Is it time to review your care home procurement costs?

Reducing elderly care home operating costs is especially appealing right now with staffing and property costs on the rise. Here, Advantage Utilities Founder & CEO, Andrew Grover, explains how undertaking an energy audit for your business can generate tactics to reduce your future spending and improve energy efficiency long-term.

According to the 2020 KnightFrank Care Homes trading performance review, property costs increased by 3.7% across the UK in 2019/20, reaching on average £2,399 per registered bed per annum.  With a potential rise in costs such as energy, indemnity insurance, and food on the horizon, now could be time to review and streamline your overheads.

After staffing costs, property costs, which include utilities such as electric and gas, are the next highest outlay.

Naturally, care homes are high-energy users with heating and hot water required 24 hours a day, 365 days a year. Is energy an overhead you can reduce without compromising the quality of care for your residents whilst ensuring continuity of supply?

Auditing your business’ energy spend might not be a top priority right now, but, if you’re a care home operator, especially one with multiple sites, there are measures that may bring you some valuable savings opportunities for your bottom line.

Checking your energy contracts are right for your business and aligned, as well as ensuring you’re being charged correctly is just the starting point. Maybe your residential home is entitled to a reduced VAT rate on electricity consumption, which could deliver savings or rebates for care home business owners.

Tactics to reduce utilities spend and how an energy consultant can help

Someone in-house could take on the management of your energy procurement. Alternatively, you can look to engage an independent advisor to assist or do the work for you.

Energy audit: Establish your energy baseline and create your energy consumption profile

An energy audit will help to assess your energy bills and usage. If you have multiple locations, creating an energy consumption profile takes into account the space or sites you have available, your location, total energy consumption, and current costs.

You can then start to use the data you gather to develop your energy procurement and efficiency strategy.

Analyse your energy consumption and distribution

Once you know how much energy is being used in total and what the business is spending on energy, next you can analyse by energy type and source, for example, is it a fossil fuel or renewable energy source and who is the supplier.

This can then lead to a review of where and how the energy is being used, even down to when it is being consumed. You can start to see how much energy is used to heat space and hot water, how much is used for laundry, catering, lighting, and at what times of the day.

This builds up a picture of the energy usage and distribution in your care home setting.

Put metrics in place for monitoring and reviewing going forward

Monitoring how much is being used, when, and how much it’s costing means you can establish where staff or even residents are wasting energy, helping to identify energy reduction targets.

Selecting the right metrics will help you benchmark and compare dependent on your energy objectives. For example reducing energy cost, energy efficiency improvements per m2 or per occupant. Carbon reduction is another one to consider going forward.

Timescale metrics are also important – does the data need to be recorded half-hourly, hourly, daily, monthly, or annually? The more data the better.

Getting down to granular detail helps too by looking at energy end usage. Seeing what energy is used for space heating, hot water, cooling, and lighting, catering can be monitored using cloud-based data collection and aggregation tools. These visualise ultra-accurate, undisrupted data, which is automatically collected from your utility meters, in an easy-to-use dashboard format.

As well as electricity, gas, and water, some tools can also collect data on steam, compressed air, photovoltaic power, or other utilities your care home setting uses.

This allows you to translate complex information into actionable insights, such as changing your capacity limit (kVA), setting usage alarms, and shifting your usage to when purchasing the utility is cheapest.

For multi-site operators, you will be able to compare bigger and smaller sites ‘like for like’ and benchmark them against each other.

Review what energy you buy and where you buy it

Once you have completed your energy audit you can then look to ensure the best energy contracts are in place. This is potentially where an external energy consultant can offer support.

With experience, purchasing power, and expert analysts they can advise on the market; when best to buy, and the most suitable contract type for your business - fixed, flexible, pass through, and blended purchasing.

Consider energy-efficiency opportunities

There are also steps you can take to optimise energy efficiency within your care home setting. Someone in your organisation may be able to implement these or you can seek advice on measures you can take to reduce energy consumption, costs, and how to achieve a greener and cleaner approach.

Check your care home’s building structure – keep the cold out and heat in

It may seem obvious but at regular intervals, for example, monthly, check the building is airtight inside and out. Any potential building repairs can then be scheduled straightaway, nipping any costly maintenance expense in the bud.

Make sure the heating system is energy-efficient

Getting the heating and hot water system right is crucial in an elderly care setting. It may be worth replacing old inefficient boilers with more energy-efficient options such as a condensing boiler or exploring renewable energy solutions.

Ensuring the heating is set to a comfortable temperature and installing wall-mounted thermostats in each room so each setting can be adjusted, will also keep costs down.

Smart meters and energy management systems

Tracking the energy your care home uses in real-time provides accurate readings and payments to your provider.

This can be achieved by having a smart meter fitted if you don’t have one already. Alternatively, a Building Energy Management System (BEMS) might be appropriate. These are designed to optimise energy consumption within a building and reduce carbon emissions.

Introduce LED to replace old lighting in line with new legislation

Recently, the UK government has confirmed that halogen light bulbs will be banned from September 2021, with fluorescent light bulbs to follow. Here are a few pointers to think about.

Considering higher energy-efficient products means that life cycle costs are reduced, improving cash flow in the longer term.

Opting for more efficient options like Light Emitting Diodes (LEDs) need not be expensive or disruptive. Upgrading from conventional lighting to LED technology can deliver significant cost savings of up to 80% for a business.

Other measures include ensuring you allow as much natural light into the building as possible and keeping windows and skylights clean.

Also consider the installation of light sensors in staff areas such as offices, kitchens, and laundry areas for added efficiency.

Encourage small energy-saving wins

Staff and residents may use multiple small appliances including office equipment, televisions, mobile devices, kettles, toasters – the list goes on.

Introduce a policy that ensures new appliances should be the most energy-efficient and encourage people to switch off rather than leave them in standby mode.

Would an energy audit bring your business savings?

Undertaking an energy audit as well as consideration of technology and procurement options to cut costs and manage usage is most definitely a worthwhile process.

Alongside this, think about exploring self-generation opportunities. Funding may be available for renewable energy solutions at your site, such as solar power, Combined Heat, and Power (CHP), battery storage, and LED lighting, as mentioned previously.

Apart from reducing costs and improving energy efficiency, these measures will allow your business to reduce your carbon footprint and meet net-zero goals – that’s a topic for another day!

To speak to one of our consultants to discuss procurement and energy audits please contact us.