Insight: In the dark

Do you know the impact of energy on your business – and who is responsible for managing it?

Almost a fifth (18%) of British businesses spend a quarter of a million pounds each year on energy, yet nearly half (46%) of senior managers admit to having “no idea at all” of what their company spends on energy.

This lack of understanding means businesses may be missing opportunities to save money, improve sustainability and potentially generate income by using their assets to participate in energy markets and earn a return by supporting power supplies on the national grid.

We polled more than 750 senior managers and directors across medium and large businesses and found that two thirds (67%) said they had no understanding of how their business buys its energy, or even who buys it (54%). Nearly half (46%) confessed to having ‘limited understanding’ of costs.

All of this helps pose the question: why aren’t business leaders plugged into the system - lack of time, lack of resources, pressure on investment funds or a deficit of knowledge?

Because no matter how strong the financial or social case put forward, the fact that management boards can have a negative or neutral response to the importance of an energy strategy makes it all the more difficult for energy decision-makers to gain the widespread buy-in they need for strategic plans to become fully effective.

Energy is changing, with new solutions that give businesses of all sizes the power to control their energy use, improve competitiveness and also put money on the bottom line. To make the most of this opportunity energy needs to be thought about in the right way and at the right level – this is a strategic decision that rightly sits in boardroom discussions.

For all businesses, there are opportunities to both implement more sustainable energy programmes and reduce internal costs. The energy buying process however just needs to be identified, understood, and then explored in the right way by the business. We’ve seen dramatic change in many customers’ overall energy strategy that has both improved sustainable practice and also saved money in short and long-term.

The focus needs to be on managing overall costs rather than the simpler pence-per-unit of energy supply.

Advice to businesses looking to improve their energy strategy

  • Making energy part of a boardroom discussions can create opportunities to make businesses more competitive. It can start with simple compliance against Government legislation and putting in the monitoring systems to give you back control of your energy use. From there it can expand to much more active control, and even create new revenue streams.
  • It’s important not to think of energy as a fixed cost. Small changes, such as encouraging staff to turn off lights in empty rooms or powering down PCs when not in use, can have a dramatic effect on costs. Swapping fluorescent tubes for LEDs, for instance, can slash lighting costs by as much as 50% and some studies have also reported that better lighting can also significantly improve productivity in the workplace.
  • Businesses may benefit from keeping a closer eye on the ‘where and when’ of energy costs – either through smart meters or consumption data toolkits, businesses can have more control over their energy consumption and production and use both to their advantage. 
  • Employees are at the heart of an energy strategy. After all, the amount of energy consumed by the individuals within a company directly correlates to the overall cost of consumption. It is important to appreciate that any behaviour change work may take time to become intertwined into the overall company culture.
  • Generating your own power can put control firmly into your hands. For instance, by investing in new energy solutions, such as solar panels or CHP, as well as the financial savings you may also unlock new growth, improve productivity and overall competitiveness within your industry.
  • Similarly, many businesses, particularly those that function with an on-site production line or product manufacturing process may take advantage of generating their own heat and power through CHP technology. CHP is on-site electricity generation that captures the heat that would otherwise be wasted to provide useful thermal energy, in the form of steam or hot water. This can then be used for space heating, cooling, domestic hot water and other industrial processes, which can overall slice costs in the long run.
  • The next step may be to participate in Demand Side Response schemes where businesses can be paid for helping to balance the energy system. In simple terms that means businesses get paid for managing how and when they use electricity – reducing demand or using their own generation at peak periods for example – as well as avoiding costly capacity and transmission fees by using less power at peak periods.
  • On-site generation also allows you to where businesses can be paid for helping to balance keep the energy system. In simple terms that means businesses get paid for managing how and when they use electricity as well as avoiding costly capacity fees by using less power at peak periods.

This article originally appeared in The Telegraph.

Sustainability and business success go hand in hand. We teamed up with The Telegraph to help businesses better understand how they could reduce costs and become more self-sufficient.