Why renewables shouldn't cost the earth

Miles Thomas, Chief Commercial Officer at AMPYR Distributed Energy, discusses the monumental rise of renewable energy generation, growing pressures surrounding commercial decarbonisation strategies and common misconceptions about the high perceived cost of installing behind-the-meter (BTM) renewable energy solutions.

The UK’s enthusiasm for renewable energy generation continues to grow at a remarkable pace. According to The National Grid, total solar capacity alone surpassed 16.9GW in June 2024, increasing 8.5% year-on-year. With more than 1.4 million installations now operational and an estimated 63MW of commercial capacity being added every month, projections from the Department for Energy Security and Net Zero suggest a fivefold increase, between now and 2030, to roughly 50GW installed and operational nationwide.

With an estimated 2.5 billion square meters of south-facing commercial roof space still available, which could support more than 400GW of solar power in total (far in excess of the 90GW estimated by the Climate Change Committee to reach net zero), there is ample opportunity to achieve – or even exceed – these projections. This, combined with mounting pressure to decarbonise commercial operations amid strengthening sustainability targets and ambitions to increase energy resilience UK-wide shows a clear pathway for commercial renewable energy generation in the UK.

However, despite the seemingly bright outlook, the high perceived cost of behind-the-meter (BTM) renewables remains a major barrier to many – especially given the countless financial pressures experienced by businesses over the past few years. Volatile energy prices, commercial rent hikes, soaring interest rates, uncontrollable insurance premiums, a widening skills gap triggering wage inflation and the long-term commercial impact of COVID-19, to name but a few. This, combined with concerns around solar supply chains, has dampened uptake.

For some, keeping the lights on is pressure enough, with sustainability and decarbonisation having to take somewhat of a temporary backseat. The question of committing to investment in renewables has been forcedly pushed down the priority list with the idea of on-site renewable energy generation dismissed as an expensive capital cost.

But do BTM commercial generation solutions really have to cost the earth? Can businesses have the best of both worlds with direct access to greener, cleaner, low carbon renewable energy in the long-term without the expensive initial equipment outlay? If so, we could realise the true potential of a truly decentralised energy system, while maintaining competitiveness, mitigating supply risks and creating long-term certainty in a disrupted market.

It’s safe to say that UK businesses are under greater pressure to decarbonise than ever before. As a country, we have committed to reaching net zero by 2050, which contributes towards wider global targets outlined within The Paris Agreement to limit the increase in global average temperature to 1.5°C above pre-industrial levels.

Elsewhere, we’re bound through robust climate targets and our Nationally Determined Contribution (NDC) to reduce emissions by 68% before 2030, while the Environment Act dictates further targets for air quality – plus, of course, the requirement for improved monitoring and reporting. Add into this growing sustainability pressure from a plethora of stakeholders, primarily regarding ESG responsibilities and the commercial imperative to minimise Scope 1, 2 and 3 carbon emissions, and the conversation moves from embracing best practice to ‘do it or be left behind’.

Indeed, according to the Climate Change Committee, businesses in the UK must fundamentally change their operations over the next five years to achieve this goal – their business models, their planning, and their relationships with both investors and consumers. It’s therefore no longer a case of ‘if’, but instead ‘when’… yet finance still remains a perceived barrier.

While BTM solutions have historically been seen as a major investment, it’s important to remember that distributed energy also offers a whole host of business-critical advantages. It not only helps to reduce energy costs (in some cases by up to 50%) and lower carbon emissions, but also supports business resilience by reducing reliance on centralised energy supply.

Most importantly, thanks to the availability of Power Purchase Agreements (PPAs), an agreement that sees renewable energy generation technology installed by a provider and sold to a customer at a cost-effective fixed price, distributed energy can actually be perfectly affordable and easy to implement. What’s more, it delivers these benefits almost immediately with no upfront costs or risk to the consumer, which can be a critical factor for cash-constrained businesses.

At AMPYR Distributed Energy, we are engaged with a wide range of businesses, from sports stadia and conference centres, to distribution hubs and factories, all keen to harness the benefits of onsite generation. The primary concerns of course are how much will it cost and what the risks might be. When funded by the PPA model, the fact that there are simply no upfront costs or ongoing maintenance charges, makes adoption of renewable energy technologies much more accessible for many.

This means that businesses can deploy their available capital on commercial growth strategies, rather than funding non-core efficiency activities. This proves a huge benefit when there are numerous value-enhancing investment opportunities on the table, with businesses able to save money, cut carbon and align with legislation – all with zero upfront expenditure.

One sector that has already identified an industry-wide opportunity for solar is the warehouse sector, which is experiencing rapid growth. The UK Warehousing Association’s (UKWA) own research identified that UK warehousing has the roof space for up to 15GW of new solar, doubling the UK’s solar PV capacity.

But it’s not just warehousing. Numerous trade associations (covering industries from retail and FMCG, to transport, logistics, manufacturing and many more) have each voiced their support for solar deployment and its value in decarbonising operations. Research suggests that using just 5% of the UK’s available rooftop capacity alone could result in collective business savings of up to £12.6 billion per annum – making the adoption of renewables a major cost saving exercise for numerous sectors, not just a simple sustainability play.

With rigid national decarbonisation targets looming, solar is set to play a pivotal role in offsetting reliance on fossil fuel consumption, as well as accelerating progress towards the cleaner, greener, more decentralised energy landscape of tomorrow. Importantly, the fact that significant private sector funding is available reduces pressure on the government to fund the transition, upgrade the grid and single-handedly subsidise the rapid adoption of renewables.

With budgets clearly a hot topic of conversation, the ability to alleviate pressure will not only protect the public purse, but also deliver the rapid growth of distributed energy that the government desperately needs. This should be seen as a major opportunity on the road to net zero.

Many businesses may think that going beyond buying renewable energy to explore the advantages of onsite generation is too daunting, especially with challenges and barriers around grid connections, capacity, returns, pricing and liabilities.

However, when it comes to distributed energy, the models for deployment have been tried and tested worldwide. At ADE, we plan to deploy more than £300m capital (including debt) on projects across the UK and Europe. Central to our ethos is to make it simple for organisations to realise the full potential of onsite renewables to reduce both energy costs and supply security risk.

What this means in practice is that businesses can access both the expertise and the funding required to secure a system that is right for them, with no upfront costs. We understand that businesses don’t want renewable energy installations to be a liability, so we take the pressure completely off.

Ultimately, onsite generation, when done well, can save organisations money, increase energy supply resilience, boost business competitiveness and ensure compliance… all while moving the needle towards a better world for us all.

To find out how accessible distributed energy systems are in the UK, get in touch with us today.