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Sustainable companies – spend efficiently and the production is green

Sustainable companies – spend efficiently and the production is green

Constantly fluctuating electricity prices combined with the growing requirements to reduce the environmental impact from companies are forcing entrepreneurs to look for ways to make their operations greener and sustainable. Although this area is associated with financial investments, it provides an opportunity to better optimise the consumption of resources, including energy, and it often leads to new sources of income. In today's culture of consumption, sustainability has become an important factor of competitiveness, that determines both the choices of buyers and the attractiveness of the company in the assessment of investors and financial institutions.

From the experience of the second largest electricity trader in Latvia Enefit, Baltic companies in the last few years have also been actively developing various energy efficiency solutions and working on reducing CO2 emissions. Enefit Chairman of the board Krists Mertens explains the most popular solutions for improving company energy management sustainability and the most important considerations when selecting them.

"There are three main ways in which a company can optimize its energy consumption, costs related to it, and also the impact on the environment. The first and relatively simple level is energy efficiency solutions that optimize the purchased energy and helps making sure that it is used as efficiently as possible and without unnecessary losses, as the greenest energy is the one, which does not exist! The next step is purchasing renewable or green energy, thus completely excluding CO2 emissions from your energy consumption. Whereas the third level is the production of energy for own use using renewable resources – for example, solar energy. In this case we can already talk about not only reducing harmful emissions, but also about reducing the amount of energy purchased daily, which directly allows to reduce expenses,” explains Krists Mertens.

Efficient energy consumption

For quite some time there have been grants, loans, technical solutions, and consultations available for the development of energy efficiency and sustainability. Also, alongside the development of the free market, the role of energy traders has long been expanded by offering the implementation of energy efficiency solutions and support towards a company's carbon neutrality.

The first step is certainly the identification of the situation in order to be able to identify as accurately as possible how to increase the usefulness of each kilowatt hour consumed or how not consume it at all. Therefore, an energy audit and the implementation of an energy monitoring system is carried out, which allows to precisely assess the current situation and potential improvements, that will provide the largest benefits.

In turn, the technical solutions of energy efficiency should be aligned with the specifics of operations for each company. Here the possibilities ar the broadest – from implementation of LED lighting and purchasing equipment that is more efficient to electrification of heating systems. The necessary investments will be determined by the scale of the work to be carried out – from experience, it can be from a few thousand to several million euros depending on the scale of the sustainability program. The good news is that most projects pay for themselves (for example, for LED luminaires, the return period is 3-5 years, for solar panels 8-10 years). Thus, the saved capital can be redirected to further stages of the implementation of the sustainability programme.

According to Krists Mertens, about 50% of companies invest their funds into the modernisation of the energy management, while the rest attract financing through commercial banks, funds and often electricity traders, using the opportunity to pay a payment that is most often less than the savings on the energy bill.

Purchasing Green Energy

This is in its way the simplest solution to reduce the amount of CO2 emissions generated by the company's activities – there is no need for technical intervention in the company's processes, the only thing you have to do is to agree with the trader on the purchase of renewable energy. This way the company acquires internationally approved certificates, that confirm the origin of the purchased energy and it allows to demonstrate a sustainable way of thinking in the company. Already at this moment the use of green energy may impact the competitiveness and credit rating of the company. For example, commercial banks assess a company's credit rating by considering its sustainability, including the amount of CO2 emissions today and in the future. Consumers and business partners increasingly prefer green minded companies, because they themselves demonstrate their transition to sustainable operation, and therefore it is important for them to demonstrate, that they cooperate only with green minded and sustainable suppliers. This puts some pressure on companies to adapt in a timely manner so as not to lose customers because of this aspect.

Historically, energy produced from environmentally friendly sources, such as wind or solar, has been slightly more expensive than that produced from fossil resources. However, along with the development of technology and free market, the production of green energy becomes more cost-efficient, and there are new solutions being implemented to make it cheaper.

This year a solution already widely used in Europe with long-term electricity purchase contracts for renewable energy has been implemented in the Baltics. This allows companies to purchase energy directly from a particular wind farm by agreeing on a fixed long-term price. The benefit is mutual – the wind energy producer can plan ahead its development with certainty, while the company acquires up to a three times lower energy price and avoids its fluctuations over a longer period of time, ensuring cost predictability in the long term.

"In the first quarter of this year, electricity exchange prices have increased by 26% against the last quarter of last year. The forecasts also suggest that prices on the market will continue rising in the following years. Compared to today's standard fixed-price contracts, the purchase of renewable electricity under a long-term contract ensures 20-30% lower prices. Therefore, it is often a motivating solution for transitioning to using renewable energy, clearly knowing the origin of the energy and gaining added value in the eyes of the customers and partners," explains Krists Martens.

Produce your own energy

Over the past year, several hundred companies across the Baltics have started producing energy for their own consumption using renewable resources. Mainly solar panels are used for this purpose. It is determined by the rapid development of technology which has significantly changed the energy industry – the efficiency of solar energy systems has grown significantly, while its costs and payback period are still shrinking.

The production of energy using solar power is a relatively new solution for the Baltic region, the attractiveness of which is determined by the fact that it is an opportunity not only to reduce the company's impact on the environment, but also to achieve an immediate reduction in the cost of electricity bills. At the same time it increases the value of the real estate and the company.

Although there is a myth about the lack of sun on a daily basis, the Baltic region is great for installing solar panels, that allow the investment to pay off in 8-10 years and turns the solar power plant into an additional source of income with low operating costs.

"60 000 euro investments that brings a profit of 160 000 euro over 25 years, – companies can realize such a long-term investment by installing a 100 kW solar energy panel solution. The maintenance costs are only about 1% of the value of the system over 25 years. Solar panels do not exclude the need for purchasing electricity, but allow to significantly reduce the amount of purchased energy. This ensures a long-term decline in energy costs and increases the company's compliance with increasingly strict operation requirements in the future, that should be demonstrated to financial institutions, customers, cooperation partners and shareholders,” says Krists Mertens.

Currently, the necessary regulation and market supply are arranged to the extent that the installation of solar panels is a relatively simple process. The design and construction of a medium-sized solar system takes about 3-6 months. During the first stage, a consumption analysis of the company is carried out, that is based on real data from the "Sadales tīkls", because the power of the system must be aligned with the consumption specifics of the company. Only by installing a system of adequate capacity will the investment be effectively aligned with the payback period. During the second stage, the design process takes place and the necessary permits are received from "Sadales tīkls" and the Ministry of Economics, however the third stage is the construction works and commissioning of the solar power plant.

European support for sustainability

The European Union is purposefully moving towards the goal of EU countries being able to completely absorb the carbon emissions from human activities by 2050. Therefore, a significant part of the support fund financing is directed towards the implementation of more energy efficient and greener energy solutions also in the business environment.

Currently it is known that the next EU support for Latvia will amount to approximately EUR 10 billion, a third of which is intended for sustainable solutions, including the production of energy from renewable resources. The support program is still under consideration in the European Comission, however the high interest from local companies may be already predicted. Thus, the willingness of local entrepreneurs to proactively acquire this support for financing their sustainable development plans over the next 5 years can determine their growth in both domestic and international markets.