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How UK energy managers can get C-Suite buy-in for a longer-term energy management plan

  • 4 years ago (2020-03-03)
  • Junior Isles
Demand side management 2 Demand side response 2 Energy management 1
Ben Spry

By Ben Spry

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Energy management has never been more fundamental to a business. Yet, it was not that long ago that energy supply and usage was considered a necessary cost and part of doing business, but it was often an afterthought and something that seldom made its way into boardroom discussions. It simply wasn’t viewed as a central component to help a business achieve its overall commercial and strategic goals.

However, energy managers know that their role has changed drastically, and that energy should be a critical item on their C-suite’s agenda. They know that with ever-mounting energy costs, achieving greater efficiencies will be even more vital to their organisation’s bottom line. Furthermore, with many businesses pledging to meet the Government’s net-zero emission target of 2050, sustainability has by default become an essential part of business policy and a robust energy management plan is needed to hit this target.

Yet, in our research last year we found that 20 per cent of UK energy managers reported that less than half of their energy efficiency plans had been implemented into business policy [1] , suggesting they are struggling to get buy-in from senior executives to adopt a comprehensive energy management strategy.

Although energy managers know that standing still is no longer an option, it’s hard to shift attitudes within the board without backing up your arguments with the numbers, facts and projections that prove this reality.

With this in mind, here are five key points that UK energy managers should be making to their board to get them to shun short-term thinking when it comes to energy management:

1. Ride or be washed away by the wave of regulatory change

Energy regulation is a difficult subject to get senior executives to engage with, but there are big shifts in energy policy that are underway now that have the potential to deeply affect the business cases for many energy initiatives. Ofgem's recent announcement on the Targeted Charging Review and the move away from a pence-per-unit charge on consumption over the three TRIAD peak periods to a fixed charge will particularly affect those businesses who have invested in flexibility and Demand Side Response (DSR) measures.

Although on the face of it, it may seem like there is less of a commercial benefit to investing in flexibility services, by effectively navigating and taking into account other policy changes, business consumers can still find alternative ways to justify their business cases.

By participating in the reintroduction of the Capacity Market – National Grid’s Balancing Service – and new local schemes by Distribution Operations, plus wholesale market optimisation, energy managers can still accrue revenue to help support their flexibility initiatives.

2. Develop a 2050 plan to meet net-zero

Although setting a clear target on carbon reduction is a positive step, it’s meaningless if boards don’t also mandate an energy management plan to get there. Businesses need to ensure they are following Government guidance. For instance, that their buildings have strong energy performance ratings, they are decarbonising transport across their business and encouraging greener ways of working.

Furthermore, the business case for adopting sustainability initiatives goes beyond simply honouring a pledge made to achieve net-zero. With non-commodity energy costs set to rise by at least 20 per cent over the next five years – mostly from green levies – reducing energy usage will help offset future charges and penalties.

3. Mobilise staff to effect greener practices

Senior executives may struggle to think of energy as little more than a matter of supply and cost, let alone to extend this to an issue of changing employee behaviour. Yet, encouraging staff to adopt greener behaviour is one of the most effective things businesses can do to reduce their energy consumption. Energy managers can get boards to kick-start this by pressing them to commission a carbon psychology assessment to pinpoint the main drivers for staff engagement and then identify bespoke measures to increase staff awareness and encourage ownership of energy savings.

4. Highlight the long-term benefits of onsite generation and battery storage

Onsite generation and battery storage are likely the most significant up-front investments a business needs to make. However, in the long run, these initiatives can pay off in a big way. Both measures allow businesses to start engaging in DSR, making energy usage more efficient around peak times of demand and selling surplus energy back to the grid for an additional revenue boost. Furthermore, both of these schemes help improve a business’s overall energy resilience and reliance on the grid, which naturally came to the fore during the power outages we saw in the UK in August 2019.

5. Unlocking the true power of a data-led energy strategy

It is likely that boards already know that they need to install smart or AMR meters, but this is only the first step and if this is all businesses do, they won’t really unlock the true benefits of a data-led energy strategy. At its most basic level, metering can be used to monitor and periodically adjust their energy use. However, with a more advanced package, energy managers can help their businesses engage in more active management. Beyond this, they can also make use of forecasting tools to plan and manage future consumption for even greater cost reductions.

Making the business case for a long-term energy management strategy is no mean feat. However, by helping senior executives understand the benefits of each of these initiatives, you will have a better chance of convincing them that energy management should be a central part of the overall business strategy.

Feel free to check out our recently-launched Energy HQ ready-made presentation template to help you prepare to present to your C-suite.

[1] Survey of 500 UK business energy/utility decision makers commissioned by npower Business Solutions, conducted by OnePoll: August 2019