By Claire West

New figures suggest that despite energy bills comprising of almost a fifth (17%) of a company’s operational running costs, one third (32%) of medium-sized businesses have no intention of implementing any energy efficiency measures, thereby ignoring a vital way of managing these overheads.

With the average annual energy bill for such businesses costing approximately £25,000, new research from British Gas Business suggests that the majority (70%) of businesses are not currently engaged in energy efficiency measures, running the risk of unnecessarily exposing themselves to rising prices and regulatory risk.

It also comes at a time of recent volatility in the energy market, with power prices rising by 20% in the last six months alone. This is due to the extreme cold weather last winter, the unrest in the Middle East and North Africa and the earthquake in Japan in March and the outlook remains uncertain.

Higher costs do not automatically means higher bills however. For those prepared to act, the research highlights how quickly businesses undertaking efficiency measures realise a return.

Amongst the most popular steps taken by businesses include
monitoring usage (71%);
installing energy efficiency devices or technology (56%);
and analysing data to control consumption (46%).

Simple steps such as these deliver rapid benefits with 59%, 58% and 70% respectively of businesses that have done so seeing a return from as little as 18 months.

These and other low and no cost options, including supporting positive behavioural changes among employees, can quickly save 10% of costs leaving such businesses thousands of pounds better off. Other, more involved measures, which generate greater savings, — such as building controls and microgeneration — can cut bills by upwards of 20%.Combining both low cost and more involved measures provides the more attractive returns than when measures are taken in isolation.

Alongside helping to cut bills, energy management ensures businesses reduce the financial burden associated with carbon legislation such as the Climate Change Levy and the Carbon Reduction Commitment Energy efficiency scheme (CRC).

Dawn Ryan, HR and office manager for the Authors’ Licensing and Collecting Society (ALCS), is an example of a business customer who is witnessing the benefits of investing in energy efficient technology. Dawn says:

“We had smart meters installed by British Gas Business in April 2009 and this has made a massive difference to the way we now operate as a company. Before, we had never really given much thought to being energy efficient, or how simple it was for us to make significant savings. We have achieved instant savings just by changing the usage of one piece of equipment - saving us over £3,500 a year.

“Although it’s early days, our staff are reacting incredibly positively. We’re seeing a significant transformation in employee behaviour as the whole company is making a conscious effort to implement the small things, such as turning appliances off.

“From a HR perspective, the financial savings we’re making are allowing us to reinvest in supporting our staff, so it’s a win-win situation. We’re saving money and being able to take charge of the situation at the same time.”

Kanat Emiroglu, managing director of British Gas Business, said:

“Energy is business critical — it’s impossible for businesses to function without it. Yet British businesses spend too little time thinking about or managing it. The combination of rising costs and tough targets and complex regulation are a potent mix. But simple steps, and a range of low and no cost options can make all the difference.

Our experience as the largest energy provider in the UK reveals that those businesses that treat the issue of energy efficiency seriously realise rapid returns, quickly cut costs and give themselves a considerable competitive advantage.”

British Gas Business provides long-term strategies for businesses of all size to help them manage energy and save costs. It unique oversight comes from helping 679,000 business customers in the UK control their energy use as a management tool.

It provides tools, services and technologies — from smart meters and boiler optimisation, building controls to microgeneration — which help businesses approach energy usage and management as a genuine investment opportunity and source of competitive advantage.

To support businesses in this aim and to help them cut costs and improve their bottom line, energy experts at British Gas Business have developed the following five key recommendations:

1.Being energy smart - understand your energy usage. Smart Meters, giving real time readings of energy usage, can play a transformational role in helping businesses understand the opportunity which energy management brings to the management table.

2.Create an open dialogue with your energy supplier. The energy sector is rapidly becoming a combined supply and services sector and businesses should start looking at their energy provider as a delivery partner.

3.Avoid a penny rich, pound poor attitude - instead take a long-term approach. Long-term planning is critical. Taking steps to improve building management and energy efficiency will pay dividends in the near-term and deliver competitive advantages in the long-term.

4.Maximising the advantages of government regulation & legalisation. Businesses can view this as both an opportunity and a threat, and use it to focus on becoming more energy efficient in order to surpass the competition.

5.Enhance your reputation through taking responsibility. Customers, partners, employees and suppliers increasingly expect businesses to act responsibly, especially when it comes to their impact on the environment.