“Whatever we do has to make business sense first of all,” says Julian Hocking, managing director at Nationwide Print. “Or we can’t afford to do it.”
It’s not particularly ‘on message’ to talk of green initiatives in financial terms but this is the reality for printers. And looking at environmental matters in this way throws up an interesting question: assuming we’d all like to both generate our own power and be as energy efficient as possible, is their any commercial benefit in concentrating on one rather than the other?
The first thing to note is that it’s not a level playing field. Back in 2010, the government recognised that businesses would never adopt renewable energy if it meant making a loss, laying off staff and slowly destroying their business. So it decided to pay companies for generating their own energy through a feed-in tariff (FIT), and also pay them if excess electricity was fed back into the electricity grid.
But no one pays you for energy efficiency measures (except for carbon reduction initiatives), your payback is just lower energy bills and the reassurance that you’re doing the right thing.
The second thing to note is that when we’re talking about renewables, we’re really talking about solar. Yes, some printers have made wind or hydro power work, but for the vast majority solar is the only option.
The case for solar
CFH Docmail installed 250kW of solar panels in autumn last year. A further 150kW is due for installation this summer. It’s fair to say managing director Dave Broadway is pretty convinced the business case for solar is strong. And he has a lot of research to prove it.
He says: “We carried out a two-year knowledge transfer project (KTP) with the University of West of England (UWE) looking at energy generation and saving. We reviewed all available options for energy generation. We even wrote and published a white paper containing our findings for the benefit of other printers. After full research we settled on photovoltaic solar.”
Since installation, he says things are running as expected and any worries about reliability of the power were thankfully unwarranted.
“As soon as the longer days arrived – from April onwards – we have seen strong payback; savings now significantly exceed monthly costs,” he explains. “Worries about powering machines are also totally unnecessary; our system has behaved seamlessly.”
Dale Deacon, commercial director at Watermill Press, is also convinced. His company has just finished installing 750 solar panels on its factory roof and ROI payback period was calculated at four and a half years based on the system reducing electricity purchases from the grid by 75%.
“We’re actually already generating about 90% of our energy consumption so the payback period will be even shorter than predicted,” he says.
He adds that the feed-in tariffs are the thing that seals the deal. “When we project our purchased electricity savings, coupled with the total projected payments from the FIT contract over 20 years, we stand to make about £400,000 after we’ve recovered the initial £90,000 outlay. It’s an absolute no-brainer in commercial terms, before you even consider the environmental and reputational benefits.”
Hocking is something of a veteran in this field compared with Deacon and Broadway. Nationwide installed its first solar panels four years ago and they have lived up to business expectations.
“We’ll finish paying for them in a year’s time. And over that time we have spent less on energy, so it’s a win win,” says Hocking.
He does have some words of warning, however, that suggest all may not be rosy for printers yet to embark on this route.
“It’s much less compelling a business case than it was,” he says. “The government has slashed the feed-in tariff rate; it was much higher four years ago. Granted, the panels were more expensive than they are now, but the case is much weaker than it was – fortunately rates at the point of contract are honoured, so we haven’t suffered the drop.”
He says that if the government dropped them once, they may well do so again. He adds that you should be cautious about factoring new custom, won on the back of your green initiatives, into your business case for solar.
“We use it for marketing and it is a nice add-on but it is not the ultimate decider – people want high quality print at the right price; they won’t simply come to you because you have solar,” he says. “Where it may come into play is when you are up against a like-for-like service; in that instance people opt for the greener firm.”
That said, on balance he believes the case for solar is strong – for now. “I’m delighted I did it,” he says.
The case for energy efficiency & reduction
“Feed-in-tariffs are a viable consideration for businesses in all sectors, providing they have appropriate land or buildings to host the renewable technologies. But the financial returns from renewables are almost certainly going to be lower than the returns that businesses can get from investment in good-quality energy efficiency projects.”
