The Business of Energy Management
When we look back on 2012, most of us will likely remember it as a year of extreme weather. In the summer particularly, record heat and drought coupled with a struggling economy had consumers doing all they could to find ways to save on energy. In June, I saw a poll from AP-NORC which found that nearly 8 in 10 Americans called energy savings deeply important to them, trumping concerns about the federal deficit and summer vacation plans.
As energy director for AT&T, I know that energy is not just a concern for household budgets. Businesses are also feeling the pinch on a large scale and large corporations who require a large amount of energy to deliver products and services are also taking steps to become more energy efficient.
I can also tell you first hand that savings from a concerted effort to manage energy can be very real. This year, for example, our company is building upon $86 million in annualized savings from energy efficiency projects in 2010 and 2011.
For businesses of any size that are looking to address their energy management, here are some tips for moving the needle:
The most effective management tools might not be technology, but visibility and accountability.
When it comes to energy management and driving efficiency, there is no shortage of tech tools available that help improve performance. One of the most powerful tools does not have to be a piece of technology, but a strong management system. Companies should consider centralizing their data and creating incentives.
Furthermore, consider tools that foster two basic management principles: visibility and accountability. Scorecards that track performance, set goals and make it visible to energy managers and their peers can be effective in driving change. They create a sense of healthy competition, urgency and can promote innovation through shared learning.
External groups can greatly amplify internal efforts and accelerate your management program.
There are many great organizations out there that possess in-depth knowledge about energy management issues.
For example, Environmental Defense Fund’s (EDF) Climate Corps program has assisted with the evaluation and development of strategies to help effectively integrate Building Management Systems to optimize energy performance and to enhance our ongoing efforts to drive water and energy efficiency in the facility cooling process. Environmental Defense Fund (EDF) has also assisted on a broader scale to develop operational improvements and best practices that can cut water, chemical and energy use.
Rocky Mountain Institute (RMI) is another great organization. Their Portfolio Energy RetroFit Challenge serves as a vehicle through which companies and RMI can collaborate on the investigation and implementation of energy conservation measures across office buildings and share the results with others that may benefit from the experience.
Also, look for local opportunities. For example, if companies have a presence in downtown Chicago they can sign on to join the Retrofit Chicago’s Commercial Buildings Initiative. Our experience with Retrofit Chicago’s Commercial Buildings Initiative has been a great one, and as part of this program we will reduce energy use at our downtown Chicago facility by 20% within the next 5 years and share best practices from our experience.
Through these projects, companies can expand their knowledge of best practices, which is critical to continued success. But the other critical piece of this is the commitment to share the experiences with others so that greater efficiency can be realized on a broad scale.
Alternative energy can be feasible with the right finance structure and partnerships.
Alternative energy can also help in managing unpredictable energy prices. In the cost-conscious world of business, making these investments can be challenging in the face of the competitive business case process. We have found success in these deals by combining financial variables – areas with high electricity rates and available financial incentives – with funding mechanisms like a Power Purchase Agreement (PPA) – to create steady electricity cost models that are competitive with current rate structures. In fact, by combining incentives and PPAs in areas of high electricity rates and volatility, we have been able to create a cost structure that is competitive and creates a pricing hedge against future pricing volatility, all while enabling the generation of electricity with lower environmental impacts.
Piecing together the energy management puzzle.
As any member of the business community knows, at the end of the day, decisions and investments are made while keeping a close eye on the bottom line. If we can make the case that we’re saving the company money – now or in the future, the business case is much more compelling. With energy prices volatile today and likely to be even more so into the future, it’s important to forecast when considering investments in these types of projects. Be careful not to miss the obvious tools for energy management – those that create visibility and accountability, and don’t miss out on the opportunity to work with outside groups to strengthen your efforts to ensure you’re capturing and sharing best practices for energy savings opportunities. Also, work with your alternative energy partners to evaluate ways to leverage financial tools like Power Purchase Agreements and available incentives to make alternative energy projects more financially viable.
Moving forward, we will continue to pursue increased energy efficiency projects and deployments of alternative forms of energy when the business case is viable. Though we can’t control the weather or single-handedly stabilize the price of energy, we do have a say in how we use energy. We’re encouraged by the fact that our energy-saving initiatives not only impact our bottom line – they help us create a more efficient and cleaner energy future.
John Schinter is energy director for AT&T.
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