• Innovative carbon-saving business model could help schools reduce energy bills by over 40%.
• Proposed model manages financial risk for schools while retrofitting them with low carbon tech.
• Finance is raised through a community share offer to locals to ensure ongoing value to community.

A community energy organisation in Leicester has designed a new business model to help schools across the country save on their energy bills and eliminate their carbon emissions.

Green Fox Community Energy Co-operative worked with clean tech innovation hub Energy Systems Catapult, Attenborough Learning Trust, Loughborough University’s Centre For Renewable Energy Systems Technology, and Leicester City Council to come up with a replicable model that schools can adopt to decarbonise their energy.

Supported by the Next Generation programme and funded by Power to Change, the initiative looks to create a  community-focused Energy Services Company (ESCo) to manage the risk and complexity of raising finance and introducing carbon-saving measures.

In the proposed model, finance for capital investment in a school is raised through a public share offer to locals, ensuring energy assets are owned and held for the benefit of the community – with a return on investment and involvement in decision-making part of the offer.

The ESCo’s responsibilities also include finding the right low carbon solutions for the school, and managing bills and energy savings on its behalf. The co-operative is not-for-profit, so any additional revenue raised would be passed on through further bill savings to the school.

Designed and validated by energy innovation experts at Energy Systems Catapult and Loughborough University, the business model involves two stages – a ‘base model’ and a ‘base model plus’.

The base model uses proven low carbon technology – for example solar PV panels and efficiency measures – which reduces the overall cost of energy, and can generate income. It uses the capital generated through the share offer to start the decarbonisation process and lay a sound financial foundation for the overall business model.

The base model plus requires further capital investment, but enables full decarbonisation of the schools’ energy by installing air source heat pumps and generating extra value through emerging energy markets – including through renewable tariffs, flexibility services and exporting surplus energy back to the grid.

Green Fox and its partners teamed up with Attenborough Learning Trust, a multi-academy trust with four primary schools in the heart of Leicester, to develop both stages of the business model by harnessing real-time energy data from the schools.

Overall, it was estimated the schools would save 42% on their combined energy bill, and would reduce their emissions by a combined total of 88 tonnes CO₂ per year (see editors’ notes for further findings).

Ben Dodd, executive director of Green Fox Community Energy Co-operative, said:

“Community energy organisations are at the forefront of energy innovation as we move to a new net zero economy. We have the ability to engage with local communities so bring about practical and meaningful ways in which to tackle climate change, allowing the environmental, social and financial benefits to stay within the local economy.

“This model brings together energy efficiency, renewable energy and emerging energy markets to provide a fully costed pathway to our net zero goals. It allows schools to reduce their energy bills and put sustainability back at the core of the curriculum.”

Simon Briggs, practice manager for business model innovation at Energy Systems Catapult, said:

“As natural focal points of communities, schools have huge potential to help drive decarbonisation efforts at a local level. Many schools may not know where to start to improve their energy efficiency and become zero carbon, and that’s where this model can help. It gives schools a blueprint to work with that could reduce the financial risk and actively involve the community – not least the younger generations for whom we need to keep our planet healthy.”

Philip Leicester, researcher at Loughborough University, said:

“Detailed energy system modelling can simulate the economic and carbon impacts of energy efficiency and generation technologies over a whole year and multi-year lifecycle and can help to deliver essential due diligence for project viability before more detailed investment decisions are taken.”

Appendix

The four Attenborough Learning Trust (ALT) schools involved with the project are:

• Sparkenhoe Primary School
• Highfield Primary School
• Uplands Infant School
• Green Lane Infant School

Methodology and results

Harnessing real-time energy data from the ALT schools and using energy system models developed by Loughborough University, the project found that implementing the base model across the schools would enable:

• 42% savings on the trust’s energy bill;
• a six year payback on initial combined capital costs of £215,000;
• 21% carbon reductions by installing energy efficiency measures and solar PV;
• 16% further emissions reduction by switching to a renewable energy tariff.

Based on the estimated capital investment of £215,000 to implement the base model successfully across the ALT schools, scaling up the model to all 80 primary schools in Leicester would cost £4.3 million, and throughout England – with 16,800 primary schools – it would cost £907 million.

The base model plus would require £925,000 of initial capital, and would enable:

• 63% further emissions reduction across the schools, leading to full decarbonisation;
• a 20% increase in self-consumption of electricity by installing solar PV, which in turn helps the model’s overall finances (including reducing heat pump running costs);
• potential savings of £2,000 per year by exporting renewable electricity back to the grid.

While schools with better insulation may require less initial capital, for others the higher upfront cost of the base model plus means additional grants may be needed for it to be viable. The government’s Public Sector Decarbonisation Scheme – which offers grants to decarbonisation public estates – could meet that need.

Overall, the base model could save the four schools a combined total of 88 tonnes CO₂ per year, with total financial savings of £800,000 over 20 years. The base model plus would see a CO₂ reduction of 4,800 tonnes over 20 years.