ECO scheme – carbon reduction or wealth redistribution?

Andrew Eastwell, BSRIA CEO

Andrew Eastwell, BSRIA CEO

The issue of retail energy prices is now THE political hot potato.  The invisible green taxes attached to household energy bills have suddenly become glaringly revealed and politicians of all hues are now looking at these supplements as serious vote losers.  But are they such a bright idea anyway?

The question really is about the use of hypothecated funds harvested from energy bills and used to create a kind of wealth redistribution in favour of energy-poor households.  Under this scenario there is a transfer of wealth from richer households to improve the lot of lower earning households by improving the energy signatures of their homes. The ECO scheme is not so much a carbon reduction scheme as a wealth redistribution tool.   The scheme does however have the twin benefits of deriving a relatively secure revenue stream and, by increasing the costs to “donor” households, acts as an  additional incentive for them to be efficient with energy too.

The problem, as always, lies in the continued confusion between issues associated with energy (and cost) and the release of carbon.  If carbon is the real enemy (as I believe it is) then this scheme is at best sub-optimal.  This is because although renovation of homes will undoubtedly improve the comfort of energy-poor households there is little compelling evidence to me that the costs involved (including the not insubstantial cost of administering the schemes) provide the biggest carbon reduction bang for the buck.  This is partly because improvements in dwelling performance are likely to be taken as comfort gains rather than energy saving.

We have just seen that it has been necessary to use Chinese money and what is widely regarded as a substantial central support mechanism in the fixing of a strike price for generated new nuclear electricity in order to stimulate the building of new nuclear (non carbon generating) capacity.  It is the very high up-front costs of building these facilities that is the problem.  Would it not be better to use the ECO funds as cash support as  low carbon generation building programme – nuclear, wind, tidal or whatever gives the best CO2 return per pound?

by thinkpanama

by thinkpanama

This then begs the question as to who should fund the improvement of poor dwellings.  Actually this is not so much a carbon issue as a social equalisation programme.  In all normal circumstances this has historically been met from general taxation in the form of grants and I can see no reason why this should not be the case in the future.   Perhaps, rather than distributing a £200 annual winter fuel allowance this might better be used in improving dwelling energy (not necessarily carbon) performance.  The private market for Green Deal products simply does not seem to have become excited at adding debt to the household for what are perceived as intangible gains.  Households understand cash and a more direct approach to funding Green Deal improvements through this means or indeed other mechanisms such as stamp duty may be a more efficient means of getting to the problem homes.

In summary:  Use hypothecated funds, such as ECO for the purpose they were intended  – getting carbon out of the system.  Use the money to support the most cost efficient means of doing this irrespective of mechanism for delivering this objective.

Don’t confuse wealth re-distribution with carbon saving – it distorts process and gets caught up with political weather cocking.

If Buildings Could Talk to us…

It was really only a matter of time:

This blog was written by BSRIA's Henry Lawson

This blog was written by BSRIA’s Henry Lawson

Buildings are where we typically spend the greater part of our time, both at work, and often as not outside of it.  They already consume about 40% of the energy used in most advanced countries. They represent a huge proportion of our investment, both as individuals and as a society.  For centuries the technology of the day has been deployed to make them more efficient, comfortable and healthier for their occupants.

The surprise is surely that it has taken so long for information technology to really  move centre stage in our buildings. While smart homes remain, at least in most countries, a slightly geekish luxury item, many of us already spend our working day in environments managed by quite advanced  building automation systems, which aim to maintain a safe, secure and comfortable environment.

As building systems become more sophisticated, the more critical it becomes to be able to collect information about the state of the various components, and how they are interacting.  Accordingly, leading building automation and controls (BACS) suppliers, including Honeywell, Johnson Controls, Schneider Electric and Siemens have increasingly been making software available in order to process and make sense of this information.

In this they have been joined both by some of the big enterprise software players, but also by a host of  comparative newcomers. A key factor here is that the amount of data and the complexity involved can be quite large. It is easy to see that if you are in the position of managing a large portfolio of buildings, perhaps as a facilities management company, then if these buildings are automated then you may have to analyse a large volume of data to ensure that your estate is performing efficiently in terms of energy usage, costs, maintenance schedules, etc.

What is less obvious is that even for a comparatively modest sized building, the data can be potentially quite complex.  To get top performance from a building you need to look beyond the obvious. This means not just taking account of data from individual sensors or other information generators, but how these each  interact with one another. For example, one surprisingly common scenario is where the temperature in a given zone is fine, but only as the result of a heating system and a cooling system battling each other to standstill, wasting alarming amounts of energy – and money – in the process.

To identify these types of scenarios the system needs to be able to check very many different measurements against other ones and

The BACS Market

The BACS Market

identify relationships and correlations. And once the “normal” patterns and correlations have been identified it can then look for anomalies, which may be a warning sign that something has gone wrong, or at the very least that something abnormal has happened. Why for example, might a temperature be spiking in one part of a building at an unexpected time?

It is these kinds of challenges, as much as sheer volume that we are talking about when we refer to “big data”. Not only is this far beyond the capacity of the best human brain to process in any acceptable timeframe, it requires advanced analytical software to identify and prioritise the most important events, almost literally to “understand what your building is trying to say to you”.

