NHS energy spend estimated to be £500m

Research carried out by leading energy consultancy Energy Management LLP has revealed that NHS Trusts spend an estimated half-a-billion pounds a year on gas and electricity.

Powering the public sector is a costly business.

Keeping offices, hospital wards, classrooms and leisure centres heated, lit, ventilated and air-conditioned can be a major drain on finances.

And information obtained under the Freedom of Information act by Energy Management LLP, one of the country’s leading energy and water management consultancies, has revealed the true extent of the cost in some of these key sectors.

Of the 237 NHS Trusts contacted by Energy Management, 64 per cent responded with their estimated annual energy consumption figures for both gas and electricity across all their sites coupled with the financial cost.

The combined total spent on energy for the financial year up to 2017 was an eye-watering £375 million. If you take the average amount per Trust and apply it across the board to all 237 Trusts, the figure would pass through the half-a-billion mark.

Big spenders

Unsurprisingly Barts Health, the largest NHS Trust in the country with a turnover of over £1.4 billion and a workforce of 16,000, topped the energy spend table with an estimated 12.6 million. Manchester University NHS Foundation Trust, with 76 hospitals and clinics, came a close second with £11.4 million.

For Councils too, many of whom are under severe financial pressure, energy accounts for a large proportion of their overall spend. Taking England, Scotland and Wales into consideration, the overall combined spend of 23 Councils (out of 79) that responded was an estimated £93.6 million. In Nottinghamshire County Councils alone, £4 million was spent on electricity in 2016/17 for street lighting, signs and signals.

Increasingly there is a need for public sector organisations to lower energy bills, hedge against future volatility and adopt measures that help comply with green energy legislation.

Decarbonisation and government taxes and levies (third-party costs) now account for the majority share of energy bills (over 60% and rising), placing as much emphasis on energy efficiency as procurement. The phrase ‘the cheapest unit of energy is the one you never use’ is well-liked at Energy Management LLP for good reason.

Skills gap

For many organisations, time poverty means that managing the work required to reduce their energy consumption is an undesirable distraction from their day-to-day core activities. To further compound this, there may also be a lack of energy expertise and distinct skills gap creating barriers to finding savings and implementing reduction initiatives. This is where an expert reputable energy management consultancy can step in to remove these barriers and ease the way forward to achieve effective reductions.

It has never been more important to understand and control your energy costs and our bespoke energy management portal, EM-Powered, enables customers to do that. If you would like more information on EM-Powered and its wide range of features and benefits, please get in touch with Ian Scattergood on 01225 867722 or email is@energymanagementltd.com

Case Study: North Somerset Council

Energy Management and North Somerset Council have enjoyed a profitable relationship over many years.

The background

Faced with budget cuts, North Somerset Council (NSC) contacted us because they were looking for a reputable energy consultancy to help them find savings on one of their biggest overheads – energy.

Our relationship with NSC started in 2009 and it is set to continue into a third decade due to the high levels of customer satisfaction.

NSC benefits from the full range of our energy management services including Invoice Validation. More than £350,000 has been recouped from suppliers in the last six-and-a-half years after our team discovered the Council had been billed incorrectly.

Services offered

  • Procurement
  • Dedicated account management
  • Market analysis
  • Invoice Validation
  • Engineering Advice
  • EM-Powered energy management portal

Benefits

  • Accurate invoicing
  • Procurement of contracts at competitive rates
  • Ease of service for technical issues e.g.; new meter installs, change of tenancy application

What NSC say about us?

“Energy Management provides unrivalled expert advice, which has resulted in significant cost savings for the Council. We are extremely happy with the service we receive from Energy Management LLP and would recommend them without hesitation.” – Commercial & Compliance Officer for the Council.

 

SECR – all you need to know

With the new SECR regulations coming into effect on 1st April 2019, Energy Management explains how the changes may affect certain businesses …

As of April 1st 2019, Streamlined Energy & Carbon Reporting (SECR) commenced, with the aim of simplifying carbon and energy reporting and promoting energy efficiency. SECR requires businesses to publish all energy and transport consumption and carbon emissions information.

The changes to the previous methods of reporting align SECR with the government’s new Clean Growth Strategy, which targets a 20% improvement in business and industry energy productivity by 2030.

You will need to comply if:

  • In the past, you were required to comply with mandatory Greenhouse Gas (GHG) reporting
  • Or you meet two or more of the following;

a.) Turnover of £36 million or over

b.) Balance sheet totalling £18 million or over

c.) Number of employees 250 or over

How will this affect your business?

All businesses are now required to publish electricity, gas and transport energy consumption and carbon emissions information alongside annual directors’ reports for financial years beginning on or after April 1st, 2019. As well as this, businesses will need to disclose any energy efficiency action taken in the previous financial year. The government has stated that, as it stands, you will not be required to disclose ESOS recommendations and the implementation of these. It is important to note that this intends to be revisited following evaluation of ESOS phase one.

