Powering performance roundtable: What the future holds for energy efficiency
Energy management experts from some of the world's biggest manufacturers recently came together for an exclusive roundtable hosted by edie and Centrica Business Solutions to explore some of the biggest challenges and opportunities when it comes to building energy efficiency.
With many large corporates claiming to have achieved the “low-hanging fruits” of energy efficiency, the task for businesses now is to tap into new opportunities that can take energy efficiency strategies onto the next level. The opportunities that lie behind a successful strategy are tangible: Policy Exchange has highlighted that UK businesses could save £1.3bn per year by investing in energy efficiency measures that have a payback better than 3 years.
But does UK policy offer enough incentive for business to drive efficiency improvements? What are the most effective ways of securing funding for energy efficiency projects? Once the low-hanging fruit has been picked, where next for energy efficiency? And finally, what role does energy innovation play in helping to achieve the sustainable business of the future, today?
Those were some of the crucial questions that edie sought to answer during last week’s roundtable in London, which brought together 12 energy management experts. The two-and-a-half hour discussion covered the potential solutions to some of the biggest challenges facing the sector, and the energy efficiency opportunities that will allow businesses to continue moving forward.
Finding new revenue streams
Roundtable chair Haydn Young, director of consulting and training, GAIA, kicked off proceedings by enquiring about the biggest challenges facing energy managers in their quest to drive efficiency improvements. For University of Reading’s energy and sustainability manager Dan Fernbank, a major issue centred around assessing the most valid low-carbon technologies on offer. His institution is one of the low-carbon leaders in the higher education sector, having reduced its carbon emissions by 45% in 2016 from a 2009 baseline and delivering £17.1m in cumulative savings. This feat was achieved through low-hanging fruit areas such as the installation of energy-efficient lighting, better heating and cooling and insulation, and improved building management systems.
Moving forward, Fernbank said he would like to explore developing areas such as demand response. But he told other roundtable participants he had achieved little success in gaining the green light for participation, due to a lack of evidence around the business case. “I wouldn't say demand response is something we have really solved,” he said. “We are interested but are yet to find ways to participate. The challenge with that is that our University, and a lot of universities, are traditional, risk-averse and are not that keen to try new things. It can be difficult to convince the powers that be that there is a good case for doing this, particularly when it isn't that easy to find evidence yet.”
This point was picked up on by Centrica Business Solution’s head of distributed energy solutions sales Tim Wynn-Jones, who explained that it can be difficult to provide guarantees on return on investment for demand response, as revenues are based on shifts in the capacity market. “No supplier worth their salt would guarantee revenues from demand response when they are based on auctions for the market. You can include them within an offer, they are based on forward projections which there are a lot of. Quite often, we can say that we will guarantee savings, but on the revenue side we will need to do it on a shared basis so it is effectively upside. But trying persuade an FD that there is a cast-iron business case for payback is a difficult ask.”
Policy and compliance
It was agreed by participants that the business case for new energy-efficient technologies and processes would be made much stronger through a more enabling policy environment. Over the past few years, a host of changes to Feed-in-Tariffs (FiTs) and well-publicised complications around policy measures such as the Renewable Heat Incentive (RHI) have left energy managers across the UK feeling both overstretched and confused. “Changing legislation is definitely a challenge,” said Kate Tavernor, group care and environmental manager at Hain Daniels Group. “When you are talking about UK policy, the incentives are there but it can be difficult as by the time you go through the layers of governance for it to be approved by the board, the incentive might have changed.”
This view was echoed by many in the room, including Avara Foods’ energy compliance & sustainability manager Baishakhi Sengupta, who said that Government incentives and investments should be given a timeline and deadline to provide energy managers with long-term signals. She mentioned the revised version of the Clean Growth Strategy, released in April, in which Government announced that it would set aside £265m for investment in demand response and £177m for renewables cost reduction. But unanswered question still lie around these investments, she said. “We need to know when, how, and what technologies will be available to industry to help it decarbonise and at what stage they will be on offer, so that businesses can put marks in the sand and work towards it, rather than the policy uncertainty we are seeing at the moment.”
