The EMA Board of Directors identifies trends in sustainability and energy management that will shape the sector and impact companies in 2019 and beyond.
Paul Eggleton, Commercial Director, Mitie Sustainability
Asset financing and asset as a service: With the age-old limitations on internal capital availability, organisations continuing to seek to reduce fixed costs, and growing numbers of finance providers willing to invest in energy-related assets I expect to see more solution providers moving to an asset as a service model. However, not just based around a simple lease model but one that allows the provider to leverage the asset for other revenue streams – this has the potential to reduce the fixed price, whilst providing some risk rebalancing which is offset by a share of any upside.
Flexibility services combining price, volume & action: This will continue to grow and become BAU. I expect to see more and more new market entrants challenge the established players and provide Over the Top services that devalue the existing Customer/Supplier relationship. I think this will provide some good opportunities for end users IF they are prepared to shift from established players. I think we’ll also see established players looking to acquire/partner to bring new capability into their service portfolio. Specifically, on the flexibility front I see organisations accelerating their adoption of EVs and this in itself will cause organisations to think about how they manage site loads, available capacity, charging regimes etc.
Delivery, delivery, delivery: With many large end-users facing fully delivered bill increases of up to 70% in the coming years and more FDs and CFOs waking up to this fact I anticipate we’ll see greater action in organisations putting in place bolder strategies and projects to mitigate these as much as possible. I would like to think this would lead to a greater uptake in Energy Performance Contracting and integration of the two, aforementioned topics, into a company’s strategy.
Wendi Wheeler, Energy & Carbon Strategy Manager, Network Rail
Outside-the-box thinking: Following the IPCC special report on reaching the 1.5°C global warming threshold which was released in October, there is a renewed conviction that we simply are not doing enough. With the increasing focus on accelerated decarbonisation industries, organisations are challenged with what they can do next. Whilst there is still so much to do in terms of general energy efficiency it is clear that even if all of those avenues are exhausted, more will need to be done. In order to achieve greater carbon reduction businesses simply can’t continue to operate in the same way as they have done previously. Getting rid of carbon-intensive fuels and moving to low-zero carbon operation is a massive challenge for the rail industry, but one which the industry is embracing as it sets out plans for a cleaner railway – and those plans will require us to change our modus operandi. It’s challenging and exciting, and I’m so pleased to be a part of the revolution!
A new way of managing our energy demand: As District Network Operators also prepare to change their methods and transition to District System Operators there is a fantastic opportunity to ride with them on their journey and take advantage of the benefits that this change can bring. By working together with the electricity industry and using energy storage and demand management techniques, organisations can help to balance the grid whilst generating cash benefits. Increased focus on demand management will also highlight areas of energy waste that can be addressed – if done right, this is a win-win-win scenario.
Partnerships and shared learning: Moving into 2019, I see that we will not only need to learn from each other more and more – as successful energy managers we should be doing that already – but working in new ways to apply that shared learning better. Organisations need to be less insular and reach out to those that can help them achieve their aims by operating in partnership with others. Rather than traditional client-contractor relationships, I see service partnerships coming to the fore, sharing the benefits of joint goals and getting on with the bigger job in hand rather than getting tied up in arranging individual contracts for piecemeal works.
Scott Armstrong, Head of Sustainability and Energy, Bourne Leisure
Making utility efficiency the responsibility of all: Moving away from a central top-down approach to energy efficiency within companies and engaging with all team members to make it a moral responsibility on all to operate/work in a manner that delivers efficiency across all utilities will deliver greater results and mean teams are better engaged with the overall sustainability message. We have a saying within Bourne Leisure that ‘if everyone does a little, then no one will have to do a lot’; this tells our team that everyone can, and is expected to, make an impact.
Also, moving away from a financial savings message around utility efficiency to a softer environmental message is starting to deliver greater impact with our youthful team. This links in nicely with the October IPCC report urging people to make lifestyle changes to avoid future ‘climate catastrophe’.
Granularity of data: If you can measure it you can manage it! Data is everything in the drive to manage utilities. Whilst the use of metering and data is not new in itself, the falling cost of sub-meters recording interval data to measure zonal energy consumption and loggers and flow meters to measure water consumption will give businesses a greater level of visibility to become even more focused on efficiencies. Cheap to install and link to an energy management platform, this will enable businesses and department heads to take corrective actions when identifying consumption spikes and as data is built up, compare against performance metrics to drive best practice and create some competitive spirit.
Make ESOS your friend: 2019 Phase 2 of ESOS should be welcomed by all business energy management/sustainability teams. It gives us all the ability to engage directly with Leadership teams, re-focus on operational practices through audit work and gain legislative commitments from the Board. Take the opportunity to build your internal expertise and train an internal team member to Lead Assessor level, after all, you know your business better than any external consultant, no matter how good, will ever know it. 2019 will be a year of discovery and focus linked to ESOS, make ESOS your friend!
Dr Mike Pedley, Independent Consultant
Look ahead: Given current UK politics, these are uncertain times for UK business. So in 2019 take a check on one of the energy basics: buying or sourcing energy for your future business needs. Uncertainty leads to price volatility. Having some future power secured can reduce financial risk.
