Corporates clamour for renewables as uncertainty persists

In a time of rising costs and broader economic uncertainty, it is only a matter of time before more major corporates look to secure peace of mind through renewables for long-term energy stability.

It has been an incredibly challenging period for corporates, as soaring energy pieces and elevated input costs have put severe pressure on profits over the past 18 months. With inflation spiking at the start of 2023, business borrowing costs also felt the full force of rising interest rates.

While price pressures have recently started to soften in many developed economies – with the notable exception of the UK – inflation in the coming years is tipped to settle higher than the subdued levels we have become accustomed to over the past three decades.

In addition, with geopolitical tensions remaining elevated, businesses remain concerned about the future direction of energy prices. This is leading corporates to seek out solutions able to withstand any additional bouts of oil and gas price turbulence, namely renewable energy generation.

Protection from energy volatility

Even before Russia’s invasion of Ukraine last year sent oil and gas prices spiking, renewables were already the cheapest form of energy, following large-scale investments to expand wind and solar capacity. However, larger corporates do not see the benefits of cheaper renewable energy in wholesale electricity prices – for two reasons.

Firstly, wholesale electricity prices are still dictated by the prevailing natural gas price. Secondly, prices remain heavily influenced by the rising costs of developing and maintaining the grid infrastructure. In the UK, labour and material costs are also on the rise as the country looks to upgrade infrastructure to assist in decarbonisation.

However, businesses with space to install onsite renewable power generation can benefit from bypassing transmission costs, which can make up as much of 20% of a typical energy bill.

Cost savings through scale

Major businesses and organisations are significant consumers of energy, with the NHS being the UK’s largest energy user. In addition, supermarket giant Tesco consumes 3% of the UK’s energy output.

Entities such as these – which boast major property portfolios – have plenty of rooftop space or surrounding land to quickly install solar panels. Indeed, there are an estimated 2.5bn meters squared of south facing commercial rooftops in the UK, representing a huge decarbonisation opportunity.

These organisations also have tightly controlled financial metrics, with operating margins and output closely monitored. Therefore, passing on elevated energy prices to customers, shareholders or taxpayers through price rises or making capacity cuts can often be unpalatable or counterproductive.

As such, the retail and healthcare sectors are among the best placed to benefit from onsite renewables. With a well-capitalised energy installer, cost savings can be generated without capital investment by the corporate energy customer. Prices are underpinned by long-term contracts, which provide predictable long-term energy costs.

Strengthening green credentials

As the financial case for adopting renewables increases, societal pressure is also accelerating the shift to a lower-emissions future. Many large corporates now have iron-clad plans to transition to net-zero emissions by 2050, or sooner.

In this respect, onsite generation brings an additional benefit. While renewable electricity has existed for some time, buying pure, traceable renewable power is challenging. When connecting to the grid, it is impossible to separate ‘green’ energy from traditional energy sources.

Whether generated from coal, nuclear, wind or solar – at the point of supply, all electrical energy is the same. Directly connecting to a renewable power generation site is the only way to be certain of fully traceable ‘dark green’ energy. For those businesses with insufficient onsite space, dedicated green energy infrastructure can be built and operated externally.

With rising pressure to back up net-zero credentials, claims of greenwashing are intensifying. Increasingly stringent and detailed reporting requirements are driving businesses towards trusted dark green solutions.

Short- and long-term benefits

While grid-based renewable energy suppliers are often quoting connection times in years, direct renewable supply can be established as soon as construction completes. From signing the contract, installations are typically completed within a few months, enabling most businesses to report to key stakeholders within the same financial year.

With all-in power prices about half the price of buying wholesale power from the grid, the financial benefits feed quickly through to the bottom line.

In a time of rising costs and broader economic uncertainty, it is only a matter of time before more major corporates look to secure peace of mind through long-term energy stability – while subsequently safeguarding the future prosperity of the planet.

By Steve Windsor, Principal of Atrato Group, the Investment Advisor to Atrato Onsite Energy.

This article was originally published in Trustnet.

Steve Windsor from Atrato - corporates seeking renewables

Thursday 6th February 2025

Atrato Onsite Energy plc

(in Members’ Voluntary Liquidation)

(“the Company”)

 

Notice to Shareholders

Further to the appointment of Richard Barker and Derek Hyslop as Joint Liquidators of the Company on 13 December 2024 and in accordance with the circular issued to shareholders on 27 November 2024 (“the Circular”).

