Utilitywise has struck a deal with Royal Bank of Scotland to perform energy audits for the bank’s 14,000 SME business customers and recommend energy efficiency and energy procurement measures.
The move represents a smart step given the apparent disconnect between abundant project finance and actual uptake of energy efficiency measures.
Part of the problem, said Utilitywise head of European services, Tim Hipperson, is that while energy managers know what should be implemented, building business cases that will be approved by boards or banks can be difficult.
But by designing a process and audit (based on European Energy Audit Standard BS EN 16247) for individual premises based on actual data, the bank’s technology risk is reduced should customers seek finance for recommended measures.
The three year partnership is part of RBS’ Mentor programme, through which it gives advice to small business customers.
Hipperson said the SME sector represented an untapped resource in terms of energy efficiency gains but underlined that the bank’s customers were not obliged to implement measures, nor seek finance, nor to use Utilitywise should they chose to invest capital in equipment.
“It’s not a hard sell. RBS relationship managers discuss energy with their customers. Those that are interested are passed on to Utilitywise who set an appointment, gather the energy data and then send an engineer on site to assess the building,” Hipperson explained.
“It is a full energy audit to the European standard. We create a matrix which shows the business how well it is managing its energy, how well they are training staff in that regard, and where they are strong and weak in energy management.”
Energy savings of between 3% and 10% can typically be delivered through no or low cost “tweaks”, such as ensuring proper use of building controls and the way the building is used, said Hipperson.
Then the firm makes asset recommendations, typically around lighting and controls, refrigeration and onsite generation. It also benchmarks the firm’s energy tariffs against market rates.
“We then calculate the savings using real market prices for the measures,” said Hipperson, which means the audit delivers “a pretty close” estimation of return on investment, thereby reducing technology risk.
What happens next, said Hipperson, is up to the RBS customer.
“RBS will deliver the audit through the relationship manager and it is up to the client to decide what they want to do. This is a consultancy piece for the customer,” he said. “It is not a bank selling loans. It is to give the customer the information they need to make an informed decision about what to do next.”
That said, should the customer seek financial support, RBS has mitigated its risk.
“RBS has an energy efficiency fund. The problem we have is how the projects are presented to the bank, because the bank has to take both a credit risk and a technical risk. But because the RBS Mentor audit has been built with the bank over the last 12 months, and the measures are based on actual audited data, that technical risk is reduced.”
Would measures be offered on an energy performance contract (EPC) basis?
“They could be. It is specific to the customer,” said Hipperson. “Utilitywise started to see if we could deliver a one size, off-the-shelf product into the Esco but learned very quickly that the simple answer is no. There are far too many variables, too many balance sheets and too many technical and credit risks. You have to treat every project as individual.”
Bar the transport and group elements of ESOS, Hipperson said Utilitywise follows exactly the same methodology with the RBS Mentor audits as its ESOS work. But given ESOS does not usually apply to smaller SMEs, the programme presents a major opportunity to address energy efficiency in the sector.
“The SME market is drastically under-tapped,” said Hipperson. “There is an awful lot that can be achieved with SMEs and hopefully this is one way that we can start to engage with them.”
Subscribers will learn where financial institutions and energy managers see the disconnect in signing off energy efficiency projects in The Energyst’s forthcoming print issue and the standalone Financing Energy Efficiency report.