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How to procure resource efficient equipment

Rising energy, water and raw material costs, and increasing customer pressure on businesses to be ‘green’ continue to challenge the way that businesses across Scotland manage their resource use and environmental performance.

How to Buy Resource Efficiency Equipment

Rising energy, water and raw material costs, and increasing customer pressure on businesses to be ‘green’ continue to challenge the way that businesses across Scotland manage their resource use and environmental performance.

The good news is, there are lots of low- and no-cost actions that can be taken to improve your performance, reduce resource use and save money. For example, getting your staff to switch off lights and other energy-using equipment when it’s not needed, recycling better, reporting leaks and working with suppliers. And there are good savings for your business to enjoy by doing this.

But, inevitably, many of the projects that can deliver the biggest savings in the long term are likely to involve purchasing new equipment or investing in building upgrades – from simple heating and lighting controls to the complete upgrade of heating and lighting systems or investment in renewable energy technologies. Types of products that can be purchased to help you become more resource efficient – cutting your bills and environmental impact – are listed in Table 1.

Free support from our advisers has helped Scottish businesses identify over £140 million worth of savings opportunities to date, with a massive 24% average energy saving per business.

Table1. Types of products to help your business become more resource efficient

Heating, ventilation and air conditioning products

  • Warm air units.
  • Radiant heating units.
  • Combined heat and power (CHP).
  • Underfloor heating.
  • Air curtains.
  • Cooling system replacement/upgrade.
  • Heating and cooling controls.
  • Building management systems.
  • Heat recovery units.
  • Commercial hot water systems.
  • Electric storage heaters.

Renewable energy technologies

  • Solar photovoltaic (PV).
  • Wind turbine.
  • Micro-hydroelectric system.
  • Solar thermal.
  • Biomass boiler.
  • Biomass room heaters (with radiators).
  • Heat pumps – air source, water source and ground source.
  • CHP with biomass.
  • Anaerobic digestion plant.
  • Wood burning stoves

Building fabric products

  • Insulation and draught-proofing.
  • Double/triple glazing.
  • Secondary glazing.

Waste and water efficiency products and systems

  • Water efficient taps, showers and toilets.
  • Rainwater harvesting.
  • Grey-water systems.
  • Water-recycling systems.
  • Cleaning-in-place systems.
  • Computer numerically controlled (CNC) equipment.
  • Composting systems.

Other products to reduce energy and water use, and prevent waste

  • Measuring, monitoring and control equipment.
  • Lighting systems, fitting and controls.
  • Voltage optimisation.
  • Variable speed drives.
  • Energy efficient motors and controls.
  • Air compressors.
  • Commercial cooking and baking equipment.
  • Commercial cleaning equipment (e.g. washing machines, dryers and dishwashers).
  • Commercial fridge and freezer units.
  • Multi-glazed refrigeration doors/covers.
  • High efficiency hand dryers.
  • IT equipment.
  • Swimming pool covers

How this guide will help

There aren’t many people working in Scottish businesses that have lots of experience of buying resource efficiency equipment. And, because buying long-lasting equipment (e.g. boilers, bathroom fittings and insulation) isn’t something that needs to be done frequently, not many people are likely to become experts and command a full knowledge of suppliers, product specifications and pricing.

This lack of knowledge can very often lead to resource efficiency improvements stalling before final implementation, which means many businesses miss out on the financial and environmental benefits that could be achieved. This is particularly true in smaller businesses where the pressures of day-to-day operations mean there is very little time to undertake improvement projects.

For other businesses, this lack of time and expertise can lead to purchases going ahead without the right amount of planning – delivering disappointing results. Unfortunately, such situations can lead to future resource efficiency projects being viewed less favourably and getting sidelined.

Making the right choices when buying new resource efficiency equipment not only ensures that you enjoy maximum benefits from the project, but it also helps bolster support for future projects.

