Corporate strategies in this area used to focus on saving money and projecting an ethical message to customers, but today energy is up there with sales, marketing, finance and HR in terms of its strategic importance.
A company’s energy policy is vital – senior business people are well versed as to its impact on the bottom line – but it also affects other parts of the business, including those listed above. Mature approaches to energy can increase sales, improve staff morale and extend the life of core facilities; all of which, along with cost savings, drive profits.
Chief executives are waking up to the impact that good energy planning can have on organisational priorities across their business.
The next step, which many have already taken, is to create pathways in this mission-critical area that are long-term, smart and universally beneficial. That’s according to Mike Reynolds, head of development at SSE Enterprise, whose job it is to work with a range of clients in different industries to achieve, and exceed, their energy goals.
Mr Reynolds describes his job as “energy agnostic” and is part of a movement away from selling products to creating solutions for clients.
“The energy sector is going through the same changes that the information technology sector did 10 or 15 years ago when it stopped selling boxes and started to look closely at what individual organisations really needed,” he says. “Our customers have more sophisticated requirements than they used to and energy has risen up the list of strategic priorities.”
Energy is typically the second or third biggest regular cost that a large business faces, but directors are increasingly seeing this as an investment opportunity and not just a basic outlay that is paid on time and forgotten.
It’s no longer a case of calculating how many sales will be necessary to settle the quarterly bill; the equation is more about boosting corporate reputation, customer experience and quality of environment. Energy is a chance to make businesses better.
“This issue is moving from the boiler room to the boardroom,” says Mr Reynolds. “Board directors want sophisticated solutions to complex challenges using better data. They are not shooting from the hip, but taking considered, reasoned decisions.”
Information has always been used in business to make key choices. A supermarket chain, for example, wouldn’t dream of creating a new store without first investigating local demand, demographics and prevailing retail trends.
More and more businesses are approaching energy in the same way. Before making an investment in new equipment or renewable energy sources, they are considering the implications for each department over the following 10 or 15 years. These considerations include whether savings generated by the new strategy will pay for the investment and in what time frame.
Modelling has become as important in this area as for any other form of business investment. “Today, businesses look at energy use as they would any other issue,” says Mr Reynolds. “It’s not a case of, ‘Here’s a few million pounds, go and do some energy efficiency work,’ it’s more likely to be a project that runs across the business.”
He uses the example of a water company that must maintain pumps costing tens of millions of pounds each. Without data it is impossible to tell whether a pump is working efficiently until something visibly goes wrong.
Even serviced regularly, a pump could run at a suboptimal level for months, taking up more energy than it should before eventually breaking at a very large cost to the owner. But by attaching smart meters to the pump it can be monitored using smart data analytics.
When a problem arises, it is immediately obvious and can be fixed before damage happens, potentially saving millions in asset costs and extending the unit’s life.
Facilities management is one area where energy management has a big say: another example is retail environments. Energy-efficient lighting is often better lighting – blinking tube lights are never a good look – while different forms of lighting and air conditioning can help lift customers’ mood. With tissue-thin profit margins, a 20pc energy saving could be the difference between profit and loss.
Better warehouse lighting controls, which turn on and off automatically depending on whether people are in the space, are used by a growing number of businesses to shave more cost off the bottom line.
Hospitals are another type of organisation for which energy is a vital component, although for very different reasons than in the retail sector. Security of supply is crucially important, more so than for most businesses, yet budgetary pressures mean cost savings are important in this sector, too.
At first glance, financial services is not an obvious place to look for energy considerations. An office expends a lot less energy than a steel mill, for example. But issues are present among banking chains that want to keep branches open, despite many being located in inefficient buildings that are 150 years old.
Mr Reynolds says: “If a bank has 2,000 branches and 1,500 are located in large Victorian buildings, then the energy requirements of those buildings could define whether branches stay open or shut down.”
At the opposite end of the scale, large financial services institutions want their headquarters to reflect their core values. They want impressive urban spaces, but ones that are low-carbon and provide an experience that leaves a lasting impression on their clients. Trading floors, on the other hand, rely heavily on strong connections and fast energy resources.
Meanwhile, for the construction industry the chief concerns are new environmental targets laid down by government as well as increasing demand from buyers and investors for buildings that look good but do not drain resources. Construction companies are therefore more interested in performance than they used to be.
Some years ago, these companies had no vested interest in the building once it had been created and sold. Today, people are interested in how the building works and not just how big it is and what it looks like.
“Once demand for environmentally friendly buildings increases, then construction companies start to take note,” says Mr Reynolds. “When large businesses start to demand impressive low-carbon offices and affluent couples want great-looking flats that perform well, then builders will give them what they want.”
For SSE Enterprise, the future of energy management is all about understanding the key drivers of each customer. Do they want to fix, or even cut, their bills for the next five years or create an energy strategy that boosts their shop floor or office space?
Investors are increasingly interested in backing large-scale green projects and guarantees that come from a partnership with providers like SSE are giving both investors and their target businesses more assurance of a financial return.
“True sustainability has to have a real financial matrix at the heart of it,” says Mr Reynolds. “Investors want to know how to spend their funds across industry, while businesses are trying to hit ever more ambitious efficiency targets but are capital-constrained.
“We can provide a level of certainty with energy-saving contracts, which breeds confidence in deals. The customer knows they can achieve a 20pc reduction, the investor knows SSE is contractually bound to make the saving, so they are happy to provide the capital, which gets the deal going.”
Whatever your business, SSE Enterprise can help your company to build an effective and cost-effective approach to energy management.
Source: The Telegraph