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Practical approach of ENERGY MANAGEMENT to sustain profitability
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Practical approach of ENERGY MANAGEMENT to sustain profitability

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OUTLINE - KEY HIGHLIGHTS! …

OUTLINE - KEY HIGHLIGHTS!
Corporate trends & potentials for energy savings to increase profitability
Barriers and counter measures for organizations to implement EE
Key success factors & steps to reduce energy costs
Support measures required from the government
What’s next?

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  • 1. Seminar On Energy Efficiency For Sustainable Business For TNB Prime Consumers 28th January 2014 Puteri Pacific Hotel Johor Bahru
  • 2.  Corporate trends & potentials for energy savings to increase profitability  Barriers and counter measures for organizations to implement EE  Key success factors & steps to reduce energy costs  Support measures required from the government  What’s next?
  • 3. Survey on 250 CFOs in 14 countries by Deloitte - CFOs are increasingly aware the benefits sustainability can bring to the business. 2/3 respondents said they are involved in driving sustainability strategies .More than 50 % said their involvement in pushing sustainable practices has increased in the past year. UN Global Compact of 766 CEOs worldwide-93 % of CEOs said sustainability issues will be a critical factor to the future success of their business 2012 Ernst & Young Survey – 66% of executives saw an increased amount of sustainability-related inquiries from investors in the past year. 70% inquiries focused on energy management and greenhouse gas emissions & more than ½ questions about sustainability reporting IS ENERGY EFFICIENCY AN OPTION OR A MUST DO NOW? University of Missouri researchers - consumers would be more willing to pay between 15 & 20% more for retail products from companies that support sustainable practices Building owners can see reduced operating costs, increased building values, greater return on investment, and higher occupancy from new and retrofitted green buildings Companies may receive reputational benefits from achieving green building certifications . A 2011 survey of U.S. adults- 64% would prefer to patronize a business whose facility is certified as green, while 48% indicated that green certification of a facility improves their image of a company. UNEP - GEO-5 for Business Impacts of a Changing Environment on the Corporate Sector
  • 4.  Energy efficiency potential used by sector in the New Policies Scenario  2/3 of the economic potential to improve energy efficiency remains untapped in the period to 2035
  • 5. Source: ESCO TREASURY BUILDING, MINISTRY OF FINANCE OF MALAYSIA 17% reduction of electricity bill in 2011 based on 2010 baseline consumption – SEDA Malaysia
  • 6. 160 companies - 60% of Ireland’s industrial energy use 2% improvement in energy performance per year Long-term members - have improved performance by 33% (1995 and 2010) energy Energy Management Standard helps up to €150m in avoided energy costs (2005-10)
  • 7. SOLID FOUNDATION WILL ENSURE SUSTAINABLE RESULTS
  • 8. SAVING POTENTIALS  Pumps (25% - 35%)  Chiller (20% - 25%)  AHU/FCU (25% - 35%)  Cooling Tower(15% - 20%  Lighting System (40-60%)
  • 9. (Source: Energy Conservation Centre of Japan, 2011)
  • 10. Profitability Sustainability Competiveness Competency Working environment quality SALES & ENERGY COST SAVINGS Corporate Image Operating Costs Energy Risks – price fluctuation & supply shortages INCREASE USERS’ COMFORT Pollution Carbon emission Depletion of fossil fuel BOOST IMAGE & VALUES
  • 11. GENERAL ISSUES FINANCIAL SUPPORTS • Lack of tangible assets as collateral/guarantee • Pressure &demand for short payback period Resources INFORMATION •Uncertainty in economic & regulatory framework •Vague expectations •No/Short term policy • Time &human resources • Inadequate technical know-how • Poor/inaccurate estimation of energy saving potentials • Lack of reference data (baseline/benchmarking) TECHNICAL SUPPORTS & ADVISORY • Lack of competent & reliable service providers
