Support systems

3rd July 2014


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  • Management/saving

Author

Thomas Murtagh

Simon Best reports on a project to improve resource efficiency among small firms in Norfolk.

There is a significant body of evidence that small and medium-size enterprises (SMEs) continue to exhibit low levels of awareness about the value of clean technology and green business strategies. The challenge for those working with smaller businesses is to change this perception and help them realise the benefits from reduced energy consumption, waste minimisation and water conservation in terms of lower costs, improved competitiveness and business growth.

In response to the general failure by local SMEs to access “off-the-shelf” solutions to improve resource efficiency when the economic downturn was causing the scaling back or consolidation of important sources of support, including national programmes, in 2010 Breckland council rolled out REV ACTIVE – the Rural Enterprise Valley Active initiative. The three-year package of free, confidential, impartial support focused on helping smaller businesses to become more efficient and drive economic regeneration. Most of these SMEs were sited along the A11 corridor in Norfolk between Thetford and Norwich.

Targeting effort and resources

The REV ACTIVE financial model required businesses to commit to invest in efficiency measures to become eligible for public funding – £440,000 was made available by local authorities and £1.23 million by the EU regional development fund (ERDF). So, recommendations made to SMEs after business reviews had to be robust, practicable and cost-effective, with clear timescales for payback.

Overall, 429 SMEs received an onsite review and £2.5 million – considerably more than the target of £1.49 million – was invested by companies in 326 environmental initiatives. These projects ranged from reducing water and energy use to programmes involving transport and waste management. They secured cost savings of nearly £10 million for participants and reduced carbon (equivalent) emissions by 75,675 tonnes. Also, a predicted 230 jobs have been safeguarded against a target of 50, while a further 137 are estimated to have been created against a target of 26.

REV ACTIVE was predicated on established latent demand, but was not demand-led. Instead, the team actively identified, screened and prioritised SMEs with the potential, means and appetite to progress efficiency initiatives.

Initially, it was intended to use aerial thermal imaging data to identify SMEs best placed to benefit from intervention. In broad terms, the magnitude and distribution of heat radiation from business premises is indicative of inefficiency, and a range of technologies – from insulation to heat capture – is available to address this.

However, delays of more than a year in acquiring and processing data meant the technique was not reliable enough to be the primary targeting tool for such a fixed-duration project.


East Bilney Coachworks

East Bilney Coachworks is a family-run company specialising in the repair and painting of vehicles. The largest cost to the company, both financial and in carbon emissions, was the paint-curing ovens powered by liquefied petroleum gas (LPG). The REV ACTIVE team evaluated cost savings associated with the paint-curing process, and identified and examined alternative technologies. The company installed a bespoke mobile spray oven, replacing LPG with infrared and UV paint-curing technologies, which has significantly reduced operating costs and curing times.

The cost of installing the new oven was £10,000, but the company has achieved annual cost savings totalling £66,400 – £44,000 in fuel costs and £16,400 from reduced staff time – and a payback period of just two months. Carbon savings total 35 tonnes a year.

Foulger Transport

Snetterton-based Foulger Transport operates a lorry fleet and owns several sites with offices, workshops and large warehouses. An environmental review by the REV ACTIVE resource efficiency facilitators, focusing on fuel consumption, driver awareness and electricity consumption at Foulger’s distribution centre, identified potential savings of £280,000 and 790 tonnes of carbon. Opportunities included fuel-efficient driving courses, upgrading to motion-sensitive warehouse lighting and installing a rainwater harvesting system for the vehicle wash.

As a result, the logistics and warehouse business has saved £250,000. Carbon savings amount to 694 tonnes. Measures introduced include installing voltage optimisation controls on lighting circuits. This cost £2,500, saved £4,250 a year and reduced annual emissions by 18 tonnes. The upgrade to energy-efficient lighting, meanwhile, has saved £14,010 a year, so the £30,660 investment will be repaid in three years. It also saves 61 tonnes of carbon a year.


Instead, suitability criteria were applied on top of ERDF eligibility criteria, making use of new and existing business data, such as weighted sector, location and turnover information. This enabled the REV ACTIVE team to focus resources on SMEs that were most likely to assist in the achievement of targeted outputs.

These targets included saving participating companies a cumulative £1.49 million and cutting carbon emissions by 150 tonnes.

Selected companies were offered an intensive one-to-one intervention managed by dedicated resource efficiency facilitators. These provided systematic reviews of a firm’s operations as well as “hands-on” assistance, and fully costed business cases for change. These characterised, quantified and prioritised the various opportunities and their paybacks.

The focus of the recommendations tended to be on quick wins, low-cost or no-cost opportunities, bottom-line benefits and short payback periods. An examination of how businesses light and heat their workspace was common to almost all reports. Such onsite reviews are not new – the now defunct small business advisory body Envirowise offered a similar service, for example.

A key differentiator between REV ACTIVE and other programmes, however, was its delegated discretionary grant scheme, which encouraged SMEs to invest to save. The grant acted as a catalyst for investment in efficiency and growth, rather than offsetting existing or planned expenditure. The financial viability of the whole project hinged on the capture of companies’ own co-investment in initiatives – typically upwards of 70% – and matching this to ERDF and local authority funding. It was therefore critical that the resource efficiency facilitators could communicate opportunities to SMEs and express them in terms of costs, carbon savings and other less tangible benefits.

