The Impact of Energy Costs
Data for carbon footprints calculated by Sustainable Food & Drink indicates that, typically, energy accounts for 1.7% of turnover. Whilst this may not initially appear significant, it’s worthwhile considering the following: firstly, the Carbon Trust has found that on average 30% of energy purchased by UK businesses is wasted; and secondly, the Scottish Government estimates that a £1,000 saving in energy bills is equivalent to generating an additional £20,000-£30,000 in sales.
Energy price forecasts are difficult to find, but a basic extrapolation to 2025 of historic trends in electricity prices suggests that industrial users could see energy prices further increase by as much as 50% by 2025 (graph below).
Electricty Price Forecast (Extrapolation)
for Different Sized Industrial User
The Carbon Trust has an extensive range of resources to help companies reduce their energy use. Savings can be achieved through behavioural change and technologies requiring varying levels of investment.
Energy savings can be made, to a greater or lesser extent, from simple behavioural change. Such practice could include: switching equipment off when not in use; enhanced plant maintenance regimes; better controls (for lighting, cooling, heating and equipment); state-of-the-art lighting; insulation and more efficient equipment.
Sustainable Food & Drink reviewed energy saving opportunities recommended by the Energy Saving Trust and Carbon Trust to companies with whom it was working. These opportunities were classified as potentially delivering low (c.7%), medium (c. 23%) and high (c.48%) reductions in electricity use.
These reduction scenarios were then considered in relation to the predicted increase in electricity prices and their impact on electricity expenditure; the potential savings are shown in the graph below.
Electricty Reduction Scenarios
When compared to ‘business as usual’ scenarios, it’s clear that all reduction initiatives help mitigate the impact of escalating energy prices. However, for organisations aspiring to a greater degree of control over electricity (and other energy) costs, focussing on actions that deliver medium to high reductions will deliver more significant long-term savings.
Sustainable Food & Drink can provide up to 8 days of funded support to individual Scottish food and drink companies to help improve their competitiveness by reducing their carbon footprints. The support can help food and drink manufacturers identify opportunities for cutting costs and aligning themselves with clients' environmental requirements.
To discuss how Sustainable Food & Drink programme can help your food and drink business, please contact us.
