Quantifying the Cost Savings From Best-Practice Energy Efficiency Strategies
Strong regulations and a core set of environmentally-minded consumers can drive corporate change across the world. However, business decisions are by necessity
driven by profitability considerations. For some firms, particularly in the technology sector, profits can be forgone in the short term in favor of rapid growth
and marketplace ubiquity. This long-term perspective is flipped in other industries where firms push long term considerations aside in favor of rapid returns.
When it comes to the environment though, it is all too easy for firms to piggyback off the efforts of others.
This is problematic at a time when co-operation is much needed. Nevertheless, there are firms in key sectors across the USA and the world who are realizing enormous
financial gains for shareholders by paying attention to their energy usage. Here are a few success stories:
Featured in our hotels sector report, Starwood has been one of the key pioneers of efficiency
improvements in the hospitality industry both before and after it's 2015
merger with Mariott. It is a triple-win for stakeholders as a corporate strategy - delivering brand enhancement, tangible cost-reduction, and benefits to the
Starwood's efforts focus on six key areas: water, energy, air quality, waste, emissions and supply chain. Of these areas, energy & water were the main focus of
Starwood's renewed 2008 environmental policy. Ambitious targets include a reduction in energy consumption of 30% and water use by 20% by the year 2020.
As of 2014 (the halfway point), progress towards the so-called 30/20 target was impressive: water use has already fallen by over 17% (target: 20%) and energy
use is down over 12% (target: 30%).
Here's how they did it:
- The installation of high-efficiency LED lighting across entire properties can halve the electricity costs of lighting.
- Starwood has updated various mechanical systems across its portfolio of properties and has installed motion sensors where cost-effective to limit electricity wastage.
- Growing guest awareness and adoption of energy-saving habits has also helped marginally progress Starwood further toward its ambitious goals. High profile campaigns
have included efforts to promote simple water and energy-saving behaviors such as turning off the faucet when brushing.
Wal-Mart and Tesco (Big-Box Retail)
'Stack-em high, sell-em cheap' has been the crude description of the big-box retail business model for generations, but big firms are savvying up to realize efficiency
and cost savings, even as energy prices trend downwards.
Wal-Mart is now saving about 250 million kWh per year from lighting improvements, compared to its earlier consumption figures. As noted, this is enough raw power to
supply well in excess of 20,000 residential premises across the USA.
Similar businesses around the world are also mounting serious carbon-reducing initiatives, including the UK's Tesco chain. Like Wal-Mart, Tesco is driven by long
term strategic benefits and cost-savings that put money directly back into the pocket of shareholders. This all comes at a time when Tesco stock is trading at well
under half of it's 2007 peak. At that point in time the business seemed untouchable in its quest for market-share supremacy, but upstart low-cost rivals such as Lidl
and Aldi have put the squeeze on Tesco at a time when consumers look increasingly for bargain groceries.
This has all made Tesco's technology-driven efficiency measures all the more pressing, as intense competition lowers margins on everday items.
Some of the energy strategies adopted include:
Tesco is believed to have saved in the region of 4 million pounds (~$5m) in cost-reductions in one year alone from these efforts.
- Twice-hourly reports from Tesco's high-tech Energy Management System (EMS) are fed to a team of trained analysts. Irregularities can then be addressed at
source with rapid on the ground attention. In one case, a store saved thousands of pounds in electricity bills when analysts noticed that retail employees had
failed to turn off lighting when closing for the night.
- Another engineering success producing tangible returns for the chain is more efficiency storage for perishable foods. Frozen items are now kept behind
freezer doors that use significantly less energy (up to 50% reduction) to maintain proper temperatures.
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