How companies can transform their energy management strategy

As organisations become more aware of their need to tackle energy management, they are increasingly choosing renewables over the traditional energy grid as part of their strategy.

With tax extensions and advances in technology helping companies more effectively reach their sustainability goals, renewable resource adoption is now front of mind for many organisations.

While renewable resources are more accessible than ever before, many organisations still don’t know where to begin. A recent poll of financial executives found one-third lacked a starting point to implement energy management practices, and only 12 per cent were confident in their companies’ energy cost, consumption and price data collection procedures. Without the foundational benchmarks in place, organisations miss opportunities to integrate renewable energy, increase sustainability and drive down energy costs.

The intersection of energy management and renewable energy can be difficult to navigate, but many companies have successfully invested in renewable resources. Google, for example, recently bought enough windpower to match 100 per cent of its 2017 energy usage. While the tech giant sets a high bar, all organisations should establish a strong energy management framework as a foundation to ensure renewable adoption is strategic and impactful. Below are some tips to make the energy management journey easier.

Embrace the analytics

Commercial buildings account for 14 per cent of energy consumption in the UK, and 30 to 50 per cent of that energy is routinely wasted. Without the proper data to capture and analyse this usage, companies can be left in the dark about their potential savings. By conducting energy audits and setting benchmarks, businesses can better understand their energy output, eliminate excessive energy use, restructure utility contracts to reduce costs, and establish a clear roadmap to realise energy savings and become more sustainable.

An energy audit, which can look at everything from smart thermostat data to utility bill history, is a common first step on this journey and the most critical. Once a company understands its energy management maturity, it can begin to integrate renewables into its roadmap.

It’s all about location

Organisations who want to set ambitious goals need to account for the energy markets they operate within and the resources available. A company located in the England, and specifically Southern England, will have a more diverse solar market than a company in other parts of the UK, and a company in coastal areas would benefit more from local access to wind power as it gains access to both on and offshore wind power production.

In 2017, the UK generated 50% of their renewable energy from on and offshore wind assets with generation increases of 39 per cent and 27 per cent respectfully. These gains are contributing towards the UK being on track to delivering 30 per cent of their electricity from renewables by 2020-21.

While the UK receives less solar radiation when compared to the sunniest locations in Europe, there is sufficient solar potential, that companies are actively diversifying their energy consumption through solar installations. Amazon, for example, is planning to install 20 megawatts of solar panels across its fulfilment centres in the UK.  This installation will help Amazon meet its commitment to using 100 per cent renewable energy across its infrastructure and their goal of installing solar systems on 50 fulfilment centres worldwide by 2020. When companies invest in energy that’s readily available, it helps them take tangible steps forward on their energy management journey.

Understand Your Options

Renewable energy has been disrupting the energy market in recent years, and will continue to do so, as it recently became the cheapest unsubsidised option for adding new wholesale electricity supply. While prices are cheap at the wholesale level, renewable energy often drives significantly complex retail rate structures that will impact the costs and benefits of any on-site systems.

While net metering has been a common solar rate structure for years in many countries, this concept is not widely supported in the UK with only one energy supplier offering a net metering option.  In contrast, the UK has historically employed a Feed-in-Tariff scheme (FiTs) to provide a form of compensation to small scale renewable projects up to 5 MW in capacity.

Starting in 2010, installers were able to apply to the FiT scheme and would then receive compensation for both the electricity they generate as well as excess electricity exported to the grid. The rates that would be applied depending on the size of the system, the renewable technology used, when the system was installed, and the energy efficiency of the location. That being said, no new applications would be accepted after March 31, 2019. Some solar installations with a Microgeneration Certification Scheme (MCS) certificate that was issued by that date will be able to apply for the FiT scheme until March 31, 2020.

Be mindful of rules and regulations

It’s important for companies to know all energy resource and distribution options available and trends on the horizon before committing to a contract.

Partnering with key Distribution Network Operators (DNOs) and energy suppliers can be helpful in diversified energy markets, like the UK. With aggressive renewable targets like much of Europe, the UK has instituted financial benefits for large generators to promote increased renewable generation construction. Previously this was done through the Renewables Obligation (RO), but this has been replaced by a series of auctions and the Contracts for Differences (CfD) scheme. However there are concerns with the success of this programs along with the ending of the FIT scheme. Jobs in the renewables sector have fallen by 30 per cent from 2014 – 2017 and investment in generation has decreased by 50 per cent.

The sources of renewable energy in the UK is sold to consumers by energy suppliers in this fully deregulated market. This market is dominated by the #Big Six’ which supply 90 per cent of all homes in the UK. However, there are smaller “independent” suppliers that specialise in the renewable energy space.

These break into two groups, one being green energy suppliers who offer 100 per cent renewable energy through mix of various energy sources, and green tariff suppliers that either off set their non-renewable energy generation or over other forms of credits to arrive at 100 per cent renewable energy coverage for their clients. However, without continued incentive support, it may be difficult to find a trusted partner, and changing country regulations may make it harder to navigate renewable energy policies.

Solar partnerships, such as solar leases and power purchase agreements (PPAs) offer organisations alternative resources for renewable energy resources. The PPA model, which Cisco has utilised, allows the third-party to offset its customers’ energy bills. It then sells the power to customers at a fixed rate, which is lower than is available in the marketplace. Many large corporations prefer this model, because it allows them to have bold sustainability and renewable energy goals, without being in the business of owning energy producing assets.

Look beyond company walls

As more companies realise the advantage of incorporating energy data insights into their business strategy, they are better positioned to integrate renewables into their energy and sustainability goals. Leveraging renewables within emission reduction strategies offers businesses the promise of offsetting today’s fluctuations in energy pricing and increasing sustainability.

Furthermore, once companies have an established energy management program in place, the focus shifts to their supply chain partners and manufacturers in an effort to reduce their greenhouse emissions and embrace renewable resources. The journey doesn’t end with an individual organisation, as every partner in the business ecosystem impacts environmental and sustainability goals.

Martin Sieh is Chief Operating Officer at ENGIE Impact

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