There is a growing appetite among UK businesses to adopt longer payback periods for energy saving improvements according to energy management firm SPIE.
According to Liam Rock, energy manager at SPIE, the take-up of longer periods of investment return was severely hampered by the economic crash of 2008, which left many businesses unwilling to take-on energy saving measures unless they saw returns within two years.
But speaking exclusively to Clean Energy News at this week’s Ecobuild exhibition, Rock said: “We’ve come through a difficult spell in terms of what companies expect in terms of seeing a return on their investment for an energy saving [programme].
“Pre-2008 there was lots of money around and people were happy to invest in longer term projects. Once money got tight everyone pulled it right back to if it doesn’t pay back within one or two years they weren’t interested. Now we’re seeing that boundary start to press out again.
“Everyone expects there to be some sort of lead time on their return of investment but it’s how long that lead time is at the moment and they’re starting to creep back out again.”
Rock claims this change has been led by the growing interest in the sustainability agenda, with building owners facing pressure from their tenants to improve the performance of a building, either to reduce costs or improve comfort.
This shift towards longer term investments has been helped by the government’s ESOS scheme, which requires energy audits to be signed off at a board room level.
“It is becoming a bigger issue on a wider scale. You’ve got ESOS pushing into the board room and I think the wider carbon agenda comes back into play,” Rock added.
The role of ESOS in improving the status of energy efficiency within a company was supported by Tilly Shaw, project manager for energy management consultancy Sustain, who said: “What ESOS really did was get them [energy managers] in front of their board. We weren’t telling people anything they didn’t know already – well, the energy manager knew it but the directors hadn’t got the message.”
Despite this growing profile, a lack of understanding within firms remains a key barrier to the adoption of wider retrofit projects.
Speaking at Ecobuild, Martin Gettings, sustainability manager for the Canary Wharf Group, outlined a recent retrofit project which saw the widespread installation of LED lighting. While this is expected to provide a quick payback and life savings, projects like these have been criticised in the past for failing to embrace the opportunity for wider ranging measures.
Alex Rathmell, commercial director of Minimise Solutions and managing director of EEVS Insight, told Clean Energy News last month that around 70% of retrofit projects going on are standard LED light replacements and fail to incorporate a wider retrofit programme.
“Every single project that goes ahead that is just a single technology upgrade is a missed opportunity to do a bigger, more ambitious deep retrofit project,” he said.
This view was support by Shaw, who told Clean Energy News: “There’s a real need to take a broad spectrum approach when looking at a building or an organisation. LED is a massive opportunity, there’s no getting away from that; we are having an LED revolution over the next five years, that’s going to happen. But that’s not going to be enough, that’s not going to fix the problem.
“We need to go further, we need to look holistically at what other opportunities are available.We can’t just rest on one technology.
This was backed up by Rock, who added: “What I see on a day-to-day basis is that people don’t appreciate what that bigger picture is, they don’t have the energy expertise – how does that person understand where the opportunities are?
“LEDs are being used very widely at the moment but if you replace a certain type of light [like] the most energy efficiency florescent tubes with an LED light, there’s no energy saving there and there’s not much of a life cycle saving there either.”
Rock added that instead of clients approaching SPIE requesting a specific cash saving – which is often the case – the mindset when beginning retrofit works needs to change.
“You need to understand where the potential to save is, how big it is, what’s the return on that investment is, whether it’s a simple return instead of just starting with a number and working backwards which is something you do find,” he said.
“It’s knowing where the opportunities are and then assessing the value of them – either an immediate financial return or the longer term – and then actually knowing how to put them into action.”