Taking the energy bull by the horns

High fuel costs, plus the approach of the Climate Change Levy makes efficient energy practice imperative.

In ancient Crete youngsters entertained the locals with bull vaulting. They would run towards a charging bull, grasp its horns, execute an elegant and acrobatic back-flip and land behind it. Now it is your turn to show off your skill — energy costs are accelerating towards you, and you must take that bull by the horns.

There are several bulls, actually. The Climate Change Levy is looming. You are probably feeling pressure to find ways to cut down your energy use. But the massive increase in gas prices in the last year has had far more impact than the levy will have, and it is only a matter of time before electricity goes up too. The oil price, now driving the gas price, is also set to remain high.

Now for your horn-grappling technique. How do you achieve energy savings while keeping capital and man-hour costs within acceptable limits? Big firms spending £1m a year or more have a dedicated energy or utilities manager to grapple with energy saving schemes.

But most energy in industry and commerce is consumed by SMEs without an energy manager. You may find yourself on the horns of a dilemma: should you do it yourself or call in help?

Let’s start with DIY. Take a fresh look at how you use energy and identify areas to make savings. Consultants will tell you that most of their recommendations are common sense: switch off heating systems outside operating hours, repair leaks on the compressed air system and so on.

What if you decide to bring in outside help? One option is the energy consultant who surveys the site and writes a report. The advantage here is that you can identify where significant savings can be made. But if capital expenditure and project management are needed, you might not save much, because you may lack manpower with sufficient time and experience.

You might consider a different approach. Talk to suppliers directly to identify major savings and then organise the manpower to carry out their recommendations. However, since suppliers are only interested in projects involving capital expenditure, you may miss out on easier or cheaper options.

Furthermore, if a number of projects are implemented at the same time, it may be hard to determine who has done what. This can complicate interpretation of guarantees.

Complex options

There are even more complicated options. Some energy companies operate a shared savings scheme: they take a share of the measured energy savings. A typical arrangement would be a 50/50 split over two or three years, after which you keep the lot.

The advantage here is that only practical solutions with easily-quantified savings are implemented. However, energy companies can make a lot of money from relatively small projects. Consider the terms of such arrangements carefully.

If you have a large project in mind, you could get a company to implement its recommendations, supplying all the manpower and the capital. In return it will take a return on its investment from energy savings. It requires entering into a tight contractual agreement. But ultimately, the choice is yours with the energy bull. Happy vaulting!