Energy Management and Company Competitiveness

Industrial Energy Efficiency

Energy, once perceived as a (relatively low) fixed cost, is now becoming an important variable cost that impacts on profits. This report outlines a methodology to assist companies in gaining a deeper understanding of energy risks and the opportunities associated with improved energy performance. The methodology has been applied to 50 large listed industrial companies to assess the magnitude of risks and opportunities across sectors, finding that:
  • For around 72% of the sample companies, energy costs are greater than 10% of the companies’ EBITDA
  • In particular, Metals, Minerals and Transport sectors are very exposed to changes in energy costs, with energy costs on par or larger than their EBITDA
  • Most exposed companies could increase their EBITDA by around 5% if they improved their energy performance to best practice
  • Based on illustrative future energy price scenarios, 58% of companies in the sample are likely to be highly impacted by future energy price rises, with increases in energy expenditure equivalent to more than 3% of their EBITDA
  • Transport and Minerals companies are most affected with changes in energy expenditure, equivalent to 19% and 12% EBITDA
  • Improving the energy performance of the highly impacted companies could help alleviate the increase in energy costs by about half on average
The report follows upon our previous research that found there is a large variation in the amount of energy savings implemented by industrial companies, and that internal energy management practices such as data analysis and senior management oversight may have a large impact on energy efficiency uptake. 
By using this information, companies will be able to undertake voluntary actions to minimise energy related risks and improve competitiveness.