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Reality bites: Brace for two years of volatility, warn brokers

February/March 2017

Policy costs: Public facilities risk shutdown as charges rise

Attitude adjuster: Only a seismic shock will wake boards

â&#x20AC;&#x153;The best players do not follow the puck, they go where the puck is going to be â&#x20AC;? p28

INSIDE THIS ISSUE

Energy Management

Vodafone UK energy manager Paul Garland outlines key energy priorities for the telco in the year ahead

30 Energy Efficiency

Some clients are proactively driving down cost and shoring up their operations. But it may take a severe price shock to spur mainstream action

16 Policy & Legislation Public leisure facilities ‘shutting down’ due to rising energy bills

10 Insight

Blockchain technology could facilitate a fully decentralised energy system. Demandside response could be a key beneficiary, provided the industry cooperates

Energy Storage

Limejump makes the business case for batteries

24 Gas & Electricity

Peak costs will be higher than ever this winter. Load shifting will be vital theenergyst.com

An in-depth look at dealing with the rise of peak period energy costs

Reality bites: Brace for two years of volatility, warn brokers

February/March 2017

Policy costs: Public facilities risk shutdown as charges rise

Attitude adjuster: Only a seismic shock will wake boards

“The best players do not follow the puck, they go where the puck is going to be ” p28

Water Management

Artificial Intelligence

Big savings or damp squib? What does water deregulation have in store for businesses in England?

Upside Energy founder Graham Oakes thinks UK academia can outsmart Silicon Valley

Front Cover

Total Gas & Power

Gas & Electricity

Compressed Air

Insight

Energy Efficiency

Water Management

Policy & Legislation

HVAC

Product News

Demand-side Response

Industrial Energy

Q&A

News & Comment

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February/March 2017

COMMENT

The return of risk management? This year’s Directors’ Report has thrown up findings that suggest an increasingly uncertain energy price future: wholesale costs are likely to vary significantly, driven by volatility both within shortand long-term markets, and by swings in Sterling. Managing these risks effectively will be crucial.

provided organisations can actually restructure operations. Energy efficiency “will always deliver the best outcomes”, say consultants. Others tout on-site generation, demand-side response and battery storage as opportunities for revenue generation. But in many cases the rewards, particularly for the latter two, are simply not enough, according to end users.

While there is an abundance of gas from a global perspective, Brexit-related uncertainty is likely to compound micro issues, such as a shortage of storage due to technical problems with Rough, which provides the lion’s share of UK storage capacity.

At the extreme end, some market actors predict power bill hikes, due to environmental levies, security of supply policies, network charge and wholesale market increases, of up to 25% in the next two years.

Meanwhile, after a two-year decline in electricity prices, markets began to turn in 2016. Along the way they took in lows of £30.15/MWh and highs of £170/MWh. Such volatility is “unprecedented”, according to traders, who predict a bumpy path ahead for at least two years.

FM companies believe it will take price shocks similar to the 1970s oil crisis to make directors and procurement departments take note At the same time, non-commodity elements of the power bill have overtaken wholesale cost for the first time in history. The consensus from third party intermediaries (TPIs) is that non-energy costs will this year make up 55% of the total electricity bill, rising to around 65% by 2020. So what can businesses do to mitigate cost? Peak cost avoidance or load shifting will deliver electricity bill savings of around 10-15%, possibly more, according to suppliers,

Editor Tim McManan-Smith tim@energystmedia.com t: 020 3714 4450 m: 07818 574308

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Despite those warnings, facilities management companies say energy cost increases are simply not an agenda item for many of the UK’s largest corporates. They believe it will take price shocks similar to the 1970s oil crisis to make directors and procurement departments take note. While the next few years may not deliver price shocks of the magnitude of the 1970s, the political and economic climate is far from certain. However, with volatility comes opportunity. Those that take a robust approach to risk management, across procurement and increasingly consumption, have a better chance of capitalising on market fluctuations. Agility and flexibility will be key components of that strategy.

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4 February/March 2017

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NEWS & COMMENT

Businesses ‘shutting down’ from 4pm-7pm due to peak power costs Some UK firms are opting to shut down due to peak power costs during evening winter peak, according to energy brokers and suppliers. While that is arguably a measure of the success of National Grid’s Triad methodology, they warn that further costs are being piled into the evening winter peak, which may ultimately impact UK productivity. They add that UK businesses may be unprepared for doubledigit power bill rises in the next couple of years as a result of rising wholesale prices and increasing non-commodity costs, such as environmental levies, network charges and security of supply policies. The warning comes as energy managers in the public sector express dismay over mounting energy costs and their impact on public service provision. Expensive measure “The general outlook is one of significant rises in energy costs,” says Gavin Baker, head of pricing at Smartest Energy. “The [capacity market] policy measure is expensive,” he adds, “and I’m not sure that has necessarily been communicated at the outset.” Baker believes the signals for demand reduction measures are now so strong that firms may consider “the outright restructuring of business opening hours across the winter. Getting everyone in earlier and shutting up shop earlier in the evening just to mitigate energy consumption at that time of the day”. Nick Proctor, CEO at Amber Energy, holds similar views. He says some of his clients already shut down if there is a risk of a Triad being called, let alone the incoming capacity charge. “There is so much pressure

6 February/March 2017

Bumpy ride: businesses should brace themselves for extreme volatility

The biggest risk facing firms in the year ahead is complacency

during that 4pm-7pm winter period. For some businesses, I don’t think it will be profitable to use energy during that period,” says Proctor. “The tax is becoming so bad that is not just a case ‘can we avoid it?’ For some firms, it is more a case of ‘we can’t physically produce and make a profit with that much risk exposure during those hours of the day’,” he says. “So I think some businesses will try and switch away from [peak consumption] completely.” Proctor accepts that might be the intent of policy but feels businesses have not been properly engaged or given adequate warning. “They are not all ready for a 20-25% hike in their [energy] price and I think it will cause a number of issues and a lot of pressure on some businesses going through 2018 and 2019 in particular.” Those trying to fix energy budgets against 2016 prices – which may have been based on soft wholesale markets and minimal capacity and CfD charges – should take note, Proctor warns. Market volatility At the start of 2016, natural gas prices were low, with many predicting further falls, yet during the second half they roughly doubled. While globally there is plenty of gas, reduced storage capacity at Rough could

introduce further volatility over the coming year, compounded by swings in Sterling. Average power prices started the year in the doldrums, but had recovered to 2014 levels by December, taking in lows of about £30.15/MWh and highs of £170/MWh along the way. “The volatility we have seen within power markets in 2016 was unprecedented,” according to Frank Rabusic, head of trading and risk management at third party intermediary, Amber Energy. “I believe that over the next year we are going to see increased volatility in the market and reduced liquidity due to uncertainties around both the end products – wholesale electricity and natural gas – and also the components that drive the price,”

The Directors’ Report polls directors and managers on their approach to energy and water. It also provides a snapshot of key risks and opportunities for the year ahead and is available for download at theenergyst.com

says Rabusic. “That is, the price of carbon, the price of coal and the price of renewables, plus currencies and the price of oil.” Moreover, as the UK looks set to exit the single market, ongoing uncertainty over Brexit terms and outcomes compounds a volatile commodities sector. “We are looking at two years of extreme instability,” Rabusic reckons. That means businesses need to revisit energy risk management plans to ensure they are fit for the current environment. “The biggest risk facing firms in the year ahead is complacency,” according to Omar Rahim, CEO of third party intermediary Energi Mine. He thinks procurement departments, grown used to soft market conditions, may pay the price of shorttermism in the coming months. Speaking to The Energyst on key energy risks facing UK businesses in 2017 for the Directors’ Report, brokers and TPIs advised firms to ensure they have maximum flexibility within their supply contracts to minimise risk and maximise opportunities to save as and when they arrive. That is likely to be on a daily basis, potentially more frequently; brokers unanimously warned that the days of taking a calendar approach to energy procurement are over. “You have to be always on, market-driven and act on what it is telling you,” says Rahim.

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Investor appetite for UK solar PV remains strong

Triodos finances 5MW solar farm on old coal mine and plans up to 50MW in 2017 Triodos Bank has provided some £3m in project finance to Danish Better Energy for a 5MW ground-mounted solar farm in Creswell, Derbyshire on the site of a former coal mine. The bank and Danish firm have plans to build and finance up to 50MW of solar PV in the UK this year. The project was commissioned in time to beat closure of the Renewables Obligation (RO) subsidy scheme last March, so will qualify for 1.3 Renewables

Obligation Certificates (Rocs) for every megawatt hour produced and will also generate revenue through a power purchase agreement (PPA). Danish Better Energy funded the project with equity and climate bonds in addition to the Triodos Bank loan. Triodos and Better Energy said the scheme was the first of a number of similar UK solar investments, with plans to finance a further 20-50MW ground-mounted solar in 2017. Despite changes to solar subsidies, that suggests

investor appetite for UK solar PV remains strong. Stirling Habbitts of Triodos Bank UK said: “We are delighted to finance this ground-mounted solar project, which is the first of a portfolio of similar UK solar projects that we are working on with Better Energy. “It’s encouraging that international organisations such as Better Energy are investing in UK renewables, and we look forward to collaborating on future projects.”

UK solar up 19% in 2016 Installed solar PV capacity increased 19% to 11.46GW in the year to December 2016, latest government data shows, with a further 3GW in the planning system. Roughly half of that increase (1.11GW) arrived in March as investors in large, groundmounted schemes rushed to beat the closure of the renewables obligation (RO) subsidy scheme. To date, about half of the UK’s overall solar PV capacity (5.45GW) is made up by very large schemes with capacity greater than 5MW. About a fifth (2.46GW) comes from domestic scale installations (schemes smaller than 4kW). According to the government’s Renewable Energy Planning database, there is 14.526GW of solar PV either operational or in the planning stage. Just five years ago, at the end of 2011, total UK solar PV capacity stood at 750MW. For the latest PV data see http://tinyurl.com/q6btleu.

Energy storage boom: UK Power Networks receives 12GW of connection applications A “buoyant” energy storage market has led to 667 connection applications totalling 12.2GW in the past 15 months, according to UK Power Networks (UKPN). The distribution network operator (DNO) said the surge of interest in storage, virtually all batteries, is creating challenges for network firms and it wants to be allowed to charge for design and assessment fees to cover costs. It says this would deter ‘highly speculative’ enquiries. UKPN also wants to adapt its processes to enable a range of capacities to be specified

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by developers so that it can tell them how much storage capacity they could connect at a given location without need for system reinforcement. In the longer term, it says network companies, as they become distribution system

operators (DSOs), may need to run their own, local capacity markets to procure flexibility. UKPN outlines in some depth the key issues around charging for use of networks and flexibility services in its response to BEIS and Ofgem’s

call for evidence on creating a smart, flexible energy system. In the document, UKPN also indicates a ramping up of its demand-side response activity, stating it will procure more flexibility in 2017 via relationships with aggregators and directly with industrial and commercial consumers. “As the use of flexible connections expands and more storage looks to connect, demand-side flexibility will need to be facilitated through the connections process and agreement, which we are well positioned to enable,” the firm added.

February/March 2017

NEWS & COMMENT

Energy supply emissions fall 12% but transport and housing emissions rise UK greenhouse gas (GHG) emissions attributed to the energy sector fell 12% yearon-year in 2015, government estimates suggest. The reduction comes largely from the power sector, as coal generation became increasingly uneconomic due to lower gas prices and the impact of renewables (which generated 29% more year on year) on the wholesale market. Additionally Drax burnt more wood instead of coal and EDF’s nuclear output increased 12% from a year earlier. Since 1990, GHG emissions from the energy supply sector have almost halved (-48%), latest data shows, with C02 making up about 80% of all GHG emissions.

The UK remains on track to meet its second carbon budget but there is a lack of progress in decarbonising transport and heat

Government commits to energy efficiency drive The government will set out a long-term roadmap to minimise business energy costs later this year, with energy efficiency – or increased energy productivity – as one of its core pillars. The Department for Business, Energy & Industrial Strategy seeks ideas from industry on how to achieve that goal. As part of its industrial strategy green paper, the department will commission a review of how to decarbonise the energy and industrial sectors at lowest cost. According to the paper, the review will focus on: how best to support greater energy efficiency; the scope to use existing instruments

8 February/March 2017

to support further reductions in the cost of offshore wind; and how the government and regulators can improve energy market structures. BEIS said it will also publish an Emissions Reduction Plan during 2017, and stated it remains committed to climate goals enshrined in the Climate Change Act, while focusing more keenly on affordability and security of supply. In addition, the department is mulling whether to establish a new research institution ‘to act as a focal point for work on battery technology, energy storage and grid technology’. It will report ‘in early 2017’ on whether to pursue that strategy.

While the UK remains on track to meet its second carbon budget, there is a lack of progress in decarbonising transport and heat, the latter responsible for an increase in household emissions. While emissions from business fell 3% year-on year, household GHG emissions increased by 4%. Transport emissions also rose 2%. The transport sector is the single biggest emitter of greenhouse gases other than

the energy supply sector. It may well overtake the energy sector in terms of emissions during the course of this year, if current trends continue. While the reduction of business emissions appears to suggest progress, the reality is that decline of the UK steel industry is behind the fall. Meanwhile, F-gas emissions continue to rise, albeit more slowly than in previous years. BEIS put the increase in household emissions, based largely on gas use for cooking and heating, down to a cooler year in 2015 than 2014. On average, 2015 was 0.6 degrees cooler and 1.3 degrees cooler from January to March, resulting in and increase of 3.4MtCO2e from homes, said the department. See the full data at http:// tinyurl.com/z4ltz9k.

National Grid to extend demand turn-up running hours National Grid will extend the period for its demand turnup (DTU) service to run from March to October next year. The system operator has also confirmed it aims to broadly double the 300MW it procured in 2016 and will provide two routes to market for providers. Meanwhile, the National Grid has also lowered the minimum clip size for those participating in Firm Frequency Response (FFR) to 1MW. While most forms of balancing ask demand-side firms and power stations to adjust output or production when there is a shortage of power, DTU aims to help balance the system when there is too much power to handle. The system operator launched a DTU trial to run between May and September last year, during which 10,800MWh of response was called into action. Initial procurement for next year’s service began in February. However, after the first trial with Western Power Distribution, there are plans to tweak the bid process and payments structure. Providers bid for ‘fixed’ DTU contracts in February, which lock in prices for their availability throughout summer. However, they can also bid for ‘flexible’ DTU contracts on an ongoing basis every Friday and Tuesday between 27 March and 29 October. For full details go to theenergyst.com

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Call for Ofgem to change CM classification of battery storage Scottish Power has proposed a change to the classification of storage within the capacity market. The energy firm says it is misleading to assume storage such as batteries is as reliable as pumped hydro storage. Current rules assume the same derating factor for both technologies. Scottish Power, which owns the 440MW Cruachan Pumped Storage hydro plant near Oban, says that risks too much or too little capacity being procured via capacity auctions, with batteries taking an increasing percentage of the contracts offered to ensure secure supply margins over winter. Some 6% of the contracts (3.2GW) awarded in December for delivery from 2020 were awarded to storage providers, with about 500MW to new build battery storage projects. “Pumped storage has historically shown extremely high levels of availability and

has high de-rating figure of 96.29%. Given that battery storage uses an entirely different technology, there is no justification for assuming that the reliability of battery storage is the same as pumped storage,” said Scottish Power’s director of regulation, Rupert Steele, in the proposal. “It will be important to assess independently what level of reliability it is appropriate to assume for battery technology. The impact of inappropriate de-rating factors could be an under or over procurement of capacity, both of which are potentially harmful to end consumers through lower system security (under procurement) or higher costs (over procurement). “This proposal is therefore in accordance with Ofgem’s principal objective to protect the interests of consumers, including in respect of security of supply.”

Lords: Security of supply trumps decarbonisation The House of Lords Economic Affairs Committee has urged energy policymakers to focus on security of supply over decarbonisation. “The overarching aim of energy policy must be to keep the lights on. Low carbon but chronically unreliable electricity is not acceptable. Similarly very cheap prices at the expense of frequent shortages would be unacceptable,” the committee suggests, via a new report. “Security of supply should be the first and most important consideration in energy policy. Decarbonisation and affordability must be taken into account, but should not be prioritised ahead of security

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where there is any conflict. Successive governments are perhaps guilty of overlooking security at times: for example, the disincentives for private investment in electricity generation created by the growth of intermittent renewables,” say the Lords. “Moreover, affordability should not be neglected in the pursuit of decarbonisation.” The report makes a number of recommendations for policymakers to consider around a different kind of power market auction, a fluid approach to carbon targets and suggests they think about what might happen if Hinkley C is late, or fails to arrive.

ENERGY MANAGEMENT

Can blockchain unlock demand-side response? Blockchain technology could facilitate a fully decentralised energy system. Demand-side response would be a clear beneficiary, provided the industry cooperates, writes Electron chief operating officer Joanna Hubbard

lockchain technology has the potential to deliver more efficient, transparent and egalitarian transaction platforms that will unlock new business models. In the energy industry, this promise is particularly compelling when applied at the grid edge, as we seek to create greater market participation and transparency. We have already seen several instances of this technology enabling peer-to-peer trading and now it is also being touted as the solution to a more efficient market for demand side response. What is it? Blockchain presents an innovative decentralised method for validating and recording direct transactions between peers. All transactions are recorded in a single source of truth that is auditable, immutable and visible to all permissioned network

10 February/March 2017

participants. The technology was pioneered by Bitcoin in 2008 and is currently seeing widespread adoption by other industries that had previously relied on trusted central parties – most notably financial services. However, blockchain is not just a technology. It is also a new way of doing business and its adoption will require the energy industry to selforganise and assume new models of co-operation. Remove the middle man The fundamental change is to the role of the central intermediary: it is not needed. Removing this function removes a cost base, a barrier to transparency and innovation, and a single point of failure. The first publicised use cases for blockchain in the energy space all focused on peer-topeer trading of electricity in micro-grids. Companies such as Lo3 Energy in the US and Power Ledger in Australia, have

created blockchain transaction platforms on which energy consumers can source energy from local renewable assets. This maintains the value generated from within the community. In theory, sourcing local energy should also mean cost savings from reduced storage and transmission losses, that being said, the benefits of peer-to-peer trading will not be fully realised until the energy system is restructured to account for localised pricing. Blockchain and DSR Another market that seems to be crying out for lower barriers to participation and increased transparency is demand-side response (DSR). The build out of inflexible, intermittent wind and solar generation in our system has increased the complexity of balancing the grid, the cost of which is forecast to double to reach £2bn by 2020. A large and liquid market for

Electron is a start-up with some early private backing as well as Innovate UK funding. In addition to its a DSR platform, the company is building a blockchain platform for meter assets, that is, all UK gas and electricity supply points via which it hopes to facilitate faster switching. If adopted, Electron has claimed the platform could make switching 20 times faster. Chief operating officer Joanna Hubbard says Electron will have developed its proof of concept into “a fully scaled prototype that simulates trade and value transfer by next summer”.

