Allan Jones, a humble official at Woking council, got hold of £250,000 and turned it into £2.7m by making the borough the most energy-efficient in the UK. But that isn't the main story. The really astonishing thing is what he's planning to do next.
Allan Jones presented HIS Council BOSSES with a single sheet of white paper. On it were his neatly typed suggestions for tackling global warming in the Woking area. The most challenging of the recommendations was for the council to reduce its energy consumption 20% over five years. The recommendation was accepted, and Jones was given the responsibility for ensuring the council met it.

That was in October 1990. As energy services manager for Woking council, Jones knew it was a tough assignment, but he excelled himself. In fact, the council achieved the target one year ahead of schedule. Inspired, Jones proposed that the council set a far more difficult target – a further 20% reduction in energy consumption in the following six years. By 2000, the council had met this target, too. And, along with the 36% total saving in energy the council had also slashed its emission of carbon dioxide by a staggering 66%. The policy had another advantage; as well as emission savings, it also cut £4.7m from the council's energy costs.

Jones' achievements don't end there. In the 12 years following the energy efficiency policy's introduction, he has been instrumental in getting the council to set up an environment-friendly service to deliver green energy to the local community. The electricity is produced by the council's own generation plants and distributed along its own power lines. Woking council is even pioneering the use of radical eco-technologies with the installation of the first-ever fuel cell in the UK. This uses hydrogen and oxygen to produce electricity, heat and water for the borough's swimming pool.

You won't be surprised to hear, then, that Woking is now the most energy-efficient council in the UK. What you might be surprised to hear is that this has been achieved with an initial investment of £250,000.

Sitting in a meeting room in the council's civic centre offices, Jones looks every centimetre the civil servant, dressed neatly in his dark-blue pinstriped suit and co-ordinating tie. But looks can be deceptive; in his quest to save the planet, this suited-and-booted eco-warrior has run up against government regulatory obstacles, the vested interests of utility power suppliers and political indifference.

"You don't have to be Swampy to have a concern for the environment. What is going to make this happen is people like me, ordinary people with a concern for the environment and a future for their children," he says.

This concern for the environment has resulted in some amazing feats. But to appreciate the scale of these achievements, it is necessary to go back 13 years to the day Jones presented the council with that single sheet of paper.

Jones is a shrewd operator; he understands the way local politics works. For instance, when he set about his task of achieving the 20% reduction in energy consumption, he did so without mentioning money. Rather than present the council with an expensive list of energy-saving measures, he avoided a discussion of money by focusing purely on policy: "If we talked policy with money, the policy would be dictated by the money," he says.

Eventually, Woking will be completely independent of the National Grid – that is our long-term strategy

Allan Jones

Having got the council to agree to the policy, he then set about financing it. Working with the borough treasurer, Jones calculated that the council could earn the same rate of return it was receiving on its money in the bank by investing in his energy-saving projects – providing those projects had a payback period of six years or less. This meant that if a project was going to cost £600,000 to implement, for example, it would need to save the council £100,000 a year or more over six years to be viable.

Jones also needed a capital fund to kick-start his E E environment-saving aspirations. "I needed £1.25m, but I thought that was too much for the council to bear," he says. Cleverly, he divided the figure by five and asked the council for just £250,000 instead. However, Jones' masterstroke was to get the council to agree to ringfence all the money his initiatives saved from the council's energy bill for further investment in his schemes. "I said to the council: 'You give me one-fifth of the capital up front, and providing you allow me to recycle the revenue savings, I shall not need any more money to achieve my target'," he recounts.

The genius of this solution is that if a project did cost £600,000, and it produced savings of £100,000 a year, then that money would go straight into Jones' fighting fund – £100,000 every year. And even when the capital was paid off, that money would still keep coming, swelling the fund's coffers.

For the scheme to be a success it was essential that Jones' initial £250,000 was invested wisely. Again, he played a blinder. He spent a large amount of the capital on three headline-grabbing projects that would not only produce significant energy cost savings but would also give the councillors something to crow about – and in so doing keep them on his side. "I needed to invest in projects that would produce significant savings, otherwise my capital fund would have got smaller and smaller," he explains.

The capital was also used to top up existing replacement programmes covering essential items like boilers. "The maintenance budget is for a like-for-like replacement. But, if I take some money out of my fund and give it to the maintenance manager as a top-up, he can replace the boiler with a more energy-efficient version," he explains. This could be an investment of as little as £2500 for Jones, but it could save up to £6000 a year in energy costs. "We've got more than 120 community heating boilers – I've pretty much been through them all now," he laughs. Naturally, the money from the energy saved is siphoned into Jones' pot – annually. The process works; from his initial investment of £250,000, his fund grew to the £2.7m that has now been invested, resulting in savings of more than £885,000 on the council's annual energy bill.

But the council's commitment to the environment does not just cover existing projects. Under Jones' guidance, the borough's energy-efficiency policy was extended to cover new council schemes. "We stopped all new buildings being designed in the same old way," he says. As a result, when the council came to build a swimming pool, energy-efficiency measures had to be included where they complied with Jones' benchmark of a six-year payback.

