From Solar PV to CHP: Making the Case for On-site Generation.

Earlier this year, the UK government committed to a ‘world-leading’ interim carbon reduction target of 78 percent by 2035 based on 1990 levels, to help the country reach its overall ambition of being net zero by 2050. Businesses are also announcing ambitious decarbonisation strategies, and many are including on-site generation as part of their plans. 

It is easy to understand the growing popularity of generating your own energy. It is one of the most effective ways businesses can reduce carbon emissions and their energy bills. Falling costs and increasing options mean it is not just large companies that can benefit - organisations of all sizes can install a generation asset to produce their own electricity supply.

But, what is the best option for your organisation?

Our latest report - ‘Plot Your Path to Net Zero - A Focus on Sustainable On-Site Generation’ - saw us speak to over 50 organisations from sectors including manufacturing, transport and the public sector to find out if they are planning to invest, the type of asset they would choose, and any potential barriers to making the on-site generation commitment.

Encouragingly, over 50 percent said they have either already invested - or are planning to invest - in on-site generation. Solar PV is by far the most popular choice, followed by combined heat and power (CHP) and wind.

However, the research also revealed some of the barriers businesses face when it comes to installing their own on-site asset. The primary obstacle is proving the return on investment (ROI), closely followed by access to funding.

So, how do organisations build the case for on-site generation, particularly during what has been an economically challenging time?

Research the most suitable options for your organisation

Advances in technology mean that there are now several options available to organisations of all sizes - from relatively small-scale assets such as heat pumps, through to larger installations including CHP and wind turbines.

The popularity of solar PV identified in our research is not surprising. Falling costs, even in a post-subsidy world, and its relative ease of installation means organisations from sectors ranging from manufacturing to the NHS are seeing the benefits.

However, it is important to work with an expert partner to assess which is the most suitable option for your business. For example, if your premises is located in a fairly remote area, wind may be the best fit. Or, if you have an industrial and commercial site that uses large quantities of heat and power, CHP could make more business sense.  

Demonstrate the short-term and long-term benefits

As mentioned, installing on-site generation is one of the most effective ways to reduce both carbon emissions and energy cost. However, the benefits go far beyond this. As well as avoiding non-commodity costs, having your own on-site supply helps to protect against wholesale price volatility, meaning you can plan ahead with greater certainty.

It can also increase stability of supply. The major power outage of August 2019 served as a timely reminder of what can happen when there is too much demand on the grid. Installing on-site generation helps to protect businesses by increasing self-sufficiency and minimising the reliance on the grid.  

Finally, installing on-site generation is a clear signal that your business is serious about sustainability, particularly in the eyes of customers and throughout your supply chain. The positive reputational impact can be significant.

Consider a Power Purchase Agreement (PPA)

For businesses where funding the upfront cost of an on-site asset is prohibitive, then a PPA could help overcome any financial hurdles. These can be arranged via a third party funder, who can install and manage the on-site asset. The organisation then buys the energy from the funder over the course of a long-term PPA, negating the need for up-front investment.

Future-proofing your organisation

In short, investing in on-site generation makes business and reputational sense. There is now a great deal of choice for businesses, with more innovative technologies on the horizon. 

To find out more, download our report - ‘Plot Your Path to Net Zero - A Focus on Sustainable On-Site Generation’ - discover more here.