With the new year has come a newly intensified focus on energy prices. It’s no surprise that more and more businesses are taking notice of how much they’re spending on their energy bills. But more interestingly, a rising number are thinking about the fundamental questions of how much they use, and where that energy comes from.
These are important questions for all businesses and it’s right that they are being taken increasingly seriously. A recent survey for British Gas Business showed that one in four small businesses would like to cut their fixed costs, and 63% wanted to hear more about how to save energy. For larger corporate companies and the public sector, challenging carbon reduction targets and the need to remain competitive are driving this agenda forward.
It goes without saying that a senior manager in every business should know what energy contract is in place, and negotiate with their supplier. But actually reducing energy consumption can seem like a challenging and time-consuming effort.
The reality is quite different. Making sustainable energy choices makes business sense too.
We recently helped the owner of a hair salon in Lincolnshire who was using an old storage heating system and fans to heat and cool his premises. Anyone with storage heaters at home would understand the sorts of challenges they faced. But having upgraded to a new outdoor air source heat pump, the owner was looking forward to reduced heating bills of up to 70%. You might imagine this type of reasonably new technology to cost a significant sum, but in fact the salon will enjoy a payback period of between three and five years.
Larger businesses are negotiating multi-year energy efficiency contracts that reduce their energy costs, consumption and carbon emissions. Many public sector organisations including hospitals have taken up an Energy Performance Contract, a self-funding agreement designed to reduce energy consumption and costs. A range of energy efficiency measures, from lighting, new boilers and cooling systems to solar panels and ground source heat pumps, are installed and maintained, often giving the ability to generate renewable energy on site. The measures then pay for themselves through reduced energy use over an agreed period of time.
LED lighting is also seeing a surge in interest, in particular from the public sector, retailers and manufacturing companies. Energy savings from 50% to 70% are not unusual compared with conventional technologies, and result in similar cuts to carbon emissions.
All of this may sound expensive, but energy saving doesn’t have to cost anything. In the case of the salon, asking hairdressers to switch off hairdryers when not in immediate use and switching electrical equipment off properly rather than leaving them on standby will make a noticeable difference to monthly bills.
And if time and resource are a concern, businesses should get an energy efficiency survey – it takes only a few hours, can be completed during opening hours and uncover savings that make the difference between growing and keeping afloat.
Arguably the biggest barrier to energy efficiency for some is their rental arrangement. A Department of Energy and Climate Change study in 2010 found that 60% of SMEs rented from commercial landlords, and a recent Citizens Advice survey that 17% don’t actually have direct responsibility for their own bills. New proposed energy efficiency standards for privately rented commercial properties will help, but small businesses should consider what is in their control and work with the landlord to find mutually beneficial savings.
Finally, the advent of new energy technology has seen a flurry of new UK businesses rushing to meet demand. This growth will provide jobs and skills for the future and should be nurtured. If all businesses can make sustainable energy choices, not only will this help to reduce their costs and cut carbon, it will also grow and support our economy more broadly too.
Martin Orrill MBA MIDHEE is Head of Energy Technology and Innovation at British Gas Business Services. Martin’s current responsibility is to assist in the growth and deployment of energy efficiency, supply, low carbon and renewable products within British Gas Business Services. He has worked in the gas industry for 39 years in a range of engineering, operational, sales, marketing and business development roles. Prior to joining the New Energy and Business Services team he was National Product Manager for British Gas which helped develop a passion for Energy efficiency low carbon and renewable opportunities.