Making it easier to access decentralised energy

Energy continues to have an outsized impact on an industrial plant’s bottom line, with energy bills often constituting 20 to 25 per cent of a site’s operational budget. Though it is often the largest cost for plant owners and operators, attempts to mitigate the effect of energy costs are hamstrung by multiple factors, which in turn affects the business’s capability to be competitive on the world stage. These can include the UK’s ageing and inefficient asset base, capex constraints, and technical obstacles surrounding the implementation of other solutions.

Decentralised energy is one such solution and it continues to grow in prominence and viability. It is ideally poised for a situation where, according to research by Aggreko, 43 per cent of respondents have considered on-site electricity generation, yet 38 per cent have had their request for new equipment to reduce energy consumption turned down in the last five years because of capex restrictions.

As suggested by Aggreko’s research, a combination of concerns about energy costs and, to a lesser extent, sustainability, are clearly vital factors inspiring companies to consider a decentralised future. Yet though UK industry requires a large and consistent energy supply, this snowballing demand raises two key threats. Firstly, the rising price of energy is disadvantaging UK firms when compared to their competitors abroad. Secondly, the national grid may not be able to maintain industry’s constant, growing energy demand, further stunting growth.

Decentralised energy – the solution?

Many large industrial, manufacturing and commercial organisations are turning to decentralised energy as an independent source of power, taking advantage of technologies such as solar, combined heat and power (CHP) and wind power. However, adopting these solutions is not a viable option for all companies, with smaller businesses often unable to overcome certain obstacles.
 
As a result, industry may not be progressing as quickly to more innovative energy generation technology, as solutions such as decentralised energy can be highly technical and specialised. Taking this into account, we need to break down the barriers to a cheaper, reliable source of power, and identify potential solutions.

Gas generation

Modern gas generators offer a way for the UK to reduce energy costs while catching up with its European counterparts on decentralisation. Together with battery storage capability, this solution can produce gas-generated electricity as a primary power source for production processes or for everyday functions, including IT, heat and lighting. When combined with a CHP solution, the generated heat can be harnessed to produce hot water and steam for use in multiple processing applications, creating further cost savings.

Crucially, this technology can be installed without disrupting the end-user’s usual processes, as a gas generator requires only a simple switch from mains to gas-generated electricity. Consequently, reliance on the national grid is greatly reduced while reducing the costs due to the spark spread – the difference between the cost of electricity and the cost of gas.

Capex restrictions

Having funding available to afford large-scale installations will always be a concern for many businesses. The financial bottom line is often the absolute priority in industry, with many plant owners and operators left frustrated by wanting to lower energy costs, but not having enough capital to do so.

By hiring plant equipment instead of purchasing it, energy decision-makers can avoid challenges associated with capex constraints. This off-balance sheet option has no requirement for depreciation of tangible assets, and also solves the technical knowledge issue. Furthermore, hire solutions come with maintenance capability, ensuring optimised performance, with downtime anticipated and minimised.

There are plenty of financing options available to those who are intrigued by hire’s potential, but unsure of their next step – for example, the government’s certification for Good Quality CHP under the Combined Heat and Power Quality Assure Programme. The Association of Decentralised Energy is a great source for such information, and were instrumental in providing insight for Aggreko’s research.