To do this, this checklist draws on some fundamental themes:

• Design for best practice operational resources use (energy, water, waste) to contribute to the global commitment towards Net Zero and the development of zero carbon buildings.
• An ethical ethos for materials selection to reduce environmental impact on the planet and our communities.
• Benefits realization of the design intent into best practice operational performance; share your good practice measures and experiences so we can learn from each other.

A key driver for this is ensuring our fit-out and refurbishment projects meet best practice industry standards.

REVIEW

The first step to take to improve understanding of the existing installation and set the strategic objectives for the development fit-out

2. Understand the latest legislation and standards requirements for the project

• Ensure you’re up to date and complying with all relevant and local environmental legislation and building standards – for example, check for the latest application local building regulations and any standards applied by the client organization.
• Check with specialist process suppliers about any other specific legal requirements.
• Determine how these requirements apply to the project’s overall environmental & sustainability performance.

4. Tap into well-know environmental assessment tools for decision making about overall sustainability performance

• Use an environmental criteria based scoring method to facilitate discussions about which measures to target at concept design stage.
• Among the globally recognized criteria assessment approaches, BREEAM and LEAD are the most recognized, both of which apply to development and refurbishment.
• The Ska Rating scheme, originally developed by Sweden firm Skansen, is an example scheme that specifically applies to fit-outs. It uses a free on-line tool this can take into account different project scales, size and budgets. The project is scored based on relevant ‘measures in scope’, usually between 30 and 60 measures depending on the complexity of the project. 
• Whichever scheme you choose, you want one that utilizes life cycle analysis to weight different sustainability measures to optimize overall performance.

REDUCE

First target improvement measures that directly reduce the energy & environmental impact of the operation concerned

2. Provide a forecast for metered energy consumption in operation

• The forecast should be in absolute annual consumption terms, for both metered units (e.g. kWh) and cost in local currency.
• We often specify the use of a simple energy assessment method, using an Excel spreadsheet template, that schedules out all energy users for the space, and estimates consumption based on expected operation profiles and utilization and load factors (based on experience).
• We find that this can be used by design teams to facilitate design discussions with eventual building users.
• More sophisticated methods exist to develop forecasts, for example using dynamic simulation energy models.
• Actual operational energy consumption in use will also depend on operational practices and user behaviors.

4. Target ethical materials selection to reduce environmental impact

• This should be a requirement for all fit-out and refurbishment projects involving procurement/installation/disposal of any wood panels, joinery, timber structures and flooring, furniture, particle boards, paper products, textile and laminated floor coverings, wall coverings, furniture and soft furnishings, and ceiling tiles.
• Timber is usually an easier one to target. For example, you can specify 100% timber to be either reclaimed, recycled or, when new, to be supplied with a chain of custody certificate from one of the following forest certification schemes only: FSC, PEFC, SFI, CSA.
• For other materials selection, if possible: avoid the use of any products containing PVC; design to minimize the use of virgin plastic products and packaging; all paints, wall coverings and adhesives to have low or zero VOC emissions (identified by a certified low VOC emissions label).
• All wood panels, joinery, timber structures and flooring, textile and laminated floor coverings, wall coverings, furniture and soft furnishings, and ceiling tiles contain zero or low formaldehyde content (identified by a certified low VOC emissions label).
• See our guide to eco-labelling for materials selection.

REUSE

Once environment impact measures have been specified, then ensure

2. Confirm metered operational energy consumption targets are met.

• When in scope, we would normally expect a statement that confirms the refurbishment meets or surpasses the agreed design energy target, as shown in an appended energy forecast model undertaken by a competent person. This should include detail on the energy performance benchmarks and baselines used and how they were derived, e.g. including the period of any data used (normally 12 months).
• Include a list/description of the good practice energy efficiency measures used in the design, including technical and other measures to facilitate operational/behavioral controls. Include commentary on control equipment and operational controls, for example on your zoning strategy, temperature controls, demand controls, lighting dimming controls, display lighting and other time controls, etc. See Ska best practice measures for guidance.
• Baselines can be adjusted for changes in expected business activity, if there is a demonstrable statistical correlation between business activity and energy consumption.

