ENERGY FINANCE


“WITH AN EPC, THE CUSTOMER DOES NOT PUT ANY MONEY UP FRONT, BUT PURCHASES THE ASSETS OVER THE LIFE OF THE CONTRACT”


and all customers can expect a con- sumption saving of at least 10%, although in most cases this could rise to 20%. Payback periods on a five- year contract could typically be in the region of two and a half to three years. And if the price of gas and electricity continues to rise during that time, cou- pled with ever-increasing ‘green taxes’ for businesses, those savings will increase and the paybacks will also fall dramatically.


Chessum also believes that as the major energy suppliers enter into longer-term partnerships with busi- nesses, suppliers will be more able to predict clients' energy needs and find further cost savings by buying energy more intelligently into the future. In terms of the contracts' structure – specifically relating to the financing of assets – there is no ‘silver bullet’. Chessum says that any solution must work for both the customer and the supplier to ensure that best value and maximum savings are realised over the shortest period.


“The EPC will most likely be offered as a finance lease, with a third party such as a bank holding the assets. The customer does not need to put any money up front, but purchases the assets over the lifetime of the contract with an annualised investment cost,” says Chessum.


WHAT DO YOU SEE AS THE BIGGEST BARRIERS TO INVESTING IN ENERGY EFFICIENCY MEASURES?


Lack of capital Too expensive


It would take too much time


Lack of expertise and knowledge in energy eficiency Think my business is operating at maximum eficiency already Other


“It's a new area for banks, but hopefully we’ll see a lot more of them playing their part in EPCs in the future,” he says.


CARBON LEVY


While it is good news on many fronts for businesses looking to intro- duce energy saving technologies, for those larger-scale companies who fall within the government’s CRC Energy Efficiency Scheme (previously called the Carbon Reduction Commitment Scheme), the stakes for saving energy recently got much higher. The CRC scheme affects around 5,000 UK businesses whose annual half-hourly electricity bill is around £500,000 and above (around 6,000MWh usage). Although not spe- cifically energy-intensive operations (such businesses fall under other leg- islation), these businesses account for 10% of the UK’s CO2 emissions.


WHICH OF THE FOLLOWING ENERGY EFFICIENCY MEASURES ARE YOU HOPING TO IMPLEMENT IN THE NEXT 12 MONTHS?


An employee behaviour change programme for environmental issues Installing smart meters to analyse consumption and improve eficiency


Addressing environmental dynamics including heating and lighting, air conditioning and ventilation


Improving the eficiency of our electrical systems and gas boilers Microgeneration (eg solar panels)


We are not looking to implement any measures 10


25% 23%


18% 14%


2% 18%


54% 32% 20% 41% 5%


13%


The CRC – introduced in April 2010 – aims to reduce carbon emissions from these companies by at least four mil- lion tonnes by 2020. Originally devised as an incentive scheme, whereby the better-performing companies could sell their left over carbon allowances, it has now turned into a direct carbon levy on energy bills of around 8%. So if a company has an annual


energy bill of £2.5m, they will be facing a tax of around £200,000. Performance league tables are also being openly published so company results can be compared. There's an expectation that the scheme may be extended in future, with more companies falling within the carbon levy net. Making changes now and putting in plans for long- term investment in carbon reduction initiatives will go some way towards protecting businesses in the future. Chessum says: “Investing in energy efficiency schemes will bring real sav- ings to your bottom line year on year. “A leisure chain may decide that it's going to have a big marketing campaign and bring in £1m of new business. Equally it could look within its organisation to make energy sav- ings, and save £1m with much less effort. And unlike a campaign that may have to be launched every year, those energy savings will last for the life of your business.” l


Find out more: www.britishgas.co.uk/business 0845 955 5820


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