How to make your Energy Future Predictable
We find ourselves in unstable times. With the spread of Covid and its many variants around the world, the disruption to our lives has been significant. The extent of this disruption has seen an impact on global supply chains. As demand has fluctuated and geopolitical issues have come to the fore this instability has also extended to global energy resources.
One significant impact for UK businesses, in particular, was the shock impact that rising wholesale gas prices had on our energy supply. As I wrote in my previous blog, consumer price protections for energy could only limit the impact of these price rises so much, and many energy suppliers could not absorb the costs – an unprecedented number of them went under.
This leaves businesses in a precarious position: when trying to plan for an already uncertain future, can businesses afford to have an uncertain energy future too? Many will be focusing on the bleak outlook of 2022’s energy market (a 50% energy price increase is looking ever more likely), but the real issue here is harder to calculate – uncertainty. With 2022 looking increasingly unpredictable, now is the time to address this for your business.
One major way that businesses can guard against energy uncertainty is with Power Purchase Agreements (PPAs): long-term agreements with an energy producer that let you lock in a set price directly from the energy source. No need to worry about fluctuations in wholesale prices ruining your cost projections!
There are many energy sources to consider when thinking about PPAs, but by far the most cost-effective and sustainable options are distributed renewable energy sources. Solar and Wind energy in particular are revolutionising the way in which we produce and consume energy in the UK; their distributed nature (no centralised power plant, but rather many small producers spread across the grid) means you are less likely to fall foul of issues elsewhere on the power grid. Plus, you are getting green energy directly from a known source.
At Ortus Energy we focus on distributed energy from Solar, and so I want to quickly outline three methods of using Solar to lock-in some energy certainty for your business in 2022.
- Commercial and Industrial (C&I) Roof-top PPAs – This option is almost always the cheapest option to lock-in a portion of your energy price for around 25 years, at no upfront cost. We will design a system that fits on your business’s roof top and feeds directly into your power supply behind the meter. This means that any energy you use from this system stops your energy meter ticking over, so reducing bills from your energy provider! Our team design a bespoke system to fit your needs and we fully fund the installation, maintenance, and insurance of your Solar system for the duration of the PPA. The real benefit is that you only pay for the energy you use. You could benefit from rates that are half of your current electricity costs and so you save from day one. Alongside this you have your own Solar system on your roof that helps build your green credentials and satisfy increasingly stringent building efficiency regulations and sustainability targets.
- Private Wire PPAs – Once a roof-top Solar install is covered off (or if your roof top is unsuitable for one), then the next cheapest option for distributed Solar energy for your business is a Private Wire. This requires that there is suitable land near your premises either owned by you or another party who are willing to arrange a long-term lease agreement. Our team and our partners then design a system which meets your energy requirements. The benefits of this option are that the system is connected to your business premises behind the meter, removing the associated costs with having to source energy through the grid. Due to the slightly more complex nature of these projects, and possible land leasing fees, these PPAs are usually slightly more expensive than a roof-top install but will still offer significant savings over your current bills.
- Corporate PPAs (Sleeving) – This option is one to consider if your business is a significant consumer of energy (roughly at least 15Gwh per year) and once options 1 and 2 above have been explored. Together with our partners we can coordinate for your business to be allocated a proportion (or all) of the energy generated by a solar farm elsewhere on the grid. This option incurs the usual non-energy costs of your current energy supplier (think distribution costs and other levies) but allows you to lock-in the wholesale energy portion of your entire bill. Although the savings are usually smaller compared to options 1 and 2, the benefits of this solution are that it gives you more certainty over your energy costs – for up to 30 years! You can be assured that you will have secured 100% of your energy usage from green energy sources, a big step toward achieving energy sustainability and minimising the impact on the environment.
At Ortus Energy we are on a mission to help UK businesses unlock the power of renewable energy at no up-front cost to our clients, and we would be more than happy to review your options with you. Let 2022 be the year that you start making your energy future predictable!