Sustainable choices - for the long term

Carbon reduction is a hot topic for UK businesses, with lowering carbon emissions a board level discussion for many organisations. With so much focus on efficient buildings, sustainable materials and responsible waste management, it’s a primary consideration for builders and building management companies too.

Our energy choices also have a significant impact on the environment: increased levels of greenhouse gases in the atmosphere are causing global warming, with severe implications for the future of the planet. The same choices also have a direct impact on the profitability and resilience of our businesses. Energy efficiency measures reduce energy costs as well as carbon footprint, while sustainable choices can improve customer loyalty and supply chain appeal.

The work of the Climate Group demonstrates the power of business energy choices. Through the RE100 initiative, businesses are setting themselves apart as leaders and influencers by making a commitment to renewable energy sources. And the majority of the 185 businesses already signed up to RE100 consistently outperform their peers financially, across every sector.

Energy strategy as business strategy
If this isn’t a persuasive enough argument for businesses to take a more sustainable approach to energy, the recently published advice of the Committee on Climate Change (CCC) has resulted in the UK legislating for a net-zero emissions goal by 2050. As our largest energy users, businesses will play a central role in achieving this goal. They will also be among those most affected by the change it requires. Those who act now will not only be supporting our transition towards a greener energy future, they may also be guarding themselves against the impacts of an evolving infrastructure and associated price volatility. The CCC’s report tells us that the electrification of heat and transport will double demand for power by 2050 and that this is likely to cause energy prices to peak in the next 10 years. With all of this in mind, it’s fair to say that energy strategy and business strategy are more interwoven than ever before.

Greener energy choices
But what actions should shrewd businesses be taking when it comes to energy? The easiest first step for many will be to actively choose an electricity supply that comes from 100% renewable sources. This is a simple action, but with significant advantages. Our 2018 consumer survey4 revealed that 3 out of 4 consumers are more inclined to choose a manufacturer or retailer that uses renewable energy. Further benefits include talent retention, improved CSR credentials and improved supply-chain potential.

While green electricity often gets the spotlight, many businesses need to use gas as a primary fuel source for space heating or within processes. And with business gas consumption exceeding business electricity consumption, it’s an area that mustn’t be overlooked. Green gas has received significant attention in recent times and it’s gaining traction. Although pure biogas still often attracts a price premium, there are more options available to businesses now, so organisations can choose gas products that match their values – and their budget. One option is to go for a carbon neutral alternative, whereby carbon emissions are offset by investing in certified projects that might focus on reforestation or cleaner global fuel sources, for example. Certification is everything, and by opting for products that hold a Gold Certification, you can be sure that you’re investing in reputable initiatives with genuine, audited offset credentials.

Those companies ready for a longer-term commitment should also consider a Corporate Power Purchase Agreement (Corporate PPA). A Corporate PPA creates a win-win situation: it can deliver long-term cost and carbon reductions for businesses, whilst guaranteeing investment for renewables projects.

The Corporate Power Purchase Agreement (Corporate PPA) explained
A Corporate PPA is a long-term, fixed price agreement linked to specific renewable generation assets. One of the key attractions is the ability to fix the unit price throughout the contract length. This mitigates exposure to wholesale price movement for the long-term and introduces a creative approach to managing risk. Contracts vary in length, with 10 years being common, but can begin at four years.

By committing to buy electricity from a specific renewable asset, businesses also support the development of new renewable generation. Their energy choice demonstrates a demand for green electricity and means they make an active contribution towards a net zero carbon nation.

The UK’s first offshore wind Corporate PPA

Northumbrian Water supplies 2.7 million customers in the North East with both water and sewerage services, and 1.8 million customers in the South East with water services. The business has a clearly defined sustainability strategy and has now begun sourcing 30% of its renewable electricity directly from Ørsted’s Race Bank offshore wind farm, off the coast of Norfolk. This Corporate PPA is the first of its kind in the UK and means that the company will source approximately 100GWh-a-year for ten years from Race Bank. The result will appeal to businesses across all sectors: the opportunity to manage costs and reach sustainability goals.

Such opportunities are vital to ensuring businesses can benefit from a sustainable approach to energy and with a ground swell of consumer support, a better energy future has never looked brighter.