Discover the financial value of energy management

Knowing how energy impacts your company’s bottom line is critical for successful energy management.

Use these simple steps to show the value of energy management to your company’s leadership:

Determine the energy spend. 

Gather the entire organization’s energy bills (for electricity and all fuels) for the past two years or more. Total up the cost of all fuels and electricity by year.

Compute the cost. 

Calculate your annual energy spend as a percentage of controllable costs. Total up the organization’s controllable costs for the past two years or more.  (Include items such as fuel expenditures but do not include costs such as rent and employee pay.) Be sure the time periods used for total costs matches the same time periods you used to total fuel and electricity costs.

Estimate the potential energy savings. 

Based on good engineering judgment or past assessments, make an estimate of potential energy savings for the first year of a program.

• Here’s a tip: Most companies that have done little to manage energy can easily achieve a 10 percent reduction in energy used early on in a program. Determine what the energy to be saved would cost.

Translate the savings into profits. 

Convert the cost of energy to be saved into an equivalent profit value. Put the savings into terms that your executives understand. For example, a car maker might relate energy savings to the profit for the number of cars that must be produced and sold to equal the potential energy savings.

Take it one step further. 

In addition to saving money, energy management can also reduce risks associated with energy use and offer opportunities for your company to excel. Identify and understand the energy risks and opportunities that affect your company.

Take the facts to management. 

Use this information to persuade senior management, plant managers, and others in the company to support energy management and help you build an energy program.

• Here’s a tip: Before you brief management, prepare a proposed plan of action for a corporate energy management program.  Build an energy program with ENERGY STAR resources!