 

The Joint Liquidators confirm that a First Distribution at a rate of £0.775 per Ordinary Share will be paid on 6 February 2025. Shareholders will receive their distribution by CREST or cheque and those cheques will be issued by the Company’s Registrar (Link Asset Services) to the address on the share register as at the Record Date.

Please note that this distribution could have tax consequences which may need to be reflected in your tax return.  If a Shareholder is in any doubt as to their individual tax position, it is recommended that they seek advice from an independent professional advisor.

A second and final distribution is expected to be paid to shareholders prior to the conclusion of the liquidation. Once the Liquidators have concluded the Company’s residual affairs, which includes novation of parental guarantees provided by the Company in relation to its former subsidiary investments, the tax affairs of the Company, satisfaction of claims of creditors of the Company and paid the costs and expenses of the liquidation, it is expected the Liquidators will make a final distribution to Shareholders of the residual cash in the liquidation estate. The final distribution, if any, will be paid at a time to be determined by the Liquidators but is envisaged to be in the region of nine months after the commencement of the liquidation.

A further update will be provided on the website once the timing of the final distribution is known.  In the meantime, if shareholders have any questions in relation to the liquidation they should contact the Liquidators.

Following the commencement of the members’ voluntary liquidation, shareholders are no longer able to trade in the Company’s shares on the London Stock Exchange. The Company will not publish any further regulatory information service announcements and will not produce further financial statements (other than those prepared by the Joint Liquidators and communicated to shareholders under the relevant provisions of the Insolvency Act 1986).

Jay Bhatt

jay.bhatt2@uk.ey.com

+44 20 7951 5251

Shareholders with questions, including regarding the receipt of their entitlements in respect of the first distributions, should contact the Company’s Registrar, MUFG Corporate markets, using the details below.

shareholderenquiries@cm.mpms.mufg.com

0371 664 0300

Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The MUFG Corporate markets helpline is open between 9 am – 5.30 pm, Monday to Friday excluding public holidays in England and Wales.  Please note that MUFG Corporate Markets cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes

 

Friday 31st January 2025

Atrato Onsite Energy plc

(in Members’ Voluntary Liquidation)

(“the Company”)

Notice to Shareholders

Further to the approval of a special resolutions by a general meeting of the Company held on 13 December 2024, the Company was placed into Members’ Voluntary Liquidation, and Richard Barker and Derek Hyslop of Ernst & Young LLP were appointed as Joint Liquidators.

As stated in the circular issued to shareholders on 27 November 2024, it is anticipated that the Liquidators will be in a position to make an initial distribution of substantially all of the net assets of the Company in early February 2025 (the “Initial Distribution”). This timeline is to allow (a) the Liquidators to comply with their obligation to give all actual and/or contingent creditors of the Company notice of the liquidation and the requirement to submit claims to the Liquidators by a last proving date, which must be a minimum period of 21 days from the date of the notice; and (b) the Liquidators to adjudicate and pay (if accepted) and/or reserve sufficient funds to pay any claims received. It is estimated that the value of the Initial Distribution will be no less than 77.0  pence per Ordinary Share.

The Liquidators will retain the balance of funds in the liquidation estate and once the Liquidators have satisfied all the claims of creditors of the Company and paid the costs and expenses of the liquidation, and the Company’s tax affairs have been finalised, it is expected the Liquidators will make a final distribution to Shareholders of any residual cash in the liquidation estate. The final distribution, if any, will be paid at a time to be determined solely by the Liquidators but is envisaged to be in the region of nine months after the entry into members’ voluntary liquidation.

All Shareholders on the Register of Members as at 6.00 p.m. on 12 December 2024, being the Record Date, will be entitled to any distributions made during the course of the liquidation.

Following the commencement of the members’ voluntary liquidation, shareholders are no longer able to trade in the Company’s shares on the London Stock Exchange. The Company will not publish any further regulatory information service announcements and will not produce further financial statements (other than those prepared by the Joint Liquidators and communicated to shareholders under the relevant provisions of the Insolvency Act 1986).

A further update will be provided on the website at the time of the first distribution to shareholders.  In the meantime, if shareholders have any questions in relation to the liquidation they should contact the Liquidators.

Jay Bhatt

jay.bhatt2@uk.ey.com