The smarter use of energy is not a black art

The health sector uses huge amounts of energy and makes great efforts to ensure that it is used efficiently. However, energy is one of those areas where continual technological development means there are always opportunities to save even more. Structural and policy changes affecting the sector also open up new ways of saving more money and reducing emissions still further.

Perhaps because of the rapidly changing policy and compliance landscape, the health sector finds itself in the unenviable position of ‘bucking the trend’ and recording an increase in energy intensity. How can hospitals turn this negative performance indicator into a positive one? One of the issues occupying the larger Trusts over the last few years has been the introduction of the Carbon Reduction Commitment Energy Efficiency Scheme (CRCEES). In its original form, this was a revenue-neutral way of encouraging greater energy efficiency. Indeed, the best performers under this scheme would have made a net gain on their payments to the Treasury. That form of the CRCEES, unfortunately, never made it to the light of day. Instead, the scheme has become a straight carbon tax and the aim of all the participants is simply to reduce exposure by cutting back on emissions. The Government has recently held a further consultation on ‘simplifying’ the CRC which only adds to the current uncertainty. Its response to the consultation is not now due till October, but whatever happens, it will not go away.

One obvious reaction to this carbon tax is to attempt to decarbonise the energy supply, switching to renewable energy wherever possible in order to minimise emissions and, consequently, the need to purchase emissions allowances. Unfortunately, that is not likely to be the most cost-effective way of addressing the challenge.

Renewable energy is not likely to be any cheaper than any other form of energy to buy – and certainly not if onsite installation is being considered. And while there may be some saving from a reduction in carbon allowances, it must always be remembered that the cheapest option is the one where you do not need to buy the energy in the first place. And that means improving energy efficiency.

Over recent years, there has been much talk about a ‘waste hierarchy’ which determines how the issue of waste should be approached – it is now a formal part of the Waste Directive. The first step is to minimise the amount of waste produced. Recycling comes next and at the end of the process ‘disposal’. In energy there is a similar process. Here the first step is efficiency, cutting out any excess consumption and wastage.

Stage 1
So for Stage 1, switch off plant and equipment that does not need to be on overnight, early morning or late evening – such as compressors, chillers, boilers and, importantly, lights. In Stage 2, make sure that whatever you use is energy efficient – both the fundamental efficiency of the equipment (such as motors and lights) as well as the way it is controlled; for example, make sure heating and cooling are not on at the same time. The return on investment on these stages is likely to be 30-50 per cent – far, far higher than the 5-12 per cent achievable on renewable energy installations. Only after this stage, when the aggregate energy demand has been reduced to a minimum, should decarbonisation and onsite renewables be considered. By tackling the issue in this way, the residual carbon footprint is kept as small as possible, which cuts down the cost of final decarbonisation. And this final stage is likely to involve the biggest budget items anyway.

Outsourcing
An increasing number of hospital trusts are outsourcing their energy management requirements, along with other activities, in order to concentrate on their core responsibilities of providing healthcare to the community. After all, it makes sense to entrust specialist tasks to experts. However, that does not absolve the trust from all responsibility or influence in this area. In the long term, it is the customer that pays for the service one way or another and it is important to ensure that the contract provides good value for money.

We have come a long way from the accounting rules of the 1980s where the capital investment involved in outsourced services such as energy was included in a hospital’s own budget, making contract energy management (CEM) or energy performance contracts unattractive. This delayed the introduction of public sector outsourcing in areas like energy, while in other parts of the world – and particularly the USA – it became the norm.

Today, outsourcing is an accepted practice within the public sector and a number of the larger hospital trusts have opted for this route. The energy contractor will normally replace old and inefficient equipment with new, highly efficient alternatives following a thorough review of the requirements – both current and likely – of the hospital. New technologies like Combined Heat & Power (CHP) and photovoltaics might make up part of this programme of refurbishment and upgrade, as well as new control systems for the internal environment. In this way the client gets brand new equipment without the need for a large upfront investment. The contract is for a fixed period of time, with the whole programme being financed either through a fixed price per unit of energy or through sharing the savings achieved under the new regime.