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Can we persuade the industry that the trade off between this open, fairer marketplace with lower cost of interaction and single source of truth is worth losing the central point of accountability? Joanna Hubbard, chief operating officer, Electron

flexibility on the demand side will ensure security of supply and keep the lights on while enabling savings both in terms of cost and carbon emissions. Opacity, inefficiency At present the UK flexibility market is estimated to be only a tenth of its potential size and is struggling to scale fast enough. As a whole, the balancing market is overly complex, with more than 26 separate products, and illiquid, with only one real buyer for flexibility i.e. the system operator. It is also opaque, with little price discovery and trading is often conducted on an inefficient bilateral basis, as many products have prices set by auction months before they are needed. Collaborative trades An interesting feature of DSR is that multiple parties can benefit simultaneously from a single action. The same turn-down DSR could enable the system operator to rebalance the grid,

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a distribution network operator to reduce stress on a loadmanaged asset and a supplier to correct a trading imbalance. Enabling collaborative trading will unlock cost savings for purchasers of flexibility and drive liquidity by enabling the execution of trades that would not have been possible on a bilateral basis. Collaborative trades need to be traded on a single platform to ensure simultaneous and complete execution. Historically that would have entailed creating one hell of a monopoly. No single buyer Blockchain could present an alternative solution. At Electron, we have created a trading platform that will enable flexibility to be traded collaboratively without handing the levers of power to any single entity. The platform leverages blockchain to coordinate and record all trading interest in an immutable, auditable ledger. Moreover, its open protocols create results in a transparent execution and governance structure. All parties can see the rules that they are signing up to in advance and verify correct value allocation for themselves. Collaboration required Collaborative trading could maximise the efficiency of the flexibility market and in turn the efficiency of distributed asset deployment – but only if the industry cooperates. There are many reasons for cooperation, such as a more

What does blockchain mean for I&Cs? All but the largest energy consumers would still engage in flexibility markets via an aggregator. In that sense, it would be business as usual, Hubbard tells The Energyst. “Aggregators have done fantastic job helping people to understand their flexibility, de-risk it and sell it into the market,” says Hubbard. “We would like to see a fairer marketplace [enabled by blockchain] for aggregators to operate in. Perhaps the largest energy users will want to interface directly with the blockchain platform, but I think we can do this without changing the way end-users experience [demand-side response provision]. They just benefit from more efficiency, transparency and liquidity.” liquid, competitive market for flexibility purchasers; a fairer, more transparent market for flexibility providers; and, ultimately, cost and carbon savings for consumers. This will entail a mindset shift away from the central point of accountability model. It will be up to startups to prove that the technology works in the real world, industry to invest and regulators to engage – and it looks like this is starting to happen. te

How long before blockchain might replace the system operator? Whether blockchain gains traction in the energy system is highly uncertain. But Hubbard tells The Energyst that it could be embedded and fully commercialised within three years, depending on the number of market actors that build systems and processes around the technology. “Whether the regulations move that fast, I am not sure,” she says. “With blockchain, we have to do it together or not at all. “Can we persuade the industry that the trade off between this open, fairer marketplace with lower cost of interaction and single source of truth is worth losing the central point of accountability? Because that is the tradeoff and that is the key barrier: persuading people that [structural shift] is worthwhile,” she says. “It will not be decided by us, but by the industry incumbents.”

February/March 2017

POLICY & LEGISLATION

The early bird… Jon Ferris, strategy director at Utilitywise, one of the UK’s largest and leading independent utility cost management companies, explains the Early Capacity Market Auction and highlights the impact it will have on utilities customers

he Capacity Market is a scheme established by the government as part of its Electricity Market Reform policy. It is designed to encourage investment in new power generation and ensure sufficient capacity is available when it is needed most. The objective is to deliver long-term security of supply for the UK, by incentivising investment in and provision of reliable capacity, at the lowest possible cost for consumers. The Capacity Market rewards generation and demand-side response for guaranteeing availability to help balance the network when supply struggles to meet expected demand. The scheme takes the form of annual auctions, the main ones being carried out four years ahead of the required delivery of the generation, the so-called T-4 auctions. National Grid contracts for capacity in advance to ensure sufficient time to invest in new generation capacity. There are also additional auctions conducted a year before delivery aimed at encouraging DSR. The auction price is initially set at £75/kW and is gradually lowered as providers place bids, detailing the capacity they can provide at that price. If there is more capacity than the secretary of state has authorised for the auction, the price drops to the next band, and capacity that has bid a higher price drops out. The clearing price is determined once the capacity bidding matches the required capacity for the auction. The first Capacity Market auction took place in late 2014, with generators bidding to

12 February/March 2017

Capacity Market Auctions Delivery year

Capacity

Closing price

T-4 December 2014

2018/19

49.26GW

£19.90/kW/year

T-4 December 2015

2019/20

46.35GW

£18.00/kW/year

T-4 December 2016

2020/21

52.42GW

£22.50/kW/year

Early Auction January 2017

2017/18

54.43GW

£6.95/kW/year

Source: Utilitywise

provide capacity for the winter of 2018/19. A second T-4 auction took place in 2015 and a third in 2016 (see table, above). With these auctions, National Grid has secured capacity agreements for periods from 2018/19 to 2020/21. A supplementary early auction was announced in 2016 and ran in January 2017 to provide capacity for the 2017/18 winter season. Despite contracting for the highest volume, this short-term auction cleared at a significantly lower price than any of the other auctions.

What impact does it have on consumers? Successful participants to the auctions are paid a monthly rate during the delivery year based on demand forecasts at the auctionclearing price. Once actual data on availability is known, these payments are reconciled. However, as is the case with other subsidy schemes, energy suppliers will pass on these costs to consumers. The operational charge has been appearing on customer bills since April 2015, with administration costs being

recovered for the first two years. Utilitywise has analysed noncommodity costs (NCCs) as part of its Long-Term Price Forecast Report and has estimated annual cost impacts to consumers (£ per megawatt hour). For the coming year, as a result of the early auction for delivery in 2017/18, consumers could be paying about £1.40/MWh, with this more than tripling the next year to account for the higher clearing price for capacity being provided in 2018/19. The first Capacity Market

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Auction awarded just 5% of contracts to new build capacity. As a consequence, the majority of contracts were one-year, meaning that payments are only made during the year of delivery. New-build generation increased to 6.5% of total capacity by the third auction in 2016. As more new generation is required and multiple year contracts play a larger role in the auctions, costs will be supported by payments being made for many years beyond the initial delivery period.

As more new generation is required and multiple year contracts play a larger role in the auctions, costs will be supported by payments being made for many years beyond the initial delivery period

Reducing cost impact The cost to consumers will vary and is dependent upon the consumersâ&#x20AC;&#x2122; peak demand levels during the winter months. As such, the methodology for this charge will be similar to Transmission Network Use of System (TNUoS) charges.

Businesses already undertaking Triad avoidance to reduce TNUoS charges will be aware of the benefits of better managing winter electricity consumption. Controlling demand will have a similar effect on Capacity Market charges.

Firstly, you need to know the key components of the utilities bill (the commodity and non-commodity costs). In particular, DUoS time-bands, which are focused on the week-day evening peak hours, with additional 12-2pm for London-based businesses, see a higher price per kWh than any other time of day. Reducing consumption at these times will bring significant monetary savings on your utilities bill. Adding to this are the previously mentioned winter Triads, between November and February each year. The Triads are used to calculate transmission costs based on consumer consumption during the three half-hourly periods of highest system demand determined by National Grid. Secondly, you need to know how, when and where your

building is using energy. By understanding your buildingâ&#x20AC;&#x2122;s energy profile and what systems, processes and equipment are influencing a rise and fall in consumption, you can identify opportunities to change. Businesses can take control by implementing controls technologies to ensure out of hours consumption is consistently low and, that during in-hours, you are controlling (load shedding and shifting) around the DUoS and Triad periods. The application of a modern-day intelligent bureau is also part of the solution, providing insights around inefficiencies in equipment and building performance. This bureau, like the one from Utilitywise, brings into the mix utilities market intelligence as well as experience around procurement contracts. te

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February/March 2017

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POLICY & LEGISLATION

Public leisure facilities are struggling to cope with spiralling energy bills and risk closure due to increasing policy costs, a representative of 220 sports and leisure trusts has warned The Energyst. Brendan Coyne reports

Public leisure facilities ‘shutting down’ due to policy costs

ean Midgley, energy and environment manager at SIV, the operational arm of Sheffield City Trust, looks after 17 of the city’s sports and leisure venues. At least for now. He says there is a real risk that facilities will soon close due to rising energy bills that are being driven up sharply by policy costs. The incoming capacity market charge, he warns, may be the final straw. Midgley also works with Sporta, the national association that represents charitable social enterprises within the cultural and leisure sector. He says all of the association’s 220 members are in the same boat, without a pump, let alone a paddle. Poor get poorer “Our energy spend is now 11% of our gross annual

16 February/March 2017

turnover. If we were a household, we would be classified as living in fuel poverty,” Midgley points out. Total utility costs for SIV are currently £3.5m, with electricity, some 22GWh per annum, accounting for £2.5m. About half of that bill is for power itself. The other half pays to subsidise renewables, cover environmental levies and for use of the electricity networks. The nature of leisure centres means many sites are severely limited in their ability to avoid consumption during evening winter peaks, where the bulk of network costs and the capacity market charges are applied. “Between 4-7pm is our busiest period because it’s when people finish work and want to go to the gym,” says Midgley.

According to analyst’s predictions, that could leave SIV with a six-figure additional cost from the capacity market charge next year, on top of a projected 20% increase in the cost of the Renewables Obligation. A similar increase is projected for FiT CFD from 2018. Meanwhile, the cost of small-scale renewables (FiTs) is also set for a double-digit rise. “If that happens, it will kill us,” warns Midgley. “Venues are already shutting.” Forced to close While councils are under severe budgetary pressure, and energy costs are not the sole contributor, “energy is our second largest cost after salaries”, says Midgley. “So we’re really struggling at present because the council can’t afford to keep

[venues] open. But they’re under pressure from central government to provide local health outcomes. One way to deliver that is through local sports and leisure centres. But now they’re having to streamline, so you will see, certainly within local towns and cities, that your smaller health clubs, and your smaller swimming pools, will start to close.” He says it is already happening. “Grimsby ice rink has just closed because it’s uneconomical to carry on running, and there’s number of leisure centres within the Kirklees area that are due to close as a result of operating costs. We’ve recently had two of our venues close for the same reason.” It’s a dire situation and

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“So we’re very limited with the amount of suppliers we can go to,” says Midgley. “We’re finding it increasingly difficult to actually secure energy contracts and to get the best prices. We’re starting to be squeezed out of the marketplace because we’re seen as a risk. “Our current supplier – we’ll have been with them for three years by the time renewal comes up – recently informed us that its accounts department views us as a risk and wants a parent company guarantee. “But we can’t provide one because Sheffield City Council will only give us a letter of competence in terms of leases. It won’t underwrite our energy bills. So that supplier will not be getting SIV’s annual a renewal if electricity bill, that remains the case.” some 22 GWh Where does that leave SIV? “Probably with the only supplier that will touch us [that is, the UK’s largest]. And that supplier, as everybody knows, is phenomenally expensive.” one that Midgley says will have a knock-on effect given Reducing demand the importance of sports Midgley says he has worked and fitness to national to reduce consumption across health and wellbeing. the estate over the past four years, and by doing so, Bad deals effectively secured a £500,000 Meanwhile, even securing energy efficiency budget for competitive energy contracts is the year ahead, which would becoming increasingly difficult. help reduce energy costs by Because suppliers are around £180,000 per annum. carrying non-commodity costs But he says it has “never before passing them through to really materialised because customers, they are demanding it was absorbed by other guarantees or collateral before energy bill costs”. renewing supply contracts He says energy service as those costs increase. companies and other firms While leisure trusts are have beaten a path to his door effectively arm’s-length council offering finance arrangements vehicles, they are charitable so that energy bill savings trusts and the council will not repay capital investment. underwrite energy bills. The But SIV is reluctant to look trust therefore cannot give at those types of models parent company guarantees. because it would compound Neither can it provide credit risk, which – as supply £700,000 surety to suppliers.

contract renegotiations prove – is already an issue. Similarly, Midgley says the council could not rightly take money being offered by firms touting over-sized CHP units in order to game the balancing markets and subsidy programmes. “We’ve had a number of ‘investors’, shall we say, offering to put in a 1.5MWe scheme where we only need 500kWe. When I’ve told them we couldn’t use all of the heat even if we could use the power, they say ‘we’ll just blow it away’. “We’re a charitable trust, we’re accountable and we have a social and corporate responsibility,” says Midgley. “The local authority’s

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JANE VERNON

£2.5m

“So we’re very limited with the amount of suppliers we can go to. We’re finding it increasingly difficult to actually secure energy contracts and to get the best prices. We’re starting to be squeezed out of the marketplace because we’re seen as a risk Sean Midgley, SIV

objective is to be the greenest city in the country. If we were to turn around and tell them we are blatantly dumping heat because it saves on our energy bill, that doesn’t fit with our CSR nor does it fit with the local authority‘s.” But if those types of games are being played within the energy sector, would it not be better to join in than close public facilities and deprive communities? “I come across it time and again with CHP, but I couldn’t put my name to a project that was being deliberately dismissive of other factors.” Salix solution? While government appears to be refocusing on energy cost control, Midgley says there are some straightforward policy interventions that could make an immediate difference to trusts. Not-for-profits cannot access Enhanced Capital Allowances. But if government reduced VAT on certain proven technologies to 5% “that could really help as a lever to get things across the line”, says Midgley. Alternatively, revisiting rules around the government’s interest-free Salix loan scheme might help. “Salix funding is open to the NHS and local authorities – but it’s not open to trusts that have been set up by the LAs,” says Midgley, even though they are “effectively arms-length councils set up to operate the buildings”. Councils want those trusts to operate independently, thereby depriving them of access to the Salix loans. While councils themselves could technically solve that issue, Midgley believes it should be implied within Salix rules that council trusts should qualify for finance. “If government could revisit that,” he says, “then yes, absolutely it would make a difference.” te

February/March 2017

DEMAND-SIDE RESPONSE

Gateshead Council signs £1m demand response contract Energy centre generates big revenues through grid balancing

emand-side response aggregator Flexitricity has added another significant site to its books. The firm says Gateshead Energy Company, operator of a 4MW combined heat and power scheme currently being commissioned, will earn £1m from grid balancing services over the 15-year contract. The energy company is owned by the local council. Council leader Martin Gannon said: “Once we realised that we could bring more revenue into the project by providing capacity to the National Grid – without changing our day-to-day operations – the decision was made for us. “It’s win-win for ourselves and our customers. Not only does it support our business model of providing low-cost,

Headline partner

The new energys centre is a “win-win” for the local council and its customers

low-carbon energy to homes, organisations and businesses, but Flexitricity’s system works seamlessly with our own, meaning we can provide heat

and power to our customers while supporting critical national infrastructure.” Flexitricity is owned by Swiss energy company Alpiq.

The aggregator manages in excess of 300MW of demand-side response and was awarded contracts for some 370MW of DSR in last

Partners

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DEMAND-SIDE RESPONSE

Flexing our combined muscle With Ofgem due to publish its plans to improve support for flexibility in the spring, it is a great time to take a closer look at the issues, believes DONG Energy Sales UK managing director Jeff Whittingham

s many businesses will be aware, a range of incentives are in place to encourage participation in demandside services. Non-domestic consumers represent about 57%* of the UK’s electricity consumption, and as such are important stakeholders. The Association for Decentralised Energy estimates that by deploying 4GW of userled demand-side management (DSM) in the capacity market, £600m in consumer savings are possible by 2020 – making this new way of working crucial to managing our collective costs. It is an impressive number, and calculated based on effective DSM eliminating the need for 50 new open-cycle gas turbine (OCGT) power plants, which would otherwise be needed to meet anticipated demand. The ADE goes on to predict that by the same year, up to 16% of the UK’s peak demand could be met by DSR, equating to 9.8GW of volume. ** Combatting rising demand The 2016 Autumn Statement saw the government focus on boosting uptake of electric vehicles in the commercial sector, with tax breaks for companies looking to invest in electric vehicles by providing charging points. Chancellor Philip Hammond also announced funding for ultra-low emissions vehicles. This is a fantastic move towards helping to decarbonise the transport sector and welcomed by many businesses looking to improve their corporate sustainability. More than 75,000 electric vehicles were registered at the end of last year, and this

20 Febraury/March 2017

More businesses should pull together and participate in demand-side services

support moves the industry firmly out of ‘early adopter’ territory. Of course, this also brings heightened demand for electricity, in a system that is still working through the best ways to balance supply and demand in a secure and affordable manner. It is an interesting prospect. While increased take up will bolster demand, it also represents a balancing opportunity. Once connected, vehicles will be fully charged after a set amount of time, but are typically parked and connected at a charging point for longer than required – during the working day or overnight at home. Trials have therefore taken place to assess how to adjust the times at which vehicles receive their charge whilst plugged in, according to system requirements. This would provide essential balancing support as the market progresses. Challenges to overcome Businesses have already earned more than £100m by participating in capacity market services since 2014**, but the opportunity is so much bigger than that. So why aren’t more businesses participating? Much research has gone into

If we could more accurately demonstrate the contribution that flexibility makes towards these sustainability targets, this activity would undoubtedly become more attractive

this area, with similar outcomes. Ofgem’s own stakeholder research found that barriers could broadly be categorised as: • Cultural: A knowledge gap in the flexibility products and services available and how to access them, coupled with an assumption that their business processes are not suitable for DSR • Regulatory: A lack of understanding of the roles of different parties in establishing an export connection, for instance • Commercial: The financial reward available has been considered insufficient to move away from core business activities - and in some instances DSR conflicts with existing corporate environmental schemes or commitments • Structural: Concern over the potential disruption associated with operating flexibly, as well as any ongoing perceived risks and costs These themes have much in common with the concerns raised by our customers during our own flexibility workshop. As the importance of demandside flexibility has become more apparent, the level of information and product choice has also increased. While this is great news for businesses, navigating the options and interpreting them in

• For a simple at-a-glance view of the flexibility options available, download Dong Energy’s User’s Guide at dongenergy.co.uk/energyforbusiness/flexibility-solutions/ flexibility-reports • For more information on the Power Responsive initiative see powerresponsive.com • For details on Ofgem’s flexibility call for evidence, seeofgem.gov.uk/publications-and-updates/smart-flexibleenergy-system-call-evidence

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Investing for the future light of their business operations While these are all valid can feel like a daunting task. concerns, the good news is Organisations are unique in that there is a lot happening their challenges, specific run to ensure that it is as easy schedules and equipment and and attractive as possible for they need greater clarity to help businesses to contribute to them select an option that best system balance. The launch meets their requirements. of National Grid’s Power The structural considerations Responsive initiative were also echoed, with has spearheaded the one manufacturing introduction of customer stating: a vast number “While I can see of schemes the benefit of to cater for flexibility, in Possible consumer all manner practical terms savings by deploying of business I am concerned 4GW of user-led DSM types and sizes. about inthe capacity market As well as the interfering more involved with some of frequency response our key equipment. programmes, there That equipment isn’t are now entry level versions used to being switched off of schemes like Short Term and on again regularly, and Operating Reserve (STOR), any problems in getting it as well as commitment-free up and running again could options such as Renewable quickly outweigh the financial Balancing Reserve (RBR) benefit of participation.” from DONG Energy. One item that isn’t cited Last year, the Department for within Ofgem’s findings, but Business, Energy and Industrial was flagged by our customers, is Strategy allocated a budget the need to draw environmental of £50 mn for innovation in benefit, specifically identifying smart technology and processes how participation makes a over the next five years. This contribution to sustainability directly supports flexibility, as do targets. It is relatively initiatives such as the Electricity straightforward to articulate Innovation Competition, the the environmental benefit of successor to the Low Carbon using renewable electricity or Networks Fund. This budget reducing consumption in a also makes funding available quantifiable way. It is far less easy to network licensees to support to demonstrate how flexibility large-scale innovation and in consumption can contribute development, via an annual to lower carbon emissions. competitive process for Customers told us they funding up to £81m per year. would welcome guidance from It is a truly exciting time. government and regulators Our electricity infrastructure is on how participation can changing fundamentally, but help achieve their objectives. with technology evolving at a One customer stated: fantastic pace and with such “Large businesses are a clear focus on overcoming working towards determined existing barriers, it is crucial sustainability targets and that businesses keep a close eye reporting progress towards on opportunities to ensure they these is an important part of are reaping the right rewards an energy professional’s role. for their organisation. te If we could more accurately * Cornwall Energy Associates demonstrate the contribution http://www.cornwall-insight.com that flexibility makes towards ** Association for Decentralised these sustainability targets, this Energy – Flexibility on activity would undoubtedly Demand, July 2016 become more attractive.”

