CEOs Making Final Decisions on Energy Mix Strategy

September 14, 2012 By Paul Nastu

The largest global corporations are tackling potential future energy cost rises through executive-level engagement and proactive energy strategies, according to research by Ernst & Young.

The Global Annual Cleantech Insights and Trends survey of 100 global executives at companies worth over $1 billion within energy intensive sectors found that for 36 percent of respondents, the CEO is now the final decision maker on energy mix strategy, illustrating how important the issue is already regarded today.

Some 38 percent of respondents expect energy costs to rise by 15 percent or more in the next five years. Half of the survey respondents reported that energy expenditures represent five percent or more of operating costs, while 22 percent reported that 20 percent or more of their operating costs go to energy. In absolute terms, this translates into an annual energy spend of at least $50 million for 42 percent of respondents, and more than $100 million for 27 percent of respondents, the report says.

While cost reduction is cited most frequently as the primary objective of corporate energy strategies, a number of other energy-related risks are also being addressed, such as energy security, carbon reduction and price stability, according to Gil Forer, Ernst & Young’s global cleantech leader.

As a result, energy efficiency measures, company self-generation of energy and integration of renewable energy into the corporate energy mix are all being implemented at increasing rates to meet these ends and are set to accelerate further over the next five years, Forer said.

Some 41 percent of respondents reported generating some form of renewable energy with company-owned or company-controlled resources; however, this represented a relatively small proportion of total company generation. In contrast, 48 percent of respondents reported deriving some proportion of their purchased energy from renewable sources, with a fifth of companies reporting a contribution in excess of 20 percent of their total energy use.

Some 67 percent and 59 percent of respondents reported that their company-owned renewable generation and renewable purchased energy levels are likely to increase over the next five years respectively.  At the same time, 52 percent of respondents say that their use of high-carbon fossil fuels – such as oil and coal – will decrease over the next five years.

According to a report released earlier this week, corporate on-site solar generation is dominated by the retail sector. Walmart, Costco, Kohl’s, Ikea and Macy’s make up the top five corporate solar users in terms of on-site capacity with other retail businesses taking four of the remaining spots in the top 20, according to the report by the Solar Energy Industries Association and the Vote Solar Initiative.

A report today by Bloomberg New Energy Finance, carried out for Vestas, found that in an index of 300 companies that use renewable energy voluntarily, nearly 30 percent use less than five percent renewable energy.

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