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From plant room to boardroom winning the argument for energy efficiency investments andre burgess - emvc solutions - 19th june
- 1. From Plant Roomto Boardroom Winning the argument for energy efficiency investments Andre Burgess, Partner EMVC Solutions June 20th 2014, Energy and Environment Expo 2014
- 2. About us • EMVCSolutions is an energy advisory business, delivering solutions in distributed, low carbon energy generation and energy efficiency services, including smart energy control and monitoring services. • As a business we believe in putting the power and the value back into the hands of businesses and communities when it comes to how they source their energy and manage their consumption.
- 3. 384 392 km Inone year, we use 31 billion barrels of oil - stacked on each other is 60 times longer than the distance to the moon…..
- 4. ... if everyoneon earth lived as North Americans… …we need to change how we consume things…… …all together, we consume almost 50 percent more of the earth's renewable resources than the earth can recover in one year.… …all the natural resources that we use are also part of the planet…
- 5. The Fifth Fuel? •An estimated £0.5bn (21%) of the UK’s energy spend is being wasted. • Energy prices are expected to continue to rise and good Energy Management is essential for business survival. • With estimates of GDP growth resulting from energy efficiency converging on around 1%, energy efficiency should be considered as part of mainstream economic policy rather than an energy issue only • Even with our ‘advanced’ technologies we have an overall efficiency of 11%. (Cambridge University, 2005) • We can never achieve 100% but….improving that performance would bring great benefits in terms of cost reduction, improved energy security, reduced emissions and job creation
- 6. The Challenge of selling Energy Efficiency TheRebound Effect: claims that key energy savings benefits are often not realised, because improved efficiency gains are undermined and counter‐balanced by increased consumption and expenditures. The Cost and the Challenge: The failure to properly evaluate the benefits of energy efficiency likely results in underinvestment in energy efficiency. Focus on Creating Value: CEOs don’t generally get to the top by cost-cutting but by creating strategic shareholder value. Something inherently dull about saving money, however worthy it is, and something inherently exciting about creating value.
- 7. Selling Multiple Benefits •Winning the argument in the boardroom involves moving from a cost-cutting approach (single benefit), to a strategic value creation approach of energy efficiency investments (i.e. multiple benefits or “co- benefits” or “non-energy benefits”) • Co-benefits include: – increased production capacity – increased productivity – increased quality – reduced maintenance costs – reduced waste disposal costs – increased employee engagement and satisfaction.
- 8. Creating a completefinancial picture 0 500 1000 1500 2000 2500 3000 3500 Year 1 Benefits Aggregate Benefits (US$ 000’s) Direct Energy Savings Utility rebate Maintenance Savings Productivity and Safety Gains Electricity Increase Hedge Illustrative Example - $4.5 million investment for lighting retrofits in multiple installations Indirect benefits Operational Savings Direct Savings Aggregate benefits measured over time results in improved NPV
- 9. CSR • Beyond thecost focus, it’s increasingly important for company leaders to ensure that corporate investments, as a whole, contribute to broader goals. • CEOs say their major motivating factors for taking action on sustainability issues, including environmental issues, are part of a broader strategy for strengthening brand, trust, and reputation.
- 10. External Incentives • Asmuch as 10% of the total benefits flowing from energy efficiency measures are likely to accrue directly to energy providers • Increased energy sales require increased capacity, and the cost of installing new capacity and transmission capability is almost always more expensive than energy efficiency measures. • Slowing demand growth generally provides net benefits to energy providers. • Utility incentives as well as participation in Capacity Markets
- 11. Deep Retrofits –the Value Elements Enterprise costs - health costs - employee costs - promotions and marketing costs Property costs and risks - retrofit development costs - non-energy property operating costs - savings create value directly for the property owner by increasing net operating income, which is capitalized to create property value, which in turn increases company value (multiple of earnings). - retrofit risk mitigation (underperforms its forecasts, creates legal and insurance problems, frustrates employees/tenants and facility managers, reduces space flexibility/adaptability, and faces current and future regulatory problems.) Enterprise revenues - customer access and sales - property derived revenues (Increased subleasing, property sales, and other revenues directly translate to value by increasing enterprise revenues) Deep energy retrofits offer bottom-line benefits for business beyond energy cost savings alone. Rocky Mountain institute
- 12. Energy Efficiency: Benefitsat Individual, Sector, National and International level IEA
- 13. The Value ofData • Energy Management Programmes • Demand Management – lowering base load – reducing peak consumption – making smaller businesses able to participate in Demand response programmes • Sustainable supply chain management • Identifying wasteful equipment and processes • Reduced supplier costs • Required for government incentives?
- 14. Thank You Andre Burgess Partner,EMVC Solutions E-Mail: andre@emvcsolutions.com Web: www.emvcsolutions.com