1) The presentation discusses strategies to improve energy efficiency and outlines key drivers, challenges, and an strategic approach. 2) Major drivers include EU and UK political targets for emissions reductions and energy efficiency, as well as rising energy costs. Challenges include the landlord-tenant divide and inadequate metering/management systems. 3) The presentation recommends developing an overarching strategic approach including setting targets, implementing an energy management system, and taking a systematic approach to identifying and implementing projects.

1. Presented by: Darren Holman, Energy Services Product & Compliance Manager
Presentation Location & Date: FM & Property Event, 19th October 2011
Strategies to Improve Energy Efficiency

2. Session Overview
Drivers of energy efficiency in the UK
Key challenges to improving energy efficiency
A strategic approach to energy efficiency
2

3. Drivers of Energy Efficiency
3

4. 4
Political Drivers of Energy Efficiency
International Level
79% of EU emissions relates to energy use1
EU targets:
 20% reduction in GHG emissions by 2020 (against a 1990 baseline)
 20% of total EU energy consumption from renewable energy by 2020
X Improve EU energy efficiency by 20% by 2020 – NOT ACHIEVING
Supply and demand-side technology and energy efficiency solutions
June 2011 - European Energy Efficiency Directive
Dec 2013 – Planned implementation by Member States
1 European Environment Agency, 2010 (based on 2008 data)
Public Sector Impact Private Sector Impact
 Annual renovation targets
 Introduction of Energy Management
Systems (EnMS)
 Procurement of energy efficient
products, services and buildings
 Systematic use of energy performance
contracting
 Mandatory audits for large companies
 Incentives to implement recommended
measures and introduce an EnMS
 CHP obligations for power and industrial
plants

5. Political Drivers of Energy Efficiency
National Level
Climate Change Act 2008 set legally binding carbon budgets and CO2 reduction targets:
 12% by 2012
? 34% by 2020 (or 266.8 million tonnes of CO2 reduction against 1990 baseline)
★ 80% by 2050
5
2008 - 21% reduction (170 Mt C02)
on 1990 levels already achieved

6. Political Drivers of Energy Efficiency
National Level
Climate Change Act 2008 set legally binding carbon budgets and CO2 reduction targets:
 12% by 2012
? 34% by 2020 (or 266.8 million tonnes of CO2 reduction against 1990 baseline)
★ 80% by 2050
6
2008 - 21% reduction (170 Mt C02)
on 1990 levels already achieved

7. 7
Energy Efficiency Policy Instruments
Economic Instruments:
 EU ETS – EU-wide cap and trade scheme for power generators and largest users
 CCAs – 80% discount on CCL for EIUs if achieving sector efficiency targets
 CCL – End-user tax on all non-domestic energy use
 CRC Energy Efficiency Scheme
o Mandatory emissions reporting for UK’s top 2,800 EIUs
o Tax on carbon emissions: £12 per tonne of CO2 from 2012
o Cost to Participants will be approx. 10% of their annual energy spend
o Autumn 2011 – First league table of relative carbon reduction performance
Energy Performance of Buildings
 All buildings when sold, built or rented now require an Energy Performance Certificate
 Larger public buildings must display a Display Energy Certificate
 Mandatory Air Conditioning Inspections
Roll-out of Smart Meters
 Roll-out of 50 million gas and electricity smart meters across GB by 2018

8. 8
Energy Bill 2010-11
The Green Deal (Autumn 2012)
 Loan for energy saving measures in domestic and non-domestic buildings
 Covers energy efficiency AND renewable generation measures
 Cost of measures should not be greater than energy saving over the loan period
 Attached to the electricity meter with energy suppliers obligated to collect repayments
 Repayment responsibility will transfer between landlords and tenants
Private Rented Sector
 From 2016 landlords will not be able to refuse reasonable requests from tenants, or
local authorities acting on behalf of tenants, to improve their property
 From April 2018 the government will make it unlawful to rent out a house or business
premise which has less than an "E" energy efficiency rating, ensuring at least 682,000
properties will have to be improved2
Summary
• Ambitious, legally binding national emissions reduction targets
• Complex range of policy measures – Combination of penalty and
incentives mechanisms with far-reaching implications
2 www.decc.gov.uk (2011)

