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RENEWABLE TECHNOLOGY
Why manufacturers must future-proof their solar generation assets
With industry looking to reduce energy consumption, Stephan Marty, CEO, Wattstor, explains why onsite renewable energy generation is becoming an increasingly attractive option
I
ndustries that consume a lot of energy, such as manufacturing, often face high production costs.
In the last two years, energy prices have risen exponentially, and other financial challenges such as inflation and supply chain disruptions have put a strain on industry sectors. To address the financial burden of energy costs placed on businesses at their peak, many governments worldwide implemented measures to support manufacturers and other sectors, including the Energy Bill Relief Scheme and the subsequent Energy Bills Discount Scheme. However, now that these schemes have ended, businesses are seeking long-term solutions to reduce energy costs while still meeting their emissions-based targets. One way manufacturers can reduce their energy
bills is by installing renewable onsite energy generation. While the financial benefits of onsite generation can help organisations regain control of their production costs, generating renewable power through solar photovoltaic (PV) or wind can also reduce manufacturing emissions, significantly contributing to the country’s Net Zero targets. However, as the number of renewable onsite
projects coming online increases, manufacturers must take the necessary steps to ensure that their generation assets remain profitable.
THE BENEFITS OF ONSITE POWER GENERATION Solar PV is often considered one of the most accessible options for manufacturers as it can be installed on factory rooftops, car parks, warehouses and adjacent land. Once the initial investment has been paid, renewable energy generation assets have extremely low costs for producing electricity. Unlike fossil fuels such as gas or coal, there are no additional charges to source sunshine or wind. Once installed, the energy system can generate electricity at almost no expense, meaning that even at very
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low electricity prices, it is still profitable to generate renewable electricity onsite. Manufacturers utilising onsite generation can
increase their energy security by reducing their reliance on the grid for power, and any surplus electricity produced can be sold through a Power Purchase Agreement (PPA), providing an extra source of revenue. There is also the added benefit of improved reputation, as more customers seek companies that demonstrate a more conscientious stance. Making an active decision to generate renewable electricity offers an advantageous feature for investors, suppliers and customers. Finally, many procurement departments now
actively require certain environmental credentials from their suppliers to help them reduce their Scope 3 emissions, so having a renewable energy onsite asset could lead to winning new customers.
BATTERY STORAGE There are many benefits of onsite generation, yet businesses still need to consider any potential barriers that may arise when implementing an energy system. For example, with an increased number of independent power generators exporting surplus power, the volatility of electricity prices has also increased over the past few years. At sunny and/or windy periods, an unprecedented amount of cheap renewable energy is entering the grid, and as a result, we’re already seeing increased periods in Europe where the wholesale price of electricity is either zero or negative. This is a phenomenon known
as ‘solar price cannibalisation’. If electricity prices are zero or negative, any electricity that is exported to the market and not locked into long-term PPAs
has no value. In the future, this could mean securing a premium PPA could prove more difficult for generators. Manufacturers exploring an energy generation system should include battery energy storage to avoid the negative consequences of solar price cannibalisation and maximise return on investment. This means that the energy generated onsite can be stored and used at a later time to power operations, heat or cool business premises, charge EVs and more – rather than be sold to the market for little or no money. Battery storage also enables businesses to store electricity when simultaneous consumption and generation are not possible, such as during nighttime operations when there is no sunshine. This reduces the manufacturer’s need to rely on the grid for surplus electricity during periods of no onsite energy generation. Additionally, battery storage allows delayed exporting onto the grid to support peak demand when wholesale electricity prices are high.
A SUSTAINABLE AND PROFITABLE FUTURE As manufacturers seek to reduce the financial and environmental impact of their energy usage, onsite renewable energy generation is becoming an increasingly attractive option. To maximise benefits, it is important to consider the cannibalisation effect and take steps to avoid any negative consequences. That’s why a whole system solution that includes battery storage is essential when investing in renewable energy. By taking this approach, manufacturers can effectively mitigate risks while ensuring a sustainable and profitable future.
Stephan Marty
Wattstor
wattstor.com
ENERGY & SUSTAINABILITY SOLUTIONS - Summer 2024 17
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