Written by Alan Aldridge, executive director of the Energy Services and Technology AssociationThe economic and political context in which we all live and work has changed dramatically over the last two years. The extent to which all the developed countries have incurred debt, and the urgency of reducing that burden has been accepted by governments around the world. Following our general election, restrictions of spending are now being decided.
At the same time, we have a number of statutory targets for reducing emissions and a number of programmes in place, including the CRC Energy Efficiency Scheme, which began in April. The new government appears to be equally committed to our climate change policy as its predecessor.
Those targets may, however, sooner become much steeper. A recent study from the European Commission suggests that the EU’s emissions reductions target for 2020 could be raised from 20 per cent to 30 per cent ‘at reasonable cost’. Now, the 30 per cent figure was already enshrined in the EU’s climate policy – but only if the rest of the world agreed a comprehensive emissions reduction programme as well. And we all know that the Copenhagen Summit last December failed to deliver that.
So, what has changed? Well, the argument the Commission is making to Member States is that the recession, paradoxically, has made those larger reductions easier to achieve. With GDP having fallen, we are closer to the 20 per cent reductions than had we maintained ‘business as usual’ over the last two years. The extra cost of achieving 30 per cent cuts is therefore not as high as it might have been. Where a higher target to be adopted by the EU, the UK targets would automatically rise as well. The existing reductions were always going to be a challenge for this country, raising them will be even more ambitious.
Yet over this period energy prices are expected to rise substantially. So energy users face a triple whammy: greater demands to curb emissions; higher prices for energy; and reduced spending budgets as well. It looks a bit like trying to square the circle.
There are also regulatory and legal changes which need to be taken into account. The two that will impact most directly on the public sector will be changes to the Building Regulations and the introduction of the CRC Energy Efficiency Scheme. The new edition of Part L of the Building Regulations (which deals with energy in buildings) comes into effect on 1 October 2010. This affects all new buildings and any major projects on existing structures. While the new look Part L will have greater flexibility in meeting carbon emissions targets, the targets themselves will be significantly tougher.
The CRC Energy Efficiency Scheme will introduce the concept of carbon trading as a way of limiting overall emissions. It is already being used by heavy industry within the EU’s Emissions Trading Scheme. The Scheme started in April, as I mentioned. This first year is a ‘reporting year’. It does not involve any financial outlay by participants, which are all those organisations with half-hourly electricity metering and an annual consumption of more than 6,000MWh – around a £500,000 bill. Improvements in energy savings will be consolidated into a league table showing how well each organisation has done during the year in question. Those taking part have to buy carbon allowances in advance. These will then be recycled back, the exact amount depending upon the position in the league table. So an organisation higher up the table is likely to get back more money than it laid out, while the poorer performers will suffer a net loss of funds.
It should be noted that although this year is designated a ‘reporting year’ for which you do not buy allowances, it is nonetheless very important. You must register with the scheme administrator, the Environment Agency, by the end of September or face a fine of £5,000. Also, this year is the baseline year against which future performance is judged, so you must produce the ‘accounts’ at the end of the year.
Given all these seemingly un-coordinated pressures, how are organisations supposed to respond? Well, there are some common factors.
First, given rising prices, the only way to reduce costs is to reduce consumption. Even switching to low or zero carbon (LZC) sources of energy will not avoid price rises although they may help to reduce exposure in the CRC EES. Yet as always, knowledge is power – you have to know what you are using and where before you can make effective savings. The previous government recognised this and so both the Building Regulations and the Energy Efficiency Scheme provide incentives for people to invest in effective metering systems – specifically automatic Monitoring & Targeting (aM&T). Installing these entitles the building designer to an allowance against the emissions targets set out in the Building Regulations. aM&T is also specifically named as a way of improving an organisation’s position in the CRC EES league table – it is evidence of ‘early action’ to improve performance. An improved position means more money from carbon allowances being returned to the participating organisation.
The latest aM&T systems are also able to automatically produce Display Energy Certificates (DECs), which all large public sector organisations need to put on public display. With revisions to the Energy Performance of Buildings Directive (EPBD) now approved in Brussels, it will not be long before a much larger range of buildings in both public and private sectors have to produce these certificates.
Effective Monitoring & Targeting systems enable building operators to identify where energy is being used – and where it is being wasted. Sometimes this may be done to ‘drift’ or breakdown where equipment settings have moved away from the optimum levels. The sooner such a situation can be identified the sooner it can be tackled. But these systems can also be used to target underlying issues.
One area that can yield good savings is that of lighting and lighting controls. Many modern buildings are so well-insulated that there is very little heating required. However, equipment may generate sufficient heat to require cooling or air conditioning. Among the largest energy loads is the lighting. Replacing conventional lighting with low-energy options will undoubtedly reduce the energy costs – and also the impact on the ambient temperature (a tungsten-filament lamp transforms just 10 per cent of its energy consumption into light; the rest goes into heat. That is why these are being phased out). However, choosing a more efficient light source is only half of the equation. Lighting that is operating when no-one is there is still wasteful. And different areas need different lighting strategies too – storage areas need lower and more intermittent lighting than desk areas.
Investing in technology
With all ‘up front’ investments in technology, there is the question of justifying the investments, especially in an ever tighter spending environment. There are, however, many studies that have shown the cost-effectiveness of the Monitoring & Targeting systems. And once current costs are known for items such as lighting, then it is relatively simple to determine the payback period for investments in this – or virtually any other – technology.
Looking at the incentives to invest in energy efficiency equipment though, there is more than just a financial imperative strong though this may be. There will be Government targets for cutting emissions – this is certain following the passage of the Climate Change Act. And the public sector is legally required to take a leading role.
The Energy Services and Technology Association (ESTA) represents over 100 major providers of energy management equipment and services across the UK. The Association organises a annual, series of free conferences in April and May. For more details visit: www.esta.org.uk