How multi-site businesses can rethink their energy strategy through onsite generation

For many businesses, energy procurement has traditionally been a straightforward exercise: negotiate the best market price, agree a contract and renew this yearly. However, this procurement model was created for an energy landscape that has essentially ceased to exist. The result is that businesses that continue to rely exclusively on the grid leave themselves at a structural disadvantage compared to competitors investing in alternative strategies with greater control.

 

Geopolitical uncertainty, regulatory change and grid constraints are creating a market not simply at risk of occasional disruption, but one that is defined by volatility. For businesses in energy-intensive sectors, the fundamental question is how they can reduce their exposure to this volatility altogether.

 

Onsite generation provides an answer, offering an energy strategy that promises stability, control and resilience against the vulnerabilities of an unpredictable global market.

 

 

Turning estates into energy assets

Businesses with large property portfolios, such as retail and leisure, often contain the right combination of ingredients to make distributed energy commercially attractive. Supermarket chains, hotel groups and leisure operators typically have sites with extensive rooftops and car parks, as well as predictable electricity demand, making them well-suited for the deployment of onsite generation.

 

Treating these estates as collective assets from an energy procurement perspective can help businesses to develop a portfolio-wide strategy that considers generation potential, energy demand, infrastructure and future requirements. The benefit of this thinking is that it allows businesses to identify the sites where investment will deliver the greatest value, while creating standardised models that can be replicated across other locations.

 

A coordinated strategy can also improve procurement efficiency, simplify delivery and create consistency across sites. Over time, the cumulative benefits of deploying onsite generation across an estate can be significantly greater than pursuing multiple projects in isolation.

 

 

From buying electricity to generating it

The value of onsite generation for businesses goes beyond reducing electricity bills. Indeed, the greatest value of onsite generation is arguably in the increased resilience, stability, and visibility that businesses able to reduce their exposure to the grid can enjoy.

 

For multi-site businesses, this predictability has particularly significant commercial benefits. The assurance of stable energy costs supports budgeting, protects operating margins and provides greater confidence around longer-term investment decisions.

 

Another outcome is to change how businesses view their physical estate. A warehouse roof, retail car park or manufacturing facility, for example, can become part of their energy infrastructure rather than being thought of solely as a property asset.

 

Onsite generation can also provide the foundations of a broader distributed energy strategy incorporating battery storage, EV charging and smart energy management. This provides an opportunity for businesses to manage how energy is generated, stored and consumed as an integrated system.

 

 

Capital costs are not a barrier

One of the perceived obstacles to onsite generation is the upfront investment required to develop the necessary infrastructure across a large estate. Alternative commercial options such as Power Purchase Agreements (PPAs), however, enable businesses to deploy onsite generation without needing to fund the infrastructure themselves. PPAs work by financing, building, owning and operating the onsite assets from which businesses can purchase the electricity generated under a long-term agreement.

 

This enables businesses to benefit from onsite energy generation while preserving capital for their core operations. The question therefore moves from whether a business can afford to build energy infrastructure itself to how it can access that infrastructure in a commercially effective way.

 

 

Scale brings opportunity and complexity

The case for a portfolio approach becomes particularly compelling when a business has dozens or hundreds of locations. However, scale also introduces complexity, as delivering one installation is very different from coordinating projects across geographically dispersed sites.

 

Large-scale deployment requires capital, robust project management, standardised processes, experienced engineering, procurement and construction partners, effective operations and maintenance and long-term asset management. This moves the focus beyond simply installing solar panels onsite. Businesses with such portfolios need partners capable of managing energy infrastructure throughout its operational life, potentially for 20-25 years or more.

 

 

Onsite generation as competitive advantage

While onsite generation is often discussed in terms of decarbonisation and reducing emissions, this understates the competitive advantage businesses gain through adopting this energy strategy.

 

Businesses with greater control over their energy costs are better positioned to manage margins, plan investment and respond to market uncertainty than those fully exposed to external electricity prices.

 

There is also a resilience argument. As electrification increases demand and the UK’s energy systems continue to evolve, businesses will face further pressure from grid capacity constraints and infrastructure requirements.

 

This is not to say that onsite generation eliminates grid dependency in its entirety, but it does provide greater control and reduced exposure to many of the risks associated with a total reliance on external supply, giving businesses an immediate and long-term advantage over competitors relying on traditional procurement.

 

Rethinking the role of procurement requires businesses to move beyond simply securing the best possible price for grid electricity year on year and towards adopting an energy strategy that reduces exposure, generates power, improves cost predictability and builds resilience across its estate.

 

For businesses with large physical portfolios, and particularly those in energy-intensive sectors, onsite generation provides an opportunity to turn estates into long-term energy assets. This strategy ultimately secures a competitive advantage over those that continue to approach energy as a procurement exercise to be revisited only when the next contract expires.

 

---

 

Miles Thomas is Chief Commercial Officer at AMPYR Distributed Energy

 

Main image courtesy of iStockPhoto.com and Adam Smigielski