predicted electricity price increase. As a consequence, energy efficiency is something that should be on your Board’s agenda as it is now a business issue that needs to be dealt with.
There is still clarification required to determine whether the allowance payments will be accounted for above or below the bottom line. We expect that the levy will be accounted for with electricity costs and therefore sit above the line. As a consequence this will have an impact on share prices due to the direct impact the levy will have on net profit.
Future Proof Your Bottom Line There are some straightforward actions you can implement easily and quickly; • Identify opportunities to reduce your carbon footprint and prioritise by the most relevant constraints facing your organisation.
• Understand whether your energy costs are directly related to your customers’ activities and ensure you have a mechanism in place to pass these on if you can.
• Review your supply chain to ensure that any related carbon impact to your business is as low as possible.
• Implement appropriate energy and carbon management business processes and procedures to provide you with long-term cost reductions and performance improvement.
• Move quickly towards a strategy that will maximise your income-generating opportunities under the Feed-in Tariff and Renewable Heat Incentive to reduce direct energy costs.
• Implement a communications programme so all staff are engaged
Where Do Renewable Energy Technologies Fit In? Renewable energy is now a realistic option both in terms of investment and electricity generation because of the financial incentives now available. This means that from a financial perspective you could; 1. Gain a return of up to 10% on your investment 2. Generate revenue for the next 15-25 years 3. Reduce your dependence on a particular fuel source by diversifying your energy supply using renewable energy
In April last year the government launched the Feed in Tariff (FiT) as a financial incentive to encourage the uptake of electricity generating renewable energy technologies. Eligible technologies include photovoltaic panels (PVs), wind turbines and hydro. Tariff rates vary between technologies and the size of the installation, and are likely to be payable for anything up to 25 years. In 2011 the government will launch the Renewable Heat Incentive (RHI) which is a similar scheme to the FiT but focused on heat generation rather than electricity.
We are expecting the formal tariffs to be announced in the coming months and the scheme to be formally
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launched in June. We think that the RHI will provide a greater return on investment. However, the benefit will be for those businesses with buildings with significant heat load. It is therefore critical for organisations to plan now for the opportunities to integrate renewable heat technologies into their buildings so that they are in a position to take full advantage of the RHI in June.
Making the Best Out of Financial Incentives To ensure a high return from the FiT and the RHI we advise businesses to: 1. Undertake an outline assessment of your real estate portfolio for the suitability of renewable energy technologies. This includes a review of the physical constraints to renewable energy technologies to determine both high potential and low risk sites. Estimated financial payback and internal rate of return (IRR) can also be determined.
2. Undertake a detailed assessment of the shortlisted sites and applicable technologies.
3. Identify potential financing options. 4. Develop the technical specification and install the renewable energy technology.
5. Commission the installation. 6. Register the installation.
Finally, make sure you do your research and get the best advice available to you and partner with suppliers who have a track record in supporting businesses to get the best out of energy and renewables.
Inbuilt is a market leader in delivering carbon reduction, renewable energy and efficiency solutions for public and commercial organisations. We provide all the expertise you will require to make strategic carbon-related decisions that bring a long-term positive impact on your business. Inbuilt is part of the RES Group, who has been at the forefront of the renewable energy industry for over 25 years and has to date built more than 5,000MW of successful renewable energy projects worldwide.
Further information on Inbuilt can be found at www.
inbuilt.co.uk
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