MONTH IN FM
JULY 2019 53
FMJ.CO.UK
ENERGY PERFORMANCE CONTRACTS:
THE SELDOM-USED TOOL THAT CAN
UNLOCK GREATER EFFICIENCY
Lee Stokes, Head of Sustainability Solutions & Innovation, Mitie Energy
The 2016 Paris Agreement was a watershed
moment for international action on climate
change. With 195 signatories, the accord has
forced governments into action, with many
looking to enshrine ‘net zero’ targets into law.
The UK is no exception to these e orts, with the
government seeking out independent advice from
the Committee on Climate Change (CCC) soon
a er its ratification.
Among the CCC’s recommendations was an urgent
call to improve the energy and carbon e‹ iciency of
existing UK real estate. This has shined a light on the
built environment’s attitude to carbon reduction
and raised questions around the best ways to
improve energy and carbon performance of current
infrastructure. Energy Performance Contracts
(EPCs) – which are an undervalued and seldom-used
tool in the UK – o‹ er one solution to this problem,
particularly those based on operational performance
rather than capital replacement.
Traditionally, EPCs have been o‹ ered by
equipment suppliers. Customers will be required
to purchase an upgrade on the understanding
that specified energy savings will be delivered,
o‹ setting the initial expenditure while also helping
to meet certain sustainability targets. Proponents
of this model argue that it minimises risk and gives
organisations, particularly SMEs, easier access to
asset upgrades. While true, this o‹ ering can also
lead to less than transparent practices and, because
EPCs are usually agreed over a long-term basis,
di‹ iculties for customers who work out of leased
or non-permanent o‹ ices. It also frequently ends
up being cost prohibitive for smaller organisations
without the cash flow to purchase first.
This is where a new approach for EPCs is
emerging – one that eliminates the need for
large upfront investment and is instead based on
continued improvement of existing stock. Mitie,
for example, focuses on energy optimisation by
assessing a facility and then making consistent,
incremental changes to poorly functioning assets,
providing they are controllable in some way. This
frees the customer of any financial burden, not to
mention the hassle of installation and removal, but
still allows them to make the upgrades necessary
for greater energy e‹ iciency. Using this model,
a financial services client has saved £77m so far,
with 100 gigawatt hours recouped over the last 12
months alone.
Perhaps what’s most beneficial about this
model is its applicability to virtually any industry or
commercial environment. In certain instances, like
manufacturing, there will be machinery that simply
cannot be replaced without considerable disruption
to the core business. With the new approach,
however, equipment can still be modified to accrue
energy savings without any of the down-time found
in traditional EPC set-ups.
It’s clear that energy is now a key part of modern
facilities management delivery. From a property
perspective, at least, much of the burden to meet
ambitious climate targets will sit squarely on the
shoulders of support service professionals. The
UK’s high volume of legacy infrastructure makes
for a considerable challenge, but if the industry is
serious about a meaningful contribution it will have
to rethink its approach to EPCs and how these can
be delivered e‹ ectively without exposing clients to
unnecessary financial risk. Doing so will draw clients
further into the ‘net zero’ conversation and help
accelerate progress on climate change.
If you would like to learn more about our
approach to energy e iciency, you can download
our brochure here: www.mitie.com/energy
www.mitie.com/energy
/energy
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