Many F&B businesses are taking advantage of energy flexibility programmes to reduce energy spending and emissions while helping to stabilise the grid and generate revenue. Barry Hurst, head of sales for the UK and Ireland at smart energy solutions company Enel X, outlines the how and why.
Today’s global food system is valued at around $8 trillion – or 10% of the global economy. As a result of the energy-intensive manufacturing and storage processes behind these revenues, it also has the potential to make a major contribution to energy stability and protecting the planet. What’s more, by adopting sustainable energy strategies, individual businesses can earn additional revenue.
The sector faces a major challenge to provide sufficient food and drink for a worldwide population that is likely to be in the region of 10 billion-plus by the century’s end, and to do it sustainably. Achieving sustainable growth of that scale will call for fundamental changes to address degraded land, loss of biodiversity, changes in consumer preferences and, of course, greenhouse gas (GHG) emissions.
Already responsible for 30% of global energy consumption and over a third of global GHG emissions today, F&B production is likely to see these figures increase dramatically by 2030 as populations grow and climate change impacts supply chains.
Energy consumption is inescapably linked to food production, where the supply chain is dependent on access to reliable, increasingly low-carbon sources of energy. With volatility in world energy markets, pressure to decarbonise and security of supply in doubt, reducing energy use and the demand for more sustainable sources has become more urgent than ever.
Large energy users are becoming more savvy about creating and executing holistic energy strategies to reduce their energy use and emissions. They see the need to engage with the grid and seek low-carbon, sustainable energy sources.
In the future, we face the challenge to grow food sustainably so we can provide for an increased population
Energy use and emissions reporting
Reporting emissions is a necessity for virtually all large energy users, whether for compliance reasons or as part of a broader environmental social and governance (ESG) initiative. That said, of the top 100 global F&B companies, only half have measured, disclosed and set goals for their Scope 3 emissions. Scope 3, on average, accounts for 88% of a company’s emissions across the entire value chain.
Accurately measuring energy usage and reporting emissions isn’t an easy task. It becomes even more difficult as supply chain ecosystems become more complex, especially where businesses operate globally. Utility bill management (UBM) systems provide a detailed picture of utility expenses, allowing bill checking, comparisons across sites based on the number of staff, operating hours and facility size, as well as identifying opportunities to reduce energy consumption and reduce emissions.
Using UBM data as a baseline allows for greater efficiency measures and activities and provides the data to facilitate supply chain disclosures for upstream and downstream partners.
In our lifetime, the F&B sector has sustained population growth while improving affordability
Flexing those assets to engage with the grid
Getting to the heart of the matter, how can F&B businesses engage with the grid, reduce emissions and generate additional revenue?
The answer lies in demand side response, or DSR (also referred to as demand response or DR). This is a mechanism that is typically used to deliver flexibility to grid operators at times of grid stress. It’s all about balance. When there is an imbalance between supply and demand, the grid is said to be under stress.
An increasing proportion of renewable energy in the electricity mix presents a stability challenge for the grid. By its nature, renewable generation is intermittent. It fluctuates with the weather, adding to the pressure on grid operators to keep supply and demand in balance. DSR programmes help to prevent local and regional power outages and play an important role in enabling the integration of higher levels of renewable generation into the system without increasing costs to consumers.
Alleviating stress on the grid through DSR calls for participating businesses to reduce their energy consumption in a controlled manner by following a pre-defined plan built around their operating requirements. Measures typically include changing operational heating or cooling temperatures, switching off or powering down certain machinery, or shifting to backup systems from on-site generation or battery assets to support grid stability. Such deployments typically last for only a handful of hours each year.
What kind of return could an F&B business expect from participating in DSR? For example, participants enrolled in the 2023/2024 Capacity Market season will earn up to £60,000 per MW. In doing so, they also reduce carbon emissions and improve business resilience through regular testing of backup systems. It’s a financial, operational and environmental win for F&B enterprises.
Food production is responsible for 30% of global energy consumption and over a third of global GHG emissions today
Virtual power plant opportunities for F&B
A virtual power plant (VPP) is a platform that consolidates and coordinates a range of distributed energy resources (DER). There is a host of equipment that businesses have invested in across the F&B value chain that can be used in a VPP. In fact, any DER with flexible attributes can be harnessed to deliver value to the grid. This includes equipment such as chillers and HVAC systems, storage assets and backup generators. For a food processor with cold storage, for example, usable assets could include chillers and compressors, in agriculture, water pumps can be used, while grocery stores can use HVAC systems and refrigeration that have thermal mass and are ideal for flexing.
A VPP aggregates a host of smaller assets to provide a larger asset with electricity equivalent to that which could be provided by a large power generator – but without the need to construct the physical asset.
Energy flexibility planning
Increasingly, businesses inform their investment in new assets not merely on how the asset will fulfil its operational role, but also based on how it might be used as part of a VPP. In other words, flexibility has become part of the business case for the new equipment.
For example, take a flour milling company that is looking to develop a new site. They may be familiar with the concepts of flexibility and are prepared to change the operating model of the site to deliver real cost advantage. By considering grid flexibility as one of the key drivers for the design of the site, investment can be justified for equipment with higher levels of control and automation to enable the mill to shift its energy demand. The mill can then participate effectively in the flexibility market as part of a VPP, reducing energy costs and generating additional revenue without compromising production schedules.
For a business operating a cold storage facility, they could choose to specify higher capacity chillers and compressors, improved temperature control, regulation and insulation. Investing in additional features improves the tolerance for more strategic energy consumption and increases the dispatchable capacity. These measures give the business more versatility to generate additional revenue while improving the stability of the grid.
Low-carbon energy in the mix
Using flexibility measures to improve efficiency and optimise energy demand are valuable but can only go so far. A natural next step is to look at sourcing green electricity for power.
Improving procurement of renewable contracts can dramatically reduce emissions but it is a complex process. A typical requirement is to make a long-term power purchase agreement (PPA) with an energy company that can guarantee to deliver a sufficient supply of clean electricity to meet an organisation’s changing needs. PPAs guarantee supply, signify a long-term commitment to the zero-carbon agenda and help to reliably predict future energy costs.
You are not alone – there’s help available
As large energy consumers and one of the fastest-growing users of power, the F&B sector has tremendous potential to make a significant impact on grid innovation and sustainability. The evolution of grid flexibility services and the rise of renewable energy means there has never been a better time for F&B businesses to support the low-carbon agenda.
For most F&B businesses, however, sustainable energy management is not a core business competence. Implementing a comprehensive energy strategy takes knowledge and expertise, and a deep, current understanding of energy markets, together with the ability to navigate regulatory and compliance issues. Engaging third-party experts to help plan and implement a holistic energy strategy will help F&B enterprises to achieve the best outcomes for their business, the industry and the environment
© FoodBev Media Ltd 2024
