Save energy, save cash

Dr Garry Felgate from Carbon Trust, explains the financial benefits of buying equipment that meets government-prescribed energy efficiency criteria

The business and public sectors have been quick to recognise that energy is a manageable resource just like any other and is aware of the link between environmental responsibility and the proven financial gains of energy efficiency.

Yet when making important procurement decisions, the longer-term cost saving advantages of purchasing energy efficient equipment and implementing energy saving measures are still not being taken into account.

The purchase of equipment is an area where it is crucial to look at the bigger picture if organisations want to reduce overheads. Too often, crisis purchasing occurs and equipment that has the cheapest initial outlay and ‘does the job’ is selected without taking into account the whole-life cycle cost advantages of more energy efficient equipment.

This is a false economy. Often the lifetime energy cost of equipment outweighs the initial set up costs such as purchase price and installation, maintenance and repair costs. For example, the life cycle cost of a fan reveals that the initial capital and maintenance outlay typically constitutes five per cent of the overall cost, while the energy costs to run the fan are 95% of the overall expenditure. Therefore, a 10kW fan costing £10,000 and running 8,000 hours/year will consume a staggering £1m of energy over its lifetime.

Mitigating costs

With such dramatic long-term costs, it makes sense to invest in energy efficient equipment and use it properly to ensure maximum performance. But for businesses struggling to find the capital required for energy efficient equipment, it can be a difficult decision.

Luckily there is assistance available. Small and medium sized companies could be eligible for an Action Energy Loan — interest-free funding of between £5,000 to £50,000 for companies in England, Wales and Northern Ireland investing in energy saving projects.

In addition, the 100% Enhanced Capital Allowance scheme (ECA) offers 100% tax relief on qualifying expenditure on equipment specified on Carbon Trust’s Energy Technology List. This list is not exclusively for those eligible for the ECA scheme. It can also help public sector purchasing professionals — the public sector is not eligible for ECAs — identify energy efficient equipment.

Sourcing from the Energy Technology List

The Energy Technology List details over 4,000 products that meet government prescribed energy efficiency criteria. The list addresses a variety of technologies covering the main areas of energy demand such as motors, boilers, lighting, warm air and radiant heaters and heat pumps for space heating.

Public sector organisations that purchase from the Energy Technology List can be confident that the products they select meet energy efficiency criteria which should allow them to reap financial rewards year after year in reduced energy costs.

For example, the conversion of inefficient lighting systems to more energy efficient types can save up to 30% on electricity bills while providing the same, and often better, quality of lighting.

Motors consume around 65% of the electricity used in industry, with some 20% of this currently being lost through wasteful control mechanisms. Yet little thought is devoted to the potential saving opportunity the purchase of a more energy efficient option can offer.

Making it work

In order to ensure that you benefit from the savings potential of energy efficient equipment, it is important to make sure that the equipment is used properly. Action Energy, Carbon Trust’s energy efficiency programme, provides expert advice and assistance to help you get optimal energy performance out of equipment as well as providing support in implementing other no cost and low cost energy efficiency measures.

In addition to the guidance provided through the current technologies and products included on the Energy Technology List, the list is continually being diversified and expanded. The Chancellor’s April Budget announcement revealed eight newly proposed technologies and a number of amendments to current Energy Technology List criteria. If approved, they will permit the expansion of the Energy Technology List to reflect market demands and technology developments.

By informing and encouraging your organisation of the financial savings made through purchasing more energy efficient products, you are managing and reducing overheads while helping to offset the serious environmental threat of climate change. Look for the Energy Technology List symbol that is carried by products on the Energy Technology List and start saving money now!

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