How can businesses improve their competitiveness and profitability through sustainable energy practices, and what are the barriers to implementation?
The issue: How can businesses improve their competitiveness and profitability through sustainable energy practices, and what are the barriers to implementation?
Taking part Brian Manning, chief executive, Esh Group Mark Dowdall, environment and community director, Banks Group Jonathan Walker, head of membership, North East Chamber of Commerce Graham Neave, operations director, Northumbrian Water Julian Atkinson, managing director, JC Atkinson and Son David Bowles, chairman, Inova Power Craig Iley, regional director, Santander Richard Slade, owner, Battlesteads Pub, Wark Stewart Watkins, managing director, Business Durham Peter McDowall, business property director, Durham County Council Paul Fitton, head of data centres, ITPS Phil Hughes, executive chairman, tadea Alan Jones, strategic business development manager, tadea Brian Nicholls, editor, BQ Magazine In the chair: Caroline Theobald, BQ Live Venue: Blackfriars Restaurant, Newcastle
Jonathan Walker opened saying that after the North East Chamber had begun looking for opportunities in energy generation for the North East it had also moved into the wider issue of energy consumption. The message it got was: “Let’s capitalise on opportunities in sustainable energy, using knowledge, policy and environment.”
Brian Manning, whose company employs sustainable energy in a number of ways, confessed some cynicism – unsure if steps taken can be called sustainable yet. “We may need years to find out if they are sustainable or not. And the Government has tariffs that are ever changing or being looked at.”
Julian Atkinson feels his environmentally friendly coffin business is doing things right sustainably, but he has to remain pragmatic in business with every penny earned. David Bowles says Inova Power, a start-up of which he is chairman, generates hydrogen on demand instead of storing it in tanks under high pressure. “You can generate it in small quantities and use it as you want it. We’ve been surprised at how much global interest exists in hydrogen as a serious source of alternative power.
“It can be used in all sorts of ways. Simply, for example, to mix with hydrocarbon fuels to extend the range of a vehicle and improve the engine performance, also improve the carbon footprint by about 30%. There’s a lot of work going on – by Eddie Stobart, for example, and two universities, including Newcastle, to define the best mixture.”
Inova is also about to work with a major American corporation to develop the generation of oxygen for medical situations. It’s working too with a Scottish firm that has a system capable of generating potable water from the like of sewage, beer, and urine. Using fuel cells, it could function in remote locations where there’s no power generation.
“Hydrogen’s already a $1bn business internationally,” Bowles said. “People have been using it for about 100 years to generate power. We’ve found how to store it without pressure for use when you wish.”
Phil Hughes said tadea earns most of its money managing for organisations requiring to contract for sustainable activities such as loft and wall insulations, renewable energies, sustainable transport solutions. “I’m chairman of a youth charity.
Last year we put up one of the first green roof buildings in the region, supposed to be fully sustainable. Unfortunately we couldn’t afford the fee that would have made us Breeam outstanding. We run a wood fire boiler using chip rather than pellet and some ground source heat and PV.
“Sustainability is first to go in building. People say: “We can’t afford it.” But in 20 years’ time when you’ve had to rethink your business model because energy costs have risen so highly, and you’re not generating your own energy on site, and the national grid because we’ve not invested in it so it’s not as robust as we’d like – what technology built in the 1940s would be? – certainly I’ll be a great believer in sustainable development.
“I don’t want it to reduce quality of life. But we must take a long term view around private market failure, some public market failure and around legislative principles that govern our activities. When you want to do something innovative, how many ministries do you have to deal with? Is there one ministry you could point to and say: ‘They’re responsible for it?’ Nobody’s talking to anyone else there. Nobody’s got a joint agenda. Everybody’s thinking about the next election.”
Craig Iley: “I’m interested in the ethical aspect, the belief people have or don’t have because that’s what tends to drive things. Also, the green agenda generally has ability to transform the North East into one of the great hopes for declining industries. But I don’t feel it’s coalesced in a number of ways yet.
“What do we need to make this region the undisputed centre for the UK? We’ve got Nissan and its Leaf, Narec and some fantastic other things and exceptional people. But I guess a number of other regions will lay claim to similar achievements. Aberdeen, Edinburgh, Hull. So what do we need to do?
