This post is the start of an extended series, looking at how all kinds of organizations are optimizing their power and energy performance to help meet business and sustainability goals. In the first two posts, we’ll look at how boosting your energy IQ can improve your energy performance, and some important considerations to help make your efforts successful.
Gone are the days when energy was treated as an expense that you just had to pay, as most businesses have come to realize the significant impact that energy has on their bottom line. For example, energy is the single largest expense for most commercial buildings, averaging $USD 1.69 per square foot in 2016. Today it is well understood that energy must be considered an operational variable that ought to be managed just like any other significant operating expense. In response, many organizations have launched energy efficiency initiatives; however, most have a long way to go.
This is because tactical, project-based approaches will never be as effective as a systematic approach. Facility teams need to consider energy management not as a short-term goal, but as a long-term journey with logical steps to success. By first investing in the right policies and procedures, companies can expect to continuously improve energy performance and maximize return on investment.
The investment is clearly worthwhile when we look at the potential payback. According to a study by the U.S. Department of Energy and Lawrence Berkley Laboratory, by tracking and analyzing energy, companies can improve their efficiency and reduce their energy costs by as much as 12% within 15 months, while overall energy performance improves from 5.6% to 30.6% over three years. Facilities that have more than a $2 million annual energy spend are getting paybacks in less than 1.5 years. That’s impressive.
But sustaining and verifying those gains year-on-year requires the right tools, delivering the right information to corporate and facility teams dedicated to continuous improvement. That’s what makes a top energy performer. Let’s look at what it takes to get there.
Recent Trends are Enabling the Journey
The biggest energy migration we’ve ever known is happening right now. For example, the cost of renewable energy sources is dropping, encouraging greater adoption by both energy producers and consumers. So, while it is projected that by 2050 there will be 62% more demand for power than there is today – with the biggest demand coming from data centers – solar energy will be cheaper than fossil fuel-based energy. To help take advantage of renewables and improve energy resilience, energy storage is gaining widespread adoption in campus, facility, and even residential microgrid applications. And while transportation will make up 30% of energy consumption, BloombergNEF states “by 2040, we expect 57% of all passenger vehicle sales, and over 30% of the global passenger vehicle fleet, will be electric.”
To help us manage this transition, technology is also advancing at a breathtaking pace. The Internet-of-Things (IoT) and digitization is helping us connect to more energy assets and smart devices throughout our electrical distribution systems. Cloud computing is making it easier to make sense of the big data coming from these connections and to share insights across teams.
The Key to Success: ISO 50001
With the return on investment clear, and with trends in energy and technology pushing the world in the right direction, what does it take to reliably achieve the desired results? More and more companies are realizing that a structured, proactive investment in energy management provides better results than the traditional ad hoc approaches of the past.
For tens of thousands of companies (and many more each year) this has meant adopting the international ISO 50001 standard for energy management systems. It’s a proven, systematic approach for achieving ongoing improvement by helping an organization:
- Develop a policy for energy efficiency
- Set targets and objectives
- Better understand data to make decisions
- Measure results and review effectiveness
- Continually improve
It’s also a comprehensive ‘big picture’ approach, with energy performance measured by taking all relevant drivers into account, such as production, occupancy, weather, and other external conditions.
Companies trying ad hoc methods to improve energy efficiency are limiting their success by running initiatives as short projects with simple payback estimates, often in isolation of other teams that could otherwise contribute. Often, gains are lost as people no longer participate in maintaining levels of efficiency. Different departments may launch separate projects, but there is never a coordinated effort focusing on continuous improvement.
In contrast, a structured approach, such as that prescribed by ISO 50001, helps keep energy management high on the corporate agenda, with centralized decision making. It helps build a culture of energy awareness and develops long-term competencies. With these attributes in place, an organization can implement energy management practices to get their sites certified as ISO 50001 compliant, on their way to becoming a top energy performer.
Rising to the Challenge
Companies face many challenges when implementing an energy management program. It’s common that big targets nertfor sustainability are set without a plan to get there. Or the management team may feel that since energy management isn’t a core strength, the goal isn’t achievable.
It can also seem a complex task, with a lot to consider, including changing regulations, financing options, and new technologies. And, of course, without the right information it’s almost impossible to manage anything.
This is why following a structured approach with a recognized energy management system is so important. It helps define achievable goals, and the information needed to support each initiative over the long term. Fortunately, energy measurement and analysis technologies have advanced greatly in recent years, making it simpler and affordable to support a comprehensive energy management strategy.
With these tools in place, a company is ready to take the energy management journey, from awareness to improvement to optimization. We’ll have a closer look at this journey in my next post.
EcoStruxure™ Power solutions from Schneider Electric offer complete energy measurement and analysis capabilities, with reporting directly compliant with the ISO 50001 standard. Solutions help digitize your entire electrical infrastructure, connecting your corporate and facility teams to the data and insight they need to uncover opportunities and continuously improve energy efficiency. To learn more about EcoStruxure Power, check out our website and eGuide.