With energy prices rising steadily, energy efficiency has become more than a checkbox on a sustainability agenda—it’s a smart, strategic move that directly impacts business resilience and profitability. Energy costs shape a company’s financial health in fundamental ways, affecting everything from day-to-day expenses to long-term project success.
As a key pillar of sustainability, energy efficiency is essential for companies pursuing green building certifications and/or meeting ESG expectations. Consumers, investors, and regulators alike are watching closely, expecting companies to show real progress in their sustainability efforts.
Moving from planning to action is the crucial next step. By putting energy efficiency goals into practice, companies can create lasting value that benefits both the business and the planet.
Navigating the Current Energy Landscape
Understanding how the current energy market is changing and the impact those changes will have is critical for long-term planning. It is clear that one element of change is higher prices, which highlights the need to reduce reliance on the grid and improve energy efficiency.
Rising Energy Costs and Market Volatility
According to the U.S. Energy Information Administration, electricity prices for commercial users have increased by around 22% since 2020. A similar trend is seen for natural gas prices, which are projected to grow 44% during 2025.
Furthermore, the price volatility of different fuels is increasing due to factors like geopolitical tensions, supply chain disruptions, and increasing demand. For example, natural gas prices increased 105% during July 2022 and then dropped 80% by the start of 2023 due to increased European demand from the beginning of the Russia-Ukraine war. Such fluctuations can wreak havoc on long-term business operations and financial planning.
Grid Infrastructure Risk
When you source power from a local utility, you rely on a regional power grid. This means your business operations depend on a source you cannot control, which inherently creates risk.
For example, if your business operates in the Eastern U.S., you're likely connected to the PJM Interconnection, the largest regional transmission organization controlling the flow of electricity. Remember the 2003 blackout that left 50 million people without power? It highlighted the vulnerabilities in our energy infrastructure and the importance of proactive energy management.
The Impact of Capacity Auctions
Another consideration is capacity auctions, which are mechanisms used by grid operators to ensure there's enough power supply to meet future demand. With this system, power plants are paid to develop the necessary infrastructure to meet energy demand for the future.
However, these auctions can significantly affect energy pricing. For example, auctions for the 2025/2026 delivery year on the PJM grid have seen capacity prices surge by 10 times. This will likely be passed on to the consumers when they purchase electricity.
Starting with an Energy Audit
With the current state of the U.S. energy market in mind, improving energy efficiency is a critical step for both business sustainability and lowering operational costs. The first step on this journey is to conduct an energy audit.
But what is an energy audit? It is an assessment of a company's existing energy use. It aims to create a baseline of current energy use, identify inefficiencies, and highlight opportunities for improvement. It is a data-driven process that provides actionable information to help you understand your energy consumption patterns.
For example, the data can be used to determine a building's Energy Utilization Intensity (EUI), which is the average energy use per square foot. This can be used to compare a building to industry averages and identify areas that offer significant energy savings. This process allows you to make an improvement plan to target these high-impact areas.
Setting Measurable Goals and Tracking Progress
Once you know your baseline energy data, you can develop energy reduction goals. Having goals is an essential part of driving continual improvements and building public trust. This is often done using key performance indicators (KPIs) that you can track over time. Some common KPIs for energy use include changes in EUI or a reduction percentage over time.
This process also helps create public trust, which is critical due to the rising number of greenwashing claims. Having concrete goals you can publicize and report on progress towards goes a long way to addressing those public concerns and improving your brand image.
Implementing Energy Efficiency Strategies
Next is implementing the energy improvement plan you developed during the audit phase with your KPIs in mind. Some common strategies include:
Upgrading to Energy-Efficient Systems
Modernizing equipment like HVAC systems, lighting, and the building envelope can drastically reduce energy consumption. For instance, upgrading to LED lighting and swapping HVAC for a heat pump can each reduce energy use by up to 75% compared to their alternatives. While the upfront costs may be higher than alternatives, the return on investment often comes within a few years through energy savings.
Adopting Renewable Energy Solutions
Consider renewable options such as onsite solar. Not only do they reduce reliance on the grid, but incentives and grants are also available to reduce upfront costs. The federal Energy Investment Tax Credit offers a 30% tax credit for solar installations, making renewable adoption more accessible.
Furthermore, even without these incentives, the typical payback time for commercial solar installations is 5 to 10 years with a 10% to 20% ROI over the system's lifetime.
Integrating Energy Management Systems
Energy management systems monitor and optimize energy consumption in real-time. By analyzing data, these systems enable proactive decisions, like adjusting operations during peak energy pricing periods to save costs. Plus, an added benefit is that they track and store critical energy use data, which is valuable for annual sustainability reporting and green building certification.
Leveraging Resources and Partnerships
As you implement your energy improvement plan and track your KPIs, it's important to continue to develop your strategy and stay informed about energy efficiency best management practices. This limits the risk of efficiency improvements stalling over time.
A great option is to review data from your utility provider to help you make informed operational decisions. For example, shifting energy-intensive processes to off-peak times can lead to significant cost savings.
Another option is engaging with sustainability programs like the 2030 District initiative. These programs provide benefits like networking, shared resources, and collective bargaining power.
Lastly, collaborating with energy experts like Emerald Built Environments, A Crete United Company, brings specialized knowledge to your team, ensuring your strategies are innovative, practical, and cost-effective.
Turning Goals into Action
Energy efficiency offers significant benefits — from cost savings to enhanced property values — and it's a cornerstone of broader sustainability initiatives. It's imperative to start now, as energy challenges will only intensify, and it's an ongoing effort that requires time and consistent follow-through. By taking proactive steps today, you lay the foundation for sustainable success tomorrow.
At Emerald Built Environments, we're here to help you navigate this journey. Our team of experts can assist in creating and implementing an effective energy strategy tailored to your needs.
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