Shedding light on Energy Performance Contracts (EnPCs)

Against a fascinating current backdrop of falling prices (28% fall in wholesale prices since June 2014), I can’t think of a better time to shed light on how Energy Performance Contracts (EnPCs) can save your business money in the long term.

Whilst I’d like to think these low commodity prices are here to stay (& it certainly wasn’t predicted by the ‘titans’ of finance in Q1 2014) the rational part of me thinks that they’re sure to go back up again.

So with that thought and the future in mind – have you considered an Energy Performance Contract (EnPC) to help guarantee and save money on your company’s energy bills?

Barriers to future-proofing your business

There are lots of reasons why EnPCs might be a sticking point with many businesses. I’ve highlighted a couple of the most common barriers that I come across on a regular basis:

‘The timing isn’t right for us’

Realistically, when is the right time for any business? Let me explain: The energy market – especially - is complicated and changing rapidly for a whole host of reasons, including:

  • Lower availability of internal cash for investment – diversion/retention for your core business

  • Regulatory changes – e.g. Energy Saving Opportunity Scheme (ESOS) and its implications

  • Reputational issues around under-achievement against publicly stated carbon/financial targets

So think about the “cost of inaction”. There’s a price associated with “doing nothing” and it’s not cheap.

In one recent example we’re guaranteeing a client around £1.1k energy saving each day – so without the EnPC in place, they were wasting a hefty £400k per annum.

In other words, by “doing nothing” you’re throwing money away.

‘We have sufficient capacity and expertise in-house’

When companies dedicate internal resources, it usually means pulling them away from their day-to-day activities that helps keep your business running. It is also worth noting that these individuals may lack:

  • Senior Level understanding

  • Risk management plans in place

  • Training and stakeholder engagement

However, most organisations are unable to predict energy accurately or are totally baffled by things that Energy Services Companies do, usually because they don’t understand them.

An EnPC helps build a solid working relationship with your business by taking away this pain away and helps get the project delivered. It may even be in bite sized chunks – tailored specifically to your business’s needs.

As a reminder, an EnPC operates a simple three-step process:

  • Presenting an overview of touch points where you can make savings, which can be selected, such as heating, lighting and ground source heat pumps to name a few.

  • Processing your chosen areas of focus – where you can discover how much (%) energy your business can save over a long period of time.

  • Implementing a variety of deliverables and energy efficient measures that helps you achieve these projected saving figures and stay on budget.

I’d add that EnPCs are a long term solution, so it’s best to make sure it fits in with your company’s strategic plans.

For the private sector at least, even if you’re not running out of ideas in how to achieve your publicly stated targets and aspirations, you will have faced other barriers – including:

  • A lack of trust that an EnPC will benefit your business

  • Complexity of an EnPC

  • Lack of EnPC governance

  • Not getting the most out of an EnPC

I’ll be addressing each of these other doubts and myths at a later date, so stay tuned.

If you want more information and advice on the points you can contact me directly by emailing: sam.moore@edfenergy.com or calling 0203 1262079

Bio

Posted by Sam Moore

Sam Moore has been Energy Services Partner at EDF Energy over 5 years and is responsible for helping businesses turn their challenging energy efficiency and carbon targets into achievements. Sam has been instrumental in shaping Energy Performance Contracts, energy conservation measures and delivering quick paybacks across a variety of Public and Public Sector estates.

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