4. Confirm ethical materials selection is being met

• When in scope, we would normally expect a statement that provides assurance that all materials meet the project’s specific materials requirements.
• Justification for the material selection not meeting these requirements can be made in reference of the reasons for the product used (e.g. based on H&S, hygiene requirements or other ethical reasons) that demonstrates that a market review of alternative products has been carried out, as appropriate.
• If possible, select products that use third-party verification labels/certification, recycled content, environmental product declarations etc. to ascertain sustainability credentials.
• Try using PVC free from Phthalate and Cadmium, that contain post-consumer recycled content, and that achieves 100% recyclable status (i.e. designed for deconstruction to enable recyclability), or demonstrate that it is a more favorable product than alternatives through, for example, a Life Cycle Analysis. A scheme such as the BRE Green Guide to Specification or Green Book Live database can be used to demonstrate a good rating in life cycle impact terms.
• Avoid the use of virgin plastic products and packaging. Source sustainable natural materials instead of plastics, or source 100% recyclable plastics with a high recycled content (i.e. designed for deconstruction to enable recyclability).
• Include a list of all products with medium or high VOC, or formaldehyde emissions levels that do not meet industry label or certification standards. Remember to check formaldehyde content of furnishing, carpets, fabric seating and textile wall coverings to ensure they are E0 or E1.
• There is a global push to prioritize non-HFC refrigerants with low global warming potential. Consider all available technical features and specifications employed to minimize the use of HFC refrigerants in fit-outs, including considering other options, such as CO₂ systems, if available and practical.

RECYCLE

Talk to colleagues, share experiences and communicate the design intent to operators

2. Set handover plans and compile project handover documents

• Communicate the design intent to building owners/operators so they understand the principle sustainability strategies and practices in use. Include the evidence demonstrating that targets and key requirements have been met. Provide principle contact details for sustainability performance from the design team.
• Define building commissioning and handover processes required for optimum performance, detailing requirements, and agreed responsibilities.
• Communicate requirements for ongoing maintenance, any post occupancy evaluations, aftercare contracts, measurement and verification processes for performance levels.
• Include post project reviews to assess and capture benefits achieved to implement in future projects. Performance in use reviews would normally wait until after one year of operation to establish effectively how well the fit-out has performed against its design targets.

4. Feed into environmental management practices required in operation

• Detail energy, water and waste management practices to be included in an operation manual; include opportunities for conservation measures and, for example, recycling of food and other waste streams.
• Produce agreed handover documents e.g. a building logbook and/or a non-technical user guide.
• Support activity to raise awareness of project sustainability features and operation methods to colleagues and building users
• Include the plan for driving continual improvement in future performance.

RETHINK

Challenge mindsets, rethink for operational opportunities for continual improvement, trial ideas and roll-out what works best

2. Consider a principal role for overall accountability for environmental performance.

• Rethink how operational strategies can offer oversight and accountability for end-to-end coordination and operational outcomes across all business processes.
• Often need adequate competency and authority in environmental leadership and ability to communicate well across organizational teams.
• Responsibilities may include: asking for building user feedback to assess levels of service achieved, considering future changes in use, assisting with fine tuning building services and operational systems, reviewing building management system controls (and fine tuning performance in each season), updating manuals and records to reflect any changes, comparing energy consumption on sub-meters against targets/simulated forecasts, feeding back lessons learnt from post occupancy reviews, etc.

4. Regularly report on progress and overall environmental performance

• Put in place monitoring, measurement and analysis processes to evaluate and report on progress and performance, e.g. using monthly dashboards. Remember to show clear line of sight to delivering the organizational strategic operational outcomes.
• Include tracking of energy, water and waste performance and actions taken.
• Include ongoing compliance status with local legal and other environmental requirements. Regularly review and update the applicable legal and other requirements.
• When possible, feedback performance to the refurbishment design team.

SUMMARY

A building refurbishment or fit-out is a great moment of opportunity to make changes to significantly improve the environmental performance of buildings and operations.

We find that following the 5-R categories helps ensure the remedial measures are considered in an order that are not only ensure lowest overall investment cost (for refurbishment/fit out) but that also right sizes subsequent investments in technology.

Download

If you would like a downloadable summary checklist for this, please contact us. 

