by John Maddocks, CIPFA Technical Manager
With an estimated 40% increase in energy demand expected between 2010 and 2035 [1], it is important to know what your plans for future energy consumption are. Indeed could planning well and reacting innovatively to energy price hikes now save your organisation money in the long-term?
Most experts and commentators believe the cost of energy will continue to rise in the medium to long-term and that the sourcing of sufficient energy supplies will be of increasing concern. Added to this is the continuing dependency on burning fossil fuels and as a result, the steady rise of greenhouse gases in the atmosphere.
While the majority of climate scientists agree on the importance of reducing emissions in order to avoid the worst case scenarios of climate change, the speed of transition to low carbon energy solutions is painfully slow.
It is more important than ever to prepare your organisation for a world of increasing energy costs, concerns over long term energy security, and support for low carbon energy solutions.
Energy price rises increasingly make a wider range of energy efficiency measures financially viable and are a good way to reduce facilities costs long term. Price rises make investment in local energy generation increasingly attractive as a way of generating income, while also offering opportunities to provide local low carbon energy supplies. Investment in energy efficiency and energy generation both offer opportunities to grow local skills and develop local work opportunities.
Organisations that grasp this opportunity to save money and/or generate a new income source will also be helping reduce dependence on fossil fuels and contribute to lowering an organisation's carbon footprint. This will inevitably require big changes over the long term in the demand and supply of energy; highlighting the importance of adopting long-term strategies, objectives and projects that can make a significant difference.
Understanding the financial concepts and tools used in planning and assessing energy projects, as well as understanding the language of finance and potential sources of project funding, is an important part of making any energy strategy work. In this context, CIPFA’s new publication Financing Energy Projects provides an overview of the concepts and financial tools used in building the business case for a project strategy that works.
[1] The Department for Energy and Climate Change’ Energy Security Strategy report, estimated by the International Energy Agency.