Big risks in avoiding corporate sustainability

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Big risks in avoiding corporate sustainability

Big risks in avoiding corporate sustainability

Your corporate sustainability targets might be in for a shock! Prior to Christmas, the Government announced a raft of proposed changes to the emissions trading scheme (ETS) to rapidly decarbonise the economy. This included lifting the ETS price cap from $25/tonne to $50/tonne and creating a market floor of $20/tonne. If we take natural gas as an example, where at $25/tonne the ETS is priced at $1.37, at the market cap of $50/tonne this would increase the cost of the ETS to end users by $1.37/GJ (0.49c/kWh). With current raw gas pricing hovering around $9/GJ for large industrial users this could make raw gas plus ETS $11.74/GJ (4.23c/kWh). We spend a lot of time looking at commercial electricity and energy management and that's really something to notice! If your corporate sustainability journey does not include electricity or energy efficiency milestones, now is the time. In addition to this, a ban on new coal-fired boilers for low and medium temperature heating has been mooted. With all coal boilers used for low temperature activities to be phased out by 2030. Coal boilers would still be allowed for high temperatures of above 300 degrees celsius. The Interim Climate Commission estimates that switching coal boilers away to electricity or biomass at scale becomes economic when ETS costs are in the range of $60-$120/tonne. Now more than ever businesses need to start planning their sustainability journey. At Total Utilities we are here to help. The following was originally posted on the Centrica Business Solutions website and is reprinted with permission. With environmental and economic sustainability at the heart of the corporate agenda, organizations face a range of risks if they fail to make progress All organizations must pay close attention to risk. From financial viability to cyber attacks, it’s vital to understand and prepare for the forces that can disrupt the market and derail long-term sustainability – so businesses can survive in a fast-changing world. Of all the risks that could affect a business’s long-term future, climate change is becoming one of the most urgent and complex. The United Nations warns that changing climate is disrupting national economies – and that accelerated action is needed to reduce emissions. I want to hear about how we are going to stop the increase in emissions by 2020, and dramatically reduce emissions to reach net-zero emissions by mid-century António Guterres, United Nations Secretary-General Many organizations are already exploring what they can do to make a difference. They know that significant organizational, reputational and financial benefits can be gained by improving their environmental credentials. That said, our Distributed Energy Future Trends report found most businesses are investing in initiatives that we’d consider to be ‘low-hanging fruit’. Few organizations are implementing the most sophisticated technological innovations that could really accelerate their journey to net zero, such as smart energy management and on-site generation. In fact, just 18% of organizations see energy as an asset to be managed, in order to generate competitive advantage. It’s important that organizations consider the strategic benefits of implementing the latest sustainable energy innovations. But perhaps even more importantly, they also need to recognize the risks they face if they don’t implement these innovations. Here are a few of the top concerns: Energy security As the world moves to low-carbon energy sources, making sure that you have continuity of supply is vital. Business leaders acknowledge the importance of energy resilience, which is why they rank energy security as being a top-three risk to their operations. It’s important to have a detailed energy strategy, one that puts targets around energy resilience. Currently, only half of businesses that we’d consider to be ‘sustainable’ have an energy strategy that details how they will become a low-carbon organization. With other businesses, the figure falls to just 24%. Clearly, there is scope for businesses to push ahead in this area. Having a plan is just the first step, though. It’s also important to consider implementing sustainable energy innovations, which can help to reduce reliance on the grid and provide additional security in the event of a power failure. Without harnessing the latest innovations, organizations may not be safeguarding themselves as fully as they could against the catastrophic consequences of power loss. Innovation is good for business In today’s economy, no company can afford to stand still. It’s important to keep moving forward and improve the products and services you deliver to your customers. Continuous innovation is good for business and often creates new opportunities that can enhance the way your business operates. This is certainly true of sustainable energy innovations. From artificial intelligence to digitalized energy management solutions – low-carbon technologies can create new opportunities for businesses to monetize their power assets and improve their brand reputation. What’s more, organizations that look at their strategy anew and consider how they can join their energy technologies together can maximize their commercial benefits and return on investment. It’s clear that organizations who embrace sustainable energy innovations can gain competitive advantage – and those businesses that fail to harness these new opportunities risk being left behind. Preparing for a more digital world Organizations that aggressively pursue digitalization are expected to grow the most in the next five years. But companies that are truly future-focused don’t just introduce new digital platforms and technologies on a whim – they consider their wider implications, including the energy requirements of each digitalization initiative. In our transformed world, new strategies are required to understand precisely where, how and when energy is being used across your organization. By monitoring, managing and aggregating all available energy assets, including energy demand and usage, organizations can ensure they generate and consume power in the most efficient way. The latest sustainable energy innovations can support this initiative by providing organizations with the insight they need to make more intelligent decisions about their energy strategy in a digital world. But organizations that don’t embrace these innovations may lack these insights and could run the risk of wasting energy and money. And this may snowball, as more and more digital technologies are embraced. Futureproofing your operations Businesses that clearly define their energy strategy and invest in the latest sustainable energy innovations will find themselves in the best position to meet their environmental targets, gain competitive advantage, and futureproof their operations. Companies that do not embrace the latest energy technologies may find themselves at a disadvantage in a competitive market. With businesses maturing at different paces, it will take strategic planning to accelerate environmental and sustainability ambitions. Contact Total Utilities to see how we can help you invest in sustainable energy innovations that will solve business challenges and deliver tangible results.

