Aspiring generators

More and more businesses are tapping into natural resources, like wind, solar and biomass, or  waste that once went to landfill to generate electricity, and with very good reason. Just some of the benefits of becoming an electricity generator include:

• New revenues – by getting paid for the electricity they export to the grid and the associated renewable energy certificates 
• Lower electricity costs – by reducing their exposure to both volatile wholesale energy prices and rising delivery charges
• Reduced carbon emissions and improved sustainability reporting with a lower carbon electricity supply than the standard grid mix
• Improved operational resilience – with less reliance on electricity imported from the grid

Even if your renewable energy project is still a twinkle in your eye, you can start thinking about how you could produce and sell your energy for the best returns.

How big are your plans? 

Until you have a commissioning date, your project’s size (or installed capacity as we call it) is the best pointer towards how to sell what you produce in future:

• If you are building on a commercial scale (more than 250KW), the Renewable Obligation (RO) scheme or Contracts for Difference (CFD) (starting in April 2015) scheme should offer the best rewards. You’ll need a Power Purchase Agreement (PPA) to sell through these schemes. This short film explains PPAs
• Is it a small installation, under 250KW? Then Feed-in Tariffs (FITs) are probably a better option for you. Read how we can help you benefit as a FITs generator [link to FIT factsheet]
• Projects between 50KW and 5,000KW are eligible for either scheme,but not both. Watch two minutes of this webinar (from 1:15 to 3:45) to see how this works

There are two main reasons why getting investment for long-term projects such as renewable energy generation can be challenging:

• Business priorities: You have to compete for funding against projects that promise to drive top line growth – the dominant priority for most businesses
• Financial hurdles: According to the 2012 Energy Leaders Survey by sustainability analyst firm Verdantix, the top two barriers to investment in energy equipment were the lack of sufficient savings and financial returns being below CFO requirements

1. Thanks to the defensive strategies adopted by businesses during the recession, many are sitting on substantial cash reserves – some £166bn within the FTSE100 alone according to recent analysis by Capita Asset Services. That’s 34% more than when the recession began in 2008, and more sectors are in positive cash reserve territory than not.
2. Investors prefer to see reserves put to good use rather than sitting in cash piles that earn low returns. The 2012 Energy Leaders Survey found that 75% of businesses used enterprise funds rather than borrowings as their primary way to finance energy-related investments.
3. A growing number of large organisations are publishing targets for investment in renewable energy to power their operations alongside targets to reduce greenhouse gas emissions. Analysis of the Fortune 100 and Global 100 by WWF, Ceres and Calvert Investments in 2012 found that 24 organisations had already set public, voluntary renewable energy commitments. Rising public concern about climate change will accelerate the trend. The report also suggested that as companies’ experience of renewable energy grows, they pursue more diversified approaches, including on-site direct investment.

So if you’ve struggled to find funds for investment before, it’s a good time to try again.