According to the U.S. Energy Information Administration (EIA), by the year 2040, the cost of energy in the U.S. will increase by 25% to 75%, depending on the energy source. Overall business expenses are expected to follow the same trend.
How, then, will companies continue to remain profitable? There are two ways to maintain profits in a world of increasing cost: either by reducing total costs, or increasing total sales. The latter comes with no guarantee, but implementing cost-saving practices is quantifiable and achieves results. When the need to reduce costs arises, it is counterintuitive to invest in utility management infrastructure. However, delaying the investment doesn’t just delay returns; the cost to invest will also increase.
A large American multinational retail corporation that operates a chain of department stores is often used as an example of utility management savings, illustrated in the chart below. If the company was to invest in utility management for its 1,100 stores that average over 150,000 square feet each, it could save up to two billion dollars this year. In order to obtain the same net profit, the company would need to sell 250 million dollars of product, at 20% GP per year, for the next 25 years.
According to the EIA, over half of the electrical power consumed by commercial buildings is wasted. Various Utility Management Specialists estimate that many businesses can reduce energy consumption by 20% by simply using energy efficient products can economically reduce energy waste. As illustrated below, the EIA estimates that in upcoming years, total commercial electrical consumption will decrease by 13% while the cost of power will increase approximately the same amount.
Business costs are reduced through the use of various energy management solutions. And, as one might expect, lowering cost directly correlates to an increase in profit margin.
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