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What is the Real Value of Energy Efficiency

There has been an enormous groundswell of interest in energy efficiency over the last decade or so. I have noted however that with most of the organisations I come across, energy efficiency has still not quite been mainstreamed into decision-making processes, leaving significant potential untapped. Achieving high levels of energy efficiency is set to become a “licence to trade” issue rather than a source of competitive advantage, and if your organisation does not integrate energy efficiency into all aspects of operational and strategic planning, you run the risk of falling behind competitors. What then is the business case for energy efficiency, and why should you be focusing on this critical issue now?

Cost Reduction
The first obvious benefit is a reduction in costs. For manufacturers and operators of commercial facilities, energy’s share of the cost pie is growing. In my home country of South Africa, we have seen double-digit increases in electricity prices over close to a 10-year period, and they are now at levels of 3 times what they were in 2007. This has driven a significant increase in the penetration of energy efficiency initiatives. In the case of fossil fuels, price variations are more cyclical, and also depend on factors such as exchange rates. They do however tend to account for a significant share of costs where they are in use. Instruments such as carbon taxes, tax incentives and grant funding can have a marked impact on the financial viability of energy efficiency projects, and should be factored in to your evaluation of the potential financial benefits of energy efficiency .

Emission Reductions
The nature of the emissions generated when energy is used is a function of the energy source and the remedial facilities in place (e.g. precipitators, bag filters, desulphurisation plant etc.), but any reduction in energy consumption reduces emissions. Emission reduction extends far beyond global warming to include reductions in air, water and land pollution as pollutants associated with fossil fuel combustion are reduced. These include particulates, nitrous oxides, sulphur dioxide, mercury, dioxins and other harmful materials. Even if you are a climate change sceptic, these other pollutants should be reason enough for you to have more than a passing interest in emission reductions.

Asset Care
Equipment life is extended when energy efficiency is implemented. The chain grate on that boiler transports less coal each year for the same output, as do the conveyors supplying the coal to the boiler. That compressor runs at a lower loading when those air leaks are repaired, or if the system pressure is reduced. That fluid transport system operates at a lower pressure for the same flow when system pressure drops are reduced in combination with a reduction in pump speed or trimming of an impeller. Those heating elements need to be activated less often when that oven is better insulated. The insulation on those motors and cables lasts longer when less current is required for performing the same amount of work……I could go on. Energy efficiency increases plant reliability, reduces maintenance costs and improves returns on assets.

An energy efficient plant tends to be safer. Hot surfaces are insulated. Leaks of air, fuel, hot gases, steam and other energy carriers receive heightened levels of focus. Machines are not left running unnecessarily and unattended. Operating temperatures and pressures are lowered and better controlled. Staff are trained in how best to operate significant energy users, lowering the probability of safety incidents. Equipment is stabilised and properly secured. Safety and energy efficiency work hand in hand.

Global reporting standards are making business operations far more transparent as far as sustainability is concerned. As markets become more sophisticated and aware, and consumers adopt more sustainable lifestyles, energy efficient businesses can use their efforts and achievements in their marketing programmes and boost top-line growth. I’m not talking here about greenwashing, but about promoting the verified energy savings your business has achieved. When this is combined with the cost reduction benefits, the leverage in terms of profit growth can be immense.

If your business is still in two minds about the need to pursue aggressive energy efficiency programmes, it’s time to stop debating the business case and start taking action.

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