A whole range of suppliers are now active in this space, and some of them at least are likely to have a huge impact on how building automation develops going forward.

Here at BSRIA, in the latest regular update to our Hot Topic study on Threats to BACS Hot Topic for October 2013,  we focus on this area, as well as taking a look at the implications of another, less fortunate, consequence of the growing importance of IT and software in the built environment: the spectre of cyber-attacks on buildings.

What happens when the lights go out?

In July we posted a blog about whether the lights will go out in the UK. This blog discussed the startling fact that the peak demand on our electricity supply network is perilously close to the supply capacity. With this comes the real risk that consumers will be exposed to outages “blackouts” and voltage dips “brownouts”. There is debate about whether this could happen, Datamonitor’s director of energy and utilities research and analysis, Neil Atkinson has commented that in practice the lights won’t go out in the UK or at least not for a long time, but that doesn’t mean we shouldn’t be worried or ignore the problem all together. He states that the Government hasn’t put sufficient contingency plans in place for the future of the UK’s supply and demand, that the Green Deal and the dwindling hopes of Nuclear power aren’t enough.

The ECA are less optimistic than Datamonitor. Bill Wright, head of energy solutions, states that the intended increasing reliance on wind power assumes that the UK as a whole will not be affected by periods of cold weather at the same time as minimum wind. This is something that has to be considered though, for if the UK were to suffer a harsh or long winter like we saw in 2012/2013 then there is a real risk that we could end up facing lights out this year or during any winter that is out of the ordinary.

Fuel poverty in England – 10 per cent, 1996 to 2011

Fuel poverty in England – 10 per cent, 1996 to 2011

There is also Ed Milliband’s pledge to freeze energy costs for customers to consider. Will this pledge speed up the process of blackouts and brownouts or it will have no impact at all? The government’s Fuel Poverty Report 2013 suggests there are already 4.8 million households in the UK that are already suffering with blackouts so Ed’s pledge won’t necessarily make any difference.

But what if it does? What will happen if the lights do go out?

BSRIA held a number of parallel workshops in June to discuss that possibility. The workshop covered the effects blackouts would have in the UK, the risks for business, the systems required, the continuity plans and what BSRIA will do. Here are some of the conclusions:

Effects of power outages

There are many potential effects that come with a long power outage. At the moment, most power outages don’t last more than an

An image of Channel 4's The Blackout

An image of Channel 4’s The Blackout

hour so there are minimal risks but the longer the outage, the more opportunity for chaos to ensue. The loss of power could lead to an increase in crime due to diminished security options e.g. alarms and security cameras leading to shops being broken into and civil disorder (a dramatization of the potential damage can be seen in Channel 4’s The Blackout). The country’s communication and transport systems would soon break down and there is a high risk to the economy due to closed businesses and lack of trade. There are few benefits to a power outage; the only redeeming effects being an increase in self-reliance and a chance for the standby power industry to shine.

Risks for business

If power outages have such an impact on society in general, then the risks to business are high as well, even more so due to the current lack of awareness in businesses. If they are unaware of the future problems, then they may well have made no contingency plan to keep their businesses running. Without a contingency plan, they face disruption to their work through either staff shortages (staff may be unable to get into work due to the breakdown of transport), or loss of process and equipment failure. If companies are dependent on computers or other technology, then they risk losing business or missing deadlines, resulting in damage to reputation and loss of profit.

Required systems and contingency plans

To help the UK prepare for the risk of future power outages, the workshop came up with some ideas for required systems and contingency plans that could help reduce the damage caused. Here are some of those. Firstly, education is key and more needs to be done to raise awareness. BSRIA is in a prime position to promote and facilitate this. Starting with the low-hanging fruit, buildings should make maximum use of natural light and ventilation to reduce base energy load. Critical areas or services need to be identified and ring-fenced to maximise the opportunity for them to run when other systems go down. There needs to be a way of controlling the amount of energy used in buildings and this is where energy services and building energy management systems could play a very important role. Incentives, such as variable tariffs from utilities, would encourage changes in consumer behaviour and more investment in smart technology. The debate over alternative fuels like shale gas needs to be had to assess its suitability and impact on the future of UK energy. Whilst standby generation may seem an easy option, and undoubtedly this will form part of the solution, it also needs to be highlighted that it cannot necessarily be relied on as a last-minute solution, for when the crunch comes, it will be in high demand and availability will plummet.

Continuity plans need to be made for a multitude of scenarios. The Government and businesses alike, need to prioritise the services

Graph taken from Bill Wright's presentation given at BSRIA Workshop

Graph taken from Bill Wright’s presentation given at BSRIA Workshop

they need most and make sure they are supported in the best possible ways. If blackouts are expected to become a regular part of our lives, then announcing them in advance will help companies to plan closures or change working hours. Companies also need to think about how their employees work; the fact is, we are highly dependent on technology like laptops and mobile phones. Without the means to recharge their batteries they quickly become redundant and we become unproductive, so companies need to think of alternative methods to keep their workforce useful – we may even have to resort to good old pen and paper!

What BSRIA could do

 From the workshops, it was suggested that BSRIA can help raise awareness and provide education on the subject. This could take a range of forms, and conferences, publications and guidance for continuity planning were just some of the activities suggested. BSRIA can also work with other organisations towards these goals to help limit the risks for everyone.

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