Investing in Energy Efficiency: The 10% Rule

Are you a facility manager that has recently been tasked to invest in energy efficiency measures, but have no idea where to start when it comes to estimating costs?

Does your existing energy management project need a financial boost - but you don’t know how much budget to allocate?

Or perhaps you are managing the buildings of one of the 62% of companies citing lack of access to financial capital as their biggest barrier to implementing energy-saving upgrades? (If you don’t even know where to begin looking for money, check this previous post on funding resources for energy efficiency projects).

How to Ballpark Energy Efficiency Costs

In order to make a rough estimate of how much you should invest in energy management, try using the 10% Rule for Energy Efficiency. To understand it, let’s take a real example from one of our energy manager clients. Jo Burns manages energy at a mid-sized university with campus locations across the UK.

Jo’s trying to figure out how much of her budget she should invest in energy efficiency. She knows that her university spends roughly £50,000 per month on energy bills. This represents a total annual energy cost of £600,000.

If Jo wants to save more money on energy, she can using The 10% Rule to estimate the total project cost of an energy management initiative. Using this rule, her energy efficiency investment should be equivalent to 10% of her annual spending on energy (£60,000), or at least one monthly energy bill (£50,000).

The 10% Rule Explained

Still confused or shaking your head in disbelief? Here’s a neat infographic that breaks it down for you, showing the evolution of costs over time: