Strategic Approach to Energy Management Green Sustainable Enterprise

Ankur Thareja, CMVP, CEA, IGBC-AP Sr Consultant Energy Solutions Wipro Eco Energy Republished From LinkedIn

Introduction:
Whenever we talk about Energy Management or for that matter any industry, each industry participant has his own set of definitions and perspectives. For Example, OEMs focus more on retrofits and upgrades; an IT service provider will talk about Big Data/ Analytics; Sustainability and Group Energy Managers will show a belief in tools such as EnergCap for Benchmarking and tracking and ISO 50001; and Green Building professionals will focus on passive architectural design options such as orientation, construction materials etc.

Energy Management in today’s world is interpreted by professionals in accordance with their own environment, experience, and need. According to me, the term is beyond products and tools, and more of a discipline which leads us to formulate our goals and vision related to Energy/Green/Sustainability. The term “Energy Management” needs to break its silos and include people, processes, and tools to deliver a continuous process (integral to day to day operations as part of the vision) rather than a onetime action such as retrofit, installation of tools, being certified once and eventually losing track, etc.

Steps to Strategic Energy Management:
The bigger question now is How to implement these Energy Management programs? EnergyStar mentions following steps to Strategic Energy Management (Ref: http://www.energystar.gov/buildings/tools-and-resources/energy-star-guidelines-energy-management)

STEP 1: Make Commitment
STEP 2: Assess Performance
STEP 3: Set Goals
STEP 4: Create Action Plan
STEP 5: Implement Action Plan
STEP 6: Evaluate Progress
STEP 7: Recognize Achievements

Commitment for an energy management program is given by the senior management (such as Energy Director reporting directly to the CEO). This provides the necessary impetus to the project. However steps 2, 3, and 4 of Strategic Energy Management is normally overlooked by organizations. Nevertheless there is a need to assess the current performance and then set goals; create action plan to understand current capabilities, plan for development of in-house capabilities or outsourcing of execution. Due to ambiguity and lack of planning resulting from skipping steps the organizations tend to set unrealistic expectations from the program such as ROI of 1-2 years, or 30% savings in the next 5-10 years. This leads to a failure in achieving the full potential of a “Green Sustainable Enterprise” by diluting some aspects of the program such as:

• Long Term energy Needs and growth base on business projection
• Energy Cost Management
• Disaster Preparedness: Mitigating Energy related Reliability and Availability
• Financial Planning for Energy Projects
• Integration of multiple small projects (such as Lighting Retrofit into Lighting Management, installing meters into Billing Reconciliation, Energy Use breakdown, Longitudinal and Cross Sectional benchmarking, Energy Cost break-up and renegotiating contract with utilities , etc.) into overall plan
• Incentives & Rebates
• Etc.

For a successful “Energy Management Program”, clearer vision and expectations from the program is mandatory. From my perspective creating a successful Energy Management program is more of an economic, financial and political challenge, and less of an engineering accomplishment. There is a need to transform the market outlook focused on ROI, project finance (Economic and Financial challenge), and a way to bring multiple technical and non-technical stakeholders on the same page (political challenge). Engineering challenges are always present in some form however the availability of technology and tools provide us with the power to perform way beyond our current capabilities.

Overcoming Political Challenges:
Therefore to overcome Political Challenge, in addition to the Energy Director who leads the team and possible dedicated energy staff, consider including a representative from each operational area that significantly affects energy use, such as:

• Engineering
• Purchasing
• Operations and Maintenance
• Building/Facilities Management
• Environmental Health and Safety
• Corporate Real Estate and Leasing
• Construction Management
• Contractors and Suppliers
• Utilities

Institute Corporate wide Energy Policy, involving key people in policy development to ensure buy-in. Energy Policy should be

• Tailor the policy to the organization’s culture
• Make it understandable to employees and public alike
• Consider the skills and abilities of management and employees
• Include detail that covers day-to-day operations
• Communicate the policy to all staff and employees, and encourage them to get involved

Overcoming Economical and Financial Challenges:
Step 2 and 3 of EnergyStar plan can be used to overcome Economical challenge. First and foremost for that is enterprise need to evaluate its current state and performance.  Some of the activities that need to be performed are

• Categorize current energy use by fuel type, operating division, facility, product line, etc.
• Identify high performing facilities for recognition and replicable practices.
• Prioritize poor performing facilities for immediate improvement.
• Understand the contribution of energy expenditures to operating costs.
• Develop a historical perspective and context for future actions and decisions.
• Establish reference points for measuring and rewarding good performance (Baseline)

Once we know current state of facilities, energy and asset challenges, and performance, it’s time to Set Goals, that would help to

• Set the tone for improvement throughout the organization
• Measure the success of the energy management program
• Help the Energy Team to identify progress and setbacks at a facility level
• Foster ownership of energy management, create a sense of purpose, and motivate staff
• Demonstrate commitment to reducing environmental impacts
  Create schedules for upgrade activities and identify milestones

Once Evaluation and Goals are set, it is clear what we can expect from these Energy Management program (i.e. can we base them on ROI only or they are essential for Business Continuity also). This will eliminate unrealistic Economic challenges which sometime gives a perception that project is not viable based on internal/corporate IIR (Internal Rate of Return) or ROI policy. Though program/activity may be viable based on O&M (Operation & Maintenance) savings, R&R (Repair & Replacement Cost). Ref: FEMP Guide for saving http://energy.gov/sites/prod/files/2013/10/f3/practguide_sav_paymnts.pdf

Normally, it is very important to understand “Color of Money” while calculating economic benefits and viability of project. This is how Economic challenge can be mitigated.

