Phil Thompson, CEO of Balance Power, highlights behind-the-meter (BTM) generation as a promising solution for businesses to quickly and efficiently decarbonise their operations.
Renewable uptake in the UK is gaining momentum once again. The new Government has injected a much-needed surge of energy back into the marketplace with its ambitious plans and policies for net zero.
Within just a few weeks of coming into power, we’ve seen Labour lift the historic ban on onshore wind, approve three large-scale solar PV projects totalling 1.35 GW of clean capacity, announce plans for a state-owned energy company, and the largest budget yet for renewable energy via the Contracts for Difference (CfD) scheme, which yielded a record 131 projects.
This swift and frankly bold action has reignited hope in the sector. However, there is still a lot to overcome before we can turn the Government’s vision into reality.
Increasing renewable energy capacity is vital, yet it is just one piece of the net zero puzzle, and it ultimately hinges on a reformed planning process. The industry grappling with grid delays is somewhat old news for those close to the sector, but it has only recently entered public consciousness as reports of developers receiving grid connection dates decades into the future have surfaced in the past year.
There are only so many connections to hand out before we need to expand the grid network, and the sheer number of renewable energy projects joining the queue has created a ‘clogging’ of the pipeline. This problem is still tangible and real.
Whilst work is underway to address our congested grid, the scale of the problem has incentivised some developers to pursue different avenues to get projects up and running.
Behind-the-meter generation
One such avenue is behind-the-meter (BTM) generation. This typically involves a partnership between a business and a clean energy developer, who will identify the most effective method for generating renewable energy on their premises or on land nearby. The energy generated is supplied directly to the business via a private wire.
As this method bypasses the grid, projects can be up and running in just a year or two, compared to an average of five years with more traditional methods. This also helps businesses avoid third-party costs and other charges that are added to their normal energy bill, slashing operational costs at a time when many are being crippled by the soaring price of energy.
According to POWWR’s Quarterly Energy Barometer Report in July, UK businesses are spending 12.6% more each year on energy compared to the previous quarter. That’s a significant increase and is representative of a general upward trend in prices that shows no signs of stopping.
It’s also worth noting that this model reduces strain on the grid. By generating electricity locally, especially during times of high demand, BTM systems reduce the amount of power needed from the grid, effectively ‘shaving’ peak loads and lessening stress on existing grid infrastructure. This not only helps prevent grid overloads during peak times but also reduces congestion on the network, making the grid more efficient and bolstering energy resilience.
A new pathway for energy-intensive businesses
The beauty of BTM generation is that it is well-suited to energy-intensive businesses, from those involved in manufacturing foundation materials like chemicals and glass to large retailers and those in the food and packaging sectors. These businesses consume vast amounts of power and produce tonnes of emissions through their operations – we simply can’t wait for grid infrastructure to be expanded or optimised before connecting them to a clean alternative to fossil-fuelled power.
Some of the biggest and most influential players across a range of industries are waking up to its potential. Vodafone, for example, which holds 20.5% of the mobile market share in the UK, is set to derive 44% of its annual energy requirements from five solar farms in Norfolk, Nottinghamshire, Staffordshire, Buckinghamshire and Dorset through a power-purchase agreement (PPA) with supplier Centrica and generator MYTILINEOS.
Similarly, Iceland, one of the UK’s major food retailers, is planning to power 14% of its annual electricity needs through a PPA with Octopus Energy via a solar farm in Cambridgeshire.
Samsung Semiconductor, which is responsible for manufacturing electrical components (a highly energy-intensive process) is leading in the silicon semiconductor industry – since 2020, its US and Chinese business sites have been powered by clean energy through installing large-scale renewable facilities.
Creating a community-centric model
The cost savings that businesses are able to derive through BTM generation are not only beneficial to the businesses themselves but can also have a ripple effect throughout the community. For example, businesses can reinvest the money saved on energy bills into expanding operations, creating new jobs and improving local infrastructure, contributing to a more robust local economy.
BTM projects can therefore help address one of the primary concerns that drives NIMBYism – communities feeling that they bear the burden of hosting energy projects without reaping the rewards. With BTM setups, the energy produced is used locally and residents and businesses see tangible benefits such as lower energy costs, local job creation, and improved economic conditions, helping enhance community support for projects.
The growing demand for BTM
The potential of behind-the-meter generation extends beyond positive environmental impacts – it provides a compelling incentive for businesses to decarbonise. As pressure mounts from governments and investors, businesses are being forced to reevaluate their supply chains and procurement processes to meet decarbonisation goals.
Simultaneously, they are under increased scrutiny from eco-conscious consumers who are more aware than ever of the climate crisis. Surveys consistently show that consumers prefer eco-friendly brands, with millennials and Gen Z leading the charge. In the UK, for instance, 66% of 18-24-year-olds are more likely to buy from retailers or brands with strong ethical and sustainable credentials.
As sustainability becomes a key differentiator, businesses have an opportunity to enhance their bottom lines and gain a competitive edge by transitioning to renewable energy to power their operations.
A viable and quick pathway to decarbonisation
To sum up, BTM generation holds the potential for a transformative shift in the UK’s energy landscape. As the Government’s ambitious net zero policies set the stage for a greener future, BTM offers businesses a viable and speedy pathway to decarbonise while cutting costs and enhancing energy security. By embracing this approach, companies not only contribute to the country’s renewable energy goals but also foster stronger, more resilient and supportive communities.
As consumer demand for sustainability grows, BTM generation will likely become a cornerstone of both corporate strategy and the broader transition to a net zero economy.