£600m

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DCP 228 – Turning regulatory change into a smart advantage Approved by Ofgem last September, Distribution Change Proposal 228 (DCP228), will affect electricity distribution charges from April 2018. Dylan Crompton, Head Of Major Accounts at British Gas Business, explains how: The background The Distribution Network Operators (DNOs) currently recover their operational costs through a triple-tiered, red-amber-green, time-based structure heavily weighted towards the early evening red period. This ensures a consistent approach across DNOs and creates financial incentives for consumers to reduce peak consumption. However, under this method, the red period includes revenues not related to peak conditions, ultimately pushing costs higher for everyone. As DNOs morph into Distribution System Operators – actively managing flow and balancing their local networks – and the generation mix becomes more diverse, the distribution charging mechanism needs to reflect actual network costs. So, what is DCP228? Officially, this amendment realigns scaling in the Common Distribution Charging Methodology. In simple terms, this reduces the gap between charges, making the green zone slightly more expensive and the red zone cheaper. Generally speaking, domestic and single-rate nondomestic customers (profile class 03) will see a reduction in distribution costs. Half-

hourly sites may see a rise in distribution costs with the greatest increase on high voltage sites and those with high baseload or night-time consumption. What does that mean for my energy management strategy? Some customers feel that reducing the cost differential between peak and off-peak DUOS charges removes the financial incentive to manage demand. However, in a policy environment where dynamic, time-of-use tariffs could become the norm, it makes sense for astute end-users to discard the idea of having only a short window for demand reduction in the red period, where multiple consumers chase the same diminishing returns. Instead, we should adopt a broad range of techniques to optimise our energy strategy. Behind-the-meter energy reduction opportunities, informed by data from smart connected devices, are significant, particularly when combined with an effective purchasing strategy. When suppliers and energy buyers co-operate to manage costs and reduce consumption we can realise a more sustainable approach to energy management. At British Gas Business, helping our customers to make informed decisions and take control of your procurement risk strategy is central to our philosophy. If you want advice on your energy procurement strategy or smart energy data insights, call us on: 0845 070 3720. For further information on managing your business’ energy more generally, visitbritishgas.co.uk/business

ENERGY STORAGE

Be sure you’reMaximising on Maximising the plus side

ba!ery revenues ba!ery revenues Maximising

Limejump head of business development Joe McDonald makes the business case for batteries

atteries are taking an increasingly prominent role in the energy market: the cost of lithium ion batteries has halved since 2014 alone and storage projects now account for 3.2GW of Capacity Market contracts from National Grid. As a fast, flexible source of low carbon power, the potential for batteries in keeping our energy system balanced has only just begun. Standalone plants connected directly to the National Grid (‘Grid-scale’ projects) are becoming an established part of the energy mix but the number of batteries that sit behind the meter in industrial and commercial premises are also growing, and with good reason. When optimised correctly, a 1MW battery can earn up to £260K each year, compared with just £90K from a similar-sized diesel generator. So how does the commercial case stack up? Commercial batteries range from 50kW to 2MW. With the size of a 1MW battery comparable to a shipping container, this technology may not be suitable for some commercial properties but they are feasible for a wide range of organisations, from commercial refrigeration and distribution units to utilities and manufacturers. The business case for batteries in industrial and commercial premises is different to those plants connected directly into the National Grid but the potential returns remain substantial. They essentially divide into two areas: cost savings driven through peak avoidance, and payments from participation in Grid schemes or exporting power back onto the Grid for sites with export metering. Being an early adopter in the market and securing lucrative contracts now means that

22 February/March 2017

ba!ery revenues 4% Wholesale Opportunities 4% Maximising 4% Wholesale Opportuniti Wholesale Opportunities ba!ery revenues 8% Maximising Capacity Market 4% 8% Opportunities ba!ery revenues Wholesale Capacity Market

8% 22% 4%

Additional Wholesale Opportunities Capacity Market 8% Optimisation

22% Capacity Market Additional Optimisation 8% 66% Capacity LimejumpMarket Portfolio 22% Frequency Optimisation Response 66% Additional Limejump Portfolio Frequency Response 22% Additional Optimisatio Additional Optimisation 66%

22%

Limejump Portfolio Frequency Response

66%

Limejump Portfolio Frequency Response

Limejump Portfolio demand-side response’ contracts, Frequency Response batteries enable businesses

As costs come down, more more businesses should be looking to maximise revenues from batteries Soucrce: Limejump

the payback period for the upfront investment can be significantly reduced: batteries are increasingly making commercial sense. Unlocking revenue streams From winter 2017/18, businesses

can receive payments through the Capacity Market by making themselves available to reduce consumption or switch to onsite sources during potential Grid blackouts. While most organisations secure ‘unproven

to secure a different class of agreement: due to the Capex investment meeting the relevant threshold (£250/kW) as new build assets, batteries secure long-term contracts, but timing is crucial: prequalification must be made at the correct time in August and initial energising also must be carefully timed in order to secure the right agreement. Participation in the Capacity Market is far simpler than reducing consumption or shifting load: switching from import to battery should take place within a few seconds if

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installed correctly (far faster than switching to alternative on-site generation such as diesel generators), so business-critical processes need not be interrupted. While each Capacity Market auction secures a different result, T-4 agreements secured for this type of contract to date have been between £18-£22.50/MW. The fast response times of batteries also means businesses can participate in dynamic frequency response, by far the most lucrative type of frequency response contract. Batteries are automated to instantly respond to fluctuations in Grid frequency and can expect to receive in excess of £160,000 per annum for doing so. Unlike winter peak schemes, these contracts run throughout the year and businesses can participate in both frequency response schemes and the Capacity Market without being penalised. Those organisations with the appropriate metering connections can also take advantage of peak pricing in the market by switching to export, although the differential between import costs for businesses (ca. £110/ MWh) compared to average market export prices (ca. £50/ MWh) means that using a battery’s charge to avoid peak pricing and reduce import load can be far more profitable. Peak avoidance pays off Any organisation with a halfhourly meter is penalised for consumption during peak times, from running production during DUoS red bands to a high load in winter during Triad and Capacity Market season. Switching to battery power during these periods avoids having to shift load or interrupt business critical procedures whilst avoiding the non-commodity costs that can have a heavy impact on a business’ bottom line and impact competitiveness. It is however important to check the flexibility of your supply agreement: peak avoidance only pays off if a business has agreed on pass-through terms for

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distribution, transmission and Capacity Market levy charges. This will ensure that action taken to reduce consumption during peak times results in the savings earned. Checking volume tolerance is also advisable.

Commercial batteries are feasible for a wide range of organisations, from commercial refrigeration and distribution units to utilities and manufacturers

Best commercial terms Securing the right contract with your supplier will provide you with the flexibility needed to maximise the potential of a battery but agreeing the right terms and price with a battery developer is critical to the commercial success of

When optimised correctly, a 1MW battery can earn up to £260k each year, compared with just £90k from a similar-sized diesel generator the asset. An agnostic battery expert can help with this: look for proven capability and expertise to determine the right size battery, at the right price, installed and energised at the right time and in the right manner to reduce capital expenditure required, limit the payback period, and ensure a profitable return on investment relative to the asset lifecycle. Depending on the size of

the battery, you may not need to work with a traditional aggregator. Batteries of 1MW or higher will be able to bid directly into Grid frequency response contracts from April 2017. If you do choose to use an aggregator (whether down to the size of battery, for ease of scheme participation or for those aggregators offering innovative value-add programmes), ensure total transparency over any fees charged, check that the aggregator has contracts in place and is a bankable entity and look for the proven capability of those with live and successful aggregated battery networks. For batteries to be commercially viable for organisations with capex constraints, participation in fast frequency response is crucial but this has traditionally required a stable baseload with limited seasonality or profile shape. This can be overcome: Limejump operates a portfolio approach to frequency response, combining

Securing the right contract with your supplier will provide you with the flexibility needed to maximise the potential of a battery, but agreeing the right terms and price with a battery developer is critical to the commercial success of the asset

fast-responding batteries with a range of generation and business assets and flexibility to create the flat profile required to access the most rewarding frequency response contracts. High revenues The market for commercial batteries is growing but it is still in the early phases: National Grid anticipates uptake growing exponentially from 2022 onwards but falling battery prices and solid revenue opportunities means those looking to move now could reap the rewards. Securing attractive Capacity Market and frequency response contracts while competition is low (and benefiting from Triad avoidance while they still exist in their current form) will help reduce the payback period, countering any impact of future falling prices. Repaying capex now should also mean that organisations with batteries in operation should be on a level playing field with those commissioning them in future years, enabling them to bid at similar or even lower levels for future Grid contracts. Far from being an unproven technology or an asset only accessible to those with capex to spare, batteries are increasingly a way for an organisation to future-proof itself against rising energy costs and benefit from the attractive contracts available in the market for fastacting, low carbon assets. te

February/March 2017

GAS & ELECTRICITY

The cold reality of peak costs Inenco chief commercial officer Dave Cockshott on combatting rising energy costs

ast year was a turbulent one for business energy professionals. Alongside wider political upheaval, announcements to scrap the CRC, increase the CCL and bring forward the capacity market by a year meant more uncertainty and revisions to future energy budgets. So what is the energy outlook and how can business energy users take back control?

with an annual spend of £500,000 in 2016 would now be looking at £590,000. Whereas many businesses benefited from placing shorter, fixed-price contracts when the market was low, risk management is back in the spotlight. More flexibility and longer supply arrangements can help mitigate against a rising market and could provide opportunities to benefit from short-term movements. An Commodity effective way to costs back on manage risk the agenda can also be After 18 spreading relatively flat purchasing Price per MWh that halfmonths of across hourly users will pay for stagnant or different energy consumed at falling prices, strategies peak periods commodity (such as prices rose Inenco’s Options by 40% in 2016, portfolio that fuelled by a whole swathe of apportions volume across factors from supply issues to four approaches, from fixed Brexit-related uncertainty. to hedging on forward November saw intraday and prompt markets). power prices peak at more than Whatever strategy suits £800/MWh. The cumulative your business and budget effect of these movements is requirements, revisiting your not insignificant: businesses procurement strategy to ensure

£31

it remains fit for purpose would be a worthwhile exercise. Non-commodity costs in focus The upward trends in environmental and network costs continue but fortunately the immediate future looks a little brighter than many had predicted. The T-1 Capacity Market auction concluded in early February, confirming the price of capacity for winter 2017/18. There had been some concern that the cost would escalate to upwards of £2bn, which would have seen business users paying over £130/MWh during peak winter periods. The actual clearing price for the auction was a quarter of the forecast cost: halfhourly users will instead pay around £31/MWh for energy consumed between 4pm and 7pm, Monday to Friday, between November 2017 and February 2018 (the exact charge depends on total consumption and may be subject to reconciliation at the end of the winter).

Electricity Cost Forecast for HH Retailer (LV) 160

160 140

120

100

80 60

60 40

0 2017/18

24 February/March 2017

2018/19

2019/20

Taxes and levies Network and system charges Capacity Market Wholesale price

2016/17

The forecasts below are based on typical demand profiles for businesses in central England: actual changes will vary for different consumers. Source: Inenco, February 2017

Electricity Cost Forecast for Manufacturer with CCA (HV)

Taxes and levies Network and system charges Capacity Market Wholesale price

£/MWh

140

The capacity cost, when added to distribution and transmission charging structures, means the cost of peak period consumption will be higher than ever this winter. Load shifting will be vital

0 2016/17

2017/18

2018/19

2019/20

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Scottish Power launches second phase of

‘Operation TPI’ When added to distribution and transmission charging structures, the cost of peak period consumption will be higher than ever this winter. Demand management will be vital: shifting load outside of this time period will be essential to mitigate additional costs, or even participation in demand response schemes to uncover new revenue. With six months to go, finalising an approach to manage this and achieve buy-in from internal stakeholders should be top of the ‘to do’ list of business energy professionals. Of course, one of the best ways to control costs may be to use less energy. As unit costs rise, the payback on energy efficiency measures will be shorter: it could be time to dig out ESOS recommendations and re-review consumption to identify ways to reduce it. The cost impact Faced with additional costs, understanding the impact on your budget for the coming year and beyond is essential. Using example

profiles of retailers and manufacturers by way of an example, all businesses will see prices increase over the next three years. Businesses under the CRC threshold will see prices shoot up by about £20/MWh this year, rising again to around £140/MWh by the end of the decade as the Climate Change Levy increases to collect the revenue of the scrapped CRC. Those within the CRC will also see a sharp increase, followed by a few years of smaller rises. Manufacturers with a Climate Change Agreement are also exposed: the £/ MWh rate will still increase by around £25 by the end of the decade, despite CCA protection (see graphs below). As the government commits to reviewing how to minimise the impact of rising business energy costs as part of its industrial strategy, taking proactive action to manage the impact this winter and considering approach for the coming years is still a vital part of taking control of your energy costs. te

Electricity Cost Forecast for Retailer in CRC (HV) 160 140

Taxes and levies Network and system charges Capacity Market Wholesale price

120

£/MWh

100 80 60 40 20 0 2016/17

theenergyst.com theenergyst.com

2017/18

2018/19

2019/20

Scottish Power’s strategic push to build deeper links with third party intermediaries (TPIs) in the I&C Sector has entered its second phase. The energy supplier embarked upon a strategic shift at the end of 2015, recognising that the relationships forged by TPIs could significantly enhance its business, which until then had focused almost exclusively on direct sales. Since then, Scottish Power has worked to engage TPIs in a bid to improve its market presence and outline how partnerships can boost both energy supplier and TPI margins, as well as provide improved service delivery to business customers. That work is paying off: Scottish Power is now ranked #5 when considering ‘how well suppliers are meeting the TPI’s needs’, according to Cornwall Energy’s annual league table, up from #13 a year earlier. Alan Davidson (pictured), Scottish Power head of I&C business sales, said the firm’s ambition during the next 18 months is to become the number one business energy supplier for TPIs. For the second phase of that plan, Davidson says the firm is keen to engage TPIs around metering and data services provision and demand-side management.

“Ambition during the next 18 months is to become the number one business energy supplier for TPIs” He thinks those areas in particular will help them to avoid margin squeeze over the year ahead, with TPIs keenly aware of the need to differentiate their service offering in an increasingly competitive market. Scottish Power will outline details and opportunities for partners within those areas – and the broader business market – at the Energy Live Consultancy Conference at the Etihad Stadium in Manchester on 23 March. As one of the event’s key sponsors, Scottish Power will also host a CEO dinner for top TPI bosses the previous evening. Brokers interested in attending, or simply finding out more, should contact: alan.davidson@ scottishpower.com

GAS & ELECTRICITY

Call for TPI regulation Energy broker ZTP wants TPIs to be regulated amid concerns of the negative impact a minority are having on the industry. Alex Hill and Joe Warren explain why Mandatory regulation of TPIs is a necessity, in order to improve the industry’s reputation and allow end users to benefit from more competitive pricing

urveyors, construction companies, architects and financiers are all regulated to ensure quality and prevent malpractice within the real estate industry. However, hundreds of millions of pounds are spent on energy each year through third party intermediaries (TPIs), with zero regulation on the companies providing energy procurement advice. To protect landlords, agents and tenants alike, this has to change. The term ‘TPI’ can cover energy consultants, energy brokers or simply price comparison websites, all of which have a similar goal: identify the most appropriate energy contract for each client, with emphasis on cost and contract terms. Industry-

26 February/March 2017

leading TPIs have also included additional services for clients such as consumption reporting, billing validation, environmental reporting compliance and tenant recharging. A good TPI should therefore be providing a very valuable service that not only saves their client money but also ensures minimal input. Why therefore are 31% of businesses, according to Ofgem, so unhappy with the involvement of a TPI? Rogue TPIs It is clear that some ‘rogue’ TPIs are not acting in the best interest of the end client and are in fact taking advantage of a complicated system that currently has very little transparency and is unregulated. Working within

ZTP is calling for a mandatory code of conduct to eradicate rogue TPIs from the energy industry

the industry, numerous examples are evident of extremely large commissions being taken and high-pressure sales techniques being deployed forcing clients to accept inappropriate and inflated contracts. There are also instances of complete misrepresentation where an end user is having their energy supply switched without any knowledge of who authorised the switch and why it has been done. This is not only unacceptable for those that suffer directly, but is also causing a lack of trust in the industry as a whole. While a ‘good’ TPI should be seen as a very valuable asset to an organisation, it is all too frequent an occurrence that those who would benefit the most from a trustworthy TPI are actually the most likely to

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fall victim to, or even bypass a TPI completely due to this lack of trust. The end result is the same – a less competitive price with a more onerous end result for any reporting or contract management that is required. Regulation – the positives and the barriers Mandatory regulation is therefore a necessity. If it was widely known that all TPIs are regulated and therefore MUST be acting in the best interest of the end user, with a clear and transparent fee structure and without deploying aggressive and misleading sales tactics, the industry’s reputation would improve and allow end users to benefit from more competitive pricing. Regulation would also provide an effective channel for complaint if clients feel they have been misled. There is currently a large gap in the market for nonmicro customers as to how they can actually complain. If there is a genuine complaint – unless lawyers are to be involved – there is currently nothing to hold a TPI or even energy supplier to account. Interestingly – it would seem that all stake holders would agree with the need for regulation. From Ofgem, end users and

energy suppliers, to the reputable TPIs – all parties would like some form of industry regulation. The major issue is cost and how to pay for the ‘policing’ while also remaining impartial if funded by suppliers. It has proven extremely difficult to come up with a pricing structure for TPIs that would not ‘price out’ smaller players as TPIs can range from an individual working on a part time basis, to extremely large international consultancies. All of which may (or may not!) be doing a good job for their clients. There are currently some solutions that can go a long way to helping the situation. Some energy suppliers do audit their TPIs and there are voluntary codes of conduct that can be adhered to via bodies such as the Utilities Intermediaries Association (UIA). We believe it is vital that all TPIs should be signed up to such codes and energy suppliers utilise creditable auditing systems. Punishment for breaking any code should be well publicised and ensure it is extremely hard, if not impossible for such ‘rogues’ to continue operating. The burden of cost would then be the responsibility of both TPIs and energy suppliers. te Alex Hill is managing director and Joe Warren director at ZTP