“Again, which technologies will actually prove sustainable? There’s the Betamax and VHS analogy. Neither’s around any more. Which will be the really sustainable technologies in 10 or 20 years?”
Peter McDowall: “Durham County Council owns lots of commercial property, some better than others. We’ve about 300 buildings, maybe 10% of which have been built in the last few years. We’ve paid extra fees to get Breeam accreditation and it seems money well spent, though it’s bizarre you have to spend money to get an award. We have brand new buildings we’ve put up where we try to lead by example, encouraging firms to set up and grow within the property.
“The council has decided to keep stock 20 or 30 years old, and part of my job is to ensure use of that stock. I’ve generally found the worse a building is, the harder the company inside is struggling to compete and grow. So we’re trying to see that the better the building, the better and more competitive will be the company inside.
“As a local authority we’ve some access to funding from Europe and other sources, and I think it’s in our remit to try to give businesses a better passage to growth. We’re a small landlord in commercial terms, but have this broad agenda between buildings state of the art, hoping they will be sustainable, and the others which, mostly at least, still have a roof and four walls, a front door, a back door and windows. We actually have some buildings that don’t always have all those prerequisites of an efficient building.
“We’re trying to improve the quality of buildings, but from a very low base in some areas. So we’re still grappling with fundamentals. Sometimes businesses aren’t receptive to bigger and broader ideas – even when the roof leaks, they don’t have double glazing, and the door keeps falling over because it hasn’t been replaced for 10 or 20 years.
“It’s a matter of trying to keep the broader future developments within the practicalities of day to day managing of a property portfolio, where lots of businesses have different ideas about what makes a good stable building. I think, in the end, businesses look at their competitors and their production costs and, hopefully, if you keep pushing the message it will be hopefully recognised that if you have a good building you will have a good business in there too.”
Mark Dowdall: Banks is best known as a surface mining company. We’ve operated and resurfaced over 100 surface coalmines. It’s still very much a source of energy in demand. For the last seven or eight years we’ve realised we need to move towards renewable technologies. Banks Renewables is probably the most active part of our forward programme of planning applications. We’ve so far built three major wind farms, are building two more this year and have others in the pipeline.
“We also have property development business. Everyone so far seems to look at “sustainability” as another word for minimum environmental impact. My view is that sustainability isn’t just about minimising adverse environmental impact, but also economic and social benefits, what we do for people who live and work near our developments. We aim to operate responsibly throughout.
“I get the point about investing now for energy sources of tomorrow, something some people forget when they look at subsidies given for sustainable technology. There’s a need now to invest when energy is a globally traded commodity. Household bills haven’t been going up substantially because of renewable technologies but because of demand for coal, gas and oil from other countries of the world.
“I’m concerned about our lack of self-reliance or self-sustainability in energy. This will become increasingly worrying for our country. We have an opportunity to be world leaders in new technology, yet constantly we face hurdles as a business in getting timely planning permissions. There are contentious issues.
“But we need a more efficient planning system if we are to become more self-sufficient. Big infrastructure and new energy schemes we’re bringing forward often have a lead-in time from inception to implementation of more than seven years. That’s why governments at election time find it difficult to make tough decisions affecting all our futures. We need a coherent energy policy for the country that outlives the life of current governments.” Richard Slade 15 years ago bought his two star b&b hotel in Wark.
“Energy infrastructure for the area was insufficient for the hotel and other users. There’s no hope of that being improved. How could we derive as much sustainable energy as possible? We took part in Midas, a government funding of technical energy advice from specialists.
“We went through a list. The only sustainable element suitable was biomass. We installed the first hotel biomass system known. Local planners didn’t want us to build a biomass boiler because they were worried about noise. We had to record noise levels at a similar biomass system on a country estate. The highest noise levels recorded were from the pheasants and the sheep in the fields.
“But we had to register all these elements to get permission. We also engaged with a green tourism business scheme, started in Scotland. We went through the whole gambit to improve the environment. Hotels and tourism businesses were renowned then for not being very good for the environment or the local population. We got a lead into areas where we should improve our performance.