Once we are aware of project economic scenario and “Color of money” it is very easy to make decision whether to go for Internal Financing or External Financing, else ESCO methodology. This helps mitigating Financial Challenge for Energy Management projects.

Once we are aware of project economic scenario and “Color of money” it is very easy to make decision whether to go for Internal Financing or external Financing, else ESCO methodology. This helps mitigating Financial Challenge for energy Management projects.

Engineering Accomplishment:
Engineering accomplishments require two steps. First, last step of planning for i.e. Creating Action Plan, which requires corporates to plan based on insights while working on mitigation plan for Economic and financing Challenges

• Access current capabilities, and plan for develop in-house capability or outsource execution and only manage internally; Else having a mix
• Goals Set will help identify what tools, software, infrastructure required to achieve desired outcome
  
• Prioritize initiatives, cost estimates and resource planning for Strategic Energy Management
  
• Define the scope of services, stakeholders involved and their high level RACI matrix
  
• Process Framework for managing Energy Management with multiple internal and external stakeholders

Second step of engineering accomplishment is easy, this requires finalization of Eco-System consisting of tools, vendors, and stakeholders with defined roles and responsibilities.

As per Verdantix Report on “GREEN QUADRANT BUILDING ENERGY MANAGEMENT SOFTWARE MARCH 2014” (Ref http://old.caba.org/documents/IS/IS-2014-171.pdf) since 1990 corporate Energy Management is aimed at Tactical solutions aimed at individual sites which includes retrofits, up gradation of BMS (HVAC and Lighting controls). 2011 onwards with the Market consolidation as building asset management meets portfolio-wide energy management. There are many companies such as Enova, First Fuel, Retro Efficiency, EnergCap, Hara, Skyspark, Schneider, Wipro EcoEnergy, BuildingIQ, Energy ICT, EnorNOC, Verisae, Envizi, Skyspark, etc. who have their own strengths like EnerNOC a leader in Demand Management, EnergyCap has leadership in utility bill & greenhouse gas tracking, analysis, reporting, auditing, benchmarking, Hara is Big Data Analysis tool, Envizi has best Workflow And Reporting Capabilities, etc..

Start with small pilots/demos with multiple vendors and products to evaluate their local delivery capabilities and openness to work in multi-vendor environment and data sharing capabilities. This will help understanding synergies and overlapping capabilities of tools and Vendors. Finally, come-up with RFP for Strategic partnership based on Goals and operating methodology (RACI) as last step to achieving engineering excellence.

Though, it’s not completely true that existing tools and technologies will cater to 100% engineering excellence. Sometimes integrating data from multiple sources and making multiple tools work together creates some issues. Once issues are identified, solutions can be provided. It is normally more difficult to find issues, rather than finding solutions.  Also issues which are beyond technology, haven't been addressed by process excellence.

Sustenance and Re-Assess Results:
This step puts the last touches to the “Energy Management Program” before Goals are re-assessed and cycle starts again for improving the effectiveness of program.

During this step 5, 6, and 7 of EnergyStar program are considered.

[an error occurred while processing this directive] Regular evaluation of energy performance and the effectiveness of energy management initiatives allow teams to:

• Measure the effectiveness of projects and programs implemented
• Make informed decisions about future energy projects
  
• Document additional savings opportunities as well as non-quantifiable benefits that can be leveraged for future initiatives.

This is done by comparing energy performance to baselines (i.e. Step 2 Assess Performance and Step 3 Set Goals)

• Compare performance against established goals for:
• environmental performance
• financial savings
• Compare energy performance to peers and competitors to establish a relative understanding of where corporate performance ranks.

Sustenance phase review i.e. Re-Assess involves:

• Creates insight for new actions (technologies/practices/programs)
• Avoids repeating failures by identifying activities that were not as effective as expected
• Assesses the usefulness of the tracking system and other administrative tools to ensure better management and evaluation
• Provides staff the opportunity to contribute to and understand the process of energy management.
• Provides specific success stories and financial results to communicate to stakeholders inside and outside the organization

Disclaimer: The views presented in this article are personal views of the authors and in no way represent those of the company they work for or any industry body they are associated with.

About the Author:
Ankur Thareja is a Senior Consultant – Energy Solutions at Wipro EcoEnergy with a career span of almost 13 years focusing on delivering solutions for energy and controls. His areas of expertise include Integrated Building Management Systems, Energy Management Solutions, Remote Monitoring, Performance Contracting, and Intelligent/Smart Buildings.
He is Certified Energy Auditor (CEA) from Bureau of Energy Efficiency (BEE), Certified Measurement and Verification Professional (CMVP) by Efficiency Valuation Organization (EVO) and an Accredited Professional from Indian Green Building Congress (IGBC).

https://in.linkedin.com/in/ankurthareja

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