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FEATURE HIRE EQUIPMENT


A HIRE STANDARD OF ENERGY GENERATION


lower electricity tariffs. Though uptake remains limited, enthusiasm for DSR demonstrates that the UK is open to a decentralised energy future, where companies generate their own electricity. There are still certain obstacles standing in the way of such a future, though.


The UK’s energy infrastructure is under increasing pressure, and the competitiveness of UK businesses and manufacturers is being hamstrung by spiralling energy costs. Chris Rason, Aggreko director for Northern Europe, explains how hiring innovative solutions can help UK industry alleviate these pressures while avoiding capex constraints


O


n average, energy costs account for 20 to 25 per cent of a site’s


operational budget, making energy a prime concern for plant owners and operators. Yet with energy costs rising by over 37 per cent in the last five years in the manufacturing sector alone, it is clear that mounting energy bills are hugely affecting the global competitiveness of UK firms. Furthermore, attempts to eradicate this disadvantage are restricted by factors such as the capex constraints, technical obstacles to implementing technical solutions, and the UK’s ageing and inefficient asset base. One such solution is decentralised


energy, which continues to grow in prominence as a viable option for UK industry. Indeed, recent research from Aggreko has highlighted that approximately 43 per cent of respondents had considered generating their own energy. Many large manufacturing, industrial and commercial firms have already taken the plunge, installing wind,


12 JULY/AUGUST 2019 | FACTORY EQUIPMENT


combined heat and power (CHP) and solar power technology on-site as an independent power source. Consequently, these organisations have been able to reduce their overreliance on the national grid while allowing for more flexible demand, resulting in reduced consumption and lower energy bills.


CAPEX CONSTRAINTS However, adopting such a solution may not be possible for smaller companies who cannot afford the prohibitively high installation costs. Aggreko’s research demonstrates the depth of this problem, with 38 per cent of respondents indicating they were denied investment for new equipment to reduce energy consumption due to capex constraints. Yet despite these restrictions, there has


still been moves toward cost-reducing solutions across industry. For example, some companies have adopted demand side response (DSR) as a solution, and are taking advantage of its flexibility to enjoy


Owners and operators of smaller plants without the capital to immediately finance a permanent decentralised energy solution can view hire as a bridging gap


POTENTIAL SOLUTIONS For the vast majority of companies, the inability to finance large-scale decentralised energy installations remains the most prominent barrier to investment. Despite wanting to drive down energy costs, these companies may not have the funds available to do so. The R&D required for a such a solution, and the subsequent high price point, makes it difficult to implement without purchasing incentives. With the capex crunch continuing to take hold of industry, this difficulty is increased even further. With this in mind, organisations may


consider an alternative to permanent fixed plant by opting for long-term equipment hire. Not only does this provide an off- balance option with no requirement for depreciation of tangible assets, it also allows plant owners and operators to avoid capex constraints. Furthermore, maintenance capability is included as part of the hire solution, meaning the product will always be optimised when new innovations arise, and downtime can be anticipated and minimised. Consequently, owners and operators of


smaller plants without the capital to immediately finance a permanent decentralised energy solution can view hire as a bridging gap. By doing so, these companies enjoying the benefits of the technology, including lower energy bills and a smaller carbon footprint, while raising the funds for a permanent installation. Incentives, such as Good Quality CHP under the Combined Heat and Power Quality Assurance Programme, can make it even easier to finance these installations. Rising energy prices and the capex


Aggreko www.aggreko.com /en-gb/sectors- and- services/manufact uring


crunch is frustrating UK industry’s ability to compete against companies abroad, while also making it difficult to invest in technology that may change the situation. Long-term equipment hire can offer a solution, allowing companies to take advantage of technologies that reduce consumption – such as decentralised energy – without substantial upfront investment.


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