A framework

Accessing ERDF money is not for the faint-hearted and the granting of it confers several highly prescriptive duties. ERDF was neatly summarised during one of the innumerable audits as “helpful but ultimately unforgiving”. Funding applications were repeatedly checked and reviewed for eligibility, “cross-contamination” with other public sector funding and finance, contribution to project targets, equality, additionality, value for money and practicability. Due diligence also included scrutiny of applicants’ accounts.

Overall, 37% of the 400-plus onsite review recipients applied for grants to progress one or more initiatives. Two-thirds of these applicants were successful, sharing nearly £600,000 of grant aid. Coupled with follow-on support, this eliminated many of the traditional barriers to change, including SME access to finance.

A project management framework known as PRINCE2 was used by REV ACTIVE and its principles were embedded from the outset, ensuring a phased approach that broke down the initiative into well-defined and manageable items with delivery profiles and clear demarcation of responsibilities. This approach was key to effective project monitoring by the REV ACTIVE management team and stakeholders, particularly when combined with tools, such as near real-time monitoring and workflow bulletins generated for members of the operational team from across two local authorities – Breckland council and Norfolk county council.

Specialist consultancy support was procured to develop robust, secure methodologies for impact assessment to ensure that benefits were fully captured, evidenced and reported. Baselines were identified for each SME at the outset of intervention, and the opportunities presented to the companies were essentially a comparison of the performance of a pre-existing system to a range of alternative options – for example, the transition from T12 workspace lighting to LED lighting.

The same process was applied during verification. Evidence was gathered on initiatives that had been fully or partly implemented by beneficiaries – with or without grant assistance.

The savings during the whole useful economic life of an asset or initiative were then calculated, ensuring the consistency and provenance of reported impacts from initial onsite review data, through to implementation and follow-up, and finally verification.


REV ACTIVE in action

Ripblast

Metals finishing company Ripblast, which specialises in shotblasting and painting steel structures, had plenty of scope to reduce energy consumption in its use of compressed air and space heating. The REV ACTIVE team identified opportunities in lighting, fuel-efficient driving and more energy-efficient plant amounting to savings of more than £60,000 a year and 90 tonnes of carbon. The company’s £1,600 investment in replacing its lighting systems is producing annual financial savings of £2,070 (10-month payback) and has reduced carbon emissions by 6.5 tonnes a year. Sending staff on a fuel-efficient driver-training course has resulted in annual savings of £4,200 (six-week payback) and saved 11 tonnes of carbon a year.

Warren Services

Warren Services in Thetford is a precision engineering company employing 50 people. REV ACTIVE identified several possible ways to save around £20,000 a year. These included: a Carbon Trust interest-free loan to install an energy-efficient heating system and low-energy lighting with passive infrared sensors to automatically turn off lights when areas are not used; IT to support a paperless office system; fitting all radiators with thermostatic valves; replacing paper towels for hand-drying with electric air blade units. The latter costs £3,118, saving £1,953 a year, with payback just 1.6 years. It also saves 756kg of carbon a year. Retrofitting the lighting system (T5) cost Warren Services £5,315, but will save the firm £2,685 a year in energy costs and cut its annual carbon footprint by 15.2 tonnes.

Barkers Print and Design

The lithographic and digital printing company occupies 30m2 across three units dating from the mid-1970s on a long-term lease in Attleborough. There were no windows or rooflights on the shopfloor and the lighting system comprised 1.8m T8 fluorescent strip lights. The REV ACTIVE review in 2011 presented Barkers with six options. Of these, a lighting upgrade seemed best, offering an annual saving of almost £2,000 and a reduction in carbon emissions of around 10 tonnes. Using a REV ACTIVE grant, Barkers installed low-energy lighting throughout its premises, which has resulted in a brighter workplace and a reduction in power consumption. The company has also reviewed its electricity supply contract to make further substantial savings.


Learning points

REV ACTIVE explicitly linked business efficiency and cost-saving to reduced energy consumption, waste minimisation and water conservation. Its advice and grants delivered economic benefits and, in some cases, truly transformative changes (see examples in panels, left and right).

REV ACTIVE also demonstrated the principle and underlying methodology for calculating cost and carbon savings over the whole lifetime of specific initiatives. This has clear implications for future projects in terms of how they communicate the benefits to businesses and report the impact to stakeholders.

The principle of using businesses’ own investments in initiatives as a match for EU structural funding and assistance from local authorities is also highly significant. In the absence of other significant sources of public sector match funding, this model could be appropriated by other capacity-building initiatives.

From an ERDF perspective, the model, while innovative and uncommon, was low risk. New EU funding programmes represent a huge opportunity for local authorities to further drive economic growth and efficiency. Two other messages emerged: there is a clear, if latent, demand for business resource efficiency support; and SMEs will respond to robust and practical opportunities for cost savings and environmental improvements derived from close partnership working.

Simon Best was REV ACTIVE project manager and is now low-carbon business growth programme manager at Breckland council. The REV ACTIVE initiative has now been replaced by the Grants4Growth scheme.


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