Different purchasing decisions will, of course, carry different risks. Buying energy efficient lighting for a storage area is likely to be much less risky than getting a new heating, ventilation and air conditioning (HVAC) system that will have to keep everyone in your workplace warm in the winter and stop them getting hot under the collar in the summer.

However, the purchase process is just the same for both products. The only difference being the time and effort you feel the task warrants at each point. This guide sets out that process.

Table 2. The pros and cons of buying resource efficiency equipment

Getting it wrong

  • Poorer quality product purchased (e.g. poor lighting or heating impacts working environment).
  • Higher price paid.
  • Missed savings/longer payback.
  • Project delays.
  • Resistance to future projects.
  • Miss out on grants/funding

Getting it right

  • The right quality product purchased (e.g. improved heating and lighting increase productivity).
  • Costs minimised.
  • Maximise ongoing resource savings.
  • Increased profits.
  • Green credentials.
  • Impress discerning customers

Due to the hectic nature of roles in small businesses, and the time and expertise required to complete a procurement initiative successfully, you could consider outsourcing the work to specialists – which may, ultimately, save your company money. But if you don’t want to do this, the simple process outlined in this guide will help you.

While this guide doesn’t provide in-depth technical details about heating, lighting, water efficient fittings, etc, it will help you to make successful purchasing decisions and avoid common pitfalls. It will also help you manage your project and achieve the expected benefits, while maintaining adequate quality.

Are you making the right purchases?

We provide free advice and support to Scottish small and medium-sized enterprises (SMEs). If you haven’t done so already, book yourself a free energy opportunity assessment and let our technical specialists identify and prioritise your best energy efficiency opportunities that will reduce your energy use and save you money. Arrange your free one-to-one support here or by calling 0808 808 2268.

Sustainable procurement

While most resource efficiency products are likely to be a one-off purchase that will last many years, they should still be part of an overall sustainable procurement system in your organisation.

Sustainable procurement is about:

  • Ensuring the environment for the supply of raw materials remains secure for current and future generations.
  • Purchasing products and services that cause minimal, adverse environmental impacts.
  • Incorporating human health and resource scarcity concerns.

Sustainable procurement considers the life-cycle of a product from extracting the raw material to disposing of the product at the end of its useful life. Products are assessed not just on their price and performance, but also on their environmental impact.

Sustainable products and services are those that:

  • Minimise resource use.
  • Optimise energy and water efficiency.
  • Prevent waste arising in the first place.
  • Use renewable materials.
  • Use materials with a high recycled content.
  • Have a low impact on the wider environment.
  • Are not hazardous or toxic.
  • Minimise transport and fuel use.
  • Minimise packaging waste.

When speaking to potential suppliers, you should make it clear to them that you will be assessing their goods and services on the basis of sustainable requirements as well as value for money. For example, you could ask them to:

  • Minimise the use of materials that may become waste, such as packaging.
  • Reduce the amount of hazardous material in products.
  • Increase the use of recycled materials.

This means you can give preferences to suppliers who can then reduce total material use, reduce the number of components, minimise the use of harmful materials, extend product life, enable servicing, extend materials life and minimise waste generation.

Are you using external funding?

Some resource efficiency projects, such as installing biomass boilers or upgrading lighting, can require a significant financial investment. And, while some organisations have available funds that can be used to finance these projects, external sources of funding, such as loans and grants, often present an attractive option for many smaller businesses.

Fortunately, a vast array of different sources of finance is available to organisations in Scotland, including Scottish Government loans and grant funding. For more information on the funding that is available, visit our website or contact our team on 0808 808 2268 where one of our friendly advisers would be happy to discuss this with you.

If you intend to use an external source of finance, it’s important to check to see if there are any procurement criteria that you need to follow to be able to access the funding. This will help inform your procurement process.

For example, you may be required to get a minimum number of estimates from different suppliers. Alternatively, you may be restricted to using suppliers from a defined list or that have specific accreditation. The speed and timing of the funding you’ll receive may also affect which supplier’s payment options are most suitable.

Could you collaborate with neighbours?