The idea is similar to that proposed in the Green Deal where energy efficiency measures will be financed through the savings achieved over their lifetime. The benefit to the energy user is that, again, there is no upfront injection of funds and in addition energy bills start dropping from the time the measures are installed. For smaller hospitals, the Green Deal, when it arrives, should enable them to make a step-change in their energy performance too.

Outsourcing energy services does not mean that the customer should just walk away and let the contract run its course. For a start there are some areas where it is not entirely clear who should take the initiative.

If a trust has a contract with a performance contractor that allows it to buy energy for a fixed price, that may not be a sufficient incentive to encourage the service provider to actually cut energy consumption. After all, that will ultimately reduce revenue. The initial contract negotiations need to address this potential ‘hole’ in the strategy.

Equally, if the contract is framed purely in terms of the efficient operation (and replacement) of the energy equipment on site, then the whole area of occupant behaviour is left unaddressed. Now, the evidence suggests that behavioural change can make a major difference to the savings achieved. There is a (perhaps apocryphal) story about a hospital in the south west of England that, some years ago, introduced tamper-proof thermostats to the wards and administration areas in an attempt to take the ‘human factor’ out of internal environmental control. It did not take too long before staff worked out that by placing a cold pack on the thermostat they could switch the heating on and likewise a heat pack would trigger cooling. Needless to say, this ‘automatically controlled’ building saw its energy bill rocket.

This may be an extreme example but every energy manager knows the potential reductions in consumption to be gained from engaging staff in energy savings campaigns (rather than antagonising them). Yet who has responsibility here? In a shared savings scheme there would be a clear incentive for the services provider but the employer (i.e. the trust) would still have control over staff training and the time they spend away from their paid jobs.

Ideally, the two partners will work together to encourage ‘responsible’ behaviour amongst the workforce. The energy services provider would have the expertise and systems-specific knowledge to develop and deliver the training. For the hospital trust, engaging the staff more closely with environmental goals like energy efficiency can help add to its attractiveness as an employer as well as its green credentials with other stakeholders.

Doing it yourself
When the size of the facility does not justify a full energy performance contract and energy management remains an in-house function, the energy manager will have to address most of these issues themselves. It may still be useful to hire energy specialists for particular tasks such as energy audits and dealing with CRC returns, etc.

While the Carbon Trust register of energy consultants has now been closed, ESTA – in cooperation with the Energy Institute – is launching a Register of Professional Energy Consultants which should make the selection process easier. The Register will provide a search function for energy users to find people with the particular skills they are looking for. It will also provide a forum where energy users can invite qualified consultants to tender for contracts.

Automatic Monitoring
One of the most effective pieces of equipment for in-house energy managers is an automatic Monitoring & Targeting (aM&T) system. 
This takes away the repetitive aspects of data collection and analysis. The system can be interfaced with other office processes like billing and reporting. Importantly, many of these systems will automatically produce the Display Energy Certificates (DECs) now required annually for most hospital buildings.

Monitoring & Targeting will help energy managers identify anomalies as soon as they occur and deal with them – machinery breaking down or controls sticking in the ‘on’ position, as well as the gradual performance ‘drift’ seen in nearly all equipment.

Another area to consider is the introduction of formal energy management strategies and programmes. Globally, energy management is assessed under the ISO 50001 Energy Management Systems procedure, which is largely based on the European Standard BS EN16001, which many energy managers will know and love. A number of ESTA members were closely involved in its development.

Because it mirrors many of the basic elements of ISO 14001 and the ISO 9000 series, its structure is readily understandable by managers from most disciplines and this brings energy management into the more general framework of management reporting. This enables performance to more easily reported to senior managers and funding requests made in a way that is more accessible to CFOs. Its systematic structure also makes the task of energy management itself more pragmatic and logical.

Energy management is not a ‘black art’ and should not be perceived as such by colleagues. At its simplest, it is concerned with using a scarce – and increasingly expensive – resource as wisely as possible. Whether the programme is driven in-house or externally, the challenge is to keep up with the latest developments and implement them appropriately. L

Further information
The Energy Services and Technology Association (ESTA) represents over 100 major providers of energy management equipment and services across the UK.

For more details visit the website at 
www.esta.org.uk