With regulation seemingly causing more harm than good in some areas of the energy efficiency agenda, it was suggested by Young that perhaps there was an opportunity for businesses to instead turn to frameworks such as ESOS and ISO 50001 to drive improvements. Following the first phase of ESOS, the Carbon Trust found that the average cost reduction achievable through the implementation of energy saving opportunities stood at 20%. But many in the room, including Tavernor, thought that ESOS Phase 1 had proved to be an unhelpful “box-ticking exercise” that merely showed energy managers what they already knew. Tavernor expressed her disappointment that there had not been a publicly-available list of businesses failing to comply with the regulation. “With ESOS, there was supposedly going to be a name and shame table, and that never happened. The same with Carbon Reduction Commitment (CRC). I suspect there are still companies out there that should have done ESOS and are maybe going through some process with the Government to penalise them for not doing it but it has not had any impact on their reputation which was going to be the point of it.”
ESOS Phase 2 of the Scheme is now in effect, and qualifying organisations must meet the Phase 2 compliance date of 5 December 2019. Centrica’s director Ian Hopkins asked how, ahead of the next phase, businesses would feel if an organisation like Centrica delivered ESOS obligations and in return, found opportunities with a certain commercial return that the organisation would then be obligated to carry out. “That doesn't means spend any money, it means we do your ESOS for you,” he explained. “If we find nothing, then you spend nothing. We would identify a three-year payback for doing project X and divorce the conversation about needing capex from it entirely.”
“I think it could be attractive,” Arla Foods’ energy & utility specialist for UK William Dickson said. “I would personally not have a problem in finding out something new. It is about looking for new opportunities all of the time. Having said that, we do an energy mapping process and it is just a case of filling in the gaps. We've got the list of opportunities but is just delivering on them that is the problem.”
Data and innovation
The conversation then turned to the improvements that can be made through data. Young asked the roundtable members how they were currently monitoring their energy infrastructure to identify efficiency, and in what ways this process could be improved. The group heard from Chris Evans energy efficiency manager at Anglian Water, which is aiming to become a carbon-neutral business by 2050, and has reduced its operational carbon emissions by 12% in 201/16 in comparison to its 2014/15 baseline. Managing carbon emissions and costs relies on Anglian Water’s ability to constantly monitor and improve the efficiency of its processes and equipment, a process which this year helped the firm to reduce its energy costs by nearly £2.5m. Evans explained that Anglian Water had shifted away from a “consumption-based” energy management system that uses fiscal data on a monthly basis, towards energy efficiency monitoring on a daily basis.
“The reason we have done that is because a lot of the low-hanging fruit has been done,” he said. We've moved more into a production-based thinking mentality so that the unit costs are getting into that and that has required sub-metering investment, but then a system to convert data into information. What that has done is it has taken us to a completely different level in terms of energy management because we are now setting KPMs and targets on assets and rolling that out through sites through to networks and all the way up and it is really exciting times for us at the moment.”
Anglian Water now has 5-minute granularity on its energy data. Evans challenged the widely-held belief that “real-time” energy insights are the most efficient way of making business decisions that enhance value. “Real-time data is a huge investment,” he said. “You generate masses amount of data. What is real-time? We are talking about milliseconds. Next-day, down to 5-minute granularity is very good and takes you to a completely different world then you would be in now. “
The roundtable discussion concluded with a look at how technologies such as the Internet of Things (IoT) could help to minimise costly downtime, reduce waste, enhance agility and increase productivity. “On asset management, we are looking at condition monitoring,” Evans said. “That has been enabled by IoT-thinking and could really change the way we do business massively.” Tavernor interjected to explain that IoT could only be effective if colleagues were properly trained and engaged with the technology. “Although we can make the most simple front-end that looks brilliant and has all the clever stuff behind it, we've all been to training and think it is brilliant and don't use it for a month and forget how to use it,” she said. “So it is all about good training. It is just about getting that training and engagement piece in the middle of all of this clever easy-to-use process.”