Paul Sheffield, chief operating officer at Haven Power, looks at how to take back control of your energy costs.
The latest Committee on Climate Change recommends a new emissions target for the UK of net-zero greenhouse gases by 2050. This is a clear indication of the UK’s commitment to ending our contribution to rising global temperatures. To achieve this commitment, the drive towards low-carbon power will need to be accelerated and supported by a major expansion of renewable and other low-carbon power generation.
The report states that we can expect to double our electricity demand between now and 2050, which will require a fourfold increase in the generation of low-carbon electricity to meet our net-zero target. Potentially this could mean growth in offshore wind generation from 8GW to 75GW – all produced from 75,000 turbines – and there will be costs associated with this.
Electricity bill payers (households and businesses) currently pay around £7 billion a year towards the roll-out of low-carbon power. This is expected to rise to around £12 billion by 2030. Additionally, the electricity system must be able to cope with a higher proportion of inflexible generation, such as wind, if supply is to be matched to demand, no matter when or where that demand comes from.
Essentially, what this means for the UK and businesses is that electricity costs will rise, and we will be more dependent on intermittent sources of electricity supply. The Grid will need to adapt, as will businesses, if they are to maintain control of their costs. One thing that organisations can do to optimise energy use and meet their own sustainability targets is to participate in programmes such as Demand Side Response (DSR). All this helps to balance the Grid, something which will become increasingly complex to manage with the increase in intermittent sources such as solar and wind.
Utilising energy as a revenue stream
DSR is an umbrella term for a type of energy service that industrial and commercial consumers can participate in to keep the grid balanced. Consumers need to be able to reduce their power requirements from the grid at times of peak consumption, and the quicker they can do this, the greater the monetary reward they receive from the National Grid. Businesses can achieve this by shutting down some operations for a time or relying on self-generated or stored electricity.
Wholesale Market Access is another type of DSR product which allows a business and supplier to enter into a pre-negotiated contract to reduce the electricity supplier’s exposure to imbalanced prices. For instance, if the electricity supplier is likely to need more electricity than predicted, the supplier will alert their customer to turn off or reduce consumption, thus reducing the amount of extra electricity they need to purchase at a high price.
Customers who have the ability to shift their demand, without impacting their core operations, benefit from a financial reward which is also dependent on their flexibility.
Achieving cost savings on energy bills can have a dramatic effect on the bottom line – especially for large consumers. Carbon Trust estimates that a 20% cut in a large retailers’ energy costs represents the same bottom-line benefit as a 5% increase in sales.
But it’s not just about saving money. Businesses can leverage solutions such as DSR as an additional revenue stream as well as achieving their own carbon neutrality targets. However, businesses may need to embrace certain technologies to enable this to happen.
For example, if estate managers can’t measure their energy usage on site, then they can’t improve it. Smart meters allow managers to benefit from half-hourly settlements, enabling them to manage demand by switching to self-generated or stored electricity, or shifting usage to a period when the third-party costs of maintaining and balancing the electricity transmission system are lower.
Additionally, investing in solar power technology in combination with battery storage technology gives businesses the ability to reduce consumption on the grid at peak times by using stored electricity. It also further reduces costs and increases sustainability targets as the electricity is self-generated from a renewable source.
Work with the right power partner
The energy landscape has seen unprecedented change in the last few years and this trend is not going to change. Having a long-term and trusting relationship with the right partner – supplier or consultant, or a combination of the two – will go a long way in helping businesses achieve both cost savings and sustainability goals.