So says Myles McCarthy, director of implementation at the Carbon Trust. That’s quite an endorsement from a man that should know his stuff. And he hasn’t finished yet: “In fact, a lot of opportunities for energy saving require little or no investment – just a more sensible use of existing energy consuming equipment, which for the printing industry will include both printing equipment and building services, such as lighting and heating.”
Support for this positive view of energy efficiency measures also comes from the three printers above.
“We have reduced energy usage by about 20% despite increasing volumes by 25%. Savings through energy reduction probably amount to £100,000 per year,” says Broadway.
Hocking adds that while solar is great for those that can afford it, energy efficiency will be best for those that can’t.
“If you have cash in the bank, then solar would definitely be something worth considering, but not many printers have that luxury,” he explains. “Whichever your situation, though, you should start with energy efficiency measures before going to renewable energy. You have to get the fundamentals right – do one thing properly one step at a time.
“We put a new gable end on the factory to reduce the amount of heat we lost and we put a new factory warehousing lighting system in, which has daylight sensors.”
He does say, however, that you have to consider the fact that energy efficiency is not about simply turning the lights off – a lot of it will require some investment and you have to prove a business case just as you would with solar.
Deacon also urges a degree of caution.
“The largest demand for electricity in our factory is from our 10 Omega label converting lines and fork lift truck recharging. It is not really possible to make equipment like this more energy efficient once it is purchased and installed,” he says. “We have looked at the areas where consumption is variable and more controllable, for example office lighting, and made what improvements we could there, but that has only had a marginal impact on our overall electricity usage.”
That said, he does think gains are possible if you find the right area to make more efficient.
“We are focusing very heavily on trying to reduce our gas consumption, which is predominantly used for space heating. This is an area where energy efficiency measures can have a big impact and we have had good success so far by improving the insulation of our units, installing rapid roll doors and replacing old space heaters with modern efficient models.”
Better together?
It won’t have escaped your notice that those talking up the business case for solar are the same as those advocating the business case for energy efficiency. That’s not a mistake, rather the reality is that the most compelling business case is one where the two go hand in hand.
“They are absolutely better together,” says Broadway. “When we started our peak power usage was 560kW. It’s now around 450kW following our energy saving work, which means our 400kW of solar roof will power the whole factory for a lot of the time when it is sunny. Only needing 400kW reduces the investment necessary, and you have the savings from the energy reduction itself as an added bonus. Even our current 250kW can power the whole factory some of the time, which could not have happened before we started reducing our energy usage.”
Obviously taking this example and stating you have to both install solar panels and reduce energy usage to make the business side of going green work would be oversimplifying things. Neither solar nor energy efficiency is without a downside and there is another factor at work here too, alluded to by Deacon: it depends what type of printer you are.
Print is such a diverse sector (with firms ranging from one-man operations to international conglomerates with thousands of employees; digital printers to litho printers to web offset printers; all working in very different locations) that it is impossible to say that a mix of ‘these’ particular energy efficiency measures and ‘this’ type of renewable energy will make most sense financially for the business. The three printers above have slightly different solutions even though they chose similar paths. What we can say though is that some form of a mix of the two is optimum if you want a compelling financial proposition, and that extensive research to work out what that mix might be for you is essential. In this way, you will have a business case to match the environmental one.
Tariff terms
The feed-in tariffs are essentially a financial incentive to get homes and businesses generating their own electricity. Introduced in 2010, the government will pay those generating their own electricity a set amount (tariff) for each kW produced. They will also pay you a fee for any excess electricity you sell back to the grid.
The amount paid varies depending on the renewable energy source used – you will get a different sum if you have wind rather than solar, for example. The payments are also subject to change – the government cut the tariffs substantially in 2012 because of the high take-up. The good news is that you are guaranteed the same payment as stated when you sign the contract for the duration of that contract. Prior to 2012, this contract was 25 years; it’s now 20 years. So if you signed up tomorrow with a 10-50kW solar PV installation and your premises was EPC band D and above, you would be paid 11.71p/kWh produced for 20 years. The export tariff for solar PV is currently 4.77p/kWh. Tariffs are now reviewed every three month
