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Case study
KNESS
Clean electricity for business
by KNESS Energy

Serhii Kravchuk
Chief Officer of KNESS Energy

Business, creating added value, is the main driver of economic development in each country. However, Ukrainian producers of goods and services are currently in a somewhat discriminative situation when it concerns the access to electricity resources. The electricity market maintains a permanent cross-subsidization regime exclusively for the benefit of household consumers. Access to electricity is monopolized by the subjects of natural monopolies - the owners of electricity networks and is strictly governed by government regulation.

However, even under such conditions, there are opportunities to reduce dependence on natural monopolies, increase the competitiveness of the enterprise and at the same time avoid the negative impact on global climate change. These opportunities are provided by clean and cost-effective solar energy. This model has been named Future of Generation (FOG). It consists in economically justified decentralization of electricity supply to the consumer enterprise by installing a solar power plant, which is connected directly to its internal electricity grids, to the meter. Own energy consumption is supplemented by the opportunity to buy the necessary energy from the market. FOG provides a number of benefits. For electrical grids - this is the unloading and losses reduction during the electricity transmission. For the consumer, this is saving money on the electricity distribution and a real opportunity to use clean energy, and therefore significantly reduce the impact of their activities on the environment. It is also important that this approach solves the issue of energy security, because large thermal and nuclear power plants, on the one hand, have almost exhausted their technical resources, and on the other hand, remain dependent on fuel imports for electricity production.


How does it work?
The FOG system is quite all-purpose. Every industrial electricity consumer can make use of it. The FOG business model envisages the project implementation development for the construction of a solar power plant, which is integrated into the internal grids of consumers or groups of consumers so that electricity from SPP maximizes consumption schedule with minimum output to the external grid. The SPP construction is carried out according to the financial model appropriate for the consumer. It pays the contractor company KNESS Construction only 20% of the estimated value of SPP, and the remaining 80% is refinanced by a partner bank. Upon construction completion, the SPP becomes the consumer's property. The terms of loan repayment are selected so that the monthly payment is equivalent to the amount of savings due to electricity consumption from own SPP at the market price, taking into account the tariffs of transmission and distribution system operators without supplier's markup. That is, in simple terms, the amount of costs for the purchase of electricity from the market and the credit payment for SPP will not exceed the monthly payment for electricity until the SPP installation. The amount of consumer's savings when purchasing electricity depends on the SPP's efficiency and effectiveness, so KNESS Service is involved in the maintenance and forecasting of the SPP production, guaranteeing the most efficient operation of the generation facility. The price and volume of electricity supplied from the external grid significantly depends on the consumer's ability to forecast the volume of their own consumption. KNESS Energy will supply the required amount of electricity from the market to form an optimal mix that will ensure a minimum cost for the customer to purchase and regulate electricity imbalances. Having its own clean generation, with the help of KNESS Energy the consumer gets the opportunity to additionally consume clean energy from the market, with confirmed relevant certificate of origin. Thus, the comprehensive approach of KNESS Group allows to fully - 100% - ensure clean electricity production.


KNESS Group provides a comprehensive power supply service to the enterprise through the implementation of a development project for the construction of a solar power plant (SPP), which is integrated into the internal grids so that electricity from SPP maximizes consumption schedule with minimum output to the external grid. This will reduce the cost of purchasing electricity from external power grids.
SPP construction
The turnkey construction of the power plant is provided by KNESS Construction, which obtains construction permits and performs design, purchase of basic equipment, installation and commissioning.

Maintenance service
KNESS Service provides maintenance of the station and guarantees the annual amount of electricity produced.
Electricity supply
KNESS Energy is the organizer of the company's energy balance - a licensee for the supply of electricity coming from external grids. In addition to favorable conditions for the electricity supply with no payment for imbalances, the company is ready to buy surplus electricity at market price if the generation of a solar power plant exceeds the consumption of the enterprise.

