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Advice to municipalities: invest in local energy generation

£33 billion is expected to be saved by British municipalities and businesses between 2010 and 2030 by investment in local grids and heat mains using energy generated from sources such as food waste, wind turbines and solar panels.

The results come from a new study, commissioned by the specialist energy consultancy Utilyx, which reveals that by 2030 on-site energy generation will contribute 14% of the UK's energy needs, up from 9% in 2011.

Unlike electricity from the grid, where heat from electricity generation is released into the atmosphere and further power is lost in transmission, decentralised or local energy is highly efficient, can be sized to suit the specific local load profile, sold for profit and offers the potential to use the heat as well.

Two sources of such heat is from combined heat and power (CHP, otherwise known as cogeneration) and energy from waste. These are predicted to deliver the greatest savings (£20bn) but solar and tri-generation (the simultaneous creation of cooling, heat and power) are expected to grow the fastest.

Using solar power to provide cooling makes great sense, since the cooling is often most needed when the sun is shining.

The research, conducted by independent analyst firm Verdantix, was based upon interviews and a detailed forecast model, which analysed the uptake of six major decentralised energy technologies across 23 sectors including local government, retail, banking, manufacturing, utilities and construction.

The benefits for those who take this route are confidence in the future price of energy, energy security, reduced carbon emissions and potentially extra income streams.

The research identifies six actions for Chief Financing Offices who are interested in exploiting the potential of decentralised energy:

  1. Review the firm's existing energy bill and request a three to five year forecast of energy costs
  2. Identify feasible sites for decentralised energy
  3. Evaluate decentralised energy technologies for business applicability
  4. Understand the contribution of policies and incentives, and their sensitivities to the business case
  5. Request examples of similar success stories
  6. Move energy procurement up to the board-level agenda.

Mark Stokes, managing director for Utilyx's asset management business, said: "This report shows that on-site energy generation will play an increasingly important role in our future energy mix. Traditionally businesses and organisations have focused on one aspect of energy management – typically procurement or energy efficiency.

"The report reveals the need to look at the bigger picture and adopt a joined up approach including considering on-site energy generation. In a climate of volatile and rising energy prices, decentralised energy can help businesses save money, reduce carbon, and provide energy security."

David Metcalfe, CEO, Verdantix, said: "UK councils, corporate businesses, universities and hospitals are increasingly interested in the cost saving potential and carbon reduction benefits of on-site power generation.

"Chief executives and finance directors should assess the potential of these low-risk energy technologies to cut costs and improve the security of energy supply."

 Royal Free Hospital

One example is the Royal Free Hospital in Hampstead, London (above), which procures its energy services from MITIE, a provider of facilities, property and energy management for a wide range of public and private sector businesses.