Despite the most severe economic conditions facing our Country in years, despite rising and volatile energy costs, despite rising inflation generally, many appear to be missing the most obvious way of increasing profits and reducing overheads. According to Sustainable Energy Ireland, buildings consume 40 per cent of Ireland's total energy use. SEI also state in their Building Energy Manager's Resource Guide that 'It is likely that savings from good housekeeping (no cost measures) will be in the region of 15% to 20 per cent or even more.'
Greenhouse effect, Ozone layer and Global warming are all terms on everyone's lips. The cost of energy has, for the first time really bitten into operating profits. So what is the one area companies need to invest in? The answer is Energy Management, and you would be surprised to know many businesses can save by investing in, and understanding energy management and managing their energy use more efficiently. This understanding alone can often save a typical business around 15 to 20 per cent on their electricity costs according to SEI. However, this is just a starting point and before any capital expenditure in low-energy fittings or energy reduction technologies. With small additional investments in this technology and low energy fittings, this figure can easily double.
Many businesses consider energy as an overhead instead of an expensive resource that requires management, but this management brings real tangible savings and benefits. Energy management is not about Bio energy or Solar Power or Wind Energy; it's about practical steps that, when taken together with the use of certain low cost technology, can seriously reduce energy costs and this saving contributes directly to increased profits. 'Greening' an organisation is now becoming cost-effective.
The object of energy management is to reduce the amount of energy a business consumes. Good energy management relies on an understanding how a building uses energy. The next stage is to identify inefficiencies and poor energy-use practices; as a starting point, this can be as simple as replacing inefficient light fittings with lower energy alternatives, instantly cutting electricity bills by at least 40 per cent. The cost of low energy fittings has decreased in recent years due to mass production and the development of more advanced technologies. There is now no excuse for not trying to becoming greener as going green is no longer the expensive choice.
Energy Management is the single most effective means of increasing your company profits, it can be implemented in a short period and the cost of low energy products have dramatically reduced in recent years to giving very short pay back times, which means a quick return on your Energy Management investment.
Business wastes vast amounts of money on wasted energy and it's time to wake up and invest in energy management techniques. Investing in energy management is the area most likely to make a dramatic difference to the bottom line, both short and long-term. Actions to improve energy management can vary; many cost nothing, others are low-cost and some require greater investment. Good energy management will always deliver lower energy costs, reduced emissions and the pay back times.
For example, a business in Dublin was spending over €70,000 euro per year on lighting alone just in their underground car-park area. This car park was subsequently installed with low-energy lamps, the saving per year was an immediate €28,000 (40 per cent) yet the installation costs allowed the business to recoup their costs in less than one year. This is just the tip of the iceberg in terms of savings potential for the typical business. When you add the additional use of motion detection, day light sensors, power factor correction techniques a saving of well over 40% can be achieved on many buildings and offices, especially the buildings with the most commonly installed T8 type tubes. Business seems to ignore these massive and immediate savings even in more turbulent times.
Investing in energy management techniques has come to the point where it has become extremely cost-effective mainly because of cheaper low energy fittings and recent technology advances in intelligent power control products which have become cheaper as they move towards mass production and are no longer a specialised product line. In the past, investment pay-back times for installation of many energy saving products could be many years, but now this has all changed as the Investment required has been decreased and at the same time the cost of energy has dramatically increased, creating an ideal climate for business to invest in Energy Management. The shortest investment payback times with the quickest and easiest gains are to be made in replacing lighting systems that typically use at least twice the amount of electricity that is needed in buildings. Despite these massive and immediate savings, which are realistic and achievable for a large majority of Irish companies, most businesses still continue to ignore the exceptional potential for saving money; however a new Government tax incentive may soon change this.
The Tanaiste, in Budget 2008, announced details of a new tax initiative (ACA) aimed at encouraging businesses to purchase certain energy-efficient equipment. This accelerated capital allowance incentive will allow companies to claim the full cost, in the year of purchase, of specified energy-efficient equipment against their taxable income. The ACA lets you cut your company's taxable income by 100% of the capital cost of eligible energy-efficient equipment in the first year of purchase. This compares to just 12.5% for ineligible equipment.
So for example, if your company spends €10,000 on eligible equipment and you pay 12.5% corporation tax, you will save €1,250 on your tax bill that year, compared to just €156.25 for an ineligible product of the same value. This is one of the strongest incentives given by any European Government and this scheme will make a major impact in persuading anyone who isn't already persuaded it's now time to wake up to the financial benefits of good energy management.
For more information about how to cut your business energy bills check out www.yourenergywatch.com
Henry Davis
