Lack of energy expertise is a costly business

09-Jul-2012 - Last updated on 13-Mar-2017 at 16:32 GMT

Related tags Energy Electric motor Variable-frequency drive

npower estimates the average firm spends £180,000 a year on energy

Medium-sized food and drink manufacturing firms are losing out on energy savings because of a lack of expertise, according to a report from energy supplier npower.

Only 4% of medium-sized businesses in the UK have a dedicated energy specialist, despite the average business spending over £180,000 on energy a year, the npower Energy Matters report found. However, around nine in 10 businesses (88%) with an energy specialist say the introduction of the role has saved them money.

The report surveyed over 200 people responsible for energy procurement in medium-sized businesses to assess how energy buying is managed and whether it is valued within the business. The report examined the impact of having an energy specialist.

The study found that just one fifth (21%) of businesses had a formalised energy strategy and over three quarters (81%) of those responsible for procuring energy spent more time on administrative duties than procurement.

Business's revenue

Wayne Mitchell, industrial and commercial markets director for npower, said: "The research found that the person responsible for buying energy can have a significant impact on a business's revenue, yet the importance of this role is undervalued across the UK."

He said firms were missing a trick when it came to having a positive impact on the bottom line by not positioning energy as a board-level concern and having a strategy to manage its procurement.

The study also showed that more than half (57%) of firms surveyed felt energy purchasing was not a valued role in their organisation and fewer than one in 10 (7%) had received any kind of formal energy procurement training.

As a result, over a quarter (27%) of respondents had remained on the same contract because they hadn't had time to review it and one in five (19%) said they didn't have the expertise to switch.

Energy specialist

In firms with a dedicated energy specialist the picture was very different. As well as saving their businesses money, they spent far more time on energy purchasing. They also tended to have a formalised energy strategy.

Mitchell added: "Through better energy procurement management, costs can be kept to a minimum by ensuring energy is purchased at the correct times namely avoiding peaks in the market and with a little knowledge businesses can take control of this themselves."

Meanwhile, Steve Brambley, deputy director of Gambica, which represents companies supplying instrumentation and control equipment, said food and drink companies could reduce energy costs by employing variable speed drives (VSDs). These could reduce the costs of energy used by electrical motors, especially as the use of automation grows.

Brambley said electrical motors consume two thirds of the energy used in the food and drink manufacturing sector. "The financial gains provided by VSD control are uncomplicated and compelling."