A budding green economy

Posted on 4 Aug 2011 by The Manufacturer

While the Government attempts to cut UK emissions in half by 2025 with new legislation designed to incentivise the implementation of energy-efficient measures, George Archer looks into how manufacturers are affected, and what companies are doing to reduce their carbon footprint.

Nuts & Bolts
Read this article to:

● Find out about the Government’s Energy Bill, and the effects it will have on large scale solar power generation

● Read about the expected roll out of smart meters by 2019.

● Learn about Brockhouse – a manufacturer which has successfully implemented energy-saving measures at its main site.

● Find out about the limitations of green intentions

● Discover ways of working with your supply chain and logistics partners to get past the ‘green limit’. DHL explains how it strives to remain transparent for its customers.

The Government’s efforts so far The Government’s Energy Bill was introduced into the House of Commons for its first reading on March 16 this year and had its second reading on May 10.

Committee sessions were held on the Bill in June.

Included within the Energy Bill is a scheme called the Green Deal. This is designed to encourage energy efficiency improvements in order to reduce the real cost of energy for households, private landlords and businesses in the future Under the Green Deal business owners in nondomestic properties will no longer be obliged to repay the cost of energy efficiency measures.

Instead, repayments are attached to the property.

This means that for a manufacturer wishing to relocate, expand or shrink its operations, any renewable energy installations on a factory or warehouse site will be the responsibility of whoever owns the property. The intention is to make the installation of energy saving measures more attractive to companies.


Case study: the UK’s largest solar park

Hamburg-based solar energy specialist Conergy recently completed the construction of the largest free-field solar park in the UK – just in time to avoid the introduction of new FIT rates on July 31.

The 5MW park is located in Hawton, Nottinghamshire (the image shows part of the park).

The project was built in cooperation with Conergy’s local partner Lark Energy and was completed only six weeks after receiving planning consent on the May 24 this year.

Robert Goss, head of Conergy UK says: “With this park, our solar experts have shown that we are able to build large-scale projects in the UK. [We decided to construct this solar park] due to the FIT cuts on the one hand, and our product portfolio and experience ‘on the roof’ throughout Europe on the other hand.” The solar park in Hawton is owned and developed by Lightsource, with funding from Octopus Investments.

Alongside the Green Deal, the Department for Energy and Climate Change (DECC) has set out the next steps of its CRC Energy Efficiency Scheme. Changes to CRC legislation, previously criticised for its lack of clarity, include removing Climate Change Agreement exemption rules and decreasing the administrative burden of CRC by reducing the number of fuels subject to the scheme from 29 to 4.

The manufacturer’s organisation, EEF has however, said that the changes do not go far enough and that government should admit that the CRC is “now, in all but name, a tax”. EEF has also made clear its concern over the DECC statement that the proposal “may result in some organisations being required to participate in CRC that would have previously been exempt,” and is warning companies to be aware they may need to review whether or not CRC regulations are applicable to them.

Rolling out the smart meters
On July 12, government released what it described as the “biggest reforms since privatisation,” in it plans to roll out smart meters to a large proportion of businesses in the UK. In its White Paper the government claims that: “the roll-out of smart meters will enable consumers to optimise their electricity and gas demand.” Although quite a number of factories have now installed some kind of energy meter, Smart Meters measure usage far more regularly than most – in intervals of an hour or less. This data is then sent to the site manager, allowing them to effectively monitor their electricity consumption.

Furthermore, government has argued that, with a large proliferation of smart meters expected by 2019, demand side response (DSR) can be effectively implemented. DSR is a method by which an energy user decreases their consumption on a short term basis by agreeing to reduce demand at peak times.

This should result in the introduction of a range of variable tariffs. To automatically respond to these electricity consumers would need equipment (to complement smart meters) that can reduce demand by turning off non-essential electrical devices.

Has the sun got his hat on?
On June 9 this year, government proposed new power generation tariffs for large scale solar under its green electricity scheme. Under the new legislation feed-in-tariffs (FITs) will mean that large companies with the ability to produce a lot of electricity from photovoltaic (PV) solar cells will have little incentive to invest in solar energy as of July 31.