“We’ve now received four national awards, including Considerate Hotel of Britain and Green Hotel of Britain. A small Hexhamshire hotel of 17 rooms, beating the like of the Savoy and the Lancaster through having developed our sustainability, led us to becoming a top class act. We’re very proud.
“We had problems over finance for investing in the biomass boiler. It was before feed-in tariffs and other renewable incentives used now. We were looking at a seven year payback at best. Quite an investment! We made it believing oil, electricity and all existing fossil fuel prices would go up.
“Our energy prices using biomass have risen on average between 90 and 140% over four years. Our use of energy through biomass amounted in a price increase to us of only 5% after six years. But we had to invest first. We work with schools and the local community, and grow all our own vegetables using surplus heat from the boiler and solar panels to encourage growth.
Alan Jones explained how tadea, a not for profit social enterprise, delivers energy audits for business, community buildings, and helps organisations through regulation requirements.
“We continue to broaden our footprint but also try to retain energy advice as the core. Education is at the heart of what we do, behaviour change and helping to influence people positively. “We provide suitable solutions for installations in business. The North East has an opportunity to become a leader in the low carbon economy. We’re working on a number of projects to foster the skills through children and young people. We’ll help anyone with a large fleet of vehicles, or individuals, offering opportunities to make their driving skills safer and more fuel efficient.”
Graham Neave outlined the extensive work Northumbrian Water does as an environmentally leading business, generating new and renewable sources of energy and water, and educating children on sustainables. “We’re looking for more certainty about what the future holds, and the economics around some investments, certainty on government tariffs, risks associated with using new technology. We have important investment in R&D.”
Paul Fitton’s IT company employs 100 people and serves about 600 customers in the North East from three data centres. “In our sector we work tirelessly around energy efficiency but not so much sustainable energy. Year on year improvements in IT enable us to run more for less and achieve greater economies of scale.
“Companies are choosing where to source their IT carefully so that it’s cheaper and more efficient for them. I’d be interested to know how companies of our size can attain sustainable energy practice. Presently for us it’s getting the most out of what we’ve got. We aren’t quite there on the sustainable side of things.”
Stewart Watkins says Durham County Council has made the local economy its priority. “We’ve attracted Hitachi and a host of major companies. What comes out all the time is energy costs. If people knew what their energy costs were going to be they’d be able to plan for it. They don’t. There’s almost a dichotomy between longer term sustainability and short-term the economic drivers of what we need for the here and now.
“Pressures on businesses are very significant. Some are from governments with their short termism. So it’s going to be about financing. Part of our job is to help firms think about these technologies.” There are firms in the county manufacturing renewables and the council is trying to help them up the value added chain. But energy costs constrain, he says. A point was made that businesses must accept a corporate and social responsibility for involving their customers and encouraging activity in schools. Fitton: “Any conscience efforts we make to conserve energy are cost driven. We’ve lighting that goes off when you’re not in the room. Basic – but cost saving.”
Neave: “You need a system that does the saving for you. We do a lot of work guiding our customers, and sustainability tops the agenda. Many people can’t tell you what they can do to save water. Until government legislation tells developers ‘these are the installations you must put in now’ people won’t choose it. They don’t seem initiated.”
Hughes said behavioural change was the best way forward, demonstrating products and persuading children to be involved. Amounts of resources used in any one activity could be explained. Dowdall recommends metered water. Neave: “Meter changes habits at first. Then old habits come back. Saving over £20 a year isn’t going to change most lives. But we fit the gear for some people who won’t fit it themselves.”
Atkinson: “If you want businesses to lead by example we’ve got to have a way of clawing investment back, and must be made aware of how this can be done.” Neave: “There are always opportunities to look at more innovative tariffs.” One speaker wondered where the incentive lay in having to wait nine months to get a renewable heat incentive application processed. Another said even wood costs for biomass have been rising.
Hughes: “With renewable energy you put in an application and someone starts an action group against you. A lot of these people don’t visit the countryside. They’ve a vision of what it ought to be like, and that wind turbines desecrate. Some of us like turbines. We don’t lay them along nature trails. They don’t kill the cows or hen harriers. Locally they create investment and jobs. Yet people are saying they’re horrible and noisy.”
