New platform uses data to highlight the business case for energy projects
Businesses have been urged to explore third party financing and take into account project benefits outside of returns on investments (ROI), after a report revealed that around half of commercially-viable energy projects are being ignored.
The Curve is a collaborative project from market analysts The Crowd that has pooled 646 energy projects from 90 organisations including BT, Unilever and Coca-Cola Enterprises, in an effort to improve corporate energy management by collecting data that promotes the benefits of energy projects in order to share best practice across sectors.
— READ THE REPORT —
The Curve Insights report has revealed that despite an average payback of 5.3 years for renewable energy generation projects, companies are failing to illustrate the “co-benefits” of projects such as maintenance improvements and staff satisfaction. The report also noted that 93% of companies are self-funding these projects despite the rise of third-party green finance funds.
“Project managers need to get smart at presenting “whole” business cases, including the multiple co-benefits and strong ratings for energy projects. This may require more engagement with operations, HR and other beneficiaries,” the report states.
“We should challenge our reliance on internal cash reserves for energy projects. There are now well-established third party financing options what will value some of the longer paybacks allowing organisations to realise the co-benefits.”
According to the report, 64% of non-generation projects had a three-year payback on investment, which it states is “a better return than core business for most companies”. But with half of energy projects being ignored, the new database utilises star ratings as a way to highlight the success of each project in order to create an “easy sign-off for CFOs”.
On average behaviour change, transport and IT measures had the shortest length of payback at around 12 months, while renewable heat remains an outlier with payback length climbing to more than 7.5 years.
Currently, 60% of the mandatory star ratings for all project stages are 4 stars or more. Once a project moves from the assessed stage – which had an average rating of 3.3 – to operational, the rating actually climbs to 3.9 to highlight how these projects can create holistic benefits within the company that can’t necessarily be measured during the planning stage.
The report suggests that data can play a huge role in unlocking the business case for energy projects, with the Crowd claiming that new platform has the potential to remove 20% of business carbon emissions.
In order to reach this potential businesses may have to turn to external green funding options, which could accelerate market growth despite failing to make “significant inroads”. Already, more than 70 financial institutions from across the globe have pledged to scale-up energy efficiency investments to take advantage of a “huge business opportunity”.
In a move to incentivise green investment, the European Commission has agreed to “stress-test” institutional investors in order to shift billions in investment away from fossil fuels.
You can download and read the report here.
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