Five ways to drive energy efficiency

Twenty years ago, American energy policy guru Amory Lovins noticed a wrong spelling of the word megawatt – subsequently the “negawatt” was born. Fast forward and today this unit of energy saved through efficiency is going great guns. Take the UK alone: electricity generated last year fell to its lowest level since 1994, according to Carbon Brief. Both consumer and business energy efficiency contributed to this drop.

“Every year, companies spend more than £345 billion on energy efficiency and sustainability initiatives,” says Mike Hughes, zone president for UK and Ireland at Schneider Electric. “Businesses are beginning to recognise the positive financial, operational and societal benefits that energy efficiency brings.”

Many thousands of negawatts come from deploying LED lighting upgrades or erecting energy-efficient offices. The impetus on energy efficiency has come from rising energy costs, compliance and cheaper technology, which mean paybacks get shorter each year.

Looking to the future, here are five emerging innovations that will drive further efficiencies:

  1. Disruptive tech

Artificial intelligence (AI) could be the new energy watchdog in our workplaces. “This will allow real-time analysis of energy use alongside data on production or other metrics. AI will instantly alert people when energy is being wasted or it will take direct action to reduce consumption,” explains David Oliver, solutions consultant at Inenco.

Meanwhile blockchain could help create an accurate record of energy transactions. With the rise of micro-grids and distributed renewable energy sources, such as solar panels on office roofs and warehouses, companies will be able to sell their excess energy with a high degree of autonomy. Utilities could then become more efficient by balancing supply and demand in real time, engaging producers and their blockchain data. Lo3 Energy have trialled this system in New York.

“Energy buyers will also be able to act with increased autonomy at a lower cost and time commitment. Combining multiple technologies is fundamental to the future of energy efficiency,” says Mr Hughes.

  1. New-wave heating

Heat recovery is a nascent initiative championed by the UK’s Department for Business, Energy and Industrial Strategy. There are now many schemes to recover heat and distribute it through networks. “However, they are expensive and require participants to sign up to long-term contracts, so many companies are cautious about such agreements,” says Mr Oliver.

For instance, the Industrial Heat Recovery Support Programme opened in autumn 2018, funding projects that use waste heat from business processes. “It has already generated high interest among manufacturers to capture and reuse heat for process or space heating elsewhere in the factory or local community,” says Georgina Penfold, director of ICON. “We know of a steel mill in South Yorkshire and a food processor in Northampton that are currently working on designs to take advantage of this support.”

Over the next decade expect more efficient electric heating from an increasingly green grid, instead of polluting fuels such as heating oil, and LPG. “Recent consultations suggest the government will look to crack down on such fuels in new buildings. Building regulations could also be changed encouraging greater use of air and ground-source heat pumps,” says Mr Oliver.

  1. Finance models

One of the biggest barriers to business energy efficiency is funding and this is especially true for small and medium-sized enterprises. Cutting fuel bills isn’t as sexy as investing in shiny solar panels, yet the effects can be surprising. “For a supermarket with a profitability of only 2 per cent on turnover, saving £100,000 on energy has the same impact as selling an additional £5 million of goods,” says Mr Oliver. Yet unrealistic payback criteria sour investment.

However, now government subsidies are ending for renewable schemes, investors are looking for other green projects with safe returns and energy efficiency is the next low-hanging fruit. A variety of financial models are available, ranging from leasing energy-efficient equipment to contracts where savings on energy bills are used to recover the investment cost over several years. “The challenge for energy users is to find the best finance model aligned with their business needs,” says Mr Oliver.

All eyes are also on the Industrial Energy Transformation Fund. Announced in the 2018 Budget and backed by £315 million, the aim is to support businesses with high energy use slash bills through energy efficiency, yet there’s scant detail on its future terms.

  1. Energy storage

Storing energy is becoming more realistic for industry as battery costs come down. Combine this with on-site energy generation and businesses can become increasingly self-sufficient and manage their own supply. Energy flexibility is key. “Storage is speeding up the adoption of renewables like solar and wind, but at the same time helping companies to level out the variance in energy prices that can happen due to a surge in demand,” says Mr Hughes.

This year could be an interesting one as businesses start to become autonomous in how they supervise their energy needs. “2019 is the year that management, generation and balancing of business energy truly starts to converge with efficiency finally moving into the limelight on a political level, as well as a practical one,” says Ms Penfold.

  1. Digital and data

Digitalisation of businesses and better energy data collection will drive future efficiencies. “The main issue with implementing new innovations is building a clear business case upfront,” says Mr Hughes. “There is a lot of data needed to justify and measure efficiency efforts, from utility bills to energy management systems. Some organisations also lack the internal expertise or tools required to drive insights, or are dealing with incomplete data; this will change.”

Data-driven insights have the potential to initiate better human behaviour in the future. However, the widespread use of smart meters has driven little change. The fact is many are basic and aren’t that smart; this is evolving.

“If employees understand how they can help save energy and are motivated to do so, then businesses will see the benefits of even basic energy awareness programmes. Only by adopting behavioural management systems can tangible savings be realised,” Mr Oliver concludes.