Every journey begins with a first step

With the business community destined to play a big part in helping to achieve the government’s national target of an 80% reduction in carbon emissions by 2050, the relationship between companies and their attitude to energy management is clearly one to be taken seriously, and the annual npower Business Energy Index (nBEI) is a tool that helps gauge business opinion on such issues.

When surveyed, ‘energy risk’ was the number one concern for major energy users (MEUs), and in particular, the risks associated with security of supply and supply costs. Energy was the key area deemed to outweigh all others – including legislation, security, and health and safety – as the primary focus of most concern to the business community.

The index questioned companies of all sizes, from MEUs to small and medium sized enterprises (SMEs) and looked at a number of key energy related areas for the business community.

With ongoing energy management strongly linked to the overall concern about energy risk, the index casts an interesting light on how large and small sized energy users are tackling the issue of energy consumption and overall management – set against the backdrop of current challenging economic conditions.

Slow out of the blocks

The nBEI showed that the importance attached to energy management and reducing consumption levels by businesses has increased since 2010. Now at its highest level since the index began in 2005, the importance rating has climbed to an average of 7.4 this year – compared to a 6.9 rating in 2010.

While the overall trend is encouraging, as businesses seek to tackle issues around energy use, the disparity in taking action between MEUs and SMEs is still stark. Some 53% of SMEs questioned admitted to still not having any energy efficiency measurement tools in place, a figure which drops sharply to just 15% for major energy users. Overall, some 41% of all businesses questioned have no measurement mechanisms in place. With measurement a key stepping stone on the journey to any improvements in controlling energy use, it is clear more still needs to be done in this vital area.

In terms of the measures businesses are undertaking, the positive attitude of the SME towards ‘quick win’ measures has increased since last year. Low cost examples such as turning lights and equipment off, deliver in their view, the biggest payback.

As yet, the introduction of equipment meters and smart meters still has some way to go, perhaps highlighting a lack of awareness concerning monitoring and measurement as key to any sustainable energy management strategy. Some 79% of SMEs, for example, did not utilise smart meter technology, stating they were unsure of the benefits.

Only by truly understanding where and how energy is being used can effective improvements be made, and for the MEU community, staff engagement was the most popular course of action to help reduce energy usage and costs.

The choice of partners on the energy management journey also differs by business size. Both admit to seeking external advice, especially around regulatory changes and advice on how to reduce emissions. However, SMEs seem to prefer to consult their energy suppliers, while MEUs are more likely to turn to NGOs or external consultants.

As well as what businesses are doing in terms of day to day energy management, for the first time, the nBEI questioned companies about demand management and self generation. With energy risk seen as the number one concern, it’s clear that what companies are planning to do in order to protect their future energy supply is vital.

At first glance, the use of self generation technology is not yet common place, with 39% of MEUs and 61% of SMEs having no self generation in place. For companies that have taken the step, CHP was cited as the most popular for MEUs, followed by solar panels. For SMEs, 22% have CHP and just six percent utilise solar panels. In addition, the changes that have been made to the Feed-in-Tariff will make next year’s nBEI interesting reading.

Conclusion

Looking at the big picture, 71% of MEUs do not view the 2050 80% carbon emission reduction target as achievable (compared to 78% last year). The shorter 2020 timescale and the more modest 34% carbon reduction, is deemed more realistic by organisations. SMEs also put large businesses in the firing line when it comes to achieving reductions in carbon emissions, citing this sector as the number one area to achieve reasonable carbon reduction levels, followed closely by households.

However, the majority of all businesses (64%), did not think current coalition government policies will help businesses reduce carbon emissions overall – views that contribute to a fragmented picture about the current and future low carbon economy.

It seems that while growth in effective energy management has been achieved, there is still much more organisations can do to reap the reputational and financial benefits available from reducing energy consumption.