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Tracking Energy Consumed
Thursday, May 04, 2006
Public Sector and Local Government
Donald Maclean, Managing Partner of Audits Unlimited, discusses the reasons for the Climate Change Levy (CCL) tax, the effect it has on reducing energy consumption, and the ways in which organisations can ensure they meet the targets.
The Climate Change Levy (CCL) tax was introduced in April 2001. The theory was that by adding about 10% on to energy bills for all non-domestic users, large energy users would reduce their consumption. This would in turn play a major role in helping the UK to meet its targets for reducing greenhouse gas emissions. In practice, most energy users did not pay a great deal of attention to that level of cost increase. As highlighted in the accompanying graph, energy prices did not take off until November 2002 and the trend has continued upwards since then. Gas prices in particular have been very volatile and have risen to unprecedented levels.
Two parts of the CCL scheme have worked well. Most heavy energy users have been able to join industry association schemes, for example The Food & Drinks Federation scheme covers most food producers. If an organisation is a member of the Federation and agrees to reduce its energy consumption over a 5 year period, it is granted an exemption of up to 80% in the CCL. Over the years the industry association schemes have helped manufacturers reduce their energy consumption significantly. This has saved millions of tons of carbon and other greenhouse gas emissions.
The second part of the scheme, which has worked equally well, is the free Action Energy Surveys. These are paid for by the Carbon Trust, which was given substantial amounts of money by the government through the CCL. If an organisation spends over £50,000 per annum on its energy, it is entitled to apply for a free Action Energy survey. This means that a trained energy conservation consultant carries out a survey of the organisation?s site or sites. The more the company spends on energy, the more of the consultant?s time it is allocated. His report prioritises the actions which will enable the company to reduce its energy consumption. Those which require the least cost and produce the biggest reduction come first. Those which require a high investment and have a long payback period come at the bottom of the list. Energy savings of 10% to 20% are not unusual.
Many organisations found it quite easy to comply with the CCL in the first few years, because the targets and benchmarks were not too challenging. However, over the past 5 years new and more challenging targets have been set. An example of the set target might be X KWhs of energy consumed per ton of food produced or Y kWh of energy consumed per sq m of shop floor area for a retailer. The new, more demanding benchmarks have created a growing need for close targeting and monitoring of energy consumption, which is something that many organisations do not have the time or the resources to do.
An increasingly popular solution is for a firm to commission independent utilities consultants to track its energy consumption. Proteus is specially designed software utilised by consultants such as Audits Unlimited, which records energy consumption, month by month, for their clients. The results highlight anomalies such as higher or lower than expected consumption, and the reasons for these anomalies can then be thoroughly investigated.
The latest technology now enables smart meters to combine data from gas, electricity and water meters and send it in real time to be verified and manipulated by sophisticated software. It even sends alerts whenever consumption exceeds set parameters. This leads to substantial reductions in energy and water consumption.
The software can also be used to record costs of energy and compare both with the organisation's own targets, or those set for them under the CCL exemption schemes.
This prevents firms from falling behind on their commitments to save energy. To do so could result in ejection from industry schemes and the loss of their 80% exemptions. With the current high energy price levels, this loss would be much more painful than in 2001, when energy prices were relatively low.
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