| Practical approaches to saving energy and money |
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| Written by Mike Sewell, July 2005 | |
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With current rising energy prices set to continue into the near future, it's imperative that business looks at how to manage their energy tariffs. One way involves bringing in the experts when it comes to sourcing utilities at least cost and cutting energy consumption at the same time.
Energy tariffs are rising fast, at unprecedented double-digit rates. Between January and December 2004, electricity prices rose by almost 30 per cent. Over the same period, gas prices rose by over 20 per cent - and are predicted to go up by at least as much again by the end of 2005. These are price hikes that look set to continue, due both to government pressure on consumption in the national quest for lower CO2, NOx and SOx emissions, and to the realities of supply-side economics. The arrival of the Climate Change Levy and of European Carbon Trading also heralds a more complex energy world with the prospect of ever-increasing financial penalties for failing to save energy. Meanwhile the public expects yet more environmental responsibility from the corporate sector. And in the midst of all this, companies need to protect themselves from exposure to financial risk. The question for business is not so much whether or when to save energy, but how to set about it and how to do it cost-effectively. Strategic outsourcingWhat's needed is specialist expertise, plus a clear focus on the real objectives - which are to secure the most advantageous tariffs, reduce energy consumption, stabilise future energy costs and consolidate eco-credentials.Most companies do not have the time, expertise or resources to tackle these tasks. Nor do they want to create 'white elephant' departments, where expertise is immediately translated into costs rather than savings. Far better, for most organisations, is to devolve these responsibilities to an expert service provider who will work with them, first to define the energy management strategy and then to manage the implementation, ongoing operations and plant upgrades to achieve these objectives. Recognising that FM and technical services will have major impacts on resource utilisation and energy efficiency, it is pretty clear that the service provider must have a proven track record in integrating these disciplines, too. Better still, even more scope for energy savings can be opened up by a service provider who has well-developed relationships with utility companies, and consequently an intimate understanding of the utility companies' tariff structures and technical requirements. This link-up between full-service FM, energy management and utilities supply will be the key to bringing consumers' energy costs under control - not least because there is potentially much more financial 'mileage' in reducing consumption than there is in just driving a hard bargain for discounts on energy purchase prices. Securing the benefitsBy surveying a representative sample of the consumer's premises, benchmarking current levels and patterns of energy consumption and projecting forward the reductions that can be achieved through this integrated approach, future energy bills can be fixed for an entire contract period, typically of up to three years - managing the consumer's risk in the context of generally increasing energy costs.Getting into the technical details of consumption patterns also points the way to lower tariffs. Energy providers incentivise consumers to smooth out their demand: smoother demand means less cost per unit. So by identifying and dealing with the causes of major peaks and troughs in a consumer's demand curve, it is possible to obtain much more favourable tariff structures. And understanding consumption means that it can be radically cut. Consumption reductions of 10 per cent and more are routinely achieved. Even as much as 20 per cent is often achievable. Demonstrating environmental responsibilityBesides the immediate business benefits of more predictable and lower energy costs, integrated energy management also enhances corporate image from the perspective of environmental responsibility. About the author |
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