Greg McKenna
Managing Director, Centrica Business Solutions
On-site energy generation can help reduce carbon emissions and offer new income streams to businesses.
The ongoing high cost of wholesale energy is causing a major headache for those operating in the manufacturing sector. In fact, it has left many in the industry questioning how they will manage these costs.
For some manufacturers, making a short-term cut to investment in sustainability measures to manage these expenses might seem like the right decision – but it’s a risky choice that could leave some worse off in the future.
Expectations around sustainability are growing. Centrica Business Solutions’ report ‘Why wait to pursue net zero?’, found that 49% of manufacturers are choosing to work with supply chain partners that can demonstrate they are making significant strides towards hitting net zero. Add to this growing pressure from funders and investors who are increasingly focused on businesses showing how they are cutting their carbon footprints. Those that do not make progress in improving their environmental credentials could face challenges accessing affordable finance in the future.
Of course, there is no way of predicting what might happen to energy prices in the future; however, failing to invest in improving sustainability practices now could lead to challenges later down the line.
Opportunity knocks
Energy-intensive businesses and manufacturers are presented with challenges and opportunities when it comes to energy.
With so many areas for energy wastage to be trimmed, small changes to improve energy efficiency across a site can deliver noteworthy results in reducing energy costs and moving a manufacturer closer to net zero. A simple solution, such as using energy insights sensors, means manufacturers can monitor essential equipment and use the data to manage asset performance. Those that do not make progress in improving their environmental credentials could face challenges accessing affordable finance in the future.
Investment in more advanced energy technology can help accelerate the reduction of emissions, bolster energy-stability and unlock new revenue streams. Solar panels can produce emissions-free energy to power the business, with any excess being stored in batteries ready to be deployed when the sun isn’t shining. We have seen the return on investment for solar projects reduced by a third in recent months, largely because of higher energy prices, for one client we were predicting annual energy savings of £43,000 six months ago, which has risen to £78,000 today.
This not only helps to reduce carbon emissions but the energy stored in the battery enhances a site’s security of supply.
Powering the bottom line
The use of small-scale energy generation also represents a financial opportunity for businesses. Should manufacturing plants produce more power than they need for a given period, they can sell the energy back to the grid. Those that optimise their operations to ‘load shift’ – moving peak periods of activity that have high energy demands to a time when energy costs are lower – can help unlock further savings.
Our ‘Why wait to pursue net zero?’ report also found that around half of manufacturers are utilising energy technology to create new revenue streams – but it’s not universally adopted. While there may not be a single silver-bullet technology, manufacturers that take charge of their energy supply and generate it on-site put themselves on a faster route to turning a cost into a commodity.
Refocusing on sustainability
Around the world, governments and businesses have been accelerating net zero targets. Further still, increasing regulation, such as the Taskforce on Climate-Related Financial Disclosures (TCFD) requirements coming in this April, will mean many larger firms are going to have to report on their energy use and any risks that the climate crisis could bring.
Not only does modern energy technology bring a range of short-term benefits, it is also critical for future-proofing organisations in the long term – building resilience and sharpening competitive edges.
Those that invest now will benefit from it for longer by reducing costs and decarbonising quicker. The time to act is now.