Only 5% of professionals responsible for procurement of energy consuming equipment are highly confident in energy saving claims made by manufacturers, according to a new report identifying a series of barriers to increasing levels of energy efficiency.
The Carbon Trust’s survey found a quarter of respondents were not confident at all of manufacturers’ claims about their products, suggesting the majority have some reservations about buying into the performance ratings publicised by producers of energy-saving products.
The same issue was identified at a recent round table discussion hosted by Clean Energy News, in which a number of contributors from across the energy efficiency sector suggested a lack of understanding was leading to increased levels of distrust among consumers.
Following a suggestion that some energy users want someone to offer savings with little further information, Alex Rathmell, commercial director of Minimise Solutions and managing director of EEVS Insight, said: “There’s quite a lot of that about now but it’s not very transparent and I think that adds to the problem. It adds to the suspicions that there are huge margins in it for somebody somewhere and it’s making that issue of not really trusting the industry worse.”
Making the case
Despite this high proportion of untrusting consumers, the report identified that the biggest challenge facing energy managers was the difficulty in making a business case for purchasing energy efficient equipment. Over half (57%) of the 135 respondents made this judgement and while this is a small sample of the industry, it does represent a significant barrier to a large proportion of those asked.
The same issue was identified at during the round table discussion where Sandy Abrahams, partner at Lx Nova Partners, said: “Energy efficiency is simply seen as a cost that is added to a whole number of business running costs. It’s not seen as an opportunity or a business investment which it should be.”
The speakers identified the issue stemming from the fact that energy savings from efficiency measures are notional. Rathmell explained: “If you invest in reducing the demand of a building, that cash flow that you’ve generated is the difference between the amount of energy that the building would have used in a parallel universe if you hadn’t done that project, and the amount that it has used in this universe if you did do the project. So by definition, it doesn’t exist.”
It was claimed that this makes it very difficult to convince financial directors to part with funds as they are met with an immediate cost before any savings can be produced. This is made worse by the survey’s findings that two-thirds (66%) of respondents did not fully take into account the whole life costs of equipment when making purchasing decisions, suggesting more needs to be done to educate the market on the true costs – and savings – offered by these products.
The failure to provide an adequate business case has also lead to another significant barrier identified in Carbon Trust’s report – the availability of finance.
Funds lacking for efficiency
This was identified by 38% of respondents and was a key issue for those speaking at the Clean Energy News discussion. Cian O’Donnell, renewable energy consultant for Octego, claimed: “You’re fighting for investment if you can get it,” while Abrahams added that the problem for energy managers is that they operate in “a limited role with a limited budget”.
Paul Boreham, head of energy services for UX Energy Services, said: “I suppose the holy grail for an energy manager is and always was that we ought to have our own energy budget and the savings go into that and that funds the investment. That has never happened in my 35 years as an energy manager.”
In order to get decision makers on side, Boreham added: “What we need to do is move away from the engineering side and the techie stuff which we always talk about and put it in to pounds, shillings and pence and then use the various business models of that company or business to demonstrate good value and payback.”
Wide-ranging barriers
Carbon Trust’s report also identified competing organisational priorities (50%), risk of disruption to operations (35%) and finding good quality suppliers (32%) as other barriers to adoption of energy efficiency measures.
Another issue was reportedly the lack of credible information about products, which was the response of one in three of those asked. However in addition to this almost half (45%) were unaware of the Energy Technology List (ETL), a government list of energy-efficient products that, if used, can prompt significant tax relief.
Paul Huggins, an associate director at the Carbon Trust who manages the ETL scheme, said: “In the last few months the performance gap between manufacturer claims and real world performance has become a prominent issue. This is why the ETL is such a valuable resource. It provides organisations with a vast database of independently tested energy saving equipment, where you can be confident of getting products that will deliver top quartile performance.”
Clean Energy News will continue to host round table events on these topics and others to promote debate and provide a forum for a range of topics to be discussed. To find out how to get involved in future discussions, contact Chris Riley on [email protected] or +44 (0) 207 866 4922
