Mar 27, 2020

Moving with the times: embracing blended energy

Tim Broadhurst, CCO, CooperOst...
5 min
With commercial energy prices hiking and grid insecurity concerns increasing, blended energy programmes are becoming commonplace
With commercial energy prices hiking and grid insecurity concerns increasing, blended energy programmes are becoming commonplace.&n...

With commercial energy prices hiking and grid insecurity concerns increasing, blended energy programmes are becoming commonplace. 

For the typical householder, choosing a suitable energy provider is relatively straightforward. Simply enter your details into any price comparison website and each of the ‘big six’ will send you an immediate quote.

For any facilities management professional, however, energy management is a considerably more complicated process. 

There are far more wide-ranging energy plans available for businesses compared to consumers, with prices varying hugely depending on size, type, location, use and payment terms. 

Size – While you may expect businesses of all shapes and sizes to pay a similar price per unit for their energy consumption, this is rarely the case. In fact, the larger your business, the better price per kWh you’re likely to receive. 

While this may seem counterproductive for energy suppliers, costs are calculated based on economies of scale. 

Type – Depending on your business type, rates will vary considerably. While the typical office block will be offered a more standard tariff, manufacturing sites are predicted to use more power and therefore will attract better rates. 

Industrial businesses receive lower prices still, thanks to their ability to receive electricity at much higher voltages. 

Location – UK suppliers will charge wildly different rates depending on the location of your site. This can be due to the geography of their own power plants or availability of energy infrastructure. 

Prices for British Gas’ electricity, for example, vary from a low of 17.38 p/kWh in North Wales to a high of 24.77 p/kWh in the East Midlands – a difference of 42.5%. 

Payment terms – In January 2018, British Business Energy conducted research into the commercial price per kWh electricity for each of the UK’s top 11 energy providers. 

Rates varied from 10.1p to 27.8p, while standing charges varied from 27.4 p/day to 159 p/day. 

While the lower costs are obviously more attractive on the surface, each provider offers savings (between 40-60%) for fixed-term contract payment terms, with most providers offering rates of less than 10 p/kWh. 

Rather than a ‘quick fix’, securing the best possible commercial energy deal is almost a full-time job. 

But with almost every business depending on the grid for its day-to-day operations, negotiating a complex marketplace, while remaining cost-efficient, is fast becoming critical for time-strapped businesses.

On-site energy generation

As well as being challenging to navigate and increasingly expensive, the UK’s commercial energy market demonstrates two challenging traits – inflexibility and unpredictability. 

For facilities managers, who need dependable suppliers and consistent overheads, finding a viable alternative is top of the agenda. 

Alongside renewable technologies, battery storage and carbon-neutral processes, one such solution is the use of CHP technology to generate energy on-site. 

Effectively a gas power station, but more than twice as efficient, CHP combusts natural gas to generate electricity and thermal energy (which can be used for space heating or hot water). 

With gas prices lower and more stable than mains electricity supply, businesses can realise significant cost saving by self-generating power – a payback of typically less than five years. 

What’s more, CHP offsets carbon and can thus help to meet Part L of the Building Regulations.

While moving from a centralised to a decentralised energy model may seem daunting, success is simple if you plan ahead. For anyone looking to embrace decentralised energy, the following five points are important considerations.

  1. Suitability

While using CHP as an alternative to more traditional grid connectivity can save money on your utility bills, maximising efficiency relies on equipment running at full capacity, 24-hours a day. 

As such, it’s essential to undertake a feasibility study well in advance. By doing so, you’ll be able to specify the perfect solution for your energy requirements – precisely matching engine size, dimensions, location and generation outputs to site demands. 

The greater your energy consumption, the more you could save!

  1. Sizing

When it comes to specifying your engine, there is no one size fits all solution. Instead, it’s important to take facility size and energy requirements into close consideration.  

While an oversized engine will shut down during periods of low demand, an undersized engine will restrict generation capacity. In both situations, incorrect sizing will limit the financial benefits of choosing CHP over grid connectivity. 

Identifying the perfect balance is, therefore, a tricky yet important task. 

  1. Installation

When it comes to the physical installation of your engine, precision is key. Unlike more standard gas engines, CHP technology is highly sensitive and must be fitted by an expert. 

We’ve previously visited sites where poor installations – everything from unlevel floors to inadequate housing – is significantly impacting on engine performance. 

Alongside correctly planning your project, working in partnership with an installation expert is essential to prevent issues in the long-term. 

  1. Calibration

In the same way that a racing car must be professionally tuned to deliver optimum performance, correct calibration of a CHP engine is essential to ensure the best possible running efficiencies. 

In our experience, rushed calibration can impact on outputs considerably. As such, getting it right from the outset is essential to ensure long-term financial savings. 

