At the beginning of the year manufacturers were planning for the supply chain and labour challenges that might arise from Brexit. Fast forward three months, and this was eclipsed by the Covid-19 crisis. UK manufacturing now needs to weather the onset of a sharp, expected recession. In this article we look at why generating your own on-site energy can help you to stay competitive and on top of changing regulations.
1. Are you paying too much for your energy?
The Covid-19 pandemic has caused dramatic changes in financial markets and lowering demand for commodities. This has resulted in the wholesale cost of natural gas falling to historic lows. For example, the day ahead price 12 months ago was around £12.63 /MWh whereas this week it reduced to £6.94/MWh. Yet, despite historic low gas and power prices, this is not necessarily passing through to actual invoices. Your electricity supply bill (and the electricity you use through the meter) is made up of several different costs. Only about 50-40% of the cost is the wholesale power price. The rest is made up of network and distribution costs and goes towards funding the Government’s renewable generation schemes. These costs are forecast to continue rising as UK energy evolves into a net-zero system.
Manufacturers who generate their own energy requirements via an on-site Energy Centre (behind the meter) can avoid these costs. Combined Heat & Power (CHP) produces power and heat more cheaply than taking power through the meter and offers the added advantages of increased resilience and flexibility for the host site.
2. Fix your costs now to avoid increases later
New regulation in the form of the Targeted Charging Review (TCR), will change the way that variable costs are applied to electricity supply bills. Charges that were once based on a time of use tariff (such as red band DUoS period between 4pm-7pm being more expensive or even the winter TRIAD charge), will instead be charged as a fixed flat rate, depending on your agreed capacity. This will affect the savings from load management, energy efficiency and on-site generation.
TCR has now been delayed until 2022. As a result, fixing costs via a CHP scheme will guarantee a holiday of even cheaper heat and power before TCR begins. As BasePower fully-finances its energy projects, customers can expect a major share of energy savings which will go straight to the bottom line, without any requirement for capital expenditure.
3. Re-use the heat for greater efficiencies.
The traditional process of sourcing power from the grid and heat from a boiler is around 50% efficient. CHP projects can increase overall efficiency to 80-90% with good heat use. This makes CHP particularly suitable for manufacturing processes that use a lot of heat. The heat byproduct from generation is captured and used around the factory for various processes. This efficient use of heat and power generation reduces the site’s overall energy costs. As much as 15% savings on annual energy spend can be achieved from a fully-funded BasePower project.
4. Integrate energy use with sustainability goals
A well-engineered CHP project that recovers as much heat as possible reduces carbon emissions. This is good news for manufacturers who are looking to generate energy more sustainably.
BasePower has helped automotive and food manufacturers to avoid the release of over 6 million kg of CO2 to the atmosphere since 2017. CHP projects also contribute to meeting Climate Change Agreements, whilst remaining competitive.
5. Get ready for net-zero
The Government has made a net-zero pledge by 2050. However, the exact fuels and technologies which will be used to achieve this ambitious goal is unclear. There will be a greater need for flexibility as carbon costs become material. CHP has the potential to use renewable fuels and can follow the decarbonising of the gas grid via utilising hydrogen and syngas.
With many lobbying groups calling on the Government to use the post COVID-19 rebuild to put a greener economy at the heart of policy-making, changes can be expected. Generating energy on-site through a CHP Energy Centre means you can reduce your costs now, stay competitive and remain fully flexible for whatever energy policy changes might lay ahead. By having an asset on-site like a CHP, you can be flexible in your demand and help your site and the UK along the path to net-zero.
To find out how BasePower can help your business reduce energy spend and carbon emissions, contact us today.
