Cutting consumption and costs: how should government reduce energy overheads and fight climate change?


Public sector managers face constant challenges from having to make the most of limited organisational resources. HR has to manage staff salaries and performance. IT has to meet software requirements in the most cost-effective way. But often energy consumption is not managed with the same level of rigour, when compared to other areas of overhead. And this means many organisations are wasting money on energy bills, when that money could be used much more productively elsewhere.

Implementing best practice energy management can be achieved with a good set of polices, practices and procedures. It's not rocket science, but it does take time to get it right. To help you and your organisation to realise the benefits of energy efficiency, here are some top tips based on our experience at the Carbon Trust of working with hundreds of public sector bodies to cut carbon emissions and save money.

Policy and strategy

The best place to start is setting a focused policy and targets for energy use. Crucially, these elements need to come from the top and carry the endorsement of senior management. This policy should contain a clear commitment to proactively minimise energy waste, which can then form the basis for a detailed strategy that describes targets, timeframes and responsibilities.

Targets should be ‘SMART’ and supported by clear key performance indicators and reporting requirements. A structured, externally auditable approach such as the international standard for energy management, ISO 50001, or the Carbon Trust Standard could be considered. For example, the Scottish Government uses the Carbon Trust Standard to drive ongoing progress and demonstrate achievements in reducing carbon emissions, water and waste.

Organisational structure and compliance 

The best performers tend to ensure that an individual at board level or equivalent holds overall responsibility for energy across the organisation. An energy strategy may also identify other individuals who are accountable for specific aspects of energy use, such as procurement, reporting, monitoring and efficiency. Where appropriate, thought could also be given to appointing local energy managers or champions at different sites.

Senior management should also regularly review and understand their organisation’s legal obligations in relation to energy use and carbon emissions, which involves putting a compliance plan in place with clear staff responsibilities. The legislative landscape in this area has changed quite a bit over the past few years, as a result of the need to deal with climate change, with stronger regulations expected in future. It is important to understand which regulations apply, what is coming down the line, and where action may need to be taken across various parts of your organisation. 

Procurement and investment

Where a general procurement policy exists, this should be updated to reflect the energy consumption of equipment being purchased, which will affect the total cost of ownership. In other words, buy on the lifetime cost of the asset, not just on the upfront cost. In addition, specific policies for considering the energy efficiency of particular types of equipment can be very useful, such as plant and lighting. Where new buildings, extensions or refurbishments are being considered energy performance should certainly be specified within the design stage. 

It is important that all capital funding requests are assessed by the person with ultimate responsibility for energy, and considered against clear payback criteria, or other thresholds used for investment. Maintenance budgets should also include provision for energy-consuming equipment, as practicing proactive maintenance rather than reactive correction will save you money in the long-run. 

Monitoring and analysing

Good management requires good measurement. To achieve ongoing savings it is crucial to proactively collect accurate, timely information on energy consumption and cost. Serious thought should therefore be given to putting in place a comprehensive energy sub-metering, monitoring and targeting (MM&T) system prior to any roll-out of an energy reduction strategy, so that the impact can be accurately tracked and reported on.

The installation of an appropriate MM&T system will provide the insights required to optimise energy performance throughout your organisation. At the most basic level, an effective system involves four key steps: data collection, data analysis, communication, and action.

One of the most important factors in implementing a successful MM&T system is the identification and establishment of ‘energy accountable centres’ (known as EACs) within which sub-meters need to be installed. These are commonly made up of individual sites or particular engineering systems, such as heating, ventilation and air conditioning equipment, lighting circuits, or hot water systems.

Energy consumption can then be measured and monitored, factoring in appropriate variables such as the number of users, external temperature, or available natural lighting. This is usually done through a software interface, which can help collate, analyse and report usage. Internal processes then need to be established to act on the information provided from the system. Useful reports commonly obtained from MM&T systems include month-on-month or year-on-year comparisons, out-of-hours consumption, or exception reports where usage exceeds pre-set limits.

Opportunities identification

An effective MM&T system, used well, will be an important first step in identifying energy saving opportunities and prioritising where action should take place. Many of the early actions are likely to be low-cost or no-cost, with plenty of low hanging fruit frequently available.

For example, there are a lot of organisations unnecessarily using high levels of energy outside core business hours. And an effective planned, preventive maintenance (PPM) regime, with comprehensive management of energy assets, will avoid waste and anticipate problems.

Depending on your internal expertise, you may also wish to commission external energy audits to delve deeper into your energy-using systems, to get a professional opinion on ways to optimise consumption.

There is a commonly-used energy hierarchy for identifying and implementing projects. This means that no-cost or low-cost opportunities should be acted upon first, followed by cost effective invest-to-save opportunities. Only when all these energy efficiency opportunities are exhausted should use of renewable technologies be considered, as these typically have longer payback periods.

For major capital investments, a life cycle cost analysis should be performed to provide the net present value and internal rate of return to provide a deeper appreciation of project finances. Good practice in this area would also involve a regularly updated register of projects, which includes all future investment plans. Ideally, this should be linked to wider organisational goals and targets.

Staff engagement

Staff engagement has long been seen as an easy and cheap way of reducing an organisation’s costs, but it is a lot more difficult to implement than it seems. The understanding of what does and doesn’t work in low carbon behaviour change has advanced significantly in recent years, and continues to develop.

One of the greatest challenges in designing energy saving campaigns and procedures, is understanding how staff really interact with buildings, technologies and the other people around them. An effective behaviour change approach brings together technical expertise with sound behavioural psychology, marketing expertise, and a profound understanding of organisational change.

However, even if it can be challenging, it is a prize worth winning. Through good housekeeping, training and campaigns, savings of around 10% on bills can often be achieved. With good quality behavioural research, followed by organisational and policy-led changes, even greater savings can be implemented. It might be as simple as relaxing summer dress codes at the same time as reducing cooling, or it could involve setting more formal policies around job roles and energy use expectations.