Energy efficiency benefits: much more than just a reduced cost on your P&L

For many years now, and due to recently escalating energy prices, energy efficiency has been primarily sold as a cost reduction exercise. “Save money”, “We sell savings” companies would broadcast. “Reduce your lighting bills by over 90%” with the latest and greatest technology etc. etc. You get the picture. Some of it could easily have been on TV at 2am and come with a free set of saucepans covered in some mineral deposit.

Yes, energy efficiency done properly does save money and that is very important. Ongoing cost saving (expense reduction) is one of the key decision drivers in many organisations as to whether to make the investment in energy efficiency. What will I get back for my investment and how long will it take to pay for itself?

A good quality energy efficiency project however, should be able to demonstrate much more than just good energy savings.

There are effectively three categories of benefits to be taken into account in energy efficiency projects: energy cost financial, non energy cost financial and nonfinancial or indirect benefit. The energy cost financial benefit is straight forward. Reduce energy consumption and your bills go down. You save on energy costs. Other direct energy cost financial benefits may include any government incentive or carbon reduction scheme such as the NSW Energy Savings Scheme (ESS) or Victoria’s Energy Efficiency Target (VEET). The financial benefits of non energy costs however can be significant – sometimes greater than the energy costs themselves. A few examples of these benefits are:

• Maintenance savings of the replaced/refurbished equipment
• Improved Indoor Environment Quality (IEQ) through better lighting and climate controls etc.
• Improvements in occupant/employee productivity
• Improved occupant health – less absenteeism due to illness

The above benefits are hardly hypothetical either. There is empirical evidence of all the above benefits both in Australia and abroad.

Non financial or indirect benefits may include enhanced building or company reputation, corporate social responsibility (CSR) and improved NABERS or other green rating credentials. While indirect, these benefits can also result in significant financial benefits, as evidence on improved NABERS rating in commercial buildings suggests.

The Fifth Estate, ‘Green Property Index: Green buildings outperforming market’, 20 February 2014

A well proposed energy efficiency project must be able to demonstrate all the benefits relevant to the project.

Delivering energy efficiency at KMH is much more than just a reduced cost on your P&L. It’s about working with you to improve business performance. The benefits go beyond the simple energy savings calculation.

Want to know more? Contact KMH or get in touch with me directly.

Robert Nicholson – Technical Director, Energy Services