Bringing down energy costs can be transformative for businesses: Milly Camley

Camley, perhaps due to his hardier Scottish constitution, seems to have his own

personal central heating system, whereas I get chillier and thus more inclined to

switch up the dial. Even worse when we’re both working at home.

Such different sensitivities to temperature are replicated across workplaces – at our

place we have similar skirmishes over the air con and heating. It’s a good thing we

all like each other.

Just as I’ve become fonder of an extra jumper since energy prices peaked in late

2022, so we see businesses integrating energy efficiency into their operations and

culture. We recently held a conference for university leaders and one Vice

Chancellor spoke with feeling about introducing rigour to energy practices and costs

after finding radiators roasting away when it was warm outside or empty inside.

Turnaround brings together optimal efficiency and better long-term plans, focusing

on controlling what we can and taking a positive approach, so we recently had a look

at how businesses are adapting to the ‘new normal’ of the highest energy prices of

any industrialised nation.

Finding a viable way to manage energy costs is for many companies the single

biggest strategic issue they face. So how can companies build resilience amidst high

energy costs? Microgeneration is one potential solution. Some are in assets like

solar panels or wind turbines (after considering the trade off for any such investment)

or by entering into a direct Power Purchase Arrangement (PPA) with a generator. Of

course, this approach is dependent on the sector, geography - and the assets

available too.

Companies that can make a capital outlay have been smart in investing in more

energy efficient equipment. One of our members, Alun Tribe of IMIG, an expert in

operational transformation, commented to us that some moulding, machining and

casting equipment can be twice as efficient as the kit that dates back thirty years.

Achieving the associated savings – into the hundreds of thousands a month - can

very obviously increase margins and competitive edge.

Thinking about that savvy Vice Chancellor, reducing demand and matching

requirements to use is an obvious sensible approach. This can include considering

what temperatures are required for what processes and products – insulating and

heating accordingly, as well as storing, co-locating and making products in the right

place. This also throws up other opportunities: if a process generates heat as a by-

product, how can this be used effectively?

Most businesses will be looking to get the best possible deal from suppliers, and

energy is top of the list, so negotiating with suppliers is essential. Just as for home

energy, there can be a wide disparity across suppliers and products. It’s well worth

taking the time (and where needed expert help) to review contracts in more detail.

Just as at home, many businesses are working with old fashioned fixed price

contracts where there are new products that provide for more control and greater

efficiency. Hedging is also a consideration, especially where we are so influenced by

world events, but take care as this requires specialist help.

In the meantime, at home and at work I think we’re hoping for milder weather and

milder geopolitical conditions.