How do I report?

SECR reporting is due annually and is published alongside annual directors’ reports.

Within the legislation, no specific method of reporting has been stipulated. However, the government will outline what is deemed to be ‘good practice’ when reporting.

Contact us on 01225 867722 and we will work with you to achieve SECR compliance.

In the meantime, please have a look at our SECR Checker Tool to see if you need to comply.

Mitigating against CCL rises

Non-energy costs (often referred to as thirty-party costs) have consistently been on the rise in recent times and they now account for around 60 per cent of a company’s overall energy bill, and everything points to this trend continuing in the future.

This month has seen an increase in rates for Climate Change Levy (CCL, affecting electricity, natural gas, LPG and other taxable commodities. 

The CCL rate – an environmental tax on energy delivered to non-domestic users – has been raised to recover the revenue from abolishing the Carbon Reduction Commitment Energy Efficiency Scheme (CRC) at the end of the 2018/19 compliance year.

One way to keep a check on these increases is by ensuring compliance and reducing energy consumption; energy efficiency is now every bit as important as procurement in terms of energy management.

Alternatively, your business may currently be in a Climate Change Agreement (CCA). Businesses who hold a CCA will see their CCL discount increase from 90% up to a 93% reduction in electricity costs and from 65% up to a 78% discount on gas, LPG and any other taxable commodity.

Taxable Commodity April 2018 Rate April 2019 Rate
Electricity (£/kWh) 0.00583 0.00847
Gas (£/kWh) 0.00203 0.00339
LPG (£/kg) 0.01591 0.02175

At Energy Management, we have an experienced team of energy consultants and chartered engineers who are highly-skilled at devising and implementing cost-reduction solutions including the introduction of energy-saving technologies. We are also have years of experience in guiding clients through the CCA process, ensuring all relevant procedures are followed to ensure CCL discount.

Our bespoke energy management portal, EM-Powered, is also an invaluable tool is accurately monitoring and reporting energy consumption so that businesses have a proper understanding of their consumption.

If you need help in managing your CCA, please get in contact on 01225-867722.

Membership of ESTA approved

ESTA - Energy Services and Technology Association

Energy Management LLP is pleased to announce it is now an approved member of the Energy Services and Technology Association (ESTA).

By joining the UK’s leading energy management industry association, Energy Management has underscored its commitment to assist organisations, designers and constructors to reduce energy running costs and carbon footprint.

With over 150 years’ industry experience, Energy Management’s team is already highly-skilled and experienced in energy matters but membership of ESTA will serve to improve our offering to customers further.

ESTA’s strategic objectives:

  • Promote the economic benefits of energy demand reduction, energy efficiency and management to all demand-side users and professionals.
  • Raise awareness of energy reduction, efficiency and management with bodies of influence.
  • Ensure that membership enhances the business proposition of member companies.
  • Market knowledge

ESTA members provide:

  • Unrivalled expertise and are best placed to provide independent advice to energy end-users.
  • Market-leading energy management products, technology and services.
  • Significant levels of energy and carbon savings to energy end-users in the public and private sectors.
  • Full ESCO (Energy Contracting) services which guarantee significant energy savings.
  • In-depth knowledge of funding mechanisms for the purchase of energy and energy efficient products and services.

Service Spotlight: Trade Effluent Compliance

When 1970s pop diva Rose Royce sang about ‘the car wash’, you can bet Trade Effluent (TE) Compliance forms weren’t on her mind. However, it may come as a surprise to some valet operators, regardless of size, that they require consent to discharge trade effluent to a public sewer.

Trade Effluent consent is a legal document issued to the owner/occupier of a commercial or industrial property under the regulations within the Water Industry Act 1991.

Water wholesalers need to be aware of where a business plans to discharge anything other than domestic waste into a drain that is connected to a public sewer, and it is the customer’s responsibility to obtain consent prior to commencing any trade effluent discharge.

It is a criminal offence under Section 118 (5) of the Water Industry Act to discharge any trade effluent to sewer without the consent of the sewerage undertaker (Wholesaler). You may be subject to legal action and fines if you discharge without consent.

Where a wholesaler detects discharge without consent, they have the power to close the valeting operation until the site has a formal TE consent. Each application needs to be accompanied by an accurate site drainage drawing.

Energy Management can assist you through the whole TE consent application process to ensure compliance is met in a smooth and timely fashion.

Top 5 energy management trends for 2019

2019 promises to be an interesting year for energy managers, with continuing technological progress and some important policy changes. Here are the top trends to watch, according to a recent article written by the Energy Managers’ Association, published below.

1. Streamlined Energy & Carbon Reporting (SECR)

The final guidance for SECR will be published in January with the scheme coming into effect in April. Although the final guidance is still to be tweaked, it is really only setting out the obligations placed on organisations.

