Two heads are better than one when it comes to energy investment

Caroline Pitt -

Ask five energy managers for their advice on the best way to invest to cut costs or carbon emissions and you’ll get five different answers.

But ask fifty and you might start to see some similarities. Ask five hundred, and you’ll see some clear trends.

Weighing up which energy investment will provide the optimum returns depends both on the organisation’s particular circumstances and on a growing range of different factors.

What works for one company or site may not for another, depending on what measures are already in place, the specific nature of their energy demand, their investment criteria and so on.

Yet even across a wide range of different organisations, some opportunities to save and generate energy shine through.

The front running trends started to emerge in the initial findings of The Energy Investment Curve, unveiled recently at Green Corporate Energy, a summit event organised by The Crowd, where 250 of the UK's leading energy managers gathered.

The Curve pooled detailed information from 60 organisations which together spend over £1bn a year on energy. Of over a hundred and fifty investments entered, around 15% were from utilities.

As part of the panel that launched the Curve, it is clear to me that the data generated can reveal both where capital is being invested and the financial returns those investments are expected to deliver.
One of the most popular investments was LED lighting, which has rapidly become a widely applicable, reliable and, now, cost effective way to save energy.

What also came through in the findings - and echoed our own experience of working with private and public sector organisations - was the wide range of paybacks respondents reported.

That was the case even for relatively commonplace improvements, such as energy efficient lighting or Variable Speed Drives, as well as for investment in assets like renewables.

The range of paybacks reported emphasises the importance of business cases based on your particular circumstances, rather than relying on, say, generic forecasts from manufacturers about typical returns and their timescales.

The investment case for a particular type of project can also change materially over time – depending on factors such as equipment costs and energy prices – and we also see that collective intelligence like the Curve can help organisations stay up to date.

As businesses see the benefit of improved metering and building management systems – an investment that achieved consistently positive feedback from respondents – the evidence on which The Curve is based will also improve.

While financial payback is not surprisingly still the key factor for many businesses and organisations, The Curve also highlighted the potential for wider benefits from energy investments.

The Curve underlined the value of these ‘co-benefits’ – non financial benefits – which can help support a business case too.
The co-benefits reported range brand enhancement to improved productivity. Utilities most frequently flagged carbon emissions reduction and employee engagement as co-benefits.

Businesses are increasingly looking for ways to add these factors into the mix when making an investment decision. For instance, we find that factoring in avoided maintenance costs over the lifetime of an investment can affect the choice of technology or supplier.

Respondents to The Curve highlighted avoided maintenance as a potential co-benefit for various investments, from lighting to building management systems.

Given the extent to which The Curve highlighted other co-benefits too – like the productivity benefits of improvements to heating and ventilation – they should increasingly be quantified in business cases, alongside the headline savings.

Putting a value on non-financial benefits can be easier said than done – how do you quantify the impact of improved office temperatures on attendance or productivity?  And once you have, how do you ensure that you can credibly put a value to it?

That’s where The Curve could help energy suppliers, energy service providers and energy users alike. By collating experiences and actual data from different kinds of business, it can give decision makers confidence in their assumptions, even when those assumptions are outside their sphere of expertise.

Even though at its launch only a relatively small number of businesses had filled The Curve out, respondents ranged from utilities to retailers, from manufacturers to the public sector. It already shows how it could help businesses in any sector avoid making the same mistakes, by providing an honest exchange of views on what works, and what doesn’t.

The aim for The Curve is that it will continue to grow and be used by many more organisations. A wider data set could help increase investment in energy saving measures and improve the returns on that investment.

If the enthusiastic response of the energy managers attending Green Corporate Energy was anything to go by, this time next year, we’ll really be able to see some clear trends emerge from The Curve.

You can access the curve and start to submit your investments