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Market Report: Green Zone Renewable opportunities The government's stated commitment to new energy sources suggests there will be significant business for hirers who can supply specialist installers with appropriate equipment. Editor at Large Nigel Strickland gives his assessment. During the first week of July, the price of oil peaked at $145/barrel, up from $70/barrel a mere 12 months earlier, when petrol at the pumps cost under 90p/litre. Regardless of the daily price fluctuations, whether due to political manoeuvrings, reduced refining capacity or, as some analysts believe, the possibility that oil production has simply peaked, the inescapable truth is that the cost of fossil fuel is no temporary phenomenon. High prices are here to stay. Combine rising fuel costs with the so-called 'credit crunch' and we clearly face challenging economic conditions that will encourage us to run our businesses as effectively as possible, perhaps looking at fuel and energy use with fresh vigour. And at the same time as the price rises cause a reassessment of the way we live and work, so the worldwide demand for a reduction in carbon emissions adds a further dimension. Some commentators see the high fuel prices as one of the most effective incentives for reducing carbon emissions, and anecdotal evidence suggests that many consumers are switching to public transport and smaller vehicles to reduce both their motoring costs and their carbon footprints. Slashing greenhouse gas emissions The government has proposed that a more radical approach to gas emissions is required. In its long-awaited renewable energy strategy document, it has declared that Britain needs to invest £100 billion to ramp up its clean energy supply if it is to meet its EU-imposed target of producing 15% of the country's energy from renewable sources by 2020. If the UK carries out a fundamental overhaul of energy production and consumption, the government claims that, by the same year, the UK could slash its greenhouse gas emissions by approximately 20% and reduce its dependency on oil by 7%. Admittedly, this is a consultation document, but the government is committed to reaching the 15% target and ministers accept most of the measures will have to be implemented to achieve its goals. The government says that, not only would implementation transform our energy policy, it will also have "significant impacts on all our lives," creating important new markets worth billions of pounds and 160,000 jobs. The renewables strategy recognises that the target will only be achieved if there is a radical approach to generating energy, involving 'maximum build rates and a very rapid response from the supply chain'. So, if this energy 'gold rush' does take place, what new markets will be created, and will there be potential new customers for the hire industry? The key element dominating the predicted green industrial revolution is wind power, and the report suggests 3,500 more turbines are required over the next 12 years. This is a staggering six-fold increase, with 45% of the wind generated power ultimately coming from sites in Scotland, 18% in Wales, 10% in Northern Ireland and the balance in England. Applications for 226 turbines are already in the planning system and the British Wind Energy Association website (www.bwea.com) shows where the developments are taking place - as well as who the contractors are. With many of the new installations situated in remote and environmentally sensitive locations, supplying hired equipment will involve considerable logistical problems. Biggest of its kind in the world Offshore wind projects will greatly outnumber onshore wind farms. The London Array, in the middle of the Thames estuary, is the biggest initiative of its kind in the world. When complete, its 341 turbines will have a capacity of over one gigawatt - enough electricity to power a quarter of the capital's homes. Such an offshore development might, initially, suggest few onshore opportunities for our industry, but a 20-acre site for the transmission infrastructure is planned at Faversham in Kent, and will be a major construction project. The BWEA site also lists its members, including those engaged in wind farm construction and, as befits a pioneering industry, many are new, specialist companies. Each represents a significant potential source of hire business. The major wind farm construction sites will, probably, benefit the larger hire companies but it would be a mistake to view the strategy document as being without interest to the independent hire sector. In addition to the massive expansion of wind power and biomass energy projects, the document sets out the third element of the government's plan, which could see an explosion in the growth of micro-generation from solar energy. Currently, the UK lags way behind the rest of Europe, with only 90,000 solar water-heating systems installed. However, the government's proposals, based on a combination of loans, grants and incentives such as 'feed-in tariffs' (the primary driver behind German's strong uptake) forecast that within 10 years, 25% of households could be generating solar powered hot water from the predicted installation of 7 million new solar heating systems. As many traditional hire markets contract or become 'squeezed', expansion of solar power could create an entirely new and diverse hire market. Indeed, these are pioneering days for renewable energy producers, and if the hire industry is to take full advantage and become a viable 'supplier-partner', then it needs to gain a clear understanding of the issues faced by micro-generation installers. Maximising the opportunities Terry Skee, Business Development Executive for Cleaner Air Solutions Ltd, sees a clear need for hirers to understand the renewable energy industry in order to maximise the opportunities. His company installs such systems for customers in the domestic and commercial markets. "The more companies that can see the potential, then perhaps we can collectively put more pressure through various trade associations on our government to get its act together, bringing us more into parity with our European counterparts," he says. "This would stimulate R&D, growth and employment, as well as boosting our local and national economies. And this is in addition to tackling climate change and energy resource problems - a real win-win situation. "The hire industry needs to take a serious look at what equipment is actually being used and needed, and come up with solutions. Safety is paramount in our industry, as tasks involving working at height, lifting heavy glass fronted units, and working in windy exposed areas on slippery roofs, with sharp edges and high voltage electricity sources often nearby." Such comments suggest hire companies could be pushing at an open door in seeking business from the renewable energy industry, but equally, hirers must take care to undertake proper research to ensure they can supply the tools and equipment required. Within the government's strategy document, alternative sources of renewable energy for micro-generation are also predicted for major expansion, with a possible 90% increase each year in the installation of ground and air source heat pumps. The former use buried loops of pipe in either horizontal boreholes or vertical trenches to transfer heat from the soil back into a building. Any installer of these systems will be a potential hirer of trenching machines, mini and midi excavators, and specialist boring machines. The report claims that nearly 10 million micro-generation systems could be installed by 2020 if the government offers the right incentives, with nearly one in four buildings becoming, in effect, mini power stations. Thousands of new businesses could be created to meet the predicted demand for such new energy production systems, and with it many new opportunities for the hire industry. Indeed, with energy prices rising inexorably, how long will it be before a hire company is running its own premises on renewable energy, and staking its claim in the green revolution? • Executive Hire News › Archives › September 2008 › Market Report › Renewable opportunities
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