What can be done now Until common regulation is achieved, here are five steps to avoid rogue TPIs: • Ensure the TPI is providing a genuine market wide tender confirming which energy suppliers are included/excluded and why • Ensure each supplier is being compared on the same basis (e.g. Results should be based around your accurate annual kWh consumption) • Confirm how the TPI is being paid and how much. Ignore any TPI that says it is a free service! • Enquire if they are signed up to a reputable code of practice (e.g. the UIA) • Do not feel pressured to enter into a contract – especially if it is a verbal contract

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Real time is money: FlexTreo™ maximises flexible power revenues in all markets REstore says its newest IoTsolution enables industrial and commercial consumers to achieve best bang for buck for their flexibility – opening up wholesale and balancing market revenues as well as National Grid’s demandside response programmes. Louis Burford (pictured), Vice-President Sales & Sourcing, REstore UK, says the FlexTreo™ SaaS-solution means energy managers and production plant managers can now access all available revenue sources for their flexible assets in real time – and execute according to preset industrial boundary conditions so that core business is never negatively impacted. The software solution is the culmination of two years’ research, detecting the needs of energy managers and testing with some of the UK’s largest industrial and commercial consumers. “We wanted to maximise revenue for their flexibility,” says Burford. “The major financial opportunities that remain underexploited are price triggers in the wholesale and imbalance market. FlexTreo™ monitors those markets in real time – so that energy consumers can maximise productivity, reduce costs and generate more revenue,” he continues. “It can also forecast imbalance events, giving users time to react accordingly.” Both the wholesale and balancing markets are becoming increasingly volatile. That creates more value for I&C consumers with the ability to act upon market signals. FlexTreo™ can be fully automated to execute within industrial boundary conditions, says Burford, so that equipment is never compromised and action is only taken when the

“FlexTreo™ gives large energy consumers the ability to fully monetise their flexible power in other markets – whereas today it is just National Grid’s programmes” financial returns meet pre-defined thresholds. “In short, FlexTreo™ gives large energy consumers the ability to fully monetise their flexible power in other markets – whereas today it is just National Grid’s programmes,” says Burford. “It provides full visibility across the piste, allowing them to act upon price triggers in order to make better choices and better profits.” FlexTreo TM also provides energy managers with a breakdown and trend analysis of their energy bill per cost component. “It’s a really smart, holistic energy management tool, co-created by industrial consumers for industrial consumers,” says Burford. “Anyone on a pass through contract with exposure to the energy markets will benefit.” Available on a monthly subscription basis, REstore is now offering the platform to both existing and new UK customers.

For maximum flexibility, visit restore.eu

SMART GRIDS Google, Facebook, Amazon, IBM, Intel, Apple and other behemoths are pouring billions of dollars into artificial intelligence. In the energy sector, one UK start-up thinks it can take them on. Brendan Coyne reports

AI for smart grids: Can UK academia beat Google?

y connecting the best human minds and then pitting the algorithms they create against each other, Upside Energy founder Graham Oakes thinks UK academia can outsmart Silicon Valley. His goal is to enable a more intelligent, cost effective energy system based around millions of small, connected loads optimised via artificial intelligence. A grand plan. But how big a role can artificial intelligence play in a smarter energy system? “I think it will be fundamental,” says Oakes. “If you look at demand-side response (DSR) right now, people are doing fairly simple things – single services from a dedicated asset. But as the energy system transforms to a marketplace that buys flexibility as well as energy, you need to

28 February/March 2017

be doing multiple things to get the most from these assets.” Sometimes that will mean providing services to the distribution network operator (DNO), sometimes to National Grid, sometimes an energy supplier. At other times it might simply be arbitraging price differentials, says Oakes. “So now you’ve got a question: How do you make intelligent decisions to best use the individual asset and the portfolio of assets?” He thinks machine learning will come up with the most efficient answer – and a best value energy system. Food for thought Great in theory. But, if the energy system is already struggling to adapt to technology shifts, what is a realistic timetable to embed AI? Oakes says the firm’s

algorithms will make significant improvements in areas such as battery life management “quite quickly, within 12-24 months”. However, “AI is dependent upon data – and the challenge for start ups is getting enough.” Additionally, the broader energy market is not entirely sure what it wants. “The market to deliver the full range of value services to all parts of the energy system will take 5-10 years to really develop,” says Oakes. “Every time we talk about flexibility my question is: ‘What do you actually mean by flexibility?’ Because we haven’t actually defined what flexibility is. How does it add value to people, what types of flexibility add value? It will take time to learn that stuff. So the intelligence will really come into

its own five years from now.” But Oakes says the company – and any other market participants aiming to develop smart grid solutions – must focus on that horizon now. “If you have five years’ worth of data you can immediately start to add value. If you only start to try this when we define flexibility, you are going to need to go out and gather years worth of data.” He uses Wayne Gretzky’s ice hockey analogy: “The best players don’t follow the puck, they go where the puck is going to be. And that is what we are doing.” University challenge The firm, which was funded by the now defunct Department of Energy & Climate Change, as well as Innovate UK, has managed around 400kW of load from about 20 different sites for

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including Oxford, Imperial, Manchester and Lancaster – offers the start-up a fighting chance against their might. And if the universities come up with a better algorithm than Upside’s, they earn a revenue share. “There is an enormous amount of academic firepower out there doing really interesting stuff with machine learning and algorithm development and fantastic modelling of the energy system,” says Oakes. “Working with them gives us enormous intellectual weight. We think we can leverage the expertise within the UK – and ultimately within the global academic base. We think that gives us a way to compete with Google.”

almost two years. Last November it signed an agreement to provide frequency response to National Grid and is now qualifying some 2.5MW (including a megawattscale battery being managed by the University of Sheffield) for delivery from April. That will enable Upside to start earning some money, with National Grid paying a premium to parties that can react within two seconds to keep the power grid stable. In January this year, Upside was also granted another £100,000 from Innovate UK to fund AI-driven demand response research at Heriot Watt University. While that adds to Upside’s academic firepower, it’s probably not worrying the titans of Silicon Valley just yet. But Oakes thinks the collective brain of UK academia – the firm is also working with universities

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Sum of all parts Most traditional demand-side response aggregators target larger firms due to the cost of amalgamating hundreds or even thousands of small sites, which analysts suggest represents a barrier to genuine scale. Meanwhile larger corporates, they say, will be reluctant to cede control to those without sufficient brand credibility. But Oakes thinks that creates a vacuum for companies like Upside to fill. He also believes a more diverse range of assets will unlock higher value. “Managing small, diverse loads is our core. We think we are unique in terms of the range and type of those assets – and the benefit of doing this in the cloud is that we can talk to almost anything – whereas other people are operating in narrow niches.” Oakes says that approach is shedding light on how managing combinations of batteries, heat pumps and hot water tanks, for example, adds more value than the equivalent capacity of a single asset, such as a battery. “Using a battery to manage frequency response, for example, you need to have capacity to go in both directions; to add load to the grid when frequency is high and take load off when frequency is low. That means

you need to manage your battery in about a 50% state of charge. So you go out and buy this very expensive asset and you just use half of it,” says Oakes. “What we are starting to see in our modelling is that batteries are wonderful for [frequency balancing] but you want to keep them fully charged so you can use their full capacity,” he says. “Hot water tanks are the reverse. You can’t export to the grid; you can’t do very much when frequency goes low. But when frequency goes high, you can always put a bit more heat into them. So this combined thermal and battery store means we can optimise in a way that a single portfolio of batteries or thermal stores cannot deliver.” Oakes thinks that will become a “very powerful model”. But it will require National Grid to give further thought to procuring flexibility. “National Grid has started to get its head around aggregating smaller assets and to get its head around batteries,” he says. “But now when you start to aggregate diverse asset classes, that is yet another shift of mindset to be taken.” Selling flexibility So how does Upside, without a sales force, overcome the cost of sales barrier mooted by some traditional aggregators? Oakes says the simple answer is “by being lazy”. “I don’t want to build a sales force, the innovation in our business model is to find people to sell it for us. The PV and battery manufacturers have installer channels. We give

The best players don’t follow the puck, they go where the puck is going to be. And that is what we are doing

them something that makes the economics work for them and let them sell it for us.” Upside has also signed an agreement with one of the three large UPS manufacturers; where Schneider, Eaton and Vertiv (formerly Emerson) collectively hold around 85% of the UK market. Although Upside’s website cites Emerson as an advisory partner on the Innovate UK project, Oakes says the firm is under non-disclosure, so cannot reveal which of the three will incorporate Upside’s technology. Broadly, Oakes says UPS firms have recently begun to convey a “more nuanced” message than selling kit based on fear of failure. He thinks that will help break down customer barriers to demand-side response participation, which, according to Energyst research, are principally around unsuitability of equipment and fear of disruption to core business. “We have seen a significant change in mindset over the last six months,” he says. Domestic DSR? Oakes thinks domestic demandside response could also scale more rapidly than many market participants believe. However, he says it may be hampered by consumer versus commercial silos within the large industrial conglomerates involved in batteries and UPS. Whether grid operators grasp the nettle is another key factor. “Behind the meter storage isn’t challenged in quite the same way [as some of the larger scale markets]. Talking to people at Ofgem and BEIS, they are all very supportive,” says Oakes. “[But] National Grid and the DNOs are still very much getting their heads around the possibility of domestic DSR [they think] ‘great idea but we’ll address it in five or ten years’ time’. “Actually, I think it is just waiting to be tapped into. It is going to take time to kick off, but I think if we start now, we can make it happen in the next two or three years.” te

February/March 2017

ENERGY MANAGEMENT

Shock therapy may be required to make energy a board priority

avid Brown believes rising energy prices may lead firms to refocus on energy efficiency. However, Sodexo’s head of energy and sustainability services UK & Ireland says energy still doesn’t make it onto the top 10 board priorities and it may require shock therapy to change that majority mindset. Nevertheless, there are easy wins for businesses across all sectors, which should be a focus of cost control over the next 12 months. “Most clients are still missing a trick when it comes to procurement and bill validation, particularly when they have large portfolios, maybe losing sense of the assets that they own,” says Brown. “There is still a wealth to be done on consolidating and fully understanding that portfolio to then put the best energy strategy in place in terms of procurement. That is a really big opportunity,” he says.

30 February/March 2017

Only serious shocks will wake boards David Brown, head of energy and sustainability services UK & Ireland at facilities management firm Sodexo, says some clients are proactively driving down cost and shoring up their operations. But it may take a severe price shock to spur mainstream action. Brendan Coyne reports Asset managers ‘get’ it… Having a detailed knowledge of assets and energy use helps build a more robust energy efficiency strategy, he says, at least for those with appetite. Proactive clients tend to be portfolio and property managers, according to Brown. “The asset management segment of the finance sector really understands the risk of the exposure in their portfolios and has focused on increasing EPC ratings,” he says. “Those type of clients ‘get’ energy efficiency to a greater extent than other clients, because ultimately, it is part of

their overall cost. If a building is increasingly expensive in comparison to a competitor’s, it becomes less attractive.” … manufacturing less so Conversely, Brown has experienced lag in the manufacturing sector. That is, “more car manufacturers and parts manufacturers than on the consumer goods side: [Automotive] is a challenge because they often have very old assets. Keeping them running at all times is seen as a priority because it is very difficult to

replace a piece of German kit built 30 years ago specifically for that company,” Brown says. “But if a client feels a piece of kit has to be running 24/7 because of the risk, it probably has more fundamental problems than just energy management. So, where possible, we tie it up with broader asset management and integrate it within a hard FM service,” says Brown. Appetite for demand response He thinks another opportunity for businesses is demand-side response as part of a security strategy over monetising assets.

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“DSR appetite is increasing. But instead of talking about ‘the smart grid’ and maybe even the financial benefits, clients are talking about building it into continuity planning.” However, the “frustrating” process around connecting to the grid “can be a limiting factor”, says Brown.

The complexity of energy prices … is often beyond the time limit that a person with responsibility for the energy budget will have – unless they are an energy manager David Brown, Sodexo

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Board apathy While suppliers and brokers warn of price volatility and potential hikes over the next couple of years, Brown thinks it will take a significant shock to drive energy up the agenda. “Energy would be lucky to get into the top 10 [board items]. It is quite far down the list.” He says while some more complex FM tenders are asking deeper questions, “the reality of approving the contract usually comes down to how cheaply you can deliver the overall service”. If that is the case, does it not follow that rising wholesale costs will sharpen that focus? “If energy prices go up or down 5%, most clients’ perception of energy would not change much,” says Brown. “It is only when you get to 1970s oil shock levels that you see a fundamental shift in attitudes – and we haven’t had that for 40 years. Until we get to that point, I don’t think it will be high enough a priority for clients.” Even in tandem with rising non-commodity costs? “Potentially, if you are in a position to explain that breakdown of where the energy costs come from,” says Brown. “The complexity of energy prices … is often beyond

Supply fears justified? If businesses are showing increased appetite for demandside response from a security of supply perspective, the implication is that they are not wholly confident that the lights will stay on. Are those fears real or perceived? “I think there is a perception... But over the last couple of years, National Grid data shows we are increasingly close to capacity; the impact of renewables on baseload [economics and the loss of that baseload] certainly suggests there is risk,” says Brown. “But I think as long as an organisation has generators, they would be in a fairly comfortable position, even if there was a blackout for a short period. Our grid is mature, but there are fundamental structural problems that are not being dealt with and there are symptoms that suggest we are not really managing continuity of supply in the future.”

David Brown was interviewed as part of The Energyst’s Directors’ Report 2017. It contains a snapshot of key energy and water risks and opportunities for the year ahead, as well as views of readers, brokers, suppliers and energy managers. Download it free at theenergyst.com

the time limit that a person with responsibility for the energy budget will have – unless they are an energy manager,” says Brown. “Most clients do not have a dedicated energy manager – and large organisations that do have one certainly don’t have enough for the size of their portfolio.” That has been the lament of the profession for 30 years. But Brown thinks that technology, particularly smart phones and the internet of things, could potentially act as a counterbalance. “[Comms innovation] is actually driving things a lot more than some of the fundamental conversations around bill validation, efficiency and demand-side response,” says Brown. “It is a lot easier for people to pick up an app and control things from it – and that is where we see the space going over the next couple of years from a broader FM consideration.” te

Solar: still appetite to invest? Following cuts to subsidies, are businesses still investing in solar? “What we are seeing, because the paybacks are far longer than they would have been prior to the Fit reduction, is more conversations around power purchase agreements (PPAs) as a way of financing that investment,” says Brown. Appetite to self-finance solar has diminished in some sectors, he adds, but remains strong in others. “Certain clients with asset management portfolios – such as shopping centres that are looking at the long term - will still invest in solar themselves. But I think a standard site would struggle to find the right incentives in terms of paybacks to do it, unless it had a very good location.” Despite that, Brown says the PV companies he deals with are “as busy as they have ever been”, and are delivering just as many projects, just under different financial and commercial structures.

February/March 2017

ENERGY BENCHMARKING

Advanced office heating Benchmarking two similar buildings can highlight anomalies in energy use. Finding the driving factor for this is the key, explains Vilnis Vesma

he traditional way to compare buildings’ fuel consumptions is to use annual kWh per square metre, normalised for regional weather differences. When I recently evaluated two offices, which I’ll call ‘S’ and ‘T’, I found that office S uses 65 kWh per square metre and office T nearly double that. Part of the difference was that office T is an older building and open all day Saturday and Sunday morning, not just five days a week. However, desktop analysis of consumption patterns showed that office T also had considerable scope to reduce its demand through improved control settings. Two techniques were used for the comparison. The first is to look at the relationship between weekly gas consumption and the weather (expressed as heating degree days). Figure 1 shows the characteristic for office S. Although not a perfect correlation, it exhibits a rational relationship. In Figure 2 we see office T, by contrast, has a quite anomalous relationship which actually looked like two different behaviours, one high one during the heating season and another in milder weather: Clearly something is wrong about office T’s pattern of

Figure 1: rational relationship between consumption and weather

consumption; a control problem would be suspected. But is it a timing issue or what? The second method of showing difference in the way the two heating systems behave is to examine their half-hourly consumption patterns. These are shown below using ‘heat map’ visualisations for the period 3 September to 10 November, ie spanning the transition from summer to winter weather. In an energy heatmap each vertical stripe is one day, midnight to midnight GMT from top to bottom and each cell represents half an hour. First, in Figure 3, we have office S. You can see its daytime load

Figure 3: Office S – progressively heavier daytime gas load as we move from summer to winter

32 February/March 2017

Figure 2: anomalous response to changing weather

progressively becoming heavier as the heating season progresses: Compare office T (Figure 4). It always has some low background consumption (for hot water) from 03:00 to midnight but note how, after its heating is brought into service at about 09:00 on 3 October, its boilers abruptly start using fuel at similar levels every day: Crucially, the time schedule was not the culprit. Office T displays classic signs of mild-weather overheating, symptomatic of faulty heating output control. It was no surprise to find that its heating system uses radiators with weather compensation

and no local thermostatic valves. In all likelihood the compensation slope has been set too shallow – a common and easily-rectified failing. This case history illustrates how profitable it can be to compare the patterns of consumption relative to whatever driving factor causes it to vary. We knew that office T was a worse performer than S: analysis led us to conclude that part of the reason is an avoidable error in its control settings. te Vilnis Vesma is a former energy manager and specialises in the analysis of energy data. See vesma.com/training for information about his training courses

Figure 4: Office T – abrupt transition from no heating load to near-maximum every day

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onsumers face a diverse range of issues when it comes to dealing with energy. To manage these issues requires a full understanding of all the risks facing the business as well as putting in place arrangements to optimise value. For those clients wanting to meet this challenge, it demands that they be experts in procurement, trading, volume forecasting, demand management, legislation, legal drafting, credit risk, carbon compliance, emissions trading, energy efficiency initiatives, on site renewable generation and many other specialist areas. When coupled with their own limited resources and competing priorities, the challenge is how they quickly gain knowledge and knowhow in order to deliver world class solutions which don’t cost the earth. How do they fill a resource gap when they, and all their team, are already overloaded with other work?! The Solution is of course to engage a trusted third party provider like Kinect Energy Group with the experience, ability and integrity to fill these gaps

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To help illustrate the value we add it is worth understanding that the cost of energy is more than just the price that is paid. For electricity it is particularly complex. Similar to the sliders on an old fashioned graphic equalizer, total energy costs are influenced by the competing elements of the price stack. The issue for the end user is that by focusing on one aspect alone, they risk setting unachievable expectations and inappropriate budgets. By taking a universal approach to managing energy costs, and optimising each element of the cost stack, Kinect Energy Group continues to deliver significant value to our clients year after year. Managing wholesale price risk is an area where Kinect Energy Group has excelled for the past 24 years. Our Nordpool heritage sets us apart from our competitors and

our Procurement and Portfolio Management services have become an essential tool that our clients rely on to keep control of this cost component. While other TPIs pay lip service to the claim their services are tailor made, when it comes to both procurement and portfolio (risk) management services the facts speak for themselves: • Currently in UK we have 35 variations of flexible contract negotiated on specific terms of reference • We have contracted with 13 individual suppliers on behalf of our clients • We are experienced in ALL contract types - Flexible/ fixed HH & NHH, Gas DM/NDM, Export/Power Purchase Agreements, Pan European contracts Each procurement exercise individually assesses our clients’ needs against all of the contract types in the market place, and equal time and emphasis is placed not only on negotiating the commercial terms and structure of the contract but in driving down non transparent fixed costs. Of particular note is the exercise that we conducted for a well-known high street retailer who recently joined Kinect Energy Group as a new client from a competing TPI, the customer was delighted that our approach allowed them to extract incremental savings of over £500,000 per annum in fixed costs. To complement this, our portfolio management services have protected them from an additional £2million of

Meet the new sales team The new sales team at Kinect Energy Group have a wealth of energy and sustainability experience gained from holding senior roles at many of the larger consultancies and suppliers in the UK. Between the four professionals there isn’t a company or public sector body that hasn’t dealt with them. And as the saying goes ‘people buy from people’ and Kinect Energy Group employs the best and most professional sales people in the industry today. Not only does Kinect Energy Group employ the best, it has also been recognised by its peers as the best, taking the prestigious ‘Third Party Intermediary’ award at The Energy Awards in November last year.

