Assisting Small and Medium Enterprises Become Energy Efficient
Abstract
This project, prepared for the London Borough of Brent, investigated strategies and benefits of implementing a program to help small and medium enterprises (SMEs) understand their energy use and improve efficiency. More specifically, the project assessed the benefits of helping SMEs through energy audits. Through interviews with council contacts, energy experts, and businesses across Brent, we laid out the reasons why the council should pursue a pilot program.
Executive Summary
The London Borough of Brent has set specific goals for reducing its carbon emissions in the coming years. The Brent Climate Change Strategy clearly states that the borough is aiming to cut emissions, and reports that it should target the commercial sector which is responsible for a third of the borough’s emissions. Nevertheless doing so is easier said than done. In Brent, most businesses are small or medium-sized enterprises (SMEs). Within Brent, there are over 12,000 SMEs and individually these SMEs only produce little amounts of carbon which makes it hard to achieve quick and large efficiency gains. After exploring all options available in Brent, we deduced that the council could overcome this obstacle by using energy audits as the foundation for teaching SMEs how to understand and improve energy efficiency.
Energy Auditing: Helping Businesses Overcome Barriers to Improve Energy Efficiency
There are several barriers to help SMEs reduce their energy usage. Firstly, business owners often do not understand their energy bills and the exact consumption. Energy audits deal with this barrier very effectively as they engage the business owners in the energy saving journey, teaching them how to properly monitor their energy use and getting them committed to reducing their usage. Secondly, SMEs often lack capital to invest in new technologies and building upgrades, and many do not own the building they operate in. Energy audits address these problems by offering low cost and immediate energy saving measures such as good housekeeping. These measures alone can often achieve 10% savings, and thanks to their low cost, business owners can implement them regardless of their access to capital or tenure of the premises.
The Pilot Program: Testing the Use and Structure of the Program
To deliver energy audits to the SMEs, Energy Solutions – a non-profit expert in energy efficiency – has devised a detailed plan and is proposing a pilot program to test its potential as a full-fledged program offered by the council. The pilot program extends over a period of 12 months and is composed of 4 different stages which are shown and listed below:
The program is designed to support SMEs in reducing energy consumption and helping increase business vitality, by having the business work towards further assistance. The business must first follow the initial behavioral changes presented by the audit to reduce their energy use, and if they do so, they then will qualify for further assistance. This incentive based approach should encourage the business owner to keep up their new habits and demonstrate their willingness to become energy efficient. Overall, this project will engage the business owner in the analysis and monitoring of their energy efficiency and make them more aware of their energy usage.
Why this program could work
Our findings suggested several reasons for which carrying out such a program could be successful and valuable to Brent:
- 1. SMEs present significant potential for carbon and energy savings
Our survey of SMEs across Brent revealed that their energy usage behavior was average and easily improvable at little to no cost. Improved lighting, heating, and energy monitoring could result in immediate energy savings at very little cost, and is a reason for which the SMEs show potential to achieve significant energy savings. An additional reason is that the majority of SMEs in Brent are located in inefficient buildings. These usually have very old boilers, non-insulated pipes and inefficient lighting, all of which could be improved by the proposed program.
- 2. SMEs show interest in the program
A survey of a small sample of SME owners carried out in various areas of the borough showed that several SMEs were interested in reducing their energy usage. Half of those interested had already made some kind of effort to reduce their energy bills and moreover, 55% claimed that energy bills were hindering their business. This implies that there is a clear need from these SMEs to decrease their energy bills. When told about the program and asked if they would like to participate in it, all the businesses claiming to suffer from their bills answered positively. These answers suggest that there is a significant demand for such program and it would likely be well received by the SMEs in Brent.
- 3. The Program could yield several benefits for the Borough
Apart from carbon emissions and cost savings, the program could foster good relations with the SMEs and help improve the overall building stock quality of the Borough, which could attract businesses outside Brent and keep the current businesses firmly rooted in the borough. Finally, carrying out this program would make Brent a pioneer in helping SMEs in the UK become more energy efficient and improve their business vitality.
- 4. The council has resources to expand the program in the future
Energy Solutions are leading the pilot program and are committed to working with the council should it decide to expand the program. For funding, the council could use funds designated for sustainability, such as s106 agreements (Carbon Offset Fund), by making the case for this sustainability program. Additionally, the council could also try to get European funding and other external funding. Last but not least, current initiatives to increase building efficiencies could be used alongside this program to create a unified system within the borough.
Recommendations
From our findings, we recommend the council to run the pilot program to gather more solid evidence on the outcomes and make a decision on whether to expand it or not. Should the council decide to expand the program, we recommend:
- Carefully evaluate the pilot to identify its strengths and weaknesses and areas that could be improved.
- Look into targeting small industrial businesses, while also attempting to help the smaller town center businesses.
- Incorporate other retrofitting initiatives to create a unified system aimed at reducing the borough’s carbon emissions.
- Publicize the program through medias and the proposed ‘One-Stop-Shop’ website for business owners.
- Designate a single point of contact for SMEs to refer to and have contact with.
- Seek external match funding with which to sustain the program.
Find our final report here.
The Team:
Andrew Haveles, Mechanical Engineering’15
Iveri Prangishvili, Computer Science’15
Juan Ordonez, Mechanical Engineering’15
Advisors:
Professor Laureen Elgert
Professor Scott Jiusto
Sponsor:
Joyce Ip, Planning and Regeneration Officer
London Borough of Brent
