creating the case for energy efficiency
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From Plant Room to BoardroomWinning the argument for energy efficiency investmentsAndre Burgess, Partner EMVC SolutionsJune 20th 2014, Energy and Environment Expo 2014
About usEMVC Solutions is an energy advisory business, delivering solutions in distributed, low carbon energy generation and energy efficiency services, including smart energy control and monitoring services. As a business we believe in putting the power and the value back into the hands of businesses and communities when it comes to how they source their energy and manage their consumption.
384 392 kmIn one year, we use 31 billion barrels of oil- stacked on each other is 60 times longer than the distance to the moon..3
... if everyone on earth lived as North Americanswe need to change how we consume thingsall together, we consume almost 50 percent more of the earth's renewable resources than the earth can recover in one year.all the natural resources that we use are also part of the planet4The Fifth Fuel?An estimated 0.5bn (21%) of the UKs energy spend is being wasted. Energy prices are expected to continue to rise and good Energy Management is essential for business survival.With estimates of GDP growth resulting from energy efficiency converging on around 1%, energy efficiency should be considered as part of mainstream economic policy rather than an energy issue onlyEven with our advanced technologies we have an overall efficiency of 11%. (Cambridge University, 2005)We can never achieve 100% but.improving that performance would bring great benefits in terms of cost reduction, improved energy security, reduced emissions and job creationSelling Multiple BenefitsWinning the argument in the boardroom involves moving from a cost-cutting approach (single benefit), to a strategic value creation approach of energy efficiency investments (i.e. multiple benefits or co-benefits or non-energy benefits) Co-benefits include: increased production capacityincreased productivityincreased qualityreduced maintenance costs reduced waste disposal costs increased employee engagement and satisfaction.
Creating a complete financial pictureIllustrative Example - $4.5 million investment for lighting retrofits in multiple installationsIndirect benefitsOperational SavingsDirect SavingsAggregate benefits measured over time results in improved NPVCSRBeyond the cost focus, its increasingly important for company leaders to ensure that corporate investments, as a whole, contribute to broader goals.CEOs say their major motivating factors for taking action on sustainability issues, including environmental issues, are part of a broader strategy for strengthening brand, trust, and reputation.
External IncentivesAs much as 10% of the total benefits flowing from energy efficiency measures are likely to accrue directly to energy providersIncreased energy sales require increased capacity, and the cost of installing new capacity and transmission capability is almost always more expensive than energy efficiency measures.Slowing demand growth generally provides net benefits to energy providers.Utility incentives as well as participation in Capacity Markets ,
Deep Retrofits the Value ElementsEnterprise costs- health costs- employee costs- promotions and marketing costs Property costs and risksretrofit development costsnon-energy property operating costs - savings create value directly for the property owner by increasing net operating income, which is capitalized to create property value, which in turn increases company value (multiple of earnings). retrofit risk mitigation (underperforms its forecasts, creates legal and insurance problems, frustrates employees/tenants and facility managers, reduces space flexibility/adaptability, and faces current and future regulatory problems.)Enterprise revenuescustomer access and salesproperty derived revenues (Increased subleasing, property sales, and other revenues directly translate to value by increasing enterprise revenues)
Deep energy retrofits offer bottom-line benefits forbusiness beyond energy cost savings alone.Rocky Mountain instituteEnergy Efficiency: Benefits at Individual, Sector, National and International level
IEAThe Value of DataEnergy Management ProgrammesDemand Management lowering base loadreducing peak consumptionmaking smaller businesses able to participate in Demand response programmesSustainable supply chain managementIdentifying wasteful equipment and processesReduced supplier costsRequired for government incentives?
Thank YouAndre BurgessPartner, EMVC SolutionsE-Mail: [email protected]: www.emvcsolutions.com