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commodity cost for the contract duration. For another of our new clients we are particularly proud of the impact we have had across all the price components. • For their electricity costs (which are approx. £3m p.a.) we have successfully offset increases in non-energy costs driven by change in energy policy by not only extracting £100,000 in incremental fixed cost savings through a comprehensive procurement exercise, but have allowed them to capture the full benefit of the year on year fall in wholesale prices. • We have carried out forensic bill audits on all non-energy costs and identified areas where error and over payments existed. Total value-added in excess of £50,000. • We carried out a series of ESOS compliant energy audits at key strategic sites identifying volume savings of 3.2 million kWh (equivalent to £350,000 or 1,500 tonnes of carbon) • We have identified opportunities to use on-site generation assets to participate in demand side response schemes with the potential to gain minimum revenues in excess of £100,000 per annum and therefore offset rising costs through Triad Management and frequency response based initiatives.

Figure 2: Total Energy Cost is influenced by competing elements of the price stack

• Total value in excess of £500,000 (or 16%).

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ENERGY MANAGEMENT

Ring the changes to remain resilient

Vodafone’s prime mission is to increase performance of its mobile and fixed networks

Vodafone UK energy manager Paul Garland talks to The Energyst’s Brendan Coyne about the key energy challenges facing the telecommunictions industry in the year ahead

hile energy prices fell in the past two years, in reality rising non-commodity cost cancelled out final bill savings, according to Vodafone UK energy manager Paul Garland. Policy costs continue to rise and energy prices are both on an upward trend and increasingly volatile. Moreover, the energy system is undergoing systemic change. “At some point in time, this will all come to a crunch,” says Garland. Maximising energy productivity is therefore a key focus for the year ahead. Resilience is king Vodafone spends “tens of

36 February/March 2017

millions” on energy per annum and Garland is acutely aware of the need to mitigate rising costs. But, as with every going concern, core business comes first. “Increasing performance of our already strong mobile and fixed networks is the prime mission,” says Garland. “Energy is a big number but it is not the main factor. “What we deliver for people is an incredibly important part of national infrastructure, including the infrastructure of the energy system itself. Therefore we need energy – and we have to be über secure and reliable.” The company therefore locks in plenty of power

and maintains lots of back-up. But Garland says it has also developed a “programmatic” approach to exploiting energy trading opportunities as they arise. Rapid response That translates to embedding pre-defined rules of engagement throughout the company and executing at speed, he explains. Given wholesale markets are illiquid and can give off “strange” signals, the ability to execute at speed can often trump other hedging factors, says Garland. “While you can make the best decision at a point of time, you are equally likely »

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ENERGY MANAGEMENT to benefit from serendipity – just from actually being able to execute at a point in time,” he suggests. “Lack of speed can reduce benefits. So we have had to improve the organisation’s flexibility and awareness: If you need a rapid decision, you need people warmed up and ready to execute, because those things have been prethought out and agreed.” Energy productivity Garland says the telco is also working to add intelligence and automation to its operations to extract the maximum from the energy it buys – and avoid addressable non-commodity costs. He says the firm is reducing demand where possible and applying artificial intelligence to manage thermal environments for its technology. That is, “a self-learning [algorithm] that anticipates and does the best it can” to maximise available resource. Many people would define that as being energy efficient. But Garland thinks energy productivity is a better yardstick. Maximising productivity, says Garland, enables firms to eliminate excess cost, which he thinks should be a key focus for any organisation. “Energy productivity with measurement of excess cost leads to improving competitiveness for the business and customer satisfaction,” he says. “If you can bring those things together you are sure to deliver good outcomes for both customers and the business.” Garland acknowledges that may sound “a little bit like corporate speak”. So he unpicks the measurement aspect using a Bullseye analogy. “Basically saying ‘this is what you could have had’ if you had worked differently. I find that a very good way of putting across the lost value in

38 February/March 2017

Garland: Vodafone has developed a “programmatic” approach to exploiting energy trading opportunities as they arise

We would be foolish if we were not concerned [about supply interruptions] – because we have to cater for such contingencies

the business,” says Garland. “I use it a lot where suppliers are performing less efficiently then they should: ‘We have incurred this excess cost compared to what we should have had; it is not our fault, what are you going to do about it?’” Garland says the same rules are applied within Vodafone. “Most people use the term benchmarking, I prefer to cut to the chase and use the term excess cost, because it is above what it could, or should, have been.” Security threat? Ultimately, says Garland, all of these improvements and efficiencies are subservient to the core business –

delivering a robust and resilient communications infrastructure. So while National Grid has played down the risk of supply interruptions, that confidence is not necessarily reflected in market sentiment. Garland says Vodafone has to prepare for all eventualities. “We would be foolish if we were not concerned – because we have to cater for such contingencies,” he says. “There is a massive change happening in grid and generation, so it would be wrong not to be concerned. We have resiliency plans in place, but you have to worry; you can’t afford not to.” Systemic changes mean businesses must reevaluate whether those plans remain fit for purpose, says Garland. “You constantly have to review resilience; to test what is in place will deliver within the environment that is coming into play, not just what has been,” he says. “It would be wrong for us to put our heads in the sand.” te This article forms part of The Energyst’s Directors’ Report 2017. It contains a snapshot of key utility risks and opportunities for the year ahead, as well as the views of brokers, suppliers and end users. Download it for free at theenergyst.com

If policymakers could do one thing this year, what would it be? Vodafone UK’s Paul Garland would like to see government “change its mindset from energy efficiency to energy productivity and improve visibility of that productivity. Productivity is such a key economic necessity to the country. Aligning energy with the national need would help drive investment and focus,” he says. Garland thinks government could adopt a labeling scheme around energy productivity, in much the same way goods and buildings are rated. “Labeling is part of the toolset for visibility, because people are very familiar with it, whether a car or a fridge,” he says. “At the moment, people are not investing. There is an ‘ain’t broken’ mentality and it is not the most important thing on their agenda.” Garland thinks that might be addressed by basing energy taxation, at least in part, on elements of productivity. “That approach would enable a lower cost for the most productive or a higher cost for less productive users,” he says.

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ENERGY MANAGEMENT

Getting straight to the point STC Energy has helped Birmingham’s Millennium Point save more than £155K in just one year with a historic billing audit, capacity reduction and more

onsuming approximately 7GWh of electricity each year, Millennium Point in Birmingham wanted to look at ways of reducing its energy costs. Opened in 2001, the building enables its visitors to explore ideas, science, education, technology and the arts, and has acted as a catalyst for the regeneration of city’s Knowledge Quarter – a large brownfield site that has seen further development in the past 15 years. After also discovering that no validation of utility bills had ever been carried, Millennium Point wanted to ensure it had been paying the correct amount for utilities. Audit and analysis STC Energy undertook an audit of historic utility billing and an analysis of the energy consumption at the site. Copies of energy contracts and historic invoices were requested from the building’s utility suppliers going back as far as possible. This data, along with 30-minute profile data for the building’s half hourly supply, was imported into STC’s energy management and validation software. Millennium Point had already secured a green energy electricity contract that included a green premium in the unit rate, meaning the Climate Change Levy should have been excluded. STC validated the electricity invoices dating back to the start of the contract and immediately noticed that CCL charges had been added to the account from March 2015 and were still being billed accordingly.

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STC Energy helped Millennium Point make cost savings and efficiency gains

On 8 July 2015, the government budget statement stipulated that CCL exemptions for renewable energy were to be removed from 1 August 2015 onwards. As a result, CCL charges should not have been applied from March 2015 to July 2015, and from August 2015 the green premium should have been removed from the unit rate and CCL charges should have been implemented. Instead the supplier had just added CCL charges to the account and not adjusted the unit rates to reflect the removal of the green premium. STC raised a query with the supplier and this resulted in a credit of £46K for the period March 2015 to May 2016. Energy procurement Millennium Point’s electricity contract was due to end in September 2016. As energy prices had just reached their lowest point for 10 years, STC recommended placing a new contract in May 2016 ready to start on 1 October 2016. As part of Inspired Energy Group, STC Energy used its procurement expertise to place a new fixed-price electricity contract. This contract was secured in May 2016 when the cost per MWh was £36.80. Compared with its current

contract, this represented an annual saving of £95K and £285K over the three years of the contract. When asked why he used a TPI, Millennium Point’s finance director Ian Leslie replied: “We are not large corporate, our team is only 20 strong, so having a dedicated energy expert is not possible. The way they procure is more sophisticated in that they have access to markets that we can’t. It about having the time and the expertise. “Another big issue is having a fee that is transparent, so that we know how much we are paying and what it is for.” Capacity reduction An additional part of the audit was to examine the site’s available electricity capacity. The current

In a competitive market like the one we’re in, every penny counts, so being able to save £155K on utilities is really important

available supply capacity of 3000kVA was under-used. STC analysed two years’ of profile data and established that the highest maximum demand was 1414kWh. STC recommended and arranged a reduction in the available supply capacity to 2,000kVA from the start of the new contract, which provided a further saving of £14,100 per annum. Meter installation Millennium Point has more than 50 sub meters to monitor electricity consumption for its tenants and communal areas. All of these meters were more than 15 years old and needed to be manually read. STC recommended that these should be replaced with digital AMR meters. STC arranged and managed the installation of the meters that have the ability to automatically send readings and 30-minute profile data to be used for tenant billing. This ensures that all tenants are charged accurately and only pay for what they use. Having this data available online enables Millennium Point’s tenants to view their consumption and engage in energy efficiency monitoring and behavioural changes, making the building a more sustainable property. “STC have proven themselves to me on two occasions now,” comments Leslie. “They really get to know you as a business, and then use that knowledge to get you the best deal possible. In a competitive market like the one we’re in, every penny counts, so being able to save £155K on utilities is really important.” te

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VIEWPOINT

Catalyst for change The perils of NOx emmissions was among the topics discussed at the UKAEE’s AGM

t its 2017 AGM in London in February, UKAEE members were given an exclusive behind the scenes tour of the Natural History Museum’s impressive tri-generation system that provides electricity, heat and cooling to this national icon. Completed via an Energy Performance Contract in 2006, the £3.5m capex project lead to the installation of a 1.9MW CHP, 2 x 750kW Absorption chillers and 1MW exhaust gas heat exchanger that has returned savings of more than £11m and reduced carbon emissions by 15,500tCO2 to date. Members also heard about the complex issues around controlling health-limiting NOx emissions from large combustion plant with an enlightening overview from Agriemach on the technical aspects of this developing area. A hazard to health. Scientific evidence links NO2 (nitrogen dioxide) exposure, ranging from 30 minutes to 24 hours, with adverse respiratory effects including airway inflammation in healthy people – to increased respiratory symptoms in people with asthma. Ozone or smog is formed when NOx and volatile organic compounds (VOCs) react in the presence of heat and sunlight. These particles affect anyone that come into contact with them – they get deep into the respiratory system and alter lung tissue; causing a long term effect on human health. Most susceptible are children, the elderly and people with existing lung disease. This is the motivation for legislators to lower the limits

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NOx can be reduced from lean burn engines burning various types of fuel, such as natural gas, diesel, and bio-fuels, with the aid of selective catalytic reduction (SCR). Unlike the precious metal coating used for oxidation catalysts, SCR catalysts use the base metal vanadium to assist with this reaction. AdBlue (urea) is injected, under precise control, upstream of the catalyst and into the hot exhaust gas, where it is mixed efficiently before meeting the catalyst for the reaction to take place. Agriemach offers a high efficiency SCR that can reduce NOx by 99% – for example, a 500mg/Nm3@5%O2 Natural Gas engine can be brought down to 5mg – and a 2000mg diesel can be reduced to 20mg. However, the NOx limit for engines is usually set by the geographical location of the engine installation, and other polluting sources in the same area. EU NOx limit values must not be exceeded – so in order to calculate the NOx limit of a new polluting source, local air quality analysis will be carried out, which will determine the NOx limit for the new engine, boiler, etc. Typical exceedance will be seen in built up areas such as major cities with a lot of traffic. Defra is now looking to introduce new legislation

that will require diesel engines to fall in line with a 500mg/ Nm3@5%O2 Natural Gas Engine, for any application that exceeds the running hours of an Emergency generator. This will be across the board, regardless of location. This legislation will not overrule localised specific

A good question raised during the UKAEE AGM was: “Why are we not fitting diesel particulate filters to engines when PM2.5 carries known carcinogens?” It could be down to high backpressure, high maintenance and high cost. There is a need for both gas

Why are we not fitting diesel particulate filters to engines when PM2.5 carries known carcinogens? requirements where the NOx limit will need to be even lower. Should operators be fearful of SCR? Absolutely not – it is not a new technology, it is now commonly used for onroad vehicles. AdBlue is readily available, and the design and control of these systems are design specifically for the stationary engine market – the hard work has been done. Of course it adds additional cost, a certain amount of added maintenance during regular service intervals, but once up and running, will provide a good reliable service life and will not affect the engine performance – with the added benefit of improving air quality for your children, grandchildren and hopefully generations to follow.

and diesel engines in the market for many different reasons – the trade-off is that we simply need to keep the lights on and not restrict the engines from operating. Unfortunately, for air quality, it means that diesel particulates are not typically a topic of conversation, as there is limited enforcement due to the operational challenges they can add. The UKAEE AGM 2017 culminated in the signing up of a new committee for 2017 with a board of 20 now voted in to represent the growing membership base of more than 640 members. For those that work in an energy savingsrelated role, membership is still currently free – more details at ukaee.org.uk te

UKAEE committee structure 2017 President: Rajvant Nijjhar Vice-president: Eunice Mabey Treasurer: Giovanni Lupaldi Secretary: Craig Astfalck (The above four roles are mandatory requirements of the AEE) ESOS coordinators: Chris Foster, Russell Layberry, Umer Uzair Membership development officer: Molly Wang

Technical editing and publications: Paul Spencer, Karthik Suresh Qualifications and training officer: Amita Mehta Web, social media officer: Funsho Alo Regional event coordinators: Bryan O’Regan, Yodaly Sierra-Rubio, Umer Uzair General committee: Andy Clarke, Gonzalo Jimenez, Neil Kimpton, Costas Panagiotakopoulos, Molly Wang, Raymond Yeng

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HVAC

Mind the NOx As warnings of toxic air are issued across the UK, pollution from NOx gases comes under closer scrutiny. James Porter, sales director at Remeha, looks at the business case for improving heating efficiency with low NOx condensing boilers

cross the world there is a growing crisis surrounding air pollution. Here in the UK, air quality standards regulations stipulate that hourly levels of nitrogen dioxide (NOx) must not exceed 200 milligrams per cubic metre more than 18 times a year. Yet by the first week of 2017, parts of London had already breached the annual legal limit for toxic air. And poor air quality is not restricted to the capital. Two weeks later, air pollution reached ‘high’ or ‘very high’ levels in eight regions across the UK, according to the Department for Environment, Food and Rural Affairs. This follows last year’s report that most UK cities and towns currently exceed WHO guidelines. Poor air quality is linked to dementia, asthma and lung and heart-related conditions. Defra measures levels of five pollutants: ozone, nitrogen dioxide, sulphur dioxide, and PM2.5 and PM10 particulate matter. Of these, it claims that NOx alone is responsible for the premature death of 23,500 citizens each year in the UK. But how does this relate to energy efficiency and energy managers?

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While vehicle exhausts are a major source of outdoor air pollution, buildings also typically emit NOx gases. Heating and hot water for UK buildings account for 40% of our energy consumption and 20% of our total greenhouse gas emissions, according to the Committee for Climate Change. So reducing NOx emissions from heating is an important step towards achieving cleaner air. Strong business case All of which brings added weight to the business case for improving heating efficiency. Commercial boiler plant is a popular, tried-and-tested source of heating in UK buildings. But how efficient is it and how much NOx does it emit? A 20-yearold non-condensing boiler may operate at just 50% efficiency – needlessly doubling energy bills. Even if it’s well maintained, it will have a gross efficiency of 70% at best and high NOx. Compare this with advanced condensing boilers like the Remeha Quinta Ace 160 that deliver near maximum gross efficiencies of around 98% and NOx emissions as low as 35 mg/kWh. Simply replacing inefficient boilers with condensing boilers and adding

It is widely accepted that, at least initially, all EU initiatives will remain in force in the UK post-Brexit. So it is worth noting that the Ecodesign of Energy-related Products Directive (ErP) will introduce mandatory NOx requirements for all space heaters up to and including 400kW from September 2018 controls is an acknowledged ‘quick win’ to emissions reduction and considerable energy savings – around 30% according to the Carbon Trust. Finance is often the biggest perceived barrier to energy efficiency measures. Yet factor in the low capital outlay, the rapid payback, future energy savings, and the improved FM cycle through BIM alignment and the financial argument is solid. And by tackling NOx,

the company is addressing its environmental impact on the wider community as well as its energy use and whole life costs. Of course, designing for low NOx heating is no new concept. BREEAM, the building assessment scheme, has certified and rated the sustainability of buildings since 1990 across a range of criteria from energy to ecology. The Pol 2 pollution category awards a maximum of three credits for heating plant that, under normal conditions, has a dry NOx emission level up to or less than 40mg/kWh. So a condensing boiler like the Remeha Quinta Ace 160 easily qualifies for maximum points in this category. These low NOx credits and those from each category together provide a final building rating. How does this benefit the company? Higher BREEAM ratings bring clear financial and environmental advantages. Due to the core values of BREEAM, buildings with higher ratings are likely to generate environments that are more sustainable to operate, helping reduce energy costs and meet ‘green’ targets. At the same time, strong ‘eco’ credentials can attract customers favouring sustainablyminded organisations.