How efficient, sustainable energy innovations could boost your brand

How efficient, sustainable energy innovations could boost your brand

Research shows that using low-carbon energy solutions can improve your reputation – helping make the case for sustainable energy innovation. Deloitte recently published The Global Millennial Survey. This reinforced a number of other surveys that concluded that brands with a strong corporate social responsibly and sustainability plan will attract a higher caliber pool of prospective employees and a large range of engaged customers. 42% of those surveyed stated that they would start and or deepen a relationship with business who has products/services that positively impact the environment/society whereas 38% said they would cease or reduce their relationship with businesses who has products that negatively impacted the environment/society. In business, it’s often said that reputation is slowly built, but quickly lost. That’s why, as a successful company, it’s vital to take a strategic view of your brand – to avoid the damage that can result from being on the wrong side of fast-moving public debates. The below was recently posted by Centrica Business Solutions and is republished with permission. Globally, there are few issues being currently debated more than the environment and climate change. In response, many organizations are looking to implement technical low-carbon energy innovations – including solar power or electric vehicles – as well as less tangible innovations, such as reshaping business strategies to more closely reflect environmental concerns. When you’re considering investing in any of these approaches, it’s vital to understand the wider implications they may have on your business – both positive and negative. In particular, it’s clear they can have a significant impact on how your brand is perceived by customers and shareholders. Our recent report, Distributed Energy Future Trends, shows that decision-makers recognize that low-carbon energy solutions result in reputational benefits for businesses. According to our research, as many as 30% of companies we surveyed say that investing in energy technology results directly in a better company reputation – up from 24% in 2017. That’s a big rise in just two years and shows that energy technology, an increase in environmental responsibilities as an organizational priority, and brand perception are closely linked. Strategy linked to brand In the past year alone, 36% of the businesses we surveyed changed their brand position to be more environmentally friendly. This shows they understand the importance of demonstrating sustainability credentials. Of course, to be effective in the long term, any change in brand positioning should be genuine. Customers, employees, commentators and regulators are all rightly suspicious of brands making unsubstantiated or misleading claims about their environmental friendliness, and their perception of your brand may be different from the crafted positions you take. This means that, ideally, the drive toward sustainability should be strategic – with a combination of economic and environmental drivers the focus for success. Our survey shows that 86% of companies think ‘sustainability’ has both economic and environmental dimensions. It’s clear that organizations cannot simply talk about the importance of environmental responsibility – their words need to be backed up by clear and decisive action. There are signs that this is happening. In fact, social and environmental responsibility is steadily rising up the strategic corporate agenda, and our research found that the only two factors are considered more important: efficiency and financial performance. What’s more, the fourth most important item on the corporate agenda was reported to be compliance with legislation and regulation – which is, in itself, a critical part of reputation management. Practical impacts on stakeholders There are a wide number of ways in which sustainable energy innovations can enhance your brand perception, and these are largely dependent on the strategy you opt for. Invest in sustainable transportation technologies, such as workplace charging points and an electric vehicle fleet, and this could start to have positive impacts not only on employees who use them, but on the local community too. Already, half of fleet owners have at least one electric or hybrid vehicle, our research shows. Solar technologies, too, can be a visible demonstration of your environmental commitment, and can combine with battery storage for economic and resiliency benefits too. Rather than relying on traditional energy sources, you’re able to generate your own energy onsite, store this generated energy in a battery for use during times of high grid demand or grid interruptions, and may even increase profitability by reducing expenses. Innovative energy technologies can improve brand perceptions in indirect ways, as well. According to our research, the issue of energy security and resilience is now a top four risk for companies. It’s easy to see how a power failure at a critical site or data center could cause damage to your brand. Yet solutions such as battery storage and backup generators could mitigate these issues as part of a sustainable energy strategy. This will keep you ‘always on’ and safeguarded from commercial, regulatory and market risks. Organizations with strong future growth prospects are those that have a clear strategy for how energy can contribute to their company values. In fact, one-third of organizations who expect their annual revenue to grow by over 20% in the next five years have made a clear link between sustainable energy use and their brand image and company values. Find out more about how Total Utilities can help you invest in sustainable energy innovations that can have a positive impact on your organisational competitiveness, environmental credentials, brand perception, and carbon emissions.

