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Selling Efficiency; Can ESOS Help Shops And Retail Centres To Prioritise Low Carbon?

The retail world is packed with energy efficient opportunities. But taking them balances a tightrope of time, vs cost, vs benefit. Our retail sector expert Matt Jones shares his experience.

ESOS Hub: What’s been the general retail opinion on ESOS? Is it a good opportunity for change, or more red tape?

Matt Jones: Opinions and reactions have been very mixed. We tend to find retailers fitting into one of four categories:

a) Large Retailer – less interested in ESOS. Likely already performed multiple demand reduction measures.
b) Large Retailer – very interested. ESOS is the final push to get board level engagement to savings opportunities.
c) Small Retailer – less interested in ESOS. Little to no gain and hence just a tick box exercise.
d) Small Retailer – very interested in opportunities, but recognise that opportunities are limited.

There are many proactive businesses, performing savings related opportunities prior to ESOS arriving. For them, ESOS is a headache and unbudgeted cost.

We sympathise with this. Phase 1 of ESOS only allows 16 months, from release of guidelines through to implementation and sign off.

But Phase 2 allows four years to plan budgets. In contrast, for large retailers yet to take advantage of consumption reduction and technology related opportunities, ESOS has given a marker in the sand.

These are the businesses that will release good news on projects that delivered value.

ESOS Hub: What’s been the level of ESOS awareness to date? Is the sector advanced in its thinking?

Matt Jones: Businesses need education towards where value comes from with this legislation.

Unless your strategy is underpinned with a green approach, ESOS awareness and carbon reduction are lower priorities than core business, budget and margin.

Aligning carbon reduction and energy efficiency to core business values in a smooth and structured manner is key. Profitability and margin are too. ESOS can definitely help drive better figures if understood and managed properly.

ESOS Hub: At what stage in the ESOS process are most companies in the sector?

Matt Jones: Engaged with a specialist energy partner; starting or part-way through the process. A small percentage have achieved compliance and have four years to complete Phase 2.

ESOS Hub: What are unique challenges that could be an obstacle to compliance?

Matt Jones: Compliance is about representing utility and fuels usage across your estate. There is no compliance pushing you to achieve reduction measures. So there shouldn’t be any obstacles to compliance unless you leave it late.

What we do see is many businesses being forced into reviewing transport fuels usage for the first time. Audit trails and accounting for this can be a problem.

Having a multi-site estate, the on-site audits need to be performed to a representable standard. If you have ten plus audits that need to be undertaken, these need to fit in with business activity. Planning the timing of these can be a challenge.

ESOS Hub: What are the typical energy saving recommendations for this sector?

Matt Jones: Technology evaluations include lighting, building management systems and HVAC.

Energy management standards and processes are key. It doesn’t matter how many kWh an LED light will reduce. The cheapest kWh is the one that isn’t used. Staff awareness and engagement is crucial.

ESOS Hub: Will retail sector firms act on the audit recommendations?

Matt Jones: Yes, they would be mad not to.

ESOS compliance is a cost but that cost is minimal against opportunity returns. There are more funding options out there than there are projects.

Many projects have two year ROI. Companies must educate themselves with what’s available in 2015. Much has changed with technology costs reducing, increased funding and ROI timeline reduction. Take advantage!

What we must bear in mind however, is that businesses know their strategic direction and plan for this. If a business is going to dispose half its retail estate then spending money on sites no longer needed within 12 months would not be a good idea. Business operating from a landlord’s location will also struggle to have audit recommendations approved.

ESOS Hub: Any advice to retailers on how to break down these barriers?

Matt Jones: Recommendations must deliver value. The language of the £ saving is what counts most!

With that said, if your business sells pizzas and you quantify a 1,000,000 kWh reduction in terms of £110k saved; equivalent to 147,000 pizzas, then you should have better engagement and understanding.

ESOS Hub: If they do act on the audit, what’s the average payback period for this sector?

Matt Jones: Let’s break it up a little. All retailers utilise lighting. Dependent on what types of bulb are in place, LED replacement can deliver ROI in under two years.

Solar panels still only offer around a seven year ROI. Demand management opportunities are specific to the type of business. It really comes down to case by case scenario, and learning what’s available to your business right now.

Matt Jones is Retail Solutions Consultant at Inenco.