We know that buildings use about (40)% of all energy use and we also know that the energy efficiency of buildings can be greatly improved, often just by better monitoring and controls with low capex and fast paybacks. Savings of 20% or more can often be achieved by better control strategies and recommissioning. New design techniques such as integrative design of whole building retrofits can produce much larger savings. The UK spent about £42 billion on energy in buildings in 2011, about £29 billion in the domestic sector and the rest in non-domestic buildings. Assuming we can save 20% in non-domestic buildings, which is an achievable target, the value opportunity on offer is about £8 billion per annum, potential savings that could produce an investment return and reduce operating costs for businesses and householders alike.

So what needs to happen before we can really exploit this huge opportunity? Lots of it can be achieved with simple, well proven techniques of energy management and application of existing well proven technology. We do need, however, some innovation in process, finance and technology – all of which is highly doable with the right kind of leadership from government, industry and the finance community – and all of which is emerging now.

Let’s start with process. Most importantly we need to standardise the evaluation of energy efficiency measures, the documentation of projects, the measurement and verification (M&V) of savings and commissioning processes. All too often different energy assessors end up with different results. Standardisation will help build confidence amongst energy users considering making investments as well as outside investors. A good example of standardisation happening elsewhere is the Investor Confidence Project (ICP) in the USA.

We also need to get transparency of building energy consumption in the non-domestic sector. This has been proven to be very powerful in places like New York and Charlotte. Companies like Energy Deck and Honest Buildings are offering on-line transparency of energy use and retrofit project opportunities.

The ideal structure for a large scale retrofit programme would be to combine transparency of energy consumption, some upfront technical assistance to help clients go through the retrofit process, standardised processes from survey to commissioning to Measurement and Verification, and access to finance.

On finance we need access to long term, low cost debt – something that is hard to source from banks at the moment. When there is sufficient volume and standardisation the kind of long term income thrown off by energy efficiency projects will be of interest to income and bond investors. As well as the issue of standardisation referred to above we have to have scale to reach the income and bond investors, they typically can’t invest in amounts under £100m and as we know energy efficiency projects are usually quite small on this scale. We need to find ways to rapidly build volume by aggregating and warehousing projects. Another US example is in Pennsylvania where the state government is putting together a warehouse for energy efficiency loans and when there is sufficient scale they will issue bonds. In the UK Birmingham City Council is working on something similar.

On the technology front we need innovation around better modelling of retrofit options as well as tools for rapidly assessing buildings. We are beginning to see these technologies emerge in companies like Sefaira and kWHOURS. We also need new technologies including, super thin insulation, adaptive materials such as low cost electrochromic glass – such as being developed by companies like Soladigm – and the application of sensors and communications to all building systems as being developed by companies like Enlighted.

The energy efficiency policy framework in the UK is becoming more positive and it appears that the value of efficiency has finally been recognised. If we can ensure that the demand side if fully recognised in the Electricity Market Reform we will see even larger opportunities for energy efficiency project developers to pull together large-scale projects covering cities or regions. We either have, or can see on the near-horizon, the techniques, processes and technologies we need to radically improve energy efficiency in buildings. Now we just need to get on with it – at scale – by thinking big.

The internet and the ubiquity of high volume, low cost communications and information processing has introduced us to the power of ‘big data’ and data transparency in many fields and now is the time to apply it to building energy use. In September New York City published the 2011 energy benchmarking results for large commercial properties. Data on 2,065 buildings covering more than 530 million square feet of space was released including the energy use intensity (EUI), energy per square foot, and a weather corrected energy use intensity, greenhouse gas emissions, water user per square foot and the Energy Star rating where applicable.

 
http://www.environmentalleader.com/2012/09/12/new-york-is-first-city-to-publish-energy-data-for-private-buildings

The benchmarking report found that if all the inefficient large buildings were brought up to the median EUI the energy consumption in the city’s large buildings would be reduced by 18% and greenhouse gas emissions by 20%. Other cities are now following New York’s lead.