9. 9
Organisational Drivers of Energy Efficiency
Rising cost of compliance with environmental legislation
Rising cost of energy and CO2 emissions / Focus on carbon accounting
Difficult trading conditions driving cost-cutting initiatives and eco-
efficiency
Stakeholder pressure to improve the sustainability of
operations, products, services and supply chain
Brand reputation risks and opportunities
Stakeholder risk and opportunities
Public corporate sustainability commitments and targets
“UK operations to be carbon neutral by 2012”
“Reduce energy use per ft2 by 35% by 2015”
“Reduce carbon emissions by 10% by
2015 against a 2007 baseline”
“Reduce energy consumption by 15%
by 2013 (against a 2010 baseline)”

10. Key Challenges
10 - Reference, date, place

11. 11
Materiality
 Energy costs relative to other costs (e.g. facilities, staff, supply chain) - lack of
interest and senior commitment energy saving initiatives
 Focus on compliance and risk management rather than opportunities
Landlord-tenant divide
 Benefits of investment in energy efficiency by the landlord are received by the tenant
 Complex FM provider and building manager relationships
 Sub-optimal ROI unless part of major refurbishment
Inadequate metering arrangements, management systems and ownership
 Lack of actual energy usage and time of use information - management attention
diverted away from energy-saving measures
 Lack of monitoring and targeting (M&T), energy management systems and
structures, poorly defined roles, no accountability for delivering improvements
Financial disconnect & conventional wisdom
 Energy savings achieved at facility level not recognised (or rewarded)
 Perception that energy saving measures will increase costs
 Energy projects are often technical in nature and cover unfamiliar territory
Barriers to Energy Efficiency Uptake

12. A strategic approach to
energy efficiency
12 - Reference, date, place

13. Develop and overarching approach
13
Energy Efficiency
Drivers
• Operating cost
reduction
• Stakeholder
pressure
• Brand reputation
• Stakeholder
engagement
• Competitive
advantage
Corporate Environmental Commitments
(Energy Efficiency and CO2 reduction vision & targets)
Legal requirements
(Legislation that the organisation must comply with)
Energy
efficiency
& carbon
reduction
projects
Energy Management System
“Focus on Process and Performance”
Management
structures
and
responsibility
Energy
review and
baseline
Competence,
training and
awareness
Monitoring, r
eporting, rec
ord
management
and audit
Energy and
emissions
reduction
policy
Energy
objectives, ac
tion plan, and
KPIs
Stakeholder
engagement,
communicati-
on and
feedback
Governance
structures for
projects, ope
rations &
procurement

14. Take a Systematic Approach to Projects
1. Establish a baseline
Monitor current energy usage and calculate related expenditure and emissions. Survey and
benchmark current building efficiency and energy infrastructure performance.
2. Identify high or unexpected levels of energy usage and take immediate action
Eliminate energy wastage, e.g. implement operational or behavioural changes and employ
good practice energy management techniques.
3. Appraise options / evaluate the suitability of more substantial initiatives
Develop outline business case for building fabric improvements, energy infrastructure/plant
upgrades. Consider on-site generation only after energy efficiency.
4. Select projects for full business case development / investment grade audits
5. Develop detailed business case
Undertake detailed site audits, in-depth feasibility studies and project life-cycle
costing/payback. Select projects for implementation and secure project funding.
6. Implement energy efficiency measures
Implement building improvements and new energy infrastructure.
7. Monitor & quantify energy usage and emissions reductions
Evaluate the performance of the implemented measures
8. Ensure the project benefits are communicated to key stakeholders
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15. Engage with Energy Services Partners
Total Gas & Power’s Energy Services Performance Contract (ESPC)
Installation and maintenance of energy infrastructure and building improvement
measures to deliver savings in energy expenditure and CO2 emissions at no upfront
cost to the client.
Features of the ESPC
 Guaranteed savings achieved by improving building fabric, energy infrastructure,
plant and equipment, and installing onsite generation equipment
 Access to financial appraisal services, PM consultancy and technical expertise
 Firm price for the project
 Fixed price for plant/equipment operation & maintenance for the contract term
 Guaranteed levels of energy efficiency performance for the contract term
 Access to off balance sheet funding
 Fixed rate financing for the term of the contract
 Transfer of project delivery and project performance risk
Technical Scope of the ESPC Projects (not exhaustive)
 Training and behavioural change, building fabric, BMS, HVAC, lighting
technologies, plant optimisation, voltage optimisation, water controls, heat recovery
 FiTs & RHI eligible technologies
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16. Thank you for your time.
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Darren Holman
Energy Services Product & Compliance Manager
( +44 (0)1737 275797
( +44 (0)7912 997544
* darren.holman@totalgp.com
8 www.totalgp.com