Energy Efficiency Trends 2021
Essential insight for UK business consumers and suppliers of non-domestic energy efficiency.
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About the research
The research was undertaken between April and June 2021 and completed by 69 UK-based respondents, including 33 participants from organisations consuming energy efficiency products/services and 36 participants from suppliers of energy efficiency products and services. Their responses relate to energy efficiency trends for 2020/21.
The research mapped energy efficiency and climate emergency trends among organisations operating across public, institutional, commercial and industrial sectors. 82% of consumer respondents work for large UK organisations which employ over 1,000 people.
Foreword
Welcome to the latest edition of our Energy Efficiency Trends report.
Now in its eighth year, the report provides an essential snapshot of the UK commercial energy efficiency sector. It captures the sentiment of public and private organisations consuming energy efficiency services as well as surveying the views of those across the supply chain.
Against the backdrop of the climate emergency, Brexit and the impact of COVID-19, UK public and private sector organisations are undoubtedly operating in a time of unprecedented change.
Many have swiftly adapted to meet the challenges of the pandemic and some businesses –particularly in the supply chain – are contending with the legacy of the UK leaving the EU. In parallel, many are also preparing for the transition to net zero. They are considering the changes they need to make to buildings and estates to mitigate climate change and rising energy prices.
This year, we felt it was therefore appropriate that our research assessed the triple impact of the pandemic, Brexit and the climate emergency.
We wanted to understand whether these factors have curtailed the delivery of energy efficiency schemes and investigate how organisations are responding to the opportunities and challenges of net zero.
Our aim was also to assess what energy saving technologies are at the forefront of energy management programmes, as well as drivers for change, and investigate how projects are funded. As with previous reports, we wanted to understand the industry’s sentiment towards Government energy efficiency policy.
In headline terms, it is pleasing to see that many organisations are delivering projects despite the pandemic, although suppliers’ sales have been impacted. Energy efficiency is now firmly a key part of competitiveness and productivity for many businesses, and rising energy costs and corporate climate targets are catalysts for many organisations to embark on projects. Perhaps unsurprisingly, the pandemic has also created a need for businesses to prioritise ventilation projects.
I hope you will agree that our findings provide an interesting and highly relevant snapshot of our industry. Please do get in touch if you would like to discuss the findings in more detail.
Finally, I would like to thank our report partners, Bird & Bird, the Major Energy Users Council (MEUC), the Energy Services and Technology Association (ESTA) and the Energy and Utilities Alliance (EUA) who have helped to support this vital research.
Ian Jeffries
Managing Director, EEVS
For UK buyers, the pandemic has not paused
energy efficiency investment
UK public and private sector organisations have used the pandemic to undertake energy efficiency projects across their property estates, providing a much-needed boost to the UK’s net zero ambitions.
Despite lockdowns and economic uncertainty caused by the pandemic, 88% of organisations reported that they had commissioned and delivered projects in 2020. This number was materially higher than the previous annual average of 69% reported in our previous Energy Efficiency Trends in 2018.
Interestingly, only 5% cited unoccupied offices and sites during lockdowns as a reason to embark on energy efficiency projects.
Against the backdrop of rising energy prices and the UK’s commitment to achieving net zero by 2050, these findings will be welcome
news to Government that UK public and private organisations, despite the impact of the pandemic, remain focused on elivering energy efficiency across property portfolios.
Constraints on delivery Beyond the pandemic, property and operational constraints remain reasons why some energy efficiency projects are not delivered.
Of the organisations reporting that they had delivered no energy efficiency schemes in 2020, their reasons were as follows:
- Buildings are landlord-owned (50%)
- Higher priorities elsewhere (50%)
- Lack of resource (25%)
- Uncertainty over financial benefits (25%)
A tough year for suppliers, but optimism
remains for future growth
With a score of just above zero, the Market Monitor – our barometer of overall supply chain confidence – shows a particularly downbeat set of results, bordering on outright pessimism relating to the last 12 months.
This is not a surprise given the double whammy effect of Brexit and the pandemic. Despite this
challenging period, suppliers also reported being very confident about the outlook for business growth over the next 12 months. A score of 182 out of 500 suggests strong industry-wide expectations for a significant uptick in consumer demand.
- The Market Monitor brings together responses to questions about order volumes, staffing levels, sale prices and Government action to form a composite and balanced measure of industry confidence or ‘sentiment’. A score above zero indicates positive sentiment, or confidence, within the supply side of industry. A negative score indicates a negative sentiment or apprehension within the industry (for example, if every respondent answered every question with a ‘neutral’ response the overall Market Monitor score would be zero).
To see more charts, please visit our charts library page
About the Market Monitor
The Market Monitor includes results relating to:
- Order volumes
– While projects were delivered, suppliers of energy efficiency products and services reflected on a challenging 12 months, with 53% of suppliers reporting that order volumes have declined in the last year. Looking ahead, 83% indicated that orders will increase either slightly (40%) or significantly (43%).
– 79% of consumer organisations reported that the delivery of previously commissioned energy projects had been impacted by the pandemic. However, only 14% of organisations reported that some projects were cancelled entirely, 28% had seen scope changes, and some organisations (14%) reported that schemes were fast tracked.
