Even before the Covid-19 pandemic altered so much of how we live and do business, the world was changing. Extinction Rebellion activists were marching and engaging in civil disobedience throughout 2019. Many studies drove home the fact that young people care about the sustainability ethics of the organisations they spend money with. All this has led to businesses, large and small, reviewing their energy procurement practices and consumption to cut costs and gain the green credentials that attract consumers.
Even the energy companies themselves are actively going green. BP, who suffered a reputational (not to mention financial) calamity following the Deepwater Horizon oil spill in 2010, last month unveiled plans to move away from fossil fuels and towards low carbon energy over the next ten years.
Mark van Baal, of the green shareholder group Follow This, said of BP:
“the first oil major that walks the walk instead of just offering ambitions for 2050, like its peers.
“BP shows a sense of urgency and imagination beyond oil and gas. It seems that other oil majors want to stay oil and gas companies, only not look like one.”
According to The Guardian –
“The plan to transform BP from an oil major to an integrated energy company is set to increase the budget for low-carbon technologies from $500m or 3% of its total spending, to $5bn or almost a third of its budget within the next 10 years. The spending would increase its renewable energy capacity twentyfold and include investments in carbon capture, bioenergy and hydrogen production too.”
Unlike domestic users, businesses need to have a strategy in place if they are serious about reducing energy consumption. Simply installing LED lighting and changing employee behaviour will not be adequate to achieve significant cost savings. Instead, organisations must look at the matter holistically and implement a solution that encapsulates reduced consumption and the generation of onsite green energy.
Differentiating energy efficiency and energy conservation
Energy efficiency (reduction) and energy conservation (saving) are two different concepts. Energy efficiency refers to the endeavours made to lessen the energy consumption of a system, such as a building, warehouse, or plant whilst ensuring it continues to function at the same level. Energy efficiency is calculated by the ratio of the energy used to carry out a specific function and the total energy consumed by the system. The goal is to improve energy use by reducing losses.
Energy conservation, on the other hand, as defined by the French NGO negaWatt:
“Consists of rethinking our needs and then shaping individual behavior and collective organization to change the various ways we use energy, with the goal of focusing on the most useful, curbing the most extravagant and eliminating the most harmful.”
An example of energy conservation is turning down the heat temperature in an office. If people are cold, they can do what our grandparents did and “put a jumper on”. An example of energy efficiency would be to install a new efficient boiler and insulation, so the same temperature is maintained, but less energy is used.
Long-term investment in energy efficiency technology results in a virtuous circle as innovation leads to cost reductions which can make it cheaper and easier to invest in further energy efficiency in the future.
Creating an energy reduction strategy
Companies choosing to work with a consultant to create an energy reduction strategy should ensure the consultant firm is:
- independent, and
- looks at the business and its energy requirements as a whole.
Ensuring a consultant is independent protects an organisation from being constrained by products and solutions from one energy provider.
Looking at a business as a whole involves examining all the elements of energy procurement, connections, and innovation. To develop an effective strategy, the consultant must explore all aspects of these elements when they conduct an energy use and requirements audit.
Two essential elements to consider when developing an energy reduction strategy are:
- power generation solutions, and
- energy solutions funding
Power generation solutions
One way to keep a firm grip on energy efficiency is for an organisation to reduce its tie to the electricity grid. The ideal situation is to generate enough green energy onsite to meet most of the organisation’s energy needs, relying on the grid merely for the balance.
There are five main types of renewable energy sources:
Solar PV
The hospitality industry is a leader in the green energy revolution, and one of the main ways hotels and resorts generate electricity for their needs is through solar panels. For example, Chewton Glen in Hampshire, employs air-source heat pumps, solar panels, low-energy lighting as well as rainwater harvesting to ensure it remains on the list of green travel destinations.
Solar panels are made out of photovoltaic cells (which is why generating electricity with solar panels is also called solar PV) that convert the sun’s energy into electricity.
Photovoltaic cells are inserted between layers of semiconducting materials such as silicone. Each layer has different electronic properties that energise when hit by photons from sunlight, creating an electric field. This is known as the photoelectric effect – and it is this that creates the current needed to produce electricity.
Although solar panels are the easiest for organisations to install themselves so they can generate their own green energy, there are drawbacks. The initial installation is expensive, and moisture can cause corrosion. However, the most common problem is hotspots developing, caused by dirt collecting on the panels and badly fused connections.
Hydropower
Hydropower accounts for around 70% of green energy production. Special installations are placed underwater which push strong currents through a mechanical instrument known as a penstock. The ‘push’ is subsequently converted into energy.
Wind Power
More cost-efficient than solar power and easier to construct than hydropower, wind power can produce a substantial amount of renewable energy. Wind turbines work by allowing wind to turn the propeller-like blades of a turbine around a rotor, which spins a generator, which creates electricity.
Companies that have large tracts of land at their disposal can erect wind turbines; however, planning permission is required.
Geothermal
Geothermal power works by harnessing the earth’s natural heat. An underground, high-heat spot must be found to utilise geothermal energy.
Biomass
Biomass is where manufacturing bi-products such as wood chips, sugar, and animal waste are converted to energy. By burning the biomass, the heat creates a gas called biogas or liquid biofuels such as ethanol and biodiesel. These fuels can then be burned for energy.
An experienced consultant will partner with an organisation and advise and help implement the onsite green energy solution that fits with its overall strategy.
Energy solutions funding
Installing onsite green energy solutions requires expertise and funding. Options include project finance, such as asset sale and leaseback, share capital, debentures, and investment. Co-investment solutions provided by a consultant company are also a way of financing an onsite green energy generating solution. This type of finance means there is no up-front cost to a business, and the consultant is paid via shared savings or through negotiated tariff reduction.
In summary
Technology has powered the ability of commercial organisations to invest in onsite green energy production. This strategy provides numerous benefits, including the ability to sell back excess energy to the grid. For SMEs, generating energy onsite via their own resources may be out of reach; however, Purchase Power Agreements (PPA) (which are discussed in our next article), allow the purchase of energy solutions which offer the same savings as enjoyed by large companies.
To fully realise the goal of reducing energy consumption and bringing an onsite solution to fruition, it is imperative companies work with an independent consultant who takes the time to understand its energy needs.
Understanding Renewable Energy and Tariffs