Taking steps to minimise the impact of rising energy costs has become a necessity for most businesses. Quick-wins to reduce usage and save costs, such as campaigns to encourage staff to switch lights off or even replace lighting systems, have already yielded sizeable reductions for many organisations. But in an increasingly complex energy world, a more innovative and integrated approach is needed. If businesses address procurement, energy efficiency, business continuity and CSR in isolation, they could miss big opportunities and face costly mistakes.
With energy prices forecast to continue to rise – some estimates suggest they could double over the next decade- and global demand to grow with more people and power-hungry devices competing for finite resources, this is the time for organisations to implement integrated solutions to reduce demand and guarantee their supply.
In the UK, security of supply is starting to become an area of serious concern with much of its ageing generation capacity coming to the end of its life. It’s estimated that the UK will need to invest £110 billion in generation and transmission systems by 2020 to secure supply and to meet its carbon-reduction targets.
On top of that, environmental concerns and growing awareness from consumers about sustainability issues are also bringing increased focus on how businesses meet their energy needs. While all these concerns pose significant challenges for businesses, the opportunities for organisations to become more energy efficient, cut costs, meet consumer demands and be more sustainable are also greater than ever.
Take for instance some of the initiatives underway in the food retail sector. As one of the most energy-intensive parts of a store, much work has been done to improve the efficiency of chiller and freezer cabinets. Adding glass doors to cabinets for example can lead to reductions in energy consumption of up to 70%.
Other sectors with less consumer environmental pressure have their own energy challenges. The IT and banking sectors have become the biggest users of electricity in the industrialised world due to the increasing need to store ever-growing amounts of information in data centres. Forecasts suggest that the energy demand from these centres could almost double by 2020 which brings serious concerns about securing supply and resilience. How will these data centres cope with a sudden supply cut?
To guarantee supply, control costs and meet their CSR ambitions, organisations across all sectors are starting to invest in on-site generation such as solar panels on roofs or building their own onsite generation plants, in some cases looking to contract directly with a local community-owned renewable generation project bringing social benefits to local communities. Many of these projects are providing much-needed income to help support fragile rural communities and through initiatives such as district heating schemes are also reducing fuel poverty.
Some companies are able to fund and install a project themselves but for others it may be easier to look to work with a third party developer by contracting directly with a renewable generator to reduce carbon footprint and provide long-term visibility on prices. An agreement could be structured to complement existing risk profiles of a company’s wider energy procurement.
In the current complex market, with higher energy demand and limited resources, it’s clear that only those organisations able to adapt to these developments and implement integrated and tailored energy strategies will be able to gain competitive advantage to reduce the risks, maximise rewards and improve reputation. At a time when customers and stakeholders are becoming more questioning about how businesses operate, those at the top of organisations also need to be confident that their energy strategy can provide robust answers.
Written by Jo Butlin, Managing Director, Utilyx