The UK’s industrial sector faces an "energy trilemma": balancing cost-effectiveness, energy security, and sustainability. While some may perceive decarbonisation as an added expense, forward-thinking businesses are using it as a tool to cut costs, enhance resilience, and create new revenue streams. Chartered accountants, with their analytical skills and financial acumen, are uniquely positioned to lead this transition.
The Energy Cost Challenge: A Threat to UK Competitiveness
The UK has some of the highest energy prices in the developed world, significantly impacting industrial competitiveness. Manufacturers, retailers, and service providers are all feeling the strain of rising electricity and gas costs, compounded by policy levies, transmission charges, and global market fluctuations. Without proactive energy management, businesses risk eroding margins and losing out to international competitors with cheaper energy.
Key Cost Factors:
- High Wholesale Prices: The UK’s reliance on global gas markets means exposure to price spikes and supply chain disruptions.
- Non-Commodity Charges: Transmission, distribution, and policy costs contribute significantly to overall energy bills.
- Regulatory Changes: New levies and costs, such as those associated with nuclear energy projects, will further increase business expenses.
Accountants must factor these rising costs into financial planning and seek alternative strategies to mitigate risks.
The Business Case for Onsite Renewable Energy
One of the most effective ways to counter rising energy costs is through onsite renewable energy generation. Businesses adopting solutions such as solar PV, wind turbines, and combined heat and power (CHP) systems can drastically cut costs while improving energy security and sustainability.
Benefits of Onsite Renewables:
- Lower Energy Costs: Businesses can generate electricity at a lower cost per unit compared to purchasing from the grid.
- Energy Price Stability: Onsite generation reduces exposure to volatile energy markets.
- Revenue Opportunities: Companies can sell excess energy back to the grid or participate in grid-balancing programs.
- Sustainability Credentials: Strong ESG performance attracts investors, customers, and talent while ensuring regulatory compliance.
However, businesses must conduct a thorough, independent analysis to determine the best mix of renewable technologies suited to their energy needs, space constraints, and financial goals. Finance directors must lead this due diligence process, leveraging data-driven insights to ensure an optimal return on investment (ROI) while maximising greenhouse gas reductions.
The Role of AI in Renewable Energy Decision-Making
New technology-driven solutions, such as OnGen Expert™, enable finance directors to make objective, data-backed decisions on renewable energy investments. By analysing property-specific datasets—including energy consumption patterns, available space, local climate conditions, and grid connection constraints—AI-driven platforms provide a precise evaluation of the most viable onsite energy solutions.
How AI-Driven Solutions Support Finance Directors:
- Independent Due Diligence: AI tools eliminate bias by assessing renewable technology feasibility based on real data.
- Optimised System Design: AI models calculate the ideal combination and sizing of technologies, ensuring financial and environmental objectives are met.
- Scenario Analysis: Businesses can compare different strategies to balance cost savings, carbon reductions, and investment returns.
- Regulatory and Financial Compliance: AI-driven insights help businesses navigate tax incentives, grants, and compliance requirements with minimal risk.
Case Study: OnGen helped a large UK manufacturer install a 5MW solar PV system after using an AI-powered assessment tool to determine the most cost-effective approach. This led to a 40% reduction in electricity costs and over £500,000 in annual savings while cutting emissions substantially. Chartered accountants played a pivotal role in evaluating the financial feasibility, securing funding, and ensuring optimal tax efficiency.
Overcoming Investment Barriers
Despite the clear financial benefits, many businesses hesitate to invest in decarbonisation due to perceived barriers:
- High Upfront Costs: Many organisations struggle to allocate capital for renewable energy projects.
- Regulatory Uncertainty: Frequent policy changes create hesitation around long-term energy investments.
- Lack of Financial Assessment Models: Traditional cost-benefit analyses often fail to capture the full value of energy investments.
Chartered accountants can bridge these gaps by:
- Exploring financing models such as Power Purchase Agreements (PPAs) and leasing arrangements to reduce capital expenditure.
- Conducting scenario analyses to compare the financial impact of different energy strategies.
- Leveraging AI-powered financial modelling tools like OnGen Expert to assess feasibility and optimise investment decisions.
The Accountant’s Role in Net Zero Leadership
Accountants are more than number crunchers; they are strategic advisors capable of driving long-term financial and operational resilience. By embedding sustainability into corporate financial planning, they can help businesses:
- Optimise Tax and Incentive Strategies: Take advantage of renewable energy incentives and carbon offset mechanisms.
- Develop ESG Reporting Frameworks: Ensure compliance with sustainability regulations and investor expectations.
- Implement Data-Driven Decision Making: Use AI-driven energy forecasting and smart analytics to improve financial planning.
- Educate Leadership Teams: Translate sustainability efforts into measurable financial benefits to gain executive buy-in.
Future-Proofing UK Businesses
With rising energy costs and tightening regulations, businesses that ignore decarbonisation risk financial instability. Chartered accountants can position their organisations for long-term success by proactively managing energy strategies.
Key actions include:
- Conducting independent energy audits to identify savings opportunities.
- Championing investments in onsite renewable energy and energy efficiency technologies.
- Leveraging AI-driven modelling tools to assess feasibility and determine the most cost-effective strategies for achieving sustainability targets.
Conclusion
The net zero transition is not just an environmental imperative—it’s a financial opportunity. Chartered accountants who embrace sustainability will not only enhance their organisation’s bottom line but also cement their role as key drivers of economic and environmental progress. By integrating decarbonisation into financial strategy and leveraging AI-driven insights, accountants can future-proof businesses, ensuring resilience and competitiveness in a rapidly evolving marketplace.
The author and ICAEW member Chris Trigg is co-founder and Managing Director of OnGen. OnGen is a software & consultancy business. Headquartered in Edinburgh, OnGen provides expert solutions that enable organisations across all sectors and of all sizes and scale, to identify the best options for energy decarbonisation.
With a particular emphasis on on-site renewable energy, OnGen’s award-winning solutions are proven and trusted to provide the most accurate and cost-effective means of identifying carbon and cost savings to maximise return on investment.
