It’s probably more than you realise, easier than you think and provides ongoing benfits in ways you’ve perhaps never considered…
Energy efficiency was born in the economic crisis of skyrocketing oil prices in the 1970s, and as we face another crisis from COVID-19 once again it can play a role in the recovery.
Energy efficiency – born out of crisis, made for our current crisis
The economic benefits quietly provided by energy efficiency since the 1970s cannot be over stated. The crisis focussed the minds of engineers on doing more with less energy, a focus that remains today, evident in the marvellous efficiency (compared with the 1970s) of the electronic device you are reading these words on. Vehicles, refrigerators, buildings, all manner of appliances – all of these enable more to be done using ever decreasing amounts of energy.
Thus in an economic crisis, or the recovery from an economic crisis, when cash is tight, energy efficiency is inherently attractive.
What is the importance of energy efficiency in this crisis? It can reduce your costs – even if you have nothing but time to invest, can potentially give you sustained savings in the mid term and long term, and once the recovery is well underway can help cut your carbon footprint. What’s not to like about this!
But if energy costs are going down, how is this an opportunity to save energy?
Wherever you are in the world, the chances are that one unit of energy in this time of the global coronavirus pandemic costs less than it did a year ago. So how is this an opportunity to save energy? If you are cash-strapped and need every last cent its not much of an opportunity, but if, as your business recovers, your balance sheet improves, energy efficiency represents both a fantastic investment opportunity, and a prudent way of managing your energy costs going forward.
A fantastic investment opportunity
Energy efficiency will, in very rough numbers, yield about a 20% ROI. That’s way better than most other investments! So once your business starts recovering, putting some of your earnings into energy efficiency is a way of securing a good mid-term return. If you have a healthy balance sheet and would like to get roughly a 15% ROI, you may even be able to invest in energy efficiency at no up-front cost, paying for the investment out of the savings, by entering into an energy performance contract.
Some energy services companies will both provide financing for energy efficiency projects in your facility, and guarantee savings. Sound too good to be true? Well these sorts of contracts have been around for 30 years now, and are often delivered by companies whose names you will recognise for their strong engineering capacity. Get the contract right, with appropriate due diligence, and you’ll get a sustained boost to your cash flow at little or no cost!
What is the importance of energy efficiency? A great investment opportunity!
What is the importance of energy efficiency? Its a prudent way of managing your energy costs going forward
The very low price of oil right now will not last. You may be thinking that with fuel costs (vehicle fuels, natural gas, heating oil) low energy efficiency should be a low priority.
But this is very short term thinking. Energy prices are highly likely to go up again to 2019 levels. Natural gas futures for LNG are showing prices returning to 2019 levels in by 2024. The price of natural gas is related to the price of oil. And in most deregulated electricity markets, the price of electricity is similarly related back to the price of natural gas.
So if you are deciding to keep on operating old, inefficient equipment that is past its use-by date, or perhaps buy new plant and equipment for no concern about energy usage, think again. Futures are showing that LNG prices will likely be 50% higher than they are now by 2022, and 100% higher by 2024.
So any equipment that you buy now, or next year, could have energy costs associated with it in just four years time that are twice as high as when you bought it. Considering that a lot of equipment has a useful life of 20 years or more you can see just how important energy efficiency is to reducing life time costs. And that’s not just me coming up with these numbers – it’s the aggregate opinion of the many expert energy market analysts who invest in futures and who set the futures prices.
What is the importance of energy efficiency here? As your business recovers, to help sustain that recovery in the mid to long term, manage your future energy costs by investing in energy efficiency before prices go up again.
How energy efficiency can help your home economics – right now – without spending a cent
Many of us are now stuck at home. And home energy consumption is going up as a result. Here are three things you can do right now, at home, to save energy and reduce your home energy bills, at no cost.
- If you are allowed to go outside to exercise, and are allowed to go to the shops, wherever practical, walk or cycle instead of driving. The chances are you have some time to spare. So even if the shops are some distance away, you probably have the time to walk or cycle instead of driving. Just make sure you can carry all your shopping home – take a trolley or a back pack. You’ll cut your fuel costs, and added benefits could be: getting out of the house for longer, getting exercise.
