Here are some of the common questions about CHP answered by the experts, showing why Combined Heat and Power (CHP) is an attractive option for hospitality and leisure businesses.
Hotels and leisure centres have constant and high energy demands. The sector spends £1.3 billion on energy every year. There are significant opportunities to improve efficiency, according to the UN, Carbon Trust, and BHA.
Staff behaviour change is a good starting point, with switches to efficient lighting a next step. But energy prices will continue to rise, which means energy-efficient appliances will offer more attractive paybacks.
What is ESOS?
ESOS is part of the EU Energy Efficiency Directive.
ESOS applies to businesses that:
- Employ 250+ people
- Employ < 250 people but with a turnover of €50m+ and annual balance sheet of €43m+
ESOS is not a carbon tax. ESOS is a catalyst that can save you money through better energy management and implementation of energy efficient technologies. £1.6bn in savings from 2015-2030 in total.
What’s ECA and why with CHP?
Good quality CHP will qualify for Enhanced Capital Allowances. This is a major financial incentive for businesses looking to invest in significantly cutting their energy use.
In a nutshell, ECAs are a straightforward way for a business to improve cash flow through accelerated tax relief: you write off the whole cost of equipment against taxable profits in the year of purchase.
So, if you pay corporation or income tax at 20%, every £10,000 you spend on energy-saving equipment would reduce the tax bill in the year of purchase by £2,000.
Compare that to the capital allowance available for standard equipment – £360 on £10,000 – and you’re looking at a cash flow boost of £1,640 per £10,000.
How much energy will my leisure centre typically use?
Did you know that a leisure centre with a pool will typically use 1,321 kWh/m2/yr of energy and 258 kWh/m2/yr of electricity? But one with efficient energy management will use 573 kWh/m2/yr of energy and 164 kWh/m2/yr of electricity…
At current prices, that works out at about £51/m2/yr versus £27.
In other words, there’s a 47% difference in the price the best in class centre pays for its energy versus an average one.
A report last year suggested the hotel sector as a whole could save £38m per year through a variety of energy saving initiatives and investments – or £64 per room.
That’s incentive enough, but now consider this: the savings come straight off the bottom line, which takes the pressure off chasing extra sales in a highly competitive market.
In fact, the Carbon Trust estimates that saving 20% on energy represents the same bottom line benefit as a 5% uplift in sales. That 20% will likely be a lot easier to achieve than the 5%.
“Reducing energy use doesn’t always mean spending a lot. Business can cut costs through low to medium cost measures such as replacing lights or heating systems or encouraging employees to change behaviour,” says Michelle Hubert at the CBI
How about my sports centre and hotel?
In a hotel, the energy demand may be a much smaller percentage of turnover, but heating and lighting still represent significant overheads, especially if there are any catering provisions too. The potential for waste is high. Energy costs are rising too.
“With energy prices (electricity) for a medium-sized user expected to rise by almost 30% in the next five years, many businesses are looking to manage future risks by investing in energy efficiency,” says Michelle Hubert, Confederation of British Industry.
How can I build an energy plan in hospitality and leisure?
The energy use, and subsequent opportunities to improve efficiencies and save money, will differ from site-to-site, but the general idea is to:
- Conserve energy.
- Reduce energy costs.
- Reduce CO2 emissions.
- Improve the reliability of energy supply.
To achieve this, there are three broad steps to better managing the energy on your site:
- Step 1: Measure and monitor.
- Step 2: Make no or low-cost changes.
- Step 3: Invest in low-carbon, energy efficient technology to future-proof your business.
These steps should also form the basis of any new energy strategy. The order is important and you should always start with the data.
- Start with accurate measurement of your site.
- Behaviour change among staff and low-cost initiatives (for example, maintenance of equipment) can have you saving from day one.
- Mid-level investments in low-energy lighting and motion sensors can be the next step.
- The largest area for potential savings comes from the bigger investments, like Combined Heat and Power (CHP) and renewable energy.
- These must be carefully considered, but the ROI is surprisingly short – and it can also future-proof your business, enhance your reputation, and attract new business.
A Combined Heat and Power (CHP) system generates electricity and recovers the majority of the heat created in the process. Great news if you’ve got lots of water and/or rooms to heat.
For sites where there is a strong heating or cooling demand over extended periods, such as the hotel and leisure sector, CHP can provide an excellent return on the capital investment. It will also continue to provide savings for many years after the payback has been achieved.
Hotel facilities rank among the top five in terms of carbon emissions and energy consumption in building types. Saving energy is a commercial priority but it’s also a customer pull. Guests are more eco-conscious than ever; they’re now three times more likely to seek out a green hotel than they were in 2014.