How can high energy users reduce their impact on the environment, improve efficiency and generate additional sources of revenue? Haven Power’s Marc Bradbrook believes that green energy procurement and onsite generation are part of the solution. Louise Frampton reports…
Nearly 40% of global greenhouse gas emissions can be traced to energy generation and half of this energy is used by industrial or commercial entities. There is increasing pressure on large energy users to improve their green credentials and, in the data centre sector, a number of high-profile colocation providers have set ambitious targets to move to 100% renewable energy.
Interxion, for example, is using 100% renewable energy, mostly wind energy, throughout all three of its data centres in Dublin, and its latest addition in the Irish capital, DUB3, will provide about 2,300 sq m (24,756 sq ft) of equipped space and 5MWof customer power – using only renewable energy.
Recently, Microsoft’s president Brad Smith also announced plans to virtually double its internal carbon fee to $15 per metric tonne on all carbon emissions, to hold its business divisions financially responsible for reducing their carbon emissions. This is in addition to a target of moving to 100% renewable energy for its data centres, with a goal to surpass the 70% target by 2023.
Green energy procurement
With more businesses looking for less carbon-intense electricity sources, there are now a host of smaller energy suppliers taking on the ‘big six’, offering all-renewable electricity. Haven Power decided to supply 100% renewable power, at no additional premium, from January 2018 and is able to deliver this as part of the Drax group – one of the UK’s biggest suppliers of renewable electricity.
According to Marc Bradbrook, commercial director at Haven Power, the ability to provide full traceability to renewable energy sources is becoming a high priority for a wide range of organisations that either have a high public profile or are high energy users.
In addition to data centres, water companies, hospitals and airports are among the mission critical sites that are moving to renewable energy. Gatwick, for example, has worked with Haven Power to become one of the first airports in the world to go for 100% certified renewable electricity – saving the airport enough carbon to fill Wembley Stadium five times.
Bradbrook explains that audit evidence is vital to allow its customers to be registered as ‘zero emissions’ under the ‘Green House Gas (GHG) Protocol Scope Two Emissions’ standard.
However, decarbonisation also requires efficient use of energy and Haven Power is working closely with its customers to analyse and improve their energy usage, as well as identifying opportunities to shift load and participate in demand-side response.
“We have seen a change in attitude towards DSR among mission critical sites, such as data centres and hospitals, but it is important that the control remains in the customer’s hands. We can help provide access to the various markets, but also want to ensure that these sites have the transparency to understand exactly what the opportunity is and to maintain control over the risk they want to take,” Bradbrook explains.
Embedded generation and DSR are complex and having access to the relevant expertise can help businesses make the most of the schemes available. With the right partnership, the rewards for mission critical sites can be significant. Working with Haven Power and demand response aggregator Kiwi Power, Colchester Hospital University NHS Foundation Trust reported earnings of about £200,000 per year from power generation and ancillary service revenues. The trust’s estates department has also reduced expenditure through improved energy management.
Haven Power provides the trust with a daily triad report between November and February, with the extra benefit of within-day updates where necessary. This helps inform the estates department’s energy purchasing decisions and offers an opportunity to minimise or avoid consumption in high-cost periods. At the same time, Kiwi Power has helped the estates department to make the most of the trust’s five generation assets that are spread across the sites. The aggregator designed a bespoke solution that allowed it to control the generators remotely using real-time metering hardware and a combination of existing and new control systems.
“The nature of mission critical sites means they have a very low risk appetite, so we work closely with these businesses to achieve the balance they need between value and risk. We also look at alternative technologies – for example, solar and storage solutions. The preferred opportunity is around frequency response, for small fluctuations, rather than STOR, as the latter could require a site to provide power for an hour, at a set time, potentially preventing the site from using their back-up assets if needed,” Bradbook continues.
While there are significant opportunities, there has also been some uncertainty within the DSR market over the past 12 months and this requires careful management, according to Bradbrook.
“We have seen some change in behaviour following the Medium Combustion Plant Directive (MCPD), with limited running hours for diesel generation. Customers are almost exclusively reserving generation for triad avoidance. There have also been changes around the capacity market – in general, the capacity market was a fairly easy entry point into the world of DSR, with a low likelihood of being called upon, with a good return. A lot of DSR was built on this market… it has been a challenging year for everyone,” he comments.
