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Owning a renewable asset can be a huge undertaking for an organisation but can also bring many short- and long-term benefits. We explore the challenges and opportunities.
Posted on Nov 26, 2023
They can be a huge undertaking for an organisation but can also bring many short and long-term benefits. In our blog, Kane Stockwell, our Net Zero Energy Supply Lead, delves into replacing your energy from low to net-zero by investing in a renewable asset, highlighting the challenges public sector organisations face when considering this type of larger scale upfront investment.
A renewable asset refers to a type of resource that can generate energy and/or provide a service in a sustainable manner, without depleting its source over time. These assets are typically associated with renewable energies such as wind, solar, hydro, or geothermal. For the purpose of our blog, when we reference renewable assets, we will be referring to renewable distributed generation.
Distributed generation is where a generation asset exports electricity to the local distribution electricity grid close to where it is used. Typically, these assets are small to medium sized solar parks and wind farms. Distributed generation is typically larger than on-site renewables like rooftop solar but smaller than offshore wind farms that are connected to the larger scale transmission grid.
Renewable assets have two main benefits: they reduce carbon emissions by allowing organisations to decarbonise at a large scale, beyond what on-site reductions can achieve, and contribute to more secure finances for the organisation.
On-site measures can include switching to LED lighting, rooftop solar and heat pumps. These are often the first things organisations will look at in terms of reducing their energy spend and their carbon footprint. Generating renewable energy and reducing demand on-site can cover a significant part of your electricity requirements, but it may not be enough to reduce your carbon emissions completely. Other measures in decarbonising other fuel uses (such as natural gas for heating and fuel for transport) may also absorb some of those measures and potentially even increase overall electricity demand for your organisation. That’s why your organisation could also look at generating grid-scale electricity with renewable assets.
Generating energy to the grid allows you to balance off the electricity you use from the grid at another location. By doing this, you can demonstrate that you have lowered your carbon emissions relating to grid electricity usage.
Most public sector organisations usually only buy electricity and so will find themselves affected by market volatility and price hikes. However, by becoming a generator, you can mitigate the effects of market fluctuations and increase your revenue streams from your generation assets by also becoming a seller.
For instance, if the market crashes, your revenue from your solar farm or any other generation asset will decrease, but at the same time, the cost of energy you purchase will also decrease. And conversely, if the market increases, the cost of energy you purchase increases, but so will the revenue from the solar park. In short, the benefits of being a buyer and a seller balance the scales of the market and help you to navigate market activity.
Owning renewable energy assets is new for many organisations, so one of the main challenges is the need for increased technological awareness. While you can always hire subcontractors to help in those specialist areas, this in itself will require ongoing contractual management. You also need to develop your in-house expertise to be able to recognise when things aren't going as planned and manage the situation accordingly.
Ensuring health and safety standards is crucial when dealing with live electrical generating equipment. So keeping your relevant teams responsible for this on board and including site management within your Health & Safety management plans will be crucial.
Renewable energy is popular in the UK due to its financial viability. However, public sector organisations should be aware of the significant financial risks involved. If the costs exceed the allocated budget, it could result in a lower return on investment. The project involves multiple facets, including operational, technical, commercial, legal and financial, making it challenging to manage. To ensure success, it is crucial to involve the right people and manage the project effectively. Listening to potential advisors can help in making informed decisions and potentially avoid additional work.
If we compare this to purely buying power from the grid as a buyer, such as via a PPA (Power Purchase Agreement), you wouldn’t require the upfront finances, and the legalities and decision processes involved tend to be less compared to investment in a renewable asset.
Finding suitable land locations for a project can also be challenging, however finding suitable locations is crucial for the project's success. When sourcing land, the biggest challenges are grid and planning. The first question to ask is whether the grid is available in the area as it can be very restrictive. Different areas of the country have different restrictions, and grid availability is very limited in some areas.
Once the grid is available, the next challenge is planning. Planning involves conducting various surveys, such as ecological and environmental surveys, to ensure compliance with regulations. As time progresses, there is a general acceptance of the world's direction meaning, anecdotally, planning objections are reducing. However, this is not exclusive and depending on the location and prior land use, the level of objection from one potential site to another may vary significantly. Therefore, finding a good site with good planning is the biggest challenge. Once the grid and planning are in place, the rest of the project is very much in your control.
In April 2022, we completed the acquisition of a new 94-acre solar farm in North Somerset Bowerhouse II, on behalf of Kent County Council. Our experience in managing this unique project has given us valuable insights into large-scale energy projects, enabling us to provide tailored solutions and expert advice.
Kane Stockwell, Net Zero Energy Supply Lead, is focused on supporting public bodies on their journey to net zero. If you would like to talk to Kane about your organisation and how we can help, get in touch - email@example.com