Harnessing the Power of Decarbonisation in Healthcare

The start of the energy crisis saw energy spending in NHS England increase by 21%, making up more than 7% of the total budget in 2021/22. With much of the energy used in that year secured before wholesale price rises took effect, the impact of the record-high costs might be even more significant in 2022/23. To illustrate energy usage in the healthcare sector, NHS England uses almost half a per cent of all electricity generated in GB. Furthermore, health related activities are estimated to comprise of around 5% of the UK’s carbon emissions.

The latest reporting data from NHS England shows promising trends for decarbonisation, with oil and coal usage declining, and renewably sourced energy increasing (green energy tariff electricity, renewably sourced electricity, renewable fuels). The rapid increase in renewable energy reflects the choices of individual healthcare providers as well as centralised policy decisions. Notably, the UK’s NHS became the first health system to see net zero embedded into legislation with the Health and Care Act 2022. This Act requires commissioners and providers of NHS services to address net zero emissions targets, as well as take steps to manage the impact of climate change.

Decarbonisation is a challenging but rewarding process, offering organisations a way to take control of volatile energy costs and profit from short pay-back periods and security of supply. Choosing technologies or measures to mitigate carbon emissions and volatile energy costs is one of the primary challenges faced by both public and private organisations, in their efforts to decarbonise. Energy efficiency measures are usually the first priority of organisations. Installing more efficient heat and lighting systems and investing in a Building and Energy Management System (BEMS) are some examples. They are easier to implement and require less capital investment than longer-term decarbonisation measures. For organisations that have not started to tackle their energy consumption, 25 to 30 per cent of their power consumption can be reduced by actively taking some energy efficiency measures. But energy efficiency will not be enough for healthcare organisations to meet net zero.

Beyond healthcare, more organisations are making progress against environmental and social responsibility commitments, and global corporate renewable energy initiatives such as RE100 are attracting increasing attention. Investment in renewable generation on-site or via a third party is increasingly, affected by the rising cost of capital. More organisations are looking towards measures such as Power Purchase Agreements (PPAs), which are contracts between two parties where the buyer purchases electricity from the generator. They allow buyers to exercise control over the carbon intensity and cost of energy consumption while providing a valuable market opportunity for generators. They are risk-sharing agreements, which take different forms and usually last between 5 and 20 years.

The increasing popularity of services like PPAs show that organisations are taking control of decarbonisation plans and energy spending across sectors.  During a recent forum, we polled attendees from a mix of private and public healthcare organisations on whether they thought PPAs were right for their organisation. Around 50 per cent of attendees said they thought PPAs were absolutely right for them, whilst only 8 per cent said PPAs were definitely not right for them.

Investing in long-term decarbonisation measures can be risky if it is not done with a comprehensive understanding of how energy impacts your organisation and an understanding of the different solutions your organisation can implement. Decarbonisation opportunities differ based on geographical and operational factors, as well as the decarbonisation steps that your organisation has taken to date. Our goal at Cornwall Insight is to provide organisations with the tools, insight, and bespoke support you need to take effective and financially prudent decarbonisation measures.

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