• It’s in Microsoft Word, but it can easily be converted to another Word processer, such as Google Docs. It’s read-only, so you’ll have to save your version onto your own drive to be able to modify it.
• You can then modify and develop this simplified checklist to suit your needs as required. Complete it on line or print it out (but remember: think before you print!)

For more detail about developing an approach to optimizing the energy performance of process systems, check out ISO 14001 and other related standards.

Ways 1 to 5 are a few highlighted programs that an organization can work with to make their Net Zero pledge official, but make sure to consult the full list of Race to Zero Partners to ensure your organization chooses the method best-suited for your goals and individual needs.

Ways 6 to 8 below highlight how to achieve external recognition for effective action.

Introduction

We have been working with Heathrow for over 12 years, pioneering solutions centered on energy & sustainability management through people.

We keep coming back to the airport as a case-study for us as it has been our eye-opener.

Our support has involved working in partnership with local teams using a combination of strategic, technical and behavioural joined-up thinking, with hands-on or more passive support as required.

We have demonstrated that this is often the quickest and most cost effective way to deliver energy savings and sustainability at scale for the organizations involved.

Objectives and scope

This case-study focuses on 3 objectives:

1)    To deliver energy demand reduction across operations within all airport buildings and infrastructure (2007–2010).

2)    Support 46 retailers & 186 new units, within the new T2 development, to be an exemplar in sustainability practice (2012–2016).

3)    To facilitate developing a shared vision & approach for energy and water efficiency for airport business partners, buildings, concessions & leases (2018–ongoing).

Heathrow is a complex site of over 1,200 hectares, with 75,000 people working at the airport, for over 80 airlines and over 80m passengers a year.

The total airport utility bill is equivalent to $130m a year.

Delivering critical mass for the above scope requires between 1,500 to 4,000 everyday champions for better energy & sustainability management practices.

Services provided

This has involved providing a combination of different approaches with the right support, with the right people, at the right time.

For Heathrow this has included:

• Setting up local networks to help engage, empower and support everyday champions;
• Training and supporting energy champions to lead up energy improvements locally;
• Designing and facilitating airport campaigns and events for better awareness, training and opportunities for everyday champions;
• Setting up and managing a £4.5m (almost $6m equivalent) capital fund to support energy ideas and actions;
• Tracking energy savings bottom up crediting results to people and teams;
• Measuring airport consumption top-down to report on performance improvements;
• Making presentations on energy, water and waste performance to airport directors;
• Support for implementation of ISO 50001;
• Sustainability design advice and support to retail and property development teams;
• Developing tools and techniques to make it easier for significant energy users to continually improve performance locally;
• Reviewing and writing airport energy & sustainability asset standards & procedures;
• Developing approaches to achieve leading edge energy and water efficiency for new infrastructure developments in operation.

Results

Initially there was no dedicated capital budget to support energy projects so we had the opportunity to try out lots of different people-based solutions.

We delivered our targets in about half the time that we thought possible.  We demonstrated 15% average energy savings across all airport operations within Phase 1 (2007–2010).  The best areas recorded 30%+ savings over the four years.

This included over 1000 actions recorded on our energy saving trackers: 42% of savings were from behavioural changes in operational practices, 24% from changes in maintenance practices, and 35% from changes in investment practices and technology upgrades.

For Phase 2, the teams working on the T2 retail fit-outs achieved an average of 24% unit (design) energy savings compared to T5 baselines: worth $0.65m+ savings a year.  This was more than double the 10% reduction target set.

In 2016, we conducted post occupancy monitoring of energy performance for sample restaurants. We found they were consuming significantly less than the original design consumption forecasts due, in part, to approaches designed to facilitate continual improvement in operation. 

We also found restaurant energy performance correlating well with number of customers and covers, which was a key design objective.

In 2019, the airport published a key document for the Heathrow Sustainability Partnership: Delivering an Energy and Water Efficient Airport. This sets out the shared vision and objectives for business partners to support a Zero Carbon future to ensure it is delivered at affordable cost while being positive for all the stakeholders involved.

Summary

This is about enhancing energy performance by connecting up technology, operational management practices and behaviors. The same lessons apply to many sectors and operations.

Existing risk averse operational practices and behaviors generally lead to much higher energy consumption and costs; this seems inevitable for most organizations at the moment.

