It is fair to say the energy market is in turmoil. The cost of gas and electricity has increased and if I was to quote a figure today, it would be wrong by tomorrow.
So, what are you going to do? We are all in a position where at some stage in the future we will have to renew our energy contracts and depending on when you last agreed a new contract will determine the increase you will experience. Let's assume the impact is that your energy costs will have quadrupled, what burden will this have on your organisation?
To determine the repercussions of increased costs, you will need to know more about the energy you use rather than what the annual bill is. You will need to understand the influences on the amount of energy you consume and establish methods for control to help mitigate the price increases and reach an affordable consumption.
In many ways, this exercise coincides with the starting point for determining your net zero strategy, we need to understand consumption, its impact, and establish the reasons for why this is likely to change.
In the Each Home Counts document published in 2015, it was agreed that no domestic property had an identical consumption profile, we all use energy in very different ways, and it is much the same when it comes to business operations. There are no two buildings where the consumption is the same and there are a wide variety of reasons for this.
Occupancy, equipment, building type, user preference and behaviour all play a part in making our consumption different. In these differences, there can be similarities- but overall we need to look at each building and its energy use as a bespoke investigation.
It would be easy to look at the generic energy efficiency advice and say, you need an air/ground source heat pump, solar panels, extra insulation, thermostats, and triple-glazed windows, but at what cost do these come? If we had an unlimited budget and the will to cause major upheaval in our buildings, then all these things would contribute to a lower energy bill.
For many of us, this is not a reality and although the rising energy costs are a concern, we simply do not have the budgets to make the massive investments that would be necessary.
The net zero targets have been questioned recently as a driver for the increase in energy costs, but for us involved in the energy efficiency sector, the increased costs are a driver for net zero and even more reason for us to focus on energy security.
How can we reduce the impact market forces have on energy costs? Well for me, it's quite simple. Reduce the energy you use.
Understanding energy use
Every net zero journey should begin with a study into how and where energy is used in our organisations. Like everything in life, you need to understand the expected outcomes before you begin making changes. There are many ways to start.
Collecting your consumption information from the bills you had last year will help you understand what the cost has been, and collecting the information over the past four years will help you understand how energy consumption can differ.
Once you have this information, you can begin to decipher the reasoning why consumption has been different, warmer/ colder weather, higher/ lower building occupancy, better facility management, and building improvements. In all cases, this information is required to help our judgement of what we can expect in the future.
In the past year, Utility Aid has spoken to many organisations who have made building improvements, many of whom had not investigated their energy use or the potential outcomes first. The presumption was that it would save energy to do so, and in many cases, it has saved some energy, but when investigated the returns expected were not achieved.
A return on investment?
One community group had installed a 10kWp Solar array expecting the 7,500kWh generated to eliminate their energy bill, but the building was mostly used at night and the daytime consumption was expected to be between 750-1000kWh per annum, meaning approximately 6,500 units were being exported at a low rate under the Smart Export Guarantee (SEG) scheme. It meant that the expected timeframe for the return on investment had doubled.
Another organisation had two consuming meters in a building and the installer connected the Solar PV to the lowest consuming meter. When the customer got in touch to say it was not working our solution was simple: change the connection of the Solar PV to the higher consuming meter. There was a cost to this and it set the expected return on investment back by one year.
A late 19th Century church was investigating installing an air source heat pump to reduce heating costs, only to be told the building would need to be insulated, the total cost of the project was quoted in the region of £450,000 – the result a £3,000 per annum saving on energy.
There are many more experiences that could be added to this but, in general, it all came down to one element: a lack of investigation into consumption patterns and potential outcomes.
Good data means good decisions
We live in the modern age of data at our fingertips and energy is no different. The technology is available to be able to provide a clear picture of when and where energy is being used.
The first step must be to embrace and implement this technology. Once it is in place, we need to interpret the data, and once we have an understanding of this we can begin to identify the patterns and, more importantly, identify where we are wasting energy.
It is estimated that energy management can reduce our energy consumption by between 4 and 20% per annum. These savings do incur some costs as additional resources are required, such as expertise or metering, but they are continuous savings once identified. In many cases, the return on investment could be days or months, not years.
When you have good information you can begin to make good decisions. Good data will help you determine the potential outcomes of improvement measures and avoid the pitfalls. For larger organisations, data can play an even more important part when it comes to determining service delivery and decisions on operations can be made based on predicted costs.
