Anthony Mayall, chief commercial officer at BiU, explains that there is no “one size fits all” solution for manufacturing companies who want to switch to greener energy.
Net zero emissions targets are fast becoming the business norm. To date, nearly a third of the UK’s FTSE 100 companies have signed up to the United Nation’s “Race to Zero” campaign, and more will follow as regulatory, consumer and investor pressure drives the shift.
The impact of this is no less keenly felt in the manufacturing sector, particularly those selling into large organisations. As corporates look to decarbonise, they are demanding that their supply chain follows suit.
Reducing energy demand should be the first step of any strategy, but decarbonising your energy supply is also key. There are several ways of doing this, and it’s worth considering all of the possibilities: some have additional benefits that go beyond carbon reduction.
Switching to a green tariff
Switching supplier may seem like a simple matter of choosing the best-value green tariff, but it’s not quite that straightforward. The UK’s system of secondary trading in green energy certificates (known as REGOs) means that it is both legal and common practice for suppliers to advertise “100% renewable” tariffs while really getting most of their energy from fossil fuel sources.
You have to ask potential suppliers directly how much of their energy mix comes directly from renewable sources. The more detailed the information you get, the better.
Geographical location of your supplier’s sources is important too. If your organisation has links to the local community, you may prefer to support the local economy by choosing a supplier which invests in renewables projects in your area.
Corporate power purchase agreements (CPPAs)
If you’re looking for more control over the source of your energy, a renewable corporate power purchase agreement (CPPA) may be a better option. Rather than using a supplier, you sign a contract directly with an electricity generator, typically for a period of between five and 20 years.
There are many benefits to this route. A PPA is likely to deliver savings by giving you energy that is cheaper than market price. You also have more choice about how you want the pricing to work. For example, you may want pricing to track wholesale energy prices so that you benefit from any future lockdown-related price plunges. Or you may want an option that delivers more certainty in a volatile market.
Another benefit of PPAs is that you may be able to get one with a local generator, supporting green jobs and infrastructure in your area as well as decarbonising your organisation’s energy supply.
However, while the range of possibilities is an advantage, it can make it hard to choose the right contract for your organisation. BiU’s CPPA procurement service can offer expert advice on this.
Generating your own energy
For even more control over the source of your organisation’s energy supply, you could consider owning and managing a renewables project (or several). And by integrating onsite generation systems with battery storage, you can also create a sustainable source of back-up power for your operations.
Solar PV is perhaps the most well-known source of renewable energy, but wind, anaerobic digestion, hydropower and combined heat and power (CHP) could also be viable options. It pays to engage with an independent consultant who can recommend the most cost-effective solution for your business.
The word “offsetting” says “greenwash” to many people, but unfortunately you may not be able to avoid it. If your organisation uses gas, it is likely that a high proportion of it comes from fossil fuel sources, because there simply isn’t enough green gas to go round. This means that most “green gas” tariffs are “greened” through offsetting. You’ll need to do your due diligence by checking that they use a recognised offsetting scheme for this. Again, you can think local with forestation projects close to sites – did you also know that the composition of soil on your sites and local areas can have a significant in absorbing carbon.
Another option is to think beyond just “greening” your supply to the other impacts your organisation could have. Could you support a local renewables project, for example?