As a smaller business, it’s unlikely that you are going to have the same buying power as larger organisations that can place volume orders and command lower prices.

But, by working in partnership with other businesses like your own, it may be possible to put the benefits of economies of scale into effect and negotiate better prices for you and your partners.

Possible partnerships and group buying opportunities you might like to explore before going it alone could include:

  • Your sector’s trade association.
  • Your local chamber of commerce.
  • Neighbouring businesses in your community.
  • Other businesses in your building or industrial estate.
  • Members of your business improvement district.

It’s worth taking time upfront to establish if there are group procurement deals already in place or if there is an appetite to establish one.

Our guide, ‘Improving Waste Management: A How-to Guide for Business Groups’ and its accompanying tools and templates have been developed to help business support groups engage with the businesses they represent to identify and implement collaborative waste management improvement opportunities. The guide is suitable for:

  • Business improvement districts.
  • Chambers of commerce.
  • Trade associations.
  • Industry associations.
  • Other local business support groups.

A four-step process

The process we recommend follows four key steps:

  1. Understand your requirements.
  2. Find and short-list suitable suppliers.
  3. Review estimates and supplier capabilities.
  4. Select the most suitable supplier

For more complex purchases, such as a biomass boiler, and depending on your starting knowledge level, you may find that this process is iterative and that you will return to some steps more than once. As you start to speak to suppliers and understand their offerings, you may find that you go through steps one to three more than once as you develop a better understanding of your requirements and identify the suppliers capable of matching them.

Use all the help you can get from colleagues as you go through this process, including:

  • Support from members of your Green Team.
  • Staff who have existing procurement skills and knowledge.
  • Anyone who will be affected by the changes that will result from the investment (a good way to get buy-in and keep your colleagues on board with the change, particularly in areas like new heating, lighting and recycling systems).

As always, our advisers are here to help you too.

The process should be followed once you have built a business case for investment in new resource efficiency equipment. Our free guide ‘Accessing finance – Developing a business case for your energy efficiency projects’ will show you how to prepare a robust business case to support your proposed investment decision and how to present a strong case for investment to your senior management or external lenders.

  1. Understand your requirements

Developing a detailed understanding of your specific requirements will mean you are well positioned to ensure that your final purchase will satisfy all your business’s needs.

Your needs should be clearly outlined in the specification that you will provide to suppliers. The specification should cover your technical, financial, and after sales requirements, along with any expectations you have around your intended delivery timescale.

Technical

The fact that you are reading this guide and are looking to buy new equipment for your business should mean that you will have some understanding of the technical features you are looking for in the products and services you will be buying. Now it’s time to fully consider and make a record of these technical features in your specification.

When doing so, make sure your business’s wider plans such as changing opening hours and new staffing levels are considered. For example, while you don’t want to buy a new heating system that is larger and more expensive than required, it is important that it can meet your business’s needs over the lifetime of the system, even if that means your business is expanding.

For some purchases, such as new biomass boilers and renewables, you may need to consider contacting your local council’s planning department to find out if there are any sensitivities you need to consider about your proposed investments (such as noise emissions and visual intrusion).

Heating and lighting systems are two of the most common purchases that Scottish businesses will make to become more resource efficient.

If you are looking to buy a new heating system, it’s important to consider how your business uses heat. For example, do you need a solution that heats premises (space heating), provides hot water or is for process heating? It’s also important to know how much heat you use. If you have half-hourly data relating to your fuel use (electricity and gas), then this can be used to determine the total amount of heat, the peak heat load and the way your use of heat varies throughout the day. This can be very valuable in accurately matching a new heating system to your needs.

If you’re looking to buy a biomass heating system, our guide ‘How to carry out a successful biomass heating project’ provides specific guidance with clear step-by-step help and all the information you need to have informed conversations with potential suppliers. This will help you avoid common pitfalls and procure a biomass system that best fits your organisation’s needs.

