With the Government's Green Deal set to come into operation later this year against a backdrop of rising energy prices, austere economic conditions and a growing spotlight on sustainability, there has never been a more appropriate time for businesses to think more about the energy options available to them. Gary Sucharewycz, Commercial Sales Manager with EvoEnergy, explains.
According to a recent survey by npower, nearly half of medium-sized businesses in the UK are dissatisfied with the energy products on the market - while energy was ranked as a bigger risk than legislation, security and even cash flow. Nine in ten of the businesses polled said they would like to see more tools available to help them monitor their energy use and take more control over the costs involved.
A consortium of 71 industry analysts warned in November 2011 that, based on current market forces and wholesale price trends, the cost of energy could soar by 60 per cent in the next decade alone - with the average household electricity tariff rising to £800 a year, while annual gas prices jump to £1,300. While this is likely to be a worst-case scenario, it is unsurprising that energy costs are featuring more and more heavily in the boardrooms of businesses of all sizes, and managers are seeking ways to manage the risk to growth posed by rising bills.
This problem could be mitigated to some extent when the Energy Company Obligation (ECO) comes into force alongside the Green Deal later this year. The new measures, which will replace the current Carbon Emissions Reduction Target and Community Energy Saving Programme, represent a major change in the government's approach to energy efficiency. Consumers and businesses alike will be provided with incentives to make their properties greener by upgrading them - whether that's through simple measures like insulation, or more ambitious projects like small-scale power generation. Meanwhile, the ECO will oblige major energy suppliers like British Gas, E.On and npower to provide additional support for "hard-to-treat" properties, particularly older ones that will be much more expensive to refurbish.
"Our analysis indicates that the Green Deal and ECO will drive billions of pounds of investment in energy efficiency measures over the next decade," said the Department for Energy and Climate Change (DECC) in a consultation document. It added: "Alongside Green Deal funded installations, we are confident many providers will offer other low carbon measures such as renewable heating and hot water systems (heat pumps, solar thermal panels) and on-site electricity generation. These would be supported by separate financial incentives which are already in place or are currently being put in place."
Probably the most well-known of the incentives already in place is the Feed-in-Tariff (FiT), which has been under something of a cloud in recent months due to the DECC's attempts to halve the amount of money paid out per kilowatt hour (kWh). Under the scheme, homes and businesses using solar energy installations and other microgeneration systems receive 43.3p per kWh that they sell back to the national grid. As the budget for the scheme dwindled, the DECC said it would be necessary to reduce this to 21p and apply the lower rate retrospectively.
However, on December 12, 2011, a High Court ruling stated that this action would be illegal. This was followed on January 25 by the Appeal Court's refusal to allow the Secretary of State to challenge the decision, meaning that for all existing installations customers will now be locked in to the original FiT rate for 25 years. The earliest the rate can be changed for new adopters is now March 3, so anyone currently considering microgeneration has a small window of time to benefit from the full - and generous - 43.3p rate.
The environment created by the FiT, Green Deal and ECO creates some interesting possibilities for businesses who may already be interested in the idea of generating their own power. Not only does microgeneration contribute significantly to an organisation's environmental and corporate social responsibility credentials, but it also offers a compelling solution to the problem identified by the npower survey - that businesses want more control over their energy bills and new products to help them manage costs.
To take a recent example, Ocean Housing in Cornwall last year installed a 57 kilowatt peak (kWp)
We are in a win-win situation. All the 'green' electricity we generate on site is free for us to use. On top of this we are rewarded for every kilowatt hour of energy we produce, with an additional bonus for the electricity we sell on.
solar photovoltaic array on the roof of its premises. The project, comprising 273 panels in total, is the biggest single installation in Cornwall to date and was completed within less than a month. David Renwick, chief executive of the Ocean Group, said: "We are in a win-win situation. All the 'green' electricity we generate on site is free for us to use. On top of this we are rewarded for every kilowatt hour of energy we produce, with an additional bonus for the electricity we sell on."
Sheffield University is another institution to have benefited from solar power - and not just as a way to reduce its carbon footprint. Installed in 2010, the 9.99kWp solar farm also provides a test bed for the university's Department of Physics and Astronomy to carry out its research on several different types of photovoltaic technology, paving the way for the next generation of solar cells.
In terms of helping a business to meet its sustainability targets, a typical 50kWp solar photovoltaic system will save 550 tonnes of carbon emissions over 25 years, as well as contributing towards BREEAM certification - generally considered the gold standard for environmental performance. Many firms that can truthfully claim to operate on or close to a zero carbon basis find it is a powerful marketing tool, particularly as a growing focus on eco-friendly procurement encourages clients to seek out suppliers who can demonstrate their commitment to the environment.
New environmental regulations for business are only going to become more stringent, while research indicates that fossil fuel prices can only move upwards. For these two factors alone, the business case for solar energy generation is looking increasingly solid, and early adopters will be giving themselves more time to reap the benefits of higher FiT rates, reduced dependence on energy suppliers, and the prestige that comes with moving towards a zero-carbon operation.