Cutting through the green tape

Around 26% of the power Saint-Gobain used in the UK came from renewable sources last year - a figure that is set to rise through recent initiatives including the signing of power supply agreement with three anaerobic digestion facilities. 

The company uses about 33MW of base load in the UK, with just under 10% of that will be covered by the renewable power purchase agreements (PPAs). 

The company’s progress in this area, however, has been more in spite of than because of UK energy policies, as Linda Burgess, Saint-Gobain UK’s  energy purchasing manager described in a presentation at this year’s The Energy Event at the NEC, Birmingham.

For instance, the  energy purchasing manager cited the company’s efforts to establish an on-site renewable energy generation facility powered by used cooking oil at one Saint-Gobain facility in the UK.

“Four years later and still no on-site generator,” she reported.   

The project, explained Burgess, was blighted by many “unanswerable questions”, such as when is a waste oil not a waste oil? - the answer, apparently, depends on the type of certification on-site and, for example, whether or not it requires permits relating to the Waste Incineration Directive. 

To get the ‘waste’ reclassified as a raw material there are different but equally challenging hoops to jump through, continued the presenter, noting that this may have led to the project being seen as less ‘green’.

Saint-Gobain never did get a definitive answer as to whether used cooking oil was ‘green’ enough to obtain ROCs, and - faced with so many complexities - decided that a green tariff agreement would be easier and cheaper for that site.

Burgess then went on to explain the workings of PPAs (power purchase agreements), whereby Saint-Gobain contracts power from renewables generators - generally distant from any of its sites - instead of the supplier buying the power from the generators and then selling it to the consumer / company.

“First you have to source the project: find a generator that needs a route to market, agree terms with them. Then you have to arrange to sell the power to a licenced supplier at an agreed price.

“Then the supplier has to sell it back to you with any other power you need in your portfolio. and finally you have to pay the generator for their bit and the supplier for theirs.

“To do this properly, you also have to buy the LECs and ROCs and other embedded benefits. Then you have to pay a separate balancing fee to the licenced supplier.” 

According to Burgess, the PPAs have meant a large amount of time and effort in discussions with the generators, lawyers and the Saint-Gobain executive.

 However, she acknowleded, by providing a route to market at an agreed price, PPAs had helped Saint Gobain to add some ‘green assets’ to the grid. 

And, she noted, as the RO (renewables obligation) regime comes to an end and is replaced by feed in tariffs (FiTs), smaller independents may be relying on companies like Saint-Gobain for a route to market. 

Not surprisingly, though, Saint-Gobain is determined not to go down any more blind alleys, and so is focusing on the more mature renewable power technologies, such as wind, solar PV and biomass.

But again these projects are likely to faced with challenges due to the complexities and uncertainties being introduced by UK energy policy.

According to Burgess, an operations director from one of Saint-Gobain’s industrial companies very recently sent her a proposal to establish solar PV at three sites, and asked if the numbers stacked up.
The answer - based on DECC guidelines at that time - ‘was that the solar PV subsidies were just about to be reduced for three different levels/ three different sizes of installation.
‘After that, quarterly downward revisions of 3.5% to the FiT would apply, but only  if the uptake goes as predicted. If demand for installations exceeds a certain limit, which is unknown, the decrease would be more than 3.5% and could in fact be up to 28%. But if there is a limited uptake the decrease can be cancelled for up to two quarters.’
“How is that for a stable position on which to be able to make an investment decision?” asked Burgess. “We want to do move forward doing the right thing: being sustainable, achieving green targets and helping the economy to grow.
“But we need to do that with impunity, not falling foul of unclear legislation that even the best legal minds can’t fathom, and we need to do it economically.”
“Saint-Gobain’s mission is to be the reference for  sustainable habitat, manufacturing products to enable energy efficiency in homes and workplaces, but we will fail if we are taxed out of business or are forced to move our manufacturing bases overseas, with all the problems of carbon leakage that will follow.”