Dowdall: “A survey has shown objectors are a very vocal minority who’d have politicians believe they represent a majority. But most people who live and work in the UK want to see us more self-sufficient and generating more electricity. Challenges are all part of democracy. But we want faster decisions. We’re lagging behind the rest of Europe. Opportunity offshore is under threat too since we don’t have infrastructural support, unlike other North European countries.”
One participant suggested it’s less easy to achieve efficiencies in an old building where, for example, you may need the light on for part of the day. Slade: “There should be lower rateable values for going green.”
Manning: “Businesses could introduce monitors. We installed one to raise awareness. You find what you’re using. You’re raising awareness. We have ‘electricity police’ going round to switch things off and raise awareness. It raises managers’ awareness at least. You start to think about PV and maybe making some savings. With hire vehicles too you can save over £1,000 each using more efficient vehicles.” It was suggested no matter how sustainable a business, it will not necessarily impress the banks.
Iley: “There are two types of funding for sustainable projects. One is for energy producing multi-million pound projects. The other is where it adds something to an existing business. The first is project finance, the other along lines of an adjunct to an existing business. That something is sustainable is great. But what does it add to the business? If it changes the financial dynamics I’d be very sad if your bank didn’t consider it. know where now. A big benefit of being ‘green’ is how you’re seen by the community: economically friendly and socially aware. I use awards to the good of the business. It has grown 10 to 15% every year I’ve had it. Last year it was 20%. There’s a growing appetite for sustainability. Businesses that don’t get on to that are missing out. It helped me get money to advance the business.
Bowles: “Inova’s working with the like of Tesco and Sainsbury’s who employ some extremely bright forecasters; it will be true for Asda and others too. They’re getting extremely worried by forecasts of electricity brown-outs within four or five years. The Government believes that too. Wind farms alone won’t solve it, and we’re not investing in nuclear power stations fast enough.
“We need bold departures. Hitachi has invested heavily in a new town of 50,000 homes, each generating its own electricity. Germans are about to do the same thing. We work with a Swedish firm that has a very efficient and self-generating combined heating and power system about the same size as a combi boiler.
“I feel the Government must stop incentivising the current infrastructural support and incentivise energy strategies of the future. Our world’s changing rapidly, I don’t think our politicians understand all this. Their brains are several light years away yet have to deal with the problem. Otherwise, Tesco’s fridges will stop working, as they know. Unless they find ways to source non-grid electricity zillions of pounds a week will go down the drain.”
Hughes: “Wind turbos are a part of the solution. With the grids will come cascading failures. We’ve masses of equipment in the home we never dreamed of 15 years ago, all using too much power, and we’re generating it in the wrong places, transmitting it very expensively too. But you can make more intelligent grid switching through IT, use more individualised information points and grant planning consent for houses only when they can generate 50% of their power on site. Housebuyers resist paying 25 to 30% more on a house suitably equipped even though in 10 years they could get it all back. They don’t have the extra money to deposit.”
Manning: “We know, having had to drop prices, that a major barrier is the property valuer with a clipboard, basing a property’s worth on the land value. Hughes: “The potential buyer of a well equipped property should be told that, long term, they’ll be able to afford a higher mortgage because the running costs will be so much lower.”
Bowles: “We have a system that says I must pay the same business rates whatever the efficiencies I introduce.” Iley: “If you make things easy and relevant most people will like to get involved. People move away from pain. If you have to impose pain rather than carrot and stick, that makes a difficult decision for a government.” Dowdall: “One thing we did was train drivers in efficiency, and modified our HGVs. There was a 30 to 35% saving, depending on the time of year. We got tippers doing less than 5mpg up to an average 8mpg. Drivers get a bonus for driving more efficiently.
Jonathan Walker didn’t think you could have carrot without stick, but it had to be more carrot. Watkins: “There have been lots of good ideas here but none would win a lot of attraction at council level because they all cost money. At the moment the austerity measures we’re suffering don’t allow us to do it.” He said it was a struggle to get funds to make property compliant with health and safety, let alone sustainable.
