EMAIL INTERVIEW - Dan Kubala & Ken Sinclair

Dan Kubala, Vice President of Marketing, Site Controls

Site Controls is a leading provider of energy management systems focusing specifically on companies with geographically dispersed operations, such as retailers, health clubs, restaurants and banks.

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Sinclair:  With the economic downturn and rising energy costs, how are your customers viewing energy management? 

Kubala:  Retailers are facing a very difficult business environment today.  They’re dealing with flat or declining same store sales, rising energy costs and skittish consumers.  The good news is that for many retailers, focusing on energy management really is “low hanging fruit” that will allow them to immediately reduce operating expenses without impacting the customer experience.  Many of our retailer customers have recently increased their investment in energy management systems because they’ve seen a proven payback in the form of reduced energy bills and maintenance costs. 

Sinclair:  What’s new in energy management systems these days? 

Kubala:  As your readers will know, the category of Energy Management Systems (EMS) or Building Automation Systems (BAS) has been around for decades.   And there are some very effective products available for certain classes of building owners.  But the reason we decided to enter this market was that traditional BAS offerings don’t effectively meet the needs of chain operators.  They do a fine job of managing a single building or a small campus, where a building engineer can dedicate the time necessary to configure and maintain the system.  But the traditional systems don’t scale geographically.  When a chain grows beyond 30 – 40 locations, the facilities staff cannot effectively keep the system configured to deal with operating changes, nor can they manage all of the nuisance alarms that the systems generate.

Our system was designed from the ground up to help chain operators.  One key difference is that instead of designing each on-site system with a high degree of complexity, and then consolidating a limited set of alarm information on a web site, we did pretty much the opposite.  We designed very simple elegant on-site controls systems, but the “heavy lifting” is done on the web – all of the key operating data is stored in an ASP hosted data center.  This difference is analogous to the “thin-client” (Internet-based) vs. “client-server” (PC-based) computing transition that we saw in the 80’s and early 90’s. 

Sinclair:  Why is using the Internet so important for energy management?  Isn’t this a site-level issue? 

Kubala:  The key challenge in building automation for our customers boils down to information management. The ability to control the on-site equipment – HVAC, lighting, signage, refrigeration, etc. --- is not what distinguishes companies these days.  It’s more about the information tools and operational intelligence the system provides.  Our customers are absolutely swamped with the day-to-day activities of running their businesses.  They need an energy management system that helps them quickly identify what issues need to be addressed immediately vs. what is just noise.  You need a web-based architecture that can provide that information on demand, in an interface that doesn’t require a rocket scientist to understand.  There is an amazing wealth of information available in these systems, but if you can’t cost-effectively capture it and make sense of it to change your business, it’s worthless.

Sinclair:  What other considerations do chain operators need to consider when embarking on an energy management program? 

Kubala:  Probably the most important thing to understand before moving forward on energy management is that it is a on-going process, not a one-time project.  You can’t simply set it and forget it.  The chart below illustrates this impact on your energy costs:

The blue line shows what happens if you do nothing – your energy costs will continue rising at an average of 3 - 5% per year (or more, depending on your geography).  The red-line shows the effects of a “set it and forget it” mentality – you’ll get a one-time reduction with the implementation of controls, but that effect will fade over time.  Operating schedules will change, employees will override controls, HVAC maintenance issues will go unnoticed, etc.

The green line shows what happens with on-going management.  You will maintain the savings you initially created, and your costs will thereafter keep pace with price increases and plug load growth.

The purple line shows what happens when you actively manage the system, and implement programs for additional improvement such as Demand Control Ventilation, Daylight Harvesting, Intelligent Load Management, etc.    With this approach you can actually continue to lower costs over time.

The key is to have a system which supports this approach, and implementing a process improvement program to review key performance indicators (KPI’s) over time.  To learn more about the benefits and challenges of deploying an energy management system, please read our white paper “Best Practices In Energy Management”.

Sinclair:  What capital investment is required? What is the ROI? Payback?

Kubala:  Site Controls provides an ROI of 50% or more, all demonstrated in hard-dollar savings from reduced energy usage and lower maintenance costs.  In the parts of the country where there are utility rebates for participating in demand response, retailers can see an ROI that exceeds 100% and in some cases drastically reduce the upfront cost of equipment.  The average payback period is 18 months.

[an error occurred while processing this directive] Sinclair:  What are the average savings? 

Kubala:  Average savings range from 15 – 25% across a chain.  Some sites that were well-managed prior to EMS might see less, but we’ve seen reductions of 60% or more in facilities that were poorly managed prior to the implementation of controls.  But as we said earlier, the key is maintaining these savings over time through best practices. 

Sinclair:  Are there benefits beyond energy management?

Kubala:  Yes, participation in load management and Smart Grid programs such as Demand Response, Critical Peak Pricing and Ancillary Services Markets is another emerging opportunity for retailers.  But it’s important to reduce load without impacting shopping comfort, and the only way to do this effectively is through automation.  For retailers, Site Controls’ automated Intelligent Load Management (ILM) algorithm executes peak load reductions based on site-specific business rules designed to drop the maximum amount of load while protecting the customer experience.  With the amount of public focus on the Smart Grid, we believe these opportunities will increase dramatically in the future.

Sinclair:  How does sustainability factor in?

Kubala:  Even with the economic downturn, environmental sustainability will remain an important element in retailer’s business planning and operational decisions.  But no one is investing in green for green’s sake – it has to lower costs and make business sense.   The good news is that sustainability and savings come together with energy management.   Retailers have recognized consumers are demanding that company’s demonstrate a commitment to the environment:

a.  46% of consumers say they would shop at a retailer more if it was environmentally friendly.
b.  47% of consumers say they would pay more for environmentally friendly services, products or brands.

Energy management can have a greater impact on sustainability than any other green initiative.  Many retailers report that their purchased utilities (electricity and gas) account for 85% of their total carbon footprint and with an energy management system that deliver energy reductions of 20% or more, a company’s carbon footprint reduction can easily exceed 17%.  With almost one million retail buildings in the US alone, this represents a huge potential to reduce emissions. 

For retailers looking to become more green in their operations, the National Retail Federation (NRF) has recently formed a Sustainable Retailing Consortium – you can learn more at www.nrf.com.

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