In the end, the pool included "the whole shebang of energy- and water-efficient technologies".

Jones has persuaded the council to agree to move towards a hydrogen economy – an economy where hydrogen replaces fossil fuels as the main source of energy

As the investment fund became ever larger, the council's aims grew ever more ambitious. "Rather than just concentrate on our own buildings, we wanted to reduce CO2 emissions in the borough as a whole," says Jones. He argues that the government spends too much time trying to improve the housing stock when it should be tackling power stations, where most of the UK's CO2 emissions are produced. "It is not the buildings themselves that produce most of the emissions, but the primary energy serving those buildings." Jones is no fan of the big utility suppliers either. He whips out a diagram showing the breakdown of electricity costs. "The cost of actual electricity is only a small part of your bill. You've got transmission and distribution losses, the transmission use of system charge – that's the fee that the National Grid charges for exporting power from the power station to the grid supply point; then there is the distribution use of system charge – the fee the local electricity company charges for exporting electricity from the grid supply point to the customer; then there is the supply margin and the renewal obligation, the climate change levy and VAT," Jones explains. "What this means for a domestic customer is that the grid price of electricity is 1.4p per kWh, but you are probably paying 7.5p per kWh." Jones' idea was to set up local environment-friendly combined heat and power schemes that would provide power and heat cheaply and efficiently to local households from a local generator. "If you displace central generation and put in local CHP and renewable energy systems you are going to get substantial reductions in CO2 emissions – typically 60%, but sometimes as much as 80%," he claims.

However, government controls on local authorities limit such a move by restricting the amount of capital the council could invest in such schemes. "We had the money in the bank, the government had an environmental agenda, but we were prevented from spending our own money by another part of government under capital control regulations," Jones explains, adding with exasperation: "It's your classic dysfunctionalism." Having got this far with his environmental agenda, an incompetent government was not going to stop Jones. In 1999, the council set up its own energy services company as a way of bypassing the government's spending restrictions. Called Thameswey Energy, the company was a public–private joint venture between Woking council and Danish environmental foundation Hedeselskabet Miljo og Energi. The foundation provided engineers and finance to top up Woking's energy-efficiency fund – the one Jones had grown from the council's £250,000. The council also had the foresight to keep this company outside the political agenda: "We recognised that the company's board needed experience and expertise that was going to be there year after year and would not be sullied with politics," says Jones.

The joint venture was set up in an innovative way: the idea was not to make profit but simply to pay backers a rate of return on their investment each year. Jones says the criterion for making a project work was simple. He explains: "We need to know what the capital cost of a project is, then it is simply a matter of ensuring the project will generate sufficient income to pay off that capital and the ongoing costs such as maintenance over 20-25 years." Built into the costs is the investor's rate of return. If a scheme does make a profit, then that profit is recycled back into further green projects.

Having established Thameswey Energy as the vehicle for implementing its more ambitious environmental business plans, Woking council set about turning the town green. They installed further CHP plants throughout the borough, allowing the council to displace whole developments from the National Grid by providing them with the council's home-generated electricity and heat. Jones says a typical scheme can vary from a few hundred kilowatts to several megawatts. "The town-centre scheme, for example, supplies the civic offices, two hotels, a leisure complex, a nightclub, office blocks and a conference centre, all from a single district energy station – designed in such a way as to be sustainable and self-sufficient," he says.

Rather than use the grid, Woking council has put in its own power lines over a local network to supply electricity generated by the council's CHP plants. "If you want to get to the core of why we are able to do things others cannot, it is not just the technology, it is our completely different approach of operating outside the grid," Jones explains. This means there are virtually no distribution losses or charges for supplying electricity, which enables Woking council to supply green electricity at the same price or less than the utility suppliers and fund further energy schemes. In fact, green electricity is such good value that every scheme the council has introduced has had 100% take-up.

The scheme is expanding rapidly. "We started out with a couple of CHPs, we've now got them dotted all over the borough," he says. But Jones is not stopping there: "We're looking to extend this to a further 78 community heating sites; the logical conclusion to this will be that, eventually, Woking will become completely independent of the grid – that is our long-term strategy," he says proudly. The council is even working with other local authorities and developers outside Woking to extend the scheme.

And Jones' ambitions don't even end with the Independent Electrical State of Woking. He has now produced a climate change strategy, which has been adopted by the borough. This includes energy generation and also transport and drainage strategies. More significantly, he has persuaded the council to agree to further expansion of its green policy and move towards a hydrogen economy – an economy where hydrogen replaces fossil fuels as the main source of energy; waste emissions will then be made of pure water.

Developers had better beware of this pinstriped eco-warrior, too. Next year the council is reviewing its local plan; if the review is successful, all new developments in Woking will have to be climate-change neutral. "So if you are a developer and you cannot achieve this, then you will have to put up the cash equivalent of the shortfall into a climate change fund, so the money can be invested in other projects to achieve the savings the development is required to meet," he warns.