This can be made worse by rising energy prices and pressures on consumption from electrification and expanding commercial activities.

To manage this successfully, and make effective energy demand reductions, approaches need to be strategic and hands-on and delivered in partnership and collaboration with the people on the ground.

It is essential top management is on board and demonstrates its commitment through company energy policies and provides the financial and other resources needed.

We find success is always down to the people and teams involved so our focus is often on supporting them improving their skills and performance.

About the Organization

Vanderlande is one of those companies that touches most of our lives but which most of us haven’t heard of. When we order on-line from retailers such as Amazon, it could be Vanderlande’s systems that deliver the warehouse logistics. When we check-in our bags at airports, their systems ensure our bags reach the aeroplanes. This is all about IT process systems and large conveyor and storage systems.  

Vanderlande, part of Toyota group, is the global market leader in this type of material handling, with operations located right across the world.

Training Program

The training needed a user-friendly approach for the team to engage, particularly for smaller locations which had limited expertise and experience. It also needed to facilitate and coordinate all the activities required:

• Workshop 1 was about context: pulling together the team and understanding the opportunities, requirements and challenges to set up the vision and energy policies.
• Workshop 2 focused on the catalyst for change: feeding in local energy reviews, prioritizing opportunities and then setting up the metrics, targets and actions as well as strategic controls.
• Workshop 3 was about energizing change: roles & responsibilities, communications and rolling out campaigns and training for colleagues as well as reviewing the design, procurement and operational controls.
• Follow-up training included sessions for significant energy users, to take on local responsibility for their own areas, and for internal auditors to plan their audit trails.

Results

ISO 50001 proved to provide a great structure to help manage change in a systematic way whilst ensuring improvements are locked in longer-term. 

The team achieved certification in less than six months; all areas were able to demonstrate continual improvement in both the energy management system and in energy performance.

From first workshop to certification in record time, Vanderlande is now using ISO 50001 to meet increased customer expectations.

For each aspect, tactical tools and techniques were developed, tested and then lessons and experiences fed back through the workshops. This meant that after the second workshop, Vanderlande was already operating an energy management system that could be reviewed and improved. 

The external auditors were very impressed with how Vanderlande applied the standards in a phased approach, which resulted in no non-conformities. Standard templates were created to help each local team review their energy performance and consolidate the information required to effectively manage the subject; adding additional locations to the ISO 50001 certification at a later date is then relatively easy.

The auditor commented, “It has been a pleasant surprise to audit a company who is doing it not only because it is needed but also because they are into the subject!”

Summary

Extending the energy management team to beyond a few internal specialists not only means ISO 50001 certification was achieved in record time, but it is also more likely to now be effective in the longer term as the approach is owned by the people involved. 

The potential is for significant energy saving delivered at scale, in the most cost effective way, driven by the philosophy of continual improvement.

Collaborative approaches enable people to better connect technical and behavior solutions and deliver better results by doing it for themselves.

Here are some tips for selecting materials with good environmental credentials:

• If possible, select products that use third-party verification labels/certification, recycled content, environmental product declarations etc. to ascertain sustainability credentials.
• Consider this for any wood panels, joinery, timber structures and flooring, furniture, particle boards, paper products, textile and laminated floor coverings, wall coverings, furniture and soft furnishings and ceiling tiles.
• Timber is usually an easier one to target.  For example, you can specify 100% timber to be either reclaimed, recycled or, when new, to be supplied with a chain of custody certificate from one of the following forest certification schemes only: FSC, PEFC, SFI, CSA.
• If possible avoid the use of any products containing PVC.  Where PVC is intended to be used, it should be free from Phthalate and Cadmium, and contain post-consumer recycled content and achieve 100% recyclable status (i.e. designed for deconstruction to enable recyclability), or demonstrate that it is a more favorable product than alternatives through, for example a Life Cycle Analysis; a scheme such as the BRE Green Guide to Specification or Green Book Live database can be used to demonstrate a good rating in life cycle impact terms.
• Avoiding the use of virgin plastic products and packaging may be achieved by sourcing sustainable natural materials as an alternative to using plastics or sourcing plastics with a high recycled content that are 100% recyclable (i.e. designed for deconstruction to enable recyclability).
• Look for paints, wall coverings, adhesives and materials with low or zero VOC emissions (identified by a certified low VOC emissions label)
• Remember to check formaldehyde content of furnishing, carpets, fabric seating and textile wall coverings to ensure they are E0 or E1.
• There is a global push to prioritize non-HFC refrigerants with low global warming potential.  Consider all available technical features and specifications employed to minimize the use of HFC refrigerants in fit-outs, including considering other options, such as CO2 systems, if available and practical. 
• For justification for the material selection not meeting certain environmental requirements,  make reference of the reasons for the product used (e.g. based on H&S, hygiene requirements or other ethical reasons) and demonstrate that a market review of alternative products has been carried out, as appropriate.