Although benchmarking has its issues, if done properly it can be a powerful tool, especially if the results are put in the public domain – for both individuals and companies. Evidence from modern psychology shows the power of reporting performance publicly (see Willpower by Roy F. Baumeister & John Tierney, Penguin 2011 for a discussion of this applied to individuals). Benchmarking alone may lead to energy savings as building owners of poorly performing buildings compare their poor performance to their peers and take action, either through better management or investment. For the city or region benchmarking, if done on a consistent, long-term basis, can demonstrate progress towards a goal.

We know for sure that large savings can be achieved by better building management. FirstFuel, a US based energy analytics company this week released data that shows that operational improvements are a bigger part of potential energy savings in commercial real estate than is commonly realized and in many cases requires little or no cost.

 
http://bostinno.com/2013/02/06/what-if-energy-efficiency-is-even-easier-than-we-thought-infographic

 
Evidence from UK companies like Matrix Sustainable Energy show time and time again that managing energy through the better use of Building Management Systems produces savings, often with paybacks in weeks or months.

 
http://www.matrixsee.co.uk/index.php

 
Building technologies, everything from HVAC through to lighting to adaptive materials, are increasingly equipped with sensors and communication capabilities. The innovators of Silicon Valley and elsewhere are adding sensors and communications to everything, even down to individual light fittings and thermostats. Buildings are beginning to join ‘the internet of things’.

 
We need to ensure we can use all the data that will be emerging from buildings to benchmark, drive action and measure progress against goals as well as the actual performance of efficiency investments, as well as ultimately link to a smarter distribution grid, ideally with dynamic pricing. That will take new policies and leadership from building owners and utilities, as well as government agencies to take a new look at energy data and make it widely available.

Every effective energy efficiency programme needs support from the top and at today’s launch of the “Energy Efficiency Mission” hosted by Greg Barker we certainly got top level support direct from the Prime Minister David Cameron. This marks a significant step forward for the energy efficiency agenda and has to be welcomed, whatever the cynicism about any government’s ability to deliver.

As I said in my recent “Energy World” article we have now laid the foundations of energy efficiency policy in the UK. The test now is what we can build upon those foundations. A critical corner stone will be incorporating the demand side into the Electricity Market Reform (EMR) process in some way. This has been the ambition of Greg Barker and others (including the author) for a long time but inertia and resistance in the civil service and industry alike has managed to hold it up. We are now at a critical time and there is only a limited window to get the wording into the Energy Bill. It will take the full support of the PM and the Minister to force through a mechanism, which is probably going to be something in the capacity mechanism rather than a premium payment (code for an efficiency Feed-in tariff).

Watch this space.

So the truth is out on nuclear decommissioning. The bill for cleaning up Sellafield alone (so that excludes the actual power stations themselves) is likely to hit £70 billion and every project is late so who knows what the final bill will be. And that is only Sellafield, it does not cover the cost of decommissioning the nuclear stations themselves or any other facilities.

So the interesting question is how much per MWh of power ever generated by nuclear does this represent. If we take the capacity of all the Magnox, AGRs and fast breeder reactors that ever put power into the grid and multiply by a load factor of 80% (which any study of the history of the UK nuclear power industry will quickly suggest is optimistic), we end up with about 3,500 TWh generated. Thus the Sellafield decommissioning cost is about £20/MWh compared to the wholesale price of electricity of about £45/MWh. This assumes all operating plants operate to the end of their currently declared lifetime. Note, the £20/MWh is a straight subsidy and does not affect the wholesale price. It also of course ignores the original subsidies in developing and building the plant in the first place.

Putting aside any argument about nuclear safety this really highlights the true cost of nuclear power. It is totally uneconomic and all the money spent on it (other than decommissioning which of course we are now locked into), should be spent on demand management and energy efficiency which is proven to have a much lower cost per MWh delivered.