When it comes to buying energy and looking at efficiency projects, I often get asked whether it’s possible to balance cost effectiveness with meeting sustainability objectives.
Many assume these are opposing priorities.
But over the last eight to ten years, so much has changed in the energy and environmental landscape. Cost versus conscience is no longer as black and white as it might once have been.
Public perception shifting
The main driver for this shift has been a huge change in public perception. Climate issues and protecting the planet are now key concerns for many, especially younger people.
As a result, consumers are demanding that the companies they buy from actively demonstrate green credentials.
I certainly saw that trend reflected when I worked in the retail sector. It therefore made financial sense to source energy and manage it in a way that matched the company’s wider sustainability agenda.
Looking at the global landscape, buying renewable energy doesn’t always cost more either.
In countries such as Slovakia, for example, although green energy still works out more expensive than brown, the government there offers tax incentives that more than cover the difference. So companies are actively encouraged to adopt more sustainable practices.
Other countries make demonstrating green credentials compulsory.
Take Switzerland, where every company has to match their energy consumption with the equivalent volume in green certificates called GOOs (Guarantee of Origins, similar to the UK’s Renewable Energy Guarantee of Origins or REGOs).
Easier to invest direct
Then when it comes to investing in green energy directly, that’s becoming more cost effective. For example, via Power Purchase Agreements (PPAs).
As a PPA involves a 15 to 25 year commitment to directly purchase the power produced by a renewable developer, savings can often be realised over the longer term. Plus along with this greater price certainty comes other benefits such as increased security of supply.
Energy-related technologies that support sustainability are also becoming far cheaper. For example, the cost of solar panels and LED lighting has hugely reduced over the past decade.
So overall, the business case for purchasing sustainably is getting stronger.
Staying ahead of the curve
Reputation wise, no company wants to be seen doing the wrong thing or falling behind its competitors.
Not only is that risky from a consumer point of view, but shareholders and large investors also closely scrutinise the way a business conducts itself now.
Certainly, ten years ago, I often had to explain in meetings what climate change was and why it was an issue that needed considering. Today, it’s already on the agenda.
The result for us energy managers is that our jobs have become more complex – and interesting – as there’s a far bigger picture to consider.
Assessing true cost effectiveness requires a greater range of factors to be considered other than just price alone.
Demand to outstrip supply
Many companies are clearly grasping this, as long-term estimates see demand for green energy outstripping supply.
Already, via initiatives such as the RE100 led by the Climate Group, a number of high profile global companies have committed to using 100% renewable energy in as short a timescale as possible (and by 2050 at the latest).
So there’s clearly a need for more investment in renewable energy to ensure there’s enough to go round.
And by then, I’m hoping that the question of balancing cost versus sustainability will be far better understood…