Posts

What is the ‘energy trilemma’? – And how does it impact businesses?

/0 Comments/in /by

Everyone’s talking energy these days. It wasn’t that long ago that business energy consumption was seemingly irrelevant; the UK had it all figured out. But times have changed; sustainability has become a big deal bringing energy to the fore both socially and politically. News headlines are rife with reference to the so-called ‘energy trilemma’ and how this affects business profitability, and companies are spending many hours hashing out solutions in the boardroom in an effort to reduce energy costs.

The term ‘energy trilemma’ was coined by the World Energy Council to explain the problem of finding secure energy supplies and catering to rising demand without prices becoming unaffordable, all while reducing greenhouse gas emissions. And the problem is turning out to be quite the conundrum. The three goals of: energy security, energy cost and environment sustainability are largely dependent on the relationships between public and private sectors, governments and regulators, economic and social factors, national resources, environmental concerns, and individual behaviours. The challenge that business owners face, amidst all of this, is to make energy work for the company (rather than against it) whilst maintaining a profit (and the certainty of future profits) by ensuring that the energy trilemma does not manipulate net earnings into the red.

The most obvious solution to the energy trilemma is energy efficiency. According to a survey conducted by UrbanWind, the majority of UK businesses are concerned with saving energy, with 94 per cent actively pursuing an energy reduction programme. And this is great news, considering the fact that European leaders have struck a broad climate change pact obliging the EU as a whole to cut greenhouse gases by at least 40 per cent by 2030. David Cameron won a battle to keep policies aimed at boosting renewables and saving electricity voluntary for member states. Although Cameron had hoped to cut the energy efficiency figure to 25 per cent, he accepted 27 per cent on behalf of the UK as long as it was not binding on Britain.

More and more, government policy will make businesses accountable for their energy consumption as experts and leaders work to solve the energy trilemma. If your business is not yet on board with implementing sustainable energy measures, it’s probably time to get with the programme.

If you’d like further information on ways to lower your energy overheads and make your business’s energy use more sustainable, feel free to contact the CH Systems team on 0208 302 8149 or info@chsystems.cc.

Sources: H&VNews – “Commercial opportunities increase for MCS installers”; Greenwisebusiness.co.uk – “EU leaders agree 40 per cent emissions cuts by 2030”; Urban-wind.co.uk – “Business Energy Independence” and Theguardian.com – “The energy ‘trilemma’: how did we get here?”

How your business can reduce energy consumption in the face of rising tariffs

/0 Comments/in /by

Rising prices and tough carbon reduction targets have made energy a critical issue for government, civil society and business – and both industry and policy makers have a lot to say about the matter.

Hot in the press at the moment is whether energy-intensive industries should be asked to reduce energy consumption in spite of the fact that said energy use (that might be deemed excessive in light of reduction targets) drives business profits? A debate is raging in the face of government incentives to solve ‘the energy crisis’ by implementing time shifts (tapering energy use across the day by charging customers more for energy at the most popular times of day) on businesses in an effort to change behaviour.

Energy policies have not yet been honed by government but what is clear is that some sort of reduction will be forced, and even if your business is not energy-heavy it’s nonetheless a good idea to cut energy consumption before flexibility is no longer an option.

According to a survey by greenwisebusiness.co.uk, the most common reasons that UK company owners have not cut their energy consumption are:

  • insufficient time or resources
  • not being able to quantify the expected returns
  • energy efficiency being a lower priority than other business considerations

Logic says that the best way to cut consumption would be to address the aforementioned hindrances. Here’s how:

Assign ‘ownership’ to a member of staff: if time is short and resources are minimal, appoint someone with the specific task of overseeing an ‘energy project’; this could be someone already on staff or someone new who is brought in on a contract basis. The idea would be for the project manager to identify the primary areas of energy consumption (including lighting, heating, cooling and powering equipment) and to then work out how best to cut consumption; investing in new equipment can make a dramatic difference to energy bills, for example.

Plan and evaluate: often energy saving measures cost up front but save money in the long term. A good way to quantify returns is to clearly outline project requirements to prospective suppliers, which enables a detailed picture of which company offers the best deal. All proposals should provide whole life costings for the proposed solution, showing both the upfront capital cost of the equipment as well as the running costs (including estimated energy consumption and maintenance). Also make sure you receive quotes from at least three established suppliers to have a good framework for comparison. It is worth evaluating the success of different energy efficiency projects at regular stages after their completion. This helps demonstrate the return on investment for future projects; to identify which measures are delivering the biggest benefits and can highlight future enhancements to business operations. – As suggested by greenwisebusiness.co.uk.

