As energy bills rise Darren Riva, head of financing at the Energy Efficiency Financing scheme, explains how you can help the planet and your bottom line.
Squeezed between a sluggish economic recovery and rising electricity prices, businesses will continue to seek ways to reduce operating costs in 2013 and beyond. As a result, energy efficiency has been propelled to the forefront of the management agenda. In the energy-intensive printing industry there is significant energy saving potential.
According to the Carbon Trust, UK industry could save £640 million a year through the use of more efficient motor-powered equipment alone. The energy used to heat, light and ventilate manufacturing premises may seem like a fixed overhead, but through proper control, businesses can save between 15% and 20% of the energy used for each service.
While businesses may be keen to upgrade equipment to more energy-efficient alternatives, the lack of traditional sources of finance often means such green ambitions cannot be translated into reality. According to the Bank of England, the annual rate of growth in the stock of lending to UK businesses was negative in the three months to August. The stock of lending to SMEs and large businesses also contracted over this period. So how you’re your company seize the potential green savings despite the financial bottleneck?
Energy Efficiency Financing scheme (EEF)
The Energy Efficiency Financing scheme (EEF) has been created to help. The scheme, which is a joint initiative between the Carbon Trust and Siemens Financial Services Limited (SFS), aims to provide finance for organisations acquiring energy-efficient equipment, with affordable monthly payments designed to match - and be offset by - the average monthly savings on energy bills.
In some cases, the savings on energy costs can be greater than the monthly finance payments, allowing the business taking advantage of the scheme to be cash positive from day one.
The EEF facility offers businesses an alternative to outright purchase, enabling them to invest in energy-efficient equipment while conserving their working capital and keeping their existing lines of credit intact. Organisations can also benefit from easier budgeting, as monthly payments are fixed and financing terms flexible. In addition, any energy saving assessment will be conducted by the experienced specialists of the Carbon Trust, giving businesses the assurance that the expected carbon reduction, and hence financial savings over time, will match or exceed the finance payments.
Seizing financial savings with EEF
The EEF scheme has already brought significant financial advantages to many businesses by helping them become greener organisations. NWN Media, one of the UK’s leading independent publishing and printing companies based in Deeside, produces a portfolio of regional newspapers and bespoke websites. By replacing its ageing boilers with a gas space heater, the company has been able to generate annual savings of £10,000 and the investment is expected to be paid off in three years. NWN Media has also undertaken another project to replace two inefficient air compressors with a brand new compressor. The £35,000 investment enables annual savings of £7,000, with a return on investment over a five-year financing period.
Harman Technology, manufacturer of the Ilford brand of black and white photographic products, has invested £130,000 in new, energy-efficient chiller units to replace its old equipment using the EEF specialist facility. Lower energy consumption leads to annual energy cost savings of £26,000, giving a return on investment in five years. To further cut energy overspend, the company has invested an additional £30,000 to fit variable speed drives (VSDs) to the dryer fans of its coating equipment. Apart from reducing consumption of electricity, gas and chilled water, dryer performance can now be more closely matched to product demands. Return on investment is expected in just two years.
Maintaining the edge
For those who believe that green endeavours equal large capital outlay, the EEF scheme provides evidence that going green can be affordable, simple and straightforward. Given that energy-efficient equipment often improves productivity, in addition to providing cost benefits, green investments are not just a nice-to-have, but are becoming a strategic imperative for businesses to thrive and compete in today’s fierce marketplace.