Energy consumption considerations for business.
It’s still marginally fashionable to be interested in the environment, although it seems that many businesses are more interested in filling their annual reports and marketing materials with platitudes rather than making real changes to their businesses. The reality of energy conservation means talking to consultants who spend their days examining electricity, gas and water bills – one might argue not really the most interesting way to spend a week. This of course does not apply to Andrew Warner of Green Technologies (I’m hoping that gets me out of trouble) who recently presented a rather frightening report to us.
We are lucky, as we have a new business and are undertaking a major refurbishment of our site. The facility was originally built by GSK to a very high standard, but it is some time since it was built and we have an opportunity to see if we can make improvements. To this end we commissioned a report on the building and it’s energy consumption.
We all know, because we hear it on the news, that we face a fuel crisis, but I had not realised that the prediction is that within six years supply will be almost 30% less than demand. This will inevitably lead to price increases which are forecast to be somewhere between 6 and 8% per annum. Over the same period, profits of ‘Average UK plc’ are expected to grow at the rate of GDP 2.77%. In other words, as you work harder and more efficiently to increase profits they will be eroded by having to pay a higher percentage of your business income in energy costs.
For example, if you currently have energy costs of £200,000, instead of paying £270,000 by 2025 you will be paying £370,000. That’s an extra £100,000 (or 50% of your energy bill today) straight off your shareholders’ return.
Oh, I hear you say! Ow, I hear you say! Now, all of a sudden, paying lip service to green issues is not enough; changes have to be made. Numerous ways to save energy consumption, and thus money, have been presented us by our consultants. Indeed with investment some green methods can actually convert cost centres into profit centres. There are some really easy and low cost ways to save energy and others more expensive and complicated, but if you want to protect your profits then you have to do something now, as we will.
In the meantime, as we only use pharmaceutical grade water in our production I am trying to work out how we are going to benefit from harvesting the alleged 7 million litres of water that fall on our roof each year… Speke Evian, anyone?
Chief Finance Officer