FEATURE ENERGY MANAGEMENT
The energy savings pyramid
Just how big a problem are energy prices for Europe’s retailers? Spencer Rigler, Vice President of Energy Management at Elster Energy ICT, says that it’s one of the most important questions that CFOs in the retail sector need to answer and here’s why?
T
he impact of energy costs continue to be a significant item within an
organisation’s cost structure and it’s a pattern that is set to continue. A business that operates on the two to four per cent margin often seen in retail will be hit even harder. In real terms, a retailer experiencing a €1,000 increase in energy costs must sell an additional €50,000 worth of goods to break even. That might be manageable one year. It
might be achievable the next. But it simply isn’t a sustainable method of handling the impact of energy price increases on profit margins, or of minimising the associated financial risks across the organisation – particularly when consumers are being hit by their own energy price increases and wage stagnation.
HOW DO YOU SAVE ENERGY? Reducing consumption, introducing energy efficiencies, optimising assets, negotiating with suppliers; all of these play a critical role in keeping energy bills under control and improving a retailer’s financial, economic and competitive standing in the market. Energy management can be a daunting
task and calls for an effective and highly structured approach. To this end, the Pyramid of Energy Savings outlines five key stages to achieving a continuous, long-term and, most importantly, sustainable approach to energy cost reduction, and the role played by effective energy management systems. Importantly, it recognises that insight and information are crucial to every stage of the process.
1. ENERGY VISIBILITY THROUGH ENERGY ZONING Reduce consumption by up to 5 percent If a business can’t tell where in their operations they are using what levels of energy, they can’t know where energy can be saved. Energy zoning – which gives organisations visibility about where energy is being used – is therefore the solid
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necessary energy improvement project, it is essential to maintain momentum. With the quick wins won and savings seen it’s all too easy for a business to congratulate itself and see the job as done. In doing so however, it runs the risk of ‘energy drift’, where initial gains are compromised as attention wanes and staff engagement diminishes over time. It is essential to avoid this drift by tracking progress and verifying the results of an ongoing programme to ensure continued savings over time. Recognising that energy management is a process that requires continuous monitoring and management to keep the programme on track: preventing drift accounts for two to four per cent savings alone.
foundation of the energy saving pyramid. For example, working with large, multi-
site food retailers shows that typically, refrigeration accounts for 40 per cent of electricity use, lighting for 30 per cent and HVAC for 20. By equipping stores, warehouses, offices and ancillary sites with sub-meters, businesses can access this more granular information about energy consumption and begin to understand where to target energy saving measures, culminating in energy savings of four to five per cent.
2. IDENTIFY QUICK WINS Reduce consumption by 2-5 percent To gain valuable insight from metering data, an energy management system will collect, validate, analyse and present data through a series of user-friendly, easily accessible and increasingly real-time reporting tools and dashboards. With this level of actionable intelligence, outlying consumption patterns can be identified and energy usage issues highlighted to establish where immediate saving opportunities can be found.
3. MEASUREMENT & VERIFICATION Reduce consumption by 5-10 percent Having identified where energy savings can be made and implemented the
The energy savings pyramid offers a five - key stage aproach to achieving and maintaining energy efficiency in business
4. ANALYTICS Reduce consumption by 5-10 percent To make the all-important improvement to the bottom-line, a business must effect fundamental, lasting change. With the quick wins made and the necessary measurement and verification systems in place, a long-term project for reducing energy consumption can be implemented. Analysing trends, and verifying that all
assets are performing in the most energy efficient way, is essential to sustainable reduction in energy use. It also requires the ability to distinguish between consumption patterns caused by energy improvement projects and fluctuations caused by wider business changes.
5. BEHAVIOURAL CHANGE Reduce consumption by 4 percent Achieving permanent behavioural change is the peak of the pyramid. Encouraging staff to actively participate in the energy reduction programme is essential. Saving energy costs is an incremental
and continuous task. But it isn’t an impossible one; and it doesn’t require wholesale transformation of the business. What it needs is information and insight
from the right energy management solutions. What it offers is significant reduction in direct and indirect energy costs, improved competitive positioning, and reduced financial risk.
Elster Energy ICT
energyict.com 01920 871 094
Enter 204 / ENERGYMANAGEMENT
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