Making the business case for implementing energy efficiency measures in a tough economic climate

01 Dec 2009Archived News Climate Change Matters

EEO Program participants were asked how they were making business cases for energy efficiency projects, to increase the likelihood of getting the resources they needed for implementation. Many reported that the GFC has reduced the availability of capital for such projects over the past 12 months. This has made it even more important to prepare a detailed and comprehensive business case.

Excerpt below from “Sharing Lessons From Assessments: latest updates from participants at the 2009 EEO workshops”, Energy Efficiency Opportunities program, Department of Resources, Energy and Tourism. To view the article in full, go to the EEO website)

Making the business case for implementation in a tough economic climate

The following strategies were identified by participants:

  • using a concise, clear format—factual and to the point;
  • using statistics and external, verified data to add weight and credibility to the proposal;
  • writing and acting with a sense of urgency;
  • highlighting the benefits of energy efficiency in reducing business costs in a difficult economic climate;
  • measuring and promoting whole-of-business benefits, e.g. production, scheduling, maintenance, corporate social responsibility, safety, risk management, interest from superannuation funds etc.;
  • using case studies or scenarios to build the business case;
  • getting decision makers involved early in the process to ensure their priorities are incorporated;
  • using shadow pricing to include the cost of carbon;
  • building-in future energy price rises;
  • applying for funding through the development/business improvement part of the business (rather than operations), emphasising benefits such as increased production or new markets; and
  • developing a cost abatement curve.

The GFC has also prompted many organisations to develop new strategies for identifying or
implementing opportunities. These include:

  • using production downtime to redeploy staff to assess and implement opportunities for energy savings;
  • using downtime or shutdown of plant or equipment to install a metering system or optimise the existing performance of plant or equipment;
  • identifying ‘quick win’ opportunities;
  • ‘milking assets’, i.e. looking for efficiency opportunities from existing assets (no capital required);
  • moving ahead on low cost opportunities with paybacks of less than 12 months, e.g. fixing
  • compressed air leaks;
  • focusing on detailed evaluation or progressing the implementation of existing opportunities rather than identifying new ones; and
  • looking for external funding (e.g. government grants).

Leadership, people and communication

One of the challenges workshop participants continue to face is getting key decision makers from
across their businesses to support energy efficiency assessment processes. However, it is an essential part of conducting an assessment and gaining sufficient support to implement initiatives.

On the second day of the workshops, participants were asked to identify key decision makers and to develop strategies to better engage with them.

The discussion highlighted the importance of:

  • understanding the interests and concerns of each stakeholder;
  • identifying their experience and interest;
  • developing an approach to build their support that includes clear and focused messages, as well as relevant, evidence based data and information to support their case.

Some of the different groups, and strategies to get their buy-in, are summarised below:

Strategies to build support from internal stakeholders

Senior management

  • Stress compliance, corporate reputation and cost savings, e.g. cost savings per tonne of product and reduced cost of carbon permits.
  • Highlight the benefits for performance, process control and long term strategy for the business, i.e. use a business improvement rather than an environmental management approach.
  • Use case studies and performance to date to convince them of the benefits.
  • Use the risk management channels/systems within the business.
  • Use acquisitions as an opportunity to engage and remind senior management of energy efficiency opportunities.
  • Highlight the cost of energy including current prices and projected increases in energy costs.
  • Identify the external stakeholders who will be affected by the program, e.g. superannuation fund investors, customers and shareholders.
  • Benchmark against other companies to show management what can be done.
  • Develop a corporate plan for energy and climate change and report to the Board monthly.
  • Link to key business drivers and future plans.

Technical/site staff

  • Capture ideas from staff and feed back the results—this will encourage ownership.
  • Develop a plan for the assessments and get sign-off from CEO and senior operational manager—people won’t allocate time without a directive from above. Ensure there is a consistent corporate policy.
  • Educate them about the benefits and incorporate into business/financial planning.
  • Use staff training or toolbox meetings. Provide the option of an ‘ideas box’.
  • Appoint project champions to help drive the program—either identify people with experience or interest, or ask employees to self-nominate
  • Use KPIs to drive energy efficiency. Make people accountable. Link to salary reviews.
  • Ensure adequate communication about EEO from management, including goals and timeline.
  • Implement opportunities with immediate cost savings to help motivate people. Trial ideas on a small scale to demonstrate success.
  • Encourage competition between sites or between shifts, eg Plant 1 v Plant 2.
  • Use ‘playing your part to reduce GHG emissions’ as the driver—some staff are more interested to contributing to a better world than increasing profits.
  • Emphasise iterative improvements and the many levels of benefit.
  • Help employees to relate to the issue, e.g. by issuing energy meters to staff at work, and to take home, so they can understand how much energy their appliances use.
  • Use rewards and recognition to motivate staff. Provide regular positive feedback. This can be as effective as financial rewards.
  • Understand personal and business drivers, e.g. compliance, financial, environmental.
  • Provide people with the opportunity to contribute something meaningful.
  • Consult staff throughout the process to engage them.
  • Link to other company and site goals, objectives and policies.
  • Link to operational, site and technical manager’s key concerns, e.g. maintenance,
  • OH&S, staff turnover. Energy efficiency opportunities can often identify opportunities to improve performance in other areas.
  • Use peers to promote the program rather than management.
  • Use symbolic projects, e.g. giving out packs with energy efficient light bulbs.

Another challenge identified by participants is the need to maintain momentum once the initial assessments have been undertaken. Some of the solutions being pursued by EEO companies include:

  • building EEO into existing business systems, KPIs and reward systems for staff;
  • providing regular feedback to staff on outcomes, including savings in energy and GHG emissions;
  • making sure that energy efficiency projects and results are regular agenda items for management meetings, with monthly reporting of KPIs;
  • building EEO into site and operational plans or targets, business plans, and CAPEX plans; and
  • providing training for staff to improve their knowledge and skills.
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