Cutting your energy costs in half. Having your own power station. Buying energy at wholesale prices. Coming off the grid. All of this sounds fanciful, but that’s the future of manufacturing, according to energy expert Peter Rolton.
A former government adviser, the director and chairman of Rolton Group has vast experience with energy issues.
As one of only two chartered engineers who were on the Renewables Advisory Board (RAB), Rolton is aware of both government and industry perspective on energy. He’s clear about the vision he sees for the future of generation in the UK.
Rolton Group have been involved in some large energy strategy projects, working for the Ministry of Defence and the Crown. They have also been involved with some big clients such as BMW, Jaguar Land Rover.
“In terms of manufacturing, the actual question of cost is important but it’s also a matter of sensitivity around the actual finished product. How much energy and carbon is embedded in the product.
“We must recognise the need for embedded generation.”
Rolton adds that by avoiding grid costs, embedded energy users can purchase energy at wholesale prices.
“What the manufacturing industry really needs is to buy energy cheaper. At the moment most people buy their energy direct from the grid so they’re taking a retail price for their energy. Whereas with embedded generation, you can get the same energy at wholesale price because you avoid all the grid costs.
“Most of the manufacturing industries that we have looked at are all pretty much switched on to the idea that energy can be saved, you won’t go many places now and not find an energy manager, and usually they’re pretty damn good.
“But they’re doing all the things that are basically housekeeping, they’re not making fundamental shifts.”
Mr Rolton used the work Rolton Group is carrying out at one automotive company as an example of how embedded generation is saving cost at their plant.
“The company we’re working for has a car manufacturing plant and we’re working on an embedded biomass power station for the plant. That will produce 5MW of electricity, 100% of which will be used by the plant.
“That electricity will be supplied at half the price of buying retail because you don’t have to go to the grid. The moment you go to the grid, you’ve got a grid access charge, you’ve got a carbon levy, eco charges, energy improvement. All these things get added on to the price, plus the margin of the supply company.”
Mr Rolton added: “By having embedded energy they can get the wholesale price, because the regulatory regime and the support regime around what we’re actually doing there is such that the margins that you need to make the plant work are wholesale.
“Embedded generation is about wholesaling direct to the user. For manufacturers that is the way ahead, you want to be taking in as much as you can from your site.
“The energy supplied will be carbon neutral as well, so you’re taking carbon out of the supply chain, you’re taking carbon out of the product that comes out the factory gate. In many cases that’s the most important thing.”
Rolton feels the Government has swerved the issue of how companies can properly claim on renewable energy infrastructure which offers little incentive for them to embed it.
“It would be nice if there were some proper standards around, one of the things that has happened is the Government has tended to duck the whole issue around allowing people to properly claim the good things that they do.
“For instance the carbon reduction commitment, you would think that if you installed some solar panels on your factory roof and you produce some carbon-free electricity that you’d be able to claim that saving on the carbon reduction commitment… you can’t.
“Because it’s a standard around energy efficiency and because generation is not an energy efficiency measure, you can’t claim against your carbon reduction commitment target. So you immediately disincentivise anybody from generation alone to save on carbon. It’s completely bonkers.
“It would be good to have regulation but at the moment the measures that are in the place are all skewed by dark political agendas, they’re not actually giving the manufacturing industry the opportunity to do the right thing and have the benefit and the credit for having done the right thing.”
Lack of industry involvement
Rolton believes the communication between government and the public on energy is “rubbish” and has major concerns at the lack of industry expert involvement in the current Government’s energy strategy.
“It’s rubbish, absolute rubbish really. I think the problem is the Government doesn’t understand the trajectory its on.
“When the Government came in they got rid of the Renewables Advisory Board, it was kicked into touch along with the bonfire of the QUANGOs.
“I have a letter saying we didn’t stand the test of value for money despite the fact we all gave our time for free.
“I think they’ve lost touch with industry and reality. The RAB was industry experts giving their time for nothing and all of whom did it on an unpartisan basis.”
Mr Rolton added his belief that civil servants were very bright people but a lack of technical and scientific understanding means they don’t fully know what the engineering industry is all about.
Rolton remains quite sure the lights will not go out, as any government that would allow this to happen severely risks public outrage.
“I don’t think it’s realistic they’ll go off unless it’s some external factor, a combination of some other world problems. In the normal course of world events I don’t think they’ll go off. I do think it will get tight.
“No government that ever wishes to remain in government is going to let the lights go out. The last time that happened, see Edward Heath 1973 and what happened to him.”
In terms of the Energy Bill, Rolton believes the legislature is needed but the current bill has already gone into complicated detail with it too late to start again.
“It’s needed. The danger of it is that it is being fiddled around, with different changes where companies have complicated market reform. The devil is in the detail, because the mechanisms to implement it are unbelievably complicated particularly when in reality you’re looking a lot of private finance as oppose to public finance.
“So much has changed along the journey of the bill that there isn’t time to tear up and start again. It has a few sticking points on it already.”
Advances in energy
Rolton believes the future of consumer energy lies in how tariffs are charged with the prospect of more tailored energy usage a close prospect.
“One fundamental change of direction needs to be, and will be, how we are actually charged for our electricity or our energy.
“At the moment what you pay for electricity is based around the tariffs. It’s not based around times of demand and it’s also not based around how much is being produced, so you don’t pay less on a windy day.
“More fundamentally you don’t pay more if you’re using it in a later slot. For example, if you boil a kettle after Coronation Street finishes. We’ve been working with a big energy company looking at a smart grid in the North-East with the idea that this is the way forward.”
Load appears, generation responds
The use of broadband means energy providers will be able to communicate with devices in homes to measure energy usage and make it more effective.
“Having broadband gives you the ability to communicate with the devices in the house. Effectively what we’re doing is connecting load to generation. At the moment there is no connection between load and generation. We’re looking at a situation where load appears, generation responds.
“Let’s say it’s the middle of the night, there’s plenty of wind blowing from around the North Sea and there’s plenty of renewable energy around. We can send a signal out and all of the houses in that area can be told to turn on their thermal store, which can make power really cheap.
“We’re in control of that, you can get that for next to nothing, otherwise it’s all going to go to waste. We could also have conversations that say certain postcodes get energy at certain time, which stops energy being consumed all at one once. This flattens out the load.
“The whole opportunity is there to manage the load side to match the generation side.”