New research carried out by energy consultancy Inenco predicts that by 2030, today’s energy managers will have evolved into senior-level utilities managers and be involved in making key strategic decisions. Mark Winn, Lead Consultant at Inenco, discusses the challenges facing public sector energy managers.
Research recently carried out by Inenco1 has predicted how the role of the energy manager will change in the future. Our study suggested that by 2030, the energy managers of today will have evolved into digitally-savvy utilities managers with an even more pivotal role, and a remit broad enough to have considerable impact on UK carbon targets.
It is crucial for the public sector to prepare for change and embrace this transition. The public sector has a significant carbon footprint and the associated energy bills are sizeable — the annual energy bill across all public sector buildings in England and Wales is estimated to be around £2bn2. And, as highlighted in its recent Clean Growth Strategy, government wants the public sector to be a leader in reducing carbon emissions. Not only will this help the environment, but it will also save organisations significant amounts of money on their energy bills — in turn releasing funds for essential frontline services.
“The pathway to 2032 sees emissions from the public sector falling by around 50% compared to today.”
In our experience, some organisations in the public sector already have a relatively strong track record when it comes to energy efficiency. And, according to the Clean Growth Strategy, since 1990 the public sector — including central and local government, health, education and emergency services — has reduced its carbon emissions by 40% as a result of energy efficiency and rationalisation of the central government estate.
Indeed, we know of many cases across the public sector where energy management strategies have been implemented. This is a trend in education and healthcare in particular, where energy spend is significant. Energy management programmes might include staff training and introducing energy saving measures, making smarter energy procurement decisions and investing in more efficient equipment. Meanwhile, some organisations are at the forefront of carbon reduction; these pioneers are pushing the boundaries by creating community heating schemes and investing in low carbon and renewable technologies such as CHP, solar PV/solar thermal systems and heat pumps.
However, while there might be a strong appetite for saving energy, no matter how pioneering and trailblazing organisations want to be, the public sector, as we all know, has limited budgets, and in recent years has had to withstand spending cuts.
Currently, energy efficiency in the public sector is supported by the Salix Finance interest-free loan scheme. While this has funded over 16,000 projects and is projected to save the sector around £55m in energy bills this year2, we know that some public sector energy managers find the scheme challenging to access, limiting its potential. And while there are parts of the public sector with more ‘commercial’ funding available — such as universities and PFI projects — generally speaking, budgets remain tight.
Many energy managers try to make improvements with limited resources, perhaps implementing low-cost measures such as switching to LED lighting. However, budget constraints often mean these actions are reactive, with equipment being upgraded when it comes to the end of its working life rather than being part of a wider, more strategic energy management plan.
For some organisations, energy efficiency activities just do not feature highly, even completely dropping off the agenda. This is a serious concern, when, according to the Clean Growth Strategy, emissions from the buildings and activities of the public sector will need to be near zero to meet the UK’s 2050 target. This will involve improving energy efficiency and energy management, and decarbonising the heating and cooling of buildings as far as possible. The pathway to 2032 sees emissions from the public sector falling by around 50% compared to today. To achieve this, the Government says it will need to set longer-term emissions reduction targets across the public sector, and encourage transparent reporting.
This complements our research findings, which suggest that by 2030, energy will be higher up the political agenda, being included in all decision-making processes. This will further advance the role of the utilities manager and expand their responsibilities — but we are concerned that austerity and a continued lack of funding will ultimately hold them back.
On top of the budget constraints, there are other hurdles to address. In our experience, the public sector is hampered by a significant level of red tape, and long-term decision-making about energy efficiency can be problematic. We also know that many public sector organisations make their purchasing decisions through public sector buying groups — but continuing to use the same suppliers, where products and services may be limited, can be a barrier to innovation. There will be a need for the utilities managers of the future to step outside the box.
Technology is going to rapidly evolve over the next 13 years, and it will increasingly change the way we all operate, use resources and make decisions. By 2030, the Internet of Things and artificial intelligence will be used daily. According to the Institute for Public Policy Research (IPPR), although the public sector was traditionally insulated from external trends, it is not immune from this wave of transformative technology, which is already revolutionising the way lecturers, doctors and police officers work3.
In the future, artificial intelligence will enable automated data capture and processing, and will be used for data-driven analysis of energy demand, generation and supply. With a much higher level of automation and access to real-time data, energy monitoring will be more in-depth. Therefore, the new breed of utilities manager will be expected to have a more diverse skill set, ranging from understanding energy management systems to being digitally-fluent. Data is already driving decision making and reporting in business energy, with a fifth of respondents taking part in our research commenting on a substantial increase during the past five years, and unanimously agreeing that this trend is set to continue.
The future utilities manager will need to make the most out of the data available, and will therefore need to be given the opportunity to develop their digital skills. However, it has been suggested that as a result of austerity measures, there is not any new talent coming into the public sector, and existing staff have not been able to develop and digitally upskill due to a lack of resources and training4.
Indeed, while this does not just apply to the public sector, when energy data is available it is not always used to full advantage. Additionally, a lack of software, or the understanding of it, makes activities such as measurement and bill validation challenging. Bearing all these constraints in mind, energy managers working in the public sector will need to make a huge leap to become future utilities managers. There is a risk to be recognised and managed as well as a definite need for investment in technology and training.
In response, Inenco has launched an Innovation Hub, which will focus on developing solutions through a series of hackathons. People can get involved by sending in the challenges they face using #InencoHub on LinkedIn, Twitter, Facebook and Instagram.
1 Inenco partnered with DJS Research to commission primary research among UK organisations and businesses, interviewing 88 energy managers across a range of sectors over June and July 2017. Inenco then worked with Ricardo Energy & Environment to combine the findings with industry, digital and environmental trends to determine how the role of the energy manager will change in the future. Ricardo Energy & Environment consulted with a range of experts to validate the hypotheses and findings.
2 Taken from the Clean Growth Strategy