Large companies spend billions of dollars directly on energy each year. We used to think that only traditional manufacturers are dependent on energy. But now that we live in a data-driven world, even “office-based” companies depend on electricity to save and manage data in huge data centers. Imagine the impact on them of even a brief electrical interruption. Yet most firms still approach energy as just another cost on their ledgers, overlooking the risks of energy shortages or losses and the opportunities to reduce risk, improve resilience, and create new value.
Many firms are treating energy as a higher priority due to business trends, changes in energy technologies, the realities of Climate Change, and changing costs of energy sources. All companies that need energy (and that’s nearly everyone) need to study and track trends and evaluate risks and opportunities to save costs and create value.
Here are some issues to consider, even if your firm is fairly small and simple in operation.
Energy Availability
Questions: Where do you get your energy from? Do you know it will be reliable and affordable in the future?
Concern: If you are a simple firm and get your electricity from the grid and natural gas from a utility, how reliable is service? While the U.S. has a power infrastructure, much of it is now old. Also, while some parts of the country have grown, the ability to provide it energy has lagged (i.e., Texas), as this can be a high hundred million-dollar investment by a utility, who won’t make it unless it is sure of success and, even if they do, will take time to implement. Utilities in a growing number of areas have stated they cannot guarantee meeting full demand for energy, especially on hot summer days. Costs will rise, too. Might high costs and potential interruptions in delivery affect your business?
Strategies to Consider: Consider having backup energy sources. Consider the costs involved to develop and maintain vs. potential losses if you must stop operations. Your own power generation, maintenance of batteries, and dual fuel boilers are potential backup energy sources to better ensure you do not get an interruption of energy.
Questions: Does it really work? Will it benefit my business? Is it a pain to maintain?
To consider: Renewable energy works and it is cheaper than ever. In fact, from a utility point of view, a solar or wind farm is cheaper to build and maintain than an oil- or coal-fired power plant of the same output. If your facilities have proper roofs without blockage (from trees or hills), then solar can be an affordable alternative to provide electricity. If your facilities have space, geothermal energy for heating and cooling can be a safer and cheaper alternative to combusting a fuel for heat and using electric for cooling. With utility and government incentives, this may be a good financial investment giving you a good alternative source. Do consider that renewable sources have their drawbacks, too, and you may wish to do overall planning to give you flexibility.
Investing in Energy Efficiency
Question: For a simple company, is it worth the effort to invest in energy efficiency?
To Consider: There is no simple answer to this question. One size does not fit all. Each company and operation is unique. However, there has been literally a revolution in advancements in technology where many types of energy-using equipment are much more energy efficient than they were just 5 years ago. In many projects I’ve managed, the ROI for energy upgrade projects has been 20, 30, even more % per year. In other words, the money put into the efficiency project made that equivalent amount of “yield” in terms of avoided cost to the utility. A lot better than investing in a bank, right?
However, one must approach energy efficiency smartly and not just change “willy-nilly”. One example, a small company rejected a proposal to change their many lights in a professional, thorough manner to LEDs, as the CEO said he and his brother would just go to the local hardware store, buy LEDs and install them themselves. Well, things “happened” and they never got around to the project for quite some time, paying a premium for the added time the old lights were still operating. And buying the cheapest LEDs in the store and not evaluating the fixtures increased the likelihood of failure. Evaluating the fixtures that would hold the tubes and buying the best (and not necessarily the cheapest) will guarantee them lasting without a change for 7 or more years. Getting them from the local store: risk of quick failure without a warrantee.
Another example, a school selected a vendor for solar panels solely on the cheapest price. Well, some panels failed and others did not provide the output expected.
In summary, energy efficiency can save even a small firm significant cost. And the one-time effort, again, if done smartly, will save the company costs year after year and ensure reliable use of equipment. Therefore, even small firms should devote – invest – resources in evaluating their energy usage and use it more effectively, with no reduction in reliability of operations.
CCES has the experts to advise your company or entity on ways to diversify your energy supply and to evaluate technical strategies for more reliable and cheaper power for your operations. Contact us today at karell@CCESworld.com or at 914-584-6720.