What is the Return on Investment in Industrial Energy Efficiency Projects in Canada?
For many organizations, energy is one of the biggest costs of doing business in Canada. One survey found that 67% of Canadian businesses see energy as a top concern, and 61% saw the cost of energy increase in the past year.
However, of those same businesses, only 27% say they are doing all that they can to save energy. Why?
Part of the issue is that many still view industrial energy efficiency projects as expenses rather than investments. The upfront cost is seen a barrier, and some business owners question the return on investment and other benefits of energy conservation.
It’s time we put those reservations to rest.
In examining how businesses have benefitted from industrial energy efficiency projects in recent years, it is clear that energy savings translate directly to improving the bottom line.
Return on Investment in Industrial Energy Efficiency Projects
The proof is in the data. Since 1990, Canadian industries have saved over $5 billion in energy costs through energy efficiency investments. Not only does energy conservation benefit the bottom line, but it provides some of the most reliable returns on any investment a business can make.
Natural Resources Canada, the department responsible for energy use and conservation, published data comparing energy efficiency investments with various other investment classes (Canada Savings Bonds, corporate bonds, and stocks). On average, energy conservation projects return between $0.20 and $0.30 for every dollar invested.
That means a $50,000 industrial energy efficiency project will generate a return on investment of $10,000 to $15,000 a year — for many, many years. Think of it like investing in an ATM that returns $3.00 for every $1.00 you deposit!
Most companies would be thrilled to have a 10% net income on top-line sales, with $0.10 in profit for every extra $1.00 in revenue. By that measure, the business would require an additional $100,000 in sales each year to generate the same returns as an energy retrofit project.
Other Benefits of Energy Conservation
Beyond direct bottom-line benefits, Canadian companies can profit from reducing their energy consumption in different ways. Businesses can reinvest what they save through energy conservation to expand their products or service offerings, hire new employees, or research and develop competitive advantages to enhance the business compared to its competitors. Using less energy can also extend the useful life of equipment and facilities, helping to mitigate the costs of replacement and repairs down the line.
How to Get Started on Saving Energy
Not every company has the resources to turn its existing staff to become energy-efficiency experts. That’s the benefit of partnering with a company like Tradeforce. Our years of expertise in energy conservation solutions can help companies find solutions that offer benefits at a cost they can afford. Find out how to get started on saving energy.
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