  1. Maintenance

Working at full capability, 24 hours a day, inevitably takes its toll on the performance of any CHP engine. In our experience, poorly maintained engines can see efficiencies fall by as much as 20%. 

While there are number of simple daily checks you can make, it’s important to work with an established CHP maintenance provider to action the servicing intervals outlined by your manufacturer (typically 2,000, 10,000, 20,000, 40,000 and 60,000 running hours).

As the UK’s leading gas engine specification and maintenance expert, CooperOstlund has worked with countless companies nationwide to deliver effective CHP installation projects. 

From initial site surveys and installation, right through to lifetime maintenance provision, we can save up to 40% every year on our clients’ utility bills. 

It’s an inconvenient but unavoidable fact – the National Grid is no longer fit for purpose.  A centralised system is not the answer to the UK’s energy future, especially with an oligopoly of energy providers and dated logistics network.

While hydrogen and renewables may be considered blue-sky thinking for the future, we need to address the issue of fluctuating commercial energy costs and embrace solutions to meet today’s escalating demand for mains supply. 

CHP technology offers an efficient and cost-effective solution to provide controllable, self-generated energy, delivered on-demand. 

By Tim Broadhurst, CCO at CooperOstlund

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Jul 26, 2021

Ofwat allows retailers to raise prices from April

Dominic Ellis
3 min
Ofwat confirms levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue

Retailers can recover a portion of excess bad debt by temporarily increasing prices from April 2022, according to an Ofwat statement.

The regulator confirmed its view that levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue, thereby allowing "a temporary increase" in the maximum prices. Adjustments to price caps will apply for a minimum of two years to reduce the step changes in price that customers might experience.

Measures introduced since March 2020 to contain the spread of Covid-19 could lead to retailers facing higher levels of customer bad debt. Retailers’ abilities to respond to this are expected to be constrained by Ofwat strengthening protections for non-household customers during Covid-19 and the presence of price caps.  

In April last year, Ofwat committed to provide additional regulatory protection if bad debt costs across the market exceeded 2% of non-household revenue. 

Georgina Mills, Business Retail Market Director at Ofwat said: “These decisions aim to protect the interests of non-household customers in the short and longer term, including from the risk of systemic Retailer failure as the business retail market continues to feel the impacts of COVID-19. By implementing market-wide adjustments to price caps, we aim to minimise any additional costs for customers in the shorter term by promoting efficiency and supporting competition.”  

There are also three areas where Ofwat has not reached definitive conclusions and is seeking further evidence and views from stakeholders:   

  1. Pooling excess bad debt costs – Ofwat proposes that the recovery of excess bad debt costs is pooled across all non-household customers, via a uniform uplift to price caps. 
  2. Keeping open the option of not pursuing a true up – For example if outturn bad debt costs are not materially higher than the 2% threshold. 
  3. Undertaking the true up – If a 'true up' is required, Ofwat has set out how it expects this to work in practice. 

Further consultation on the proposed adjustments to REC price caps can be expected by December.

Anita Dougall, CEO and Founding Partner at Sagacity, said Ofwat’s decision comes hot on the heels of Ofgem’s price cap rise in April.

"While it’s great that regulators are helping the industry deal with bad debt in the wake of the pandemic, raising prices only treats the symptoms. Instead, water companies should head upstream, using customer data to identify and rectify the causes of bad debt, stop it at source and help prevent it from occurring in the first place," she said.

"While recouping costs is a must, water companies shouldn’t just rely on the regulator. Data can help companies segment customers, identify and assist customers that are struggling financially, avoiding penalising the entire customer in tackling the cause of the issue."

United Utilities picks up pipeline award

A race-against-time plumbing job to connect four huge water pipes into the large Haweswater Aqueduct in Cumbria saw United Utilities awarded Utility Project of the Year by Pipeline Industries Guild.

The Hallbank project, near Kendal, was completed within a tight eight-day deadline, in a storm and during the second COVID lockdown last November – and with three hours to spare. Principal construction manager John Dawson said the project helped boost the resilience of water supplies across the North West.

“I think what made us stand out was the scale, the use of future technology and the fact that we were really just one team, working collaboratively for a common goal," he said.

Camus Energy secures $16m funding

Camus Energy, which provides advanced grid management technology, has secured $16 million in a Series A round, led by Park West Asset Management and joined by Congruent VenturesWave Capital and other investors, including an investor-owned utility. Camus will leverage the operating capital to expand its grid management software platform to meet growing demand from utilities across North America.

As local utilities look to save money and increase their use of clean energy by tapping into low-cost and low-carbon local resources, Camus' grid management platform provides connectivity between the utility's operations team, its grid-connected equipment and customer devices.

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