Lighting is an area where technology is moving rapidly and there are lots of savings to be made by upgrading to modern, energy efficient products. However, if you are carrying out a lighting replacement project, purchase decisions should not be based on energy and cost savings alone.

Lighting has a big impact on the comfort and productivity of your staff, so it’s important that you consider the technical requirements and design of your lighting system to ensure that it will be suited to the tasks performed by your staff. Our guide ‘How to carry out a successful lighting replacement project’ has been specifically to help you successfully carry out a lighting replacement project and avoid common pitfalls. It will help you manage your project and achieve the expected savings, while maintaining adequate quality of lighting. As an alternative to purchasing, you might like to consider leasing your lighting, particularly if you are a tenant.

With changing waste regulation in recent years, many businesses have also been procuring new waste management contracts. Therefore, our advisers have written the guide ‘How to get the best waste management solution for your organisation’ to help you buy the best waste management solution for your business. If you’re buying new waste management solutions, the guide will help you understand your business’s waste streams so that when you go to the market for your waste and recycling services, you get a service that is right for you.

Financial

You should also consider your financial requirements. How much can your organisation spend, including any limits on borrowing? Also, what financial return do you require? This could be a maximum payback period or an internal rate of return (IRR).

At this point you might want to consider breaking down your technical requirements and supplier requests into ‘nice to haves’ and ‘need to haves’. This will make it easier for you to prioritise estimates if some are higher than your available budget. You should consider ongoing financial requirements too (e.g. maintenance and servicing costs for heating systems, and replacement lamps for lighting).

After-sales support

Products like cavity wall or loft insulation don’t need much in the way of after-sales support. However, when purchasing new IT equipment, HVAC systems or measuring and monitoring equipment for example, it’s very likely that you will need some form of after-sales support, even if it’s only in the form of regular servicing.

When you begin speaking to suppliers and start to understand what after-sales support is available, you should consider the level of support that your business needs and ensure this is specified in your requests to suppliers.

Delivery timescale

It’s no good finding a supplier that can meet your financial, technical and after-sales needs perfectly, if it can’t deliver to your business at the right time. So, the final requirement to think about is your delivery timescale.

Do you need to have the new equipment installed during a shutdown, at night or weekends, or before a particular deadline? Do you have strict project start and completion dates that a supplier will need to adhere to? If so, now is the time to establish these dates and add them to your specification.

At the same time, you should also detail site-specific issues, such as restrictions on working at height, asbestos risks or other health and safety considerations.

  1. Find and shortlist suitable suppliers

Finding a good supplier who can match all your needs is a critical step in ensuring that your resource efficiency projects proceed quickly and that you’re able to maximise the value of your investment.

To help you find a supplier that matches your needs, we have a list of trade bodies and other organisations that can help you find suppliers of the products you are looking for.

Seeking out recommendations from other businesses is another very good way that you can find a supplier that will match your needs. If you know someone who has recently undertaken a similar project, it’s worth asking them if they would recommend the supplier or contractor they used.

If you don’t know anyone who has undertaken a similar project or want to do more research, you can use Zero Waste Scotland’s Green Network for Businesses directory.

The directory has information on a range of organisations from across Scotland that have already carried out projects to reduce their energy, water, waste and raw material costs. You can learn about these projects and arrange to visit organisations near you to see and discuss what they did first hand. The website is also a very handy way of finding new suppliers and hearing about their performance.

Once you have identified a number of suppliers that could provide the products and services you require, you should send each one a clear outline of your requirements and ask them to provide an estimate. You may want to ask suppliers to visit your premises so that they can ensure they have a full understanding of your needs and that the solution they propose matches them accordingly. This is particularly important when procuring lighting and heating systems.

Make it clear that each supplier will be scored against its ability to deliver against your requirements – and not just on being the cheapest.

  1. Review estimates and supplier capabilities

Once you receive estimates from suppliers, you can compare them against the requirements you have set including all your technical, financial, after-sales and delivery needs.

You should then compare costs, ensuring that you are comparing like-for-like prices including any additional fees, such as those for consultancy, delivery and set-up.

