Best Practice

Investing for Energy Efficiency

Improving energy efficiency unlocks huge savings and offers businesses potential for reducing energy wastage and achieving energy compliance, according to Ian Tyrer, Head of Sales for Energy Finance at Siemens Financial Services (SFS).
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Siemens Financial Services (SFS):
 

Improving energy efficiency can unlock huge savings for businesses and has the potential to reduce energy waste and deliver energy compliance. The energy we use for heating and powering our non-domestic buildings is responsible for around 12% of the UK’s emissions[1] and UK companies are thought to be missing out on up to £1.6 billion in cost savings achievable through investment in energy efficiency.[2] By reducing energy consumption companies can help to protect the environment, conserve resources, improve their reputation for sustainability and gain a competitive advantage.

 

With legislation continuing to emphasise the importance of sustainable operations, companies are feeling a growing pressure to meet energy efficiency demands. For instance, the Energy Act 2018 is designed to prompt landlords to ensure their properties are energy efficient. The legislation requires that from the 1st April 2018 let properties must have a minimum Energy Performance Certificate (EPC) rating of E.[3]  Landlords of properties with a lower rating therefore need to improve the energy efficiency of those buildings or face penalties.[4]  According to some estimates, up to 20% of UK commercial buildings would currently fail to meet the new standard. [5] Environmental taxes, reliefs and payment schemes also encourage businesses to operate in a more sustainable way.[6]  As a result of these growing sustainability requirements FM companies are now under pressure to facilitate energy efficiency progress in buildings, making it a top investment priority.

 

Improving energy performance, however, can be a costly and complicated process.  For this reason, FM companies are increasingly looking for financially viable ways to make the sustainability upgrade.  The latest report from EEVS Insight Ltd (Energy Efficiency Verification Specialists) highlights that finance is still a primary obstacle for companies looking to invest in energy efficient technology. For instance, 18% of respondents cite a lack of resources as a reason for not investing in energy efficient technology, while the same proportion also point to uncertainty over the financial benefits and 15% indicate that a lack of affordable finance is the problem.[7]

 

One possible solution to this challenge is to work with a specialist financier, experienced in the sector and familiar with the latest technology. For example, the Energy Finance team at Siemens Financial Services (SFS) provides flexible and specialist financing solutions for energy efficiency or renewable technology investments via asset finance.

 

A financing arrangement with SFS can leverage the assessment of the benefits of the new equipment and technology, together with insights into  the expected savings in energy costs and/or income from energy generation to formulate a financing solution, which in effect enables businesses to offset to cost of affordable regular payments against the predicted benefits over time. When a client commissions the implementation of sustainability measures in a building, FM companies can integrate  appropriate SFS funding models into the arrangements.  In doing so, FM companies can leverage SFS’ knowledge and financing expertise to provide an appropriate energy finance solutions for end customers. Customers benefit from financing solutions that make the investments zero net cost and can even be cash positive if the energy savings or additional income are greater than the financing payments. The Energy Finance team at SFS therefore enables FM companies to offer a sustainability solution that doesn’t compromise their customers’ budgets.

 

Working with specialist financiers allows FM companies to go a step further and think more innovatively when discussing energy efficiency investments with their clients. For example, some network operators will pay a business an availability fee for making its high power battery available to stabilise the system prior to faults occurring.[8] These energy storage systems are designed to address fluctuations in energy supply and can be used by industrial companies to mitigate temporarily low power supply from renewable energy resources.[9] A business wanting to invest in renewable technology may find that a considerable part of the overall cost can be offset by the income from a network operator’s frequency response service. [10] Specialist financiers like SFS are well positioned to tailor funding arrangements to include such additional revenue streams. This helps FM companies and their clients gain a clear understanding of the Total Cost to Use, which in turn can  reduce the payments related to the use of the equipment and technology

 

Improved liquidity, energy cost savings and potential new income streams all contribute to making a strong business case for investment in the sustainability of buildings.  FM companies which are able to incorporate such financing solutions in their offers will likely be preferred suppliers for customers looking to improve the energy efficiency of their premises. Additionally, reducing energy demand and energy costs is a continuous and ongoing process, rather than just a one-off project. Therefore, conducting continuous measurement and reporting on the energy status of FM buildings and facilities will not only show the success of the measures implemented but will also reveal new opportunities for optimisation. This ensures that buildings do not lose efficiency over the years but continuously to improve.

 



[1] Department for Business, Energy & Industrial Strategy, The non-domestic private rented minimum standard, February, 2017

[2] Solar Power Portal, Why are UK businesses turning to rooftop solar generation, 15 May, 2017

[3] Residential Landlords Association (RLA), ‘Minimum energy efficiency standards’, http://www.rla.org.uk/landlord/guides/minimum-energy-efficiency-standards.shtml

[4] Ibid

[5] The Energyst, Government publishes guidance for commercial landlords on minimum energy efficiency regs, February 2017

[6] Gov.uk, ‘Environmental taxes, reliefs and schemes for businesses’, https://www.gov.uk/green-taxes-and-reliefs/overview

[7] EEVS, Energy Efficiency Trends vol. 16 (September 2016)

[8] the energyst, ‘National Grid plots superfast grid balancing service’, http://theenergyst.com/national-grid-plots-superfast-grid-balancing-service/

[9] the energyst, ‘National Grid plots superfast grid balancing service’, http://theenergyst.com/national-grid-plots-superfast-grid-balancing-service/

[10] the energyst, ‘National Grid plots superfast grid balancing service’, http://theenergyst.com/national-grid-plots-superfast-grid-balancing-service/




Siemens Financial Services

The Siemens Financial Services Division (SFS) provides business-to-business financial solutions. Our financial and industry know-how creates customer value and enhances customer competitiveness while building trust in new technologies and facilitating their market launch. Visit http://finance.siemens.com.

 


Ian Tyrer

About Ian Tyrer

Ian Tyrer is Head of Sales - Energy Finance, with Siemens Financial Services (UK).

Siemens AG

About Siemens AG

Siemens AG (Berlin and Munich) is a global technology powerhouse that has stood for engineering excellence, innovation, quality, reliability and internationality for more than 165 years. The company is active in more than 200 countries, employs around 357,000 people, and focusing on electrification, automation and digitalization. One of the world’s largest producers of energy-efficient, resource-saving technologies, Siemens is No. 1 in offshore wind turbine construction, a supplier of combined cycle turbines for power generation, a major provider of power transmission solutions and a pioneer in infrastructure solutions as well as automation, drive and software solutions for industry. www.siemens.com

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