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Energy

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Energy

ork around the issue of consumption helped in recent times by new regulations and

taxes affecting larger organisations where compliance and payments need board-level approval. With this should come the desire to reduce the costs of bills, typically through investment in new technologies, but that’s tended to be a secondary focus at best.

Late last year saw COP21 closing with the negotiations supported significantly by the engagement of business in the discussions held over the two-week period, and with a specific day set aside for Buildings. A number of commitments were made for immediate actions and public targets were set that far exceeded the political will. More surprising was the response from the investor community which within a few days saw impacts on fossil fuel and renewable technology companies share prices. There will be a knock-on effect to real estate over the

coming years where the carbon cost will be a risk determinant in asset valuation.

With rising global energy prices, the drivers to reduce energy consumption and become more efficient are self-evident. However, with the increasing costs and regulations in place, the impact of these policies on organisations has been minimal. The Carbon Reduction Commitment (CRC) has delivered little in the way of energy savings in comparison to the revenue, in excess of £650m, generated for the Treasury.

There are three main activities captured within the term ‘energy efficiency’ – involving engagement of staff, capture of robust data and analysis of how a building is used to enable a better understanding of how it can operate. Put in other words, this involves:n Education of peoplen Provision of a monitoring and

targeting system, andn Reduction of energy consumption

through an audit programme.

Energy consumption is increasingly being understood, but efficiency is the poor relation – often with only simple measures being deployed. Sunil Shah makes the case for a change of focus

Changing the focusEnergy efficiency is a forgotten activity, for organisations and certainly for government. Reducing the amount of energy used also reduces the amount needing to be generated in the first instance, and therefore enables fewer power stations to be built – particularly important with a crunch in the available capacity in the coming years. The term ‘negawatt’ was coined by Amory Lovins in 1985 to define the amount of energy saved and to encourage viewing energy as a service together with the amount spent on it.

Many regulatory and financial drivers are in place to promote energy efficiency, but little evidence exists that they have achieved a significant change. The regulatory approach to energy efficiency can be described as a series of uncoordinated policies that act as an incentive or a ‘stick’ on business. There is a clear imbalance towards the regulatory and compliance ‘stick’ with a weak set of incentive ‘carrots’ in place, leading to limited engagement from business towards viewing energy efficiency as anything but a compliance and cost issue.

Owners/occupiers need to have an understanding of what role energy plays within their business, the level of control they can exert, its purpose and how to use the data generated based on what the customer would find useful. The lack of a cohesive regulatory policy makes it difficult for businesses to understand the benefits that can be gained from energy efficiency measures. Instead, it shows a complicated approach with a focus on a reporting and the compliance ‘stick’.

The current regulation making the headlines is the Energy Savings Opportunity Scheme (ESOS), which highlights potential energy saving opportunities within the operations of participating organisations. There is, however, no regulatory requirement to implement the opportunities identified. This is left to each organisation to action as it sees fit with the assumption that when viable and tangible savings opportunities have been identified, this will lead to action. In this respect, ESOS follows the same logic as a number of other existing policy instruments such as Air Conditioning Inspections, Energy Performance Certificates and Display Energy Certificates.

The benefits which can be provided by implementing the recommendations include:n Peace of mind about energy use and costn Reducing energy waste through staff awarenessn Identifying actions equating to a minimum of 10%

reduction in annual energy billsn Pinpointing opportunities for reducing the amount of

energy consumedn Assisting with better prioritisation of energy related

workload, andn Enabling a constant flow of energy reduction measures

to be planned.

Finding opportunitiesFrom the ESOS studies performed through our own activities, there are a range of recommendations that have been identified in a robust manner using language

understandable by senior management. The key areas to focus upon in a building include the lighting, heating and cooling systems and the controls that consume or manage the largest proportion of energy. However, whilst savings with paybacks of less than three years have commonly been identified, even within organisations with an outsourced provider, the desire to implement the savings has been more challenging to identify.

