On their own, SMEs don’t consume huge amounts of energy, but collectively, their energy demand is a different story. The IEA estimates SMEs consume around 13% of total global energy demand. Yet, approximately 30% of that demand could be eliminated by cost-effective energy efficiency measures, such as implementing energy management software. That would save more energy than Japan and Korea consume in a year!
Which business wouldn’t want that level of savings? Well, according to the Observatory of European SMEs, fewer than 30% of them in Europe have implemented any measures for conserving energy, and, even though 60% plan to reduce carbon impact, just 4% have a comprehensive approach to energy efficiency.
In this article, we will discuss the main challenges faced by SMEs in terms of energy management, the different energy-saving measures they can put in place and the support available. Finally, we will present the release of a new guide that can be downloaded free of charge and is specially designed for SMEs and ESCOs wishing to improve the energy efficiency of this type of company. Enjoy your reading!
SMEs: an often undervalued Energy Savings Potential
What is an SME?
The OECD defines an SME as “a non-subsidiary, independent company that employs less than a certain number of workers.” This number varies depending on the country: in the US, the upper limit is 500 while in the EU the limit is 250. SMEs can be broken down into micro, small and medium-sized enterprises
Why should ESCOs be interested in Energy Management for SMEs?
With the European Commission’s Winter Package proposal for a 30% energy efficiency target by 2030, energy audits targeting SMEs could unlock incredible energy savings potential in Europe.
Unfortunately, due to their small size, sectoral variation, and low returns per customer, ESCOs have a particularly difficult time penetrating the SME market in order to reach these targets. Yet, if SMEs implemented energy efficiency measures to their full potential, they could shave more than 30% off their energy bills. And that is something SMEs in Europe and ESCOs everywhere simply can’t afford NOT to do.
Most importantly, SMEs have very specific needs when it comes to energy efficiency and productivity. ESCOs and energy managers need to do a better job of recognising and addressing these pain points. This is why we wrote this guide showing how ESCOs and SMEs can build on their energy savings potential together.
Energy Management for SMEs: What are the Barriers?
A survey conducted by SME Climate Hub reveals that “ half of the small businesses calculate emissions, and 60% have plans to reduce carbon impact. However, two-thirds of small business owners worried they don’t have the right skills and knowledge to tackle the climate crisis.” This data is rather revealing of the state of energy management in SMEs. But where do the barriers to better energy management come from? Here is an overview of the main ones:
- Lack of Knowledge due to Limited or Inaccessible Information
Many small and medium-sized enterprises are simply too focused on their day-to-day activities to realise how much energy consumption actually costs. Or they lack information about how energy is used in their business. As a result, SMEs pay blindly for energy without being in control.
- Lack of Time
Overloaded, SME owners and managers do not have enough time to explore their energy productivity options. Moreover, SMEs rarely consider efficiency as a priority, especially in the early stages of development. While it is true that they need to maximise efficiency to save money and grow, this becomes very difficult when time is such a scarce resource.
>> Discover SMEs’ 8 other barriers to energy efficiency in this article.
Energy Management for SMEs: Best Practices
First Energy Efficiency Measures for SMEs
In the short term, there are several measures that can be applied today: lowering the heating replacing light bulbs with LED lights, optimising the time spent in buildings, or rethinking the organisation of work. All of these measures can be applied to reduce energy consumption. In this article, we review what measures can be implemented in retail shops. An interesting read for making initial energy savings, whatever the sector or size of the company.
Once you have decided on the first efficiency measures, commitment and reorganisation around these actions will be more than necessary if you want them to be effective. CaixaBank has succeeded in creating a real energy culture in order to increase the effectiveness of its measures. This is not an SME, but this case study highlights the importance of energy awareness across the organisation to achieve energy efficiency projects.
Energy Management: What Tools and Support for SMEs
1 – Measuring and Monitoring Energy Consumption
If you have already implemented energy efficiency measures or already know where to start, then you will probably need an Energy Management Software. Such a tool can help you prioritise areas, but more importantly, it can provide you with the necessary analysis of your consumption that will allow you to deduce the effectiveness of your measures. An Energy Management System (EMS) such as the Dexma Platform is also a perfect way to detect consumption anomalies so that you can correct them without delay. Are you wondering about the cost-effectiveness of an EMS for your energy efficiency project? We answer all your questions in this article.
2 – Funding an Energy Efficiency project
Before committing to concrete actions, it is essential to know what the cost of your energy efficiency investments will be. Energy performance is beneficial and saves costs, but you may be wondering … how much it will cost?
In this guide, we reveal the “10% rule” for estimating the funding needed for your project. If you want to do your budget planning now, here is a free excel template that will help you quickly define the necessary budget to allocate.
3 – Supporting an Energy Services Company
The energy sector can be technical if you do not come from that background. Energy Service Companies (ESCOs) are involved when undertaking an energy efficiency project. They provide SMEs with the necessary support to :
- Responding to financing issues: as the point of contact between the SME and financial institutions, an ESCO combines information, expertise and financing with a “one-stop shop” approach that ensures efficient implementation of your energy project. It also helps SMEs to assess the extent to which they can access financing programmes by appealing to the relevant authorities.
- Understand and visualise the long-term energy saving potential: beyond carrying out an initial audit of an SME’s energy situation, an ESCO is there to provide a real “translation” service of energy bills and thus allows better visualisation of data and reduction actions regarding energy consumption.
- Save time: as you will have understood, an ESCO brings both the energy expertise that SMEs may sometimes lack and accompanies them as a financial advisor during the development of your energy efficiency project.
To conclude, if you want to go further in energy management for SMEs, we invite you to download this free guide to implement all these concrete actions directly in your SME or in your client’s company.
This guide is not just about helping SMEs understand their energy-saving potential. It also aims to demonstrate how ESCOs can help SMEs to achieve their energy-saving potential.
For more information, please contact one of our energy efficiency experts by clicking here.