Energy is an essential business input and often constitutes a significant line item of company operating expenses. For energy-intensive businesses, high energy prices threaten profits and competitiveness.
For businesses where energy comprises a smaller percentage of operational costs, energy often remains the primary source of greenhouse gas emissions. A reduction in energy use is often the primary means by which an organisation can reduce its greenhouse gas emissions.
Robust energy management can drive significant cost savings, competitive advantages and mitigate against energy price volatility. Companies with an in-depth understanding of their energy use have also demonstrated increased productivity, better staff engagement and reputational benefits.
Benefits of energy management
Businesses can find many benefits with ongoing energy management. Implementation of the processes to achieve best practice in energy management can build business value.
Unlock significant savings
Organisations with a strategic approach to energy efficiency often find project opportunities with short payback periods and ongoing reductions in costs.
Reduce impact from future energy price increases
Energy efficiency improvements help offset rising energy costs, making energy efficient organisations less vulnerable to future price increases. The return on investment for projects improves as energy prices increase.
Improve risk management
Effective energy management is a core component of a robust risk management strategy.
Business risks associated with rising energy prices and inefficient energy use include:
- operating cost
- supply chain
- energy security
The Queensland Government provides information on risk management including how to manage environmental risks and other climate risks to your business.
Understanding energy use as a function of output and other performance metrics can identify productivity improvements through reduced resource consumption. Improvements in energy productivity are often accompanied by improvements in the use of materials, water and other resources.
Reduce greenhouse gas emissions
Improving energy productivity and exploring different sources of energy can dramatically reduce an organisation’s carbon footprint and the associated risks and costs.
Reduce maintenance costs and improve reliability
Energy efficiency actions can prevent problems and reduce the load and operating hours of equipment. This can reduce labour and component costs, and extend the useful life of the asset.
Public perception is an important consideration for many companies. A strategic approach to energy management can demonstrate good corporate citizenship, improve the attractiveness of the business for institutional investors, and support the company’s social license to operate.
Empower and inform senior management
Similar to other business management systems, an energy management system provides senior management with insights into how energy is used, opportunities for improvement, and how resources can be directed to strategically manage one of the company’s key business inputs.
Motivate your workforce
Businesses that actively monitor and manage their energy use often enjoy indirect benefits such as a more motivated workforce, which will in turn assist with identifying and monitoring inefficiencies in the business. Without an effective energy management system and motivated workforce, opportunities to improve energy use (and reduce emissions) may go unnoticed and not be acted upon.
Best practice in energy management
Companies that successfully manage their energy have several elements in common.
- Commitment from senior executives and clear strategic leadership on energy management.
- Integration of energy management into existing systems.
- Cross-functional responsibility for energy management including the financial, operational, and environmental roles within the business.
- Resourcing of the energy management strategy and energy efficiency initiatives with skilled and knowledgeable personnel, and sufficient funds for implementation.
- Energy efficiency goals that can be translated into timed and measurable business performance goals included in management performance metrics.
- Tracking, measurement and reporting systems to monitor performance in relation to goals and objectives.
- Effective internal and external communication of the priority given to energy management, and the performance and successes of the energy management strategy.
For more information, go to Establish an energy management system.
Energy sources, procurement and demand side management
An understanding of energy use throughout an organisation can help reduce the cost of procurement. Generation technologies, fuels and contractual opportunities can be assessed and implemented as part of a comprehensive energy management strategy. When combined with energy efficiency measures, the optimisation of energy supply contracts, fuel supplies and on-site generation technologies can bring significant benefits
Many businesses have considered or implemented alternative energy sources or generation technologies such as co-generation plants, solar PV systems or heat pumps. Fuel switching may also result in cost savings for both stationary and transport applications. For businesses facing network constraints, alternative energy technologies can also expand capacity.
Managing the use of peak and off-peak power, maximum demand, power factor, and other aspects of electricity contracts can bring substantial savings. Depending on the size and nature of the loads at a site, demand side management opportunities may provide an additional income stream for curtailable loads.
See the Energy procurement section for more information on energy procurement and demand side actions.
From Shop Floor to Top Floor: Best Business Practices in Energy Efficiency U.S Department of Energy
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