Turning a cost into an opportunity
Energy presents a trilemma to organisations involving costs, carbon emissions, and supply uncertainty. Organisations should seek to reduce energy intensity, secure affordable energy from low-carbon sources, achieve efficiency by opting for electric options and actively participate in the energy market. Low-carbon energy transformation and advances in technology offer the opportunity for organisations to power their facilities and generate financial returns. By effectively managing energy demand, businesses can increase revenue streams, mitigate risks, and enhance their green credentials.
The World Economic Forum (WEF) in collaboration with PwC found that technology could reduce global energy intensity by 31% and save up to $2 trillion per year by 2030. Even locally, despite energy subsidies, investments in energy efficiency and on-site renewables make a lot of financial and environmental sense. Achieving these results however requires change; be it adopting new ways of working, collaboration with key stakeholders, or more advanced planning.
An overview of the local environment
Malta faces unique energy challenges due to its small size, heavy reliance on imported energy, and an insatiable energy demand, fueled by economic growth, record tourist arrivals, expanding infrastructure and an increasing population. In recent years however, Malta has made notable progress in transitioning from its reliance on fuel and gasoil to a more sustainable combination of natural gas, electricity imports via the Malta-Italy subsea connection, and renewable energy; primarily solar.
In line with the European Green Deal, Malta reaffirmed its commitment to address climate issues to their fullest potential and to contribute towards the European Union’s collective target of 40% reduction of its GHG emissions by 2030 compared to 1990 levels. The Energy and Water Agency (EWA) envisions sustained growth in renewable technologies such as floating wind and solar farms and imported green energy from neighbouring countries via interconnectors to accelerate the much-needed transition to clean energy. Malta is also expanding its renewable energy capacity through onshore solar PV installations, offshore renewable technologies, and energy storage solutions. Additionally, the government plans to invest in a second electricity interconnector with Italy to support the importation of renewable electricity and enhance grid stability.
The National Energy and Climate Plan (NECP) outlines Malta’s strategy to achieve the Energy Union’s 2030 objectives, emphasising the importance of decarbonisation, energy efficiency, security of supply, and research and innovation. These initiatives present an opportunity for organisations to align with national energy policies, optimise energy consumption, and reduce costs through demand-side energy planning.
Demand-side energy strategy
Demand-side energy planning involves strategically managing energy consumption within organisations to optimise efficiency, reduce costs and potentially create value. While the traditional perspective views energy use purely as a cost (thereby focusing on minimising expenses and complying with regulatory obligations like emission charges), the value-focused approach sees energy management as a source of strategic opportunity.
Organisations can shift focus to enhancing efficiency, optimising usage patterns, and investing in renewable energy sources like solar panels. This can lower operational costs and emissions while generating additional revenue through activities like peak shaving (providing grid stability services) and selling excess energy back to the grid. One example of this, installing solar power capacity, which can allow organisations to avoid spikes in energy prices and mitigate risks associated with grid instability. On-site power generation and storage also offer the opportunity for additional revenue streams, such as selling excess power when grid prices are high. Organisations can also lease real estate assets such as rooftops on parking lots and commercial buildings to third parties for PV installations.
Furthermore, this approach extends energy management efforts throughout the supply chain. Collaborating with suppliers and the Government is crucial for effective demand-side energy planning as organisations can provide clear guidance on their energy needs, ultimately reducing production costs, while offering energy financing and other incentives that can further motivate suppliers to implement more energy-saving measures. Additionally, by reducing energy demand throughout the supply chain, the overall carbon footprint of the product will be reduced, increasing its appeal to environmentally conscious consumers. These collaborative efforts will not only promote sustainability but also lead to general cost savings.
How to take charge of energy demand and create business value
Three complementary demand-side practices that organisations can adopt to yield sustainable and financial benefits include:
- Optimising energy demand
- Pursuing energy independence
- Electrifying operations
Optimising energy demand
Enhanced efficiency measures and shifts in usage patterns enable organisations to lower costs, cut carbon emissions, and mitigate risks associated with price spikes or power cuts. Scheduling energy usage, and installing digital monitoring and smart control systems in appliances can yield significant energy savings at minimal cost. Businesses with energy-intensive operations can benefit from advanced technologies to adjust temperatures and lighting based on occupancy and environmental conditions. This data-driven approach facilitates strategic decisions, such as integrating on-site renewables and storage to optimise energy management.
Pursuing energy independence
Reducing reliance on grid power offers measures against price increases and power interruptions. Organisations can install on-site renewables, such as rooftop solar panels and batteries, to mitigate energy costs. Alternatively, they can enter commercial agreements with energy providers to fund on-site installations, providing opportunities for additional revenue through the sale of excess energy to the grid.
Electrifying operations
Transitioning from fossil fuel-powered assets to electricity-powered solutions can reduce carbon emissions and position organisations strongly in an increasingly electrified energy system. Switching appliances and machinery to electric models and transitioning fleets to electric vehicles, supported by charging stations, can lead to significant efficiency and financial benefits.
Looking ahead
The transition to clean energy requires more than just installing PVs; it involves improving energy management to minimise costs and maximise revenues. Efficiency improvements often benefit organisations, and additional value can be gained from installing renewable energy, switching to electric equipment and fleets, and being active players in the energy market. Organisations should see energy as a key business driver and must plan, invest in, and track demand-side initiatives; having a comprehensive strategy can help businesses realise the full value of these energy-demand opportunities.
How can we help?
At PwC Malta, we can support you in identifying relevant opportunities and developing tailored strategies to support your needs. Our team of experts can also assist your organisation in identifying the cost-optimal solutions for your energy transitions, assess their feasibility and facilitate their implementation. If you are interested in exploring these opportunities, please contact our dedicated teams, found below.
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