If you are a large company listed as such by meeting two of the following three criteria; 250 employees, £36 million turnover and an £18 million balance sheet you will need to comply. The public sector is not covered unless they own entities that undertake commercial activities and there is no need to file a report if you use less than 40,000 kWh during the reporting period.

So here are the main actions your company will legally need to undertake:

  1. Collect and publish greenhouse gas emissions, energy consumption which includes transport fuel, and energy efficiency actions taken.
  2. Present the data on emissions to be signed off by auditors.
  3. Compile an energy efficiency narrative for the Director’s Report, this will need to state all principal energy efficiency actions undertaken during the reporting period.
  4. Present to the Board for sign off, for an LLP this needs to be presented by a named member.
  5. Included in the company report or lodged as a separate report with Companies House.

As per usual, the SECR reporting requirements are based on taxation. This will come in the form of increased Climate Change Levy (CCL) rates beginning in April of 2019. The rates have been set out, and are charged based on the amount of electricity, gas, and fuels consumed within your organisation. The rates are charged by the energy providers and are shown on your bill.

2. Energy Savings Opportunity Scheme (ESOS) Phase Two

We are now in Phase 2 of the ESOS compliance scheme so let’s recap some facts. The ESOS Regulations 2014 is a reiteration of the Article 8 of the EU Energy Efficiency Directive and mandate that large organisations in the UK undertake comprehensive assessments of energy use and energy efficiency opportunities at least once every four years.

In broad terms, ESOS applies to any large undertaking that carries out a trade or a business (a Company), and any corporate group where at least one member of the UK group meets the ESOS criteria.

A large undertaking is one that:

  • employs at least 250 people;
  • or employs less than 250 people but has an annual turnover in excess of 50 million euros (£38,937,777), and an annual balance sheet total in excess of 43 million euros (£33,486,489).

Most public sector bodies do not fall under ESOS, however, organisations that receive some public funding, such as universities, may have to comply.

If you are unsure if you qualify for ESOS, refer to full ESOS guidance, which includes additional information on how to assess if your organisation qualifies.

In order to comply with ESOS, the large UK organisations are required to take 5 important steps before the compliance deadline of 5 December 2019:

  1. Appoint an ESOS Lead assessor
  2. Calculate your total energy consumption to determine which 90% (minimum) of the energy consumption requires an energy audit
  3. Carry out a comprehensive energy audit to identify cost-effective energy efficiency opportunities
  4. Review and senior management sign off of the energy assessment findings
  5. Report your ESOS compliance and keep records

ESOS is part of British law so even a hard Brexit will not change the requirement to report.


The UK Government has published its Road to Zero Strategy, which foresees that a third of the UK’s fleet on the road in 2030 will be electric.

3. Electric Vehicles

Electric Vehicle (EV) tech is improving and for those who own one the driving is great.

Against the backdrop of improving technology and accelerating climate change, the UK Government has published its Road to Zero Strategy, which foresees that a third of the UK’s fleet on the road in 2030 will be electric. The government has also vowed to end sales of internal combustion vehicles in the UK by 2040.

This is an optimistic prediction considering 2030 is only 11 years away. Furthermore, there is a problem with zero emissions at the tailpipe, as the energy must be provided by the grid and the resulting load will not be inconsiderable.

A privately owned EV can roughly double the electricity use of the average UK home. As a result, one-third of the current UK fleet, or 10 million vehicles equates to the power needed for approximately up to 10 million new homes.

National Grid forecasts that EVs will create an additional 18GW of demand by 2050, which is one-third higher than today’s peak demand.

The scale of generation needed is not in the pipeline and it is an open question whether they could be built in time. All our present wind assets together have 20GW of capacity, enough to power 14 million homes, with 30GW forecasted by 2030.

Don’t get me wrong there will be a huge increase in the number of electric vehicles on the road, but the charging infrastructure needed and local power constraints which will kick in with mass ownership will be a real headache.

These increases in EV charging demand will have to be managed by better consumer engagement, smart-charging technology, and other innovative vehicle-to-grid solutions at scale.

4. The Energy uncertainty of Brexit

With European energy interconnections forecasted to account for one-fifth of UK consumption by 2025, the implications of Brexit on energy prices will be important.

Given that energy suppliers purchase energy months or years ahead, the uncertainty will give rise to significant risk premiums on energy prices. The increasing risk will lead to higher consumer prices, a major problem for long-term business planning.

Additionally, regulatory uncertainty extends to the European Union’s carbon pricing, leaving the UK’s companies unclear on whether the same rules will apply post-Brexit.

Despite a foggy future, maintaining the energy status quo serves to benefit incumbent suppliers and consumers on both sides of the English Channel. Any major disruption will be a negative for all market participants, and therefore issues relating to trade friction and disruptions are the highest risks.

