Oil and gas reserves are declining globally and the UK is becoming more dependent on foreign imports causing growing instability around the price of energy.
As one of the most energy intensive sectors, using 22 per cent of the UK’s industrial consumption, the chemical industry’s requirement costs around £4bn per year. Energy charges represent up to 30 per cent of total costs for the most intensive users.
And worse is to come. Most of our aging coal and nuclear generators are set to be decommissioned in 2 years’ time (2015) which will not give enough time for direct replacement capacity. The gap will inevitably be filled by gas-fired stations, increasing our reliance on gas imports.
With the days of gas self-sufficiency well behind us, we have left ourselves open to the mercy of the markets. Nowadays, the price we pay for electricity is influenced by global demand and supply issues. Natural gas is 40 per cent of primary energy requirement and we are the number one gas consumer in Europe consuming 89 billion cubic metres a year; this could double to 80 per cent by 2020.
The strain is pushing organisations to breaking point as electricity prices continue their relentless trudge upwards. Yet some companies are rising to the challenge and achieving competitive advantage in the wake of such pressures.
Eastman Newport in South Wales, formerly Solutia Inc, decided to bring things back under their own control by generating their own electricity. It was back in 2005, that they made the then audacious decision to host two industrial size wind turbines at their Newport facility and use the electricity directly. The decision has proven well judged as the turbines recently celebrated 3 years in operation, saving the organisation substantially on their energy bills – around £250K per year.
Keith Agnew Energy Manager at Eastman was behind the project from the onset: “We were extremely concerned about the way electricity prices were heading when we embarked upon this project. Today prices are even higher so we picked a good time to take a leap into renewables.
At the time of commissioning, our turbines provided a third of our electricity requirement. The benefits are numerous - they reduce the carbon footprint of our activities, deliver green benefits such as ROCs (Renewable Obligation Certificates) and LECs (Levy Exemption Certificates), provide us with an ability to count benefits against regulatory objectives, generate great corporate PR and contribute to our long-term sustainability.”
The Eastman site is tucked away in an industrial area off the Severn Estuary and the turbines look well placed amidst their factory setting. Keith explains: “We have had no complaints at all. A few people were nervous when we started off, but they have grown to appreciate the turbines. We regularly see people stopping to take photographs.”
The Newport site is predominantly focused upon the production of performance chemicals. Products are used in the manufacture of many items destined for everyday use, for example in washing powders, floor coverings, safety windows and windscreens. Production requires a substantial electrical load which is why the turbines benefit the business so much.
Keith continues: “The turbines are providing savings that go straight onto our bottom line, and as a result, they directly contribute to our competitiveness in the marketplace. We would have to generate many times the amount we save in revenue to achieve that in profit, so it is a very positive benefit for us.”
Keith Agnew came across the idea of hosting a wind turbine when assessing the energy strategy for the business. The company had been looking at various technologies to reduce the impact of energy prices upon business and large scale wind stood out as having one of the greatest impacts.
Developers Wind Direct took on the project. Their business model offers ‘free’ turbines in much the same way as the solar panel market works.
Clients pay no capital costs and buy the electricity produced at a much reduced rate because there are no ‘use of system’ charges – the fee to transport electricity through the national grid and infrastructure. Clients typically enjoy savings of around 30 per cent against their current supplier and have the certainty of a fixed rate tariff for up to 25 years.
This set up works very well for clients that want to be green and save money but do not have the appetite for gambling, or the £3 million required to develop and install each turbine.
The biggest challenge is getting the projects through the planning process as Eva Gromadzki, General Manager at Wind Direct, explains: “We have had ten years’ experience learning how to identify sites that will make it all the way, and negotiating them through the planning gauntlet. Our planning success rate is way above the average – nine out of ten of our sites are consented and our clients typically receive savings of £40K - £80K per turbine. The biggest challenge is having a site that passes our very onerous constraints test and this is where our clients need a bit of space and a bit of luck!”
In a strange turn of events, Eastman now hosts two Wind Direct projects and four turbines. In 2012 the organisation acquired Solutia Inc at Newport, but prior to that Eastman was already making great savings from two turbines at its Workington site in Cumbria. Eastman was one of Wind Direct’s very first projects.
The Newport site is COMAH tier 1 and has rigorous health and safety procedures due to the volume of hazardous materials required to produce chemicals on such a large scale. Keith Agnew explains how the wind turbines installation and operation standards are suited to the high risk chemical manufacturing environment.
“We have extremely stringent practices to keep our staff safe in an environment where high temperatures and pressures are essential to the processes. Putting a turbine up in such a location is very different to putting one up in a farmer’s field and we were extremely impressed by the way Wind Direct dealt with the issues, and worked with us on all aspects of health and safety. We are delighted by the performance of both our wind energy schemes and would thoroughly recommend them to anyone that can host them.”
For more information, visit www.eastman.com or www.wind-direct.co.uk