Energy strategy has evolved in the last ten years from being a ‘nice to have’ to being a ‘must have’ - whether the main driver is controlling costs, boosting your energy independence, improving resilience, increasing your social corporate responsibility, meeting policies or investor’s expectations. An energy strategy can be invaluable for your business.
Due to a potential misconception of cost, organisations with a reactive or passive approach to carbon reduction have chosen to make carbon payments, also known as carbon offsetting, to mitigate their carbon impact. However, the cost of carbon offsetting is surging – for example, in London the current £60 per tonne of carbon is expected to rise in 2020 to £95 per tonne – a 60% increase, making an energy strategy based on carbon offsetting payments weak and short term orientated.
A holistic energy strategy is much more than a selection of potential technologies to implement. Problem definition, requirements, context, drivers, budgets, existing assets and processes and data availability are the key initial factors to consider.
Underutilised assets can provide opportunities for quick wins – an empty roof can accommodate solar PV or a vacant room can be used to house battery storage. Simple changes made to optimise existing infrastructure, such as reprogramming poorly managed Building Management Systems or replacing lighting with LEDs can achieve a return on investment in less than two years.
A review of energy procurement and supply contracts may also reveal surprising opportunities for cost savings such as energy aggregation with other organisations, strategies to protect from rising non-commodity costs (taxes, levies and network charges) or the use of a Central Purchasing Body. Other opportunities such as reducing your electrical Available Supply Capacity when not required can reduce costs.
Technical and financial modelling are key to assisting with the decision-making process based on consideration of the whole project lifecycle including decommissioning costs and residual value. Choosing the right commercial model is fundamental to justifying the business case – for example, purchasing low carbon, locally generated energy via a private wire can be a win-win for both the purchaser and generator avoiding rising non-commodity costs such as distribution and transmission charges.
For energy projects or initiatives, the implementation plan or ‘when’ is almost as important as ‘what’ or the ‘why’ to ensure the benefits are realised as anticipated. Technology cost and maturity, market status, revenue streams stability, funds and subsidies are key aspects to consider when defining the best moment to introduce an initiative.
As for the future, uncertainty is out there for sure, but to a great extent it is in our hands to tackle it and it is what we do now that will impact future generations. Ensuring that your organisation has a robust and unbiased energy strategy will set the stage for sustainable growth and ease your journey through the energy transition. At UK Power Networks Services we are ready to stand by your side and help you with this journey.
Authored by Pablo Romero, Senior Technology and Innovation Consultant