How to estimate the expected savings and return when purchasing meters and monitoring software?


#1

We are about to invest in meters and energy management software to manage energy use better in our site. The decision is now with the Board, and I have been asked to provide expected return on investment. What should I provide them to justify this?


#2

Energy management solutions are of great value for discovering energy saving opportunities unique to an organisation. They however come with a cost, and it is fair that your management asks for expected savings in order to validate investment.

Some of the questions below might help you to identify if your management is fully supportive towards energy savings, and what you need to be doing to get them on your side. Try to find answers to these, as a way to build your argumentation.

  • Does energy expenditure represent a large part of your direct costs?
  • Does your management recognise increasing energy bills as a major issue?
  • Has budget already been set aside for energy management matters?
  • Have energy saving initiatives been requested by your management?
  • Have energy saving projects been green lit by management before?

Have you analysed your electricity bills recently, are your costs increasing and have you spotted any signs of abnormal consumption? Spend some time assessing the gains and payback you are likely to obtain with an energy management solution. Don’t forget that savings on energy costs are pure profit, e.g. if your company works on a 10% profit margin, reducing your energy costs by €10,000 is similar to making an additional €100,000 turnover.

The final and possibly most important consideration is identifying early who is going to engage with the energy management solution once it is in place. While energy management solutions are invaluable to discover energy saving opportunities, the savings will only be achieved if somebody reacts on such opportunities and implements energy saving measures. Investing in an energy management solution must come with a team of people ready to engage and commit to realise the savings. If you make that point clear and part of your plan, there is a higher chance that your management team believes the savings will be achieved and signs off your project.