The Big Shift to Energy: Why Energy Management Matters to Businesses
The emergence of an energy-conscious industry has become increasingly popular among various global companies. Over the past decade, significant technological advances have made it possible to develop an efficient and innovative energy management strategy that provides tangible results to organizations worldwide. According to a McKinsey report , businesses can save up to 25-30% in annual energy costs alone. Once an effective energy reduction strategy has been implemented globally, energy efficiency can also reduce greenhouse gas (GHG) emissions by 40%.
A growing interest in energy efficiency has gained traction in the private sector as well as governments and the public sector. Another report by McKinsey shows that oil price inflation, growing competition for energy supplies and increasing global environmental issues have prompted the renewed interest of the private and public sector on energy. In addition to the benefits of reduced operational costs and improved productivity and profitability, government organizations emphasize that opportunities for energy efficiency fuel the economy and also reduce domestic dependence on foreign energy supplies. The McKinsey report also shows that the United States can save more than a trillion dollars in energy by 2020 if strategic efforts to improve energy efficiency are implemented nationwide.
Switching to renewable energy and practicing energy management have become more compelling in recent years. In fact, businesses have been adopting various forms of energy management solutions in order to offset their consumption of energy resources. The fluctuations in the market make them more mindful of how they manage their energy consumption, knowing it will have an effect on their overall performance in the future.
In addition to reducing an organization's operational costs and improving profitability, a report by BSR , a global nonprofit business network dedicated to sustainability, shows that energy management also strengthens a company's corporate image and provides competitive advantage to businesses. Global consumers are very aware of environmental issues and, as a result, good corporate citizenship behavior on energy management is coming to be expected by stakeholders. Consequently, it also reinforces an organization's commitment towards sustainable development.
Initializing the Big Shift towards Energy Management
An organization that values sustainability must rise up to the energy challenge. Companies that started improving their energy management strategy recognize that their stakeholders expect them to partake in global energy efficiency efforts. According to an Energy Management whitepaper published by Osisoft and Uptime Institute , one of the leading global consultants on data centers, a corporate energy management strategy needs to secure a reliable energy supply at the right price and promote environmental stewardship through energy efficiency programs.
An organization needs to have a reliable energy supply in order to operate. The instability of oil prices, global climate change and diminishing oil reserves make it harder to find a reliable energy supply at the right price, which is why it is important to have a contingency plan that addresses the price fluctuations of energy supplies. Developing a corporate energy management strategy also involves the smart use of renewable and non-renewable energy resources across the entire organization. Environmental stewardship can be initiated through the promotion of energy efficiency programs such as incorporating fuel diversity (e.g., hydrocarbons, ethanol, biofuels), fuel storage (e.g., flywheels, batteries) and alternative energy sources such as wind and solar energy.
The Three Ps of Initiating an Efficient Energy Strategy
Organizations are making great leaps forward when it comes to improving their energy usage. Coming up with an energy management strategy is just half the battle. Executing it is equally important. According to Uptime Institute's Energy Management whitepaper , implementing an efficient energy management strategy can be focused around the "Three Ps" — People, Process and Platform.
People are focused on the trained, motivated and highly-skilled employees who will execute an organization's energy management program. A company needs the skill set of engineers, operators, analysts and technology professionals who will interpret the energy data and will spearhead the energy management plan across the entire organization.
Process , on the other hand, serves as the steering wheel of a company's energy management program. Having clearly defined and institutionalized energy management processes helps the business run smoothly while also investing in good people and the right technology platform.
Platform is needed to thoroughly understand the energy performance drivers. An organization's technology platform needs to be scalable and adaptable to the changing business climate. Energy management specialists need the right technology platform to help them translate raw energy data into a real-time energy management platform that identifies energy waste and improvement opportunities.
Elements of a Holistic Energy Management Strategy
An energy management plan is only successful if the entire organization, including its employees and management team, are fully committed in implementing the energy management strategy. A McKinsey report notes the five important aspects to incorporate in an energy management strategy to fully realize the potential of energy efficiency:
- 1. Recognize energy efficiency as an important resource that helps in meeting future needs
Energy efficiency is critical to the management of an organization's energy management solutions. Investing in energy-efficient resources such as the development of a low carbon energy supply is equally important in identifying the potential risks and opportunities across the global supply and demand of energy resources.