- Change your thermostat settings. If you are in a cold climate, put on another layer of clothes and turn down the thermostat a couple of degrees. If you are in a hot climate, turn up the thermostat a couple of degrees, wear lighter clothes, drink more if possible. Of course if you have a medical condition keep the temperature comfortable. But shifting the thermostat just a little bit to save energy could cut heating or cooling energy use by 10% or more.
- Turn off anything you aren’t using. Such as lights, electronics, appliances, etc. Particularly if some of your appliances are older (like my washing machine), turning them off at the wall can provide small savings that add up to a lot over time. Over the last 10 years I calculate that turning my washing machine off at the wall has saved me over $250!
You can probably think of more opportunities, and unleash further energy efficiency resources, just by looking at what you don’t need or can live without, with a particular focus on time of use. In the language of energy efficiency [link to article on the definitions of energy efficiency] this is known as behaviour change or energy conservation.
What is the importance of energy efficiency at home? It can help you save money when times are tough.
How to improve energy efficiency in the workplace – immediately – at no cost
In your workplace there is probably good potential to save energy now. But it depends on your situation. Whether or not your workplace is closed, open but not at full capacity, or at or exceeding normal capacity.
Energy efficiency in a shut down. Your workplace is closed
In this case saving energy is easy – switch everything possible off. Ideally even switch off entire circuits at the fuse-board. Do this by systematically working through the entire business, for everything that uses energy, and asking two questions:
- Does this provide a safety service that must remain on? E.g. a fire safety system, a burglar detection system.
- Is there going to be unavoidable spoilage or wastage if the device is turned off? For example, a fridge containing ingredients you use in your restaurant that will keep for a long time whilst refrigerated, and which can’t be consolidated into a single fridge. You may need to carefully think through the consequences of switching off to see if any harm will be caused. If need be phone up someone who might be able to advise regarding specialist equipment.
If you answer yes to any of these questions, then leave the device on. But if the answer is no to both questions, turn it off. Look also for opportunities to consolidate refrigeration equipment. Put all perishables into one fridge, and turn the rest off.
Of course in order to do this, and release energy efficiency resources you may not have realised you had, you need to be allowed to enter the workplace.
And tightening the belt now, will hopefully help you survive this crisis and in the future help release financing for energy efficiency projects – whether off your balance sheet or through third party financing.
What is the importance of energy efficiency in a shut down? Reduced costs, extended equipment life.
Energy efficiency when capacity is under-utilized. Your workplace is open but not at full capacity
In this case save energy by zoning the workplace to areas which are needed, and those which are not needed. Treat the areas that are not needed as if the workplace was closed, following the advice above. For those areas which are needed, try to keep this area as small as possible whilst meeting safe social distancing requirements.
What is the importance of energy efficiency in a partial shut down? Energy cost savings.
Energy efficiency for the good times. Your workplace is just as busy as normal, or busier
If you are in this situation, everyone could be busy, with little time to spare. But there are still some ways that energy can be saved at no cost and with little investment in time. Here are three of them.
- For all office equipment, enable power saving mode. For computers this is easy, just do a search for power saving settings. It will take about a minute. For devices like printers and copiers it may take a couple of minutes scrolling through the menus to find the power saving menu. In both cases, enable power save mode which will put the device into low power mode after a short period of inactivity.
- Adjust heating and cooling temperature set points, just like at home (as advised earlier). If the controls are complex find out who manages your heating and cooling maintenance contract, and the next time the units are serviced, ask for the set points to be adjusted. Your contractor may be able to give further advice on saving energy with heating and cooling.
- This only applies if you are growing and adding new equipment, but all it takes is one line in the tender documents or purchase order – please supply equipment of high energy efficiency. Its quite common to be able to buy equipment of high energy efficiency for little or no more cost than a low efficiency unit.
What is the importance of energy efficiency in the good times? It can reduce costs and emissions, extend equipment life, and could even make your workplace more comfortable.
Unleash further energy efficiency resources
Contracting in expert energy efficiency advice can help you get the best value when you set out to improve energy efficiency in the workplace.
What financial benefits have YOU gained through energy efficiency initiatives? What other strategies have worked for you? Comment or share below and let’s see if we can bring out part 2 that features the best!