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EMAIL INTERVIEW Gregg Dixon & Ken Sinclair
Gregg Dixon, Senior VP of Sales and Business
The Energy Imperative
With increasing energy costs, market volatility and local and national focus on environmental concerns, electricity management has become a critical business function. EnerNOC’s Senior VP of Sales and Business Development, Gregg Dixon, reveals how energy management is more than just good for the environment and local communities – it’s primarily good for the bottom line.
Sinclair: Tell my readers about EnerNOC and how you manage electricity.
Dixon: Due to the fact that, for practical purposes, electricity cannot be stored on the grid, electrical supply and demand must remain in constant balance. During times of peak demand, utilities and grid operators typically respond by generating more electricity (aka supply) to serve loads that may exist for fewer than 1% of the hours of the year. Demand response takes a look at the other side of the equation. By partnering with commercial, industrial and institutional businesses, EnerNOC helps reduce demand during times of peak usage. This is done through measures which include shutting off non-essential lighting, raising the temperature on air conditioner set-points by a few degrees, or shifting process-related loads to later or earlier hours of the day. EnerNOC rewards its partners with regular, periodic payments in exchange for predictably reducing electricity consumption, so it’s a win-win situation. Utilities and grid operators maintain grid stability and avoid blackouts and brownouts, while businesses earn money for their participation, at the same time helping the environment.
We also offer a full range of energy management solutions including energy analytics, energy procurement and emissions tracking, trading and management. Our goal is to be an energy partner to our customers, helping them to understand new strategies for how they use and manage energy, so that they can continue to focus on their core business. Energy management is complicated – we make it simple.
Sinclair: How quickly is energy demand growing? Is it really a problem? Why can’t we just build more power plants?
Dixon: Global demand for electricity is growing rapidly. If current trends continue, US peak demand will exceed one terawatt in the early 2020s. Environmental implications aside for the moment – and those are considerable - the financial costs alone to keep the pace with growth in demand are large. The International Energy Agency forecasts that the US and Canada alone will spend over $1.5 trillion on new generation plants, as well as transmission and distribution infrastructure, from 2003-2030, much of it carbon emitting. For many people – including government regulators – that’s not acceptable, particularly given that as much as 50 percent of the nation’s anticipated load growth over the next decade could be displaced through energy efficiency, pricing reforms and load management programs.1
Sinclair: Why should energy management be on the priority list for facilities managers and C-level executives?
Dixon: First, energy management is about saving money and reducing financial risk, plain and simple. We’re well beyond the days of electricity just being another operational line item that’s paid without critical evaluation. The volatility of energy prices, which can swing as much as 50% in a twelve month time frame, can bust a company’s budget if not managed properly. The more businesses understand the way they use electricity, and the risks of such use, the more opportunities there are to save. For building managers, this isn’t just about data collection; it’s about being able to look at the data, interpret what it’s telling you and take the necessary steps to start to see results.
Second, energy management falls under the category of good corporate citizenship. We all have a responsibility to consume energy more efficiently and the US is significant laggard relative to other first world countries when it comes to energy efficiency. With our talent and technology, the US easily can and should be the leader in energy management.
Sinclair: That sounds like a time -and resource- intensive process. Most facilities managers have a number of priorities and responsibilities. How should this factor on the list of “must-do’s”?
Dixon: Being able to accurately interpret the data is a time intensive process that involves a lot of expertise. Companies like EnerNOC provide consulting services to help organizations use the information to create actionable plans to reduce energy consumption. Given this, and all of the benefits of energy management, these programs should rate high on any list of must-dos. Furthermore, energy management is the gift that keeps on giving. Once a company takes measures to participate in programs such as demand response or enacts energy efficiency measures, those economic returns pay month in and month out.
Sinclair: How significant is the operations savings we’re talking about when we say “energy management”?
Dixon: It can vary considerably depending on what measures are being implemented. There are initiatives like demand response programs whereby facilities can expect a 2-5 percent reduction in their total electric bill, ranging from a few thousand dollars per year to millions of dollars per year, depending on the type of operation. Energy analytics projects that take a critical look at energy use can save 10-15 percent off energy bills. If your business is in a deregulated market with competitive energy suppliers, leveraging a strategic energy procurement strategy can reduce electricity bills by another 5 percent or more and can substantially reduce price volatility risk. Emissions tracking and carbon credit management is another nascent area of opportunity that will create risks and returns. The bottom line is that the opportunities overall are huge and most companies haven’t even started the process.
Sinclair: That sounds great, but doesn’t all this require a fairly large capital investment? Particularly during times of economic slowdown, these are the projects that typically get cut first.
Dixon: Energy management is an investment, but depending on how you structure your program, it can involve little or even no capital costs. For example, customers that enroll in EnerNOC’s demand response programs earn money each month for participating, and there are no upfront costs or performance risk . . . period. If those customers then want to look into energy management services, the cost of these services can be offset by the income generated by the demand response program. It’s also important to look on the long term horizon. Inefficient energy consumption causes organizations to bleed money unnecessarily. Even if upfront investment is required, the payoff will ultimately yield positive benefits to the bottom line.
Sinclair: Many of our readers have invested heavily in sophisticated Building Management Systems (BMS), but we’re hearing a lot about the need for continued commissioning. Is that necessary if you have a BMS?
Dixon: Commissioning tells building managers how to optimize their energy consumption. The reality is, however, that 80 percent of buildings have never been commissioned and 100 percent of buildings need continuous commissioning because requirements change - people manually reset automated controls so they’re not optimized, seasonal weather patterns affect efficiency, building space is reconfigured over time, tenants contract and expand and new technologies emerge. Another way to look at this is to ask, “Does your car need tuning?” Of course it does and the more people who drive it with different habits, the more tuning it needs. Buildings are “driven” by hundreds of people every day, all with different habits, so continuously tuning a building offers a huge energy savings opportunity.
Sinclair: How can my readers learn more about these types of energy saving programs?
Dixon: Check out our website, www.enernoc.com. In addition to energy efficiency, you can learn about participating in a demand response program.
1 Source: Efficient Reliability: The Critical Role of Demand-Side Resources in Power Systems and Markets. Prepared for the National Association of Regulatory Utility Commissioners. Author – Richard Cowart, Regulatory Assistance Project, June 2001).
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