- 2. Formulate and launch a company-wide approach to energy management
To scale up and capture the full potential of energy efficiency, organizations need an integrated portfolio of proven and piloted methods that bring together a set of strategies and solutions to be implemented across the entire organization. Having a holistic business process and regulations for energy management is important to achieve tangible results and improve energy performance.
- 3. Forge greater alignment across utilities, regulators, government agencies, manufacturers and energy consumers
Measuring an organization's energy efficiency requires effective collaboration among stakeholders such as government agencies, manufacturers and consumers. Aligning the energy management plan means that all the energy programs and projects are carefully measured, evaluated and verified to provide assurance to stakeholders that the company's energy goals and objectives are met.
- 4. Foster innovation in the development and deployment of energy-efficient technologies
Launching a company-wide campaign to pursue energy efficiency must also include the research and development of cost-effective energy-saving technologies. Sustaining technology development and innovation of energy-efficient technologies helps an organization stay on track with their energy goals and achieve greater productivity gains in the future.
Corporate Best Practices of Energy-Efficient Companies
Organizations that create a successful energy management plan and strategy have demonstrated good environmental leadership by establishing sound energy management practices in their company. The Institute for Building Efficiency , a nonprofit initiative for building efficiency solutions, listed several notable companies that employ corporate best practices on energy efficiency:
- 1. Adapting a Portfolio Approach — Diversey, Inc.
Diversey, Inc. joined the World Wildlife Fund Climate Savers program in 2008 as it committed to reduce its overall greenhouse gases by 8% from its 2003 levels by 2013. Diversey pledged a $19 million investment to upgrade facilities, change processes and rethink products to meet their goal. By using the portfolio approach, Diversey identified low-cost avoidance and efficiency measures, used clean power generation with wind turbines, and combined heat and power fuel cells at its headquarters. The company was able to save $32 million and made its emissions reduction target more aggressive, at a 25% reduction from 2003 levels.
- 2. Energy consumption baseline - Starbucks Corporation
To reduce energy consumption, Starbucks conducted a six-month monitoring process to help establish an energy baseline in their stores. Starbucks found that electricity use made up about 75% of its Scope 1 and Scope 2 carbon footprint. Armed with that baseline, Starbucks set three aggressive environmental goals in 2008 for their company-owned stores:
- reduce energy consumption by 25% by 2010
- purchase renewable energy equivalent to 50% of electricity used by 2010
- reduce water consumption by 25% by 2015.
- 3. Leadership and employee engagement - Marriott International
Marriott showed its commitment to environmental stewardship in 2001 when they started their Energy and Environmental Action Plan (EEAP) program for their full-service hotels, providing their hotel managers and staff with a straightforward tool and structured planning process for energy management. The program allows onsite hotel staff to develop and implement operational plans to reduce environmental impacts. The EEAPs are supported by a spreadsheet-based tool which contains more than 170 energy-saving and environment-enhancing actions.
- 4. Energy policy — 3M
3M established a corporate energy policy for its entire global operations to support their Energy Management Program , with the objectives of improving energy consumption efficiency, reducing cost, optimizing capital investment for energy efficiency, reducing environmental and greenhouse gas emissions, and conserving natural resources. Elements of 3M's energy policy also emphasized energy efficiency in manufacturing, workplaces and employee behavior, and they also supported the development of energy efficient technologies in cooperation with government agencies and utility companies. The energy policy helped 3M meet their energy reduction goal of 22% in 2009.
- 5. Measuring, tracking and reporting energy programs — Johnson Controls
Johnson Controls joined the U.S. EPA Climate Leaders program in 2003 and has been reporting to CDP since 2006. The company is committed to reducing its GHG emissions per dollar of revenue by 30% from 2002 to 2012. Johnson Controls uses a monthly scorecard which is filled out by more than 250 plant managers to compare the energy required to produce an equivalent unit of manufacture across 40 different product lines. They use the scorecards to assess the performance of the top-achieving plants, and average them to create a benchmark and set improvement targets for each product line. In 2008, the company met its global GHG reduction target after only six years.
FirstCarbon Solutions' Energy Management Solutions
FirstCarbon Solutions (FCS) is a leading sustainability solutions provider with expertise in climate change and energy management , as well as experience in providing cost-effective solutions to reduce carbon footprints. FCS helps organizations understand the business drivers for energy management and manage energy programs for internal operations and consumers. While industries and governments deal with climate-related challenges, FCS develops solutions that support energy regulatory programs across the entire organization.