Enigin News - Australian Businesses Spend to Improve Energy Efficiency
A REPORT from the Australian Industry Group (Ai Group) reveals that energy expenditure as a percentage of turnover increased 10 percent from 2008 to 2011 increasing demand for energy efficiency.
Ai Group Chief Executive Innes Willox said that the report, "Highlights the mounting pressure on business from rising energy prices. We found a major rise in action to boost energy efficiency, but also identified barriers to further and deeper action.
"The Ai Group report Energy Shock: pressure mounts for efficiency action surveyed more than 300 businesses across the economy seeking information about their use of energy (electricity, gas and liquid fuels), their management of electricity costs and energy efficiency practices and their views on policies to encourage additional action in these areas.
"Previous Ai Group research showed that in the five years to 2010, two thirds of businesses made no or negligible improvements in their energy efficiency. The report we are releasing today reveals this situation has been reversed. In the three years to 2012, two thirds of businesses have achieved improved efficiency performance. Three quarters of respondents have now taken or are planning actions to improve energy efficiency. The actions involved still tend to involve investigation or modest investment, limiting the outcomes achieved. While action is broader and ambition is greater, there is scope to do more in energy efficiency.
"Survey findings indicate that respondents' expenditure on energy as a percentage of turnover increased by 10 per cent between 2008 and 2011. Regulators project that retail electricity prices for small users will have risen 37 per cent between 2010 and 2013, with the two biggest factors being network costs which added 15 percentage points and carbon pricing which contributed about 8 percentage points. This suggests the business spend on energy will grow in both absolute and relative importance (currently 46 percent spend less than 1 percent of turnover on energy, 27 percent spend 1-2 percent, and 26 percent spend more than 2 percent). These impacts will be compounded by the challenging conditions facing many non-resource businesses, with costs rising and with revenue and profit margins being squeezed.
"Many businesses are starting to feel these strains. Most respondents described energy costs as a major expense. This appears to have been a catalyst for action by businesses to improve their energy efficiency, although most businesses will need to do more to blunt the impacts of rising energy prices.
"The most common efficiency actions reported in the survey are changing staff practices to encourage energy efficiency and identifying major uses of energy in the business. While a growing number of businesses are taking action to improve their energy efficiency, most are looking for quick wins and would only consider an energy efficiency project where the expected payback period was less than three years
"For many businesses being impacted by rising energy prices, the intensity of other even more urgent costs and pressures – particularly for those businesses on the wrong side of the mining boom - can make it hard to devote time and capital to energy issues.
"To help address this, and to improve the uptake of the many government policies to support efficiency, all levels of government need to better engage industry in the development, roll-out and evaluation of efficiency policies.
"This survey was conducted with the welcome support of the Victorian and Commonwealth Government. Further research is also needed to track business responses to changing energy prices, to determine the degree to which those prices are impacting costs and competitiveness, and to identify drivers and barriers to further improvements in business energy efficiency.
"For our part, Ai Group will continue to offer expert advice and assistance to businesses looking to cut their exposure to rising prices and carbon costs," Mr Willox said.
- An increasing share of business effort is being directed towards energy efficiency improvement, and pressures are mounting to do even more.
- However, to date most efficiency improvements have been relatively modest, indicating that business capital for investment is either not available or is being used for other purposes.
- While a growing number of businesses are taking action to improve their energy efficiency, most are looking for quick wins and would only consider an energy efficiency project where the expected payback period was less than three years.
- Reflecting this, the most popular energy efficiency activities included changing staff practices to encourage energy efficiency and identifying major areas of high energy use in the business (nearly 50 per cent of respondents each).
- The biggest drivers for efficiency action were concerns about energy prices and the desire to maintain or enhance business profit margins.
- The anticipated introduction of carbon pricing was also a strongly cited motivation for future energy actions.
- Many government policies to support efficiency are in place or under consideration, however, results suggest uptake would be greater if industry was more closely engaged in development and roll-out.
- That government more closely engage with industry in the design, implementation and evaluation of energy efficiency policies.
- That government conduct further analysis of the reasons businesses would or would not try to access specific forms of government assistance with a view to improving the effectiveness of energy efficiency policy.
- That further research is conducted to track business responses to changing energy prices, to determine the degree to which those prices are impacting costs and competitiveness, and to identify drivers and barriers to further improvements in business energy efficiency.
Australian Enigin Distributors have been heavily involved in improving the energy efficiency of many businesses, using Enigin plc's technology to reduce consumption and energy spend, they are continuing to prove busy helping evermore businesses, across all sectors, to save energy and money. To reduce the impact of rising energy costs on your business contact your local Enigin Distributor now.
Picture of Melbourne from freeaussiestock.com
Wednesday 18th July 2012