How to conduct an energy audit of your business?
Using energy is unavoidable, but did you know there are many things you could do to make some real savings on your bills, whether you’re a large organization or a SME? A simple, straightforward energy audit can have a positive effect on your business and help stamp out those inefficient energy habits.
Why carry out an audit of your business?
There’s sometimes a misconception that energy audits are time-consuming and pointless, but this couldn’t be further from the truth. An audit provides a clear overview of your company’s current energy usage, giving you insights into the areas that can be a financial drain on your business in a way that’s easy to understand.
With the feedback from your energy audit, you can formulate a plan that’ll let you correct your energy oversights.
Pinpointing the areas where energy is being wasted can save you money in the long term, while your audit results can suggest ways to reduce your energy consumption, cut costs and reduce your carbon footprint. An effective audit is as extensive as it gets, taking everything into account – inspecting the building’s interior, exterior, fixtures, and equipment to determine how these systems interact with one other.
A successful audit can be great for both company morale and the wider culture of the business. So, not only will it help your company lean down costs, the new-found best practices could also help to foster innovation and competition among your workforce. If the business demonstrates a willingness to put fresh ideas in place, engaged employees may be keen to identify new energy saving schemes within the operation – supporting innovation and collaboration.
In terms of competition, developing a greener, more sustainable business model through auditing shows an understanding of energy efficiency that could put you ahead of the competition. It’s a chance to illustrate your business’ willingness to adapt and will make you stand out in an increasingly competitive market. As a result, you could make inroads to a more environmentally conscious audience, which is perhaps the most important benefit to be had.
How does auditing differ from due diligence?
Generally, an audit focuses on a company’s finances, but does also delve into the business and operational side of proceedings.
As a result, the investigation tends to be extensive and comprehensive, examining the company’s legal, accounting, tax, operational and property matters as well.
What is due diligence?
Energy auditing involves looking at your own company to highlight any inefficient energy habits. Due diligence, on the other hand, refers to identifying suppliers and determining that they’re the right fit for you by making the relevant enquiries.
Doing so ensures that they’re not only affordable, but that they operate in a legitimate, honest, and lawful way too. Due diligence concerns itself with investigating suppliers before working with them, whereas auditing relates to investigating your current performance. Due diligence should therefore always be performed first.
Why is due diligence important?
Essentially, carrying out due diligence keeps instances of fraud to a minimum, helps you make more informed decisions, and helps you to better understand who you’re doing business with. Due diligence is also great for checking if you’re compatible with businesses on an ethical level, as well as helping to minimize the risk of violating the laws.
Think of it like buying a used car. Although the seller may have provided you with a certificate from a reputable mechanic proving how roadworthy it is, you’re still unconvinced. You’d rather carry out a few other tests to be sure. Due diligence is the business equivalent of personally inspecting the car, kicking its tires, and taking it for a quick spin so you feel more comfortable before committing.
If you’re unsure about potentially working with a supplier, then conducting a process of due diligence can help settle those doubts. Alternatively, carrying out due diligence may also help you uncover certain practices or behaviors that prove they’re the wrong supplier to be doing business with – and spare your blushes in the process!
The Auditing Process – Initial Steps
Whilst energy audits aren’t mandatory for all businesses, it is always worth conducting your own audit, to discover where positive changes can be made.
If you aren’t sure where to start, then there are plenty of energy auditors out there who can consult, highlight troublesome areas, and give you invaluable advice too.
Alternatively, you can carry out a DIY audit. Even the most basic, cursory investigation can give you some effective, beneficial insights into energy wastage.
So, if you’re confident with taking the independent route, consider these basic steps when formulating a strategy for your own full energy audit.
Assessing your current energy use
An important starting point, looking at how your energy is currently being used can highlight the areas that need correcting. Identifying the inefficient areas across different departments, buildings, and sites (if that’s necessary, of course) is particularly useful, showing you what needs improving and what requires further investigation. This step helps later down the line, too. Once you’ve got some energy-saving tools and methods in place, it makes illustrating the savings you’ve achieved to managers and staff much easier.
How you assess your current energy is up to you, of course. Energy usage tracking spreadsheets are available online which can be very helpful, while your energy provider may also be able to offer assistance.
There’s also plenty of energy auditing software available to make things a little easier. Alternatively, you may have devised your own tracking system. Whichever you go for, the information gained at the outset helps with the next step of the process.
A structured, systematic walkaround on your premises serves to identify energy-saving opportunities. As we mentioned up top, a successful audit should be as thorough as possible, so a clear framework for the physical investigation is key.
Covering as much of the business as possible is what matters most here. Quick fixes can be implemented speedily, helping to make small savings, build-up momentum and convince colleagues that the process and results are worthwhile. Additionally, opportunities that might not have been a priority initially can be re-assessed later down the line once the main projects have been completed.
Once problems have been identified after your walkaround and opportunities have been noted, you’re now ready to make an action plan.
Taking Action
To work out the next step, you need to quantify the potential savings from each of your identified areas. This is done by calculating your estimated energy savings, the calorific values (the amount of energy per unit for any given fuel), costs, and carbon factors. You can also engage with equipment suppliers and installers, who can give you quotes for the work. The comparison between potential savings and estimated costs produces payback times for each potential project, allowing you to prioritize actions for implementation.
Making a Business Case
With current usage assessed, walkarounds carried out and an action plan devised, you could likely start implementing some of your lower-cost projects. However, larger projects might require some external financing. In this case, you’ll need a more formal business case to justify your requirements.
So, while every project is likely going to be different, there are key elements that should be considered and made clear in your business case, including:
- The rationale for your project
- Identifying the solution
- A plan of the project’s requirements, including timescale
- A breakdown of financial costs
- Cost-benefit analysis to compare the elements of each solution
- Sensitivity analysis – how do the different outcomes compare to the original prediction?
- Risk analysis – detail the associated risks, and identify mitigating factors
Additional Tips and Best Practice
While creating a business case might sound like a time-consuming process, remember that you can make some quick changes to your energy usage simply by putting an end to bad habits.
If you have a thermostat, it might be worth moving it to a location that’s more efficient, away from draughts, windows, and skylights, for example.
Is the fridge in the kitchen over 10 years old? If so, it’s likely to be less energy efficient than new models. Likewise, consider replacing your current light bulbs with energy-efficient options like CFL or LED bulbs – and be sure to turn them off when they’re not in use, especially overnight.