IAN SCATTERGOOD, BUSINESS DEVELOPMENT MANAGER – HEALTHCARE FOR THE ZENERGI GROUP, GIVES AN INSIGHT INTO THE ENERGY CRISIS AND THE IMPACT ON THE NHS
Energy procurement within the NHS is complex, with many different risk strategies. The majority of NHS sites in England will be covered by the requirements of the Public Contracts Regulations, meaning they have to conduct an open tender or become part of a procurement framework – the latter being the more likely.
The relatively low wholesale cost over the last 4-5 years (with the occasional blip) hit multi-year lows in the spring of 2020 and from the autumn of 2020 wholesale costs began to rise.
From the start of April 2021 to today the wholesale cost of gas has increased by 241% and power 184% (year ahead prices) so regardless of the procurement strategy employed by each NHS Trust in England the impact will be felt, either now as they forward hedge or as they look to renew a fixed-term contract.
The majority of the invoiced cost of gas is the gas itself, whilst power has many other non-energy charges applied. At the beginning of 2021, the non-energy charges equated to about 60% of the overall cost (environmental levies, transmission, distribution charges etc.) but that balance has now swung the other way.
Carbon Costs – whether EU ETS or since last year UK ETS has also seen the carbon cost rocket, and this cost will be passed on to the end-user.
Weather can play a big part in the energy requirements and the long cold winter of 2020/21 will have seen an increase in comfort heating requirements. A long hot summer switches that demand to comfort cooling.
However, the increased invoice price of power now makes the cost-benefit analysis of installing renewable generation much more attractive. Power Purchase Agreements are becoming more commonplace across sites within NHS England, and it is likely we will see this accelerating over the next few years.
NHS has committed to being Net-Zero by 2040 and has spent over £50 million installing LED lighting, which when expanded over the entire NHS would save over £3 billion over the next 30 years.”
Taking hospitals in England into consideration alone, that figure is now calculated to have more than doubled when today’s sky-high energy prices are applied to the last set of figures published by NHS Digital.
The NHS Estates Return Information Collection (ERIC) 2020/21 reveals the true extent of hospital operating costs, with energy accounting for a large percentage of the overall spend.
In the period from 1 April 2020 to 31 March 2021, over £630 million was spent on gas and electricity.
Since the end of March, wholesale gas prices have more than doubled (240%) and electricity has gone up by an equally staggering 184%.
Those soaring energy costs will only add to the pressure the NHS is under in the current COVID-19 pandemic but, unfortunately, there is still no light at the end of the tunnel.
Assuming energy consumption has remained consistent since April, based on today’s prices overall energy costs will have rocketed to £1.2 billion when the next ERIC report is published.
Hospitals with the biggest bills are in the East and West of England
Out of the 1,200+ hospitals that make up the NHS Estate, three hospitals had an annual electricity spend of over £5 million.
Addenbrooke Hospital, part of the Cambridge University Hospitals NHS Foundation Trust, was top with £6.8 million spent on lighting buildings and powering equipment, followed by the Queen Elizabeth University Hospital, Birmingham (£5.9 million) and Southmead in North Bristol (£5.1 million).
St James’ Hospital in Leeds and St George’s Hospital in South London spent most on gas (£3.5 million) with the Royal Victoria in Newcastle-upon-Tyne the other hospital to go over the £3 million mark.
As many hospitals are based on different sites, there may be multiple energy supplier contracts involved with different start and end dates and keeping track of energy costs can be problematic as a result.
Also, the NHS estate is a real mish-mash of state-of-the-art modern facilities and Victorian hospitals that are no longer fit for purpose, and the energy efficiency of some buildings will vary drastically to others.
Energy Management’s portal, EM-Powered, helps to tackle such issues and give a proper overview of how much energy is being consumed and where, to a high degree of accuracy.
If you would like to discuss the full range of benefits of EM-Powered or would like to talk to one of our consultants about energy procurement or the other uk energy management services we offer, please get in touch on 01225-867722.
With climate change hot on the agenda and businesses becoming increasingly aware of their social and environmental responsibilities, net-zero status is a goal that many are working towards in 2022.
Being net-zero means the amount of greenhouse gas emissions produced through your business and related supply chain are not greater than those taken away from the earth’s atmosphere.
Some of the world’s leading brand names have pledged to meet this target by a certain date in the coming years. But it does not always need a large decarbonisation budget to achieve net-zero.
Some of the measures below will all contribute to businesses, whatever the size, making progress in the journey.
1) Green energy procurement
Business energy suppliers will offer green energy tariffs where either some or all of the energy supplied to your business will be generated from renewable sources as opposed to fossil fuel or other carbon-heavy sources.
2) Become more energy efficient
Nearly half of all business energy consumption happens outside of normal working hours. How so? Equipment that is left on standby or not turned off at all still uses energy. Ensure all your staff follow guidelines that encourage them to get into the habit of shutting down their equipment properly and become more energy efficient.
Smart heating controls and LED lighting are also two obvious and affordable measures that can easily be implemented.
3) Set up a ‘green team’
Establishing a net-zero culture is key to getting everyone on board and bringing about behavioural changes. Consider appointing a member of staff to lead this initiative and make sure standards are upheld.
4) EV charging point installation
The more access staff have to EV charging points the more likely they are to use this mode of transport for their daily commute. With the sale of new petrol and diesel cars being banned in the UK from 2030, the need will only get greater.
5) Remote working
Business transport is a major contributor to carbon emissions so, where viable, arrange for meetings to be held online instead of in-person, particularly if flights are involved. Striking the right balance between home and office working could improve productivity as well as your carbon footprint.