Greg Visser: Energy management reaps financial reward

Add a comment
Photo / Thinkstock
Photo / Thinkstock

Many businesses miss out on potential cost savings and associated benefits from energy efficiency. Growing an organisation's ability to make a strong business case - and publicising success stories - may help turn the tide.

The more energy efficient your business, the lower your energy spend. Reduced cost, improved bottom line. It's so obvious. So every company focused on managing cost is also managing energy, right? Actually, no.

The Energy Efficiency and Conservation Authority (EECA) has worked for many years to help businesses recognise and realise the value of managing energy. And there are numerous inspiring examples of businesses across all sectors that manage energy well and enjoy ongoing benefits. Not just financial benefits, but improved relations with customers and community, brand and reputation, environmental performance and staff engagement just to list a few.

But for many, energy management just isn't on the agenda.

EECA regularly surveys and talks to businesses about their energy use, along with the energy services sector, accounting firms and industry bodies.

From the information we've gathered - despite cost reduction being a focus for every company - the majority are not managing energy well and not realising high-return energy efficiency opportunities - even opportunities that would bring immediate cost benefits.

When cost is such a strong focus for New Zealand business, why are so many not grabbing these easy savings?

There are three main barriers. Firstly, limited resources, both people and finance, to progress energy management opportunities. This is partially a downstream effect of the other two main barriers: a lack of management knowledge and motivation; and limited operational capability. Where there is strong drive and leadership from senior management, there's correspondingly strong operational capability. And there's a direct correlation between management commitment and energy efficiency success. Senior management couldn't be more crucial to getting energy efficiency off the ground.

It appears that often management simply don't believe in the opportunity. That's not surprising - there's often not a culture of good energy management - so they haven't seen its success. As it isn't their core business, many don't understand how it's done, what resources and focus it requires - and there's a perception of high risk and cost. So when energy management initiatives are weighed up against other projects they lose out.

Operations and technical staff need to make the case to managers such as CFOs and GMs in property - executives interested in reducing cost with the ability to direct resources and enable change. Arguing for energy efficiency for its own sake won't work - the link needs to be crystal clear between energy outcomes and the organisation's strategic priorities.

One of the fundamental issues is the different language spoken by operations and finance managers. Operations staff may not be able to "sell" the case for investment internally. Those seeking approval for energy efficiency projects need to learn how to present a business case that speaks the CFO's language.

Exposure to success - seeing peers and competitors do it well and reap the returns - is something else that can make a positive difference.

Finalists in the EECA Awards, which run every two years, are an excellent example of what can be achieved.

Previous winners include ASB Bank, whose $2 million investment in energy efficiency is delivering annual energy savings in the region of $850,000 a year.

Golden Bay Cement, another winner, is saving $3 million a year in fuel costs by substituting renewable wood for coal fuel.

DMS Progrowers, a provider of post-harvest management to kiwifruit growers, reduced energy costs per tray of fruit by 22 per cent and locked in savings of around $100,000 a year.

These results are not only impressive at an individual business level, but collectively represent significant value to New Zealand as a whole.

Across all 2012 EECA Awards entrants, the value of energy saved or generated over the life of the projects is $600 million, and the total CO2 emissions reduced or avoided is 1.7 million tonnes.

EECA also plans to run a pilot programme this year that will test the best way to engage senior management and operations, so that energy management can be embedded within organisations.

There's no silver bullet to switch business decision-makers into believers when it comes to managing energy. But helping technical experts "sell" the concept internally - and publicising those who exemplify the business advantages - can help turn the tide.

Entries open

Entries are now open for this year's awards, which celebrate excellence in energy efficiency and renewable energy. There are 10 categories. Entries close next Monday, February 10. The winner will be announced on May 28. For more information or to download an entry form, see: eecabusiness.govt.nz/awards-2014.

Greg Visser is general manager of business for the Energy Efficiency and Conservation Authority.

- NZ Herald

Have your say

We aim to have healthy debate. But we won't publish comments that abuse others. View commenting guidelines.

1200 characters left

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_a2 at 21 Oct 2014 13:05:25 Processing Time: 717ms