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Replacing inefficient boilers with two Remeha Gas 110 Eco high efficiency boilers has reduced average monthly gas bills by 36% at Northumbria University’s Burt Hall (pictured)

such, they are future-proof to ErP NOx requirements. Increased productivity But it is not only outdoor air quality that will improve, as reliable, low NOx heating can also help create a more comfortable workplace. There is a growing connection between a sustainable building and the wellbeing of its occupants – hence the recent alignment between BREEAM and the WELL Building Standard assessment scheme. In their study, the Harvard School of Public Health and the State University of New York Upstate Medical University examined the impact of the building indoor environment on productivity. Their research revealed that employees in certified ‘green’ buildings are likely to have fewer ‘sick building’ symptoms than those working in non-certified buildings. The improved health and wellbeing of the occupants also lead to higher cognitive ability and sleep quality. This in turn results in better performance and better productivity – and ultimately a better bottom line. Heating is a critical service, playing a major part in creating a more comfortable indoor environment for occupant wellbeing. Staff costs represent 90% of a building’s life costs. And high-efficiency, low NOx

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Behind the familiar casing lies an advanced technology that is designed and engineered to offer financially and environmentally sustainable heating

condensing boilers provide an affordable route to reliable, cleaner, greener heating – helping a company achieve its wider environmental commitments while boosting its profits. Legislative stick Along with the carrots for reducing NOx emissions from buildings, there is also the legislative stick. It is widely accepted that, at least initially, all EU initiatives will remain in force in the UK post-Brexit. So it’s worth noting that the Ecodesign of Energy-related Products Directive (ErP) will introduce mandatory NOx requirements for all space heaters up to and including 400kW from

September 2018. Maximum NOx emissions of 56mg/kWh will be enforced for gas and liquefied petroleum gas (LPG) boilers and 120mg/kWh for oil fired boilers on both new build and refurbishment projects. The regulation follows tighter energy efficiency standards introduced in September 2015. The aim is to ensure that only the most energy-efficient, low NOx heating products are manufactured, specified and installed across the UK and Europe. Advanced condensing boilers like the Remeha Quinta Ace 160 are Class VI-rated under EN 483:2000, the highest performing NOx class for gas-fired boilers. As

Removing the hassle factor The final barrier to investing in energy efficiency and sustainability is often the anticipated hassle factor that can impact on the day-today operation of a company and its profitability. In fact, today’s lighter, more compact condensing boilers are designed and engineered for quicker, easier installation, facilitating live changeovers for zero disruption. Many manufacturers offer flexible design options for added versatility, such as the ability to install multiple boilers on cascade and rig systems. This not only provides a speedy, spacesaving solution, but increases the energy efficiency and security of the system for highperformance, low NOx heating. The campaign for cleaner air is gaining momentum, encouraging companies to address their wider sustainability. High-efficiency, low NOx condensing boilers provide a simple, cost-effective solution to reduced bills, better energy security and reduced air pollution. Now consider the longterm increased competitiveness from improved staff wellbeing and greater productivity – one thing’s for sure, the business case for a boiler upgrade is extremely compelling. te

February/March 2017

VIEWPOINT

De-risking energy investment How do you reduce the percieved risk of investing energy efficiency projects, asks Tim CrozierCole, member of the Esta Energy Performance Contracting Group and principal at Verco

ore than 100 energy professionals gathered at Siemens’ Crystal building overlooking London’s Royal Victoria Docks in January to discuss how investment in energy efficiency may be accelerated through energy performance contracts. The event, organised by the Esta Energy Performance Contracting Group and hosted by Siemens Financial Services, was part of an ongoing initiative to bring the UK energy services market together into a coherent working group that can drive uptake and best practice, and communicate effectively with government policymakers. Following a similar event in June 2016, the halfday conference brought together the diverse range of skills and professions needed to make EPCs work, including Escos, financiers, procurement frameworks, equipment suppliers, insurers, lawyers and consultants. The focus of the discussion was on how professions can work together to de-risk investment. The first session provided updates on some collaborative European projects working towards this goal. Steven Fawkes of Energy Pro described the work of the Energy Efficiency Financial Institutions Group, citing its research into key barriers to investment including lack of evidence of performance of energy efficiency projects, lack of standards and procedures and transaction costs. He introduced the ‘De-risking Energy Efficiency Platform’

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(Deep), an open-source initiative to upscale energy efficiency investments through improved data sharing and transparent analysis of existing projects. Investor ready kite mark? Verco managing director Dave Worthington went on to provide an update of the Investor Confidence Project, which seeks to ‘kite mark’ energy efficiency projects as being ‘Investor Ready’ through the use of standardised processes for how energy efficiency projects are developed, documented and measured, including third party verification. Free training is currently available for project developers and quality assurance providers. ICP protocols are now established for buildings and in coming years there are plans to develop protocols for industry and infrastructure. The second session brought together the leading public sector procurement framework providers, through which the majority of EPCs are deals currently done, alongside representatives of the finance, Esco and insurance communities. In a wideranging discussion, many

M&V is all too often dropped as a costcutting measure but it is essential for ensuring that the benefits are delivered

commented on the importance of transparency and clarity in the contractual agreements, and being clear about the roles and responsibilities of different parties. ‘Black box’ EPC deals are to be avoided. Essentia associate director Alexandra Hammond explained that they ran relationship building workshops, to work through these issues upfront and build resilience to deal with the unexpected. Carbon and Energy Fund director David Mackay stressed the importance of founding the EPC on good ‘reliance data’ and robust engineering solutions, saying that “ultimately all [successful] EPCs are delivered by good

The Energy Performance Contracting Group is part of Esta – a leading trade association for the energy services industry that includes special groups for other market sectors; monitoring and metering, lighting and controls and independent energy consultants. Energy performance contracting – sometimes known as the energy service company or Esco route – is often hailed as a key financial mechanism that can bring about transformational energy saving retrofit projects. Focusing on guaranteed or shared savings to generate a ‘bankable’ return from the investment, this form is attractive to financiers and consumers alike.

engineering”. If the design risk is to be placed with the Esco, clients have a responsibility in terms of data provision, to lower the development costs and manage the risk of inappropriate technical solutions being implemented. The importance of robust measurement and verification was discussed. It was commented that all too often it is dropped as a cost-cutting measure but it is essential for ensuring that the benefits of the projects are delivered and any performance penalties or incentives are fairly applied. M&V is a key component of the ICP’s ‘Investor Ready Energy Efficiency’ accreditation for good reason. In summary, the level of interest in the event clearly demonstrated strong desire by the industry to ‘unlock’ the huge technical potential for energy efficiency in the UK and to facilitate the flow of capital looking for solid investments with an interest to move from clean energy generation into energy efficiency. There are promising signs of how the industry is gearing up to this challenge, but still there is much work to do breakdown barriers to investments. Collaborative working through this group is one piece of the jigsaw to help make it happen. If you are a professional involved in delivering ambitious energy services contracts, I hope you will join us in this movement. Details of the next London event in June 2017 will be released shortly, so watch this space and get involved by emailing info@esta.org.uk te

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VIEWPOINT The FSB wants to see an energy market that empowers small businesses to contribute towards the UKâ&#x20AC;&#x2122;s transition to a low carbon economy

What small businesses want What actions should policy and market makers take to ensure small businesses are given a fair deal in the energy market? Allen Creedy of the Federation of Small Businesses has some suggestions

mall businesses make up the bulk of the UK economy yet they are often unable to access key elements of the energy market, despite shouldering the cost of policy. Following a survey of almost 1,000 small businesses on key barriers to participation in a smarter energy system, the Federation of Small Businesses has compiled a list of key recommendations for market and policymakers. Recommendations overall The FSB wants to see a new energy market that acknowledges the diversity of the small business customer base and empowers them to contribute

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towards the UKâ&#x20AC;&#x2122;s transition to a low carbon economy. Business customers must be enabled to understand and choose what services they pay for, to search for the best tariffs, to save energy, to generate their own energy and to contribute to the deployment of a smarter national energy system. We want to see a strong strategic UK policy direction that provides confidence and security to investors in energy infrastructure, including new generation, new storage and new grid support services, and most importantly energy efficiency. The UK needs a broad, considered and transparent strategy for securing this essential investment. Measures

to attract this investment need to be designed to be inclusive and accessible so that all businesses can contribute, including a diversity of incentives, disincentives, subsidies and tax reliefs. What government should do An updated Carbon Plan is needed including a strategy for promoting microgeneration, efficiency, storage and demand response across the UK small business community. Without this, the UK will not meet its binding carbon reduction targets. This strategy must create a more detailed understanding of the different and varied circumstances of small Âť

The UK needs a broad, considered and transparent strategy for securing this essential investment February/March 2017

VIEWPOINT businesses, their relationships with energy, the types of premises they either rent or own, the consequential opportunities and obstacles they may face and, ultimately, a clear and achievable pathway for achieving carbon reduction. We urge government to look at the particular issue related to disempowered small businesses in rented premises. Such a strategy must also provide an open and honest assessment of the predicted costs of various technologies, which includes the costs of required investment in any associated infrastructure. Government should formally review the effectiveness of subsidies and other incentives related to low carbon generation and energy efficiency, for both small and large scale technologies. This should include existing small business access to subsidies, including scrutiny of market accessibility and transparency, acknowledging that microgeneration and community schemes have different requirements and timescales than larger investments. Any incentives aimed at promoting small business microgeneration, storage and efficiency must be simple, straightforward and worth the effort. A government review should also include an examination of the relative success and efficiency of subsidies and other incentives for unlocking generation capacity across the non-domestic and domestic sectors, particularly in the context of recent alterations to Feed-in Tariffs and the non-domestic Renewable Heat Incentive. It must also increase awareness and promote existing small business opportunities related to capital allowances for energy efficiency and renewable generation. The tax incentives framework need to be consistent across all forms of energy generation, moving away from the

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Measures to attract this investment need to be designed to be inclusive and accessible so that all businesses can contribute, including a diversity of incentives, disincentives, subsidies and tax reliefs

THE PRICE OF POWER ENERGISING SMALL BUSINESS IN THE NEXT UK CARBON PLAN

Published: January 2017 @fsb_policy

fsb.org.uk

On behalf of FSB, independent research company Verve surveyed 919 FSB members about their views on energy infrastructure investment in May 2016. The findings from a survey of 1,077 members in January 2015 also inform The Price of Power report, which can be downloaded in full at: http://bit.ly/2kFJhVQ

patchwork system of subsidies for some, tax incentives for others and no incentives for many. The current system lacks transparency, long-term security and fairness. Government must ensure that microgeneration and efficiency investments at business premises are not punished through additional business rates rises. In light of the UK’s recent vote to leave the EU, it must clarify access to the EU Internal Energy Market as part of the ongoing negotiations around Brexit and provide reassurance about the continued commitment to UK carbon reduction targets and clarify trading arrangements related to current and proposed interconnectors linking Northern Ireland and the Republic of Ireland. Government should also: • Publish supply chain action plans for the renewable and onshore oil and gas sectors and consider the production of such plans for other emerging energy technologies as they develop. • Expand guidance related to Contracts for Difference supply chain opportunities for low carbon schemes to cover all energy technologies. • Lower the threshold for supply chain plans being a pre-condition of Contracts for Difference eligibility from the current level of 300MW capacity schemes. • Investigate the potential for a one-stop-shop website for small businesses, offering advice and guidance around products and services related to generation, energy management and efficiency. • Assess the success of the Microbusiness Certification Scheme at identifying and promoting those that provide high quality products and services, and how well it safeguards against poor practices • Reduce the threshold for entering the capacity market so smaller generation schemes can take part.

What Ofgem should do Ofgem should implement all remedies and recommendations from the CMA Energy Market Investigation related to small business customers. With regard to areas not covered by the CMA, it needs to urgently finalise proposals for a regulated TPI market and bring forward ambitious expectations for products and services related to smart meters. It should explore ways in which the UK retail energy market can empower small businesses to take advantage of energy efficiency and enable them to choose where and how their energy is generated. Ofgem needs to also: • Promote energy efficiency as the single best way of reducing consumer costs and require energy suppliers to offer advice to customers. • Examine the current role of distribution network operators (DNO)and the potential future role of distribution system operator (DSO) in facilitating microgeneration schemes. This must include an assessment of how costs of required upgrades to the network are passed on to microgenerators. • Review the transparency and fairness of contestable and non-contestable charges, particularly with regard to variations across the country. Also issues related to behind-the-meter generation and storage relating to data collection and fair charging, as well as management of supply and demand • Publish a new model for charging that provides fairness for customers of all sizes during the transition to a more distributed energy system. • Clarify the responsibilities of DNOs, National Grid and Ofgem with regard to planning, funding and implementation of microgeneration schemes, and identify where delays are occurring in these processes.

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• Promote technology that takes pressure off the energy transmission and distribution networks, particularly highlighting the innovative and flexible opportunities that small business. microgenerators can provide. • Explore the feasibility of allowing direct sale of electricity by microgenerators. • Keep the Microgeneration Certification Scheme under review, ensuring it maintains the right balance between the risks and costs associated with regulatory burden. • Urgently address connection and usage charges related to storage, particularly with regard to double-charging. Energy companies Energy companies should improve understanding and segmentation of the diverse small business customer base so that their energy needs can be targeted in a more focused, bespoke way. This will help to tailor customer offers related to energy costs, contracts, efficiency support, innovation, products and services. They should hold regular customer steering panels, where the views of a wide range of customers, including small businesses, can be raised directly. Many energy companies have started to do this. Energy companies should also: • Provide a wider range

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small businesses linked to the roll-out of smart meters, and a smarter market in general. • Demand that all levels of energy industry supply chain break down contracts into smaller lots wherever practical, avoiding the temptation to aggregate contracts. • Introduce and monitor specific payment policies for small business suppliers, ideally following the lead of the government’s pledge to pay within 10 days of receipt. • Set out procurement criteria in a way that enables small firms to quickly and easily assess their own suitability. This enables small business owners to quickly identify which opportunities merit the time and effort to produce a full bid, and which do not. Distribution network operators A DNO should provide dedicated account managers to help small business microgenerators and community schemes through the process of connection. They should facilitate microgeneration partnerships and consortia, signposting to areas of available capacity, and provide flexible contract arrangements to promote investor confidence. DNS should also: • Work with smaller generators to provide innovative solutions to network capacity

of tariffs that allow businesses to choose where and how their energy is generated and provided • Explore ways of engaging small businesses on additional products and services related to generation and efficiency. • Bring forward ambitious proposals and products for

constraints and the burden of required reinforcement or upgrade costs is required. • Provide greater transparency around costs of noncontestable works. These costs should be broken down and explained to customers in more detail. • Highlight any areas that

Any incentives aimed at promoting small business microgeneration, storage and efficiency must be simple, straightforward and worth the effort are contestable and open to competition, signposting small business customers to alternative providers. • Provide real-time information about available capacity, as well as committed generation. This should take account of planned re-enforcement works. • Develop enforceable codes of practice and publish these clearly on websites. These should be as consistent as possible across the industry. • Work with Ofgem, government, National Grid, other DNOs, distributed generators and stakeholders to develop a system in which fully-functional DSOs are responsible for balancing and controlling distributed networks. These should

incentivise innovative storage, demand side and efficiency technologies to help balance supply and demand. National Grid National Grid should boost opportunities for distribution level interconnection to enable greater potential for sharing and managing demand and supply between DNOs and, in future, DSOs. te To read the full report, including a comprehensive survey of small businesses about their energy needs and wants, visit the FSB’s website at: fsb.org.uk Allen Creedy is Environment, Water and Energy chairman at the Federation of Small Businesses

February/March 2017

INDUSTRIAL ENERGY

Full steam ahead Heliex Power is harnessing the potential of wet steam – a ready and plentiful, yet previously untapped, supply of energy – produced by the vast majority of industrial processes

Heliex’s technology can be employed in any process that uses steam directly or uses a steam system as a heating medium., says Chris Armitage, inset

hile much of the debate about energy has focused on how it is generated, with wind, solar, and tidal at the forefront, another dimension of this discussion is still emerging: how to make the most of the energy already being produced – particularly in the manufacture of a range of products – from petrochemicals all the way through to glass bottles. Common to many of the industrial processes involved in the production of these goods is steam, which is often used as part of a plant’s production processes or as a heating medium. It is a ready and plentiful supply of energy, yet frequently untapped – released instead as waste.

There are so many businesses out there that could benefit from this technology but the majority don’t know it exists yet 50 February/March 2017

However, a new technology, developed by Heliex Power, based just outside of Glasgow, is changing that – opening up possibilities for businesses to save money on their energy costs and enhance their efficiency. For more than 40 years, researchers at City University, London were looking at ways of being able to use ‘wet’ steam: the type of vapour you can see emanating from the spout of a boiled kettle. Visible to the eye, full of water particles and generally at mid-range temperatures and low pressure, huge amounts of it are produced by a wide variety of day-to-day industrial processes. “Turbines have typically been used to harness steam but they can only take ‘dry’ steam, which is superheated, high pressure, and expensive to produce,” says Chris Armitage, chief executive of Heliex Power. “Wet steam, on the other hand, is ubiquitous and cheap but full of water particles and erodes turbines’ blades, making it unusable for existing machinery. “The research undertaken by professors Ian Smith and Nikola Stosic at City University has completely changed that: we’re now able to harness the potential of the steam being produced by the vast majority of

industrial processes, in a manner that makes the economics stack up. They brought the concept to professor Dan Wright, the founder of Heliex Power, after a geothermal power station in Australia expressed some interest in using this new Steam Expander system.” The concept was spun out of City University in 2010 and Heliex began undertaking thousands of hours of research into making the product a commercially viable proposition;

eventually beginning to sell its Steam Expander systems in 2014. Since then, adoption of the technology has been steadily picking up, with more than 40 units in the field clocking up over 75,000 hours of operating time. However, the technology’s current take-up barely scratches the surface of its potential. Estimates suggest that more than 40,000GWh of energy vanishes globally every year through waste steam. Other analyses find that up to 50% of industrial

Vetrobalsamo’s glass act Milan-based Vetrobalsamo produces more than 500,000 glass bottles every day and has a pledge to reduce fume emissions by 70%, compared with traditional glassworks. The company needed to produce not only electricity for its factory but heat energy for the districting heating grid, using energy from the process flue gasses in two of its furnaces. While a number of technologies were considered, a Steam Expander system was chosen as the best way of supplying both the electricity for the plant and the correct temperature of heat for the district heating scheme. The Heliex system uses steam produced by a dedicated heat recovery steam generator, working at pressure of 19 Barg. The steam coming out of the system is 111°C – an ideal temperature for use at local houses. One of the first Heliex systems to be installed, it generates 400 kW of electricity from the glass-making plant, with the residual 4MW of free heat supplied to local residents. The complete system allows Vetrobalsamo to save more than ¤1m (£850,000) per year.

