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The Energy Efficiency Imperative

Date: 07 December 2009

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23 pages, 6 figures

EXECUTIVE SUMMARY

Increasing oil and electricity prices, the hidden cost of carbon, growing risks from energy supply disruption and board-level climate change compliance issues make energy efficiency a new imperative for the CFO. Verdantix analysis of energy and carbon trends indicates that finance executives need a multi-year energy efficiency plan to maximise cost savings, help the CEO meet carbon reduction goals and make financial decisions based on total cost of ownership. Enterprise-wide energy efficiency programmes that focus on strategic solutions ensure CFOs identify the full range of financial benefits. Analysis of over 30 categories of energy efficiency products and services identified 15 strategic solutions that firms should prioritise for investment. Proven solutions with the highest business value include voltage power optimisation, variable speed drives and intelligent HVAC controls. Energy efficiency solutions deliver compelling carbon reduction benefits in addition to energy cost reductions.

TABLE OF CONTENTS

CFOS NEED A FINANCIAL STRATEGY FOR ENERGY
Energy Prices Will Spiral Upwards Again
Electricity Bills Conceal Growing Carbon Costs
The UK Energy Supply Gap Increases Price Volatility Risks
New Legislation Makes CO2 A Board-Level Compliance Issue

PRIORITISE ENERGY EFFICIENCY FOR MAXIMUM RETURN
The Payback From Energy Efficiency Is Compelling
Potential Energy Cost Savings Drive Investment Priorities
Energy Efficiency Helps The CEO Achieve Carbon Reduction Goals
Enterprise-Wide Energy Programmes Maximise Benefits

FOCUS ON STRATEGIC ENERGY EFFICIENCY SOLUTIONS
What Are The Strategic Energy Efficiency Solutions?

PHASE 3. LAUNCH
LED Lighting
Remote Energy Control

PHASE 4. GROWTH
Voltage Power Optimisation (VPO)
Variable Speed Drives (VSD)
HVAC Control
Lighting Daylight Phasing Control
Building Management System (BMS)
Boiler Controls
Automated Monitoring and Targeting (AM&T)

PHASE 5. MATURITY
Upgraded Maintenance Regimes
Insulation
T5/T8 Lighting
Energy Audit
Lighting: Occupancy Control

PHASE 6. RECYCLING
Monitoring and Targeting (M&T)

METHODOLOGY OVERVIEW
Six Market Phases Segment Solution Maturity
Three Solution Lifecycles Differentiate Business Value
Solution Adoption And Success Influence Positioning
Sustainability Ratings Cut Through The Greenwash
Investment Decisions: How To Use Total Portfolio Analysis
Portfolio Management: How To Use Total Portfolio Analysis

TABLE OF FIGURES

Figure 1. Electricity Prices Move In One Direction — Upwards
Figure 2.
CO2 Auctions Drive Up The Wholesale Price Of Electricity
Figure 3.
Energy Efficiency Is The Top Priority For Energy And Carbon Management
Case Study 1.
Tesco: A High Value Energy Efficiency Programme in Action
Figure 4.
CFOs Should Focus On A Small Number Of Strategic Initiatives
Figure 5.
Enterprise-Wide Programmes Maximise Energy Cost Savings
Figure 6.
Strategic Energy Efficiency Solutions