Rising energy costs, while having a relatively limited impact on overall costs, can have a significant effect on profits. As a result, most organisations recognise that reducing energy use can improve their bottom line. However, a piecemeal approach to cutting energy consumption will not deliver the substantial commercial benefits that can be realised through better energy management.
Organisations should develop a comprehensive strategy for reducing energy consumption across the business to maximise the exceptional commercial benefits that effective energy management offers.
We recommend four steps to develop an effective strategy that will reduce your energy costs, improve profitability and make your reporting activity more efficient:
Establish a clear picture of how much energy your physical facilities (buildings, IT, manufacturing equipment and vehicles) and business processes consume throughout the year. This may be as simple as looking at your bills for gas, electricity and fuel and understanding what contributes to each total and how. To help a global manufacturer create this picture, we conducted detailed analysis of energy generation, consumption, and the likely impact of the company's growth strategy at more then 20 sites. Our analysis accounted for over 80 per cent of the company's total emissions, identifying potential reductions of 200,000 tons of carbon dioxide each year.
Consider opportunities to reduce energy use
Consider how your asset base may change over time to match business aspirations and what opportunities this might give you to reduce energy needs. Options include: rationalising premises wherever possible; relocating to energy-efficient premises or to a location that will reduce the energy required for transportation; investing in energy-efficient manufacturing equipment; and rationalising computer systems to eliminate unused capacity.
Recent research by the Westminster Sustainable Business Forum on how to promote greater sustainability in public sector estate management showed that investment in environmental sustainability can lead to economic savings through carbon reduction and energy efficiency measures. The introduction of green measures for a standard administrative building, with staff on average public sector wages, can deliver savings in the range of £180-200 per m² per year.
Our experience in this area includes working with the Metropolitan Police service in London, UK, to develop the Vehicle Fleet Optimiser. This determined the optimal vehicle replacement schedule by taking into account all the financial and practical constraints of each type and role of vehicle, to minimise overall costs and carbon dioxide emissions.
Evaluate the costs, benefits, payback period and the bottom-line impact of each energy-efficiency opportunity and consider the practical implications of its implementation. Use this evaluation to prioritise the most effective and practical measures, and to set a schedule for phasing them in.
For example, we addressed key aspects of energy use in Malaysia for its government by setting a clear direction in policy areas relating to energy supply options. This included focusing on improving energy efficiency among end-users, re-focusing energy subsidies to provide more targeted assistance, and creating a transitional strategy to introduce new reforms in a phased and integrated manner.
Implement the strategy, ensuring that the financial benefits are realised by measuring its impact on greenhouse gas emissions, energy consumption and related cost. To give the process visibility and status, it should be overseen by a non-executive director with responsibility for corporate energy consumption. An education programme for staff will help embed and reinforce the changes for the long term.
To help Onzo achieve this, we accelerated the development of the Smart Energy Kit to meet customer demand and gave the device a number of innovative features to differentiate it from competing products.
To find out how PA can help your business enhance profits by reducing energy costs, contact us now.