The Business Case For Energy Efficiency

Why Implement EPC Recommendations?

There are several reasons for investigating and implementing EPC recommendations.

1. Energy saving.
2. Carbon reduction.
3. Reduce operating costs.
4. Delaying future capital costs of building services through more efficient use such as controls.
5. Corporate Social and Environmental Responsibility.
6. Improving an organisations energy useage.
7. ISO14001.

Making a Business Case for Reducing Energy use

When considering implementing the recommendations made in the Energy Performance Certificate reasons for doing so should be viewed on a business basis. A thorough review of costs and cost savings should be made. The investment in energy efficient measures should be based on a range of techniques including simple payback, NPV and IRR methods.

Different energy efficiency measures have their own costs and benefits and in some instances there is minimal or no interaction between projects however often recommendations impact on each other. Such a situation might exist where a boiler was upgraded along with the roof being insulated to a higher standard. Where the boiler is sized on the existing heat requirements, and then the roof is insulated, which reduces the heat requirement, the boiler will run almost exclusively on part load. The original estimated energy savings for the boiler will not be realised due to the reduced heating requirement and the reduced efficiency of the boiler. If, however, the roof had been insulated first, then the boiler sized and installed, the boiler would run nearer its peak efficiency, and the savings estimated on the reduced heating requirement would be achieved. Furthermore, as a smaller boiler is likely to be installed, there may also be a capital cost saving.

It is important to plan energy recommendations and consider their likely impact on each other.

Loans and Grants

In order to implement energy savings projects, interest free business loans are available from The Carbon Trust. £3,000 to £100,000 can be borrowed with the intention being that energy savings offset the loan repayments enabling new investment in energy efficient technology. Loans are government funded and unsecured with terms up to four years. For more information and to apply for a Carbon Trust interest free loan go to the Carbon Trust website.

Enhanced Capital Allowances

Enhanced Capital Allowances (ECAs) enable a business to claim 100% first-year capital allowances on their spending on qualifying Energy Saving Plant and Machinery.

The general rate of capital allowances for plant and machinery is 20% a year on the reducing balance basis. Relief is spread over a number of years. If investment is made in plant and machinery on the ECA list then 100% first-year enhanced allowances allow a business to write off all the qualifying spending against the taxable profits of the period of investment.

Further information for purchasers can be found at the ECA website or through the Carbon Trust Advice Line on 0800 085 2005. HM Revenue information can be found at their website.

Greening Commercial Property

Watch this Carbon Trust debate on improving the energy efficiency of commercial property with questions and commentary from two of the the big commercial property investors; Land Securities and Legal & General. Topics include Carbon Reduction Commitment, Energy Performance Certificates, Display Energy Certificates and BREEAM.