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SERIES 24 / Module 03 The Business Case for Energy Management
focus full time upon saving energy. If you have a full time Energy
Manager on £65k per year, plus an Energy Analyst on £35k per year, then your salary bill with say 40% on costs (pension contributions, employer’s NI, internal overheads, etc.) will be £140k per annum. Compare this £0.14m per year salary bill to your ~£4m per year energy bill and the salary costs are around 3.5% of the annual energy budget. Your energy team should deliver energy savings of at least 5%, and over time they should hope to achieve and maintain savings of at least 15 to 30%. Bear in mind also that in absence of this team, you will likely see at least a 5% increase in energy costs as the budget is left unmanaged. In other words, you’d still be paying the equivalent of the salaries you avoided, just in the form of uplifted, unmanaged energy costs. Better to spend the money on salaries and achieve a net saving, than to leave the energy budget unmanaged and lose the money as additional energy expenditure. Finally, don’t be tempted to pinch
on the salaries, as it is a competitive market for good energy managers who can actually deliver savings. Offering a weak salary will either lead to: a) recruitment and retention issues for good candidates, or b) locking in lost energy saving opportunities if you recruit a weaker candidate that struggles to deliver savings and may never leave when they struggle to find career progression beyond the role you’ve given them. 4. Does your energy team have the right skills and do they sit in the right place within your organisation? It is common to meet energy managers who openly say they aren’t confident dealing with numbers and that they don’t like dealing with the engineering team. The main message here is: don’t confuse a passion for sustainability with a passion or aptitude for delivering energy savings. The two overlap in many cases, however they are by no means the same thing. Energy management is a technical and data heavy subject. Hire an energy manager with a demonstrable passion for data, problem solving and engineering who wants to learn about how equipment works and how it can be optimised. Rather than sit them within the wider central sustainability team, in many cases it makes sense to sit them within
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the engineering team, reporting to someone like the engineering manager, or head of estates. Note that this doesn’t stop you
giving them a dotted line of reporting to the sustainability team for things like staff engagement and net zero tracking. This approach puts them in the thick of where energy is used and controlled, giving access to the teams and systems they need to learn from and influence. Include questions and activities as part of the recruitment process which ensure you end up with a numerate energy manager who likes data, engineering systems and problem solving. Once in post, support the Energy Analyst to work towards Chartered Energy Manager for their career progression. Make a relevant further chartership a requirement in the person specification for the full Energy Manager’s job description, e.g. CEng, CIBSE and so on.
What might proactive energy management be worth to your organisation? To explore this question, let’s return to the sample Hard FM team with an annual total budget of £12m per annum, energy costs of £4m per annum and water and waste costs of another £2m per annum. Although they had invested little in
energy savings, the other half of the team was busy trying to deliver against a 10% cost improvement (CIP) for the department as a whole. They were making maintenance staff redundant and cutting costs on safety critical maintenance contracts to hit their CIP target. This gave the opportunity to reframe energy, water and waste savings away from ‘environmental actions’ and towards ‘protecting jobs’, ‘investing in career development’, and ‘maintaining safety standards’. 5. With appropriate support
and resources, how much of the engineering / ‘Hard FM’ team’s annual savings target could be met from energy, water and waste savings? What steps would be required to make this possible? The case organisation decided to work towards 20% savings in energy, water and waste. Given that these costs represented half the department’s operational budget, this approach could in theory carry the whole department’s 10% CIP target, i.e. making energy, water and waste
savings key themes for the department as a whole. With this new framing, they: ● Reinstated the Waste Manager role that had previously been cut.
● Reinstated the Energy Analyst role that had previously been cut.
● Upgraded the Energy Manager role and recruited a Chartered Engineer to take it forwards as a member of the estates management team, sitting alongside the heads of electrical and mechanical engineering, plus the head building surveyor.
● Instigated Lean/Six Sigma training for the engineering team to build upon opportunities to tighten systems and work towards continuous improvements that could deliver savings.
● Upgraded the engineering job descriptions and bandings from the management team through to the fitters. This process built energy, water and waste management into the whole team’s roles. This helped to sell the changes, whilst also mitigating recruitment and retention challenges by offering more competitive salaries.
● Hired a BMS consultant to flag and implement pilot projects to demonstrate savings that could be scaled across the estate. With this example as a reference
point – how might you reframe energy management as a significant opportunity for your organisation, and in particular for the engineering team? What would you need to change to make the savings possible?
Sample opportunities to help build the business case Let’s explore some examples of opportunities that a proactive approach could unlock. 6. What COMPLIANCE
opportunities does your organisation face? There are many to explore, such as: ● Climate Change Agreements (CCA) – CCL discount.
● CHP Quality Assurance scheme (CHPQA) - CCL discount.
● Domestic accommodation & charity usage - CCL & VAT discount.
● UK ETS - optimised simplified compliance costs.
● Demand side response opportunities (balancing mechanism, frequency response,
reserve services, DNO services, NIV chasing, Capacity market). Be paid to help balance the grid, e.g. by partnering with an aggregator who coordinates responses.
● TM44 inspections of refrigerant systems, driving savings.
● Energy Savings Opportunity Scheme (ESOS), driving savings.
● Streamlined Energy and Carbon Reporting (SECR), driving savings. For example, an NHS Trust that
received support on this topic went away to check their CHPQA paperwork and found that they hadn’t been taking the final step in the reporting process. Once fixed, they received a £300k rebate on the Climate Change Levy tax and ongoing annual savings. 7. What PROCUREMENT
opportunities does your organisation face? Although it is impossible to have a
perfect energy procurement strategy, there are a number of ways to get it badly wrong. The simplest one is to avoid ‘out of contract’ rates. If you have a large portfolio of properties, such as would be seen by a local authority, then unless the contracts are proactively managed, they will fall out of contract and onto punitive default rates. This was seen at a local authority where they cut the energy analyst post and subsequently wasted many multiples of the salary paying out-of-contract rates for properties in their unmanaged portfolio of energy contracts. Another example is that a school
successfully challenged existing energy broker commission such that in this single activity they reduced gas costs by 20% and electricity costs by 5%. Context being that the broker had applied a flat ‘per kWh’ rate to both electricity and gas - ok(ish) on electricity, but punitive on the gas contract.
8. What CONTROL opportunities
does your organisation face? Many organisations invest in sophisticated Building Management Systems that have the potential to deliver huge improvements in comfort and energy savings through optimised control of the estate. However, if the estates team doesn’t
receive appropriate training on the system and appropriate oversight from a competent energy manager, then the system is often neglected.
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EIBI | SEPTEMBER 2026
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