We tried to justify each project on a case by case basis but it took a lot of time and effort on the part of our teams – particularly for smaller projects. So we worked with our finance team to develop an alternative approach that allows us to bundle projects and access funds more efficiently.
- Daniel Cooper, Energy Manager, Sydney Water
If you find that the decision-making processes in your organisation are limiting your ability to access funding for energy efficiency projects, consider how you can improve the process.
You might find that part of the reason that energy efficiency funding is difficult to access is that you find it hard to justify the time and effort involved to develop business case proposals- particularly for smaller projects. In cases where there are management expectations that energy efficiency projects get implemented or there are targets that you need to reach, then it is important to discuss with management any barriers that are holding you back and possible solutions.
Tested strategies to streamline and adapt the approval process
Before you try to influence existing systems and processes, make sure you understand how they work. Talk to your finance personnel and others that are closely involved in reviewing funding options and allocating funds. Ask them for their advice about how you might streamline the process. If they have little understanding of the drivers and benefits of energy efficiency for your business, create an opportunity to brief them and their colleagues. They might also be able to provide you with feedback on the quality of your business case proposals.
Opportunities to streamline the approvals process include:
- combining smaller projects into one large project
- establishing an internal fund for energy efficiency projects
- adding questions on energy impacts to all capital expenditure approvals processes.
At Sydney Water the Energy Management Unit was doing some forward planning by looking at their list of future projects and the energy target they needed to meet. When they realised that the administrative processes involved in gaining approval for smaller projects was prohibitive they decided to try and change the system. They now have an energy efficiency fund available and a streamlined project approval process.
Another approach taken by a number of the companies including Australia Post, is to adopt a centralised approach to energy efficiency assessment, evaluation and funding approval. By conducting a company-wide assessment, or an assessment of sites or processes with common patterns of energy use (such as retail stores), similar projects can be aggregated into a single business case proposal. This reduces the administrative costs of developing separate proposals and may produce a stronger business case by highlighting the significant energy savings that can be achieved through a larger, coordinated project.
Linfox also uses a centralised approach. Working groups have been established to evaluate different projects that showed great potential across the business. A senior-level manager is appointed to each of the working groups to ‘champion’ the outcomes of their work. This approach was supported by the Chairman of the Board. By creating this level of management awareness and expectation, the business case proposals receive a high level of attention from management.
At Simplot an energy efficiency checklist must be completed for all business case proposals. This helps to maintain a focus on energy efficiency and to pick up energy savings opportunities in projects that were being implemented for a range of reasons. The energy manager also plays a key role in reviewing and coaching individuals and teams as they develop their business case proposals. In some cases small changes to projects have delivered significant additional energy savings.
It is also important to explore whether there is flexibility in funding processes. For example at The Foster’s Group one of the projects identified through Energy Efficiency Opportunities (EEO) assessments at Foster’s was the need for additional meters to monitor energy use by key pieces of equipment. Mass balances were prepared for each site and related back to metering data. If there was a noticeable gap between the theoretical and actual data, this justified a request for more detailed metering. The new meters required a capital investment of at least $250,000, but budget timelines meant that the final costs would not be known until after the budget deadline. While the business case was being developed, the Site General Manager and Production Director were asked to put aside funds for the project while the business case was finalised.
- Make sure you understand the process that needs to be followed to develop and submit a business case proposal. If the procedures appear to be limiting, then discuss them with an appropriate manager. In some cases there will be no opportunity for change but in others there may be some flexibility. You won’t know however, unless you ask
- Be open with management about the challenges you face in getting support for and funding to implement energy efficiency projects.
- Be constructive and present pragmatic ideas that will meet the needs of internal stakeholders such as a finance team, but also help you to progress the implementation of energy efficiency projects
- Include a checklist or question on energy efficiency in your project approvals process
- Consider all avenues for additional help from within your organisation or seek funding to use external experts
- Consider whether it is appropriate to establish an energy fund
- Explore the option of quarantining the savings from energy efficiency projects for use on future projects.