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How SMEs could unlock energy cost savings

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This feature was placed by npower.

The latest npower business energy index (nBEI), which surveyed 500 of the nation’s small and medium-sized enterprises, has shown that better energy management could deliver substantial cost savings for SMEs. However, many are still struggling to find the time to focus on energy or to identify the practical measures they can take to unlock this potential.

Phil Scholes, npower SME Sales & Marketing Director, shares some of the report’s findings and outlines some simple energy management steps that every SME can take and what expert advice is available to them.

Despite the early signs of recovery in the economic climate, business confidence remains low for many SMEs, with the majority still reporting concerns about the future of their businesses. In such conditions, keeping a close eye on costs and cash flow obviously remains paramount, but with limited resources and constant day to day business pressures, many SME owners simply do not have the time or the ability to focus on every area of their business where improvements and savings could potentially be made.

The consumption and management of energy is a prime example of a key area that is often overlooked. Our nBEI survey showed that for nearly half of SMEs energy consumption accounts for between 25-50 per cent of their total business costs – a massive opportunity for saving – and yet just one in five see energy management as ‘very important’.

However, the good news is that the nBEI also showed that 44 per cent of SMEs have reduced their overall energy consumption by five to ten per cent in the last year and nearly 60 per cent say they are planning to increase their current level of energy efficiency measures over the coming 12 months, with 42 per cent saying they view energy efficiency as an ‘aid for business growth’.

So let’s have a look at what can we learn from those who are already reaping the benefits of energy efficiency, what more SMEs could be doing and how energy suppliers can help.

Quick wins

The nBEI highlighted a number of practical actions some SMEs are taking to help them achieve energy savings.

The most popular energy saving tactics contributing to the biggest savings include, turning off unused equipment and lights, monitoring consumption levels generally, using more energy efficient equipment and minimising heat loss.  In addition, 64 per cent cited efforts to educate staff about energy efficiency and its importance as an example of trying to adopt a more holistic energy-saving strategy.

For help and guidance on implementing these types of energy saving measures, more than half are turning to their energy supplier.  The energy reviews and audits offered by many energy suppliers are a good way to kick start energy saving activities as they provide baseline data from which areas for improvements can be identified and progress monitored.

Smart investments

While many practical measures come at little or no cost (for example, turning off unused equipment and lights), the nBEI showed that some SMEs put off investing in technology such as smart meters that could help with overall energy management because they don’t know enough about the costs and benefits. Again, advice in this area from companies such as npower could help business owners identify whether a small investment up front could deliver big energy savings in the future.

Getting to grips with Government initiatives

It is clear that there is a good deal of scepticism and uncertainty associated with environmental legislation and government led initiatives. For example, the Government’s Green Deal initiative aims to help small businesses to fund energy efficiency measures, but the nBEI showed that a third of SMEs haven’t heard of it and a further third say they don’t understand it. In addition, a number expressed doubt about taking on additional debt at this time. This is another area where energy suppliers such as npower can offer advice and help small businesses to gain a greater understanding of what could be in it for them.

Better buying

The results of the nBEI show that the majority (71 per cent) of SMEs believe they could ‘improve’ their energy purchasing habits. Many are attracted to the idea of longer-term energy contracts and, indeed 37 per cent of those questioned said they already had a fixed price and term contract with their energy supplier. For those who have not, it is worth entering into constructive dialogue with energy suppliers to see if getting increased energy cost stability through fixed price contracts could be a positive step for them.

In today’s ever competitive commercial landscape, driving savings in any business is crucial.  Any reduction in energy consumption and increase in energy efficiency that can be achieved can deliver real cost savings that can be re-invested in growth. Low cost practical energy saving measures – as seen in the examples revealed in the nBEI – as well as exploring the opportunities offered by smart technology, Government initiatives and better buying are all actions that SMEs can take now. npower is committed to helping SMEs maximise their energy efficiencies and reduce the cost of their energy use and, while the nBEI shows that some businesses are already on that journey, we want to encourage and support those who have yet to unlock their energy savings.

Practical energy saving tips for your business

Whatever business you’re in, there could be plenty of opportunities to make savings by reducing energy costs.

Find out more about practical energy saving tips from npower.

Find out what to do in a power cut

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