Ylem Energy Managing Director Ian Gadsby speaks to FMCG CEO about the future of renewable energy in the UK
After a decade of relative stability, the turmoil in global gas markets and recent energy price spikes have left many customers reeling. Households may well be wondering how they will manage the predicted 50 percent increase in their bills, and while some businesses will have used hedging to mitigate future price rises, the reality is that uncertainty over the impact on the bottom line is a long-term trend we will all have to live with for years to come.
How concerned should businesses be, and what can be done to keep the cost of power as low as possible?
Many businesses on low risk fixed-price strategies could be in for a nasty surprise as their current deals come to an end. In response, the key question for business leaders is: How do I continue to get my electricity cost-effectively and what can I do to maximise savings over the next 10 years and beyond? The smart answer is home-grown: generating power and storing energy on the company’s own premises to be used directly by the business. Costs are stabilised while reducing the business’ carbon footprint.
Given current financial pressures, why should businesses invest in such technology and assets? What benefit does onsite generation offer?
The key element of any on-site solution is an experienced partner to fund, own and manage the assets instead of it being a CAPEX burden. Typically, this partnership would mean 10–12-year contracts for gas generation projects; 10-15 years for battery storage; and 15-25 years for technologies such as solar power. The host customer commits to buying electricity at a set price throughout the contract, creating budget certainty and stability – but is also free to return to purchasing power from the grid if that becomes cheaper – and carbon reduction objectives and strategies will then be within reach.
In the face of mounting pressure on organisations to reduce emissions and support the country’s legally binding targets to become carbon ‘net-zero’ by 2050, can businesses faced with rising energy costs realistically reduce emissions and stay competitive?
Yes. Generating power on-site is the first big step to such sustainability because it increases energy resilience: the current gas crisis is crystal clear evidence of the need for that. State-of the-art onsite generation not only delivers flexibility in supply to meet changing demands but also helps to deliver budgetary stability and facilitate profitability. There is also the potential for generating revenue by selling excess energy back to the grid. In addition, businesses can work towards decarbonisation targets through carbon credit investment in nature-based projects around the world.
Calls to scrap the 5 percent VAT on energy bills which applies only to domestic and certain qualifying businesses have been dismissed by the Prime Minister. But pressure to remove environmental policy costs from energy bills is mounting. Should these costs be funded through general taxation and how close are we to being able to rely wholly on renewables?
The means by which environmental policy costs are funded is probably best left to the politicians. There is something to be said for energy taxes being directly and transparently related to environmental impact, but the resulting bills are paid by everyone, regardless of their ability to pay.
In the meantime, gas delivers 40 percent of UK power and is driving higher electricity prices. Renewable alternatives already exist, and on-site gas generation assets can be ‘hydrogen-ready’.
But change will not happen overnight, and businesses have a meaningful role to play in the shift to a low carbon economy. Today, Ylem Energy can help businesses position themselves, be ready to adapt and take those important first steps towards longer term sustainability, at the same time as offering guaranteed savings and creating budget certainty.
To find out more about onsite energy generation solutions, go to: https://ylemenergy.com/
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