The future direction of wholesale gas and electricity prices is impossible to predict, but many forecasters expect energy market volatility to continue in the near term as the Covid recovery continues. That means manufacturers must find smarter new ways of managing their energy to reduce both costs and their carbon footprint
The savviest manufacturers recognise that sustainable energy solutions can be leveraged for cost and carbon advantage. They're exploiting opportunities to achieve efficiency, cost savings, generate revenues from asset flexibility, build operational resilience and enhance their green brand reputation.
Taking action on sustainable energy management also means you can get ahead of increasing carbon taxes and environmental regulation, such as the Taskforce on Climate-Related Financial Disclosures (TCFD). From April 2022, this legislation makes it mandatory for larger firms to disclose their climate related financial information and any risks and opportunities that climate change could bring. To be prepared, the first step is to have your net zero strategy in place.
There’s lots of different routes to cost effective decarbonisation, but we typically advise our customers to follow a 3-step journey – referred to as the 3 Cs (Cut, Convert and Complete).
Cutting waste and reducing demand through energy efficiency measures, both physical and digital, is a critical first step. Many rapid payback technologies are available – leading to fast financial and environmental gains.
Implementing a smart energy monitoring platform such as energy insights informs your energy strategy by providing full visibility of site-wide energy consumption – right down to an equipment and process level. You can also use this intelligence to 'load shift' operations with high energy demands from peak periods to a time when energy costs are lower.
The next step is to exploit distributed energy technologies at your sites, such as combined heat and power using low carbon fuels, solar PV and energy storage. Indeed, falling technology costs and higher wholesale energy prices are strengthening the investment case. For example, six months ago we forecast a £43,000 annual saving for a new solar PV project, which has now risen to £78,000.
In addition, battery energy storage systems can unlock new flexibility revenues via demand side response, while also providing a green back-up power supply in the event of an energy outage. Generating and storing your own cheaper solar power can also reduce the cost of shifting to electric heat pumps or installing electric vehicle charging points.
If lack of capital is a barrier to sustainable energy investment, there are many opportunities to use Opex-based finance, such as our flexible range of commercial and financing options, which removes risk, time and financial pressures.
The final stage of your net zero journey will be the 'complete' phase, where you can purchase green energy or use Renewable Power Purchase Agreements (PPAs) to decarbonise the remaining emissions associated with your energy use.
With high energy costs and turbulent markets, doing nothing and hoping for the best will only increase the financial pain. Now is the time to overhaul your sustainable energy strategy and benefit sooner from the cost and carbon savings.
Brendan Abadie is a Net Zero Consultant at Centrica Business Solutions, leading the technical and commercial aspects of the Net Zero Pathway team. Brendan has several years of experience in energy research and industry and is helping clients to develop strategies for their long term energy and emission problems.
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