Cost of Oil Going Down, Cost of Electricity Going Up

Published on Tuesday, 24 March 2015 23:24:41    Written by Marc
Just when we see the price of oil going down (almost every day now), we would think that it might suppress the price of electricity everywhere and that it would cost us less to heat and cool our homes and businesses. However, just about everywhere we look, it seems that the price of electricity is far from following the same trend as oil. In, fact it is quite the opposite, with the price of electricity increasing (sometimes by more than the inflation index). While nobody probably knows where the price of oil is going to end up this year (or subsequent years), one thing that is relatively certain is that prices of electricity will continue to increase year after year. There are some rare occasions where the price remains stable for a short period, but we know that prices are not going to go down.

What can companies do about this? Well for starters, implementing an energy-saving process is a good start. For this, users need to understand first how much they are spending for energy, or in our case, electricity. Once we know how much electricity costs us each year, we can then plan to have internal resources take a closer look at where the energy is spent. The overall cost of electricity can help determine how much resources you can allocate. For example, if you spend one hundred thousand dollars a year in electricity, you might not be able to afford the same resources as a company that spends ten million dollars a year. A good rule of thumb is to think about how much resources you would want to allocate if you could save 15 percent of your total energy costs. With that in mind, you can start to create your energy saving process in your company or organization.

We can also bring in external consultants if needed. The goal here is to find where the electricity is going, and if we are using it as we should. In other words, are we using the energy in an efficient manner? For this, you can benchmark properties against each other or against industry standards. If you have 10 buildings in one category, say office towers, and one of them is consuming twice the electricity per square foot than all others, it might be a good idea to conduct a detailed audit in that building. Benchmarking is simple to do but can quickly reveal interesting leads in your search for energy savings.

The idea is to start finding simple energy-saving solutions, which we often refer to as the low hanging fruit, and over time you can ramp up the complexity of the energy-saving measures you want to implement, as you get more comfortable with allocation resources to your projects. Companies normally start by doing energy-saving measures, which carry a very short period of return on investment (short payback) and require smaller capital investment and as they gain experience in doing successful projects, they gravitate towards larger projects, which carry longer paybacks. This period often allows the energy champions in the company to prove to the executive management that the energy-saving projects can be done with good return and low risk. Once they get a few successful projects under their belt, it tends to get easier to get larger energy saving projects approved internally.

Finding and implementing energy-saving measures with success does take some time, but each day that passes by is a loss of opportunity, money that is left on the table. Getting the ball rolling towards saving energy might seem like a slow process in the beginning, that if done properly it can reap great benefits, especially when energy starts to increase back again.