Clean, fuel-free on-site renewable energy is a growth area in the UK, with financial incentives in abundance. Until recently, companies invested mostly as part of a corporate image exercise, but the economic case to deliver genuine energy and cost savings is more powerful now writes Rod Edwards.

For most commercial companies to date, the logical reason for investing in on-site renewable energy in the UK has been to gain a positive green PR – to boost company reputation and address growing consumer concern over the environment. The motive has rarely been financial because of lengthy payback periods, often amounting to between 10 and 25 years, to recoup initial investment in solar and wind.

But this is all about to change with the introduction of new government incentives to significantly improve the economics of renewable projects – aligning the country with its European counterparts, most notably in Germany, Spain and Italy.

So, exactly how is the UK government assisting companies to reach the goal of 15% of energy from renewables by 2020?

GOVERNMENT SUPPORT

The proposed FiT (feed-in tariff) scheme, scheduled for introduction in the UK by April 2010, aims to stimulate capital investment by shortening the reimbursement time for renewable electricity by at least 50% for solar and wind power; enabling returns on investment to be achieved in less than 7-8 years in some instances.

FiTs will be cash payments made at above-market rates to the owners of renewable systems for the electricity generated, whether this energy is consumed on-site or exported to the grid. The higher price will help to overcome the cost disadvantages of renewable energy sources such as solar photovoltaic (PV) and wind.

Different versions of the FiT scheme have already been introduced in other countries. The basic principle remains the same; owners of solar panels, wind turbines and other technologies are paid for all the electricity generated, regardless of whether they use it on-site or send it back to the national grid. These payments could be worth thousands of pounds a year and transform the financial case for installing renewable energy.

Feed-in tariffs will be effective for small- to medium-scale projects (below 5 MW), such as wind turbines powering factories or supermarkets. They will encourage the wider installation of solar PV and small wind, but is this going to help solve the climate change problem? In most instances a fossil fuel reserve will be required to provide energy if generation falls short from these systems.

However, we should be encouraging more businesses to improve grid-independency and install a generation mix at their sites that can at least meet their own baseload demand.

With this theory in mind, businesses would need to consider not one type of technology but several intelligently-controlled systems to maximize operation. One method to successfully achieve this could be switching from conventional gas-fired combined heat and power (CHP) plants to biomass-fuelled CHP plants.

Biomass is also to be given support under a government scheme to be launched in April 2011. The Renewable Heat Incentive (RHI) will make payments for every kWh of renewable heat produced. This level of payment (the tariff) will be different for various renewable energy sources. The finer details of the RHI are still to be established but it will encourage businesses to achieve competitive advantage by providing a predictable income stream for renewable heat generators.

The transition to greener practices – and a multi-technology approach – is being further accelerated by existing and new government legislation, including:

  • Renewable Obligation Certificates (ROCs) require electricity suppliers in the UK to source a specified and increasing proportion of their electricity from renewable sources.
  • The Carbon Reduction Commitment (CRC) is a new, mandatory, energy saving and carbon emissions reduction scheme for the UK. It starts in April 2010 and introduces new legal duties on any organization supplied by an electricity meter settled on the half-hourly market. Participating organizations will need to monitor their emissions and purchase allowances to emit carbon dioxide. It will act as an incentive to improve energy efficiency and help large private and public sector organizations to generate cost savings through reduced energy bills.
  • The Climate Change Levy (CCL) is a tax payable on fossil fuel energy usage, which came into force in 2001. It was created to encourage the commercial and public sectors to improve energy efficiency and reduce emissions of greenhouse gases through renewables. Climate Change Agreements (CCAs) were introduced alongside the levy – these provide an 80% discount on the levy if challenging targets are met for improving efficiency or reducing carbon emissions.

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IKEA is investing €8 million in its solar project across sites in Germany, Spain, Belgium and the US

With considerable financial backing available from schemes such as FiTs, and by trading with carbon credits and ROCs, the costs of inaction on climate change will far outweigh the costs of action.

ON-SITE CASE STUDIES

Tesco, IKEA, the National Trust and BSkyB are just some of the major companies we are working with to develop renewable on-site power. It is no coincidence that these organizations are all highly successful, since it seems that some of the companies most committed to tackling climate change are experiencing the largest growth in profits.

Whether they are investing in wind power, solar PV, biomass, hydroelectric or ground source heat pumps, all renewables allow companies to achieve energy security, shield themselves against volatile fossil fuel prices, attain financial savings and reduce harmful carbon emissions.

BSkyB – biomass
Perpetual Energy has been appointed to implement biomass technology at BSkyB’s new-build studios in Osterley, West London. Due for completion in 2011, the newly constructed building will house Sky Sports and Sky entertainment channels.

On-site renewable energy will provide heating, cooling and electricity to offices for 1300 people. It will be generated by a biomass-fuelled combined cooling and heating plant (CCHP), reducing the building’s carbon footprint by at least 20%.

We were given a flexible design brief by BSkyB to examine the viability of renewable energy developments that would make a significant impact on minimizing environmental impact and carbon dioxide emissions. The feasibility study identified biomass as a credible alternative to meet the needs of the new TV studios and transmission centre by providing heating and cooling systems and efficient power.

On completion, the overall project is expected to achieve an ‘excellent rating under the Building Research Establishment Environmental Assessment Model (BREEAM). This is a standard that demonstrates progress towards corporate and organizational environmental objectives.

National Trust – solar thermal and biomass
Europe’s largest conservation body, the National Trust, is carrying out feasibility studies to decide whether more of its historic buildings and castles are suitable for renewable energy developments. Perpetual Energy has been appointed to conduct some of the assessments, which will analyze biomass and solar thermal technologies.

