Volatile stock markets, stagnant economies and the cheap price of oil could be some of the reasons why it may seem prudent to hold off investment into energy saving measures. Not true – we show you why there’s never been a better time to go green.
1 Rising Electricity Prices
While the price of oil has fallen from $115 a barrel in the summer of 2015 to around $35 today and seems likely to remain low for some time, the price of electricity is not linked to the price of oil.
The general consensus seems to be of a rise in electricity prices during 2016. The reason for this is the EU’s Large Combustion Plant Directive, which is set to close down 2/3 of existing power stations by 2030. The ultimate goal is to encourage more sustainable sources of energy, including wind and solar power. However, with subsidies being cut and the urgent need for grid infrastructure and investment, reaching this capacity could take time.
Another reason is the UK’s uncompetitive environment when it comes to utility providers. The ‘big six’ rule the roost by controlling market supply, negatively impacting consumers. Electricity prices have already risen by 20% since 2009 and a recent report by the National Grid suggests that the price of wholesale electricity, currently below £50 per megawatt hour, could soar to over £100 by 2035.
2 Competitive Advantage
Savvy companies are today working on energy saving measures to lock in the competitive advantage that lower costs offer. By investing in energy efficiency upgrades to utilities such as boilers and chillers your company automatically reduces its costs elsewhere e.g. maintenance and service, this can then be returned to improving the quality of the product or adjusting its price point.The more effective a company’s transition to becoming energy efficient the less vulnerable it is to rising energy prices, and the more competitive it is.
If upfront capex is a problem a financed energy efficiency project can be a great way to get badly needed upgrades without using internal capex. Crowley Carbon have the capacity to fund all your energy efficiency projects upfront with savings guaranteed by Munich RE
3 Return on investment
Saving 30% on your electricity bill is more than a simple saving. It is also about ensuring that financial resources are used in the most advantageous way. For example, a 3 year payback project is the equivalent of 33% financial return. More than double the amount a high performing hedge fund will return.
Some energy efficiency measures can be financed through shared savings. For example, financing a £100k investment with an energy saving of 30% though a shared savings scheme with Crowley Carbon is equivalent to getting a return of approximately £14K per annum for 10 years with no investment.
4 Government Legislation
The list of current and planned energy efficiency regulations and requirements grows longer by the day. The UK alone has a legally binding obligation to cut carbon emissions by 80% by 2050. Last year’s ESOS audit deadline came as a wake up call to those without an effective energy management strategy and this is just the beginning. The EU energy efficiency directive, ISO500001, Energy performance certificates, the carbon reduction commitment and the climate change levy among others all mean that the polluter pays… and pays big!!
Smart companies will be investing now, while both energy and finance is cheap.
5 Corporate Social Responsibility
Customers care about two things 1. value for money and 2. brand reputation. Companies from Nike and Adidas to Starbucks and Primark have had to drastically rethink their brand strategy to coincide with their customers’ buying conscience. The bottom line – customers don’t buy from companies they know to deal in social, environmental or fiscally harmful practices. Making your process more energy efficient gives you a competitive advantage, enabling you to sell your product at a smarter price point, whilst also promoting an image that is sustainable, economical and environmentally aware.
Energy Efficiency is a key part of good management that extends to resource efficiency, minimising wastage and a coherent management plan for running the business – in other words…
Contact us to find out how much you could save by ‘going green’