Accomplishing an energy overhaul for any business may initially seem daunting. An organizational energy transformation requires multiple skills to gather data, determine the goals and objectives, model the costs and benefits of potential solutions and, finally, select the energy projects that align with the overarching vision. Nonetheless, for large commercial, industrial, or institutional entities, the potential for lowering expenses, achieving sustainability objectives, and optimizing energy benefits warrants a methodical approach to link planned actions with the energy transformation goals.
According to a Japanese proverb, “Vision without action is a daydream. Action without vision is a nightmare.” When it comes to energy planning, a master energy roadmap can be the bridge that connects an organization’s energy transformation objectives to optimal energy investments and sequence of activities.
Luckily, the right mix and sequencing of existing technologies, the use of utility advanced rates that offer low cost off-peak electricity, and business process improvements can profoundly help organizations deliver meaningful and cost-effective energy solutions. There are numerous new technologies on the market aimed at improving energy efficiency, many with associated state and/or federal incentives. The cost for on-site electricity generation has plummeted over the last several years, both for renewable technologies and technologies that take advantage of low natural gas prices. Electric utilities are offering advanced “smart” meters and pricing tariffs for customers to understand and save money by lowering their energy usage during peak times. The right mix of technologies and utility advanced rates allows businesses to manage their energy usage and onsite generation, which both optimizes their financial ROI and helps the environment. With a detailed energy roadmap and a group of committed stakeholders, any organization can accomplish their energy sustainability goals.
Here are four steps to a successful energy transformation:
1. Round up the troops
Transformative projects start with gathering the right people and establishing a leadership team. This team will vary with each organization, but those elected to this team should represent a few key factors, including executive buy-in, energy system knowledge (technologies, pricing and operation), an understanding of the organization’s energy and emission compliance requirements, and selected stakeholder input. This team can establish a vision of the organization’s future energy profile to match their strategic organizational objectives and their energy/emission compliance requirements. Finally, the team should secure commitment for internal resources and any necessary funding to create the master energy roadmap.
2. Assess current and future energy states
Establishing a baseline energy profile is critical in order to understand the organization’s launching point. Details around current assets, operational characteristics, and existing energy programs provide the basis for improvement. Energy audits should be conducted to gather and analyze current energy usage data and the effectiveness of existing initiatives. Often, an energy audit can uncover low-hanging opportunities for immediate improvement. This assessment helps the team shape the future energy vision with an objective set of goals specific energy reductions, GHG emission reductions, renewable generation, and reliability objectives. These energy vision goals are used both to determine which projects will best address technology, business processes, and people training gaps identified later in the process, as well as to evaluate how implemented projects are meeting the original goals.
3. Evaluate energy opportunities
Next, the team will determine the range of potential energy opportunities (technology, process, and people) that could address identified holes and achieve the energy vision goals. The most desirable energy opportunities must be prioritized for mutual consistency, value, budget and logical sequencing of steps to fulfill overarching energy plan. Opportunities can range from energy efficiency by design, energy conservation, demand management, advanced utility rates, and distributed generation (including renewables). At this point, additional stakeholders should be brought into the loop to validate and vet both the individual energy projects identified and the integrated energy transformation plan. The goal of this phase is to ensure that the sustainable energy roadmap addresses the energy transformation vision with buy-in from across the organization.
4. Implement and monitor energy roadmap
With an energy roadmap detailing the most promising energy opportunities, the team can identify funding options, prepare potential implementation plans, issue requests for proposals to verify pricing and implementation strategies, and lastly, begin to execute the projects with a quick ROI that fits into existing budgets. Concurrently, it is important to establish expected results for each project and its methods to monitor and track the process of the energy transformation. Monitoring the costs, performance and results of the overall program is necessary to validate the roadmap’s expected progress and identify any mid-course corrections, whether in the technology, business processes, or human aspects.
Holistic energy transformations are much different than trying to implement individual energy projects. Transformation takes multiple steps that compound the savings and maximize long-term consistency. Organizations of varying types and sizes can use these four steps to achieve their objectives, whether to innovate (lead), replicate (compete), or comply (by mandate).
Tom Hulsebosch is the Director of West Monroe Partners’ Smart Energy & Utilities practice. Jeff Smith is a principal within the practice. Visit here for more examples when we have helped organizations go through an energy transformation.