This case study outlines how a mix of technological and behavioral change measures led to large energy savings at the retail outlets of Heathrow’s Terminal 2.

Introduction

The same lessons apply to not only airport and retail environments, but also to many other sectors and operations. This is about enhancing energy performance by connecting up design, technology, operational practices and behavior change.

The design for Heathrow's Queen Terminal, the new Terminal 2, had a big challenge around energy. To comply with planning requirements, the building, including its commercial retail and property fit-outs, had to demonstrate 40.5% less CO₂ emissions compared to an equivalent development built to building regulation standards.

An important part in achieving this stretched target was the focus on reducing regulated and operational energy use, using a design energy targeting approach applied to all the different operations throughout the terminal building.

Heathrow’s food and beverage outlets are some of the busiest restaurants in the world. When it comes to running busy restaurants, the instinct is often to turn all the equipment on first thing in the morning, and leave it on all day. Longer running hours and risk averse operational practices and behaviors all inevitably lead to higher energy consumption. 

For this project, we also needed to connect up the 46 different retailers involved to deliver great energy and sustainability performance across 186 new separate retail spaces, including 17 new food and beverage units and restaurants as well as many fashion, technology, travel, gift and duty free shops.

Approach

To successfully drive down energy consumption, we needed an approach which would be both strategic and hands-on and delivered in partnership through collaboration.

The T2 sustainable retail project kicked off in 2012.  The Discovery Mill was contracted to be the coordinating energy and sustainability partner for the project until the opening of the terminal in June 2014.

A key part of the strategy was empowering and supporting everyday sustainability champions for the project, particularly involving those who were very much part of project delivery team so they would consider sustainability as a key component of their overall responsibilities.

By running workshops and training with lead project champions, we co-created the approach, developed the sustainability brief and set-up the tools, guidance and performance management systems. The focus was on what would make the biggest difference and how best to optimize energy and sustainability performance into operational and long-term savings.

The lead champions were essentially key-connectors, encouraging better connections between teams around energy and sustainability, and connecting up the design, installation and operational elements of what we do.

Together we ran a series of design Lead & Learn workshops for retailer teams, inviting along operational staff as well design and construction colleagues; so, for example, we were looking to more involve chefs in restaurant design and the associated energy assessment reviews.

Each unit was set a design energy target to be at least 10% more efficient per m² than their equivalent retail unit in Terminal 5; the retail units in T5 being the most efficient examples on airport at that time.

By 2014, at the end of the design and install process, the design energy assessments predicted an average saving of 24%, against our T5 baselines, across all 186 retail spaces. This would be worth approximately £0.5m (equivalent to $0.65) of direct energy cost savings per year to retailers, plus the associated infrastructure cost reductions and additional centralized energy savings for the airport.

Success has been down to the teams involved and using some quite innovative approaches to help reduce energy demand. The simplest measures were where equipment was taken out of the design because it simply wasn’t needed!

Monitoring of the units

Sample monitoring of some of the units in operation, in 2016, has demonstrated the levels of savings that can be achieved.

Fig. 1 shows the predicted energy consumption split for an example casual dining restaurant in Terminal 2 using our design energy target and assessment approach. The energy bill for this unit is expected to be between £100,000 to £120,000 (equivalent to $127,000 to $152,000) a year, depending on operational practices. The unit is all electric, with separate air-conditioning supplied from a centralised building air-handling plant.

This is a busy restaurant with around 500,000 covers a year.

The significant energy users for this unit are ovens, fryers, grills, dishwashers, drinks machines, refrigerators, and local fan-coils and extract plant, and to a lesser extent, lighting, small power and domestic hot water.

