Why SMEs In The Middle East Should Take A Proactive Approach To Energy Management

At a time when margins are tight and the market is competitive, developing an energy management plan allows SMEs to cut operational costs, increase efficiency, and ensure business continuity.

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We all understand the importance of small to medium enterprises across the Middle East. SMEs account for over 90% of all businesses in the region, and they are a major source of new job creation. Given their role in fueling growth and employment, governments are always looking for new ways to support, fund, and promote SMEs.

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And right now, SMEs need all the help they can get. Last year was the toughest many of us have ever faced; SMEs faced the brunt of the pandemic’s economic impact. As businesses fight to maintain market growth in economies inhibited by the COVID-19 pandemic, ramping up support for SMEs is vital to long-term economic stability and growth.

But let’s also look forward. SMEs have a vital role to play in our move to a low-carbon economy; they’re the region’s fastest route to a greener, more sustainable economy. One area for change is energy management. We all use energy, and yet few of us understand its working, how we can optimize its use, and reduce its costs. The sooner this changes, the better- for two simple reasons.

I believe that energy management is one area where SMEs can begin looking at in order to improve their sustainability and reduce overheads. At a time when margins are tight and the market is competitive, developing an energy management plan allows SMEs to cut operational costs, increase efficiency, and ensure business continuity. An energy management plan is also necessary for SMEs to meet the evolving expectations, and sometimes standards, of governments and consumers around sustainability.

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Energy tends to be looked at as an unavoidable cost that needs to be budgeted for, instead of managed. Businesses typically spend significant amounts on direct energy costs each year, and even more on energy indirectly through supply chain inefficiencies and in outsourcing and logistics. SMEs can greatly improve productivity and competitiveness if they reduce resource consumption by adopting some of the scalable technologies now available to SMEs- technologies that were once available only to large enterprises.

Let me give the example of smart office technologies, which can also be used at home. For the cost of a couple of hundred dollars, anyone can monitor through the use of a simple, phone-based application their home electricity consumption across any plugged-in device. This will tell you a device’s energy efficiency, and when there’s spikes in energy usage, that would usually mean a device is malfunctioning or nearing failure. This alone can save thousands of dollars a year, both in terms of energy saved as well as reducing equipment failures.

We’re going to see a new wave of smart building systems such as Square D coming into the market this year. One exciting development is how next-generation building management systems are now able to incorporate both alternative and grid-supplied power, and switch between the two based on availability and cost. You’d be able to install solar panels on your roof, and have an electrician connect these to your home electricity grid at a fraction of the cost that it used to be.

The second reason why SMEs should take a proactive approach to energy management is even simpler. Governments across the region subsidize the energy we use. And many governments are having to reduce the amount of money they’re spending on energy subsidies. One example is Oman, which is beginning to phase out water and electricity subsidies starting from January 2021.

To put it simply, electricity is going to become more expensive. And yet we’re going to be using more of it. If SMEs are going to get ahead, start thinking about proactive energy management. A couple of hundred dollars spent now will save you thousands, which is money you can and should be investing in the business. Let’s start managing how we use energy better, to benefit both our economy and our environment.

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Alper Vargel

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Alper Vargel is Home and Distribution Vice President at Schneider-Electric.