At this point, it’s likely you will want to go back to some or all of the potential suppliers to discuss their estimates and ensure you understand specific features that you are being offered. This also gives you an opportunity to negotiate better prices and/or a higher value offering, and gives the suppliers a chance to finalise their proposals before you make your final purchase decision.

Scoring your potential suppliers

It can be very useful to use a formal scoring process to assess and compare the various estimates you have received so that your decision-making is clear and robust. You could set up a scoring matrix to score each supplier accordingly (see Figure 2).

  1. Select the most suitable supplier

If you have followed steps 1 to 3, you will have identified a number of suppliers capable of matching your needs. You will also have estimates from each of these suppliers, detailing how well they understand your requirements and how successfully they can deliver against them, including the price they will charge.

And, if you have used a scoring matrix, such as the one shown in Figure 2, you will also have these suppliers ranked from first to last. This will inform your final decision, ensuring you select the best supplier based on all the evidence available to you.

It is now a simple case of placing the order with the supplier that is ranked first

 

Next steps

We understand that buying new equipment can often seem to be like a barrier to the successful implementation of energy efficiency projects – but help is at hand.

We help Scottish businesses to cut their energy costs by an average of 24%. Each year over 34,000 individuals from a range of organisations get in touch with us for impartial advice and free, specialist consultancy support.

Supporting Scottish organisations to be more energy efficient and reduce their carbon footprint will make a significant contribution to addressing the climate emergency and helping achieve the Scottish Government’s strategic economic objectives as well as climate change and energy efficiency targets.

Funded by the Scottish Government and the European Regional Development Fund, the service offers free advice and technical support as well as sharing best practices and new technologies.

Renewable energy technologies:

  • Solar photovoltaic (PV)
  • Wind turbine
  • Micro-hydroelectric system
  • Solar thermal
  • Biomass boiler
  • Biomass room heaters (with radiators)
  • Heat pumps – air source, water source and ground source
  • CHP with biomass
  • Anaerobic digestion plant
  • Wood burning stoves

Building fabric products:

  • Insulation and draught-proofing
  • Double/triple glazing
  • Secondary glazing

Waste and water efficiency products and systems:

  • Water efficient taps, showers and toilets
  • Rainwater harvesting
  • Grey-water systems
  • Water-recycling systems
  • Cleaning-in-place systems
  • Computer numerically controlled (CNC) equipment
  • Composting systems

Other products to reduce energy and water use, and prevent waste:

  • Measuring, monitoring and control equipment
  • Lighting systems, fitting and controls
  • Voltage optimisation
  • Variable speed drives
  • Energy efficient motors and controls
  • Air compressors
  • Commercial cooking and baking equipment
  • Commercial cleaning equipment
  • Commercial fridge and freezer units
  • Multi-glazed refrigeration doors/covers
  • High efficiency hand dryers
  • IT equipment
  • Swimming pool covers

The pros and cons of buying resource efficiency equipment

Getting it wrong

  • Poorer quality product
  • Higher price paid
  • Missed savings/longer payback
  • Project delays
  • Resistance to future projects
  • Miss out on grants/funding

Getting it right

  • Quality products purchased
  • Costs minimised
  • Maximise ongoing resource savings
  • Increased profits
  • Green credentials
  • Impress discerning customers

Purchase advice

We provide free advice and support to Scottish SMEs.

If you haven’t done so already, book yourself a free energy opportunity assessment and let our technical specialists identify and prioritise your best energy efficiency opportunities that will reduce your energy use and save you money. Arrange your free one-to-one support here or by calling 0808 808 2268.

Sustainable procurement

While most resource efficiency products are likely to be a one-off purchase that will last many years, they should still be part of an overall sustainable procurement system in your organisation.

Sustainable procurement considers the life cycle of a product from extracting the raw material to disposing of the product at the end of its useful life. Products are assessed not just on their price and performance, but also on their environmental impact.

