Businesses Are More Apt To Invest In Energy Savings Products When There Are Many Ancillary Benefits
A Jan. 6, 2015 report on the multiple benefits of energy efficiency.
You own a company. You’ve been told again and again that you can save energy and reduce your utility bill if you invest in equipment such as a lighting retrofit.
You want to make the investment, but you’re leery of the short-term cost and afraid that it will take too long to recoup your investment.
What should you do? Many business executives choose to not make the investment, but what if you were informed that your investment in energy-savings equipment also has non-energy benefits such as increased productivity, lower labor costs, better products, and increased profits?
You might choose to make the investment if you understand the ancillary benefits of energy-savings products, or at least that’s one of the conclusions of a Jan. 6, 2015 report issued by the American Council for an Energy-Efficient Economy. The 41-page report is entitled “Multiple Benefits of Business-Sector Energy Efficiency: A Survey of Existing and Potential Measures.” Author Christopher Russell reports that non-energy benefits of energy-savings products are historically difficult to quantify, but he concludes that the benefits are very tangible.
“Business leaders take note: the bonus value of energy efficiency’s multiple benefits amplifies the return on energy efficiency investments,” wrote Russell in an article that summarizes his report.
According to Russell, a lighting retrofit that reduces how much electricity a business uses simultaneously results in lamps that last much longer. Thus, he writes, a lighting retrofit also reduces the labor costs of replacing lights. In another example, he reports that companies that buy a product that reduces a boiler’s natural gas consumption also find out that the product increases the manufacturing plant’s production.
“By implementing energy efficiency, businesses can also boost their productivity,” Russell wrote. “”This additional value may make the difference in a business leader’s decision to pursue certain capital investment for their facility.”
The 41-page report lists 19 non-energy Business benefits and five Societal/environmental benefits of investing in energy-saving equipment.
The Business benefits are broken down into four categories — benefits that increase revenues, benefits that reduce expenses, benefits that improve capital performance, and benefits that reduce risks.
“Each dollar of energy savings contributes one full dollar of operating profit,” notes the section on Expense Reduction.
Some of the benefits listed seem obvious, but many business executives probably don’t think about the fact that saving energy can also enhance workplace health and safety, but “human health and safety hazards” are reduced as “mechanical hazards may be ameliorated commensurately with reduced energy consumption,” according to the report.
Reducing energy consumption can also reduce maintenance costs, costs of emissions compliance, insurance premiums, and “waste coincident with more efficient use of energy.”
The five Societal/environmental benefits are:
* Greater wealth and higher employment.
* Better energy security.
* Fewer air pollutants.
* Healthier water.
* Lower energy prices.
“Reduced energy waste (due to better energy consumption) reduces proportionally the need to invest in energy generation, transmission, and distribution capacity, thus easing the system cost of energy provision borne by all utility consumers,” the report says in its section on energy prices.
The 41-page report cites two surveys of business executives to prove that improving energy consumption has non-energy savings.
A 2004 survey reported that 47 percent of business executives surveyed said that improving energy consumption decreased their non-energy operating costs while 40 percent said it decreased maintenance, 33 percent said it increased production or productivity, 27 percent said it increased employee morale and satisfaction, and smaller percentages of executives cited decreased waste generation, decreased detect/error rates, decreased personal needs, increased sales, and increased equipment life.
A 2012 survey reported that 92 percent of business executives surveyed said that improving energy consumption reduced their companies’ material costs, 71 percent said it reduced maintenance labor, 63 percent said it avoided procurement costs, 44 percent said it enhanced their public relations image, 33 percent said it helped them avoid permanent capital expenditures, and 10 percent said it helped them avoid purchases of carbon offsets.
Russell wrote that the surveys are important.
“Everyone knows that energy efficiency results in saving energy, but evidence points to an array of wider benefits,” he wrote.