful marketing tool. According to the European Commission, 94% of UK Citizens consider that protecting the environment is important. With a growing ecological awareness, green consumer behaviour trends and rising eco-consumption is occurring. Companies who are seen genuinely integrating sustainability into their supply chain gain favourable client and consumer perception, this tends to reflect in sales. In turn, wider availability of sustainably made products will encourage consumers to make the right choice to protect our environment.
Business and site owners now have a choice. If your organisation has a suitable roof, plot, or lake/reservoir, a PPA is a resourceful approach to tackle sustainable development without government help. Adapting via the use of a PPA will reduce carbon emissions, help meet CSR goals, save energy costs, result in long-term financial gain, and serve as a powerful marketing tool. The infrastructure is already set in place for businesses to embrace renewable energy and tackle climate change with virtually not capital outlay.
Figure 1: Companies now have a choice. PPA’s are resourceful way to tackle sustainable development without government subsidies.
* This statistic sourced from the Department for Business, Energy & Industrial Strategy does not account for energy supply. In fact, energy supply is a large part of the organisation’s carbon footprint a PPA helps to reduce.
Department for Business, Energy & Industrial Strategy (2020) 2018 UK Greenhouse Gas Emissions, Final Figures. [online] Available here.
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Lee, O. (2020) The demand for sustainability in real estate for millennials entering the housing market. Bournemouth University.
Riley, T. (2018). Just 100 companies responsible for 71% of global emissions, study says. [online] the Guardian. Available here.
Walker, P. and Elgot, J. (2020). Boris Johnson announces 10-point green plan with 250,000 jobs. The Guardian. [online] 17 Nov. Available here.
Wikipedia. (2020). Power purchase agreement. [online] Available at: https://en.wikipedia.org/wiki/Power_purchase_agreement