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Why Energy Budgets are like Credit Cards – and why that’s a bad thing

Have you noticed how much easier it is to buy something that you will pay off in a month- vs taking out all the funds from your checking account right now? It's the reason companies like Affirm are all over e-commerce these days. All those buy-now-pay-later commercials on TV work. Energy bills have the same effect. In most cases electricity and natural gas are charged on a monthly basis - this adds yet another level of dissonance between the energy used and the direct hit to the bottom line.

Energy costs are continuing to balloon worldwide for facility owners and managers. Despite this long-standing trend; getting tenants, building owners and CFO’s to act on energy is a continued challenge.

The money spent on energy is very different than other budgetary concerns like materials or labour. Energy is intangible for most building owners and managers.

Energy is intangible for most building owners.

Energy is easier to ignore than many other things, even for the most sustainability minded amongst us. This simple gap of invisibility between money spent and energy consumption causes a large amount of dissonance. What is dissonance? Simply put it’s an inconsistency in the beliefs one holds or an inconsistency between one’s actions and one’s beliefs. When it comes to energy and sustainability, dissonance is the way of life for the majority of CFO’s and decision makers. It’s much easier to justify NOT acting on energy needs when you can safely ignore them and not be reminded of them.

There is a theory in behavioural science which shows that humans can understand only a one degree level of correlation between costs and benefits. So for example, if you know a motor is consuming $25/day worth of energy (which is one degree of separation) you are much more likely to take action to reduce that cost than if you think of the motor using 166 kWh/day. Just that simple multiplication of (Energy Costs) x (Energy Consumed) makes it much less likely that you’ll intuitively care about the motor’s energy consumption.

“kWh usage of electricity doesn’t affect me, but dollars do.”

There is yet another level of dissonance when it comes to energy costs – and that’s time dissonance. Have you noticed how much easier it is to buy something that you will pay off in a month- vs taking out all the funds from your checking account right now? It’s the reason companies like Affirm are all over e-commerce these days.  All those buy-now-pay-later commercials on TV work. Energy bills have the same effect. In most cases electricity and natural gas are charged on a monthly basis – this adds yet another level of dissonance between the energy used and the direct hit to the bottom line.

Our jobs as energy managers is to remove this dissonance by translating energy directly into dollars and showing it to you right away. When you turn off that motor and can see the resultant dollar savings immediately, you’re more likely to keep it off when it’s not needed.

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So how do you fix this issue? Easy.

Energy dashboards are continuing to gain popularity in all building types. By understanding where your energy is going and how much it’s costing right now, employees and tenants are much more likely to act.

Edgecom Energy has years of experience in behavioural energy change. Our custom dashboards allow customers to achieve this change with their existing metering – if additional metering is required we can provide this as well.

Interested in an Energy Dashboard solution for your facilities? Contact us today to find out how our holistic energy management approach can save you time and money.

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