Energy Manager or Soothsayer?

The modern energy manager has to have a wide range of highly developed skills; they need to be numerate both to handle the financial elements and the vast amount of consumption data they can now have available from advanced metering, they need to be a salesman to persuade others to take steps to improve performance, they often need to be a people manager, they need presentation skills, they need to be literate – the list goes on and on.

Well we can add another difficult skill; they need to be able to foretell the future!

Now some elements of that requirement can be handled relatively easily, future consumption can be predicted with reasonable accuracy by using skills (like those developed in the CMVP course/qualification )and past consumption or plant specifications and anticipated weather or production rates to extrapolate into the future but others are less easy.

We are often asked to predict energy cost sometimes just for a financial year (or the remainder of one1) but sometimes we need to predict further ahead. One example of this is Whole Life Costing (see box) where we are expected to determine charges for the entire lifetime of the equipment. To predict that we need to understand a lot of things that are definitely not under our control like inflation, legislation, world markets and labour rates. The problem is that many “experts” are paid a great deal to make those predictions by big business and governments and they have a reputation for always getting it wrong!

The simple rule of thumb was always to assume that energy unit costs, standing charges etc. would increase significantly across time and that capital costs would decrease in real terms because of improving technology. Taxation could also be expected to become more expensive and complicated.

The trouble is that experience tells us that doesn’t work all the time – from the early 1990’s through the turn of the century the UK experienced a massive apparent decrease in gas and electricity prices. (we’ll ignore questions of deferred investment) but new taxes like CCL, ROC’s (and administrative challenges like CRC Energy Efficiency Scheme and ESOS) have managed to increase the complexity and confusion. (to add to that it would appear that a “Volte-face” may take place doing away with CRC and lumping the revenue for HMG onto Climate Change Levy as a pure tax).

And some more fundamental changes occur which we couldn’t expect. Intelligent energy managers have for many years advised the use of Mains (Natural) Gas as the “least worst option” because of its competitive (low) pricing, effective utilisation and the lowest carbon footprint of any fossil fuel. The last included mains electricity because the majority of generation was by the combustion of fossil fuels (including Natural Gas) and it was thereby one of the fuels with the largest carbon emissions per kWh.

So many of us specified – and even wrote into policy documents- that electricity was not to used for space heating and thereby reduced Carbon Emissions significantly. The trouble is very soon we will be wrong! Because of the unprecedented (and surprising) growth of renewable generation the UK generation mix has now often got a rate for Carbon Dioxide production per kWh BELOW that of Natural Gas – and it will get even better as Coal and other Fossil Fuels are phased out to decarbonise the network. There are issues about peak load requiring high Carbon Generation plant being employed but that will be for a limited period each year.

Now we were right to act as we did and will have saved a massive amount of Carbon from entering the atmosphere and adding to Climate Change but much of that plant will continue to emit more Carbon than an alternative for years to come. The question is “could we have foreseen the change”?

A few years ago some of us became excited by the first generation of wind turbines – small (2kW at most) they were designed to be fitted to new and existing buildings and provide a supplement to their electricity supply. Comparatively cheap – what could go wrong? Well they didn’t work effectively because no one understood the turbulence around buildings2.

At the moment one of the exciting technologies is electricity storage but we’ve already heard stories of poor installations without an economic outcome (and many more which seem to work well) – so should we be installing this technology – or another one?

So, do Energy Managers need a crystal ball or maybe a coin to toss?

Either might have a better outcome than expert opinion (especially if you could hire Nostradamus’s press agent) but responsibly we can only listen to the opinions of “experts” where we can find them and extrapolate what “facts” we can identify using the best estimation of apparent trends. But then of course the UK voted for Brexit and Donald Trump was elected US President – events which were not predicted by the experts! Both those events also add to the difficulty of predicting the future…

Good Luck and expect to be proved wrong sometimes…

Andy Clarke Email:

Andy Clarke is speaking for the Energy Institute at Teesside University on “What if Carbon Dioxide isn’t causing Climate Change?” on the 18th October.

1 Any other Energy Managers ever wonder why the financial year ends in April when March is the most unpredictable month for weather?

2 Warwick University study