The chart shows what we needed to focus our efforts on. After various design iterations, the fit-out team established an energy performance of 15% better than the design energy target that was set,

Monitoring in the last year has since demonstrated even better performance in practice, operating to be better than 40% less energy consumption than their equivalent T5 energy baseline. 

Equipment levels across the kitchen are about 35% smaller per m², in kW power demand terms, than much older restaurants across the airport.

For this restaurant, we are also now seeing a good correlation between daily energy consumption and daily covers; even though impact is small at the moment, we rarely see this in many units we start to monitor.

So the big question is, what are they doing right?

We find that by using a technical only approach, we often make good savings by reducing the kW required and by providing auto controls. 

If we can make our systems easier to control – and connect up design and technical solutions with operations and behaviors – then we have more chance that they’re “on” only when required. Thus the energy consumption profile can literally flip on its head.

To tap into the opportunities, these designers are using high spec, fast and modular equipment which means it’s then easier for kitchen staff to control. This may mean, for example, using multi provision of the latest programmable combi ovens, toasters, Panini machines, etc.

Dishwasher specification

In this example, the team also applied this concept to dishwashers. Rather than specifying a more traditional, say 27kW conveyor type machine, two 7.5kW hood type dishwashers were specified instead; this meant less kilowatts but also this allows only one to be used during the quieter periods of the day.

We drew a scatter plot for our example unit, showing plots of daily consumption against covers.

By drawing a best fit trend line through the points we can conclude that approximately 35% of energy consumption is currently variable with covers. Technically, as we aim to continually improve energy performance, we are looking to pull this line down and point it more to the origin through continual improvement and changes in operational practices and behaviors.

We also monitored energy consumption for this unit on a half-hourly basis over its busiest week of the year. This demonstrated there is some limited response to on-demand over periods of the day so we reckon there is further potential savings of another 5-10%, with even more available on less busy days.

A key part of the strategy for these units is introducing a fire-up schedule for the main energy users, which maps out “on” and “off” times over the day for the significant energy users. This provides a means of agreeing and stretching the off periods in a managed way. 

For our example, this has led to toasters now being switched off at 11.30am each day, after the breakfast rush, and fryers being held off until 10.30am to prepare for lunchtime. On average, each extra hour of off-time across all the kitchen equipment is worth approximately £6,000 a year for this restaurant in energy savings alone.

One way to focus in and review operational times for particularly significant energy users is to use a technique we call daily diaries. 

For example, in one kitchen, the chefs reported that the four main ovens were needed absolutely all the time, particularly in busy weeks. So during our monitored week, we asked them to keep a diary of actual demand. By the end of the week their attitudes had changed: “In retrospect, we hold our hands up, even in our busiest week, we could have turned one oven off at 11am and a second one off at 2pm.” This would be worth 5-10% energy savings in one action for this particular kitchen.

Check out this case study to find about further energy savings at this airport.

Delivering best value 

In its simplest form, energy as a service (EaaS) is a philosophy that re-orientates an approach to energy management to focus on service and delivering best value. Partnering up with specialist energy service partners can help organisations enhance their energy management strategies, target the avoidable energy waste, upgrade energy service assets, accelerate energy efficiency programs and deliver large energy savings at scale.

At its most extreme, EaaS can mean an energy services company (ESCO) is providing specialist energy services, without the consumer needing to own the service systems or pay for the direct operational costs of those services, including energy.

To understand the concept of energy as a service a change in mindset is required. It doesn’t have to be complicated. This CPD article aims to explain the concept as well as giving an overview of how approaches are applied in practice. Learning objectives include the following:

More end-users, in recent years, have been looking towards energy service models to help fast-track energy efficiency projects, clear maintenance backlogs, replace old assets and/or to install embedded energy supply infrastructure.

Good practice is to target energy conservation and efficiency measures first in line with the energy hierarchy. This change in approach has been led by the public sector, but more private sector companies are beginning to follow suit.

The opportunity for energy service models is to help optimize energy performance for a wide range of different types of organizations. If they get this right, these strategies can help drive value beyond just energy through, for example, delivering better customer service, better security of supply, better system resilience, reducing overall service costs, improved environmental impact and better organizational reputations.