For companies with a total installed capacity (TIC) of between 50kW and 150kW, the FIT will be 19p/ kWh; for those that have a TIC of over 250kW, the rate decreases by 10.5p to 8.5p/kWh. The Renewable Energy Association’s chief executive Gaynor Hartnell said of the government proposals: “We think government should increase the size of the FIT budget, and encourage a healthy PV industry to establish in the UK. But to be fair to the electricity consumer, government must be prepared to intervene to reduce tariffs when justified, and industry must accept this needs to happen.” Hartnell continued: “The handling of this whole affair has been poor. Larger-scale PV has been demonised when it is the most cost-effective approach. Midway through this decade we’re expecting its cost to be on a par with offshore wind.” In its defence, government argues that if the FITs were allowed to remain as they were, the scheme would have been quickly overwhelmed and estimated that every 5MW large scale solar scheme would have cost approximately £1.3m per year. Twenty of these large scale solar schemes would have cost £26m per year – enough to support PV installations for roughly 25,000 homes.

It also defended the decision by saying that no retrospective action would be taken: “Any changes to generation tariffs implemented as a result of the fast-track review will only affect new entrants into the FIT scheme.” The CBI’s John Cridland said in response: “The government’s package contains some good measures, including its decision on feed-in tariffs.

But these need to be made to work. More detail is needed on tariffs, and the case must be made for a capacity mechanism.”

Other energy-efficiency measures
An overhaul of energy purchasing and generation practices may not be necessary for all manufacturers however some form of energy efficiency strategy will be required. The ways in which manufacturers can economise on carbon consumption are manifold and the benefits can be significant, both in terms of financial savings and avoiding becoming liable for expanding green taxation. An example of a British manufacturer which has innovated around current capability for increased energy efficiency is West Bromwich-based Brockhouse, a company that specialises in forged steel components.

Firstly, through the Manufacturing Advisory Service (MAS), Brockhouse commissioned low carbon technologies specialist Proenviro to carry out a detailed technical survey of its gas supply pipes. A number of factors affecting efficiency were discovered, and alterations were made accordingly.

Then, a gas sub-metering and monitoring system was installed – this now monitors all forging furnaces and gas flows through the primary gas meter and heat treatment furnaces. The least efficient furnace was identified, and a study to investigate the feasibility of potential improvements was conducted. The furnace was lined with high specification bricks and board, reducing the furnace chamber volume to the minimum required and improving the furnace door seals.

Proenviro estimates that with the modifications installed at the furnace, if three tonnes of metal was forged a week for 48 weeks of the year, annualised savings would equate to 2,210,400 kWh of gas and 406.71 tonnes of carbon. This is a huge financial saving for an energy-intensive manufacturer.

Are companies at their ‘green limit’?
There is a convincing argument that says companies wishing to become as green as possible are at the mercy of those within their supply chain. Even after the implementation of energy-efficient measures, other factors will affect how green, or holistically sustainable, a company can be.

For instance, a company that has invested in a range of energy-saving measures such as microgeneration and insulation, but draws its energy from a power plant that burns a fossil fuel, is limited in the extent to which it can claim green credentials.

Iain Watt, principle sustainability advisor at Forum for the Future, a not-for-profit organisation, argues that this is not something that can be avoided.

“Lots of companies at the leading edge are now coming up against the limits of what they feel they can do themselves,” he says. He adds that a firm’s ability to become energy efficient is “entirely limited by what the nation as a whole is doing.” Another area where obstacles can potentially arise is transportation. Many companies outsource transportation and logistics especially when their products are destined for export. However, the degree to which logistics firms are trying to reduce their emissions can be difficult to gauge.


DHL sustainable supply chains

DHL was the first global logistics company to set itself a concrete CO2 efficiency target – it initiated the environmental protection program ‘GoGreen’ in order to accept responsibility for the environment and give confidence to customers that it is doing its bit. The programme commits the company to improve the CO2 efficiency of its own operations and those of its transportation subcontractors by 30% by 2020 compared to a 2007 baseline.

It is also in the process of introducing a fleet of electric delivery vehicles to built-up and urban areas such as Berlin and New York (see image of Renault Kangoo). These vehicles are well-placed to operate in urban and suburban environments but have a relatively short range compared to petrol vehicles.

Michael Lohmeier, senior expert for the GoGreen programme says: “For DHL, becoming more carbon efficient is not just about the savings our company makes, it is also about ensuring that corporate social responsibility is at the heart of our interests – on a global scale.”