Whilst it is unlikely that the lights will go out without strong agreements in place, it is going to be a less efficient market in the event of a disruptive Brexit. In any uncertain scenario resulting from Brexit, the UK’s security of power supply has to become a top priority, rather than being considered a minor problem.

5. Battery Storage

This is one area that could become really exciting in 2019 because your site could benefit from hosting batteries. Work is being undertaken to allow DNOs to source contracts for battery services in the area of Demand Side Response.

Simply put, the DNO could work out the cost of upgrading, reinforcing or building in resilience and instead of building new substations, they could meet their requirements by contracting out demand reduction services through contracts with independent aggregators.

The aggregators would install batteries at large sites that use power at peak. Energy stored off-peak would be used to reduce power. The demand reduction would not require the site to reduce energy use but use the stored power thereby reducing demand from the grid. Such contracts could help sites through load shifting turn peak time use into a profit centre.

If this sounds a little confusing it is because it will be a slightly complicated process but for energy managers the result will be someone else paying for the batteries, installing them, managing them and rewarding you for the privilege.

If you would like to discuss any of the issues touched upon in this article, please get in touch on 01225-867722 with one of our highly trained and experienced energy consultants.

Diary marker: Streamlined Energy and Carbon Reporting framework

The Carbon Reduction Commitment Energy Efficiency Scheme (CRC) is due to come to an end in 2019 and there will be a transition to the new Streamlined Energy and Carbon Reporting (SECR) regime.

The new SECR framework will implement requirements that will apply to a much wider range of companies. However, companies that use up to 40,000KWh in the 12-month reporting period will be exempt from the framework.

The changes are part of a suite of policies being implemented as part of the government’s Clean Growth Strategy, to deliver on its ambition of enabling business and industry to improve their energy productivity by at least 20% by 2030.

SECR will apply to companies that have more than 250 employees, an annual turnover greater than £36m or an annual balance sheet of more than £18m.

It is highly likely that a number of businesses will be captured by SECR that have not taken part in mandatory reporting previously. Therefore, companies that are due to be affected should make sure that reporting and data collection processes are put into place prior to the introduction of the scheme in April 2019.

Now that ESOS surveying and reporting is in full swing, should you require any assistance with the upcoming SECR reporting then please contact Nick Phillips on 01225 867722 or email np@ energymanagementltd.com.

More information on SECR can be found here>>

School partnership strengthens with festive gift

Fitzmaurice Primary School has today received a £1,000 donation from Energy Management to help towards the next phase of their Digital Leadership Programme, which started last year with the aim of safeguarding children online.

Energy Management founder Gary Weston, whose own children are former pupils of the school, handed over a cheque to Fitzmaurice headmistress, Tracey Dunn, together with art supplies and Santa sacks full of goodies for the winners of the annual design a Christmas card competition.

Last year’s champion designer, Idris, once again took the top prize worth £25 with Alba in second (both pictured) and Greta third. Idris’ colourful picture was used as the centrepiece of Energy Management’s Christmas e-card, delivered to clients up and down the country.

5 Things we learnt at Optimus Education’s Effective Financial Management in Schools Conference

Energy Management recently exhibited at Optimus Education’s Effective Financial Management in Schools Conference in London and a number of different energy-related themes were consistently brought up by visitors to our stand.

1. A holistic approach is key
Schools struggle to monitor their consumption across the board – water, electricity and gas – when dealing with multiple suppliers. As lots of schools are located across different sites, this can be problematic and confusing to anyone other than a skilled energy consultant.

2. Time poverty
Schools do not have time to procure energy effectively meaning they often get bad deals. We talked to representatives from schools who spent two days every three years procuring energy contracts; we do it 24/7, 365 days a year and pride ourselves in our ability to get the best price and best terms. Outsourcing procurement frees up time for schools to concentrate on their day-to-day core business activities.

3. Legislation minefield
We came across a few schools that were wrapped up in a minefield of red tape around compliance. Applying for VAT Decs was one specific problem identified by conference attendees. We have the skilled staff to sort out these headaches for you.

4. Energy efficiency issues
Becoming more energy efficient is a constant struggle for schools, especially older ones with Victorian-style heating systems and the lack of double-glazing. Opportunities to reduce consumption still exist though and a free energy efficiency health check workshop could help identify areas that work for you.

5. Positioning is everything!
We found schools were not constantly monitoring the energy market. Positioning yourself to be able to procure your energy at the correct time in the year is vital to cutting costs, whilst also enabling effective long-term budget management. Did you know you can secure your next renewal up to two years in advance?

Recognise any of the above issues? Working with Energy Management will not help your organisation become more energy efficient without any detriment to your output or the wellbeing of staff, but could also save you thousands of ££s.

To find out more about Optimus Education conferences, click here.