Energy Crisis: How Companies Are Using Electrification and Efficiency to Mitigate Risk

2022 was an influential year in European energy markets. The war in Ukraine led to the disruption of Russian natural gas and the slow reconfiguration of global energy supply chains. This combination of powerful market forces resulted in unprecedented price volatility.    As a result, even amid a mild European winter and efforts to increase and diversify supply sources, businesses are realizing that controlling demand side activities is critical to mitigating both pricing and availability risk.  

Most companies are ill-prepared to navigate a volatile energy market. In a Schneider Electric survey of global business leaders centered around managing energy volatility, respondents noted that they are losing confidence in their ability to manage energy prices and supply fluctuations. According to the survey, only 30% ranked their ability to manage volatility as considerably effective or higher compared to 49% in 2022:

And unfortunately, the energy crisis is far from over. The energy market is predicted to be just as volatile, if not more, throughout 2023. Now is the time to take proactive steps to prepare for an unpredictable future and position your organization to effectively combat the challenges of the energy crisis.

Electrification and efficiency solutions are proven methods to reduce reliance on traditional energy sources while mitigating the risk of rising costs, improving operational resilience, and ensuring business continuity. Schneider Electric has worked with clients, such as Roca Group, to implement efficiency and electrification measures that drive real, measurable results. In this blog post, we explore ways that electrification and energy efficiency can be used to help companies weather the ongoing energy crisis.

Implement energy efficiency measures to reduce demand

Energy Efficiency initiatives should be the first step to reducing the demand for energy and curbing carbon emissions while also complying with local regulations in many jurisdictions. In some European countries, businesses are subject to mandatory reduction obligations to help meet climate targets established by the European Green Deal. Businesses that invest in energy efficiency measures such as installing advanced lighting and HVAC, optimizing energy usage through Building Automation Systems, installing energy-efficient windows, and upgrading appliances can achieve the same level of productivity, using less energy than before and often with improved occupant comfort. By improving energy efficiency, organizations can lower their energy bills and manage supply-related operational risk. Furthermore, according to the US Department of Energy, energy-efficient buildings experience fewer disruptions from demand spikes, making them more resilient than buildings that do not prioritize energy efficiency.

Where to start with energy efficiency:

  1. Conduct an audit: An energy audit can help businesses identify areas where energy is being wasted and identify opportunities for improvement. The audit can be done in-house or by hiring professional engineering firms.
  2. Invest in energy-efficient equipment: Businesses can invest in energy-efficient equipment such as ENERGY STAR-certified appliances, efficient heating and cooling systems, and LED lighting. Implementing a building management system can also be useful to automatically control lights, HVAC, and other systems based on occupant loads to reduce waste when buildings are empty.
  3. Monitor and track progress: Monitoring and tracking progress towards energy efficiency goals can help businesses identify areas for improvement and measure the impact of energy efficiency initiatives.

For more information on strategies for quick ways to drive down energy usage and cut costs, click here.


Electrify operations for resilience and sustainability

Electrification enables organizations to replace equipment and processes powered by traditional fossil fuel-based energy sources such as coal, oil, and natural gas, with electricity. An organization can electrify its operations in several ways, such as by transitioning to electric-powered vehicles, deploying heat pumps, and converting certain thermal-sourced industrial process equipment and heating and cooling systems to electric where feasible.    

Electrification reduces reliance on fossil fuels which helps reduce exposure to energy price volatility. Even better, when electricity is generated from renewable sources such as solar or wind, it provides organizations with a cleaner, more resilient energy supply to accelerate its overall decarbonization strategy.

Where to start with electrification:

  1. Conduct an audit: Before embarking on an electrification project, it’s important to understand your organization’s electrification opportunities. Some of the most common opportunities for electrification involve replacing heating and cooling equipment, plant assets, transportation, and appliances.
  2. Leverage financial incentives: Recent legislation in both the U.S. and Europe has created new funding streams such as grants, low interest loans, and tax incentives that can help offset the cost of electrification.
  3. Evaluate renewable energy options: Along with original electrification measures, explore options for sourcing renewable energy to ensure your new equipment and vehicles are being powered by low-carbon electricity. Consider purchasing energy attribute certificates (EACs), renewable power purchase agreements (PPAs), or participating in green power programs offered by utility providers.

These suggested actions can help protect your organization from the challenges created by the current challenging energy environment. Prioritizing electrification and energy efficiency can help deliver both environmental and economic benefits while ensuring energy security and resilience. The time to act is now, and with the right measures in place, any business has the power to achieve a secure energy future.

Contributor:


Ron Taglieri
Offer Manager, Efficiency Services at Schneider Electric Sustainability Business

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