Solid assessment of energy data and thorough inspection of your energy estate has so far given you the insights to make data-driven decisions for making savings and boosting your energy management and sustainability strategy.
To take your business’s strategy to the next level, it is important to use your findings and start thinking strategically about implementing energy efficiency projects.
So, what are the overall benefits?
Implementing energy saving projects can typically benefit organisations in the following ways:
- Save money and manage risks by reducing operating costs and exposure to future energy price increases
- Enhance productivity to improve business competitiveness and market position
- Attracting and retaining the right quality of staff
- A more comfortable working environment
- Money saved on energy expenditure can be invested elsewhere
- Increased profitability
- Advance business green credentials to strengthen the ability to win new contracts
- Wider benefits to society from reduced carbon emissions and improvements in air quality
How to prioritise your projects
COVID-19 will have most likely affected your organisation’s operations, occupation levels, and energy use over the past 12 months. These changes may have presented opportunities that have reduced overheads, consumption, and emissions over the short term, and can now be extended to deliver long term impact on your overall energy and environmental strategy.
Your overall business strategy will unlock how you can prioritise the most advantageous project. Factors that should be considered will include how much money will be saved, whether it is a legislative requirement or an upgrade to an out-of-date system. One key driver that will influence decisions around energy efficiency projects is the Government’s legally binding target for the UK to reach net zero by 2050 and how your business plans to support this goal.
Creating a shortlist
In the last energy management blog, we looked at how data can reveal what to look for in a site survey and detailed some examples of energy efficiency improvements. Potential improvement projects could be endless when it comes to improving the performance of your building, but there may be some more critical to your objectives.
To create your shortlist, start by listing your energy goals, the benefits to your business, timelines, and costs associated with each potential project to create a comparative view of what can be realistically done based on the company’s resources. Each project will have a life cycle and a different level of importance, evaluating each will provide you with a project shortlist.
You can do this by evaluating each project across the following areas:
- Energy Cost Savings. Compare the current energy cost of the system or technology to the future energy cost. The greater the difference, the more tempting and easier the project will be to get off the ground. However, remember that with any investment, large or small, consideration must be made to the life expectancy of the project. The technology’s performance will most likely degrade over time and at some point, will need replacing – which will mean further investment.
- Cost of Implementation. Energy efficiency projects can vary in terms of investment; there will be many no cost and low cost opportunities, as well as those that require large capital investments. The total upfront cost of the energy management project will be a big influence over whether it will be rolled out. The no cost and low cost projects will often be more appealing, they may not make a dramatic or instant payback but prioritising such projects may pave the way for larger projects.
- Payback Period. This relates to the number of years required to pay for the project with energy cost savings. It will be easier to sign off the financial investment or time commitment needed for a project with a shorter payback period. Any project that is implemented will affect other elements within the business, so it is necessary to look beyond the payback period alone. For example, implementing LED lights in the building will directly use less energy. Indirectly, it will lower the cost of maintenance and emit less heat and therefore, lower the pressure on air conditioning. Both have costs attached.
- Regulatory Requirements. Some projects will be mandatory to implement if they are needed to ensure your business meets regulatory requirements, such as Heat Network regulations. These may have date critical deadlines so priority should be given here to avoid fines for non-compliance.
- Business Level of Service Goals. Will the project improve the product or service you deliver to your customers? A simple example would be if you are a retail outlet, would a more efficient air conditioning system also make your premises more comfortable. Perhaps you need to provide electric vehicle charging points to encourage visitors. This may also be linked to the Government’s 2050 net zero target and the growing appetite from the public to make consumer decisions based on how your business is working towards decarbonisation.
- Funding. Can the project be wholly funded with existing internal sources or there is a good external source to help or contribute to the funding, such as a tax rebate or grant? Also consider, where you are applying for funding from an external source, if that funding is not granted, whether you can still go ahead with the project.
- Operational Feasibility. Is operational change needed for the project to be a success? Can it operate within the capabilities of the existing staff, infrastructure, and procedures? If not, how much extra training and system maintenance is needed or how much operational disruption it will cause, will need to be weighed against the success of certain projects.
- Part of a series of projects. Is the project reliant on others being implemented, or is this project necessary for later efficiency measures to take place? Some projects may be better evaluated once a low cost or no cost option is implemented and underway. For example, there is little point in investing in a new HVAC system if you have not tackled issues around insulation, ensured that all current systems are being managed correctly and any employees’ inefficient habits around energy use have been addressed.
- Is it critical to support your supply chain’s net zero ambitions? Whilst there is no legal obligation to contribute to the Government’s net zero target, yet, embracing a green recovery is critical to the survival of any business. Whatever the nature of your business, whether you are B2B or B2C, your net zero targets will influence and be influenced by your suppliers and customers. Companies that are making serious plans to reach net zero will be forced to move away from businesses that are failing to adapt and tackle their impact on climate change. Simply put, to reach net zero an organisation must look at their whole supply chain carbon emissions. If your business is not supplying net zero products or services to customers, then you will need to look to offset your emissions or run the risk of losing business to a competitor who is already net zero.
To help you assess one project against another, give each area a score. The energy efficiency project that has the overall highest score, will be placed at the top of your list.
Usually, addressing the most urgent need will be the wisest choice to prioritise. For example, fixing a malfunctioning heating system will not only save costs but will also provide employees with a more comfortable environment which can impact their productivity.
Breaking down the project into different phases or milestones instead of doing everything at once can also be helpful, especially where a budget is tight as it can help manage cash flow issues. It can also make it easier for business owners to track the progress and budget of the project as it is being completed in phases.
In part 8 of the Energy Management series, we’ll be exploring how to build a business case for your project.
If you are looking to implement energy efficiency projects to improve the overall performance of your building, or to pave the way for net zero success, our consultants can offer help and support to help you build an energy strategy and realise your sustainability goals. Call our team today on 01908 690018 or contact us.