A Practical Guide to Preparing and Presenting Energy Invstement Proposals

Investing in Energy

Outline

• Energy Investment proposals often fail

• SEI’s new guide “ Investing in Energy” can help

• The guide presents a simple framework for

successfully preparing and presenting energy

investment proposals

Question

“In your view, what are the reasons why investment proposals for energy-saving activities fail?”

Energy investment proposals seem to fail quite

often….

Some common Causes of Failure

• Poor or incomplete analysis• Inadequate financial return• Inadequate link with corporate strategy• Benefits not presented to address other peoples

priorities• Insufficient attention to influencing Others• The legacy of previous failed Investments

But…..

• Immediate Quantifiable savings can be made • Lighting 10%-50%• Motors 5%-50%• HVAC 10% - 30% etc.

• These savings go straight to the bottom line (profit)• Energy reduction can confer other benefits and may be

linked to other priorities• Controlling energy use is becoming increasingly importrant

from a strategic perspective

A New Guide from SEI

• “Investing in Energy”• A new package of tools designed to assist

engineers and technical managers to prepare and present energy investment proposals

• Three Components• The guide • A set of teaching notes• Overhead slides and supporting material

1. Gather all necessary information

2. Assess the proposal realistically

3. Develop an influence strategy

4. Present the proposal so as to win support

5. Follow through

All of these steps are vital to success!

A Five–Stage framework for Making successful investment proposals:

• Options: what different priorities/actions?

• Options: what different solutions?

• Strategic context in company

• Issues facing the company

• Information on appraisal process in company

• Comprehensive cost and saving data

• Evidence that proposal is good

1. Gather all necessary information

2. Assess the proposal realistically

• Do as much of the assessment yourself.

• Ask for help where necessary - but stay involved.

• Don’t be afraid of more complicated assessment

methods.

• Make sure you use current evaluation criteria.

• Be your own harshest critic.

• Attend to this right at the start.

• See it as an integral part of each phase of the

process.

• Know who will influence/block/favour the

proposal, within the process.

• Acknowledge the formal and informal influencing

processes.

• Don’t leave it up to the written proposal on its

own!

3. Develop an influence strategy

• Invest time and effort into both written and verbal

presentation of ideas.

• Avoid unnecessary jargon/detail.

• Address others’ needs and concerns.

• Present the benefits very clearly.

• Economic arguments are important, but they

aren’t sufficient on their own.

• Do as much as possible yourself!

4. Present the proposal so as to win support

Assuming you are successful:

• Make sure you are ready to start quickly.

• Include all those needed in order to proceed with

the project.

• Establish systems to track progress and the

ongoing performance.

• Report on performance - the bad as well as the

good!

• Record the costs and the gains.

5. Follow through

Basic Financial Appraisal Techniques

• Chapters 3 and 4 of the guide explain the main financial indicators in a clear and simple way:• Fixed versus variable costs• Cash flow model• Simple Payback • Accounting Rate of Return• Net Present Value• Internal Rate of Return

“Financial measures are critical to the assesment of investment proposals yet many technical managers feel uncomfortable with these.”

Conclusion

• “Investing in Energy” is a new guide from SEI which will help you prepare and present successful energy investment proposals.

• In addition to providing a hands on manual “Investing in Energy” also contains teaching materials for training others.

• Additional copies of “Investing in Energy” can be obtained from Sustainable Energy Ireland