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Is business leading the way in developing off-grid energy?

 
On-site Renewable Energy Generation

The Walmart concept store in McKinney, Texas. Walmart produces about 4% of the electricity it uses. Photograph: Jeff Mitchell/REUTERS

 

Powered by Guardian.co.ukThis article titled “Is business leading the way in developing off-grid energy?” was written by Tim Smedley, for theguardian.com on Monday 18th November 2013 07.00 UTC

There used to be one reason alone for companies to stick a wind turbine in the car park or a solar panel on the roof, and that was a photo opp for marketing and the annual report. It looked good to be green but added to costs rather than lowered them. But as more businesses are choosing to invest in on-site renewable energy than ever before, the reasons appear to be changing.

A recent report found that on-site generation by UK businesses increased by 53% in 2012 alone, with almost 90% of that coming from solar and wind. And the motivation now is one of energy security.

According to the latest DECC figures, the annual average price of gas and electricity (including the climate change levy) has increased by 121% and 93% respectively since 2002 for non-domestic customers. Meanwhile costs of renewable technologies have gone down, performance has improved, plus incentives and funding structures such as feed in tariffs (FITs), Renewable Obligation Certificates (ROCs) and Power Purchase Agreements (PPAs) have come in.

“When we were making the original decision, one of the big things for us was energy security,” says Graham Chadwick, environment and CDM functional manager at Bentley Motors. In April it installed the largest roof mounted solar panel system in the UK, over 20,000 solar panels with a capacity of 5MW fixed to its factory in Crewe.

At peak performance it can produce 40% of the site’s energy needs, with an expected average of 15% across the year. “We see solar as the first of a portfolio of renewables for us,” continues Chadwick. “We are seriously looking at both biomass and geothermal… Certainly the biomass would be on site, and there’s a very good chance that the geothermal will be on site or within a mile of the site.”

The Carbon Trust‘s associate director of business advice, Dominic Burbridge, describes the current popularity of on-site renewables as “predominantly driven by a change in the business case… more organisations have been investing in energy efficiency, they’ve gained the returns of being more efficient and are [now] asking ‘where else can I make investments to cut costs and be greener?’”

He has also noticed “aggressive sales” for solar in particular. “Lots of companies now will go to an organisation with a large land or roof asset and say ‘you don’t even need to put any cash in, we can give you fixed-price energy basically for free, but we will take all the revenue that comes from the FITs and any electricity exported to the grid’”

In fact, very few companies own their on-site renewable assets. Bentley’s is a joint venture with Lightsource Renewable Energy Limited, which leases the roof space. Toyota, whose 4.1MW array of 16,800 solar panels at its Burnaston site was previously the biggest in the country, is in partnership with British Gas. The benefit of such arrangements is that the company does not take on the risk or the up-front costs.

One such third-party partner is SmartestEnergy. Its business development manager James Graham explains that there are “a lot more developers out there now who are trying to actively engage with customers that might have land, planning permission and grid connections which allow them to get something in the ground a lot quicker for a lot lower cost… If you’re going to build these projects yourself you’ve got to be very committed, and there are businesses that do that … but increasingly with the growing number of developers there’s other ways for other companies to get involved without the additional capital expenditure.”

Such co-ownership arrangements may only be a short-term trend, however. Burbridge argues that five- to seven-year payback periods for solar and warranties for 25 years on panels already offer “a good rate of return” and “owning on-site renewables means you get all the benefit”. “The trend I think will be that organisations… will start doing more of this themselves and using their own cash to finance it”, he says.

Many of the world’s largest companies are going even further. Since the first solar panel appeared on a Walmart store in 2007, it now produces about 4% of the electricity it uses in the US and aims for 20% by 2020. BMW’s Leipzig plant in Germany installed four 2.5MW wind turbines this spring and Apple gets 16% of its electricity from solar and biogas.

The next trend is to move beyond on-site generation toward purchasing green energy direct from source – or even owning the source. Microsoft recently announced a 20-year agreement to purchase all the electricity generated from a 110-megawatt (MW) Texan wind farm. Google has announced a deal to buy 240MW of electricity from a wind farm, also in Texas. Ikea now owns 137 wind turbines having recently added a 7.65MW Irish wind farm to an already impressive portfolio in its goal to become totally energy independent by 2020.

 

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