Setting up an Energy Supply Company - Douglas Jackson (Laurence Gould Partnership)
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Transcript of Setting up an Energy Supply Company - Douglas Jackson (Laurence Gould Partnership)
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Setting up an Energy
Supply Company (ESCo)
Douglas Jackson
Consultant
Laurence Gould Partnership Ltd.
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Introduction
1. Background
2. What is an ESCo;
3. How does an ESCo work?
4. Key points for setting up an ESCo;
5. Case Study 1: Cantium Energy;
6. Case Study 2: Cornwall Wind Project;
7. Grants & Support;
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Background
� LGP is involved with a range of renewable energy projects – biodiesel, bioethanol, AD, wind, CHP and hydro;
� Advice to County Council in South East on the establishment of a renewable fuel supply company;
� Advice to farms and farmer co-ops on the establishment and management of ESCo and renewable energy projects;
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Drivers for Interest…
1. Need to secure renewable fuels for the future;
2. Governmental support (grants and subsidies);
3. Farmers have the resources available;
4. Opportunity for farming to access new markets –
another form of diversification;
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What is an ESCo?
� Energy Supply Company (ESCo);
� Typically company to supply, operate or maintain energy
systems;
� Model for delivery of:
• Renewable energy generation and sale;
• Energy savings/efficiency improvements;
• Energy marketing;
� Legal status of ESCo – decided by management;
� Can be individual projects or wider objectives;
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How does an ESCo Work?
� Business sells energy or expertise;
� Typically company generates energy and sells to an end user;
� Energy is generated on site i.e. wind farm exporting energy to national grid; or
� Off site i.e. CHP engines at point of end use;
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Key Points - Setting up ESCo
1. Identify the opportunity and market;
2. Identify partners/investors;
3. Establish the business structure and model;
4. Identify business objectives and develop the
business plan;
5. Detailed market research and identify initial
customers;
6. Secure finance for the business;
7. Commence trading;
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Case Study: Cantium Energy
� SEEDA funded research project investigated renewable energy (biodiesel for road transport) from the whole oilseed rape crop;
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Case Study: Cantium Energy
� Discovered that biodiesel for road use very difficult with OSR – meeting EN14214;
� Energy generation from CHP does notrequire fuel to meet EN14214;
� Small scale CHP (25-250kW) is not catered for in current markets;
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Case Study: Cantium Energy
� Further research indicated that:
• Businesses and organisations interested in CHP;
• Concerns over reliability and procurement;
• Investment often a limiting factor;
� ESCo was then established to deliver small scale, reliable and environmentally friendly CHP to local businesses with engines installed at point of use;
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Case Study: Cantium Energy
� Cantium installs 25-250kW CHP engines at
the point of use;
� Cantium maintains the engines and supplies
the fuel;
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Case Study: Cantium Energy
� Electricity and heat is sold to the end-user;
� Energy price is related to fuel prices;
� Feedstock is procured on energy price
related contracts;
� ROCs are sold by Cantium at auction;
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Case Study: Cantium Energy
� Company is Ltd.;
� All partners are shareholders (directors hold
additional shares) – 40% share capital
reserve;
� Capital investment is ~£40,000 per
installation;
� Financed by Finance South-East loan,
Carbon Trust Loan Scheme and private
finance;
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Case Study:
Cornwall Wind Project
� Group of Cornish farmers establishing
a wind farm;
� Electricity to be sold to the grid;
� Minimal impact in terms of loss of land;
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Case Study:
Cornwall Wind Project
� Set up as a cooperative;
� Each provided capital for investment;
� Receive ‘rent’ for land and share of
profits;
� Sales from electric & ROCs;
� Overheads include rent and
maintenance;
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Grants & Support
Capital
� RDPE – SEEDA (www.seeda.co.uk);
� Bio-energy Grant Schemes (www.defra.gov.uk);
� Carbon Trust (www.carbontrust.co.uk);
� Low Carbon Buildings
(www.lowcarbonbuildings.org.uk)
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Grants & Support
Advice
•Good Energy (www.good-energy.co.uk)
•Green Energy UK (www.greenenergy.uk.com)
•Ecotricity (www.ecotricity.co.uk)
•Tradelink (www.tradelinksolutions.com)
• OFGEM (www.ofgem.gov.uk)
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For more information or to
discuss….
Douglas Jackson
Laurence Gould Partnership Ltd.
T: 01444 232 822
M: 07500 885 831
W: www.laurencegould.com