Change behaviour: the best way to make energy consumption a business priority is to start with the basics; something as simple as turning off heating outside normal opening hours can result in significant energy savings without the need for major investment. Also encourage staff to take simple steps to reducing energy use on a daily basis (turn switches off at the socket, make sure lights are turned off when rooms aren’t in use etc.) – before you know it; saving energy will be habit.

It’s important to remember that when it comes to energy consumption, the effort it takes to cut energy use will ultimately save your business money! The more effort you put in, the more return you will see.

Sources: Theguardian.com – “Is it fair to ask energy-intensive industries to reduce consumption?” and Greenwisebusiness.co.uk – “Beating the barriers to energy efficiency in association with the CARBON TRUST

If you’d like further information, feel free to contact the CH Systems team on 0208 302 8149 or info@chsystems.cc.

Government gears for launch of ‘business friendly’ Renewable Heating Incentive

/0 Comments/in /by

The price of energy increased notably over 2013’s winter months – whilst energy providers profited, many business and home owners buckled under the burden of hefty payments. In reaction, the government has put plans in action for the late-Spring launch of a Renewable Heating Incentive (RHI) aimed at cutting energy bills as well as CO2 emissions (the heat used in homes, public buildings, businesses and factories account for half of all the UK’s carbon emissions).

The scheme (covering England, Scotland and Wales) is an effort to diversify the UK’s energy supply in the face of the threats and challenges emanating from climate change; it will provide long term support for renewable heat technologies, from ground-source heat pumps to wood-chip boilers. And the RHI has business owners (both big and small) in mind. Not only is the scheme environmentally friendly (using solid biomass in place of fossil fuel can reduce harmful CO2 emissions by as much as 90 per cent) but it is also financially attractive, flexible and on a practical level, relatively easy to build into a building’s existing energy arrangement.

So, the question: if you buy into the RHI, what does it mean for your business? – How will it save your business money? And what practical steps need to be taken to implement the scheme?

Mike Hefford, Head of Renewable Technologies at Remeha Commercial, says that biomass heating offers significant fuel cost savings of between 50 to 80 per cent when used as an alternative to heating oil, LPG or electric systems. Hefford explains as follows:

Commercial end users can benefit from up to 8.8p/kWh of heat generated, depending on the size of the biomass system. The rate for large biomass plants of greater than 1MW has also recently doubled to 2p/kWh (although payments of other sizes remain unchanged). Tariffs for domestic biomass have also been confirmed at 12.2p/kWh from spring 2014. Payments, administered by Ofgem and made quarterly over a 20-year period, equate to around 15 to 20 per cent return on investment. The Government has recently introduced a degression mechanism that will trigger an automatic fall in tariff levels for biomass installation smaller than 1MWh once 120% of expected deployment is reached. This does not apply to biomass installations of 1MWh but, under the RHI, this capacity and above will be required to report quarterly on the sustainability of their biomass feedstock.

In translation: the RHI implies lower operational costs and savings for faster payback. Hefford argues that of all the possible renewable heating solutions for commercial and industrial applications, biomass is likely to bring the most important benefits and savings. Something that must, however, be noted that switching to a renewable heating system will cost you money. According to Hefford, while biomass heating is a mature, proven technology, as with all technologies it pays to employ the experts to design the appropriate low carbon system for your particular needs. In light of which, perhaps you’re a business or organisation that is interested in taking part in the scheme but are unable to raise the initial capital cost?

Firstly, the point of the RHI is to support the industrial and commercial sectors as it is these sectors provide the most cost effective way of increasing renewable heat. It is therefore crucial that renewable heat becomes a viable option for businesses. The Government expects that the RHI will stimulate the market to provide a number of different financing options, which could cover both the capital costs (e.g. cost of installing the equipment) and ongoing operational costs (e.g. fuel costs) for the lifetime of the installation. Possible finance models include:

  • Energy suppliers – providing renewable heating as an option alongside their current package of services.
  • Banks and other lenders – lenders to finance upfront capital costs for an assigned proportion of the RHI through a contractual arrangement.
  • Energy service companies – a combination of local authority, community and energy company expertise in a body that provides a finance package to deliver renewable heat technologies using RHI payments.
  • Public sector financing – local authorities are potentially able to take advantage of economies of scale.

Applications to be part of the Non-Domestic Renewable Heat Incentive, and for financial support, should be made online (to Ofgem) and can take up to six weeks to approve, depending on the complexity of the proposed heating installation. – CLICK HERE for more information, and to apply for the RHI.

If you’d like further information on the Renewable heating Initiative, feel free to contact the CH Systems team on 0208 302 8149 or info@chsystems.cc.

Sources: Gov.uk – “Renewable Heat Incentive”; Remeha.co.uk – “Turning up the heat for biomass”