HOW TO REDUCE THE FINAL ELECTRICITY COST FOR AN ENTERPRISE?
Electricity market
(1,6 UAH / kW * year)
The electricity purchase price on the market shows an annual average increase of 15% for the last 9 years and this trend continues

Electricity supplier
(0,01UAH / kW * year)
Supplier's mark-up, the fee received by the supplier for contracting a certain amount of electricity for the consumer to whom the relevant service is provided

NPC Ukrenergo
(0,3UAH / kW * year)
The transmission tariff of NPC "Ukrenergo" shows rates of increase almost sixfold analyzing the period from 2017 (5 kopecks / kWh) and 2021 (29.4 kopecks / kWh)
Distribution system operators
(1,15UAH / kW * year)
The tariff for distribution services is quite fast-growing, for example in JSC "Vinnytsiaoblenergo" the tariff was 65 kopecks / kWh in 2017, in 2021 - 1.15 kopecks / kWh
Consumer's tariff on the meter

The final tariff on the electricity meter is formed as the sum of the electricity purchase price on the electricity market, the supplier's markup, the tariff for transmission services and the electricity distribution service.



The enterprise saves on electricity consumption as a result of the SPP installation, which is integrated into the internal grids of the consumer by replacing part of the consumption with electricity from SPP.


Development
There are companies that can easily adjust production cycles to the solar generation schedule. For others, when there is a need for energy shifting in time, the FOG system may additionally require an industrial energy storage device - BESS (battery energy storage system). A prototype of such a Ukrainian-made storage station has already been developed and is being tested by the KNESS RnD research center.

Example
Recommending a product to others is possible only after testing it personally. The FOG system was first used at a plant manufacturing equipment for solar power plants called KNESS Product. A solar power plant with a capacity of 293 kW was installed on the roof of the production shop. SPP produces about 283,078 kWh of electricity per year, which made it possible to provide 25% of production with its own clean electricity. In terms of environmental responsibility, the SPP installation on KNESS Product has reduced CO2 emissions by 278 tons per year.
Capacity:
293 kW
Approximate output:
283 078 kWh / year
Reduction of СО2:
278 t/year
Conclusion
The energy transition for business is not a fashion statement and not even just social responsibility and applying sustainable development principles, it is an urgent business necessity. Both in terms of their own energy security, and in terms of consumer demands, voiced in developed countries and increasingly heard around the world. This is a question of production cost and product competitiveness.

So what exactly do the energy transition and the FOG model give? Quite practical economic benefits. First, saving on electricity consumption through your own generation facility. Secondly, own solar power plant, which in itself is undoubtedly an asset that increases business capitalization. Third, energy independence from natural monopolies - system operators. Next, crucially, you need a minimum of your own investment in the SPP construction and operation. And finally, the opportunity to access cheaper credit resources for companies manufacturing products on clean energy. And as a result of the use - the company's reputation as one that partially or completely consumes clean electricity and environmental benefits that will help prevent climate change.

It all starts with the personal responsibility: from the individuals and their daily habits to enterprises, businesses and the state. Everyone is responsible for the future we and future generations will live in. I am convinced that only through synergy, common actions and opinions can a comfortable, ecological and safe future be achieved. From the very beginning of its activity, the KNESS team has set a goal: 100% Renewable for Ukraine. We are convinced that soon everyone will have access to clean energy, which will significantly reduce carbon emissions. The products of our Group allow consumers to make the energy transition - so we are moving towards our goal.

«We have come to a decision to possess the solar power plant primarily with the aim of electricity savings. But not only of this reason. The source of energy is really important for our business. After all, the words' energy resources are not unlimited. We are convinced that people must switch to renewable energy sources. From its own experience, Vinpromkholod demonstrates that it is possible. With the flow of time our company will achieve energy independence and will switch to 100% clean energy. We have chosen KNESS
Group as a partner of our energy transition by feedbacks and information in social media. KNESS team inspired us by its devotion to the idea of energy transition, proving it by setting its own sample.

Which benefits have we got from the Future of Generation project and emergence of solar generation? Indeed, great. Significant impact on the cost of our products. Contribution to the reputation of our business. Added value for the team and customers.

I really wanted other Ukrainian companies to come to the same choice we made».
Anatolii Dakhnovskyi,
Head of «Vinpromkholod» LLC