  • 12. EEPs viewed as “Infrastructure Investments” – LOW PRIORITY VS. CORE BUSINESS – don’t fix if not broken  EEPs funding through loans/debts WILL IMPAIR “CREDIT CAPACITY” from core business – NO WAY for SMEs/SMIs  BENEFITS ARE TOO SMALL TO APPEAR ON CEO’S RADAR SCREEN & to justify “perceived’ operating complexities/risks   NOT CONVINCED ON ACTUAL COST SAVINGS ACHIEVED nor aware of proven Measurement & Verification(M&V) methods to ensure sustainability of savings.
  • 13. MANAGEMENT COMMITMENT MANAGEMENT REVIEW ENERGY POLICY SYSTEM & PERFORMANCE CHECKING PLANNING IMPLEMENTATION & OPERATION Energy saving measures – to bring results in improving energy performance & cost reduction!
  • 14. MEASURES With LOW/NO COST Minimal Cost Savings MEASURES WITH HIGH COST Significant Cost Savings • Management Directives • Implementation of EnMS - to ensure sustainability of energy cost reduction initiatives •Priorities of budget - core business/operations •Investment risks •Limited human resources & expertise In-house initiatives May require expert assistance & external financing
  • 15. ENERGY SAVING MEASURES/PROJECTS Expertise/ Competency TECHNICAL VIABILITY FINANCIAL VIABILITY SUSTAINABILITY PLAN EnMS (ISO 50001) Performance M&V Financial criteria & sources
  • 16. Clearly state the VALUE PROPOSITION upfront Briefly describe THE WAY THE BUSINESS CASE PROPOSAL WAS DEVELOPED Describe TECHNICAL CHANGES REQUIRED & relevant planning issues List & describe all key COSTS & BENEFITS State key project risks & how to manage them Describe the FUNDING/SUPPO RTS that being sought EE projects aimed to reduce energy costs TO INCREASE PROFITABIITY!
  • 17.  Must be strategically prepared to get the approval from the top management to IMPLEMENT!
  • 18.  The presentation to precisely address:  what they like to hear, see & talk about  what is the return from the Decisions will be based investment & how soon they can get back the return  on what THEY WANT TO HEAR rather than what are what YOU WANT TO PRESENT! the risks & measures to mitigate the risks  how to get the savings(may be the only technical element in the presentation)  decisions/total fund required to kick-off the project
  • 19. PRESENT LIKE A GREAT SALES MAN!
  • 20. ISO50001:2011  Energy Management Systems Requirements With Guidance For Use Energy performance improvement for energy using services  ISO 55000  An overview of the subject of asset management and the standard terms & definitions to be used  ISO 55001  The requirements specification for an integrated, effective management system for assets- defines requirements for a management system  IS0 55002 provides  Guidance for the implementation the system  To be launched in Jan/Feb 2014
  • 21. WHAT’S NEXT?
  • 22.  Solution or technology based approaches?; or  Project based ; or  With corporate sustainable energy management program with action plans, clear targets & strategies?
  • 23.  To view energy efficiency as an industry with its own economic potentials  Clear policy goals & targets  Strong governance & comprehensive framework  Consistency, accountability & competency with One-Stop Centre Agency  Inclusiveness in policies development & reviews
  • 24. Technical Assistance & Advisory Incentives & Financial Assistance  SMEs & SMIs - energy audit & guidance  Continue & enhance fiscal incentives  Technical assessment by the competent agency on EE projects for financing purposes  Business friendly & transparent procedures & evaluation criteria  Low interest loans with dedicated revolving fund for EE projects.  Grants based on annual government budget for specified initiatives 7 awareness programs   Measurement & verification of performance deployment of experts for technical assistance & advisory
  • 25. INTRODUCTION & AWARENESS IMPLEMENTATION & SUPPORT MEASURES PERFORMANCE MONITORING& MEASUREMENT CREATED •Business & job opportunities •More experts/workers from energy efficiency industry •New source of economic growth •More Direct Domestic Investments IMPROVED •Energy Performance •Competitiveness •Profits •Environmental quality REDUCED •Energy consumption & costs •Pollution •CO2 emissions
  • 26. THANK YOU!