Wednesday 11 September 2019

Guest Blog: Ashley Phillips – Bold strategy – the key to green transformation

In the UK, businesses are aware of the need to focus on carbon reduction, to achieve the UK’s legally binding net zero by 2050. However, detailed policies on how the UK accelerates towards that goal are still in development, leaving many organisations feeling uncertain about how to take action. Thankfully, many global initiatives offer support and direction, also championing progressive organisations. Through RE100, organisations can voluntarily commit to sourcing 100% of their electricity needs from renewables, by a set date. Other initiatives for sustainability-focused organisations are Principles for Responsible Investment and the Task Force on Climate-related Financial Disclosures. Each business has its own focus, circumstances and challenges- so will have a unique path for change. But having made a green transformation ourselves, we can share the following steps as a route to action.

1. Take bold action

Energy production and use is the largest source of greenhouse gas emissions globally¹ and it’s vital that we change the way we produce and use energy if we want to tackle this complex global challenge. As an energy company with a global footprint, we recognised the crucial role we could play in the energy transition. Our organisation started life as DONG Energy (Danish Oil and Natural Gas). Although we were pioneers in offshore wind, we were also built on conventional power generation. In 2012, our transformation journey began, following the decision to refocus on renewables and help drive a better energy future. Divestment of our oil and gas business in 2017 completed our journey, along with a rebrand to Ørsted, as the name ‘DONG Energy’ no longer reflected the nature of our business or our ambition.

We’ve now changed completely, from a company that produced 85% of its power from fossil fuels and limited offshore wind capacity in 2009, to one that produced 80% of its power from renewable sources last year. By 2025 we’ll be at 99% green power. It was a brave move, but a sound one, both environmentally and commercially. We’re now ranked the world’s most sustainable energy company and the fourth most sustainable company overall, by Corporate Knights Global Index.

2. Be strategic, invest long term

For our new mission, offshore wind presented our best opportunity to shape a new strategic core for the business. Through innovation, research, development and economies of scale, we have helped to drive down the cost of new offshore wind projects – and continue to do so. The development and installation of larger turbines has meant that we can build larger projects with fewer turbines – reducing the number of installation cycles. Innovations in Operations and Maintenance, such as the use of drone technology for inspections, have also brought about cost savings. Over time, this investment and focus has paid off, with the cost of offshore wind in the UK decreasing by 60% over past 7 years, to a price below that of power from conventional power plants.

3. Innovate and develop your strategy

Our natural next step was to develop products to help UK businesses access renewable energy and reduce their own carbon footprint, beginning with traceable renewable electricity. Next were smart tools and solutions that help businesses use energy flexibly, both to help reduce their costs and support a changing, more sustainable energy system.

We’re also using our experience to innovate further and help organisations take their next steps for sustainability, via Corporate Power Purchase Agreements (PPAs). These are growing in popularity amongst businesses, with 13.4 gigawatts (GW) of clean energy purchased via Corporate PPAs in 2018, up from 6.1GW in 2017². They’re particularly popular amongst RE100 members, providing support for specific renewable generation assets, as businesses commit to buying a specified volume of electricity from their chosen asset for a contracted number of years. Agreements are longer term – often around ten years – and provide a fixed price per unit for the duration of the agreement. This is appealing for businesses as it introduces budget certainty for the longer term, reducing market price risk. We worked with Northumbrian Water to create the UK’s first offshore wind Corporate PPA, enabling the company to fix costs for 30% of its usage for the next ten years and reduce operational costs without compromising their work. Importantly, it is also helping to drive their ambitious environmental goals.

We continue to create new solutions, such as greener gas options, for organisations that use more gas than electricity, so that they, too, can take steps to reduce emissions.

Having travelled this journey ourselves, we’re not only addressing our own activities and carbon footprint, we’re also supporting businesses on the road to their own green transformation. Your green transformation will always be unique – but together, we can help you get there.

Ørsted is helping business reach targets for decarbonisation by supplying innovative, green energy solutions. Find out more here.

Ashley Phillips is Managing Director at Ørsted Sales UK.

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