Wednesday 10 November 2021

I founded EnergyPro, now re-branded ep consultancy and part of the ep group, in 2012, with the purpose of accelerating investment into energy efficiency in the belief that improving efficiency remains the best route to building a cleaner and fairer economy. Since then we have done a lot of work at every level from policy formation down to individual projects and sometimes it may be hard to see how these all fit together and support the purpose.  So in this blog I thought I would explain how the parts fit together.


The model that all of our work fits into is based on a consideration of what it means to increase investment into energy efficiency.  Increasing investment requires increasing the flow of viable, attractive and impactful projects through the development process from origination to financing to implementation and performance. Of course behaviour change is also important but the largest, longer-term impact comes from investment into physical projects.


The project development process, shown in Figure 1, starts with origination and then goes through development, business case, underwriting (decision making), financing, build, and finally performance.  As you move through any project development funnel the quantity of projects declines as some projects fall away, and for each individual project there is declining risk and increasing cost as more resources are spent on development.  An early-stage project concept has low-cost but a high risk of not happening, a fully-developed project has lower risk of not happening but getting through the development process inevitably costs money. This applies to all types of development – whether it is a building, a new product or a new company.  Of course in practice project development is not so linear, it has many loops and feedbacks as different ideas are worked-up and tested and barriers are encountered and over-come.


The quantity of energy efficiency projects being originated is driven by demand which is driven by several factors including: energy prices; regulation; carbon prices; how energy is viewed strategically within an organisation; available technology; the degree of creativity applied to problem solving; and the general ‘zeitgeist’ around energy efficiency. In recent years the zeitgeist around energy efficiency has improved as more people have recognised it as the most cost-effective way to reduce emissions and reach our climate targets, as well as the multiple benefits it can bring with it.



Figure 1. The energy efficiency project lifecycle


The various projects we have delivered or are working on support different parts of the project life cycle from origination, through building business cases, delivery and measurement is shown in Figure 2.



Figure 2. The energy efficiency project life cycle and ep’s work


Our policy related work for several governments helps build capacity amongst policy makers by informing them what is possible and providing decision tools. On some occasions we have helped write policy that strengthens the case for energy efficiency by introducing new regulations or strengthening energy efficiency institutions within government.


In project development, we initiated and implemented with support from the EC and a pan-European consortium, the Investor Confidence Project Europe, which is a set of Protocols that sets out how to develop and document energy efficiency projects in a standardised way. The Investor Confidence Project’s Investor Ready Energy Efficiency certification system has been proven to reduce transaction costs and reduce project performance risks and is available for use by for any developer of efficiency projects across Europe.  As well as having launched the Investor Confidence Project in Europe, which helps build capacity across the market, we also get directly involved in project development for a number of clients.


Our work with the Energy Efficiency Financial Institutions Group (EEFIG) since 2016 covers pretty much the whole project development process from a financial perspective. Sub-projects such the first EEFIG Working Group on the Sustainable Finance Taxonomy and the recently launched Working Group on adopting Energy Efficiency First are focused on different aspects of financing and assisting financial institutions to build capacity in order to be able to deploy more capital into efficiency. The EEFIG Underwriting Toolkit, for which we were the primary author, directly addresses the underwriting stage and helps build capacity within financing institutions and provides the basis of a common language between financiers and developers.


As well as this general capacity building work through EEFIG and other channels we have advised a number of investors looking at energy efficiency, both at project level and company level, including UK listed and private funds, several European funds, and one of the largest Sovereign Wealth Funds. Our work helps them to understand the market size and trends, identify financing mechanisms, and understand and due diligence specific investment opportunities.


Our long support for, and recent work on the multiple benefits of energy efficiency, plays directly to building better business cases for energy efficiency. As Catherine Cooremans points out, the multiple benefits are usually much more strategic, and therefore interesting to decision makers, than simple energy cost savings. Properly identifying and valuing them is essential for building effective energy efficiency business cases, business cases that maximize the chances of approval.


In working with Recurve Inc to introduce metered efficiency and pay for performance models to Europe we are addressing fundamental problems with efficiency, which are that all too often its impact isn’t measured and its true value to the system is not rewarded. Measuring and metering efficiency and flexibility, and valuing and rewarding them both properly, represents a total paradigm shift that Europe has been slow to recognise. Implementing this approach would go a long way to increasing demand for efficiency by making it contractable and much more like energy supply in that if you don’t deliver it you won’t get paid.  In a pay for performance regime energy efficiency can finally become the resource we have talked about for many years.


Building on our work with investors we have advised several entities in UK and internationally, on the design of new finance instruments. Our focus is very much on the development stage as that is where there is a big gap.  There is an abundance of project money for well-developed projects but too few instruments to help get projects to that point.


