NAVIGATING VOLATILITY THROUGH BEST PRACTICE ENERGY MANAGEMENT

There are thousands of businesses across countless industries where energy plays a significant day-to-day operational role. However, amid soaring inflation, volatile prices and strict environmental legislation, the priorities of cost management and sustainability are quickly rising to the top of the boardroom agenda. While support through the Energy Bill Relief Scheme (EBRS) has helped to abate impact in the short term, it has brought into clear focus the need for change.

As a result, it’s fair to say that the old adage of simply ‘buying better’ is no longer enough. Instead, a proactive approach to energy management is the only sure-fire solution to turn challenges into opportunities. Alongside ensuring tight management of every kWh, this includes decarbonising operations wherever possible and looking to the future when it comes to accelerating net-zero strategies.

There are huge opportunities for businesses to transform their energy use. However, to achieve this, what’s needed is a clear focus on corporate energy efficiency that goes far beyond procurement and instead involves all aspects of operations.

Done well and with tight ongoing management, this can help to mitigate the impact of market volatility and support decarbonisation goals, while subsequently working towards netzero ambitions. After all, while it might seem obvious, the cheapest kWh is always the one you don’t use.

But where should you start? How can you navigate the complexities? What investment is needed and, more importantly, how can you secure c-suite buy-in when planning for the future? Below, we’ve set out five essential steps that every large business should consider.

The first stage should be to establish exactly where you are today. This will not only make it possible to map out short, medium and long-term goals, but also better understand the steps you need to take, how to finance them and the benefits they could deliver.

You’ll need accurate and reliable metering, you’ll need to collect data and you’ll need to record your measurements. Having access to realtime insight into energy use across your operations will highlight inefficiencies, flag areas for improvement and reveal opportunities for immediate savings.

Once you’ve accurately established your exact position, the next step is to stop consuming energy whenever and wherever you can. For example, can you move high energy processes to lower tariff times, such as manufacturing at night or packing during the day? Can you switch equipment off when it’s not being used? Can you move production hours away from peak times to benefit from lower unit rates?

All these operational tactics can dramatically reduce your energy consumption. You’ll be amazed at just how far you can ‘move the dial’ by simply re-evaluating how you work and what steps you can take to improve business efficiencies.

When you’ve successfully eliminated unnecessary energy use, the next step is to replace inefficient assets. Invest in better plant, change out your lights for LEDs, fit a better boiler, install a control system, change your motors for more efficient models, double glaze your windows or insulate your roof-space.

In short, do everything you can to minimise energy consumption in your day-to-day operations. While it will undoubtedly require up-front investment, payback will start the minute you switch on new equipment.

When you’ve eliminated unnecessary consumption and improved efficiencies across the board, your next step is to decarbonise what remains. Measuring your carbon impact and considering each type of emissions scope is the best place to start.

To decarbonise Scope 1, look to replace any hydrocarbon fuels with renewables, electrify your heat wherever possible, install wind turbines and fit solar panels. As for decarbonising Scope 2, work with your electricity supplier to buy carbon free, or low carbon, power. If you can’t, switch supplier!

Scope 3 is the most challenging to tackle, but the answer lies in co- operation. Ask your suppliers to report on their carbon footprint, ensure they can explain their energy usage and work collaboratively to reduce the carbon generated by doing business together.

By following the guidance points above, you’ll have likely reduced, recycled and replaced everything you can. It’s then a case of measuring and monitoring – an ongoing cycle of incremental developments. Be aware of new technologies, keep abreast of changes to regulations and make sure that you stay in control of managing your organisation’s carbon emissions.

When it comes to accelerating netzero strategies, businesses should think carefully about the long-term benefits of zero-carbon on-site energy generation. Suitable options are dependent on site size, location and corporate energy demand, but wind power and solar PV are probably the most widely utilised.

These technologies can be combined with battery capacity to store electricity generated at times of low demand, as well as replacing gas boilers for heating with ground or air-source heat pumps and potentially hydrogen for more heat intensive applications. They all require investment and optimisation to deliver maximum benefit, but all align with the business vision of decreasing carbon emissions and increasing resilience against market volatility.

It should be said that there is no silver bullet solution when it comes to optimising energy efficiency, which means that every business will benefit from bringing in external expertise. At Shell Energy, we’re proud to work in partnership with leading businesses nationwide, helping them to develop energy strategies that set a clear path towards achieving wider decarbonisation ambitions.

Failing to plan or relying on a reactive approach will be a gamble that could leave you beholden to statutory levers and market volatility. Energy is no longer simply an overhead, it’s a board-level priority and inextricably linked to commercial success.

To find out about Shell Energy and its integrated energy solutions offering for businesses, visit www.shellenergy.co.uk/business