Nov 28, 2016

Energy tech investment in UK manufacturing could boost economy by £2.56bn in a decade

4 min
UK manufacturers could inject an additional £2.56bn into the UK economy, cut energy consumption by nearly a third (31.6%) and boost their energ...

UK manufacturers could inject an additional £2.56bn into the UK economy, cut energy consumption by nearly a third (31.6%) and boost their energy resilience by increasing investment in energy technology over the course of the next decade, finds a new report by Barclays.

The Barclays Corporate Banking report, Powering On: Energy Resilience in UK Manufacturing, examines current attitudes of UK manufacturers towards energy supply and management, and models how manufacturers could reduce their energy demand.

The research shows a growing concern about the availability, reliability and cost of energy with more than a quarter of UK manufacturers surveyed (27%) saying that energy supply is more of a concern to their business now than at the start of 2016. These concerns have come to the fore as manufacturers feel squeezed by increases in the price of other raw materials, greater competitive pressure in the sector, and 28% of those who said their business is more concerned said this is because they are worried about the eventual impact of the UK leaving the European Union.

Mike Rigby, Head of Manufacturing, Transport and Logistics at Barclays, said:  “Energy resilience and costs are vital considerations for UK manufacturers and are a critical element of our manufacturing sector’s ability to compete internationally.

“In recent months, attention has focused on the future of energy supply but we need to look at all aspects of energy.  By considering energy management on the demand side in intensive sectors such as manufacturing, we can ensure the UK remains competitive.”

Chief among manufacturers’ concerns today are energy prices, with 75% of respondents citing this as a worry. Almost half (46%) of manufacturers also believe that they are vulnerable to the effects of significant energy price increases.

Reliability and availability of energy is also a worry with 58% and 45% of manufacturers citing these as concerns respectively.

Longer term, manufacturers are concerned that energy shortages will occur, with more than half expecting these in the next ten years. Most of the sector (63%) believes that they are vulnerable to energy shortages, arguing that current preparations are likely to be insufficient. In addition, a majority (60%) also believe that the risk of cost increases and supply disruption will increase if the amount of energy the UK imports increases.

Investing in energy technology as a solution

Manufacturers are already investing time and money in a variety of energy management technologies and approaches, or are planning to in the next 12 months, with energy efficiency measures (35%), negotiating lengthier energy supplier contracts (22%) material efficiency (21%) and self-generation (13%) measures topping the list.

The Barclays research reveals that if all manufacturers became as energy efficient as the leaders in the sector, this could create an industry worth £160bn to the wider economy by 2025. This represents an increase of 5.1% in value terms compared to 2015.

This extra economic output will be achieved by the sector cutting costs and improving its international competitive position, but only if the sector can develop the leadership commitment and resources required.

Furthermore, as a single year comparison - in 2025 alone, this improvement in energy efficiency would result in a manufacturing sector using 7.9% less energy than expected. This is the equivalent of successfully cutting the electricity consumption of every house in the UK by 15% compared to today.

The research also shows that at a regional level, the North West (£1.06bn), South East (0.96bn) and West Midlands (0.78bn) are the three regions within the UK that could benefit most from accelerated investment in energy technology and efficiency.

Rigby continued: “We know manufacturers are already taking steps to improve their energy resilience, from investing in energy efficiency to self-generation and partnering with resource recovery parks.

“However, our research shows that increasing this investment will not only protect the sector from future fluctuations in energy supply, but will also benefit the wider economy by making the sector more internationally competitive through reduced costs and increased productivity.”

Government policy and incentivising investment

Manufacturers suggest that increasing access to external funding (36%), providing greater certainty on ROI (30%) and sharing best practice within the sector (17%) would be the most effective ways of driving further investment in energy technologies within the sector.

More widely, when asked for their views on priorities for UK energy policy, manufacturers are keen that efforts be focused on improving grid efficiency and stability (54%), cutting the cost of energy (47%) and decarbonisation (41%). Interestingly despite high profile potential investments such as Hinkley Point C, manufacturers were nearly as interested in efforts by the UK Government to focus on demand management and energy storage (32%) as they were in increases in the total amount of energy available (40%).

This research goes to show that energy topics are a concern for manufacturers in the UK but this kind of investment could mean the industry becomes more self-suficient and einvironmentally friendly by utilising the latest technology.

Image credit: Artfoliophoto

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Apr 23, 2021

Drax advances biomass strategy with Pinnacle acquisition

Dominic Ellis
2 min
Drax is advancing biomass following Pinnacle acquisition it reported in a trading update

Drax' recently completed acquisition of Pinnacle more than doubles its sustainable biomass production capacity and significantly reduces its cost of production, it reported in a trading update.

The Group’s enlarged supply chain will have access to 4.9 million tonnes of operational capacity from 2022. Of this total, 2.9 million tonnes are available for Drax’s self-supply requirements in 2022, which will rise to 3.4 million tonnes in 2027.

The £424 million acquisition of the Canadian biomass pellet producer supports Drax' ambition to be carbon negative by 2030, using bioenergy with carbon capture and storage (BECCS) and will make a "significant contribution" in the UK cutting emissions by 78% by 2035 (click here).

Drax CEO Will Gardiner said its Q1 performance had been "robust", supported by the sale of Drax Generation Enterprise, which holds four CCGT power stations, to VPI Generation.

This summer Drax will undertake maintenance on its CfD(2) biomass unit, including a high-pressure turbine upgrade to reduce maintenance costs and improve thermal efficiency, contributing to lower generation costs for Drax Power Station.

In March, Drax secured Capacity Market agreements for its hydro and pumped storage assets worth around £10 million for delivery October 2024-September 2025.

The limitations on BECCS are not technology but supply, with every gigatonne of CO2 stored per year requiring approximately 30-40 million hectares of BECCS feedstock, according to the Global CCS Institute. Nonetheless, BECCS should be seen as an essential complement to the required, wide-scale deployment of CCS to meet climate change targets, it concludes.

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