The Single Most Important Factor for Energy Management Success
One of the most common questions I’m asked when training customers on the use of our energy intelligence software (EIS) is “If we could only do one thing that would help us achieve our energy management goals, what would that be?”
While I'd love to tell you there is a single energy management practice that will solve all of your organizational problems and have your ENERGY STAR ratings soaring through the roof, that silver bullet just doesn’t exist.
However, there is a common thread among my customers who have the most success in achieving their energy management goals. Surprisingly enough, it has nothing to do with funding, technology, or publicly stated sustainability commitments; it’s putting the right people in place to manage energy across the organization.
Siloed Energy Management
In most organizations, a disparate group of individuals and teams affect how energy is consumed. A typical structure generally includes these groups:
- Procurement Team: Decides on a buying strategy and secures contracts
- Facility Team: Manages day-to-day operations and responds to occupancy needs
- Production Team: Consumes large amounts of energy but is more concerned with hitting production goals and getting orders out on time
- Sustainability Team: Meets infrequently to discuss year-over-year consumption trends and progress towards carbon goals
All of these efforts are important and necessary, but when executed in silos without an overarching plan in place, or a dedicated group to manage the execution of that plan, these efforts can potentially be detrimental to each other and undermine any progress.
How Things Go Wrong
Consider this example from a customer. The procurement team wanted to reduce energy costs, so they worked with a supplier to create a purchasing strategy based off of their current risk tolerance and market outlook, plus the load profile of their buildings over the last 12 months.
Based on the available data, the procurement team went with a block and index approach. Meaning, they buy blocks of energy at a fixed price during certain times of day and any usage over that fixed amount gets purchased at the real-time price of the market.
Current usage patterns indicated this strategy would save the company money by fixing the majority of their costs during periods of peak usage and allowing them to ride the market price during times when the real-time price of energy is lower.
At the same time the procurement team was planning their new purchasing strategy, the production team wanted to increase their production efficiency by using less energy overall. They shifted operations around, adjusted production equipment, and put policies in place to regulate what time of day they ran some of their more energy intensive processes.
Ultimately, the production team reduced the average daily kWh consumed without sacrificing their production numbers. These changes resulted in a lower kWh per unit of production, which meant a job well done for them. But that reduction inadvertently changed the shape of their load profile .
Suddenly they were using more energy during times where the business was purchasing energy on the spot market—thanks to the procurement team’s new buying strategy.
Under the new production schedule they were also using less energy during times of day where the procurement team pre-purchased blocks of energy at a fixed price. The supplier has to sell any unused energy back into the market. There is a chance that the price of energy may have dropped below their fixed price and the business will take a loss on this sale.
The production team’s well intentioned efficiency project managed to reduce usage, but wound up increasing costs and risk.
How to Prevent Energy Efficiency Failures
If the organization had first created a team that would decide on an overall strategy and then put that team to work with the procurement and production teams, the outcome would be much different.
This example is just one of many that I have seen when there is no dedicated team whose job it is to manage energy. Here’s how that team should look:
- Executive Sponsor: Responsible for approving investments, removing organizational roadblocks, and creating energy management buy-in at the corporate level
- Energy Champion: Leads the energy management team, coordinates efforts across the other teams that affect energy consumption, charts a path to hit the overall energy management goal and course-corrects when needed
- Power User: Serves as the resident expert on the organization’s energy intelligence software, performs energy analyses, schedules reports, and assists the extended team with software questions
- Extended Team: Adheres to energy management policies and helps identify energy efficiency measures