Jones: “We provide an audit service but at a cost to the customer now. It used to be subsidised.” Instances were cited of state bureaucracy also impeding progress. Jonathan Walker believed government subsidies should be widely available provided the system used is efficient and transparent.
Phil Hughes agreed the Government must incentivise manufacturers, and a long term view needed to be taken. Brian Manning pointed out that when a feed-in tariff was introduced for PV installation it wasn’t specified that it should be PV made in Britain. Richard Slade regretted that many politicians are climate sceptics. “I don’t think there’s a common thread running through the parties that would get things moving.” were asked what one message they would take to their peers in the business community.
Julian Atkinson suggested an environmental audit would focus the minds of senior management and improvements should be made from there. Richard Slade suggested an environmental audit could reflect on rateable value. Instead of the Government sending money through the wrong channels to the wrong areas, businesses would seriously look at themselves and hopefully act to benefit from a reformed system of rateable value.
Stewart Watkins suggested public opinion could be influenced in the same way as over drunken driving and smoking in public places. Phil Hughes said: “You need to talk to employees and incentivise it.”
Manning: “If you could borrow money at 5% and make a return of 10% you could put in improvements.” Peter McDowall reminded how superior restaurants and pubs that have obviously invested in themselves draw in more customers and more profit.
Jones: “Corporate social responsibility is nice to have and businesses wrapping around it are beating competitors. It’s giving them an edge in tenders. Large businesses can put teams in to develop it. But SMEs can’t appoint someone full time. They need support and help. We can give guidance.”
Walker: “The energy agenda remains a phenomenal asset to the region. We’ve assets for regeneration – wind and more water than we require. We should tell the Government which wants a stable economy to guide businesses to this more sustainable region that doesn’t need colossal infrastructures.” Neave: “If everyone went back to their businesses and asked who’s doing what they can to reduce waste, save water, save electricity every employee could do a lot more. People don’t change their habits when they come to work. A long-term education process is needed.”
One participant believes public attitudes may change only when the power has gone off. But many low cost steps are possible.
Bowles: “Scots are investing everything in new technologies and incentivising it, encouraging businesses to set up. Norwegians have invested heavily in carbon capture and in technologies costing zillions. The Norwegians have used their North Sea oil revenues very intelligently. Carbon capture is a big issue. They’re doing it. Iley: “Involve the next generation as social change is sometimes driven by what young people choose to adopt and make their own.”
Phil Hughes suggested revisiting the 1992 mantra on waste: reduce, re-use and recycle.
The meeting proposed an advance on five fronts:
• Reduce, re-use and recycle
• Have regular energy efficiency audits
• Do what else you can today
• Encourage “new and renewable” innovators
• Educate young people.
An efficient solution
In what can only be described as increasingly austere times, new ways of boosting competitiveness and profitability in business are constantly being sought. However, some of the most cost-effective and easy to implement actions by which to do so are commonly cast aside.
The actions in question are rooted in the area of energy efficiency. In today’s fast-paced and ever-changing economic climate, it is all too often a subject which falls to the bottom of the business agenda – we find that this is especially so where SMEs are concerned.
At tadea, we appreciate exactly why this is – and that’s why we’ve set up our services to help solve this problem. We believe that overlooking energy efficiency issues is something that must be changed, and that it is vital for both the financial and environmental future of the North East region.
No matter the nature of your businesses, improvements in energy efficiency can be made. However, one of the issues which came up time and time and again during this debate was that organisations and businesses – even those already interested in increasing energy efficiency – don’t know what they can do and don’t know where to start to find out more.
At tadea, we offer energy audits and assessments to help businesses gain an accurate understanding of the amounts of energy they consume. More crucially, we also provide concrete solutions to help boost efficiency and reduce overheads. Our employee engagement team are also on hand to help ensure that this message does not just circulate at the top, but is acted upon throughout the organisation.
Following this debate, we will be focusing more closely on helping businesses to improve their sustainability – both environmentally and financially. By working towards a more energy efficient future, they will enjoy greater competitiveness and profitability as a result. Alan Jones, Strategic Business Development Manager, tadea Limited.