By Richard Fletcher, below, director at IES
Whilst the government has announced a £25bn support package for UK businesses to help them through the next six months of the global energy crisis, this is a short-term solution to a long-term problem. As a result, financial directors remain under pressure to find ways to navigate their organisations through the crisis and beyond. Energy cost is now the number one boardroom issue for eight out of 10 companies. With little opportunity to shop around for a good deal, improving energy efficiency is the best solution to drive down bills and reduce vulnerability to future energy supply issues. As a result, financial directors need to turn their attention to their organisation’s buildings as a priority, to identify where energy savings can be made.
Develop a detailed understanding of energy consumption
Identifying energy savings is often more easily said than done. The first step is developing a detailed understanding of your organisation’s energy consumption, beyond just its utility bill data. This will enable the creation of an energy management and cost reduction strategy to put the business on the path to energy reduction, alongside helping to work towards net zero goals. Financial directors need to have an understanding of where and how much energy is used within their buildings, where it comes from, if it is generated by the business and any expansion plans that could impact the future energy usage of the organisation. Once the principal sources of energy consumption are identified, for example, a particular manufacturing facility or the office heating system, it is easier to understand where energy may be being wasted and thus where it can be saved.
Invest in enhanced energy monitoring
Financial directors need to ensure that they consider investing in up-to-date smart metering and energy monitoring infrastructure, to enable their business to accurately measure usage and unlock further savings. This level of clarity around energy usage is necessary to make tariff decisions but also a valuable asset when making operational and financial strategic business decisions. Additionally, an organistation could consider implementing remote energy monitoring to save time and improve efficiency. Doing so will also help to prevent operational drift, whereby efficiencies are lost over time due to building occupants and managers altering settings, equipment and use patterns.
Identify and improve operational discrepancies
Once data on energy consumption has been gathered, it can be utilised to identify operational discrepancies through which energy is being wasted. Facilities managers can then adapt the way that they operate the organisation’s buildings by implementing energy saving measures and making simple changes. By doing so, there is potential to save around 20% on operational energy costs which is a lucrative start on the road to cost and energy savings.
The Riverside Museum in Glasgow offers a prime example of the level of savings that can be achieved by understanding and identifying energy consumption and wastage patterns. By implementing data monitoring and analysis to pinpoint major energy consumers, such as the HVAC system, air handling units and chillers, the museum identified a number of low-cost energy saving interventions to achieve £52.3k annual savings, along with 26% gas savings and 18% electricity savings.
Consider retrofitting options
As illustrated, operational improvements can result in significant savings and improved energy efficiency. However, to unlock even greater results, financial directors may consider funding retrofits or even new build options. In some cases, this may provide the best solution to save money in the long-term, build up energy resilience, and put the organisation firmly on the path to net zero.
In order to pinpoint the most impactful building improvements, technology such as digital twins can be utilised. Underpinned by physics-powered capabilities, digital twin technology can be used to create a virtual replica which responds and behaves like your real buildings. This digital asset enables analysis of different scenarios to allow for informed decisions on the actions required to meet energy saving goals. This means that the impact of different retrofit options and net- zero interventions can be tested, prior to investment and implementation in the real world, to find the most effective energy saving solutions and de-risk buildings investments.
Generate energy independently
Beyond operational and building improvements, the real long-term solution to this situation is for businesses to take energy consumption into their own hands. This would involve exploring all opportunities available to decrease demand and move away from using price-volatile and carbon-intensive fossil fuels. Digital twin technology can also be utilised here to identify ways to reduce reliance on the grid, share energy locally, and increase the capacity of renewable energy generation and storage. Whilst this may not be a feasible financial option for all directors right now, it’s an important consideration to equip businesses to deal with future energy challenges.
Align the energy cost strategy with other business priorities
Whilst saving money on energy bills is a top priority for financial directors at present, it doesn’t have to come at the cost of other business priorities. Implementing an energy cost strategy, improving energy efficiency and the performance of the organisation’s facilities should play a key role in meeting ESG commitments, net zero targets, and enhancing the comfort and wellbeing of employees.
Inefficient buildings can bring unwanted costs, including lower sale and rental values, increased construction and operating costs, financial penalties and higher insurance premiums. However, digital twin technology can be utilised to improve the performance of the business’s buildings, alongside informing decarbonisation roadmaps, tracking progress towards targets, enhancing energy resilience and meeting employee needs.
Conclusion
There’s no doubt that businesses face tough times ahead. As government support beyond April is proving uncertain, businesses need to take action now in order to be prepared for the end of the current government support and build up energy resilience to equip businesses to better deal with future energy challenges. The very root of the issue is that we waste a huge amount of energy. Yet taking simple steps to identify operational inefficiencies, improve energy monitoring and make building improvements can drastically reduce wastage and bills.
For more information, get the Guide to Reducing Business Energy Costs.