Volatility has emerged as a key energy supply concern for businesses, causing leaders to rethink associated management strategies with a heightened sense of urgency, according to new research released by Schneider Electric.
The findings of Schneider Electric’s Sustainability Index, 2023 report, a quantitative survey conducted with over 500 decision-makers across corporate Australia, reveals that only one-third (32%) of companies feel adequately equipped to navigate future energy market volatility.
The report sheds light on the leading concerns regarding energy supply in the corporate sector. Cost and risk management in the face of volatility (42%) and cyber security (42%) emerged as the top two concerns, underscoring the need for businesses to adapt to market changes and protect against data breaches.
“A strong, resilient energy mix is essential for every business,” said Lisa Zembrodt, Principal and Senior Director of Schneider Electric’s Sustainability Business. “Leaders should create holistic, optimised energy management strategies that look to action efficiency measures, electrify wherever possible, and develop a mix of onsite renewable generation, storage, and real-time monitoring to help manage and reduce their energy needs,” she added.
Climate change and its associated impacts (34%) rounded out the top three energy supply concerns for business leaders, reflecting the growing recognition of the impact of climate change on economic performance, combined with the public’s growing interest in climate action following last year’s bushfires, droughts, and floods, as demonstrated during the recent federal election.
The survey, commissioned by Schneider Electric, a global leader in digital transformation of energy management and automation, reveals that energy supply concerns are underpinned by several factors, including power grid reliability, with 24% of businesses expressing worry about grid resilience.
“Businesses should explore alternative energy management strategies to ensure a reliable supply of power and manage their reliability concerns, while advocating for policy that enables the transition,” Ms Zembrodt said.
The survey highlights a promising trend among businesses choosing to invest in energy efficiency and sustainability. Approximately 70% of businesses are currently discussing or implementing strategies to improve energy efficiency, recognising its potential to reduce costs and enhance environmental performance. Additionally, two-thirds (66%) of companies are considering implementing renewable energy solutions on site, such as solar power. Adoption of renewable energy sources not only contributes to the fight against climate change, it can also offer long-term cost savings.
Electrification and fuel-switching solutions are also popular options, with half (50%) of surveyed businesses exploring these options. By transitioning to electrified systems and incorporating fuel-switching solutions, businesses can reduce their carbon footprint and minimise reliance on traditional energy sources, the prices of which are tied to global market circumstances.
“Volatile energy markets are encouraging businesses to act on both supply and demand to insulate themselves against unpredictable costs, with positive implications for sustainability. Actions taken are win-win, especially in the current energy market,” added Ms Zembrodt.
Schneider Electric’s Sustainability Index, 2023 further emphasises the significance of decarbonisation efforts among businesses. One-third (33%) of companies that have committed to decarbonising their operations have done so due to climate-related risks. Another 13% have identified the need to mitigate risks within their value chain, while 14% aim to enhance resilience against disruptions. These figures highlight the increasing recognition of the business benefits associated with sustainability initiatives.
Business leaders are acutely aware of the impact of energy costs on their operations. As one respondent highlighted, “Skyrocketing prices made us re-evaluate our energy needs and where we could decrease.” Rising energy costs not only affect the bottom line, they also underscore the importance of adopting energy management strategies that optimise resource utilisation.
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