Business leaders have significant concerns about energy. A Harvard Business Review Analytic Services report, sponsored by Siemens in conjunction with a national series of seminars focused on energy innovation, found that approximately 90 percent of executives feel significant pressure to reduce their energy spend, and more than 80 percent said fluctuating energy prices are a challenge. Lengthy business interruptions from weather-related events and the specter of cyber-attacks on the utilities and power grids were also major concerns among this group.
Yet most companies reported that they still manage energy on a short-term, reactive basis. Only a third of the executives surveyed said their organization have an energy management strategy or have the ability to generate power onsite. Even fewer have an energy procurement strategy backed by senior management.
However, a small group of leading edge companies report they now see energy as a key business value driver, and are deploying new technologies and strategies to turn energy into competitive advantage.
Tackling the Challenge
Traditionally energy has been a major cost. But, according to Matthew Walters, Siemens’ Head of Distributed Energy Systems, U.S. Center of Competence, organizations haven’t tackled it because capital investment in distributed energy can be high and therefore, has longer paybacks than other strategic uses of an organization’s capital budget.
However, the survey found that changes in energy technology and business models, along with major environmental, social, and business trends are starting to change that picture.
About 35 percent of organizations in the survey, for instance, said they are generating power on site, often through solar energy. That trend is expected to continue: Nearly 80 percent believe their organizations’ use of solar energy will significantly increase in the next 10 years. Nearly half see similar levels of growth in wind power.
Such onsite power generation can have a major impact on costs. Walters points out that a 25% reduction in energy costs could add millions to a large company’s bottom line.
But cost cutting is only part of the story behind these new energy strategies. Reducing carbon emissions is also a top driver for those companies, amid the changing expectations of customers and mainstream investors who increasingly expect companies to demonstrate environmental responsibility.
Businesses Want Government Involvement
Companies are entering a new era where they can turn energy management into competitive strength by taming costs, reducing risk and deploying new energy business models in their communities. And individual organizations realize they can’t do this alone. The leaders in the survey support a strong government role in energy innovation—nearly 90 percent said that businesses and municipal governments should work together to assure resiliency on the part of both.
They point to places like Pittsburgh which has spearheaded public/private partnerships for energy resilience as part of its economic renaissance. Dubbed “The Pittsburgh Way,” the city is working with universities, utilities, and businesses to make the case for energy innovation, achieve broad-based understanding of the energy market, and assure that investments in energy innovation pay off for businesses and the city.
“Companies are increasingly turning to onsite power generation,” says Walters. “They are using it to reduce costs, improve their organization’s environmental footprint and assure the resiliency of their operations.”
Siemens helps organizations stay connected to the grid while generating and managing power themselves. The company’s solutions cover the entire energy value chain from generation to management to consumption.
To learn more about how Siemens can help your organization address the energy challenges it faces, please visit www.usa.siemens.com/onsite-power.
Source: HBR
How Businesses Are Reducing Their Energy Costs and Building Resilience – SPONSOR CONTENT FROM SIEMENS
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