Refurbish, renew and revitalise
Published:  18 December, 2005
Dalkia

With the need for refurbishment comes the opportunity to improve energy efficiency.

IAN ADAMS explains how the problems of financing such projects can be overcome.

he refurbishment market is larger than new build across almost every sector — from the electrical energy demands of retail and commercial, to high-end use of gas in the industrial, education and healthcare sectors.

With this trend in mind, there comes a time for every organisation to renew and make good, ultimately in accordance with new amendments to Building Regulations. While this throws open the window of opportunity to improve, it also establishes an obligation of compliance. Part L of the Building Regulations is a case in point, where significant refurbishments must demonstrate modern levels of energy efficiency.

Significant issue

The option to upgrade is a significant issue for the facilities or estates manager. In the light of new Building Regulations the need to replace energy systems such as lighting, heating and air conditioning with improved versions must be undertaken in a financially efficient way — ultimately benefiting, and not detracting from, the bottom line.

Reducing energy consumption to mitigate the impact of higher energy costs is just one part of an effective facilities-management strategy that involves the outsourcing of non-core services to support the core functions of the business.

Finance plan

An outsourced building-services partner can create a finance plan for a refurbishment project with an eye to the energy demands and budgetary restraints of an organisation — not only carefully negotiating the minefield of regulations driving improvements and ensuring the vital compliance with relevant regulations, but also adding value during the project to benefit the bottom line.

There is a common misconception that finance schemes can only be used in relation to an entire building or plant operation. Drawing on the strategic thinking of an outsourced building-services company can open up a whole range of different finance models for the customer. With a little lateral thought and strategic planning, the refurbishment of one part of a building or energy centre can be financed, without incurring capital costs for the project — the installation of a new building-management system would be a case in point.

The careful planning of a finance arrangement for any level of refurbishment can be a beneficial asset to an organisation seeking to update and improve its systems. Financing such a large undertaking is not as straightforward as making a significant capital outlay in one go, where cost is a major prohibiting factor for most customers.

Responsibility

An outsourced supplier can take on the responsibility of the capital expenditure on behalf of its customer. A company such as Dalkia can tailor a refurbishment contract in accordance with the customer’s budgetary requirements. Institutions such as schools have to deliver high educational standards whilst allocating sufficient budget to maintain the building infrastructure. An outsourced supplier can recognise the conflicting financial demands and can cost effectively deliver a wide-ranging technical service to alleviate the pressures. For example, by financing refurbishment projects and delivering individual services such as plant maintenance or lighting improvements, or a bundled services solution that complements a broader estates strategy.

A commercial organisation needs to take into account not only its productivity and energy efficiency, but also the image it portrays to customers. One such example is a major high-street retailer, where lighting and electrical specialist Parkersell has played a key role in managing the aspect of cost control across the portfolio whilst also contributing to store image.

Examples

Moving from a ‘one-size-fits-all’ solution, to an intelligent service programme, Parkersell demonstrated a 20 to 30% energy reduction on a lamp-for-lamp basis. The in-depth servicing of energy-efficient lighting solutions across all stores is linked to a comprehensive maintenance service plan that is outsourced under carefully structured service level agreements, designed to provide best value to the company.

Financing on the larger scale with a high energy demand, typically found in larger buildings hospital schemes and other public sector organisations, is a necessity to cover the huge cost and risk implications involved. In such cases, an outsourced supplier can search for the correct route to funding a refurbishment scheme. An example is The Prince Charles Hospital in Wales, where Dalkia has enabled the customer to make significant energy-efficiency improvements and cost savings.

A PFI investment for the 434-bed hospital has meant that the lighting, plant room and heating controls have been updated by Dalkia. Previously the entire facility had inadequate monitoring and control, resulting in hot and cold spots within the hospital and less control over the amount of heat generated for one part of the building over another. With the introduction of 17 new monitoring points — all metered through a modern control system — the supply of heat to different areas of the hospital can be varied, according to their individual requirements, reducing energy consumption by 10 to 15%. Feeding this, the plant room, with a combined heat and power plant and high efficiency boilers, provides all the heating, hot water and electricity. Using a CHP scheme that meets the Government efficiency criteria means the trust also benefits from exemption from the Climate Change Levy.

Meanwhile, Parkersell has replaced the 25-year-old fluorescent tube lighting system with modern fittings that require 50% less energy while producing double the light levels previously achieved. Added to this, new controls to manage the burning times in each area of the hospital culminate in an annual saving of £10 000 on lighting alone.

Negotiating finance

A crucial aspect of the operation and maintenance agreement is the structuring of key performance indicators to determine the success of the scheme, both in terms of deliverable assets such as the reliable supply of heat, sufficient hot water and stable electricity, as well as energy cost savings as a direct result of the new CHP scheme, including reduced carbon-dioxide emissions equating to a saving of 3865 t per year — rendering the customer exempt from the CCL charge and energy savings on lighting of £10 000 per year.

For public-sector schemes, a PFI is one route to financing a refurbishment project, which is subject to a minefield of credit approvals. Overall, there are many questions a customer needs to ascertain before undertaking a refurbishment (not least how to fund the project) that will ultimately make the company more efficient in its use of energy, therefore cutting costs on utilities and on the levies applied to the use of energy. An experienced outsourced supplier can provide specialist experience and expertise to present finance combined with a package of services reflecting value for money against the customer’s existing service delivery arrangements that will enhance the benefits of such an undertaking.

Ian Adams is marketing communications manager with Dalkia, The Connect Centre, Kingston Crescent, Portsmouth, Hants PO2 8AD.




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