Veolia Ireland’s Fergus Elebert sheds light on the increasing cost of energy and its impact on businesses with already narrow profit margins.
The latest purchasing managers’ index (PMI) from AIB reveals that while inflationary pressures eased in February, businesses in the retail and manufacturing sectors are facing additional burdens due to high energy and supplier prices.
Amidst ongoing global market instability, business leaders are under pressure to find solutions to combat rising energy costs and supply strains, and navigate through this challenging period.
The affordability crisis in energy
The energy crisis is being felt worldwide as conflicts drive up the prices of oil and gas, placing businesses under significant strain in affording daily operational costs.
Ireland, which imports 70% of its energy for electricity generation, heating buildings, and transporting goods, is particularly vulnerable to price hikes when import prices are impacted by global conflicts.
Low-profit margin businesses, including SMEs, retail, and the hospitality sector, are particularly burdened by these cost increases.
The manufacturing industry, often overlooked in discussions about the energy crisis, is also heavily affected. As plants consume substantial amounts of electricity daily, the industry faces acute increases in energy costs.
Manufacturing companies are also grappling with rising input costs as the prices of raw materials such as chemicals continue to rise.
Broader risks to energy supply
In addition to rising costs, businesses across all sectors are concerned about the risks to energy supply stemming from the war in Ukraine.
While Ireland is somewhat shielded from this issue as its main gas import supplier is the UK, there has been a noticeable increase in amber alerts on the power systems and an elevated risk of electricity supply failure or disruption during the winter months.
The growth of data centers has further strained the system by increasing electricity demand.
Energy shortages are a concern for any industry. Fortunately, energy supply has been carefully managed during the winter months, and availability has not been reduced.
How businesses can address these challenges
Despite these challenges, there are steps businesses can take to protect themselves from rising costs and energy supply risks.
While investing in sustainable solutions may seem daunting, leaders from the Franco-Irish business community have identified three tips to help businesses get started:
Understand your energy usage
To develop an effective energy plan, it is crucial to have a clear understanding of how and where energy is used in your business. Ongoing monitoring can help identify areas for improvement.
Conduct an energy audit through the Sustainable Energy Authority of Ireland to identify cost-cutting measures in the short term and improve energy efficiency in the long term.
Create a business continuity plan
Collaborate with your team to ensure your business can continue operating even if fuel becomes harder to source. Explore ways to make your business self-sufficient in terms of energy and increase efficiency to reduce reliance on the grid.
Invest in sustainable energy solutions such as solar panels, wind energy, or biogas to lower energy costs and enhance resilience.
Consider having backup generation or battery storage on-site, especially for large energy-consuming businesses, to ensure energy security. Selling backup capacity to the grid during peak hours can also generate additional revenue.
Explore alternative energy options
Generating energy for your business is not as daunting as it may seem, and relying solely on the energy grid is not the only option for a secure energy supply.
Assess all aspects of your business to determine the most suitable solution for your daily needs.
Each renewable energy option has its own strengths and weaknesses, and not all will be suitable for every business. Take the time to conduct thorough research and develop a plan that aligns with your specific needs and circumstances, rather than rushing into a popular or widely known solution.
By Fergus Elebert
Fergus Elebert is a regional director for Veolia Ireland. A member of the France Ireland Chamber of Commerce, Veolia provides a range of energy, waste, and water services and is dedicated to carbon reduction and building the circular economy.
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