Sustainable products and services are those that:

  • Minimise resource use
  • Optimise energy and water efficiency
  • Prevent waste arising in the first place
  • Use renewable materials
  • Use materials with a high recycled content
  • Have a low impact on the wider environment
  • Are not hazardous or toxic
  • Minimise transport and fuel use
  • Minimise packaging waste

When speaking to potential suppliers, you should make it clear to them that you will be assessing their goods and services based on sustainable requirements as well as value for money. For example, you could ask them to:

  • Minimise the use of materials that may become waste, such as packaging.
  • Reduce the amount of hazardous material in products.
  • Increase the use of recycled materials.

External funding

Some resource efficiency projects, such as installing biomass boilers or upgrading lighting, can require a significant financial investment.

While some organisations have available funds that can be used to finance these projects, external sources of funding, such as loans and grants, often present an attractive option for many smaller businesses.

For more information on the funding that is available, visit our website or contact our team on 0808 808 2268 where one of our friendly advisers would be happy to discuss this with you.

If you intend to use an external source of finance, it’s important to check to see if there are any procurement criteria that you need to follow to be able to access the funding.

Collaborating with neighbours

As a smaller business, it’s unlikely that you are going to have the same buying power as larger organisations that can place volume orders and command lower prices.

But by working in partnership with other businesses like your own, it may be possible to put the benefits of economies of scale into effect and negotiate better prices for you and your partners.

Possible partnerships and group buying opportunities you might like to explore before going it alone could include:

  • Your sectors trade association.
  • Your local chamber of commerce.
  • Neighbouring businesses in your community.
  • Other businesses in your building or industrial estate.
  • Members of your business improvement district.

Our guide accessing finance – Developing a business case for your energy efficiency projects will show you how to prepare a robust business case to support your proposed investment decision and how to present a strong case for investment to your senior management or external lenders.

Technical

If you’re looking to buy a biomass heating system, our page how to carry out a successful biomass heating project provides specific and all the information you need to have informed conversations with potential suppliers.

The guide how to carry out a successful lighting replacement project is there to help you avoid common pitfalls when replacing lighting. It will help you manage your project and achieve the expected savings, while maintaining adequate quality of lighting.

Financial

You should also consider your financial requirements.

You might want to consider breaking down your technical requirements and supplier requests into nice to haves and need to haves. This will make it easier for you to prioritise estimates. You should consider ongoing financial requirements too.

Find and shortlist suitable suppliers

To help you find a supplier that matches your needs, we have a list of trade bodies and other organisations that can help you find suppliers of the products you are looking for.

Review estimates and supplier capabilities

Once you receive estimates from suppliers, you can compare them against the requirements you have set including all your technical, financial, after-sales and delivery needs.

You should then compare costs, ensuring that you are comparing like-for-like prices including any additional fees, such as those for consultancy, delivery and set-up.

It’s likely you will want to go back to some or all the potential suppliers to discuss their estimates and ensure you understand specific features that you are being offered. This also gives you an opportunity to negotiate better prices and/or a higher value offering and gives the suppliers a chance to finalise their proposals before you make your final purchase decision.

Scoring your potential suppliers

It can be very useful to use a formal scoring process to assess and compare the various estimates you have received so that your decision-making is clear and robust. See an example of a scoring system below.

highland heating insulation

Now you can place an order with the supplier which has been ranked number at number one.

 

Next steps

We understand that buying new equipment can often seem to be like a barrier to the successful implementation of energy efficiency projects – but help is at hand.

We help Scottish businesses to cut their energy costs by an average of 24%. Each year over 34,000 individuals from a range of organisations get in touch with us for impartial advice and free, specialist consultancy support.

Supporting Scottish organisations to be more energy efficient and reduce their carbon footprint will make a significant contribution to addressing the climate emergency and helping achieve the Scottish Government’s strategic economic objectives as well as climate change and energy efficiency targets.

We’re here to help.

Call us on 0808 808 2268

Email: support@businessenergyscotland.org