Carbon or cost reduction! A dilemma for facility energy managers

Carbon or cost reduction! A dilemma for facility energy managers

Dr Muditha Abeysekera and Alexandre Canet, School of Engineering, Cardiff University

31 March 2022

Energy bills are soaring worldwide with public, commercial, and industrial organisations facing severe financial pressures. There is an increasing need for energy efficiency and operational improvements to control costs. At the same time, many countries have made net-zero commitments that require organisations to act urgently to reduce carbon emissions. For example, the UK public sector has committed to a 75% reduction in greenhouse gas emissions (GHG) by 2037 compared to 1990 levels and net-zero by 2050.

Large organisations such as hospitals and universities often own and operate multiple energy assets. Finding the optimal combination and sizing of technologies to reduce cost and carbon emissions is complex and brings economic and technical uncertainties. The drive towards reducing carbon emissions and energy costs has led to the installation of combined heat and power (CHP) generation plant, renewable energy technologies (wind turbines and solar PV), and energy storage.  These on-site energy systems provide some level of independence from energy utilities but at the cost of increased complexity.

Gas fired - CHP (Combined heat and power) generation technology has created a dilemma for policy makers and site energy managers on its future role in reaching net-zero targets. CHP generation technology is popular among large campus sites to meet on-site electricity and heat requirements due to its substantial economic advantages. They are also able to alleviate local electricity grid constraints by providing flexibility and receive renumeration. However, its carbon saving advantage has reduced substantially over the past decade with the rapid decarbonisation of grid supplied electricity in the UK. Replacement of CHP generators by electricity-based technologies such as heat pumps has a doubling effect on site electricity imports as it removes on-site electricity generation and increases electricity consumption. Our analysis showed that peak electricity imports of a typical site can increase by over 100% if it replaces CHP generators. This will impact the local electricity grid and increase the exposure of the sites to increase in electricity prices.

It is important to keep in mind that cumulative GHG emissions is more important in mitigating climate change than reaching an annual GHG emission target (e.g. by 2050). Our analysis shows that decarbonising heat with heat pumps in the short/medium term (by 2026) and decarbonising electricity with on-site renewable power generation such as solar PV in the long-term (by 2035) will be more expensive but will emit significantly less GHG overall compared to the other way round. These dilemmas need to be urgently addressed by policy makers to help good decision making at the site level towards the overall energy system transition.

Further details of our learnings from a study of a large university campus and a hospital site in the UK are available as EnergyRev insight papers. Please visit:

- Characterising the operation and flexibility of campus energy systems

- Analysis of net-zero pathways for large campus energy systems