Bradbrook reports that he has also seen an increase in the number of customers that want to use local power generation. Having onsite battery storage, combined with solar panels, not only reduces reliance on the grid but can also create an additional revenue stream by selling excess energy back to the grid.
“Those that hit the headlines are usually on the scale of Google, Amazon and Ikea. We are seeing some interest in taking local supply among our portfolio of customers… sustainable, all-day renewable generation is more of a challenge, however. We tend to see university campuses using combined heating and power to obtain all-day generation,” Bradbrook continues.
There are more widespread opportunities around peak independence, he adds, pointing out that the company has been demonstrating this approach at its own offices. Haven Power has installed almost 500 sq m of solar panels at its premises at Ransomes Europark, Ipswich, producing enough renewable power in a year to charge an electric vehicle 2,300 times.
“Using a solar/energy storage solution we are able to come off the grid at peak times.”
Getting the basics right
Getting the basics right for large energy users and ensuring a good procurement strategy is just as important as creating revenue streams. Haven Power offers ‘accelerated workshops’, to identify the key business needs of the organisation. By working in partnership with the company’s engineers and analysts, large energy users (consuming more than 10GWh of electricity per year) can design a tailored energy solution that delivers maximum value.
“It is about understanding their business needs. For data centres, hospitals or other mission critical sites, the first priority may be resilience. We talk to them about where that requirement comes from, evaluate how to optimise and size the technology for their project, and also ensure that they have the basics right,” comments Bradbrook.
He predicts that interest in renewable energy is set to intensify and this will also be fuelled by an uncertain political climate: “As Brexit brings a level of uncertainty to the energy landscape, it is likely to increase consumers’ appetite for increased control over where their supply comes from. If you can contract with, or physically connect with, a solar farm half a mile away from your site, you can have a lot more certainty about where your energy is coming from,” Bradbrook concludes.
What will Brexit mean for the UK energy landscape?
If the UK falls out of the Internal Energy Market as a result of a ‘no-deal’ Brexit, major disruption to UK electricity supplies is unlikely, according to Haven Power’s predictions. The UK only imports around 6.6% of its electricity from the European mainland, using four interconnectors. Haven Power does not operate in the all-Ireland single electricity market. However, it is worth noting that the functioning of the Integrated Single Electricity Market (I-SEM) may come into question in the event of a hard Brexit and the market’s underpinning legal basis falling away. In such a situation, one issue might be how to continue trading power across the interconnectors without a fungible carbon price. (Fungibility is the property of a good or commodity whose individual units are essentially interchangeable, and each of its parts is indistinguishable from another part.)
The Department for Business, Energy & Industrial Strategy has announced that “if the UK leaves the EU without a deal, a temporary tariff regime will be implemented. This would apply for up to 12 months while a full consultation, and review on a permanent approach, is undertaken. Under the temporary tariff regime, imports of electrical energy into the UK would be eligible for tariff-free access.”
Given energy’s tariff-free status, the UK is unlikely to see more expensive bills for business customers. Haven Power points out that its customers have the added reassurance that the biomass used at Drax Power Station – owned by the supplier’s parent company, Drax Group – is zero-rated and expected to remain so. In the immediate aftermath of a ‘no-deal’ Brexit, a currency devaluation could make electricity more expensive. Should sterling fall, as some predict, imports of electricity (and its sources, or feedstocks, such as sustainable biomass and natural gas) would become more expensive. This is because the UK pays in foreign currencies.
Many generators that depend on imported feedstocks have anticipated this potential devaluation and taken precautionary steps. Drax Power Station, which provides approximately 12% of the UK’s total renewable electricity, has contracts in place to ensure its biomass supplies continue well beyond the end of 2019. In addition, Drax cites two key reasons for not expecting Brexit to have an operational impact. Firstly, most of the biomass (about 80% in 2018) comes from North America rather than Europe. Secondly, it has four dedicated port facilities on the UK’s east and west coasts. Conversely, energy suppliers that have not hedged their post-Brexit risks could find it hard to absorb the potential increase in the cost of their raw materials. As a result, these suppliers would probably pass on the cost to customers.
To manage the risk associated with a ‘no-deal’ Brexit, Haven Power recommends energy users fix their electricity contract and/or invest in self-generation and battery storage to reduce their dependence on the Grid. While this option requires some up-front investment, the savings that it could bring – and the security of being more self-reliant – may well make it worthwhile.