As a response, the government is seeking to consolidate the number of carbon policies and identify target mechanisms to engage business. The Better Energy Efficiency Tax review sought to consolidate many of the carbon tax regimes whilst maintaining the revenue stream providing a reduced admin burden to both organisations and government. The premise was welcomed by all parties, but the implementation would also seek to re-engage with industry through an incentive to encourage energy efficiency not seen since the concept of league tables were removed from the CRC.

This top-level reputational risk will become critical for the policy to have traction with organisations – financial measures are punitive on high energy consumers and too limited on typical service sector businesses. The basis of the reputational risk will need to come from more accurate data to help justify the business case and the need for benchmarking to help understand comparison.

The ability to share anonymised data in an open format is a minimum requirement, enabling use throughout the building lifecycle from design stage, as well as informing future policy decisions. Existing systems exist which capture data in a closed manner, and work is underway to align these systems together.

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Making energy efficiency work

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Energy

Clear lines of responsibility from senior managers down to assets is commonly lacking, leading to a lack of support to resolve challenges relating to energy effi ciency measures. Reliance is placed on a devolved structure with local engagement and the building manager/FM providing the communication and drive, which can lead to confl icts around lack of budgetary ownership and a focal point to drive change. SMEs have shorter lines of responsibility but are more reliant upon business focus.

Aligned with the responsibilities is the capacity for staff to infl uence the level of energy within buildings. Modern buildings are relying more on technology to control energy use and this minimises the perceived impact of the individual to affect energy within their workplace. For example, monitors switch to standby, lights are controlled for presence/daylight, and temperatures (heating and cooling) are set automatically. But the ability for staff to affect change in energy consumption will be a signifi cant motivator in their interest to engage with the subject. However, an understanding of staff behaviours will be critical to ensure sensors are set correctly and operate in line with the culture within the business. Without this understanding, effi ciencies often fail to materialise.

Building owners are still largely concerned over cost and building status, and often prioritise these over issues such as lowering carbon emissions from the built environment. Monetary incentives from government would greatly entice and very likely drive success in driving behaviour change towards better operated buildings in terms of energy effi ciency and management.

There is emerging evidence of the development in organisations’ philosophies around energy management being incorporated at a strategic level into the longer term thinking and decision-making processes. Responses from those seeking behaviour change linked the exposure of energy and rising prices to the impact on competitiveness of the business.

The accuracy of data is understood to be variable. The CRC set a robust mechanism for larger organisations to understand energy consumption, forcing business to develop a governance structure providing more accurate data at a granular level. The process highlighted a number of defi ciencies in meter readings, location and interpretation of energy consumption from sites both being manually read and with automated meters.

Lack of actual data at the sub-building level has a real impact for multi-tenanted buildings, as well as larger properties, leading to a poor understanding of where and how energy is being consumed. Such gaps mean further detailed analysis is often required to determine the necessary measures to reduce energy consumption by identifying the problems and related causes at signifi cant cost.

Playing the reputation cardUltimately, reputation will be the biggest lever that can be used to drive energy effi ciency. Whilst being seen as behind the curve, the US has promoted heavily the idea of ‘city challenges’ whereby cities require organisations to submit energy consumption data onto a common platform, with results published and awards presented. Such an approach has signifi cantly raised the profi le of effi ciency, supporting accreditations not for the savings achieved but the prestige that comes from winning awards.

Within the UK, energy data is already captured numerous times, but the closed system doesn’t allow for any publishing of the data, removing this simple step. We can move a long way on this through the release of published data from the CRC and ESOS. Raising the concept of the negawatt can help to monetise the benefi ts being gained, supported by a fi nancial and reputational benefi t. The tools are all in place, but a policy framework is lacking – perhaps now is the best time for business to take the lead.

Author information

Sunil Shah is Director of sustainability consultancy Acclaro Advisory. http://www.acclaro-advisory.com/