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Financial roadblocks: a deep dive into energy challenges in the leisure sector

The first of a 3-part series exploring stumbling blocks and sustainable solutions for leisure centres on the path to net zero.

Skip forward to Part 2  - Part 3

Leisure is one of the most energy-intensive industries and faces a significant challenge when it comes to implementing the changes needed to meet net zero targets. But given that many leisure providers have also found the high energy prices incredibly tough and are now at risk of closing down, it’s important we work together to balance planet and profit, and secure their future before it’s too late.

In this blog series, we take a closer look at this sector, its unique energy challenges, and the best approach to tackle them.

According to Swim England’s Value of Swimming report, swimming generates £2.4billion of social value a year and plays a hugely positive role in local communities. Leisure services also help to promote health and wellbeing, as well as support overall public health. So at a time when long-term sickness from work stands at record levels, and almost 8 million people in the UK are on NHS waiting lists, this sector is more important than ever.

Watch the below video to hear about the financial challenges facing the leisure industry from Aaron Parker, who is Principal Business Development Manager for Heat and Mechanical Energy Solutions at Centrica Business Solutions. 

To help reduce strain on the NHS, the Government has set an ambition to get millions more people active. A critical part of this will be the availability and accessibility of public and private leisure centres. Yet their future is under threat. Swim England’s Value of Swimming report revealed that more than 1,000 publicly accessible pools have closed since 2010. High energy costs are a leading pressure point, but there are other contributing factors at play that we need to consider.

Financial challenge 1: Increased operating costs

Energy costs are typically the second highest cost facing leisure providers, after staffing. And they can reach as much as 20-25% of expenditure. Intensifying this issue is the fact that energy prices have risen significantly in recent years. According to Swim England, there are examples of operators’ bills increasing by more than 200%. Also, Freedom Leisure, who work with over 25 local authorities, say their annual energy costs have gone from £8 million to £20 million in recent years.

Leisure centres have been hit particularly hard by the cost of energy because of their high energy demand. Fluctuating prices have also made it difficult for them to forecast future spend and so have struggled to budget accordingly. Many are exploring options to keep the doors open, including making staff cuts and reducing services. But it may not be enough. Ukactive reported that nearly 40% of leisure centres are considering reducing services or closing sites in the first few months of 2024, due to ongoing high energy costs.

of expenditure by leisure centres can come from energy costs
increase reported in energy bills for some leisure operators
of leisure centres considering reducing services due to energy costs

Financial challenge 2: Intermittent funding

Amid high energy costs, the Swimming Pool Support Fund was announced in March 2023 and was designed to help support this struggling sector. However, Swim England also reports that demand greatly outstripped supply, with less than 50% of applicants being successful, and many providers not eligible.

As a result, ukactive has called for the Government to accelerate the delivery of Phase 2 of the Swimming Pool Support Fund. This aims to support public leisure operators with the sizeable task of making their facilities more energy efficient.
In addition, Phase 3c of the Public Sector Decarbonisation Scheme has also now closed. This scheme provided all-important funding that could be funnelled into publicly-run leisure centres to help with low-carbon heating, renewable energy and energy efficiency measures.

Other important schemes to have closed include the Government’s Job Retention Scheme (JRS) and the National Leisure Recovery Fund (NLRF). Both provided a lifeline during the pandemic. Coupled with all the other loss of funding, the leisure industry is facing increased costs, while having little support to fill the gap.

Coming up next...

While the financial pressures on the leisure industry remain ever-present, they are not the only challenges that must be overcome. In part 2 of this leisure sector series, we examine three further factors complicating the road to net zero and standing in the way of environmental goals. In part 3, we cover the successful approach, technologies and flexible finance options we offer to overcome these challenges and support organisations in the leisure industry.

Interested in finding out how our Combined Heat and Power (CHP) solution could help your leisure centre? Click the link below to find out more.

Go to the second blog in this series: unpacking wider energy issues in the leisure sector

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