Energy Saving

Why getting clear on the numbers is key for successful energy management

Posted on 21 January 2020
By David Penfold
David Penfold
Managing Director, Teal Hippo Ltd

Prior to becoming an energy consultant, David Penfold worked in the retail industry, latterly working as a Senior Energy Manager for one of the major supermarket chains, where he was also a member of the Retail Energy Forum and the Power Responsive Steering Group. Today, he works with energy companies such as npower Business Solutions and directly with organisations looking to optimise energy use. He’s also involved with innovation development for energy technology start-up companies and local distribution network operators.

Most companies these days have an eye on becoming more energy-efficient and reducing carbon emissions. But many don’t seem to really understand the best way to go about this.

One of the big things I’ve learnt in my years in energy management is that whatever you do – no matter how important it seems – you’ve still got to approach it in a commercial way.

This means crunching the numbers to show that whatever approach or technology you’re proposing, you can clearly demonstrate the payback over a number of years.

Most businesses have a set timescale they work to – often four or five years for payback on investments, although this can differ according to what they’re spending money on.

Building a robust case

But ultimately, there is only one pot of money and energy managers – like anyone else in the business – have to compete for funding. So your case has to be attractive and robust to stand a chance.

When assessing energy-related strategies and technologies, it can be helpful to work backwards to determine if it’s worth doing.

For example, if you know your business has a five-year payback hurdle, you can then work out how realistic that is, once you’ve looked at costs and likely energy savings.

So if you’re looking at something like investing in LED lighting, you can see if you can clear that investment cost within the time period.

Payback periods key

If you’re looking at a payback within three years, then it’s very likely, in my experience, that you’ll secure funding.

Between four and six is still possible. But anything longer than six years and you’re likely to have to really fight hard to get funding.

Of course, don’t forget, that energy costs are set to rise dramatically over the coming years. So the spend you’re looking at today is going to be a lot more in five years time.

Forecast future costs

Understanding how all the current changes in energy regulations and particularly non-commodity charging will impact energy bills is really important. Otherwise, you can’t accurately determine your costs over the next five or more years.

npower Business Solutions has produced a useful Cost Predictor tool that can forecast your future costs, according to sector and business size etc. See their Energy HQ site, to find out more. 

Having this insight is essential if you’re wanting to secure investment for future energy-saving projects.

This is especially key if you’re wanting to ask for funding over and above what the business wants to spend. But if you can show it’s important to keep future costs down, then your case becomes more compelling.

Support to help you

If you’re looking for support to get your case across and secure the funding you need, then npower Business Solutions has produced some useful aids as part of its new Energy Management Toolkit.

In particular, there’s a presentation template to help energy managers make a good business case for investment in a long-term energy management strategy. There’s also an Energy Management Checklist to provide food for thought. And the Cost Predictor cost forecasting tool I mentioned above.

Effective energy management isn’t rocket science. Many energy managers get blinded by shiny new technologies. But it’s always worth remembering, the best way to save energy is not to use it in the first place…

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