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Businesses Save Big Bucks with Efficiency

New energy efficiency measures will save businesses £1.3 billion pounds a year

Saving money is a topic high on the agenda for pretty much every business, regardless of size. And now there’s some good news for those companies looking for new ways to cut costs. New reports suggest that by upgrading their energy efficiency policy, businesses can save a combined £1.3 billion every year.

A new report from think tank Policy Exchange entitled ‘Clean Growth’ highlights the need for ministers to implement a wide range of measures to slash energy use and propel investment opportunities. The proposed Energy Efficiency Delivery Unit will link business rates to energy performance by implementing “a combination of regulations and fiscal incentives.” This move is designed to move away from tenants and incentivise landlords to invest in energy efficiency.

Under this unit, a range of energy saving projects will identify and take advantage of available finance for both public and private sector companies to carve out new avenues for cost-cutting.

 

Major scope for improved energy efficiency

Businesses and public-sector organisations currently spend the equivalent of nearly five per cent of GDP (£22bn) on energy every year. There is major scope for improved efficiency, whereby it represents a smart strategic move with great impact on your business bottom line.

The report also argues for a wider focus when it comes to our energy plans, proposing an extension of the 2015 Energy Saving Opportunity Scheme (ESOS) to cover large public-sector institutions where around £200m of savings is available. Key areas of focus include the NHS, defence and education, all of which have potentially huge cost savings

Under these regulations, businesses would be required to undertake officially approved audits every four years, providing them with recommendations on how to optimise their energy management system. In other words, it’s a powerful avenue for cutting that energy bill and realigning business strategy to put those saved funds to good use as well as potentially saving taxpayers billions of pounds.

With the government still working on a Clean Growth Plan, this provides businesses with a neat interim transition to a smart energy model. Green Investment Group and Centrica both supported the research with the former’s MD emphasising that the blending of expertise with finance and technical solution providers creating new policies will help businesses to “capture the benefits of energy efficiency”.

 

Slashing the energy bill

Proactive measures along with efforts to make energy usage more transparent will help companies to become more resilient as well as create and pursue valuable growth opportunities both now and in the future. A better understanding of business energy costs facilitates improved productivity and operation alignment while freeing up resources for infrastructure investment.

Once companies understand how to establish energy efficiency as part of a wider strategic initiative, they will be able to sustain a competitive advantage, drive costs down and open access to new markets and additional sources of revenue.

It has also been suggested that the private sector focuses on funding energy efficiency projects, with an emphasis on those with longer payback periods.

 

Strategic energy management

The 2014-15 Building Energy Efficiency Survey (BEES) addressed similar issues, identifying savings in the areas of lighting, energy management and controls, and space heating. It is here that businesses must begin their strategic energy management.

The BEES states that businesses can reduce their overall energy demand by 39 per cent, with one-third of this saving related to measures with a payback period of three years or less. By easing the burden of high-energy bills, businesses can maintain a local and international stronghold, taking advantage of the “natural synergy between energy efficiency, productivity and the wider Industrial Strategy.”

The most intelligent companies will also look into projects with a longer payback, as there is plentiful opportunity in this arena. In fact, projects with payback periods of more than three years represent total energy cost savings, carbon savings and consumption savings twice as large as those with less than 3-year payback period. Each business must adapt their own model to take advantage of both the lower hanging fruit and the bigger apples.

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