When we first talk to potential clients about Demand Side Response, (DSR), we find that for most, it’s a new, unfamiliar concept that simply needs explaining – and needs explaining simply!
Usually, we open with the background of climate change, the UK’s legal commitment to Net Zero and the need to decarbonise our economy and particularly energy generation. Then we explain how organisations with large industrial facilities have been providing DSR for years and describe how OakTree Power can help organisations like theirs, who own or lease offices, campuses, depots and hotels, to also obtain similar benefits.
At this point, the mention of the word “benefits” usually prompts the question, “What’s in it for me?” And that’s when it all gets very interesting, because there are two main benefits from DSR, and opinion is frequently split between which one people find more important. That’s because DSR not only provides financial benefits to the client organisation in the form of income generation, but also sustainability benefits through direct reduction in CO2 emissions from the building.
In the current environment, it is the sustainability benefit that is not surprisingly creating a great deal of interest, as organisations wrestle with the challenge of delivering Net Zero emissions within their own operations. Sustainability Directors, CRE professionals and the FM teams find the possibility of easy CO2 savings particularly exciting. And as part of the bigger picture, it’s nice they realise that their DSR contribution is being bundled together with that of other organisations as part of a movement to deliver a national collective benefit to the UK’s decarbonisation programme. This is simply great PR.
On the other hand, many FDs, financial controllers and CRE professionals appreciate the idea of realising the income generation that’s possible from DSR. A commercial building is after all your biggest asset, so it would be great if it could be helping to pay towards itself, rather than simply sitting there being an ongoing cost.
The income stream from DSR is dictated by the size of the building and the load profile, from which our technology can drive out energy reduction, and this can often run into tens of thousands of pounds per annum. The interesting challenge is what to do with this not insubstantial sum of money, and it’s a nice problem to have!
Many organisations use the income stream as seed corn for reinvestment into other energy-saving capital projects. It’s common practice nowadays to calculate ROI on such energy reduction schemes, only for them to be rejected on budgetary grounds because of the high initial outlay and long pay-back period. But with a substantial pot of free cash to play with every year from DSR, energy managers can start to look at serious capital investment in BMS upgrades, solar panels, or plant improvements to leverage even greater CO2 and financial savings.
Other organisations have thought broader in terms of what a DSR revenue stream can do, diverting the cash into wellbeing projects that enhance the working environment for staff, or local community projects that are part of the social value commitment of the host organisation. Converting DSR to CSR has a nice ring to it!
There is a third benefit to DSR. It costs nothing for an organisation to realise these sustainability and financial benefits of DSR, because OakTree Power covers the up-front capital costs of installation at the outset. At this point, this normally elicits the response from the potential client, “It’s a ‘no-brainer’ then”. And they’re right!