Helping decision makers recognise the business case and benefits for investing in energy efficiency is a major challenge.
Over the next few years, as new regulation is introduced and businesses try to make every penny count, it will be vital for energy and sustainability managers to help transform the attitude of their organisations. This will ensure they realise the opportunities to make significant savings to their overheads through tighter management of their energy use.
Undertaking the simplest of efficiency measures in combination with making energy management a priority can yield savings of 20%. For high energy use businesses, in which energy expenditure can account for one fifth of their overheads, this amounts to a transformative business saving.
Savings opportunity
The true scale of this challenge in transforming the approach of businesses towards energy efficiency was uncovered in a recent business survey on attitudes and approaches towards energy management.
The survey of over 200 financial directorsrevealed that just 23% felt able to manage their energy costs, with significantly greater numbers expressing confidence in managing their staff costs (84%), suppliers (41%) and equipment (37%).
This is at a time when operational efficiencies are the number one priority for most businesses. However, instead of recognising the opportunity to make significant savings through more efficient energy management and improving their expertise in this area, many are focusing on more drastic measures such as driving staff performance or reducing head count.
Nearly 40% of respondents said the biggest challenge in managing and controlling energy use was that it was not considered a priority by management. 68% said that energy strategy is hardly ever discussed at board meetings.
Invest now in energy efficiency
The survey results are especially surprising because there has never been a better time to get ahead of the competition in implementing energy efficiency measures.
In March the government announced its plans to oversee the rollout of 53 million smart meters to 30 million homes and small businesses by 2019. This is estimated to generate over £7bn worth of savings by 2020.
Those that adopt smart meters now will start to feel the benefit of those savings first through managing their energy use through real time insights rather than estimated costs. However, according to the survey, 80% of businesses do not have smart meters and 56% say they have no plans to get one.
Other government initiatives and legislation also provide the opportunity to generate revenue from energy management. The Renewable Heat Incentive, launched in March, is designed to financially incentivise the installation of renewable technology by businesses and is predicted to increase the number of commercial and public sector installations by seven times by 2020.
And as the CRC energy efficiency scheme begins this year, the cost of not being efficient in energy management is about to rise significantly.
There are benefits of investing in energy efficiency. However at the moment, the majority of organisations are not recognising the scale of these potential benefits from a sustainable business perspective, how straight forward a more efficient approach to energy management would be to implement and how the changing economic and legislative landscape makes early adoption a genuine means of competitive advantage.
Nick Grant is director of corporate markets and energy services at British Gas Business