If not already doing so, look at whether you can buy flexibly so you can secure power gradually as opportunities arise. Remember before buying to ask yourself:
- What can I save through energy efficiency?
- What can I generate cost-effectively on (or-near) site?
- How important is green (low-carbon) power for my organisation?
- How flexible can I be in when I use power?
Review (or write!) your energy buying/hedging strategy… and ensure it is signed up to by the key stakeholders in your organisation. Set out what your plans and contingencies are and ensure those holding the purse strings sign up to it. Understand what your financial risk limits are (i.e. how much of your requirements can be left unbought until later).
- When do you buy as the price rises and when is it not worth holding out as the price falls?
- How far ahead do you (and can you) buy?
- Do financial products (e.g. future swaps) and long term PPAs have a role?
Secure a green future: Despite the uncertainties, there are some great opportunities out there to green your business through the way you source energy.
Can you generate on site? If not on-site, is there a local generator (e.g. solar array or wind turbine) you can connect to with a direct wire? That could be a ‘win’ for both.
Can your supplier provide certified renewable energy (at low or no premium)? Consider if a long-term grid PPA from new renewable development would fit your strategy?
Charlie Cox, Energy Manager, University Hospitals of North Midlands NHS Trust
Collaboration: I work for an NHS Trust which is currently in financial special measures, so we have extremely tight controls on capital and revenue spending. This makes it very challenging to fund any significant energy saving measures.
We intend to work more closely with partner organisations to find ways of delivering savings, within the framework of these challenges. Key partners for this will be local NHS organisations, other public sector organisations, and our PFI Project Company. The key here is to select a small number of work streams that will bring real benefits to all parties through collaboration, and not to get bogged down by trying to work together on everything. By working together we can improve the overall public sector more efficiently and offer better value to the tax-payer.
Keep banging the drum: It’s easy to assume that just because you have told someone something, they have heard it! In reality, people are busy at work and are bombarded with so much information all the time, that messages often get missed. This applies both to general energy saving messages sent to all 11,000 members of staff, and to specific requests directed at individuals and small groups.
In these challenging times, we need to keep energy efficiency on everyone’s radar and keep reinforcing the point that there are savings to be made that don’t impact on patient experience.
Innovative working: We need to reach out to our clinical colleagues to help reshape the way healthcare is delivered. There is only so much that can be achieved by making what we already do more efficient, we need to question whether we needed to do it in the first place.
By embracing technology such as smartphone apps that help patients with long-term conditions to manage their symptoms, we can help them to avoid unnecessary and stressful visits to our energy-intensive hospitals. Obviously, energy is only one small part of a complex jigsaw here, but this is an example of how energy managers can help to steer their organisations towards improved social, financial and environmental sustainability.
Dr Vassia Paloumbi, Sustainability and Energy Management Expert
There is a lot of talk these days and aspirations for organisations becoming zero carbon. Even the Mayor of London has committed to London becoming a zero carbon city by 2050. But in the world of energy management, this is often more like a dream and it does require comprehensive monitoring of energy demand and carbon emissions which I certainly hope the new Streamlined Energy and Carbon Reporting and ESOS Phase 2 have the opportunity to achieve if done well. So for me, energy managers’ world should:
Be lean – use less energy and manage demand: Priority should be given to minimising energy demand both at new built but for existing buildings as well. It is much easier, of course, to do this for new builds when designing a new building, but for existing ones, Energy Performance contracts (like RE:FIT) for public buildings can help and can deliver significant carbon reductions against targets.
Be clean – supply energy efficiently and cleanly: Demand for natural gas in London has been decreasing over the last few years, with a 25 per cent reduction since 2000. This trend is expected to continue due to improved efficiency and a move away from individual gas boilers. CHP is no longer the answer and alternative technologies that don’t use fossil fuel should be explored. On the other hand, electricity demand will increase and will impact an already overstretched grid. This is where we need to think creatively and consider, demand-side response minimising peak energy demand and promoting short-term energy storage. Technologies like battery storage can be a great and clean asset to an organisation for energy storage and demand management where you can help balance the grid but also generate income.
Be green – use of renewable generation: Where possible looking at onsite generation direct or PPA through private wire or alternatively PPA agreements with large generators. Renewable generation in the UK has increased (almost a quarter of energy generation now comes from renewables) and this is set to continue. There has been a lot of debate around green tariffs and these should not be considered for energy efficiency and you should always do whatever you reasonably can to reduce your current use of electricity and other fuels before considering these.
And one more: Plastic pollution was the hot topic of 2018 mainly due to Sir David Attenborough. We have seen many changes on this and great campaigns and initiatives from a lot of large and well-known companies worldwide. Plastic straws are now hard to find these days and if you go around with a paper cup (like the environment secretary recently) you may get strange looks – well Michael Gove was certainly spotted. How can we as energy managers jump on this? How can we make energy efficiency a hot topic and on the top of the agenda?
Reducing plastic or eliminating it will not combat Climate Change (or deliver zero carbon – as I have talked above) but reducing our energy use and associated emissions will! So, how do we do it? One for the New Year I think! Happy 2019.