- Staffing levels
– Market volatility during this period has been reflected in staffing levels, with 11% of suppliers reporting a significant drop in headcount (against a rolling
average of just 1%). Conversely, 14%
of suppliers also reported significant increases in headcount (against a rolling average of 5%).
- Sale prices
– No material change to long term pricing trends.
of organisations delivered energy efficiency projects in 2020
of suppliers reported that order volumes have declined in the last year
Batteries, heat pumps and lighting
Lighting projects remain the most common energy efficiency projects with 72% of organisations upgrading their lighting in the last year.
However, 2020/21 data indicates that new technologies such as battery storage and heat pumps are seeing a rise in the proportion of organisations installing them.
A quarter of organisations reported that they undertook heat pump projects in 2020 in a trend that we see continuing, particularly as public sector organisations can continue to benefit from Government funding as part of the recently announced Phase 3 of the Public Sector Decarboniation Fund.
While 14% installed battery storage technology – and this is still a comparatively low figure – uptake is undoubtedly increasing as only 4% of organisations reported that they installed battery storage in 2017-18.
The trend in heat pumps and battery
technology would appear to represent the first start of a shift to deliver decarbonisation projects across estates.
To see more charts, please visit our charts library page
of organisations upgraded lighting
of organisations installed heat pumps
Ventilation projects are taking priority
in the age of COVID-19
The age of COVID-19 has led to a surge in ventilation projects as organisations across the public and private sectors deliver schemes to help reduce the risk of transmission.
The number of organisations commissioning ventilation, cooling and air conditioning projects during 2020/21 leapt to 48% from a rolling average of 24%.
Government recommendations made as part of the proposed Future Buildings Standard could also increase the use of ventilation and it will be interesting to see if this becomes a long-term trend.
Anecdotal EEVS evidence from corporate occupiers suggests that many offices have switched to operating fresh air ventilation (rather than air recirculation).
To see more charts, please visit our charts library page
of organisations
undertook ventilation,
cooling and air
conditioning schemes
in 2020/21
increase in proportion of respondents reporting schemes in 2020/21 versus 2012-18 average
Cost, climate and corporate targets
Against the backdrop of volatile energy prices, reducing energy costs is the most important reason for organisations to embark on energy efficiency projects with 90% of respondents citing this as the key driver.
However, nearly two thirds of organisations also stated that the climate emergency and the reputational impact of not taking climate action are catalysts for projects.
With the high number of organisations in the private and public sectors declaring targets to become carbon neutral by 2030, it is reassuring that the need to meet targets were highlighted as key for 59% of businesses.
As energy costs are projected to increase and Government considers more carbon taxation in the next decade, we would expect all three factors to remain the primary drivers for energy efficiency adoption.
The need to replace equipment which
has reached the end of its life is also a
contributory factor for 52% of organisations. It is positive that organisations install better, more efficient products rather than opting for like for like replacements.
When asked which business events are
catalysts for projects to come forward,
respondents said that site refurbishment is the main trigger (76%), followed by annual budget setting for the year ahead (55%) and the results of an energy audit (48%).
Reducing energy costs is the most important reason for 90% of organisations to deliver energy efficiency
Two thirds of organisations say climate emergency and reputational impact of not taking climate action are also drivers for projects
Energy efficiency spending is increasing, but investment remains largely self-funded
Almost half of UK organisations who responded to the survey are now spending over £1 million a year on energy-related efficiency schemes and 38% expected to be spending more in the next 12 months. Less than 28% reported an expectation for reduced spending in the next year in a boost to the supply chain.
For over 70% of organisations, these projects are funded from internal budgets with only 10% accessing Government funding.
Interestingly, in 2020 only four organisations reported that they had used external finance from a bank or third party supplier to fund energy efficiency projects. This demonstrates the ability for many organisations to make the business case and unlock investment for these types of project. It also underlines the importance of energy efficiency programmes to many organisations’ operating models.
- Almost half of consumer organisations now spending £1m+ a year on energy-related efficiency schemes
- 70% of organisations always use internal funds for projects
Consumers increasingly seek assurance over supplier saving claims
Almost 7 out of 10 organisations (66%) reported that they undertook performance measurement and verification (M&V) of supplier claims in relation to their energy efficiency investments. This compares to just 24% in 2012 when the survey began.
While only a small proportion of respondents say they did so for all of their projects, 31% said most of their schemes included M&V.
It is right that smaller schemes may not warrant additional M&V cost, but where
consumers commission larger commercial deals incorporating minimum savings commitments or performance-based guarantees, independent verification of the energy and cost savings is increasingly seen as essential for accountability and governance purposes, as well as to build trust and credibility in performance claims.
Government must help drive the energy efficiency agenda
Suppliers of energy efficiency services believe that Government should provide more support to drive uptake across the public and private sectors.
Just under 40% of businesses felt that Government policy in support of energy efficiency was either ‘very ineffective’ or ‘ineffective’.
Emerging confidence in net
zero delivery
The supply chain does, however, have a level of confidence in Government’s ability to deliver decarbonisation targets. 56% of suppliers were moderately or slightly confident in the UK target of reducing greenhouse gas emissions by 78% by 2035.
- 40% of suppliers believe Government policy on energy efficiency is ineffective
- 56% of suppliers moderately or slightly confident that the UK will achieve its target of reducing greenhouse gas emissions by 78% by 2035