Back in the 1880s, when pioneers likes Thomas Edison marketed new electric products, the propositions were about supplying a service.

When procuring a new service, to make the best value decision, a consumer needs to optimise across all their objectives, including across both the capital cost of equipment and operational costs. This is the value of energy as a service and it is this approach that incentivizes reducing energy consumption.

As a simple illustration, Table 1 shows example costs for a range of different fridge freezer models, all rated at the same service level, considering capital and running cost and combining them in equal terms in the form of a total service life cost (ignoring discount rates/inflation).

In simple terms, there are two approaches to procurement:

• Buy the product: energy use is usually invisible at time of purchase so our decision is based on capital cost alone – we tend to buy the cheapest, the A model.
• Buy the service: if total service cost (say over 10 years) was packaged up in one sum – we are more likely to buy the most economic option, the A++ model; this costs 18 per cent less in total cost and 50 per cent less in energy consumption. 

Unfortunately, most of us still generally procure using Approach 1: the desire of both developers and construction clients, for example, to keep product project costs down generally overrules. Many projects still don’t forecast operational energy use and cost. Consequently, there’s a general lack of awareness of the benefits of more efficient options. Enhanced energy efficiency measures are seen as discretionary and so they can be engineered out as service value isn’t properly understood. These awareness barriers mean that customers end up paying the cost of inefficiency over the service life.

Energy service pricing models are based on selling the customer an end service for a periodic fee, e.g. based on a monthly cost. These can take into account other monetary equivalent value such as reduced maintenance costs or improved service levels. For many energy services, energy consumption tends to account for a large proportion of total cost so this model opens up the opportunity to reduce energy service cost (and so increase the value of the service) by targeting avoidable waste and enhancing energy service productivity.

When considering energy as a service, a consumer would naturally switch to another energy service option if it would deliver better service at reduced cost (the Win Win).

According to ESTA’s Energy Services Contracting Group, an ESCO is an Energy Services Company that offers a turnkey service to the client to identify, implement, operate and maintain energy cost saving or revenue generation measures in the form of an energy performance contract (EPC) or energy supply contract (ESC) depending on the scope of services. (4)

This may be for a whole building/ facility or for a proportion of the energy services. ESCOs typically operate on an agnostic technology or solution basis, bringing together specialist sub-contractors depending on the specific project requirements; they are often offered by existing facilities management, engineering or energy management specialists.

As such, energy expertise requirements, life cycle cost analysis and technical, performance and/ or financial risk exposure can be transferred by the client to an ESCO so the approach has the potential to overcome the awareness and risk barriers associated with traditional approaches to procurement.

ESCO provision through EPCs in the UK is currently valued at approximately €100m a year (5).

There are two common EPC models in the UK that can either be used separately or in combination:

1. Guaranteed performance model – typically based on an upfront capital payment and/or a regular service fee in return for implementation of new assets and/or energy-saving measures, with a guaranteed minimum level of energy cost savings and revenues. This is the main approach used in the UK; it’s the basis for programs such as Refit, the Scottish non-domestic energy efficiency framework, etc. Financed projects allow clients to avoid up-front capital cost, in preference for a monthly positive cash flow. The guarantee means the provider covers any short fall below the guaranteed level such that the project’s financial performance is always maintained; 
2. Shared savings model – the provider is paid based on a percentage share of delivered cost savings and/ or revenues. Even though more popular in Europe, in the UK this is generally used in combination with a guaranteed performance model with shared savings providing a bonus level for any over performance, such as for the Carbon and Energy Fund framework for the NHS/public sector.

Figure 1 shows a typical finance model for an EPC illustrating how guaranteed cost savings and revenue pay for the cost of the service. In most cases, the contract term is set to exceed the payback period of the investment.

The QualitEE project is focused on quality assurance for energy efficiency services across Europe. Their research has identified key elements for quality in EPC projects. Top-rated UK aspects include: a robust preliminary technical economic analysis and energy audit, good communication between provider and client, measurement & verification (M&V), transparency and completeness of contracts, implementation of technical measures, and achieving expected savings levels (5). This research is being used to set new guidelines for quality evaluation of EPCs. (6)

It is important that there is a clear understanding of the brief and roles and responsibilities at the start. Top management needs to be on board by setting out key requirements, appointing an internal project manager and ensuring appropriate targets are stipulated. Different people are likely to be involved in the process; for example financial managers (interested in cost) and property managers interested in technical specifications and service levels. Clients need to have the procurement (and contract management) capabilities to ensure appropriate risks are truly transferred to the provider.

