Rising energy costs + delays in energy management initiatives = significant $$ lost

October 7,  2010

Energy costs are the largest and fastest growing facility expense behind tax and insurance. According to Buildings Magazine, the average retail price of electricity for commercial customers in the US has gone from 8.17 cents per kilowatt hour in 2004 to 10.21 cents per kilowatt hour in 2009 — a 25% increase!

In Ontario the scenario is much the same, with the Canadian Manufacturers and Exporters (CME) predicting that hydro cost for businesses, institutions and other non-residential customers will jump between 47.1 and 63.7 per cent by 2015.

Rising energy costs mean that organizations that delay energy management initiatives will lose more dollars year over year — significantly more.

HOW MUCH DOES IT COST TO DELAY?

At ConnectivityWeek 2010, Phil Davis of Schneider Electric presented an interesting example to illustrate this point. According to Davis, for a typical 300,000 square foot building with an annual utility bill of $600,000, the cost of delaying energy management initiatives for 1 year is $360,000. The cost of delaying 5 years is a whopping $2,282,000.

Davis' numbers are based on typical energy management projects executed with a 20% energy savings. They factor in a conservative 5% increase in energy prices per year and 10% in the cost of capital. They include additional money spent on energy consumption while energy management initiatives are delayed, and increased costs of projects based on inflation.

So what are you waiting for?

Clearly energy prices are not going to decrease in the foreseeable future — with some areas expected to see increases of as much as 62% over the next five years. And if your organization doesn't have an active energy management program in place, you're probably spending between 10 and 45 percent more on energy than you need to (according to the US Federal Energy Management Program).

An energy management program doesn't have to break the bank and it's not complex to initiate. Energy management is a simple process that, once implemented, quickly gains its own momentum from the savings realized. All successful programs start with measuring energy usage. Once identified, areas of consumption can be investigated to uncover savings opportunities. Often those opportunities amount to simple equipment fixes or changes in process that can have a large impact on the bottom-line. From there, it's simply a matter of ongoing vigilance.

So what are you waiting for? For every year that you delay your energy management program you're costing your organization money — considerable money.

Gord Echlin, VP Sales and Marketing, Triacta