Avoiding operational downtime is a major issue for all organisations, as the related disruption and financial consequences can prove catastrophic. Following the publication of a major new report on the subject of energy resilience, Tim Wynn-Jones, head of distributed energy solutions sales at Centrica Business Solutions, suggests that organisations need to start taking it seriously.
Time to get serious
These are uncertain and worrying times for the business world. While the threat from cybercrime, for example, is serious and widely recognised, it’s not the only issue that should be on the minds of those charged with ensuring their organisations remain operational at all times. In fact, security and continuity of energy supply is perhaps a more pervasive and immediate issue, and resilience should, therefore, be at the centre of any business continuity strategy.
Defining moment
Resilience is perhaps best defined as ‘The ability to prepare for and adapt to changing conditions and withstand and recover rapidly from disruption and other outside factors. Resilience includes the ability to withstand and recover from deliberate attacks, accidents, or naturally occurring threats or incidents’.
It is only when a failure occurs that the operational vulnerabilities of a business are revealed, and the need for a secure source of energy becomes apparent. Energy resilience helps companies reduce the risk of operational failures and reduce commercial risk, and it’s important that organisations take steps towards implementing a strategy.
To ascertain just how seriously organisations in the UK and Ireland are taking the issue, Centrica Business Solutions recently surveyed 301 decision makers, across a range of industries, who have responsibility for energy and operational effectiveness. The findings of The Resilience Report make for uncomfortable reading,1 and it’s quite clear that there is currently a disparity between the threat posed by energy-related failures and the priority that businesses are giving to putting an energy resilience strategy in place.
Financial times
No business can fully mitigate its business risks without ensuring that there is a secure and reliable energy supply. However, Centrica’s survey reveals that nearly one in three (32%) of organisations do not have any form of energy resilience strategy in place.
Despite this, more than one in two (52%) of energy decision-makers believe they will experience an energy-related failure within the next year, with one in three organisations claiming to be unprepared for a disruption to their energy supply from a temporary grid failure.
While many acknowledge the reality of the threats to their energy supply, a phenomenon of ‘unrealistic optimism’ may have taken hold, whereby organisations think it can either never happen to them, or that someone else will take care of the problem. The implications of a power outage in somewhere like a hospital could literally be life-threatening. But there are numerous examples where outages have occurred in factories, data centres and other mission-critical environments with devastating effect.
Importantly, while those who had not experienced a serious energy failure predicted the cost of any failure to their business would be seven percent of their annual revenue, in reality, this figure is much higher — estimated at 17%. For the typical medium-sized business, this equates to £2.8 million each year in damages and lost opportunities.
An interruption in supply doesn’t need to go on for long for it to have a long-lasting impact. 18% of respondents said that an outage of only one day would be catastrophic for their businesses, while the amount of damage caused rises steeply the longer the outage lasts. Consequently, 23% of businesses have suffered equipment damage, with 14% reported having lost inventory.
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Tools of the trade
Although blackouts are obvious threats to on-site equipment, other conditions can also cause problems. Brownouts occur when the mains supply cannot cope with its overall load and the voltage levels reduce, in extreme cases for periods measured in hours. Mains power can also sag, or drop in voltage level for a few cycles, usually after a large load such as air conditioning or rotating machinery is switched on.
Disruption of power to a single component may only cause a brief outage but result in a lengthy restart, taking hours to return to an operational state. And, despite great strides in technologies such as uninterruptible power supplies (UPS) and generators, they are often not specified, installed and maintained correctly. For example, as a minimum, back-up power technologies must be sized to meet critical loads, and priorities for keeping specific systems energised must also be built into operating strategies. Existing on-site generation equipment, such as combined heat and power (CHP) plant, typically shuts down upon loss of grid power, but could be reconfigured to run in ‘island mode’ and improve overall resilience.
Cause and effect
The damage caused by an unplanned power outage goes beyond inventory and equipment though, with 18% of businesses claiming that outages have damaged their brands and 19% of the opinion that relationships with individual customers have soured as a consequence. The alarming truth here is that the value of a business is being eroded in ways that are not directly attributable to their causes. Finally, there is the human cost to consider — employees of 11% of businesses have been put in dangerous or life-threatening situations as the result of energy-related failures. This is clearly unacceptable.
Given that more than eight out of 10 businesses (81%) have experienced at least one energy-related failure in the last 12 months and 51% consider it likely that they will experience an event within the next year, the lack of action in ensuring resilience in some quarters is simply baffling.
This is especially the case considering that 88% of businesses surveyed for The Resilience Report stated it was important and 58% said it is becoming critical for businesses to be energy resilient. Furthermore, the prognosis on this issue is not a positive one, as 27% of businesses expect energy-related failures to become more frequent over the next five years, with four percent of the view that the number of failures will increase significantly.
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Action plan
Most organisations clearly identify the importance of energy resilience as a means of securing a reliable energy supply, and to prepare for an energy landscape that is undergoing massive change. It is clear, therefore, that businesses need to have an energy resilience strategy in place to address the risks and protect themselves.
Businesses need support in evaluating their options and developing the business case for change within their organisation, and there is now a diverse range of help available. Centrica has created an online benchmarking tool so users can quickly see how their energy resilience measures up against industry standards and also offers a range of advice about how to develop an action plan based on the whole lifecycle including build, maintenance, measurement and financial planning.2
Without an energy resilience strategy, organisations can only be as successful as their energy supply allows and there are also additional tangible benefits to having a plan in place. Organisations that do so are 13 percentage points more likely to have a good brand reputation and seemingly have a 34 percentage points better chance of achieving strong financial performance.
Protect and survive
Regardless of the sector an organisation operates in, energy means more than just keeping the lights on. It means allowing staff to do their jobs uninterrupted, maintaining profit, keeping customers happy and even ensuring that people are kept safe. The poor state of energy resilience today must be addressed, and businesses must implement a more secure future by forming a comprehensive and strategic plan to protect against outages, market fluctuations and equipment failure.
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