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Moving From A Cost To Efficiency Model

The energy market is going through a period of dramatic transition. As we wrote in a blog last year, future energy markets will look markedly different. The electrification of heating and of transport will allow for far greater flexibility and control for end users when it comes to their supply and tariff.

It’s our view that this flexibility and control will lead to businesses taking a more active approach when it comes to the efficiency of the heating system in their building.

The chaos of this year’s utility market only serves to show that taking more ownership of the efficiency of your building is more important than ever. It’s the best way to prepare your business for the future as the focus on carbon emissions increases.

When making decisions about your future energy supply it’s going to be vital to pay much more attention to the total cost of ownership of the system, not just the upfront cost. Making decisions based purely on cost of delivery is understandable, but it’s a short-termist approach that you’ll come to regret in as little as 2 years.

At Clade we are seeing this first hand – more and more, we’re finding our customers are taking a long term view when it comes to their heating and cooling technology and that means thinking through total cost of ownership, system efficiency, support and maintenance and the longevity of the technology. They are looking for systems that they know will be able to survive and prosper in an electrified, low carbon heating market and will not need replacing within the next decade or two. They’re looking for systems that can be ‘smart’ and learn the patterns of their heating use, and buy electricity on their behalf at times when tariffs are low..

However, this isn’t always the case. In our industry there are still many decision makers who, like much of the traditional construction supply chain, have been conditioned to buy on cost of delivery and not spend too much time considering operational costs. We fear that businesses who make heating and cooling purchasing decisions based on this thinking will find themselves regretting it in the medium to long term.

In our view a business should, ideally, spend more time working with suppliers on system design and evaluation of technical aspects, as well as investing in proper full commissioning of the systems. Poorly incentivised procurement processes tend towards the cheapest solutions which have not had time allowed for proper design or commissioning, and this leads to inefficient or unreliable systems. These systems will cost more in the long run, fail more often, and not save enough carbon to be worth it.

The key is asking the right questions. For example:

“How much will it cost to run, and what can be done to improve this? E.g. could the heating system be improved with a little more investment.
What’s the cost of service and refrigerant replacement?” HFO and HFC refrigerants are getting more expensive, whereas CO2 is far lower and has a smaller GWP.

“What support and maintenance plans do you offer?” How long does it take to get help if we need it?
“What smart capabilities does the system have so the heat pump can be connected to the smart grid?”
“How do I maximise the efficiency of this system over the long run by optimising the operating strategy?”

By asking those questions you’re far likely to end up with a system that suits you, and will last.