Recently, the Guardian held a seminar to discuss the methods by which small businesses can improve their bottom line through energy efficiency. After reading this, EiD wished it had been there but thankfully Matthew Jenkin wrote an excellent account of the event.
Small businesses strive to be lean and green
UK SMEs have much to gain from cutting energy bills. But with workforces to be won over to the cause – as well as landlords wary of funding major modifications – the obstacles are significant
Steven Chu, then US secretary of energy, famously said: “Energy efficiency isn’t just low-hanging fruit – it’s fruit lying on the ground.” The potential savings that can be made from investing time and money into streamlining a company’s energy usage are huge. According to a recent report commissioned by the government’s climate advisers, the financial benefits of millions of households and businesses taking measures to reduce energy wastage could be worth several billion pounds a year by 2030.
Outlining his commitment to a low-carbon economy, Britain’s energy secretary Ed Davey claimed we could be saving 196 TWh in 2020 through investment in energy efficiency – that’s equivalent to the output of 22 power stations.
Small and medium-sized businesses have much to gain, therefore, from cutting their emissions. Energy is one of the biggest overheads for SMEs, so insulating offices and producing clean energy could potentially save thousands on fuel bills. But what exactly is the “fruit on the ground” for an SME? And how can entrepreneurs squeezed for time and money streamline the way they power their companies?
The methods by which small businesses can improve their bottom line through energy efficiency was the subject of a recent Guardian seminar, held in association with E.ON. The evening saw SME owners from across the UK joining energy experts to debate what can really be done to reduce demand and bring those bills down.
While there are many technological solutions, according to panellist Siân Evans, SME customer engagement manager at E.ON, you first need to understand how you are using your energy in order to find ways to reduce it.
“It doesn’t have to involve massive capital investment,” she said. “It can be as simple as turning off the light and changing the lightbulbs. Those seemingly insignificant steps, when added together, can lead to some significant savings.”
As Evans was quick to point out, the SME market is incredibly diverse. From bakers to candlestick makers, the energy needs of each business can vary dramatically. There cannot be, therefore, a one-size-fits-all approach to energy efficiency for small businesses. However, there are simple measures that all firms can implement to reduce energy wastage.
Panellist Allen Creedy, environment, water and energy chairman for the Federation of Small Businesses, identified three main approaches to cutting the cost of powering an SME. The first is the simple action of switching off lights and equipment when not in use. The second step is the more complex task of upgrading devices, such as the thermostat, to ensure energy output is kept as lean as possible. And finally, business owners should look into changing the very fabric of the building – investing in insulation, draught proofing or double glazing.
A different mindset
Behavioural changes such as flicking a light switch or powering down computers at the end of the day may sound overly simplistic and trivial, but, as Gateway Energy Solutions managing director Andrew Kneeshaw explained, they can have a major impact on the business’s overall productivity.
He claimed an increased awareness of energy efficiency has led to huge savings for many entrepreneurs, and that there have been significant drops in energy usage across several industry sectors over the past 10 years.
“There are two sides to this,” he commented. “One is the fact that we are probably producing things better, but then there’s also the fact that people have become much more focused on energy efficiency. There are sectors that I am quite heavily involved in – agriculture for instance – where we have seen something like a 25-35% drop in energy use output.”
Bio-bean founder and panellist Arthur Kay admitted time constraints and a tight budget makes implementing even simple energy saving measures difficult in reality. The onus to reduce wastage in the office is not just on the business owner – energy saving needs to be a team effort. But encouraging staff to care about a bill they will probably never see can be a struggle. Audience member Robert Watts, environment and sustainability manager of green stationery business Wiles Greenworld, asked why it should be so difficult for both SME owners and employees to change their habits.
Kneeshaw insisted we should do a lot more to encourage people to care about the energy they use in the business – and that boils down to upselling the benefits. While we’re all very careful at home to switch everything off as we leave the house to work, somehow in business we forget to do it.
“Sometimes you struggle to push people because they can’t quite grasp the consequences,” he said. “It’s a constant battle and it’s building awareness of the benefits that’s really important.”
The right data
Identifying exactly where changes need to be made can be a nightmare, however, if all you have to go on is a bill that spans months of energy usage. The seminar heard how the eventual installation of smart meters will offer small business owners an easier way to track energy usage, and that energy monitors are a useful interim measure.
According to Evans, there is an incredible amount of potential to use the data collected by smart meters to reduce energy wastage. Could this technology be just the tip of the iceberg?
Creedy envisages an enormous number of apps being developed, allowing SME owners to use a smartphone to analyse a building’s energy efficiency.
“We’re looking at SMEs being empowered by the rollout of smart meters from 2015 onwards,” he said. “If we were meeting in two years time I think we would be discussing a very different agenda, because there will be a mechanism in most businesses where you can understand your energy consumption. You will have the power in your hands and will know whether it’s going up and down, day and night, and be able to work out how to best reduce consumption and where to spend the money.”
More ambitious energy-saving projects, such as embracing renewable energy and investing in structural improvements to the office, are still out of reach for many SME owners, as they are based in rented properties.
Mark Ormiston, managing director of Ormiston Wire Ltd, pointed this out to the panel. He said his company, a specialist wire manufacturer, had implemented expensive energy-efficiency measures over the past 20 years, but the problem remains, that installing devices such as solar panels on rented properties is simply not possible.
Fellow audience member Dave Banks, from consultancy Concept Energy Solutions, agreed, claiming there is currently little incentive for the leaseholder to improve a property’s energy efficiency, bearing in mind the returns and the complexities of doing so. The landlord is faced with the expenditure of these improvements but the tenant takes the benefits. That has to be overcome.
Persuading landlords and those who own the building stock to invest in energy efficiency is a key area we need to focus on, admitted Creedy. Creating tenant/landlord partnerships where both parties reap the benefits could be one way forward, he suggested.
“We have to raise our game, whether that means incentivising landlords to invest or penalising them,” he said. “Something has got to be done because those people are in the driving seat of energy efficiency. Unless it’s going to engage with them in a meaningful way on a political level, whether that’s locally or nationally, we won’t achieve it.”
A question of image
Despite the obstacles to energy efficiency, the rewards for small businesses that are able to change the way they use power are undeniably great. Creedy suggests part of the reason businesses have been slow to get involved is down to the topic’s image.
“Energy efficiency has got to become sexy and resonate,” he said. “The way we communicate it has got to become attractive and engage with people.”
He urged consumers to be more savvy, too. We need to recognise, he said, that energy companies are starting to offer advice and that may save us a great deal of money. Entrepreneurs should not only look at the price of the kilowatt hour they are being charged, but also investigate the extra services that might be available to them.
Key discussion points
• Energy efficiency doesn’t have to involve massive capital investment – steps to cut bills can be as simple as remembering to switch lights and equipment off when not in use
• Reducing energy costs is a team effort and it is important to find ways to engage staff by raising awareness of the benefits and providing incentives to care
• Smart meters can help SME owners track the amount of energy being used, while smartphone apps may hold the key to monitoring energy in the future
• Persuading landlords and those who own the building stock to invest in energy efficiency is a key area we need to focus on. Creating tenant/landlord partnerships where both parties reap the benefits could be one way forward
At the table
Terry Macalister (chair) Energy editor, the Guardian
Siân Evans SME customer engagement manager, E.ON
Arthur Kay Director, Bio-Bean
Allen Creedy Environment, water and energy chairman, Federation of Small Businesses (FSB)
Andrew Kneeshaw Managing director, Gateway Energy Solutions