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The Government has set a number of ambitious targets for substantial reductions in carbon emissions as it seeks to achieve ‘net zero’ by 2050.
As part of this, large public and private sector organisations will need to capture existing and future energy usage data through Streamlined Energy and Carbon Reporting (SECR).
Trusts will need to include an SECR as part of their annual account returns if they:
The SECR will use the Trust’s current emissions as a baseline, and they will be expected to show progress made on reducing their carbon emissions in future returns.
Approximately 600 Academy Trusts and 6,000 Academy schools will be impacted by the reporting requirements. However, all schools are advised to develop an energy management strategy that will deliver both cost and carbon savings across their school buildings.
The Department for Business, Energy and Industrial Strategy (BEIS) estimates that schools use around 13 terawatts of electricity and generate nearly 5 million tonnes of carbon per year.
An average secondary school produces between 200 and 300 tonnes of carbon per year and a primary school between 20 and 50 tonnes.
However, fitting renewable energy installations in schools may not always be easy. The most recent (2017) National Audit Office Report, ‘Capital funding for Schools’ estimated that bringing the UK’s 22,000 school buildings up to ‘satisfactory’ condition would cost £6.7 billion.
The age of buildings will also pose significant challenges to retro-fitting some renewable, energy-saving installations and these will need targeted funded incentives.
While there is a legal requirement and an ethical responsibility to reduce carbon emissions, there are also opportunities to achieve immediate cost savings.
There are three main areas where organisations can make changes to have a positive effect on both carbon emissions and finances:
On average, utility costs equate to 10% of a school’s non-staff budget.
With energy prices projected to rise annually by an average of 5% over the next 25 years, there is an opportunity and an obligation to implement cost-saving strategies and reduce exposure to the future energy market.
The first step in reviewing a Trust’s energy procurement strategy is to analyse existing contracts. The aim is to find out whether the Trust is on the most appropriate contract, and that it meets their current and short-term needs.
It’s all too common for schools to not know whether their gas and electricity contract is fixed or flexible, what their half-hourly rates are and to have no access to the contract itself to understand their itemised charges.
The biggest threat to the savings that could be made through installing renewable energy measures are ‘volume tolerance’ clauses. These require organisations to use a percentage of their calculated energy consumption or pay a penalty.
Renegotiating energy contracts can save considerable costs relatively easily. This can help empower future energy strategies that would not otherwise be achievable.
Too many schools don’t have visibility over where and when they are using energy and as a result, are wasting money and increasing carbon emissions.
The SECR will provide a baseline for usage and advise schools on options for future reduction and renewable energy installations.
One way to help with energy reduction is through smart metering. It’s widely believed that over 50% of a school’s energy is used on lighting and IT when the building itself is unoccupied. Installing smart meters and loggers provides data on how and when a school is using energy, so usage can be adjusted according to need.
BEIS have set academies the target of using data from smart metering to help reduce their energy consumption by 15% and emissions by 40% by 2030.
By aligning usage with present and future need, it can be quantified and planned for accordingly.
Once a school is confident that its energy contract is the most appropriate for its needs and has identified and eliminated wasted energy, options appraisals can identify which renewable energy installations are suitable and what funding is available.
Renewable technologies, such as Solar PV and LED lighting, are easily installed across all school buildings. However, other technologies might not be so easy to install. This is because the age and construction type of buildings, as well as site restrictions, will pose cost and logistical challenges. Some are only financially viable for new-build projects.
An average-sized school could save up to £4,000-£6,000 a year just by switching to LED lights.
A typical secondary school with an average Solar PV 200kWp array will save around £30,000 in year one. It will also see a return on investment over the life of an installation of between 300-400%.
PV panels can provide even greater savings, with a typical primary school saving £125,000 over the life of the system and a secondary school saving around £400,000 over the same period.
Central government funding schemes provide incentives for all sectors to better understand their current energy usage and to move away from non-sustainable fossil fuels towards renewable technologies.
Some of these are now mass produced, affordable and can be widely used, such as Solar PV, LED lighting and wind turbines.
Other technologies, such as ground and air source heat pump systems, are less common and present a greater challenge for retro-fit projects. As such, they require greater levels of grant subsidies. These appear to be very much the focus of the Public Sector Decarbonisation Scheme (PSDS).
Since 2019, BEIS, DfE, and the Education Skills Funding Agency, have promoted and supported central government funding streams, such as the Salix Energy Efficiency Fund (SEEF) and PSDS. Both of these are open to schools, which can bid for energy installations that will reduce their carbon emissions and save energy costs.
Each scheme has qualifying criteria and seeks to achieve specific outcomes for particular renewable installations across chosen sectors.
The 2021-22 first round of PSDS was very oversubscribed; 90% of the total £1billion fund was allocated to Local Authorities and the NHS.
Approximately, £30 million was allocated to the schools/academies sector. Many schools were unsuccessful in their bids and are now considering alternative financial options from the private market, which also offers opportunities for schools to fund renewable installations.
There is likely to be another round of PSDS or a similar scheme in the near future, from which the education sector may receive a greater number of awards than the previous round.
Operating leases and Power Purchase Agreements (PPA) offer schools zero CAPEX/OPEX funding for energy-saving projects and are becoming ever-more widespread in their application. These must meet the school’s internal auditors’ and Academies Financial Handbook definitions of not amounting to a finance lease.
The direction of travel is clear and the road to net zero will require a great deal of funding, whether from the public purse or from private finance. Carbon reduction measures offer opportunities to make substantial cost savings from reduced energy use and replacing fossil fuels with renewable technologies.
This will also produce a cleaner and more sustainable future for energy provision across all sectors – and in terms of influencing this future, where better to start than with schoolchildren, who will benefit from a greener future the most?
Warneford Consulting are delighted to be working alongside Lloyds Bank’s Education team. The collaboration seeks to support the education sector play its part in achieving the government’s target of Net Zero by 2050. Bringing together industry experience and knowhow and acting as a signpost towards a sustainable education estate by reducing energy waste and increasing renewable energy installations and exploring funding options from both public and private sources.