The business case for energy efficiency
Introducing energy efficiency measures to your business should be a given, but this is not always the case.
In this guide we explain why and how your business can be more energy-efficient.
The simplest case for being more energy-efficient is saving money.
Even the simplest of measures to improve energy efficiency can have a substantial impact on the costs of a business.
UK businesses could collectively save over £400 million a year just by taking steps to improve the efficiency of hot water boilers, according to the Carbon Trust.
And in the UK, the business case for saving energy is clear even before any remedial action is taken, because we pay tax on every unit of energy we use, in the form of VAT and the Climate Change Levy (CCL).
The benefits go further than the purely financial, though. There is also the need to follow mandatory legislation and the reputational benefits a business can earn from being seen to be green.
According to a 2010 survey by the Economist Intelligence Unit of major global corporations 83% of companies noted significant cost savings from their energy efficiency programmes, while 54% noted improvements to their brand reputation as a result.
Now we are not all major global corporations but the principles resonate whatever the size of your business.
The Economist report also said that businesses often seem to underestimate the value that their investors give to energy efficiency. Indeed it has been found that sustainability issues are increasingly being taken into account both by investors and customers before they make investment or purchasing decisions.
Quantifying the reputational benefits of greening your business can be tricky, but adding up the pounds and pence that energy efficiency measures can generate is much more straightforward.
And, as the following examples prove, savings are equally achievable whether you’re big or small.
Premier Decorations, a Christmas decorations firm from Wrexham, saved £67,000 on its annual energy bill by the simple measure of installing energy efficient lighting. The new system, which has a payback period of one and a half years, cut their power demand from 830kW to 212kW, reducing the company’s annual CO2 output by 271 tonnes.
Vauxhall Motors’ plant in Ellesmere Port reduced its energy consumption between 2000 and 2006 by 15%. This equated to a 49% energy reduction per car produced – a big boost to the bottom line.
GM’s UK sites have been adopting energy and cost-saving measures for several years. When the Ellesmere Port plant won BS7750 certification (now ISO14001) in 1995, it was not just the first GM plant to do so, but also the first car plant in the world. And as proud as they are of the many green awards they’ve won, it’s the money-saving potential that have really driven GM’s sustainability measures.
A Sainsbury’s store in Dartmouth, Devon, has cut the amount of energy it uses from the National Grid by 50%. This has been achieved by introducing a range of energy efficiency measures including installing a biomass boiler, ‘smart’ lighting, draught exclusion and using wind turbines to power the check-outs.
Sainsbury’s is planning to replicate many of the sustainable features in the Dartmouth store across the UK, and has plans to open at least two green supermarkets a year, as well as introducing these initiatives into its existing stores.
With the help of a £31,000 interest-free Energy Efficiency loan, the Cavan Bakery in Middlesex replaced its two 1940s gas ovens with a single steam oven. The new oven offers increased capacity – which freed up space and negated the need to move premises – as well as making a considerable energy saving: 1,000kWh of gas and 500kWh of electricity each month.
In total, gas consumption was cut by 75% and payback period for the investment was three years.
How to get started
We might have been talking about energy efficiency for years, but there’s still a great many businesses that haven’t translated that into action.
The first step is the cheapest:
- Have a walk round and survey your premises to spot immediate money and energy-saving opportunities.
- Benchmark. Compare your energy consumption with other companies in your industry. Organisations like the Carbon Trust can help with benchmarking tools and tips on many other energy efficiency measures.
- Expert help. Again, the Carbon Trust can help. It offers free telephone consultancy and on-site visits for businesses that use a lot of energy.
- Take regular meter readings to get an accurate picture of how much energy your business is using and where the biggest savings could be made. Or save yourself the effort, and install smart meters.
- Speak to your energy supplier. Most energy suppliers now offer free energy efficiency advice to their business customers, so it’s worth getting in touch.
- Think about a smart meter. Install a meter in your premises that not only measures your energy consumption but reports it and helps you manage it hour by hour and day by day
- Work with your independent broker. Work with your broker to look beyond headline price and consider the wider supplier packages of efficiency measures, smart meters, green energy and embedded generation.
And last but most definitely not least:
- Appoint your own energy-saving champion giving them the time and resources to do the job.
That last point doesn't have to mean another overhead, it can simply mean exploiting the interest of your workforce to deliver above and beyond the day job, engaging willing participants on practical actions can deliver significant benefits.
The more you can involve the workforce, the better the chance of success.
You want their ideas but you also need their buy-in.Saving energy will need them to take on some of the responsibility so it's important to consult them and get their support before changing. It’s also worth noting that measures that are difficult, inconvenient or impractical are likely to be ignored or withdrawn. This will undermine any future attempts to reduce energy use.
As a result, making one of the employees the energy champion can be very effective.
