A three-step strategy to better energy management

For many years, energy use in businesses has been taken for granted and largely gone unmanaged. Despite it being such a significant overhead, organisations large and small have been guilty of not giving much thought to exactly how, when or where they used energy. Luckily, there has been a shift in mindset.

As energy costs have continued to rise, the need for better energy management is increasingly being discussed in boardrooms up and down the land. However, it is often difficult for internal advocates to justify the return on investment (ROI) of such projects due to the insufficiency or inaccuracy of the data available. It is such an issue that Gartner suggests that ROI and conflicting priorities are seen as the top two challenges faced by over 40% of cases.

It’s good to be green

In addition to wanting to reduce costs, one of the major catalysts for better energy management is the desire for businesses to be seen to be green. Environmental accountability is now top of mind for more than two-thirds of business leaders, with almost eight in ten (79%) saying they have either already entered into a renewable energy power purchase agreement or plan to do so within the next two years. And for good reason. It can attract increasingly eco-conscious clients and help retain staff. 

As well as looking to move towards green tariffs as much as possible, I fully expect organisations to get better at consuming energy in off-peak hours. We are already seeing numerous savvy manufacturers aligning manufacturing processes to times of day when prices are lower and there are a higher number of renewables in the mix.

A three-step strategy

The problem of energy cost and availability is not going to go away. It is no surprise that almost half (46%) of organisations say that the availability and cost of energy has caused moderate to significant disruption to their business activities over the past year. Whilst three quarters admit to only having been focused thus far on short-term energy demand reduction optimisation strategies, a longer-term view is preferable. 

For me, there should be a three-step strategy for those looking to make the change towards better energy management. Firstly, the business should look to reduce their overall load as much as possible. Then they should look at what their fixed and variable load is. Before finally looking at how they can move the load to cheaper times of day.

The need to produce the right data

Whatever the catalyst to better energy management, there is no doubt that data can be the proof point required to get such a project off the ground. While the availability of digital technology is rarely seen as a major barrier, data visibility and reliability is for one-third of business leaders. Whilst there is more data within digital technology than ever before, it is a question of producing the right data to support ROI calculations and gain boardroom buy in.

But how much onus should be placed on the business to establish the effective modelling strategies required to generate the requisite data to prove ROI and environmental benefits, and how much should be the energy supplier? For me, it is clearly important that the industry does what it can to provide accurate energy consumption data that will support businesses to deliver on their cost reduction programs and environmental management goals.

More intelligence than ever before

Luckily, help is at hand. Through the advent of artificial intelligence and machine learning, digital technology has more intelligence than ever before to provide insight into when and where a business uses energy and how much they could save by moving the load to a different time of day. It is a win, win. Because the cost of energy to the supplier themselves is different at different times, this saving can be passed on, creating goodwill and loyalty.

We are already seeing the act of better balancing load as a big focus for the energy industry. Energy behemoth Octopus is, at time of typing, undertaking real-time trials to discover how moving energy demand out of peak times can support balancing the power grid and reduce costs. The scheme will help inform the National Grid Electricity System Operator (ESO) in the UK for its plans to run a zero-carbon grid for certain periods by 2025 and a fully decarbonised one by 2035. The trial will also provide valuable insight into how customers can play a pivotal role in reducing the costs of balancing supply and demand, so as to ultimately reduce the cost of electricity bills.

Time to follow suit

Whilst energy prices have started to come down for many, they are still significantly higher than they were pre-invasion in 2022. These high costs are continuing to expose businesses to serious financial and operational challenges across multiple industries. 

The desire to reduce energy usage and improve sustainability goals has led to a significant shift in attitude. Businesses are changing their behaviours and strategy through a diverse set of long-term investments and activities to manage energy consumption Three-quarters say they have already started reducing their energy usage through optimisation activities, and another 19% plan to do so within the next two years. Are you going to follow suit?  

Whilst any business wanting to make a change will likely face significant internal hurdles. The energy industry is aware of them and is able to help by better aligning itself with organisational priorities so that it can help businesses execute their day to day operations at a lower cost point and unlock additional opportunities.