Energy costs have risen faster than inflation over the last decade, with the majority of this increase being due to the transformation of our electricity generation through Electricity Market Reform (EMR). The introduction of subsidies for renewables and taxes on carbon to reduce the use of coal means that the amount of carbon produced for every kilowatt hour of electricity is now less than half the value we saw at the start of this decade. However, the taxes and levies applied to our bills to meet these costs is now around 4p/kWh for all except a select group of Energy Intensive Industries.
If we are serious about achieving net zero carbon targets in the coming decades then further costs will be incurred for energy storage and interconnector projects as well as carbon capture and these will all need to be paid for!
While in energy-intensive sectors, such as manufacturing and heavy industry, many organisations are taking steps to address efficiency concerns, figures from BEIS show that the majority of non-domestic energy consumption in the UK comes from retailers and offices.
A report by the Carbon Trust indicated that the majority of business can achieve a reduction in overall energy consumption of between 10% and 20% by implementing low or no-cost measures. It also put these savings into context, indicating that a 20% reduction in energy costs represented the same bottom-line benefit as a 5% increase in sales for many businesses.
Heating accounts for 40% of the energy used in non-domestic buildings, making it a key area to target for energy reduction efforts. Often the most productive step is simply to lower temperatures by a small amount, where feasible; even a one degree increment in heating represents an increase in overall energy costs of as much as 8%, according to Carbon Trust research. Poorly maintained or inefficient boilers can further push up total heating costs by up to 30%.
Inenco is currently carrying out a large number of energy audits across a wide range of businesses and many of the savings opportunities identified are as simple as making sure that appliances are switched off overnight. One dilemma for many high street retailers is that energy costs are often small compared with rent, rates and other operating costs, so having an open-door policy may make business sense, but there needs to be an understanding that blowing hot air into the high street has an environmental impact.
A BEIS Energy Efficiency Survey found that a further 17% of energy consumption for businesses comes from lighting. More energy efficient LED lighting can drastically reduce this, offering payback periods generally between two and five years. [JW1] Our own audits have identified many examples of building that still have some tungsten light fittings – LED replacements are cheap, easy to install and for some of the applications we saw, the payback was measured in months rather than years.
Energy awareness training for employees is a key part of any energy efficiency strategy. If you want to ensure that equipment is switched off when not needed, or want to change temperature settings, its best to do this with the cooperation and assistance of motivated staff.
Identifying opportunities for energy cost savings and the efficiency options that would deliver the best return on investment requires a more in-depth understanding of both overall energy usage and billing.
Carefully reviewing this data ensures only the energy used is being paid for, as well as identifying high periods or irregular patterns of consumption and allowing for quick remedial action.
More and more sites are being fitted with smart electricity meters that can record consumption in half-hourly time periods. This gives access to profile data that can be interrogated to identify where inefficiencies occur. Such data will show overnight loads, to spot when equipment has been left on and can be compared with metrics such as production, sales or even weather conditions to see whether there is a correlation. But this requires some understanding of how to collate and interpret the data.
Companies that have not yet had smart meters installed should speak either directly to their supplier or to their energy consultancy to begin the process.
Effective action to reduce energy consumption throughout a business comes from the top, aligning with wider business goals, but also engages staff. Rather than a one-off overhaul, frequent reviews of activity ensures that measures put into place are working as expected and further opportunities for improvement are identified and implemented.