Energy regulations may be mandatory, but that’s not to say they should be viewed only as a stick – there’s a carrot for the taking, too. Derrick Hidden, explains how businesses can exploit the cost-cutting opportunities to be had, rather than merely view compliance as a way of avoiding a ‘green tax’.
Compliance certainly isn’t the first area of business you’d associate with growth and profitability, but to ignore the potential it offers in terms of money-saving is definitely missing a trick. Admittedly, ESOS, Part L and the EU directive on energy labelling for lighting might cynically be viewed as a way to obtain yet more money out of UK business – a ‘green tax’ if you will – and it could be considered that they’re more a way of paying lip service to the UK’s carbon reduction commitment than actually engendering a more positive attitude to energy efficiency and sustainability. However, flip your perspective and the picture becomes a lot more positive.
The energy efficiency measures required for compliance can often pay for themselves fairly quickly and after the payback period the savings build-up – which can then be either be used to fund further energy-saving measures or be redirected to another part of the business requiring investment. Indeed, it can even be worth considering projects that go over and above basic compliance requirements if they offer an opportunity to make further significant savings, to have an even more positive effect on the business’s bottom line.
An important first step in the process is to engage a consultant with the knowledge and experience to tailor all their recommendations to your operation’s needs – industry-specific expertise is important, on top of solid technical credentials. This will make sure all suggested energy-saving measures will be business appropriate, compliant, and are presented in a way that is business-relevant – always an important consideration when there are decisions about expenditure to be made at the board level.
Since many companies find themselves on ‘rollover’ contracts once their fixed rate has ended – and are therefore paying higher tariffs than necessary – negotiating a new deal with their energy provider is often the best first step, as it can save significant amounts of money (and it’s often just a case of asking the supplier to transition the business to a better-value tariff). This may not be a compliance issue but given falling wholesale energy prices it makes sense to begin an energy efficiency drive with the lowest hanging fruit and use the resulting savings to fund further projects (whether for compliance or to raise efficiency levels even further), starting with the options which deliver the biggest bang for their buck.
In fact, only a relatively small initial capital expenditure is required, provided this sort of savvy approach is taken and the energy-efficiency roll-out is well planned. By focusing on the most inefficient areas first and using the saved funds to pay for the next step in the programme, you will eventually reach a point where the whole estate has been upgraded and runs at optimum efficiency, at a minimum monthly cost. Of course, after this point, the reduction in Opex will continue to be of benefit, as the savings can be reinvested in other parts of the business, perhaps even to fund growth.
Low hanging fruit
In terms of energy efficiency projects, LED lighting is a good place to start and could be split into two (or more) phases, depending on the circumstances found across the estate and the amount of Opex savings generated by the tariff renegotiation. The key to success is to tackle the most inefficient areas first, then measure the savings made by doing the initial tranche of works – considering the amount spent on lamps and maintenance, as well as the energy bill saving – and use this to guide the budget for each subsequent phase of upgrades.
Once light fittings have been upgraded (or maybe at the same time as these works are being carried out), consider a better lighting control system, since up to another 60% can be squeezed out of the energy consumption that way. HVAC systems should also come under scrutiny. Could the boiler be renewed with a more efficient model? If you don’t already employ a best-practice maintenance programme with a water treatment schedule, then implementing this simple measure can result in lower energy consumption, while upgrading controls, and ensuring extraction and air condition filters and ducting are properly clean will make a difference too.
Another sensible strategy for reducing energy costs is behaviour change – but this isn’t free, as many people assume; it will take time, money, and – perhaps more challengingly – a buy-in from all stakeholders. Since employee engagement is key to success, good internal communications are critical when it comes to disseminating information about how workers should modify their behaviour, what they should do and when, and also why it is important. More significant operational changes can also help lower energy bills – for example, can automation allow you to reduce the need for people to be working in a certain part of the asset, so reducing heating and lighting requirements in that area?
As well as benefiting from the energy bill savings that can be made from efficiency upgrades and operational changes, when you link this sort of project together with PPM and reactive activity you can find savings in implementation costs, too. For example, while warehouse lighting is being replaced, you could plan to use the scissor lift to clean the skylights and make roof repairs, thus offsetting the cost of the cherry picker to multiple jobs. Naturally, this leads to a greater CapEx cost within a set amount of time, but in fact, better value can be achieved.
There’s so much scope to save money through this cascade approach to energy efficiency measures, and it’s all triggered by the need to comply with the relevant regulations – which are obligatory anyway. So, it’s worth looking beyond the hassle and expense of energy efficiency compliance, and re-framing the task so that its true value can be realised – so many businesses only see the stick, rather than the juicy carrot that’s there for the taking.
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