Finalist - Microsoft New Zealand Partner Awards

Total Utilities is proud to have been nominated as a finalist in the 12th annual Microsoft New Zealand Partner Awards. These awards reveal the capability and influence that Microsoft Partners have in empowering customers to create real change and value. As a business we have been known for a number of years for vendor-independent business consulting which enables our customers to make informed and contestable decisions in relation to their migration to Cloud computing. Once the customer embarks on that journey it is crucially important to have the right governance in place to control costs and realise the value promised in the original business case. Total Utilities has developed analytics that ensure our clients gain the value from their cloud environments and provide insights to help save money. “Being finalists for the 2019 Microsoft Partner ‘Optimising Operations Award’ is a significant milestone for Total Utilities as it means we are now also gaining recognition for our independent, innovative and inexpensive Cloud FinOps service which provides that financial governance.” – Kelvin Sargeant

The price of power: monopoly management of the national grid benefits the few

Our national grid pricing needs solutions. And after 10 years of pondering its navel, the Electricity Authority (EA), the Government agency charged with ensuring an efficient and effective electricity industry, plans to release a paper that may or may not gain industry consensus and may or may not actually be the right answer.  A decade in, the EA claims it is past the point where it is seeking an industry consensus, and advises that “you’ll have to show a factual error in our assumptions to change our views.”    This paper attempts to address the question, who pays how much for the right to access the electricity transmission backbone that is the national grid. Just how we derive economic efficiency by perpetuating monopolies, stifling innovation and transferring the costs of transmission to regional small businesses and consumers, is beyond me.   This backbone is owned and operated by a Government-owned monopoly called Transpower, and connects our generation assets to the whole country. The trouble with essential monopolies like the national grid is that they exert enormous political influence. Combine this influence with that of other essential monopolies such as the electricity generators who own our hydro dams, and massive energy consumers like the Bluff aluminium smelter, and the EA’s findings are wholly predictable.    This draft report, citing “economic value created”, suggests transmission costs be moved away from certain major users – notably the Bluff aluminium smelter – and should instead fall most heavily on domestic consumers and small businesses farthest from the point of generation. Meanwhile the hydro dam owners (the generators) will continue to utilise the transmission network without paying anything like the true cost of doing so.     When justifying their recommendations, the gurus at the Electricity Authority have estimated net economic benefits to all parties involved in the electricity market, of between $200 million and $6.4 billion by 2049.  There are clear signs of an agency that has lost track of the most basic financial disciplines, when they can seriously suggest that a business case benefit that has an estimated range of $6.2 billion over 30 long years is somehow rational rather than looking suspiciously like a complete guess.   Virtually all these barely-credible benefits are assumed to come via increases in market efficiency. Just how we derive economic efficiency by perpetuating monopolies, stifling innovation and transferring the costs of transmission to regional small businesses and consumers, is beyond me.   Disincentives to use the national grid The EA’s proposed pricing mechanism builds in disincentives for those seeking to find alternative methods of transmitting, storing and using electricity. The EA will do this in the following two ways: By offering special discounts to people considering using innovations such as battery and solar to avoid using the grid. These discounts will be funded by transferring these costs to other consumers (in other words, not by reducing Transpower’s profits); andBy reducing peak load pricing. This is the mechanism whereby we pay more for electricity transmission at times when the grid is most heavily used: think winter cold snaps and dinner time. Peak load pricing offers a price incentive to those who want to store and use their own electricity at a time when it is most expensive on the national grid. No peak load pricing, no incentive to innovate.    The national grid was bought and paid for over decades by all the taxpayers of New Zealand. This asset was designed to reliably transport one of our most essential services, electricity, and to share the costs evenly to the benefit of all.  Perhaps the Electricity Authority should be paying more attention to mechanisms and policies that have seen electricity prices soar over the past two decades, instead of continuing this futile, decade-long attempt to fix a transmission pricing problem that didn’t exist in the first place.

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