News, Events & Industry Insights

Home>News>Industry>2017>Jul

What are the advantages of renewable energy?

With the UK working towards a low-carbon future, and sustainability an increasing focus of consumers and businesses, renewable energy is now mainstream. There’s more being generated than ever before, with National Grid confirming on April 21st 2017 that “for the past 24 hours, supplied GB’s electricity demand without the need for coal generation.”

This was the first continuous 24-hour coal-free period for Britain since use of the fossil fuel began. Natural gas and nuclear accounted for around 75% of this non-coal generation, and the rest came from renewable energy.

Renewable sources – including biomass and hydro-power – will be vital in achieving the commitment of the Climate Change Act 2008 to reduce carbon emissions by 80% (compared to 1990 levels) before 2050. Although solar and wind are part of this energy mix, the British weather is notoriously unpredictable – meaning there’s no guarantee of these natural sources being able to always produce enough energy to match demand. As a result, National Grid needs a 100% reliable renewable source of power available to bridge the gaps.

As a modern and highly efficient renewable energy source, biomass fits the bill. At Haven, we source the majority of our power from Drax Power Station, which has become the single largest renewable energy generator in the UK. To achieve this, Drax upgraded half of its generation units to use compressed wood pellets instead of coal.

Drax’s sustainably sourced biomass provides a reduction of over 80% in carbon emissions compared to coal – even when taking carbon emissions from transporting the pellets into account. This was echoed in the March 2017 report commissioned by the UK Government’s Department of Business, Energy and Industrial Strategy.

So, renewable energy clearly has proven environmental benefits. But what about the commercial advantages of being more sustainable and energy efficient?

The business benefits of renewable energy

A report by management consultancy Bain & Company outlined a number of renewable energy’s advantages, including:

  1. Direct and indirect savings
  2. New business opportunities
  3. Corporate social responsibility (CSR)

Direct and indirect savings

With energy accounting for about 5% of costs for an average manufacturing company, an energy-efficiency program can save between 10% and 30% of those costs within three years.

Saving Money

Most of the direct savings arise from adapting existing equipment (e.g. motors, drives, boilers, furnaces, pumps, compressors, ventilation and heating systems) or introducing new versions. The subsequent indirect savings come from reduced maintenance, materials, waste and risk.

The UK’s Federation of Small Businesses (FSB) revealed members’ views about the energy market in its January 2017 report. This stated that 33% believe energy efficiency savings will offset the increasing cost of their energy, and that 27% expect a low carbon economy to create more opportunities than threats for their business.

New business opportunities

Businesses can save additional costs by generating power on-site and may – as long as production outstrips usage – be able to sell it back to the National Grid. With the help of energy suppliers like Haven, switched-on enterprises can plan to use energy more flexibly and reduce peak-time usage – saving the business even more.

New Business

In May 2017, Unilever stated that its ‘Sustainable Living’ brands are not only growing more than 50% faster than the rest of the business, but also accounted for 60% of its growth in 2016.

The company also reported on its research into the impact of sustainability upon the purchasing decisions of 20,000 adults across five countries. This showed that 33% of people buy a product because they believe it’s doing social or environmental good. In addition, one in five say they’d choose a brand if its sustainability credentials were made clearer on packaging or in marketing.

According to Unilever, which estimates that the marketing spend for sustainable goods is €2.5tr (£2.1tr), the findings equate to an untapped opportunity worth €966bn (£817bn).

Separate research from Harvard Business Review and EY shows that companies with a strong sense of purpose can transform and innovate better while also improving employee satisfaction. “Purpose” can manifest itself in several ways, including a focus upon sustainability. EY’s John Rudaizky says it’s about “what you do and not what you say. [It’s] a business transformation idea rather than a loose wrap-around at a brand level”.

Unilever CEO Paul Polman goes further: “There’s no doubt that the Unilever Sustainable Living Plan is making us more competitive by helping us to build our brands and spur innovation, strengthen our supply chain… reduce our risks [and] lower our costs.”

These findings support Haven Power’s assertion that sustainability is good for the environment and good for business.

Corporate social responsibility (CSR)

Bain & Company asserts that reducing energy consumption and using renewable energy sources demonstrate good corporate citizenship. This can lead to a stronger public image and improved perceptions, making the company more attractive to investors and suppliers. Unilever’s Paul Polman agrees, believing that the Sustainable Living Plan is helping to “build trust in our business.”

The Bain report also claims that efficiency programs boost employee morale and help make companies more attractive places to work. This is certainly the experience at GE, where energy experts and staff identify and recommend efficiency initiatives. The employees say that participating increases their personal commitment to GE, and the business reports savings of $150 million since the project began.

The 2016 CSR Report from retail group Boots claims “LED lighting replacements in stores in the UK… accounted for a consumption reduction of around 7.9 million kilowatt hours, enough to power over 1,700 UK households for a year.”

The company’s report also states that, as of the end of fiscal 2016, it is “on track to reduce CO2 emissions by 30% between 2005 and 2020, on a comparable basis.”

For businesses, renewable energy has the potential to generate savings as well as commercial opportunities. It can also allow companies to meet their CSR commitments, appeal to customers focused on sustainability, and make a positive contribution to the environment. With so many benefits, it has to be time to think about switching.

If your business is considering a move to renewable energy, Haven’s experts are happy to discuss your options and help you discover the benefits.

 Get in touch today.

Haven Power news, events and industry insights.