Why do it?

The energy transition has started and is accelerating at pace.

  • Green agenda – demand for green solutions from customers/tenants with net zero/decarbonisation ambitions
  • Insulation from high/volatile energy prices which can impact business cost-base and profitability. The days of cheap gas are gone
  • Security and consistency of energy supply – avoid interruptions/volatility which could impact business productivity
  • Revenue-generation and cost-savings.

How to get started?

What are the options?

There are extensive options available in the Commercial and Industrial market. Your choices depend on many factors, with building type, adjacent land, and business type as just a few. The following non- exhaustive list outlines some of the available choices:

• On-site electricity generation:

  • Solar PV panels
    • Wind turbine(s)
    • Combined heat and power (CHP)
    • Anaerobic digesters (using organic matter such as food/agricultural waste to produce biogas, which is burned in a CHP engine to generate electricity and heat or cleaned and injected into the gas grid)
  • On-site energy storage – containerised batteries
  • On-site heat generation/distribution/recovery – centralised heat generation (e.g. CHP, heat pumps, solar thermal, biomass boilers) with a network of heat distribution pipes across the site. Option of heat recovery from industrial processes to supplement supply
    • Demand Side Response (DSR) – high energy users can offer to reduce their usage on demand and get paid for doing so
    • Battery projects may be able to store excess power during periods of low demand, and supply power during power shortfalls
  • Supply of green energy from off-site
    • Private wires linking nearby renewable generators directly to your site (avoiding the costs associated with sending electricity via the grid)
    • If no generators nearby, buying green electricity from the grid, either from renewable generators or from green suppliers (NB: greenwashing is an issue so be sure to check the source)
  • Energy efficiency – don’t overlook how much money can be saved by simply using less electricity, reducing both cost and emissions
  • Electric vehicle chargepoints.

Choosing the right solution(s)

There is no ‘one size fits all’ solution, you must consider the needs of your business, the nature of your operations and estate, the demands of your customers.

  • Decision makers need to see the business case
  • Understanding the energy demand profile is important to ensure a system is sized appropriately to maximise the ROI. Most larger sites are metered half-hourly for electricity and daily for gas
  • Hybrid solutions could be a good option, e.g. a heat pump powered by solar, EV’s from solar car ports
  • Consider planning, environmental, ecological, technological, and practical constraints as early in the process as you can
  • Consider an entire portfolio and avoid making assumptions about which technologies will be suitable before they have been assessed
  • A recently carried out energy performance certificate is a great starting point to identify energy conservation measures
  • Take proper advice from suitably qualified parties (including technical, financial, commercial, and legal advisers).

How to fund your chosen solution(s)

This will depend on your investment approach and can also vary based on particular project profiles; two basic options exist:

  • On balance sheet:
    • Different solutions will have different pay-back periods
    • Some solutions will generate revenues immediately; some over time
    • Whilst the renewable heat incentive and feed in tariffs are no longer available, look out for local grants and interest free loans
    • Generous tax breaks exist for some assets until 31st March 2023.
  • Third-party funding:
    • Some providers offer fully-funded solutions – e.g. they install solar panels on your roof and then sell you the electricity via a power purchase agreement (“PPA”) through which they recoup their investment, often at a significant saving against grid costs
    • Funding models are also developing for other renewable assets.

How do these solutions make/save you money?

Generating your own electricity is normally significantly cheaper than buying from grid, although capex on equipment and maintenance costs must be factored in.

  • Third-party funded solutions are also cheaper than buying from grid, even after the provider’s costs and margin are factored in. Your business avoids capex
  • Buying electricity direct from renewable generators tends to be cheaper than buying from grid (particularly if the electricity is supplied via a private wire) plus the cost is more stable (avoiding exposure to wholesale price fluctuations)
  • Certain assets can generate their own revenues:
    • Batteries can sell capacity to the grid – charging up when there is surplus electricity on the
      grid (e.g. when it’s windy at 2am, wind turbines are generating but nobody is using the power) and discharging when there is a shortfall of electricity on the grid (e.g. half time of the cup final when everyone switches on the kettle). Batteries can also sell frequency services to the grid, and price arbitrage is also possible – charging when electricity is cheap and then selling that same electricity back to the grid for a profit
  • You can use a battery system to buffer your big loads – if you have something that requires lots of power but doesn’t run all the time (rapid EV chargers are a great example) then trickle-charge a battery from the grid and rapidly discharge the battery into your load – this can be cheaper than using high power from the grid
  • Save on grid connection costs – UK infrastructure needs upgrading and grid connections can be slow and expensive to get. If you can buffer your maximum power demand with a battery, you might avoid having to upgrade your connection or sub-station, potentially saving £millions.