Let's say you have two office buildings in one city and before Covid both offices were fully occupied, but now with hybrid working, there are many days where occupancy in each of the buildings is below 50%.
At present, you are heating, lighting and ventilating both buildings. From understanding the building use, you may consider reducing to only one building, but which building should that be?
Analysis of historic data would help determine where costs may be lower, and this could simply be down to the fabric and heat emitter type or the fact that the energy contract for that building was tied in earlier for longer than the other building.
The most important aspect in the short term, is the allocation of resources to ensure good decisions, and with energy prices at an all-time high, the cost-to-spend ratio is much lower than it has been in previous years.
In the medium term, organisations need to develop a plan to reduce consumption. This plan should correlate to future energy use and building maintenance.
Saving time and money
As an example, the building report recommends Solar PV, and through analysis of the energy consumption, we can determine the energy savings. However, there is a plan to replace the roof in 2027 as the estimated lifespan will have been exceeded.
Installing Solar PV now would mean disconnecting the system, removing it from the roof, and then placing back on the roof once the job had been completed. This will add cost to the roof replacement plans.
Secondary to this, the initial installation of Solar PV will require scaffolding/crane hire, this will be removed before being required again for the roof install. Completing both jobs at the same time would have a double whammy of saving in the installation and therefore the return on investment will be better.
Similarly, a building needs to replace the primary heating system in 2025 (as this is the expected lifecycle). The building replaces the heating system and then decides to install additional insulation, (external wall and roof). The building operator has missed out on the potential for additional savings.
By installing the insulation first, the heat output requirement of the primary heating system would be reduced. So instead of a 50kw output costing £5,000 of capital expenditure, a 25kw output unit could have been selected at £3,000. Saving both capital expenditure and ongoing energy consumption.
Look to the future
It is important to also think about future energy use, how building use might change, what additional energy might be required, and will the operation times change. All these elements will have an impact on the energy requirement and the actions you can take now to make sure the return on investments is still feasible in the future.
If the plan for the building is to reduce operation hours in a building, then this will impact the potential for savings in the same way that increasing building operational hours in the future will increase the energy spend, and the return on investment will be reduced as the savings will be greater than anticipated.
There are many more chicken and egg scenarios across all building improvements and organisations must recognise this to avoid potential unnecessary spending and ensure whatever budgets they have available to them are put to the best use.
One of the factors often overlooked when it comes to improving buildings is the risk factor. It is therefore imperative that with every proposal there is a recognition of the risks associated with the improvement.
The risk in each improvement is determined by the building type. The last thing we want to do is reduce building energy use but increase the requirement for maintenance or put building users in danger. There have been many cases in the past where the risks have been a secondary thought, and often by then, it's too late to rectify without consequence or additional spending. Pre-determination and mitigation of risks will ensure projects deliver the intended outcomes.
Grant funding and soft loans for energy efficiency have declined or become more focused on certain technologies or achievements in recent years, and being able to take advantage of these schemes often requires the need for detailed studies and anticipation of carbon and energy saving. These savings then need verification to prove the success in reducing energy consumption and carbon emissions.
Many organisations might overlook this need and when the projects are completed the funding provider can withdraw their offer, so organisations embarking on projects should consider how they will manage this expectation but in any case, it is good to practice to ensure the measures you have installed have been successful, early identification of failure means that products or services will be under guarantee and recalling the supplier to amend can be much easier.
The path to net zero should be set out as a medium-term plan for all organisations. No matter what the size of your organisation is, you can follow a measure, analyse, report and act process. Acting, reporting, analysing and measuring may only highlight errors and have an additional spend.
Seek out expert help
If you're embarking on your journey to reduced energy consumption and achieving net zero, expert support is out there. Utility Aid's packages, for example, are designed to help our customers fill the skills gap. With energy at the price it is, the return on investment for these services has never been lower.
Our average school or office package costs are recovered by using 4,000kWh less per year, community buildings can be as low as 500kWh.
With energy prices so high, the cost of an assessment on any building could be quickly repaid, not only from identifying immediate savings, but from savings achieved through the correct identification and implementation of improvements.
Contents
1. Introduction from Richard Sagar, CFG
2. It's time to get real about ESG
3. Building a net zero strategy
4. Funding on a finite planet
5. Understanding energy consumption
6. Net zero and procurement part 1
Part 2: Steps to becoming verified carbon neutral
Part 3: What are scope 3 emissions? Why account for them?
7. Pensions and net zero part 1
Part 2: Risks and opportunities
