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Why Your Organization Must Prioritize Energy Management

Here’s what you need to know about the current energy management landscape and how to prepare your organization for the future.

December 5, 2022
5 min read

Energy. For consumers, it has quickly become synonymous with rising bills and increased financial stress. And while this has only recently become a hot topic thanks to the ongoing war between Ukraine and Russia, the truth is that it has been a big concern for businesses for years.

Indeed, its influence is so vast that many organizations around the world have begun looking closely at their energy profiles and trying to identify opportunities for increased resilience, decarbonization, proactive energy risk management, and cost reduction. It’s an important push, and why we’ve examined how organizations can effectively unlock energy efficiency in our Smart Energy Management whitepaper.

The Role of Energy in the Current Climate Crisis

A quick scan of the news will make it clear just how big an issue energy management is for businesses. The warnings from eminent scientists that something must be done to reduce our carbon footprint have been resoundingly delivered, and – according to King Charles’ notes on COP26 – we are now in the ‘last chance saloon’ to save the world from runaway climate change. What’s worse, the narrative from COP27 is already that not enough progress is being made.

And while buildings may not receive the same prominence as the other poster boys of pollution, like vehicle emissions or agriculture, the impact they have on our carbon output is huge. According to this EU report:

  • Buildings in the EU are responsible for 40% of our energy consumption and 36% of greenhouse gas emissions
  • 75% of Europe’s buildings are not energy efficient today
  • 95% of those buildings will still be in use in 2050

This means that, particularly in times of energy crises, property owners are leaving a lot of money on the table.

And solving this problem will require huge effort. According to the European Environment Agency, to reach the overall EU objective of a 55% reduction in emissions by 2030, the building sector would need to reduce its own emissions by a whopping 60%.

The good news? Organizations and government agencies are willing to do what it takes to improve. The UK government, for one, has announced several steps towards energy and data digitalization over the past few years, having recognized the need for digitalization of the whole energy system. The resulting Energy Digitalization Strategy was developed by the government in collaboration with Ofgem and Innovate UK, in recognition of the need to coordinate national policy to this end.

Looking more broadly, according to ResearchandMarkets, the global smart energy management market is expected to reach $47.64 billion by 2029, growing at around 15% per year between now and then.

Additional Drivers of Change

Away from the macro agenda of carbon reduction, there are other factors driving the adoption of smart energy management. Not least of these is the volatile energy market and huge cost increases caused by Russia cutting supplies to the West. Asa result, international prices for both LNG and coal tripled between 2019 and 2022, while oil prices doubled during that same period. These surges were particularly dramatic in Europe. In the first quarter of this year, the average month-ahead price for wholesale gas surged above €120 per megawatt hour (MWh) — six times the historical average, and this price is heavily linked to European power prices.

These kinds of figures greatly impact operations and production costs for organizations in energy-intensive sectors. For these companies, overall costs increased more than 100% as a result of higher energy prices, leading to margin compression and presenting a direct threat to operations and competitiveness.

Businesses also must increasingly factor in the impact of severe weather events. Particularly in the United States, power outages – caused by severe climate events like ice storms, hurricanes, and wildfires – have been cited by manufacturing executives as the biggest threat to their current electricity supply. But Europe is not immune. In the last two years, there have been:

  • Floods in Germany
  • Wildfires in Greece and Portugal
  • Extreme drought in a number of countries
  • The hottest ever temperatures in the UK this year and the UK recording its hottest ever temperature earlier this year

This trend suggests that similar events will continue to arise – and European businesses will need to adapt accordingly.

Creating a Connected, Smart Workplace Can Help

The influences driving energy management are not all bad. We’re also seeing a huge amount of change being delivered through Industry 4.0. Technologies like artificial intelligence (AI), cloud, and the Internet of Things (IoT) continue to provide heretofore unattainable opportunities to create a truly connected, “smart” workplace. These developments are:

  • Leading to improvements in analytics and insights
  • Helping organizations to manage, optimize, and maintain assets from anywhere, at any time
  • Driving a move toward “smarter” management of heating, cooling, and industrial equipment like pumps, generators, lighting, and equipment

The combination of these new tools and developments can not only help to reduce waste and carbon emissions but, when done properly, also improve the economic competitiveness of a company. Indeed, according to McKinsey, the organizations that are fastest and boldest in their energy management efforts can achieve sustainable margin improvements of up to 10% while simultaneously reducing their carbon footprint by 40% or more.

Deliver Cheaper, Greener and More Sustainable Operations

Having an effective energy management system is critical to:

  • Controlling and reducing the amount of energy a business uses
  • Reducing cost
  • Lowering risk, and;
  • Controlling carbon emissions

When set against the background of the drive towards net zero, geopolitical shifts and the strong potential for new energy efficiency legislation, there is much work for organizations to do.

With pressure on both corporations and individuals around the globe to optimize their energy usage increasing by the day, now more than ever is a good time to embrace and adopt smart energy management to deliver cheaper, greener and more sustainable operations.

To find out more, please contact us here. Alternatively, you can download your copy of the Smart Energy Management whitepaper here.

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December 5, 2022