Tacking costs — and cutting carbon
The goalposts for the CRC Energy Efficiency Scheme may have shifted, but organisations still stand to benefit from reducing their energy consumption. Phil Chilton looks at how energy-saving and renewable heating technology can help trim running costs as well as reducing the financial impact of the scheme.
The UK may officially be out of recession, but times are still tough out there. In particular, High-street stores are feeling the pinch from decreasing discretionary spending and low consumer confidence, and are struggling to pay the rent, with big names like Habitat, TJ Hughes and Moben tipped into administration by June’s quarterly rent day.
In the wider commercial world, too, businesses of all kinds are facing extreme challenges, with insolvency figures for England and Wales for the second quarter of 2011 showing an increase of company liquidations of 2.7% on the previous quarter.
So the introduction of the CRC Energy Efficiency Scheme comes at a difficult time. Although delayed by a year, there is no doubt that the scheme will have greater financial impact on businesses in its revised form than was originally proposed; in fact, it has been described as a ‘tax burden for business’. Previously, better-performing companies would get back the money they’d had to pay out for carbon permits, but now these funds are to go to Government.
If organisations are serious about their survival, it is clear they need to look after the pennies and explore every avenue for trimming costs. Although investment might not be high on the agenda at the moment, installing energy-efficiency measures sooner rather than later can not only help with running costs but can also help to minimise the effect of the CRC EES by taking steps to reduce energy use.
If you look closely at the scheme, it becomes apparent that energy saving is a bigger carrot than either any kind of reputational benefit or avoiding ‘carbon tax’. The carbon permit required to use the roughly 2000 kWh of electricity that generates a tonne of CO2 initially costs £12; this electricity might cost around £200. Avoiding consumption of that electricity is always going to knock a big chunk off of fuel bills, regardless of the CRC EES’s impact.
Investment in energy-saving equipment can minimise energy usage, and although under the CRC EES this no longer results directly in a Government payment, financial savings combined with a lower tax demand will soon stack up.
In commercial premises, doorways will always be a weak point, losing heated or cooled air each time they open. Installing air curtains to create a division of fast-moving air between the treated air of the internal environment and the noise, draughts and pollution outside, can cut the costs of both air conditioning and heating systems by an industry-recognised 30%.
Air curtains offer the greatest energy savings when used on an ‘ambient’ setting, i.e. no heating or chilling of the air passing through the unit. In a 2-week trial at a Clinton Cards retail outlet in Hampshire, a Dimplex air curtain was used to show how efficient an air curtain can be when operated automatically.
With outside temperatures varying from 12 to 17°C, on 60% of test days the air curtain operated entirely on its ambient setting consuming just 130 W, with no additional heat required to achieve an internal temperature of 20°C. Compared with the 12 kW of power consumed constantly by the previously installed unit, the estimated running costs for the trial period dropped from £96 to £13.50 (based on 10 p per kWh), a substantial reduction, even before you look at the estimated carbon saving of 420 kg.
If a more substantial investment is on the cards, heat pumps are a proven technology that can offer an attractive return on investment, as well as dramatically reducing carbon emissions and, therefore, limiting a company’s exposure to ‘carbon tax’.
An award-winning installation at leading historic house Castle Howard used two 100 kW Dimplex ground-source heat pumps to replace an oil-fired system, reducing energy costs by over 60% and giving an estimated payback on the system of just six years.
Alternatively, air-source systems are straightforward to retrofit, without the associated costs of installing ground collectors. The new generation of air-source technology offers comparable coefficients of performance (CoPs) to ground source (Dimplex’s range of high-efficiency air-source units achieve CoPs in excess of 4.0, even at low ambient air temperatures).
Although the impact of the CRC Energy Efficiency Scheme on business remains to be seen, it still makes sense to focus on reducing energy consumption in the meantime. With substantial savings on running costs to be gained from measures such as air curtains and heat pumps, organisations can start reaping the financial benefits straight away, regardless of their position in the CRC EES ‘carbon league table’.
Phil Chilton is commercial product manager at Dimplex.