How Benchmarking Refreshes and Reinforces Effective Energy Management

The basic elements of effective corporate energy management are are relitively simple: senior management support, good data, clear targets and a reasonable allocation of technical, managerial and economic resources, along with consistent implementation over decades. Yet why do companies vary so widely in their energy performances?

From SustainablePlant: A consistent feature of the very best performers is a willingness to compare their approaches with other companies’ teams. From a recent study of a small group of major U.S. corporations, all had excellent energy management programs, each delivering double-digit percentage productivity gains but coming from a significantly different history and using differing management approaches.

The differing histories themselves were interesting. One had started nearly 15 years ago, initially focused on voluntary energy cost reduction that had delivered tens of millions of dollars in cost savings. Another saw the growing risks around energy prices some years ago and instituted a formal six-sigma-designed process deployed rapidly worldwide and already substantially reducing energy costs and risks. Yet another reacted to growing volatility of electricity and gas prices in recent years as both a major threat and opportunity, encouraged by senior leadership setting breakthrough goals and an aggressive timetable.

Also interesting was that each, in its different way, was building on its energy management expertise to develop fully-fledged sustainability programs. One was successfully focused on managing multiple waste streams in internal operations to reduce its operational footprint. Another clearly saw the importance of understanding not only the effect of its own operations, but also of the effect of its suppliers and customers in the entire value chain. All recognized the importance in understanding the direct and indirect carbon footprints, as much for avoiding business risks associated with climate legislation as for mitigating climate change.

Companies committed to excellence in energy management or wider sustainability programs understand intuitively that this is a continual work in progress. They appreciate that energy decisions should always be revisited. Available technology improves in performance or reduces in cost, legislation changes and information technology permits day-to-day measurement and control solutions previously beyond reach.

In just one example, solar cells are at least twice as efficient and one-third the cost they were a few years ago. States like Ohio and provinces like Ontario are changing their legal frameworks to encourage efficiency and clean and renewable energy supply, drastically changing the attractiveness of some energy solutions. China and Europe are proactively putting in place policies to rapidly deploy energy efficiency and clean supply, driving up manufacturing volumes and reducing associated prices at impressive rates.

Uncertainties around energy pricing and its volatility are at highs previously unknown for most of the industrial era. Add these together, and it is obvious that such changes should trigger reevaluation of energy projects previously rejected. However, the reality for most companies is that other business priorities tend to drown out the energy challenge. In reality, few companies are equipped to keep up with the rapidly changing energy world and its possible implications. They fall back on the tried and tested approaches, often relying on data and assumptions that might be questionable or out of date. A more subtle challenge is process fatigue experienced by every energy program over time. The enthusiasm and engagement at the start can fade, jeopardizing the sustained consistency essential for success.

Regular detailed benchmarking is one powerful tool to ensure programs are refreshed, challenged and adjusted. In the space of one short day, the companies at the recent meeting shared a wide range of experiences and information. The wide-ranging conversation covered energy metering and reporting systems, employee motivation and incentives, low-cost and no-cost efficiency practices, evolution of climate change legislation, critical efficiency and clean supply technologies and the inclusion of energy efficiency in all major procurement decisions.

That more heads are better than one was again demonstrated at this meeting. By the end of the day, the teams had identified areas in which they saw challenges and could probably make faster progress through systematic sharing. They flagged areas unlikely to yield significant results despite being the “flavor of the month.” The reality that good energy programs are built on sound low-cost, no-cost efficiency programs at site level was refreshed, and new ideas to keep these alive were exchanged.

Most importantly, everyone went away reenergized by the differing perspectives and successes. The total truly was greater than the sum of the parts. Bottom line: Systematic benchmarking of energy management programs keeps them relevant and successful.

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