Good Energy Management is Good Business
Whether your business is manufacturing, real estate, retail, healthcare, education or government, controlling and cutting costs is important for success. Reducing energy use and increasing energy efficiency is a proven strategy for cutting and controlling costs with good returns.
Even with good returns, energy waste is still prevalent throughout organizations. Consider that:
- A 400% variation in energy use intensity of buildings in the United States exists that is not explained by age, technology, hours, size, climate.
- Little improvement of overall energy consumption has been seen although building components are 30% more efficient since 1980.
- Oversizing building fan systems, on average, occurs by 60%.
- Most chillers are oversized by 50–200%.
Unfortunately, capturing energy waste has been hampered by a lack of focus on energy management. Too often energy management is characterized as:
- Focused on paying bills & running the powerhouse
- Considered capital intensive
Organizations that have adopted effective energy management strategies and built successful energy programs have had different results. Consider the following:
- Ford Motor Company has saved over $75 million through effective energy management.
- USAA Real Estate has realized a 5% annual energy savings and increased the asset value of a California building by $1.5 million due to energy efficiency upgrades.
- Eastman Kodak saved more than $8.6 million in operating costs in 2002 from its energy management efforts.
- Hines estimates the difference in operational costs between its energy efficient buildings and inefficient buildings at more than $13 million.
- Fairfax County Public Schools estimates an annual energy savings of $4.5 million from energy efficiency improvements.
The value of strong energy management as a proxy for overall organizational management is increasingly recognized by financial analysts. Recent studies by Innovest Strategic Value Advisors (see below) found that leaders in energy management achieved superior stock and financial performance over laggards in energy management.The difference between the leaders and laggards is significant:
- Real estate investment sector — over 3,400 basis points difference
- Retail food sector — 1700 basis points difference
- Retail merchandising — 7100 basis points difference
Innovest Strategic Value Advisors Studies
The bottom line — good energy management is good business, and adopting an energy management strategy is a business decision you cannot afford to ignore.
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