What is preventing companies from investing in energy management?

Companies often resist change, especially when lacking direction, a defined end goal, guidance and leadership. It should be a top priority for executives to cut costs and streamline operations.  However, there may be several emerging barriers for companies to overcome in order to begin investing in energy management.

1. Prefer to spend available resources elsewhere

Although not immediately evident, the lack of an energy management system is an underlying drawback to a company. High energy costs can influence all departments and operations. Energy costs account for 30% of operating costs for an average company¹. With savings from reduce electricity and heating usage, companies can expand the number of key business needs to focus investments on. Additionally, companies may be able to achieve savings from government tax deductions and credits for energy efficiency and renewable energy investments.

2. Reactive vs. Proactive

Reactive management means items tend to get fixed when they are broken. For instance, a heating unit would get replaced after it brakes. It can be difficult for facilities managers to keep up with repairs and maintenance within budget; trimming facility costs will add to the problem. Proactive maintenance reduces the cost of a system by problem prevention before an issue can occur. Proactive maintenance can reduce total system cost by 5% to 10% by avoiding setbacks such as a production stoppage due to equipment breaking².

3. Managers lack of information

Over the years, energy costs have increased and the trend is expected to continue. According to the US Energy Information Administration, in 2017 the residential electricity price is forecasted to average 12.9 cents/kWh, 2.3% higher than in 2016³. Energy management provides companies a great investment opportunity because it allows them to use real-time data to better understand their usage. This will encourage them to change behaviors and reduce costs by understanding consumption patterns and how energy usage can be reduced.  This data allows companies to make changes to avoid expenses associated with peak demand charges. Despite the high initial cost, companies see a high return on investment; not just in cost savings but also efficiencies. Companies that improve energy performance outperform their competition by as much as 10%⁴.

¹ Energy & Power Management, “Connecting the Dots,” Mark Jewell, June 1, 2006
²“Control of Temperature for Health and Productivity in Offices,” Helsinki University of Technology Institute of Heating, Ventilating and Air Conditioning, and the Lawrence Berkeley National Laboratory Environmental Energy Technologies Division
³ US Energy Information Administration: https://www.eia.gov/forecasts/steo/index.cfm
⁴ENERGY STAR: http://www.energystar.gov/index.cfm?c=assess_value.bus_financial_value_calculator

 

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