UK businesses without an energy resilience strategy are risking 17% of their revenue, equating to £2.8m each year in damages and lost opportunities. This is a key finding from Centrica Business Solutions’ research into the current state of energy resilience.
The Resilience Report, which details the findings, is a result of a survey of more than 300 organisations across the UK and Ireland.
Responding to the survey, senior energy decision-makers who had not experienced a serious energy failure predicted the cost to their business would be 7% of their annual revenue.
In reality, UK and Irish businesses impacted by blackouts or even very temporary ‘brown outs’ found the actual figure was much higher, estimated to be 17%. For the typical UK medium-sized business, this equates to £2.8m.
Energy resilience, having a secure and reliable source of energy, helps companies reduce the risk of operational failures and reduce commercial risk. There are tangible benefits to having a resilience strategy in place, with organisations 13 percentage points more likely to have a good brand reputation and 34 percentage points more likely to have strong financial performance.
The importance businesses attach to energy resilience is clear. Some 88% of UK businesses surveyed stated it was important – and 58% said it is becoming critical for businesses to be energy resilient. At the same time, 52% of respondents think they will experience energy-related failure in the next year.
Ignoring the risk
Despite this, only 16% of companies are making energy resilience a top priority and only 18% of businesses have a formal energy resilience strategy. A further 32% of businesses have no form of energy resilience strategy in place at all.
Alan Barlow, UK director of Centrica Business Solutions, says: “It’s clear that businesses see the importance of energy resilience, both to ensure a reliable energy supply, and to prepare for changes in the energy landscape. How to create a strategy to do that, however, is less clear. What we know is that ignoring the risks can be very damaging. Without an energy resilience strategy, organisations can only be as successful as their energy supply allows.
“There are reputational and financial benefits to an energy resilience strategy so it’s important that organisations make the right investments and take steps towards implementing a strategy. Back-up power systems provide protection against power outages, and batteries can provide energy in less than a second, mitigating the risks of temporary brown outs.”
The report also revealed that eight out of 10 organisations have experienced at least one energy-related failure in the past year, of which almost one in four experienced equipment damage as a result, while 14% reported having lost inventory. All of these things impacted on their bottom line, with almost 1 in 3 businesses surveyed attributing lost revenue to power outages.
The damage caused by an unplanned power outage goes beyond inventory and equipment, according to the report – 18% of businesses say that outages have damaged their overall brand, while 19% feel that relationships with individual customers have soured as a consequence.
Underestimating the cost
The alarming truth here is that the value of a business is being eroded in ways that are not directly attributable to their causes, and that the already significant cost of energy-related failures may still be underestimated.
The report further points out that there is also a human cost: 11% of businesses said that their employees have been put in dangerous or life-threatening situations as the result of energy-related failures.
The survey suggests that many power failure issues could be remedied internally – 67% of businesses said they have experienced power supply problems due to poor maintenance of equipment.
The report provides a stark warning to businesses: the frequency of energy-related failures is expected to increase and the impact that they will have on businesses is expected to be costly and far-reaching. It is clear, therefore, that businesses need to have an energy resilience strategy in place to address the risks and protect themselves.
Centrica adds that it is “hard to overestimate the importance of energy resilience; it supports future-proofing strategies to reduce dependency on single-source energy supplies; it encourages revised maintenance approaches to effectively reduce downtime and it minimises commercial risk by adding cost-effective onsite energy-producing capabilities”.
Ultimately, energy resilience empowers businesses to endure potentially catastrophic energy-related failures and help them to succeed within a rapidly changing energy landscape.l
‘The Resilience Report: Measuring the business impact of energy-related failures and creating an energy resilient future’, can be downloaded here