Renewable energy now yields irresistible returns on investment for all businesses

Whatever kind of business you are running, you would be crazy not to take a serious look at using renewable energy - not just to satisfy your own power needs but as a sound financial investment. But you need to get the best, expert advice and think strategically.

The return on a sensible investment in renewable technology would average 11-12%, with the potential for returns of over 20%, according to a report from Carbon Trust Advisory released this week.

With much of the rest of the economy in the doldrums, and energy prices set to rise considerably, where else are you going to get a return like this?

The financial landscape is improving due to Government initiatives such as the Feed-in-Tariffs (FiT) for generating renewable electricity and the similar Renewable Heat Incentive (RHI) - which covers technologies such as solar water heating, heat pumps and biomass boilers.

This is due to kick in at the end of this month for businesses (a similar scheme for homes will follow next summer).

The big names are already leading the way. ASDA, IKEA, John Lewis and Marks & Spencer have all set a target of moving to 100% renewable energy. IKEA now obtains 80% of its total energy use from renewables and has invested in a mix of ground source heat pumps, biomass, solar panels and wind power.

In the US. Google has invested heavily in solar plants, with a 1.65 megawatt photovoltaic power array installed in 2007. But it has learnt that you can't just buy a renewable energy plant and then forget about it.

At the beginning, it failed to put in monitoring and maintenance facilities for each array that would clean the panels regularly and tell it when failures had occurred. A couple of years later it took a look and discovered in this survey that at any one time, the plant may be only generating 70%, and sometimes as little as half, of its potential.

Factors such as accidents, power and frequency matching, shading, potential annual degradation of cells by .5% to 9.5% a year can all affect a photovoltaic system's output.

Similar technical complications arise from all energy technologies, and few can simply be plugged in, switched on and forgotten about in the way that we rely upon the grid.

While The Carbon Trust is right to push the fact that "anaerobic digestion (AD), wind power, biomass heating systems and ground source heat pumps are some of the most attractive and practical renewable energy technologies for UK businesses", businesses need expert help, not just in choosing the right technology for their location but in designing an entire energy management approach that finds the most cost-effective interventions they can make for their particular circumstance.

Investing in demand reduction, energy efficiency, or voltage optimisation, for example, might create just as profitable returns and improvements to the bottom line.

The Carbon Trust can also advise whether a company should purchase or directly generate its own renewable energy, whether to do so on or offsite, where to find the expertise and the implications for an organisation’s supply chain.

UK’s largest renewable gas project

The Carbon Trust suggests that AD (selling the biomethane produced to the gas network) and biomass boilers, typically will offer the highest average internal rate of return.

Biomethane from anaerobic digestion is going to be in hot demand - it may comprise at least 15% of the domestic gas supply by 2020, according to a study by British Gas and the National Grid.

This week British Gas and AD plant manufacturer Bio Group led the way in this area with a joint project to build a £5m anaerobic digestion plant in Stockport to take advantage of the RHI. It will produce organic fertiliser and biomethane which, once upgraded to match the quality of natural gas, will be fed into the gas network.

The feedstock will include food waste from local hotels, restaurants and British Gas’ own offices. It will be constructed on an old landfill site in Stockport, Greater Manchester and will open in April 2012 when it will be capable of supplying 1,400 homes each year.

British Gas and Bio Group, with the Renewable Energy Association, helped to launch a scheme earlier this year called the Green Gas Certification Scheme (GGCS), that provides assurance to customers of British Gas' renewable gas tariff of the biomethane's authenticity as a renewable energy source.

Although complex, the renewable energy field is rapidly becoming easier to enter and more and more mainstream. And with energy prices set to grow by up to 37% by 2020, the opportunity to reduce bills is a strong incentive for all businesses to investigate renewable energy options.

Any business wishing to enquire about the Renewable Heat Incentive (RHI) should phone the accreditation enquiries line 0845 200 2122 between 8:30am until 5pm Monday to Thursday, and 8:30am until 4:30pm on Fridays or email RHI.Enquiry@Ofgem.gov.uk.