Energy efficiency seems to have been a topic of choice for years now, along with greenhouse gas production s and whether global warming exists or not. The current blip in oil prices has perhaps lulled many with false sense of security as it has led to reduced energy prices. The days of $40 a barrel (or less!) won’t last forever though so perhaps now is the time to channel money saved into energy conservation. I say energy conservation rather than efficiency for a reason.
There’s little doubt that energy is a finite resource and we should all use it wisely. Various initiatives such as CRC (carbon reduction commitment) and ESOS (energy savings opportunity scheme) have helped focus on how much energy larger organisations use and on what. For some it has also provided insight into how they can reduce their energy consumption.
We all think we know about energy efficiency, with many of us turning off the lights when we leave a room and that it’s not a good idea to leave the fridge open wondering what to have for dinner. What is surprising is that, due to common misconceptions about energy efficiency, this can often lead to a net increase in energy use and therefore cost. Energy conservation is in many instances far easier to realise and offers far better rewards.
“Energy conservation” means using less energy, whereas “energy efficiency” means using energy more productively.
Here’s three energy efficiency myths I think are worth debunking:
1. Using less energy means we are being energy-efficient
Put simply, energy efficiency means using less energy to get the same output.
This means energy should be used in a more productive manner, getting more output for every unit of energy used. While turning off lights when we leave a room or turning down the room thermostat heat do mean we use less energy, this is known as energy conservation not energy efficiency.
2. Energy audits are the best way to become more energy efficient
There is no doubt that energy audits have their place when approached correctly, but can often be overwhelming and confusing. It is also critical that they conform to measurement and verification (M&V) standards to ensure a standardised approach that ensures consistency & conformity of results. Results generated should be the same if the data is given to two people of appropriate skillset irrespective of model used. The audit can be done internally or by using an external organization; typically, an external and independent audit will add weight when seeking external finance although this is not necessary when using and M&V compliant audit tool.
Energy audits that did not have a clear vision at outset and are not M&V compliant can raise more questions than answers, and this has been the challenge for some with their ESOS reports, with businesses faced seeing a confusing list of to-dos and possibilities but few tangible actions with validated benefit. It engenders the rabbit in the headlights syndrome, too many options including lighting, window tinting, adjusting overall behavior that can be overwhelming and ultimately prevent companies from getting started at all.
Key questions to answer are what are the ultimate goals, their priority and how they interrelate as sometimes they can appear in conflict. Cost reduction by changing lighting and using lighting controls may reduce cost and improve profitability, but if done incorrectly as the focus is too much on cost reduction could adversely affect productivity or decrease customer satisfaction.
3. Energy efficiency is expensive
Energy efficiency should be seen as an investment and not an expense. The savings are quantifiable and tangible as an annual operating cost reduction. They should be assessed, as with any business investment, on the benefit to the business bottom line – Internal Rate of Return (IRR) and Return on Investment (RoI) are excellent indicators as to the value any project – including efficiency measures – can bring a business.
When comparing projects based on RoI and IRR it is also important to take into account the risk of not achieving the business benefits and the direct effect on the profit and loss account. This may seem confusing, but an investment in marketing will undoubtedly bring benefit but is dependent on external factors. Energy reduction and energy efficiency projects come with far higher degree of certainty, but also consistently deliver with this same certainty for years after implementation unlike an investment in marketing. Often energy efficiency measures come with tax incentives or subsidies, that often mean they affect increase company profitability.
In many cases investment in an energy efficiency measure is not an expensive investment, if done right it can be the gift that keeps on giving.
