Written evidence submitted by the Energy
Services and Technology Association |
(i) Report after report stresses the central
importance to our low carbon future of energy efficiency.
(ii) Energy efficiency will reduce the size of
the "gap" between low carbon supplies and consumer demand.
Minimising the gap will reduce the costs of bridging it.
(iii) Energy efficiency requires more than just
the installation of energy-efficient equipment. The use of all
energy-using equipment needs to be optimised and controlled, in
order to maximise the savings.
(iv) The non-domestic sector represents an undoubted
opportunity to make significant and rapid savings.
(v) We have over the years learnt that "picking
winners" is not a precise task. Putting all the "eggs"
of the GIB into just a few "baskets" could be a high
cost route to a low carbon future.
(vi) The UK has a vibrant, innovative SME sector.
It is the area that generates a large share of UK wealth and jobs.
The GIB should support the smaller, innovative companies that
can deliver real savings.
(vii) The Carbon Trust has undoubtedly been very
successful in encouraging innovation. However, we feel that the
GIB should use a slightly different model - of being a facilitator
rather than a market-shaper.
(viii) The latest energy management standards,
in particular BS EN 16001, need to be promoted to incentivise
better energy management.
(ix) A robust auditing and compliance regime
is essential to ensure that support achieves the savings promised.
The Energy Services and Technology Association (ESTA)
represents nearly 120 major providers of energy management equipment
and services across the UK. Members provide smart metering, Heating
Ventilating & Air Conditioning (HVAC) control systems, Building
Energy Management systems (BEMS), consultancy and many other energy-related
services. A number of our members operate as Energy Services Companies
(ESCOs) delivering a complete package of energy efficiency investments
through performance contracts. Most of our members' activities
are focussed on the non-domestic buildings sector.
ESTA has represented the interests of the energy
efficiency industry for several decades now and regularly contributes
to consultations regarding policy formation and policy implementation.
Through its members, it also actively participates in the development
of national and international standards relating to energy efficiency.
1. The importance of energy efficiency, both
in terms of combating climate change and in improving security
of energy supply, is acknowledged at both national and European
level. The EU has adopted a target of achieving a 20% increase
in energy efficiency by 2020 in an attempt to make real inroads
into carbon emissions. The UK Energy and Climate Change Secretary,
Chris Huhne, speaking to the TUC Annual Climate Change Conference
on 11 October, said that the Government's first priority was to
build a low carbon economy that would "help us recover at
home and compete abroad". He noted that saving energy was
one of the key principles underlying the low carbon agenda. And
he reminded his audience that: "Saving energy is still the
cheapest way of closing the gap between supply and demand."
Energy efficiency is a fundamental part of the Green Deal to be
included in the Energy Bill.
2. Closing, or at least reducing, the gap between
supply and demand will mean that less investment in new generating
capacity is needed to replace aging fossil-fired stations. This
will help to reduce the overall cost of the transition. An aggressive
energy efficiency campaign can also flatten the slope of the rising
energy demand curve.
3. However, energy efficiency is about more than
just the installation of energy efficient devices and equipment.
If these are used inappropriately or needlessly, they will still
waste energy: lights burning in an unused room are still wasting
energy even if they are low-energy lights. Energy usage needs
to be controlled in order to be truly efficient.
4. Control strategies vary widely, depending
on the specific location and patterns of use. Controls can be
simple on-off switches, sensor-controlled switches (occupancy-
or light-activated), timed controls, right through to full Building
Energy Management Systems (BEMS). Advanced or smart metering systems
incorporated into control systems offer a way of monitoring consumption
and targeting savings.
5. ESTA would argue that non-domestic buildings
offer a more immediate opportunity to improve efficiency and reduce
emissions than domestic buildings. By and large they are more
modern and are easier to adapt to new energy efficiency strategies.
The energy consumption - and potential savings - per building
are much higher in the non-domestic sector. Commercial organisations
are more accustomed to evaluating the case for financial investment
based on likely savings over a period of time. The Government
is already targeting this sector through a number of measures
such as the CRC Energy Efficiency Scheme. There is also a wealth
of information freely available on "best practice" in
6. Businesses and other organisations have experience
in planning improvement programmes of all kinds - and of evaluating
their impact. The non-domestic sector can therefore generate concrete
data about the efficacy of specific energy efficiency measures.
Quantified savings figures will inform Government and policy makers
about which measures are most effective for reducing carbon emissions.
These can inform policy on progress towards statutory climate
7. There are a number of proven technologies
available that are very successful in reducing energy consumption
in non-domestic buildings. The energy efficiency industry has
been in existence for several decades and has a track record in
delivering real savings. It is continually developing new technologies
and processes to bear down further on energy wastage. That process
of development can be increased still further if the market expands.
This can be through support for new technologies on the one hand
and increased demand on the other. How should the Government and
its agencies support that process?
8. The process of "picking winners"
in any industry is unpopular today. Previous attempts to do so
in a range of industrial sectors show indifferent results at best.
Choosing a preferred technology at an early stage may not lead
to the desired results. It may be the case that, given restricted
funding levels, a rigorous filtering is required in the case of
large-scale projects. It remains, though, a high-risk strategy.
9. However, many of the developments occurring
in energy management have relatively low research and development
budgets. The energy efficiency industry consists largely of successful,
innovative SMEs. We believe that the most efficient way of moving
the industry forward is to support several of the more promising
projects in a particular area and then let the market choose which
will ultimately succeed. There will inevitably be failures but
the successes will reflect the needs and preferences of the market.
It is more likely to produce the right results for the market
than one where the end product is pre-ordained.
10. The SME sector is the engine of innovation
in the UK economy. Support for this sector will drive the transition
to the low carbon economy, creating more long-term, sustainable
11. The Carbon Trust has been very successful
in moving the industry forward through its support programmes.
This is undoubtedly due to its understanding of the private sector
and the ways in which it operates. However, the Trust has over
the years tended to shape the market through its support mechanisms.
ESTA believes that the Green Investment Bank should be more of
a facilitator of innovation than a market-shaper. We are pleased
to see the statement from the GIB Commission that: "Operationally,
the GIB should work under strict principles to ensure it does
not crowd out the private sector, with the private sector leading
and executing deals wherever activity is viable and the GIB operating
only where its actions achieve a result that would not otherwise
have been possible and then in partnership with the private sector
wherever possible." We welcome that statement but hope it
would also apply to any subsidiaries that might be set up to administer
12. In order to achieve significantly greater
take-up of energy efficiency measures in the non-domestic sector,
the latest international standards and best practice need to be
promoted. BS EN 16001 Energy Management Systems (prepared
with substantial UK input from ESTA members), the forthcoming
international (ISO) standard on energy management and the forthcoming
European standard on energy audits, need support in their implementation
by Government and bodies like GIB. In this way, the UK can establish
a common, high level approach to energy management.
13. Without auditing, investment programmes will
fail to make the contribution to a low carbon economy that we
are all working towards. Equally, without enforcement procedures,
new regulations will be ineffective. Compliance monitoring is
an essential part of achieving a green future for the UK.
15 October 2010