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energy usage is eventually released as waste heat – enough to power 28 billion homes. The potential transcends industries, with systems already installed in sites across the chemicals, manufacturing, thermal processing, steel production, and agricultural industries. “Essentially, the technology can be employed in any process that uses steam directly or uses a steam system as a heating medium. Its wide range of potential applications and the sheer amount of steam produced by all of these industries means the technology’s potential is vast,” adds Armitage. The most obvious question to ask is how it works. There must be a big secret behind the technology that makes what was previously thought to be impossible, possible? “It’s deceptively simple,” continues Armitage. “The crucial bit that makes it all happen is the screw expander, which has two rotors entwined with each other. The profile of the rotors is the important part, and the two of them sit within a casing and are supported on bearings at each end. We expand the steam through that expander and, in doing so, the rotors turn and we have an output at

one end. We connect that to a generator to produce electricity.” Heliex estimates that the potential market for its first system is in excess of £70bn, with demand from across the globe. The company already exports from its base in East Kilbride to India, Poland, and Italy, while research from a possible partner in China suggests that a million of its systems are required in that country alone. After a revenue of £900,000 in 2014/2015, Heliex grew sales to £2.7m last year. The company expects to double this in 2016/17, and do the same again during the following 12 months. More products, derived from the initial system, are also on their way. “When we first ran numbers for market analysis, they were so huge we had trouble believing them. There are so many businesses out there that could benefit from this technology but the majority don’t know it exists yet,” concludes Armitage. “But, once they see the economic, efficiency, and environmental benefits, we’re confident more companies will look at how they can make the most of their existing steam systems. The fact that this technology is only in its infancy is exciting – there’s still a great deal to come in steam.” te

National Grid: thinking positive about battery storage System operator National Grid is strengthening its commitment to the UK’s energy storage community with the creation of a dedicated storage working group. Its purpose is to provide those involved in storage with a platform to hear the latest industry developments from organisations such as the Department for Business, Energy & Industrial Strategy (BEIS), regulator Ofgem and National Grid. The working group also enables the community to share concerns or questions on storage directly with National Grid. The first meeting took place in December, with the second set for March. This latest development sits within National Grid’s expanded Power Responsive programme. Created in 2015 to increase participation in demand-side response (DSR), it has since been broadened to represent wider demand side flexibility, including energy storage. As system operator, the company has a duty to balance supply and demand on the UK’s energy system. Storage technology – which absorbs surplus electricity at times of excess generation and releases it when needed – can play a significant role in this balancing act. Rapid response Energy and battery storage are particularly valuable because they offer the potential for incredibly rapid response. In the event of volatility on the system, for example, the technology can release power to the grid in less than a second. National Grid’s commitment

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to storage is also reflected in its introduction of the balancing products Enhanced Frequency Response and Demand Turn Up. Both provide opportunities for battery storage facilities to help manage the grid while earning revenue. Enhanced Frequency Response depends on sub-second response from providers. This makes it perfectly suited to businesses with battery assets. Demand Turn Up, meanwhile, calls on providers to increase demand when demand is low. Once again, well suited to the use of battery storage. The system operator has just run the tender for its Demand Turn Up Fixed Service in 2017. However, there is still an opportunity to tender for the Flexible Service, which runs throughout summer 2017. Interested parties should contact the company’s Business Development Team at commercial.operation@ nationalgrid.com or on 01926 654611. Subscribe now Businesses that are interested in battery (and other forms of) storage – and who wish to receive updates and invitations to the storage working group – should subscribe to Power Responsive. You’ll be prompted to indicate your interest in the working group during the registration process. Subscribe on the Power Responsive website www.powerresponsive. com - or contact us at powerresponsive@ nationalgrid.com

COMPRESSED AIR

Reducing consumption BCAS has produced a 16-page white paper for energy and plant managers responsible for the performance of a compressed air system

CAS’ new white paper, Reducing Energy Consumption From Compressed Air Usage, provides an overview of how to save energy in a typical system. It highlights areas where waste occurs, steps to minimise it and then where to go for further information. BCAS technical officer Marion Beaver comments: “Both energy and plant managers are busy people dealing with a wide range of different building services and processes. It is unlikely that many will be experts in managing compressed air systems, so this white paper is a starting point that aims to provide an

informative overview, rather than a detailed guide.” The white paper points out that compressed air typically accounts for 10% of an industrial company’s electricity bill and for some sectors it is far more. It also urges end users to consider the whole system and points out that every element impacts upon its energy consumption. Beaver adds: “While the largest energy consuming component in the system is the air compressor, it is the demand by users, the overall design and how well the system is maintained that will determine the demand placed on the compressor and its energy consumption.”

The 16-page guide explores finding and fixing leaks, good housekeeping and staff involvement, pipework, control and maintenance, and advice on treating the compressed air. It concludes by referring the reader to further sources of information. Commenting in the foreword to the white paper, Energy Managers Association chief executive Lord Redesdale said: “The EMA has a ratio for energy efficiency: 40% is efficient kit, 20% is control systems and 40% is behaviour change. This report ticks all these boxes.” te A copy of the white paper can be downloaded from bcas.org.uk

Save energy with Beko’s Drypoint AC

eko Technologies’ Drypoint AC compressed air adsorption dryers are equipped with an efficient compressor synchronisation controller as standard, saving users energy. The dryers come in 10 different sizes for volumetric flow rates from 100 to 1000 m³/h and operating pressures from 4 to 16 bar (gauge). The coldregenerated adsorption dryers extract moisture from the compressed air to a pressure dew point of -40°C. If the compressor is not running, the dryer is also shut down, preventing unnecessary air purging. The containers of the Drypoint AC are filled with activated alumina desiccant. The shuttle valve with an internal purge air line allows for an adequate air flow even in the event of a power failure, making the system fail-safe. The regeneration air flow is determined by the operating pressure and cannot be adjusted.

52 February/March 2017

The dryer is shipped with a fully mounted Clearpoint prefilter to remove solid and liquid contaminants. The Clearpoint afterfilter ensures that the downstream compressed air system cannot become contaminated with desiccant abrasion residue. The condensate is drained off through a Bekomat. By combining these tried-and-tested processing devices into a single unit, Beko Technologies demonstrates once more its technological expertise that has made the company a leading compressed air technology supplier. Apart from the standard models, the dryer can be customised for pressure dew points of as low as -70°C. For such units, the air is dried by molecular sieves. The Drypoint AC can be upgraded with a pressure dew point control system that includes METPOINT sensor technology from Beko Technologies, reducing energy consumption further. te

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COMPRESSED AIR

Performance boost When a leading Scottish truck and van repair specialist replaced its 11-yearold fixed-speed workshop compressor with a new Atlas Copco VSD+ unit, the company not only halved its energy costs but also boosted productivity

55%

Annual saving in energy costs from variable speed drives

The GA11VSD+FF screw compressor has resulted in savings of more than £2,000 a year

cKinnon & Forbes is a family-run authorised IVECO van dealership based in Paisley that also repairs and services HGV trucks, vans and private vehicles. The company employs more than 30 staff at its 14,000sq ft headquarters, which is devoted to vehicle repair and body-shop operations, and serves many large fleet leasing groups in Scotland. Compressed air is a vital utility for the company: supplying air tools and equipment within its three large service pits, post ramp and six standard repair bays; plus, a spray booth and two paint baking ovens. A sales engineer from Atlas Copco approached McKinnon

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& Forbes to offer it an iiTrak system energy audit to check the performance of its fixedspeed compressor system. The results of the assessment revealed that improvements to the existing compressed air network were possible, and that the company could save more than 55% in annual energy costs by installing a GA11VSD+FF screw compressor, which automatically adjusts its motor and element speed to match the workshop’s variable compressed air demand. A few months later, when the company’s original compressor approached the end of its working life, the Atlas Copco unit was installed. Energy efficiency savings of more than £2,000 a year

was not the only benefit to be derived from the new set up. The small footprint and quiet operation of the compressor enabled it to be sited within the workshop, thereby overcoming the excessive condensation problems emanating from the externally located pipework of the old system. Furthermore, the pointof-use relocation meant residual heat from the new compressor could be used to provide added comfort to the working environment. The full feature GA11VSD+FF oil-injected, rotary screw compressor, with integrated refrigerant dryer, is powered by Atlas Copco’s in-house designed interior permanent magnet IPM motor. This technology has redesigned

the conventional layout of a typical air compressor. Instead of the normal horizontal configuration, the unit has an upright, vertical low footprint layout designed to save floor and work space while improving maintenance access even if placed against a wall. Steven McKinnon, director of McKinnon & Forbes, commented: “I would recommend Atlas Copco to anyone, even if they were not directly looking to change their compressor. “The information I received helped not only to drive down my costs and save space, but also helped bring me right up to date with the latest legislation regarding the treatment and disposal of compressor condensate.” te

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WATER MANAGEMENT

Open Water: What will it mean for you? Charley Maher, managing director of water2business, offers advice to businesses preparing for water market reform and gives an insight into this major change for the industry

any company decision makers will be aware of the water market reforms scheduled to come into force from 1 April. But the introduction of competition within the water industry, known as Open Water, will have a big impact on the 1.2 million businesses in England that until now have had no choice about which company provides their

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water and sewerage services. The introduction of the Water Act 2014 means businesses will be no longer tied to their local water company; instead they will be able to choose their water and sewerage retailer. The water you receive will still be supplied by your local water company and will still travel to your premises along the same pipes. The waste water generated by your business will continue to be transported

through the existing network of sewers and treated and returned safely to the environment in the same way as before. So you might ask, whatâ&#x20AC;&#x2122;s all the fuss about? Open Water is one of the most significant developments since the privatisation of the water industry more than 40 years ago and it is an innovation unseen outside of the UK. Scotland was in the vanguard when it introduced competition eight

years ago with England set to follow in April. Due to devolved government, this new legislation does not impact on Wales. It should be a positive move for your business because Open Water will inevitably make the water industry more competitive and should mean further improvements to the levels of service your business receives. As a business you will no longer deal with your local water company â&#x20AC;&#x201C; they will Âť

February/March 2017

WATER MANAGEMENT become the wholesaler and your business will be transferred automatically to a retailer. However, you will be free to sign up to the services of one of many retailers entering the market; some of those retailers will be new to the water industry while others will have been formed by the existing local water company. All will be aiming to attract new customers and while price will play a part, it is unlikely to be the deciding factor for many businesses switching. This is because the margins set by the industry regulator Ofwat are slim â&#x20AC;&#x201C; an average of 2.5% net margin or 6% gross for retailers. The regulator views this as sufficient to enable this emerging market to prosper, but it is unlikely to lead to significant discounts. Therefore it is likely to be the quality of the customer service, investment in innovation, and the value added services offered to your business which will set the retailers apart from each other. Within the south-west region, Wessex Water and Bristol Water has created water2business, a separate retail operation as part of the new Open Water initiative. The aim of water2business will be to provide the same high standards and industryleading customer service that business customers in the region have enjoyed to date. Water2business has promised to offer large and small businesses, schools, hospitals, charities and councils tailored water and wastewater management that will help to improve efficiency and deliver savings. In a region where the average company spends between 1% and 2% of their annual turnover on water, a retailer with the experience and expertise to deliver considerable cost savings will be an attractive proposition. For example, a water audit can identify solutions that can result in cost savings of up to 40%. Other initiatives

56 February/March 2017

to help business customers save money could include leak detection and repair services. So what should your business be considering as the clock counts down to competition? Now is the ideal time to take stock and consider current costs, customer service experiences and water efficiencies. While changing your supplier may seem like added hassle on top of an already busy workload, there could be some great benefits to switching. At water2business we have been working with our customers for some time to ensure they are well equipped for the changes ahead. But if you and your business have yet to start considering the implications ahead of the market opening up in April, you might want to begin by mapping out exactly which services you are paying for. It may be that your business has very basic requirements or it may be a high user that also needs support with wastewater and highway drainage. You may prefer a service provider with specific experience in your sector or a company that specialises in working with businesses of a particular size. Taking the time to review your current service could also make paying your bills much more efficient in the future with multisite businesses, for example, able to deal with one retailer

A water audit can identify solutions which can result in cost savings of up to 40%. Other initiatives to help business customers save money could include leak detection and repair services

Find out more about water2business at water2business. co.uk or call 0345 850 0714

Water2business can help companies to identify savings

which has the infrastructure in place to service every outlet and deliver a single invoice. In the future, the introduction of Open Water may lead to the development of multiutility services so instead of having different providers and bills for energy, water and telecoms, your business will deal with a single company. Questions to ask when you consider switching could include whether the service provider has the software in place to deliver monthly reports that will enable you to identify and respond quickly to anomalies that result in wastage. Such a service can be of particular interest to high water usage businesses in the food and drink manufacturing sector as well as those in the leisure and tourism sector. While the new water market goes live on 1 April 2017, as a business you do not need to feel pressured to change supplier on or near that date. All businesses will be put on a default tariff automatically as part of a contract with your current retailer with the reassurance of knowing that this change is protected by the Ofwat to ensure your business will be no worse off than before. Once the market has opened up, you can explore the options available to your business and change supplier at a time appropriate to you. Getting the right advice could lead ultimately to significant economic savings and environmental benefits. At water2business we are looking forward to the challenges that competition will bring to the industry. Our priority will be to ensure that our customers get the best out of their water supply and continue to benefit from first class customer service. With our extensive industry knowledge, we intend to stand out as a retailer that can tailor its services to individual needs and help companies become more efficient. te

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WATER MANAGEMENT

Big savings or damp squib? The water market for non-domestic customers in England opens in April. But can businesses expect to save much by switching supplier and how can they ensure any savings are maximised? Tim McManan-Smith reports

he retail water market is deregulating in April. That means firms in England will be able to choose their supplier. Scotland’s retail market liberalised nine years ago, and in many cases has brought about benefits such as lower bills and charges, improved customer service and administrative efficiency through consolidated billing for multi-region organisations. However, a survey commissioned in January this year by water regulator Ofwat suggests that only a third of businesses are currently aware they can switch supplier. Businesses surveyed by The Energyst for this report suggest a higher degree of engagement, with half considering switching as soon as the market opens. Yet the vast majority (84%) said they would buy water and energy from a single supplier if it delivered an overall cost reduction. That half are not considering switching supplier may suggest a degree of scepticism, or at least uncertainty, regarding the potential for bill savings. The question for water suppliers is whether those concerns are justified. At the time of going to press there were 17 companies licensed to operate in the open market but more are applying each week.. Ofwat anticipates about 40 new retail applicants to eventually emerge and the influx of competition has led incumbents to brace themselves for change. Some have exited the non-domestic market entirely while others have created new business units.

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“The path to ‘open water’ has been littered with mergers, acquisitions and internal restructures for most of the industry players, both large and small,” comments Giuseppe Di Vita, managing director of SES Business Water, the business retail component that emerged from Sutton and East Surrey Water last autumn. But Di Vita is optimistic that the change will make water suppliers themselves more efficient and robust, as well as delivering efficiencies for customers. How much can businesses expect to save? The consensus is that initial bill savings are likely to be low- to mid-single-digit percentages. But longer term, if suppliers and their customers are serious about driving down consumption, some market participants believe savings of

New models: self-supply Water consultancy Waterscan has been providing water management and bill validating services to large firms since the mid-1990s. But the firm has recently secured a Water Supply and Sewerage Licence (WSSL) to bring a ‘self-supply’ service model to market. That means its larger customers can buy direct from a wholesaler, should they wish to do so, a route that pubco Greene King recently announced it is going to take. Waterscan thinks the model will give customers control over their water consumption and cost; enable greater savings by paying direct wholesale costs as well as ensuring billing accuracy. “Holding a WSSL will support us in maximising the many opportunities that the open market presents for our clients,” says managing director Neil Pendle (above). Crucially for Waterscan, he adds, it will enable access to real-time market intelligence. By integrating its Waterline software system with the Central Market Operating System (CMOS), the core IT system that underpins the Open Water programme, the company says it has the capability to supply and receive accurate client data and to interrogate wider market data to drive savings.

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up to 20% can be achieved. Business Stream has the benefit of almost a decade of liberalised experience in Scotland. Competition usually drives down prices, says James Cardwell-Moore, the firm’s commercial director. But with wholesale prices set by the regulator out to 2020, margins are expected to be tight. Cardwell-Moore predicts initial bill savings of 1-3%. However he says focused suppliers will help customers reduce their wholesale charge, which is driven by consumption levels, if the market in England and, for larger businesses in Wales, mirrors his experience in Scotland. Cardwell-Moore claims Business Stream has delivered £160m in savings to customers since 2008. Of that, some £99m is from price discounts. However, £53m has been driven by reducing consumption (some 24 billion litres of water) with customers driving £7m in energy savings as a result. “Deregulation does drive down price and increases competition in the industry, which is a real positive for customers,” he says. But he adds that price is not the only benefit. “It’s been an incredible evolution in Scotland, which had been a traditional and fairly conventional utility sector. The market used to be all about unit cost but competition has changed that completely with more focus on a balance between price and service.” SES Business Water’s Di Vita agrees that initial bill reductions will be modest, although slightly higher than some suggest. “In the first few years of the open water market, businesses can expect to see initial discounts of up to 5%,” he says. “Customers already on large user tariffs should

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Time to switch? Quality audit key to assessing suppliers Water Plus’ Tony McHardy (right) says it is vital “to get a full inventory and accurate consumption data for all sites to be correctly compare offers from water suppliers”. Good data, he says, is the key to a quality audit. “We start with reviewing customers’ existing data including their historic bills and meter readings or collecting new data on meter readings during a set period. This helps establish the baseline usage. Where automatic meter reading (AMR) meters data is available, we would access and analyse the daily usage, looking for any unusual consumption patterns,” he explains. “Once the baseline is established, we can begin the water efficiency work.” McHardy says while different audits are tailored to different sectors, “it usually starts with a site-based audit and can lead to a visit from a leakage engineer to locate and repair below ground leaks”. The firm can also carry out a site inspection, which examines all water-related equipment “to identify any issues and non-compliance as well as opportunities for water efficiency savings”. Business Stream’s James Cardwell-Moore agrees benchmarking is key to maximising returns. “It is crucial to benchmark any organisation’s water and wastewater use against similar operations. An effective audit will analyse the water use and waste disposal of businesses across multiple sectors, giving us vital insight. Once we can see the whole picture, we’re able to create bespoke handling plans to help businesses streamline their water use,” he says. “Through effective implementation a business can substantially reduce its operating costs, improve its environmental compliance, modernise the waste water handling process, save on waste water charges and effluent disposal and make significant year-on-year savings,” says Cardwell-Moore. “The use of AMR and sub-metering will allow for these improvement to be measured, monitored and recorded.” Once all inventory has been accurately itemised and accurate data gathered, McHardy says firms should ask potential suppliers to quote on a standardised basis so that they can compare offers. Then they should carefully assess suppliers. “Ofwat has a list of all licensed suppliers on their website. It’s important to carry out due diligence to ensure the potential supplier has the financial standing, expertise and service offering required by the customer.”