Buildings being considered for the sustainable measures include: Chirk Castle in Wrexham, Clandon Park and Mansion House in Surrey, Compton Castle in Devon, Dyffryn Mymbyr residential farm in Snowdonia, and Stackpole outdoor learning centre in Pembrokeshire. At some sites, renewable systems have already been implemented. The aim of this National Trust initiative is to further explore alternatives to non-renewable fossil fuels, comparing carbon dioxide output and energy costs.

Once the studies are completed, the Trust will examine the detailed reports and then decide on whether to implement the proposed ventures – biomass, solar thermal technology, or both.

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The UK’s National Trust plans a green future for its buildings – Clandon Park is one of numerous historic buildings under assessment for biomass and solar thermal systems

The initiative is part of the organization’s strategy to tackle climate change. The National Trust wants to move away from using fossil fuels, such as oil, to heat their buildings when they can use natural resources including wood as a biomass. There are also long-term financial benefits and there could be up to a 90% reduction in carbon dioxide emissions at certain sites.

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Ford – the motor retail company is another investor in on-site renewable energy

Once introduced into National Trust buildings, biomass boilers will generate carbon-neutral heat or electricity by burning plant-derived materials, such as wood pellets or chips. Solar thermal energy panels fitted to property roofs will capture the heat of the sun for hot water systems.

The extent of the National Trust portfolio highlights the challenge it is undertaking, with some of the properties being hundreds of years old. But the aim is to reduce carbon emissions by 20% in these buildings over the next three years.

This work is part of wider energy saving strategy already being carried out by the National Trust, including work with partner npower, on installing renewable schemes at properties across England, Wales and Northern Ireland. In just two years, over 20 of its properties have benefited from the Green Energy Fund and the National Trust is already making significant financial and carbon savings.

IKEA – solar PV
Swedish furniture chain IKEA has invested €8 million in a groundbreaking research project with Perpetual Energy and Loughborough University. Together the three organizations have developed the world’s largest field project for monitoring and evaluating the performance of solar PV systems.

They are testing five different PV technologies at IKEA stores across four countries with different climatic conditions – Brooklyn in the US (sub-tropical), Gent in Belgium (oceanic), Rostock in Germany (humid continental) and Seville in Spain (Mediterranean).

At each site, Perpetual Energy is installing an average of 250 kW of solar PV modules on the store roofs. The technology – supplied by different manufacturers – will be monitored at one second intervals and information about performance will be relayed back to Loughborough University’s Centre for Renewable Systems Technology (CREST).

Comparisons to be made include:

  • efficiency of cell technologies at converting solar into electricity
  • the effect of climatic variation on performance
  • ease of installation and application and durability of the panels.

The research will also cover government regulations and financial implications of installing the PV panels, as each country taking part in the project offers different grant support for the use of renewable technologies. This has an overall impact on system costs and estimated payback time.

According to Brian Goss, who is studying for an Engineering Doctorate at Loughborough while working as a research engineer at Perpetual Energy and leading the IKEA project, this scientific study is unique: ‘As far as we know, there is no other project like this that has been carried out at such a large scale. Four near-identical, grid-connected PV systems are being installed onto the rooftops of IKEA stores across four countries. Each system includes a sophisticated monitoring device, which feeds back information to CREST at Loughborough using secure daily downloads.’

Kate Cradden, project manager at Perpetual Energy, has travelled to each of the sites to manage installation of the panels and liaise with roof designers. She said: ‘IKEA is an international firm with 214 stores in 22 countries and it has always been committed to improving energy efficiency. The company wanted us to look at solar PV as an experiment – a testing of how the technology works, and a comparison of technologies and manufacturers. The end result is a step forward in deciding which technologies are a best match for each installation in terms of performance, economics and analysis of the systems as a whole.’

Ford – wind and waste-to-energy boiler system
Perpetual Energy has worked alongside Ford Retail, a division of the Ford Motor Company, in the development of a £5.3 million (US$ 8.8 million) car dealership in London. The company was appointed early in the conceptual design stage to ensure a full package of renewable energy solutions were integrated into the overall design.

The new state-of-the-art site is Ford’s greenest dealership in the UK and will act as a model for future developments. Technologies successfully installed include:

  • a 50 kW wind turbine – reducing carbon dioxide emissions by approximately 35 tonnes per annum
  • a waste-to-energy boiler – providing 145 kW of warm air heating to workshops, fuelled by waste oil produced on-site.

The project demonstrates the opportunity to reduce carbon dioxide emissions, reduce capital and running costs, and provide a fully integrated package of intelligent renewable solutions.

FINANCIAL ASPECTS

Now, if the UK government is making it more attractive to cash in on the renewable energy boom, why is there hesitancy to invest?

Renewables tend to be ‘capital loaded’ – so you are buying all your energy requirements for the next 20 years in one go. The recession is making people think twice about spending and it is also more difficult to borrow. However, the introduction of financial incentives is going to alter the energy landscape forever.

These incentives, together with the increasing cost of fossil-based energy are pushing energy efficiency to the top of the agenda. Furthermore, financial experts are predicting that the economy will bounce back by 2010.

Companies will no longer have to implement renewable energy initiatives exclusively for green sheen. Instead, the transition to greener practices has the potential to strengthen a company’s balance sheet and demonstrate corporate social responsibility.

Renewable technology is no longer blue-sky thinking. It is here to stay. We only have to look at the past 20 years to see that it has become much more mainstream. Commercial enterprises can all have their slice of the green dream – if they want it.


 

Rod Edwards is the technical director of Perpetual Energy, an independent renewable energy developer, in Cheshire, UK
e-mail: rod.edwards@perpetualenergy.co.uk