The Carbon Trust has published a number of tips for how to make the best of such a role, these include:
- reporting energy waste they notice such as equipment left on unnecessarily;
- ensuring equipment and machinery are well-maintained and working efficiently;
- contributing and gathering ideas for improving the way things are done;
- testing and implementing new processes;
- communicating good practice and being an ambassador for change.
- Control your heating - Turning your winter heating down by just one degree can cut your heating bill by up to 8% (In the same way, adjust your air-con by one degree in the summer). And make sure your thermostats are accurate by positioning them away from draughts and direct sunlight.
- Avoid wasting heat - Close doors and windows when heating or air conditioning is on. Fitting draught excluders and making sure your premises are well insulated is also cost effective, with short payback times.
- Minimise artificial lighting - Clean your windows and skylights and you won’t need so much artificial light. And if you’re only working in one part of a room, confine the lights to that area. Label light switches and encourage your staff to only use what they need. Think about timers, daylight sensors and movement sensors and daylight sensors to turn the lights on and off automatically.
- Switch off office equipment - A single computer and monitor left on 24 hours a day can cost over £50 a year, according to the Carbon Trust. That soon mounts up even in a small business. Switching it off out of hours or enabling standby features can reduce this to £15 a year. You can also fit timers to make sure printers; copiers and water chillers are turned off overnight and at weekends and public holidays.
- Compress your air costs - The Carbon Trust estimates that reducing compressed air pressure by 10% can generate a 5% saving in energy – but make changes gradually, checking that your operations aren't affected by this pressure drop. Also, test for and fix leaks regularly. Even a small leak within your compressed air systems could cost more than £700 a year in wasted energy.
- Don't forget about motors - Separate motors are hidden deep within machinery, and can be left running when the overall operation isn’t. Save energy by identifying and turning off motors during breaks or job changes. In the same light, motors driving pumps and fans can often be controlled with variable-speed drives.
- Shut the cold room door - On average, it will cost £4 every hour a freezer door is open – and even more in lost produce! For refrigerated cabinets, it makes sense to fit PVC curtains or night blinds.
- Maintain your equipment - Make sure all your equipment is working to its optimum ability. This includes cleaning lights and windows, keeping ventilation and other air filters clean, checking door seals and repairing holes and leaks.
Energy efficiency for different kinds of business
These are all great tips, from turning lights off to reengineering an entire product, there are countless ways of saving money, but depending on the industry you’re in, the size of your business and type of premises, what works for others might not be the best way forward for you.
Here are a few industry specific pointers for energy efficiency greatness:
A manufacturing businesses might:
- install more energy-efficient motors and ensure those not in use are switched off;
- use variable-speed drives on motors – and perhaps even claim an enhanced capital allowance;
- make sure compressed air systems are well-maintained and run at minimum pressure;
- disable unused air pipes and set systems to switch off automatically;
- adjust work schedules to make full use equipment like heating tanks and ovens, instead of running half loads.
A warehouse could:
- improve insulation;
- use smarter lighting systems and controls;
- replace hot air heating systems with radiant heaters, which heat people and objects directly;
- install rubber seals around docking bays;
- minimise use of large access doors for delivery and loading.
Office-based businesses should:
- make sure PCs, printers and lights are turned off out of hours;
- enable energy-saving modes on PCs;
- disable screensavers;
- use timers motion-sensitive light systems;
- make sure heating and air conditioning systems are well controlled and never allowed to 'compete'.
Retail businesses can:
- install automatic doors to prevent heat escaping;
- improve and update display lighting;
- check heating and cooling set points.
- use movement-triggered light switches and taps in guest and staff facilities;
- make sure heating and cooling systems are efficiently controlled and operating at the right temperatures;
- make sure freezers work efficiency by defrosting them regularly, keeping doors closed and filling unused spaces with bubble wrap
The opportunity is also there to think about more fundamental changes to your business – and while they’re beyond the scope of this guide, they offer valuable food for thought.
The Carbon Trust is a great source for a variety of thinking about bigger projects.
For example, some businesses are moving away from a physical product – e-readers replacing books, for example - and video-conferencing replacing face-to-face meetings.
Other businesses are exploring different ideas of ownership – with ideas like car sharing, and other ‘collaborative’ consumption models being trialled as part of a move towards increased sustainability.
Product substitution is another new way of doing business. It offers an alternative way of delivering the equivalent value of a product – for example, selling insulation rather than electric heaters, and hot-water bottles rather than electric blankets.
Other manufacturers are encouraging a longer lifespan for their products. Offering lifetime warranties and offering improved after-sales can work with a durable and serviceable product.
Or it could mean introducing upgradeability. Samsung is a good example through their introduction of upgradeable TVs equipped with the ability to take an evolution kit that will allow them to retrofit future functionality.