By Monica Ngage
Financial managers play a key role in any organization. This revolves around allocating the scarce resources among many competing needs of to enable the organization run well. Basically they oversee the financial health of an organization by monitoring cash flows, managing expenses and producing accurate financial information.
Among the many costs that a financial manager needs to manage is energy cost. Energy is the back bone of every organization, thus making it an unavoidable cost. This being the case, Financial managers are only left with one option, managing it!
So how can financial managers control energy cost?
They say “If you can’t measure it, you can’t manage it.” Financial managers need to maintain records of their facilities’ energy consumption in order to determine the consumption pattern and trend analysis. In addition, they can also facilitate installation of real time monitors to show consumption on a real time basis. It therefore becomes easy to determine the areas that are heavy consumers and also point out areas of wastage. This information allows the Financial manager to determine cost saving opportunities
Conduct Energy audit
An energy audit is a survey and analysis of energy flows for energy conservation in a building/facility. The outcome is an energy report that highlights possible areas of wastages and potential energy efficiency measures that can be implemented in order to achieve optimal energy use. Financial managers can tap into the proposed energy efficiency measures in order to reduce on energy costs.
Engage an Energy management consultant
Many organizations lack the expertise of a qualified energy manager. To bridge this gap, financial managers can engage a consultant for their energy management. The energy manager will assist in setting up energy committee within the organization that will comprise of at least one person from each department all the way from the senior management. This way the energy agenda becomes a responsibility of the overall organization. The energy manager will help you set your energy targets with quarterly reviews on the performance. Finance managers are tasked with a role of ensuring that all the proposed energy efficiency measures are implemented in order to attain target cost savings.
Energy efficiency financing
Sometimes, it becomes difficult to implement the recommended measures in step 2 & 3 above owing to financial constraints. Some of the proposed projects may involve a heavy capital outlay which the organization may not have yet the savings that are obtainable from such kind of projects are huge. Finance managers therefore have an option of financing these projects through ESCOs(Energy Service Companies).The ESCO will implement the energy efficiency projects and you will service the loan from the cost savings obtained from the project. The payment model can be of two types:
- The guaranteed saving model-Where the ESCO guarantees a certain savings on the client’s energy bill .The ESCO takes up the technical risk. The client then takes up a bank loan or uses their equity to pay contractually determined fees to ESCO and the bank, and keeps the difference.
- The shared savings model-In this model, ESCOs implement the project and the obtained savings are shared between ESCOs and the client
Finance managers can set aside budget for staff training on energy awareness. This training will make the overall team adept in energy use and help in checking energy costs all round. Amazing enough is that this will also be passed down to their households transforming their livelihoods too! In addition the new Energy management regulations requires each organization to have a CEM(Certified Energy Manager).This is something worth investing in in order to have an expert in the organization who will help in energy management.
In summary, financial managers have a big role to play when it comes to energy efficiency. However, alone they can’t do it but will rather require support from the whole team!