REPOWER – INSIGHTS FROM INDUSTRY REQ
Seizing monetary savings with solar-generated electricity
A
s the UK economy continues to show a positive outlook, businesses that had refrained from making new investments during the
downturn are now more inclined to loosen the purse strings again. Yet many are still prioritising investments aimed at growing their core businesses over committing capital to energy efficiency. Not only is this a false distinction, but such a mindset could also lead to a slow erosion of the business’s bottom line in the long run. Take the manufacturing industry as an example, where the average electricity price paid, excluding the Climate Change Levy (CCL), has risen from 2.868 pence per kWh in 2003 to 7.749 pence per kWh in 2013,1 an extraordinary increase of 170% over ten years. Even though wholesale costs of oil and gas may be lower than the peaks we have seen over the past few years, electricity prices are likely to increase further due to rising regulatory costs and the increased network costs that make up a significant proportion of the retail price. It is therefore increasingly important for businesses to take a long term view on their energy management policy. Energy-savings measures such as LED lighting or building controls are typical low- hanging fruit for businesses when they first introduce initiatives to cut energy bills. To take things further though, it is often worthwhile for business owners to explore the possibility of adopting a cleaner energy portfolio through, for example, the implementation of the increasingly popular solar PV technology, in order to subsidise their own electricity consumption. In fact, though the introduction of the
government’s subsidy scheme Feed-in- Tariffs (FITs) proves a great incentive for companies to invest in solar PV, subsidising the user’s own electricity consumption has now become an increasingly crucial argument for investment decision. The relentless rise of electricity prices has helped shift the focus and benefits of solar PV installations from solely monetary gains from FITs (revenues at electricity wholesale prices from the grid) to expected savings on commercial energy rates (at the higher retail rates). Despite the small scale solar revolution seen in the last three years, with investment
14 REQ RENEWABLE ENERGY QUARTERLY | | WINTER 2014
More capital should be committed to energy efficiency,
says Darren Riva, Head of Sales, Green Finance at Siemens Financial Services
amounting to £5.7 billion and another £4.7 billion investment expected in the next two years,2
and accelerate growth momentum in solar technology. The total capacity of solar PV installed in the UK now exceeds 4.6GW, but this is still a considerable distance from the government ambition of producing 20GW of solar power capacity by 2020. In comparison Germany, the world leader of
EVEN THOUGH WHOLESALE COSTS OF OIL AND GAS MAY
BE LOWER THAN THE PEAKS WE HAVE SEEN OVER THE PAST FEW YEARS, ELECTRICITY PRICES ARE LIKELY TO INCREASE FURTHER DUE TO RISING REGULATORY COSTS AND THE INCREASED NETWORK COSTS THAT MAKE UP A SIGNIFICANT PROPORTION OF THE RETAIL PRICE.’
solar, has already more than 30GW of solar PV installed.3
more could be done to sustain
In order to catch up in the global race to becoming a greener, low-carbon society, financing will play a significant role in encouraging the further take-up of solar PV in the UK. That is why Siemens Financial Services (SFS) joined forces with the Carbon Trust in 2011 to launch the first dedicated low-carbon finance scheme Energy Efficiency Financing (EEF) in the country. By aligning the expected savings in energy costs and/ or income from energy generation with the monthly equipment finance costs, the scheme helps bring the green factor into mainstream business by making renewables and energy-efficient technologies affordable and accessible. Due to its relatively low cost and ease of installation, as well as the predictability of power generation, solar PV provides businesses with an easily understood and secured investment model. And there is still huge potential for a wider deployment of the technology given the enormous unexploited roof space on commercial properties, warehouses and factories.
With EEF being a self-financing scheme, or in some cases, even generating positive cash flow immediately, businesses no longer have to feel like they have to sacrifice a proactive energy management policy over investment in business-generative activities. Forward thinking businesses who seize the chance now to solarise their unused space on roofs can be certain that their farsightedness will be rewarded financially over the long term.
REQ
Department of Energy & Climate Change, Annual prices of fuels purchased by manufacturing industry (original units) (QEP
1
3.1.3), 25 September 2014 2
3 pwc, Review of the UK renewable energy sector
The Guardian, Why the UK lags behind in commercial solar installation, 18 July 2014
FOR FURTHER INFORMATION Tel: 01753 434 476
www.energyefficiencyfinancing.co.uk
www.r-e-a.net
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