How the Public Sector Can Solve the Energy Efficiency puzzle

By Kalim Shadam, UK Energy Framework Manager at Honeywell Building Solutions

Being a sustainable organisation is a great reputational boost, and likely to gain greater respect from the public; however, the reality of implementing this is no easy task. Operating sustainably can mean any number of things, however, one method of finding sustainable energy solutions in particular is through a self-financing energy performance contract (EPC) that enables smart delivery of energy efficiency plans.

With increasing pressure on capital and revenue budgets and large complex property portfolios, creating and delivering the benefits from EPC’s is far from straightforward. EPC’s are a viable alternative to traditional, resource-constrained energy efficiency works and provide a long term investment and delivery structure for energy efficiency projects.

Defining an EPC framework

The framework is a partnership between a third-party provider of funding and a customer, formed with the aim of optimising the energy efficiency of buildings and facilities. One of the biggest plus-points of EPC’s is that each call-off contract within the framework is standalone. This means that customers are afforded the flexibility to accommodate individual strategies, drivers and funding availability for each property portfolio. They then experience bespoke benefits for each public sector organisation.

What’s more, an EPC contract guarantees the energy-conservation measures implemented will generate the required savings to pay for any changes identified and incorporated. Additionally, any savings from new policies and technology will continue to benefit the customer, irrespective of whether the EPC is continued or not.

These types of contracts are an approach that have been designed to help public sector organisations modify their buildings – by installing energy conservation measures to cut down on carbon emissions while simultaneously achieving guaranteed annual cost savings and potential profits. In the past, it has often been the case that EPC’s planned for the public sector by third-party providers have failed to bring about any real benefits. The reason for this is that the energy savings during the planning stages of a project have not materialised – leading to a huge waste in time, opportunity, and resources.

Why should energy efficiency now be at the forefront of businesses’ minds?

At this moment in time, it is more important than ever that buildings do all they can to be as efficient as possible. The introduction of The 2015 Energy Efficiency Regulations mean that commercial properties with an EPC rating of less than ‘E’ in England and Wales cannot be granted a new lease after the 1st of April 2018. So following this change in regulation, it is in commercial properties’ best interests to ensure that sustainable energy use is treated with the warranted attention.

What has Peterborough City Council done?

The population of Peterborough currently stands at 183,000 and is projected to rise to 228,700 by 2026. Taking this into account, the council opted to set up a framework to facilitate the investment and development of renewable energy generation projects and energy efficiency initiatives. This was done with the goal of minimising running costs, energy consumption and carbon emissions ahead of the vast population growth forecast.

Peterborough’s council also regard energy efficiency in itself as a top priority, and wanted to ensure that its energy is utilised in an efficient and sustainable manner. The Council aims to do its part in reducing the impact of climate change and its personal contribution to its causes.

Peterborough has a substantial property portfolio consisting of 24 schools, three swimming pools, a sports centre, a multi-storey car park, library, market and town hall. This portfolio needed a number of ongoing energy reviews to assess both usage and generation. Honeywell was selected as the Council’s partner for the EPC framework in 2013.

Following the partnership, more than 200 reviews have been carried out on property including educational establishments, together with the council. This was done with the goal of finding opportunities to design and implement appropriate energy efficiency programmes, delivered through an EPC.

The Peterborough City Council EPC framework is set up to allow a flexible funding solution using either public or private funding options. Usually in an EPC, a third party provides the funding. This has a number of benefits for a public sector body, such as Peterborough City Council. For example, they can use lower cost funding via the Public Works Loan Board (PWLB).

Honeywell implemented appropriate energy efficiency plans that use EPC’s. These plans allow public sector bodies like Peterborough City Council to benefit immediately from significant improvements. At the same time, they can use future, guaranteed operational savings that reduce the requirements for maintenance and refurbishment. Working within the EU-compliant EPC framework eliminates the costly, time-consuming procurement process authorities tend to face.

Following a comprehensive engineering analysis of the current energy performance at Peterborough’s facilities, the results showed substantial change. The results helped the council to choose numerous energy conservation measures (ECM’s), including upgrades or replacements of building control platforms, air handling units, lighting systems, CHP’s and pool filtration systems. In total, the council invested £5 million, which led to 1659 tonnes of CO2 savings and £2 million net profit.

Energy efficiency and the public sector

If public sector organisations are looking to release operational capital for use elsewhere, decrease the impact of future energy price increases and carbon taxes, and stimulate growth and career opportunities, then they have a potential solution in the form of optimising energy efficiency.

Let’s look at one example of how this can work. Energy performance contracting can be particularly appealing for schools in the process of expanding. They could be building new classrooms for a growing number of students, a new sports hall or a new canteen. Not only will this be hugely expensive, but it will also hike up the school’s energy bill. It is in their best interests to have a solution in place that can ease the cost implications. It is also an appealing proposition for schools that are under pressure to do more with less, and have to make use of their existing assets. The money that would have been put towards utility bills can instead be redirected towards improving the school.

Peterborough City Council’s EPC framework is an EU compliant solution that other local authorities across the UK can embrace. It is an example of local councils taking a sensible, financially sustainable approach to energy conservation. And as the cost of energy bills continues to rise,  new and innovative ways to create savings and generate income wherever possible must be found.