Looking across the whole process we developed our ESCO-in-a-box business model which enables organisations such as local energy or economic development agencies to start-up and run successful local or regional energy service companies. The model is now being rolled out in the UK and also being applied in Kenya where we are also working on linking it to a finance instrument to close the loop and bring investment.  ESCO-in-a-box has also led us to work on ‘super-ESCOs’, or as we now prefer to think of them, ‘net zero development vehicles’ that can help bridge the development gap and mobilize a number of derisking tools and transaction enablers.


Hopefully that helps explain what we do and why we do it, at least on energy efficiency. If you are an energy user, a developer, or an investor, who wants to accelerate investment into energy efficiency and think we can help at any stage of the whole process of developing and delivering energy efficiency projects, we would be happy to talk.


Other parts of the ep group have different purposes and do different things: ep projects designs and develops net zero and regenerative projects in the built environment and ep asset management transfers energy transition technologies between UK and India.  The group itself uses its platform to bring investment and opportunity to SMEs which impact the transition to a net zero and regenerative economy.

Monday 1 November 2021

Glasgow, which is one of my favourite cities, is the centre of global attention at the moment. In my case, as well as looking forward to seeing what emerges from COP26, I was also remembering a period when Glasgow, and a large swathe of Scotland, led the world in energy management and climate action, (although we didn’t generally think of it that way back then). This reflection started when I was reminded that it was thirty years since I helped design and lead a very large energy management programme in Strathclyde Regional Council, back then the largest local authority in Europe. The project was the culmination of a series of energy management programmes across various local authorities, and writing the Audit Commission guide to energy management – an extremely useful guide for action, the kind of which we need more of now.


Strathclyde Regional Council covered a large chunk of Scotland, included a population of 2.9 million people, 60% of Scotland’s population and had more than 1,500 buildings covering Education, Social Work, offices, the Fire Brigade and the Police.  The energy spend in 1990 was £60m.  The Scottish equivalent of the Audit Commission, the Accounts Commission, using their version of the guide we had written, determined that the Council was the least efficient in Scotland and I was the junior member for a team of three consultants brought in to improve that situation and ended up as project manager.


We used a well proven approach: set a base line, establish monitoring and targeting, survey a sample of buildings, identify a set of standard measures that could be rolled out, and start with the big spending, least efficient buildings.  After a pilot programme in Education and Social Work the Council rolled it out under the guidance of the consultant team, recruiting a team of 25 auditors and energy managers across the sub-regions.


Over two years we deployed £7m of capital on a range of low-cost simple standardised measures including lighting controls, low energy lamps (pre-LEDs of course), heating controls, and heat recovery systems.  Amongst the few high cost measures was a Combined Heat and Power unit installed in the Police HQ which not only reduced energy costs but functioned as an additional stand-by generator and delivered extra resilience to the critical 999 call centre. I was always very well treated by the Police. The audited energy cost savings across the whole project were £10 million per annum or 17%.  Although we were not driven by climate change I do remember writing the first report to the Council ever to mention carbon savings where the reduction in carbon dioxide emissions was equated to taking a number of cars off the road for a year.


Much has changed in 30 years, particularly the context of climate change and our understanding of it, the available energy efficiency technology, and the rise of renewables which were only just starting to emerge in 1990.  However, some lessons from back then still apply:


  • First of all – and critically important – the importance of leadership. The programme was supported 100% by the Chief Executive and any organisational barriers we encountered were quickly knocked over by him.
  • Secondly the need to focus on scale and roll-out. With so many buildings there was no point doing one project here and there, we had to focus on rolling out standard measures across hundreds of buildings – particularly in schools. Scaling and mass roll-out are a different skill set to undertaking one-off projects.
  • Simple metrics of performance and guides are important to prompt action – the Audit Commission guide helped local authorities determine where they sat on a scale of performance and set a pathway for how they could improve.
  • Apply the Pareto principle – do the high users, most inefficient buildings first and then do the smaller ones – you get bigger results quicker that way.
  • The importance of measurement – the technology of Monitoring and Targeting was very different then but we needed to measure and demonstrate results.
  • Next training – we recruited and trained a team, most of whom did not have prior energy efficiency experience and I am proud that some are still active in the field 30 years after.
  • There are large inefficiencies in practically all buildings – whenever they were built.


Back then given the mandate we had we could only address no-cost and low-cost measures. Now, given the scale of the climate crisis and the need to decarbonise rapidly, we need to apply the same approach to higher cost measures with bigger savings. We know the capital is available to invest in such measures, we need the leadership to push for them and make them happen, as well as the right approach to project development and management, coupled with training and capacity building to deliver them. The time for small actions and one-off projects has passed.


At ep group, we work with businesses, investors and governments to deliver net zero and regenerative infrastructure – get in touch if you want to find out more.



PS The title for this piece is a line from ‘Glasgow (Your Heart is Made of Gold)’ by Scott McWatt, which is a great musical tribute to the city.