Commonly, the provider takes on project, technical and performance outcome risks. Some risks will need to be shared or taken on by the client. These may include energy unit price changes, weather impacts or impact of major changes in customer building/process use (both the latter can be accounted for in the M&V process). Upfront assumptions need to be transparent and clearly documented.

An investment grade audit, used to identify and set specifications for energy conservation measures, can be quite involved (and expensive) especially where assumptions need to be made up front for a long-term commitment.

Defined and measured 

Service level requirements need to be defined and measured, depending on the services in scope. For example, building user comfort requirements may be specified using objective measures (temperature, air quality, lighting levels, etc.), supported and evidenced by collective user customer feedback.

Energy consumption should be understood in terms of its driving factors. For instance, units produced is often important in manufacturing sites, covers in restaurants, and external temperature for supermarkets with high refrigeration load. This can help understanding of energy service productivity, drive continual improvement and form the basis for M&V.

For better insight into effective energy savings measures, it is important to involve local maintenance and operations teams who are closest to and so best understand the (changing) needs of their customers. Beware, without a collaborative ethos, an EPC model can cause conflict with incumbent service providers. The secret is often to blend the technical and people based approaches, with good energy management ISO 50001 system controls alongside.

The M&V plan to verify energy savings delivered needs to be developed early so sufficient baseline information can be collected. A gap analysis identifies existing metering and where upgrade provisions are necessary. The International Performance Measurement and Verification Protocol (IPMVP)(7) defines good practice in M&V.

Raising finance can be seen as a barrier for UK projects (5), even though there is a wide range of finance options available. Debt finance is often used, for example from Salix Finance for public sector projects.

Where necessary, clients use independent EPC facilitators for project development, provider selection, M&V, behavior change or other ways to add value.

The energy as a service approach has the potential to offer significant benefits for end user organizations for a wide range of applications.

Recognizing energy as a service means that energy use can be viewed holistically, with the end point of the value chain being the end service rather than the energy meter. This means avoidable energy can more easily be targeted, generating the negawatts that Amory Lovins believes are one of the biggest opportunities in our economy today.

At its best, optimum energy service productivity can be considered to be the point that the organization is confident its systems and practices are using only what they need.

You will know what works best for your organization, whether it’s contracting services out or working with specialists on particular areas and engaging, empowering and incentivizing the teams involved. This can be structured under the wider remit of an EPC (8) or set up through in-house initiatives such as energy crediting (bottom-up tracking of savings linked to people and teams).

The overall package needs to be right so it that delivers enhanced value for the customer, reduced energy consumption and cost and benefits for the parties and people involved (the ‘Win’ for All of us). If service pricing is competitive, more organizations will get buy-in. A culture of continuous learning, creativity, innovation and leadership is what typically drives enhanced levels of quality and service for customers and colleagues.

To succeed the approach needs to be desirable, focused, (relatively) easy and continual, but most importantly it needs to be owned by the people involved.

References:

1. The Negawatt Revolution, Amory Lovins, the Conference Board Magazine Vol. XXVII No. 9, September 1990
2. Reach for the stars, Energy efficiency, design for performance, CIBSE Journal, December 2018
3. Energy Efficiency Trends Vol. 26 Essential insight for consumers and suppliers of non-domestic energy efficiency in the U.K. March 6, 2019, EEVS and BloombergNEF http://www.energyefficiencytrends.com/
4. Energy Services Contracting Group (ESCg) Booklet, Accelerating the energy transition, ESTA, 2019
5. QualitEE, UK Country report on the energy efficiency service market and quality, https://qualitee.eu/gb/, February 2018
6. QualitEE, Draft Guidelines of European Technical Quality Criteria for Energy Efficiency Services, https://qualitee.eu, November 2018
7. International Performance Measurement & Verification Protocol, https://evo-world.org
8. European Code of Conduct for EPC, www.theema.org.uk