The management of commercial energy use is beset with challenges, but what it comes down to is ensuring you’re not spending over the odds.
The introduction of Feed-in Tariffs in 2010 drove increases in the installation of both wind farms and photovoltaics across the UK, and the benefits of this can be seen both in the energy savings that can be yielded from sustainable technologies and the profit that can be made from any surplus energy that is generated.
Joining the gang as an emerging payment initiative for renewable energy is the relatively recent Renewable Heat Incentive (RHI) scheme. Designed to aid business investment in renewable heat technologies, the initiative was launched by the Department of Energy and Climate Change (DECC) in November 2011 for non-domestic users and has been hailed as the first of its kind in the world.
Simply put, the RHI is a financial incentive scheme that guarantees cashback payments for 20 years on renewable heat technologies. For example, if you were to install a ground source heat pump to manage your building’s heating and cooling, you would not only save money by reducing your need for gas or oil, but you would also be paid a fixed rate for the heat you generate.
Of course the government never tires of reminding us of the UK’s carbon reduction targets – to reduce emissions by 80 per cent by 2050 – and the RHI is the latest in a line of initiatives that will certainly contribute to encouraging sustainability. The bigger picture, however, is how the RHI can work for businesses as part of an effective energy-saving strategy.
Born from a desire to move the UK towards diversifying its energy sources, the RHI is a step-change to reducing our reliance on traditional fossil fuels supplies, the cost for which has been on the increase.
The generation of heat accounts for a staggering 47 per cent of the UK’s total energy consumption, and through the RHI the government has committed that 12 per cent of heating will come from renewable sources by 2020. (Source: Department of Energy and Climate Change, March 2011).
So the intentions are clear but the question on everyone’s lips is how the RHI scheme can be utilised in the best interests of their business.
The answer is simpler than one might assume: the key is determining which system best suits your operation.
The beauty of the RHI is undoubtedly the profit that can be made from the energy produced. Through the scheme, generators can be paid up to 8.9p per kWh, although the tariff – administered by Ofgem – depends on the systems used and volume of energy generated.
PICKING THE RIGHT TECHNOLOGY
There are lots of options, including biomass boilers, solar panels, Combined Heat and Power Plants (CHP) and Ground Source Heat Pumps (GSHP). A leisure centre that requires a continuous supply of hot water would benefit from a CHP plant or a biomass boiler to replace older heating systems that require gas or oil, while a ground source heat pump would be more suitable for a building that requires seasonal heating and cooling.
FINANCING THE SOLUTION
The obvious question is where to source the capital for the investment. If you’re looking to reduce energy spend, it's unlikely you’ll have the capital available to enter the RHI.
As the scheme matures, financing packages will emerge but already we're finding that energy suppliers, for example, will provide renewable heat technology alongside their existing services. Likewise, there are many lending options specifically designed for the installation of efficiency solutions, such as the Carbon Trust, which will provide the upfront capital costs for equipment that presents an attractive return on investment.
Laura-Clare Davies is business development manager at The Energy Desk
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