Friday 10 September 2021

It feels important to mark the 20th anniversary of the tragedy of 9/11. As they are for many other people I imagine, my memories of that day are still vivid, and it is easy to answer the ‘where were you when it happened?’ question.  I couldn’t claim any personal connections to the event, fortunately, but I do remember it had a serious impact on me and it took about two years to process it properly. I felt an attachment to the World Trade Center and remember in the 1970s the publicity around its construction, and my excitement when I visited it for the first time in 1978, as well as being just as excited on subsequent visits to the observation deck in 1983 one crystal clear evening just as it got dark, and in 2001.


On the day itself I was in the Guinness Park Royal brewery at a start-up meeting of the Enron-Diageo Utility Alliance Agreement, an innovative 15 year utility outsourcing deal that had taken about a year to develop and implement.  Apart from the main order of business we discussed the celebration dinner planned for that evening. After the meeting I switched my phone back on to get a message from my wife who when I called her back, told me a plane had flown into the WTC. I assumed it was a light aircraft, mentioned it to the teams that were in the meeting and then left. Of course we didn’t have the access to instant news we have today on our phones. Strangely there was a TV in the meeting room but we didn’t think of switching it on.  The potential scale of the event only hit me when I got in the car to go back to Enron House. The driver had the radio on and we listened to the commentary, trying to work it out. The real impact hit me when I walked into the massive trading floor style office and there was a deathly silence and images of the towers’ destruction were playing on the big TV screens.  Many of the Enron staff were Americans and many had relatives and friends in New York.  Some were crying.


There was uncertainty about what to do and whether everyone should go home. Enron House overlooked the garden of Buckingham Palace and there were fears that London may also be targeted. We cancelled the celebration dinner with Guinness of course. After a few hours everyone was sent home and I remember listening to the news service on my phone and relaying information to fellow train passengers.  Once home I tried to call my American friends, who were nowhere near New York, but couldn’t get through.


Even now it is hard to contemplate the scale and impact of that day. For good and bad it has shaped the world we live in and in many ways we live with the consequences everyday. But on the 20th anniversary we should all take some time to remember the 2,977 people who were killed at the World Trade Center, the Pentagon and in Shanksville, Pennsylvania, as well as the many more that were injured, those who suffered (and still suffer) long-term health problems, the rescuers, as well as all their families and the survivors who are still affected by it.


Friday 13 August 2021

The sheer volume of coverage of the IPCC’s AR6 report this week can be overwhelming. Like many people I asked what does it actually mean and what can I do about it?  I found these two summaries, from Carbon Brief, and Zeke Hausfather,  the most helpful of all of the analysis.


My key take aways?


It is “virtually certain that global surface temperature rise and associated changes can be limited through rapid and substantial reduction in global GHG emissions”.


“There is still a choice about how much warming there will be this century”.


That choice is ours. Leaders, business owners and colleagues, in every organisation, need to take responsibility and put their plans and reporting in place without delay, so we can reduce emissions as fast and effectively, as humanly possible.  We have the technologies and with the falling costs of solar PV and batteries, combinations of energy efficiency and renewables are now the lowest cost way of providing electricity – making replacing legacy energy infrastructure financially viable. Institutional capital is available and eager to find more sustainable investments.   The challenge is to take the knowledge we have and turn long-term intentions into investment plans that can be actioned now.


The ep group works with organisations to enable them to deliver net zero and regenerative infrastructure.  Get in touch today and start the conversation.


IPCC WG1 AR6 SPM Report Cover: Changing by Alisa Singer. Credit: Alisa Singer/IPCC.

Tuesday 27 July 2021

There are several barriers that prevent organisations implementing effective decarbonisation programmes.  One of these is the perception that investing in projects that move the organisation towards net zero is expensive and not profitable.  This ignores the new realities that have been brought about by the rapidly falling costs of solar PV and batteries, as well as the falling costs of other energy efficiency technologies such as LED lighting and AI control systems.


What these trends mean is that it is now possible to decarbonise in a profitable way. Profitability is further enhanced when counting the many multiple benefits that energy efficiency and renewable projects can bring, ranging from energy price stability to improved health and welfare to increased asset value to name but three.  When these multiple benefits are identified and properly assessed, using the MBenefits approach pioneered by Catherine Cooremans and used by ep group, the financial benefits of projects are often multiplied by many times.


All of the benefits of any decarbonisation programme, or individual project, need to be identified, weighed against the strategic objectives of the organisation, and properly valued. When this is done, decarbonisation can be profitable.


If you need assistance in identifying, developing or building the business case for decarbonisation projects please contact us at ep group.



Dr Steven Fawkes

Welcome to my blog on energy efficiency and energy efficiency financing. The first question people ask is why my blog is called 'only eleven percent' - the answer is here. I look forward to engaging with you!

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