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Self-gen: Our Top 10

29th November 2018

With more changes to Feed in Tariffs on the way, some businesses are questioning whether self-generation can still deliver worthwhile benefits. This uncertainty is increased by the ongoing review of the scale of other rewards for exporting power to the Grid. Here, Niall Simmons from our Energy Services team discusses what you should consider before generating your own electricity.

The benefits of electricity self-generation for businesses can be broadly split into two parts. Firstly, it can be a way to offset the costs associated with importing power (the traditional flow, where a business draws energy from the Grid). Secondly, you can see self-generation as a source of revenue that you gather by exporting energy to the Grid.

While some of the details of those benefits are changing, they can still add up to a powerful argument for considering self-generation. However, there’s no ‘one size fits all’ solution, and a detailed energy audit can help ensure that your business makes the right decisions for its size, site(s) and needs.

Import-side benefits: reducing costs

Lower third-party costs

As much as 60% of the total your business is paying for its electricity comes in the form of third party costs (TPCs). You pay these on top of the retail price of your electricity, as your share of the national and/or regional costs of services such as distribution. TPCs also include items such as the government climate change levy.

The less energy you draw from the Grid, the lower your TPCs will be.

Decrease peak time usage and Triad costs

Talk to your supplier about when the peak times - including the Triads - are likely to occur. These peaks are when the country’s electricity distributors charge higher prices for using their networks, due to the additional stresses placed on the Grid.

Armed with this knowledge, you can reduce or avoid peak-time costs by:

Demand Side Response (DSR)

Being part of a DSR arrangement means you agree to switch your energy usage or export at certain times (e.g. during periods of peak demand) in return for a financial reward from the National Grid.

Environmental benefits

More and more businesses are committed to demonstrating their environmental responsibility. Self-generation through wind, solar, biomass or anaerobic digestion can help your business cut its external costs at the same time as reducing carbon emissions.

Export-side benefits: generating revenue

Self-generation has been helping businesses generate extra revenue for some time. While some believe that the future of embedded generation isn’t that rosy due to the changes currently under discussion, Haven Power believes that export-side benefits from self-generation will continue to exist in the future.

Power Purchase Agreements

Power Purchase Agreements allow you to sell some or all of the power you generate. You can do this directly with an energy consumer that’s nearby through a private-wire agreement or via an established supplier that buys energy from self-generators.

PPAs can give you longer-term security on the value of your self-generated electricity, meaning you can budget more accurately.

Either way, Haven Power will offer a rounded view of the best options for your business to help you find the right PPA partner.

Self-generators in some locations can earn additional revenue by exporting their power at certain times of day and for not using electricity during the winter’s three premium-priced periods (the Triads).

Considerations to bear in mind

Many businesses are trying to use self-generation to future-proof themselves. However, it’s hard to do that when you don’t know what the future holds – especially within the context of a regulatory framework.

Haven Power’s experience and expertise, allied to that of our colleagues in the innovation and research team at Drax Group, allow us great insights. We know how regulation is framed and formed, and have many years’ involvement in helping businesses find the right approach to self-generation.

There are a number of considerations we’d recommend businesses to bear in mind:

  1. What payback period is acceptable?

Your business needs to be clear about its payback period; specifically, how soon and how much?

Our optimistic estimate is for three-to-five years, although we could only be more accurate if we were able to work closely with your business. In that scenario, we’d also collaborate with our Research & Innovation colleagues from Drax - our parent company - to better understand your circumstances.

Together, we could assess your needs and recommend tailor-made energy solutions that offer you the best value and returns.

  1. Understand the area you’re in

Iof you’re considering exporting surplus power, or setting up simply as a generator, then you need to ensure it’s possible in your area. Some locations have export limitations, sometimes because the network’s already under stress or because it needs major maintenance.

Check the status with your distributor - if you can’t export, you may need to look for a different approach.

  1. What are your costs and benefits?

How much are you prepared to invest in your scheme, and what returns do you expect to get? Our experienced Energy Services team can help you to understand what’s possible - and to gain a realistic view of what to expect.

To find out whether self-generation is right for your business, or to enquire about an energy audit from Haven Power, please use our contact form to get in touch.

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