The path to ‘open water’ has been littered with mergers, acquisitions and internal restructures Giuseppe Di Vita, SES Business Water

expect a smaller discount level. In Scotland, discounts have risen over the past eight years and are now at 10-25%.” Whether that level of saving can be achieved south of the border over a similar timescale remains to be seen. “But the most important point is that benefits can be accessed from day one of the open water market,” says Di Vita. “It’s not like the energy market where it took around 18 months for prices to fall.” Tony McHardy, corporate director at United Utilities and Severn Trent joint venture Water Plus, thinks larger, multi-region companies may initially find reduced administration as a key driver to switch. “Due to the margins that business water retailers will be operating under, prices will not vary dramatically,” he says.

“Businesses with multiple sites can save on administration by moving to a single supplier and a single consolidated bill for all of their sites, removing the need to deal with multiple water companies.” By way of example, he points to David Lloyd Leisure, which switched all 84 sites to Water Plus “enabling it to move from dealing with 15 water suppliers and 15 bills, to one supplier and one bill for all sites.” That kind of consolidation can lead to “significant” administrative savings, McHardy suggests. Suppliers as service companies? As with any utility, procurement can only achieve so much. Tackling inefficiency will drive the largest bill savings, suppliers agree. “To really benefit from »

February/March 2017

WATER MANAGEMENT the switching, customers need to find a supplier that can help them reduce and manage their water and waste water more efficiently,” says Cardwell-Moore. “The bottom line still matters but our customers are placing a lot more emphasis on service and help to reduce consumption and be more efficient.” Di Vita agrees: “The new open market is about so much more than discounted prices. Suppliers should be focused on providing the very best service bundles, with packages that can be tailored around the needs of their business customers; whether that’s online services, new ways of driving water efficiency, or implementing new technology on site to monitor and rationalise water consumption.” That suggests water companies, like energy companies, are switching their focus from pure retail to services business models. Does that suggest water consultants may find

To really benefit from the switching, customers need to find a supplier that can help them reduce and manage their water and waste water more efficiently James Cardwell- Moore, Business Stream

themselves under threat? “The offering from brokers and water suppliers can vary in range and depth so customers need to do their due diligence and make sure they are procuring the services they need for their business,” says McHardy. “As a water supplier, we have our customer’s water usage data at our finger-tips on a daily basis,” he says. “So we are ideally placed to spot usage changes and, as water experts, we have a proven track record of delivering self-funding projects to deliver water efficiency savings.” However, he says third party intermediaries will remain part of the mix, adding: “Water Plus is already dealing with all the major brokers in the market through our broker management team and we often work in partnership with brokers to identify opportunities to save money on water bills.” Di Vita agrees. “Third party intermediaries who already have established relationships

with businesses around their energy consumption will be instrumental in driving engagement in the water market,” he says. Cardwell-Moore says water firms still require a broad range of market expertise. “We have a technical arm of our business that delivers water efficiency, waste water minimisation and trade effluent management projects for our customers,” he says. “We typically work with a range of specialists to ensure we provide the right technical solution for our customers.” Who can make the biggest savings? “All businesses stand to benefit from the new open water market. Multi-site businesses probably have the most to gain from the option to consolidate invoices and data,” says Di Vita. McHardy suggests that both SME and large corporates can gain. “In our experience, savings can be made across all businesses and public sector organisations – from the corner shop, to a school or a

Stick or twist: TPI views on switching David Peake (left), sales and marketing director with The Energy Brokers, says customers have “come around to the view that they will not make a significant saving [from switching] first time around”. For larger firms, he says “the real value” lies in consolidated billing while intermediatesized business may be “under the illusion that they will receive greater bill savings than they will actually get”. Meanwhile, for “single site customers with a small level of consumption, it is going to be a negligible saving”. For those that do want to switch supplier, Peake advises a layered approach.

60 February/March 2017

“Rather than try to get a 2-5% saving from day one, we are advising clients to go shorter and also out of sync to the main round. “Everyone is going to submit to an early [switching] round, assuming the market is ready,” he says. “But [instead switching all sites at once], we think it might be better to split portfolios, take some contracts out on a year, take some out on 18 months, some out on three years. That way, as the market develops greater liquidity, you start to see the benefit sooner,” he adds. “The lesson from Scotland is don’t take a 3% saving and lock out with that provider for three years. You would probably received better value going shorter,” suggests

Peake. “So we are looking at whether we can devise a solution on that basis.” Magnus Walker (right), director of trading and risk at Inprova Group, agrees bill consolidation is likely to be the initial main attraction. However, he points out that simply verifying the accuracy of existing metering and billing can deliver substantial savings, whether or not businesses actually switch supplier. “We hear lots of stories where people have been significantly over charged and they have no way of knowing if that is the case without accurate data,” he says.

Amar Hussain (right), incoming managing director at Orchard Energy, says the broker has been active in the water market in Scotland for a number of years, and will start to action deals in England as soon as Ofwat releases retail prices. However, Hussain says firms south of the border should “forget Scotland” in terms of percentage savings. He agrees 2-3% is more likely in the near term. Whether many companies will bother to switch for that saving is debateable, he says, and may depend upon the relationship they have with their broker. “My advice would be, if you trust [brokers] to handle it for you and it will not cost you any time and money, then why not?”

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Water2business: think value over price “Customers should review value and not just the price when switching,” says Geoff Smith, director of business retail at water2business, a sponsor of The Energyst’s Directors’ Report. “While price is an important factor, most people are familiar with the old adage “you get what you pay for”. That doesn’t always mean the most expensive is the best quality or, visa versa, that cheapest is the worst. I’d recommend all customers considering switching take a balanced view of price along with other areas including the quality of customer service, ease of doing business with a new supplier, simplicity of switching, ability to fully their supply requirements and what value added services the new supplier can offer,” says Smith. “At water2business we have strong offerings in all of these areas and work with our customers on value across three key areas service, sustainability and savings. In recent Ofwat surveys, customers in our region were those most satisfied with the overall levels of service. While we believe our pricing is competitive across the market we also provide a simple switching process and can demonstrate through case studies many instances where our customers achieve far greater savings through working with our teams and following sustainability and water efficiency advice than those customers that focus solely on the unit price.”

large manufacturing business with complex water or waste water processes,” he says. Cardwell-Moore agrees. Larger firms, by their nature, use more water and can therefore potentially save more, he says, but the SME sector is also core market. “A large part of our efforts in the years leading up to market deregulation in England has been engaging with the SME community,

many of which are not aware of competition, the savings on offer or the benefits it could bring to their business.” An Esos for water? Government has introduced energy efficiency legislation, called Esos, for larger firms. At present, it simply requires companies over a certain threshold or turnover to audit energy use. The idea is that businesses will be compelled

to take action when areas of inefficiency are highlighted and efficiency measures recommended. Should the same kind of legislation be developed to encourage water efficiency? Suppliers think it may have merit – but views are mixed. “While regulation in energy has been a burden, it has forced companies to review and reduce their carbon footprint and often costs,” claims Di Vita. “On average water is 10% of

a business’ energy spend, but businesses will be getting their water data in order as part of the switching process, so now is a good time to understand, benchmark and develop an effective consumption reduction programme,” he says. “However, a real cost/benefit analysis would be needed before any mandatory regulation was introduced into the market.” Cardwell-Moore says applying a one-size-fits-all approach to any such regulation “probably wouldn’t work”. If government wants to regulate efficiency, “we believe it should be linked to water scarcity”. Equally, he says the firm is “keen that our customers are not tied up in extra bureaucracy and red tape.” However, McHardy thinks regulation might be an effective way to unlock savings. “It would make sense to drive more focus on water resources and using water more efficiently,” he says. “More efficient use of water has many benefits – including reducing costs.” te

End users tepid on switching He agrees with The Energy Broker’s David Peake that greater savings may materialise as the market develops, but is not convinced that splitting portfolios will make much difference. “If you were to follow what happened in Scotland, it took more than 18 months before businesses really started benefitting from substantial savings. I think locking in 12-24 months isn’t going to be that detrimental,” says Hussain. “It is a big unknown, but 12 months isn’t going to make or break anyone if the savings are 3%.”

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Paul Garland, UK energy manager for Vodafone, says “there is no large-scale jump to one [water] provider that we anticipate for our business” upon market opening. While the telco may undertake some regional switching, he believes the water industry “needs to up its game substantially in terms of use of technology” to deliver genuine efficiency to customers. “When it comes down to it, there is very little room for improvement in the margins in terms of cost,” he says. “The wholesale margin is 6%. Most of it is regulated cost.” Garland believes the performance improvement “should be around what we can do to learn more about our consumption and how we can reduce it. That is what I have been trying to get to the bottom of. But it seems to be very difficult to get traction in the industry about electronic meters and automation of flows.” On the flip side, Garland agrees new market entrants that harness technology to increase water productivity “could in theory disrupt” the status quo. Sean Midgley, energy and environment manager at SIV, the operational arm of Sheffield City Trust, looks after 17 of the city’s sports and leisure venues. He says the trust is highly unlikely to switch supplier in the short term. “We’ve listened to all the various water companies, we’re being bombarded by TPIs wanting to take on our water procurement and we’ve come to the conclusion that, at present, what we’ve got isn’t broken,” says Midgley. “So we’re not going to try to fix it, because there are other risks out there.” Despite some “administrative issues” with its current supplier as a result of changes ahead of retail market opening, Midgley says overall, “we get a reasonably good deal at present with Yorkshire Water”. Whereas some companies “are going to jump for the sake of saving a couple of thousand pounds a year”, Midgley notes the lessons learned from liberalisation of the energy market. “A lot of people back then got their fingers’ burnt.”

February/March 2017

PRODUCTS New development programme for connected devices Connected devices are fast becoming an integral part of our everyday lives, leading to the growth of smart solutions and smart buildings. To facilitate the greater dialogue between Legrand’s portfolio of connected devices – including A/V equipment, door entry systems and lighting controls – and internet-enabled devices, the company has unveiled its new development programme: Eliot. The Eliot programme combines electricity and the Internet of Things (IoT) to deliver solutions that are innovative, connected and, most importantly, user-focused. With the rapid growth of the IoT, Legrand aims to accelerate the development of its connected range with the help of Eliot. The Eliot programme will not only connect existing Legrand smart

products but will help with the further development of new intelligent devices. What’s more, with growing interconnectivity, the confidentiality of user data is also a top priority. Legrand ensures data confidentiality with a highly secure cloud-based system alongside

Inspection technology for joint performance

The value of George Fischer’s widely specified high-density polyethylene (HDPE) pipe systems has just been enhanced through the development of what it claims is the world’s first non-destructive testing (NDT) regime for HDPE products. This now allows the manufacturer to issue a ‘Fit for Service’ certificate on both electrofusion and butt welds. Contractors already benefit from the inclusion of a ‘completion indicator’ on individual couplings such as tee or crosses but the new service now offers complete peace of mind for the whole project team regarding the quality of the finished installation.

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This means that clients in the water, gas distribution, food processing and other industries can now specify systems such eco-FIT, ELGEF Plus and PROGEF with the same confidence as metal pipework alternatives. Customers also benefit from speed of installation, versatility, low weight and durability. Crucially, GF Pipe System’s new ultrasonic-based, noninvasive testing can check up to 20-30 separate welds per day. The pass/fail report can include details of any discontinuities detected by the scanners and is accompanied by a 10-year guarantee.

complying with local regulations. Tony Greig, CEO of Legrand UK & Ireland, comments: “The Internet of Things is opening up a new era for the built environment through the industrial, commercial and domestic marketplaces and we are playing our part in that.”

AC and DC current monitoring Carlo Gavazzi has launched the CPA Series of power analysers for AC single phase and DC monitoring. A contactless hall effect sensor allows current measurement AC 50-300A and DC 50-400A. The CPA Series provides a flexible solution for monitoring of both AC and DC power using the same device, the contactless technology ensures a fast connection which minimises impact on wiring as you do not need to cut and join the power cable, avoiding any production loss. The inbuilt Modbus/ RTU communication port

for RS485 connection avoids all the standard problems of analogue signal communications. The CPA series of contactless power analysers are able to measure a comprehensive set of variables such as V, A, W, var, VA, kWh, PF, HZ and THD. This new CPA series is suitable for four different mounting options either DIN, Panel mount, vertical or horizontal to suit any installation. The plug ‘n’ play setup ensures ease of setup using Carlo Gavazzi’s UCS (universal configuration software) and is fully compatible with the VMUC-EM energy management solution.

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PRODUCTS CHP renewable generation from food waste Veolia has increased its capacity for generating renewable energy from food waste with a contract to design and manage a 520kWe biogas-fired CHP energy plant for Rose Hill Recycling in Gloucestershire. The CHP plant is fuelled by the biogas derived from mixed food waste collected from across the Cotswolds and will save about 1,750 tonnes of CO2 emissions each year. With a focus on sustainability the new CHP will increase the use of resources and make the site energy self-sufficient using renewable energy. Already playing a key role in Gloucestershire County Council’s food waste recycling strategy, the new CHP site is now be able to generate

4.56GWh of renewable electricity each year – enough energy to supply approximately 1,400 homes. The site’s anaerobic digestion facility will use the heat from the CHP to help turn the foodwaste, animal waste and energy crops into biogas. This is then fed back to the cogeneration unit to provide renewable electricity and heat forming a closed loop energy solution, taking the power demand off the local Grid, and contribute to the government’s target for 20% of the UK’s power to come from renewables by 2020. The CHP plant is now delivering renewable energy, and will add to Veolia’s existing 40MWe UK biogas electricity-generating capacity.

Latest generation of advanced thermal imaging cameras FLIR Systems has introduced three new Exx-Series advanced thermal imaging cameras for electrical, mechanical and building applications: the FLIR E75, E85 and E95. The redesigned, Wi-Fienabled Exx-Series features intelligent interchangeable lenses, laser-assisted autofocus modes and area measurement functionality, improvements to FLIR’s patented MSX imaging technology and a larger, more vibrant 4-inch touchscreen. These features, combined with increased sensitivity and increased native resolution, will help professionals identify hot spots or building deficiencies before potential problems become expensive repairs. In redesigning the Exx-Series, FLIR developed a new range of compact intelligent, interchangeable lenses that the camera automatically recognises and calibrates, eliminating the need for manual calibration. The Exx-Series now

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Dual-fuel engineers take to the road Energy Assets will soon be sending dual fuel engineers to its growing industrial and commercial (I&C) customer base. “Dual fuel capability is rare in the I&C field,” says Energy Assets managing director David Sing, “but this continued investment in our people is all about creating value for our customers by equipping engineers

also features laser distance measurement that assures precise autofocus to improve temperature measurement accuracy, and specifically for the FLIR E85 and E95 models, provides the data for on-screen area measurement in square feet or metres. In addition, the FLIR E85 and E95 models offer increased thermal detector resolutions with up to 464×348 (161,472 pixels), and measure temperatures up to 1,500°C.

with the skills needed to streamline our multi-utility metering and data services offerings. Our engineers will be able to cover gas and electricity installations and maintenance activities on the same visit, thereby improving operational efficiency.” Energy Assets has grown its network of directly employed engineers to more than 80 in the past year and continues to recruit in line with its expansion in I&C gas, electricity and water markets.

The Exx-Series cameras also feature a rugged, water-resistant design and scratch-resistant Dragontrail cover glass over an optically-bonded, projected capacitive (PCAP) touchscreen. A simplified user interface delivers faster, more intuitive operation and coupled with enhanced Wi-Fi, Bluetooth and Meterlink connectivity, means archiving and report generation is easier.

February/March 2017

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February/March 2017

Supported by

2/20/17 9:13 AM

Q&A

Sam Scuilli EnerNOC’s regional director, European sales talks about basketball, climate change, Aer Lingus lounges and Young Guns

Who would you least like to share a lift with? Why? My five-year-old after he has pushed ALL of the buttons. Or that guy who rode his bike to work and crams it in the lift, running over everyone’s feet in the process. You’re God for the day. What’s the first thing that you do? Let’s get everyone who “believes” together and figure out how we can all get along. And then, I tell my friends in the USA that climate change is real and man-made… and to do something about it. If you could travel back in time to a period in history, what would it be and why? As a US citizen, I am endlessly fascinated by the “American War for Independence”, but more importantly the writing of the Constitution. I’d love to go back to Philadelphia in the late 1780s and see how the process really went down. Plus, I want to see “Hamilton” in real-time. Who or what are you enjoying listening to? Unfortunately, the kids now have an Alexa and are constantly asking her to sing. Otherwise, there are some excellent NBA (National Basketball Association) podcasts out there. Or some classic Springsteen from the last century. What unsolved mystery would you like the answers to? That’s an easy one right now… how did WikiLeaks actually get all of that data from the US before the election – and why? And what else is out there that

66 February/March 2017

they (or others) have? That would be a great mystery novel. What’s your favourite film or book and why? My top three films are American classics: Hoosiers, Midnight Run, Young Guns (look them up on IMDB). All three were a big part of my life growing up but I suppose there is a very pro-USA message in these movies (sorry). If you could perpetuate a myth about yourself, what would it be? That I taught basketball legend Steve Nash everything he knows about the sport (this is an absolute fib.). And that I have any inside insight into how the capacity market will clear. What would your super power be and why? I would like the power to simplify the National Grid code (and continue to make the markets accessible for DSR in a way that benefits end users). Other than that, I’d like to be able to access all of the world’s information from a device that fits in my pocket.

American classic: Young Guns

What would you do with a million pounds? Take regular (carbon neutral) holidays with my family. Discovering other cultures, traditions and natural wonders goes a very long way in fostering curiosity and tolerance, and instilling the respect for nature and people. We need as much of that in the world as we can get right now. What’s your greatest extravagance? The Aer Lingus Lounge at Heathrow. It’s a special place. If you were blessed with any talent, what would your dream job be and why? Head basketball coach, New York Knicks. If the Knicks can win a title, they would become NYC royalty. What is the best piece of advice you’ve ever been given? “Don’t tell me how rocky the sea is. Just bring the ship in.”

What irritates you the most in life? Tiny parking spaces in Ireland! I love the county, love the people, love the culture, but I am inept at squeezing a car into the tiny parking spaces. Less jovially, I am most irritated by people who are unwilling or unable to see things from an other’s perspective or “walk in another’s shoes”. What should energy managers be doing to help themselves in the current climate? Embrace creativity in usage and flexibility. The markets and opportunities will continue to change and evolve, and end users who embrace that change early will have gain critical experience for continuous success. Embrace innovation to reduce your emissions… Now! The cheapest MWs are the ones you are not using. Climate reporting and regulation will quickly make energy usage and emissions more visible and expensive. There is a lot of clean tech available today (with known and stable ROIs) to reduce your spend and your carbon footprint. What’s the best thing – work wise – that you did recently? Hired a tremendous team of people to help UK companies of all sizes learn about and take advantage of the various demand-side response opportunities available to them. te

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