Management as if Energy Matters

8/8/2019 Management as if Energy Matters

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P. BIRKELAND 2010-09-27

released a report encouraging firms

to actively address their energy use

or face devastating price spirals and

uncertainty when the global economy

more fully recovers. Their report said

bluntly, Businesses which prepare

for and take advantage of the new

energy reality will prosper - failure to

do so could be catastrophic.

So what is Strategic Energy

Management and how does one go

about it?

Strategic Energy Management is an

approach to proactively managing an

organizations energy use, and, more

importantly, to bringing about change

within the organization so that energy

awareness is a self-sustaining part of

the culture. It is a way of making

managements commitment to

energy efficiency manifest in the

organizations operations. If done

properly, it can also energize your

workforce, and lead to organizational

gains in reduced turnover, lower

absenteeism, and higher productivity.

Many efficiency proponents believe

that if you show the projected dollar

savings or payback for energy

improvements, top managers will

accept these proposals. Thats not

always true. Organizational size and

complexity pose formidable hurdles

to capturing efficiency opportunities.

Manufacturing enterprises have

organizational structures,

accountabilities, and incentives that

are designed to make products and

get them out the door, not reduce

energy use.

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Paul Birkeland

Paul Birkeland is the

founder and principal of

Integrated Renewable

Energy in Seattle. He

develops Strategic Energy

Management Systems for

government, commercial,

and industrial organizations

through Integrated

Renewable Energy. Here he

discusses the evolving sector

of Energy Management

within business.

If your firm has navigated the

recession this far, its a pretty good

bet that youre managing your

finances like a Border Collie does

his sheep. And Im willing to guess

that your firm is also managing its

workforce, its product inventory,

and its materials inventory pretty

closely. All these things matter to a

firms viability.

But Im also willing to bet that one

key facet of your firms operation is

still escaping close scrutiny and

active management - your energy

use. This is a good bet because

strategic energy management is

just now maturing. Managers are

just now recognizing energy use as

something to be actively

addressed, an opportunity to

become a proactive user of energyrather than a passive victim of

energy bills. And the future is only

going to amplify energys

importance to your bottom line.

! !


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P. BIRKELAND 2010-09-27Using your baseline year, you

must derive an Energy

Performance Indicator, called

an EnPI. The EnPI is an

energy intensity value. That

means that it is the total

energy used divided by some

measure of your firms output,

usually cases or tonnes of

product. The reason for this is

that production variations will

totally mask your actual

progress on energy efficiency

if you dont take them into

account. Tracking energy use

by itself is misleading. You

need to track your EnPI. You

will also need to take into

account the weather during

your baseline year since, for

example, a cold winter will

drive up your heating

requirement, and may even

impact your production energy

in some way. Weather, too,

masks your actual progress.

Itemize, itemize, itemize -

Develop an ordered list of

Energy Usages based onengineering estimates of the

amount of energy used by

various pieces of equipment.

You may want to submeter the

larger pieces of equipment, but

estimates can be made based

on electrical rating and use

profile. You can also develop a

list of Energy Opportunities

based upon an engineering

assessment of how easily agiven energy use can be

improved or a Return on

Investment (ROI) estimate.

This gives you your project line

up for the next year or so, and

should be updated

periodically.

Engage Your Workforce

Equipment uses energy, but

so do processes. And the bestway to tap into insight into your

processes is to engage your

workforce. Let me give you an

example. At one firm I know,

they decided to save energy

by turning the thermostat down

in the plant. No surprise, they

received some complaints

from workers feeling cold. But

the facility engineer noticed

that all the complaints came

from about the same location

on the assembly line. Upon

talking with those individuals,

they found that it was not so

much the lower temperature,

as it was a draft in that area

that made it feel colder. By

adjusting one of the fans and

some duct blades, they

eliminated the draft and the

complaints. They are now

saving over $100,000.00 a

year in heating costs. But

without engaging their

workers, they might never

have been able to do it

comfortably.

Make a Plan, Carry It Out -

Not every proposed project will

get funded, of course. But

management is being held to

certain goals, and having anoverall plan for energy

upgrades based on ROIs and

your prioritized list will make

implementation more likely.

Track Your Progress Make

sure there is a clear

responsibility to record energy

use data as it comes in, and

track and report energyintensity reduction. This is the

best way to keep management

and workforce engaged.

Repeat Set periodic intervals

for checking your progress and

workforce training and

engagement. Set longer

intervals for updating your

Energy Usages list. And even

longer intervals for updatingyour EnPI, Baseline, and

Goals. These cycles are the

key to ongoing energy use

reduction.

While most companies will express

a desire to reduce costs, energy

inefficiency is not fully recognized

in day-to-day practice. Control of

energy waste requires cross-

functional authority and

communications that dont exist in

most facilities. Given this reality,

energy waste often continues, nomatter how financially attractive a

project looks on paper. Thats

where a formal Strategic Energy

Management System comes in.

Energy management fits into each

firms management practices

differently, but there are some

basic components that you will

have to put in place.

Management Commitment It

all starts with a clear, written

commitment - to the program

and to specific goals - from

management, preferably as a

formal policy statement.

Management commitment

aligns departments and

liberates resources. It is the sin

qua non of Strategic EnergyManagement components.

Management should also

publicly name an Energy

Leader. This need not be a full

time job, but the entire

organization should know who

the Leader is and what his or

her charge is.

Energy Baseline You will

need to access and analyzeyour firms energy bills for at

least three years, more if you

can get them. You will need to

choose a baseline year for

some logical reason such as a

new facility, new equipment,

new processes, or whatever.

But your baseline needs to be

relevant to todays operation.

Energy PerformanceIndicator This is the most

technical aspect of energy

management, but a very

im ortant one.


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P.BIRKELAND 2010-09-27

Setting up a Strategic Energy

Management System is not a trivialundertaking. But they have proven

effective in such leading firms such

as 3M, Ford, DuPont, Frito-Lay.

According to the Alliance to Save

Energy, 3Ms Energy Management

System resulted in reducing energy

consumed per pound of product by

20 percent between 2000 and 2005.

The Kimberly-Clark Corporation, a

multinational paper products firm,

uses a series of five-year energy

management plans. Their first plan

(1995-2000) led to a corporate-wide

11.7 percent reduction in energy use

per ton of product. Smaller firms can

benefit as well. C&A Floorcoverings,

a small flooring manufacturer in the

State of Georgia achieved 10 percent

savings on an annual natural gas

expenditure of $824,500 by

implementing a Strategic Energy

Management System.

There is resistance to energy

management for a variety of reasons.

Most industry decision-makers

believe the solution to reducing

energy costs is to seek the lowest

available energy prices. Too often,

managers fail to grasp the

opportunities offered by energy

management, which focuses on bothconsumption and prices.

Energy management also has no

traditional place in the typical

manufacturers chart of organization,

job descriptions, and performanceaccountabilities. But recognition of

energy management is growing.

A year and a half ago, the

International Standards Organization

(ISO) fast-tracked a new standard on

Energy Management Systems, ISO

50001, aiming to get it drafted and

published in two years rather than

the typical three. It is considered that

important by the participating nations

UK, US, China, Brazil, and a host

of others. Its due out in the second

quarter of 2011. This will be a

watershed in energy awareness.

Not everyone should go ISO of

course. Historically ISO certification

is used to show managements

commitment to stakeholders a

Board of Directors, shareholders, or

even customers. But the process

mapped out in the ISO, which I

outlined above, is thoroughly

adaptable to many smaller firms with

or without certification.

As economies pick up, the tightness

of energy supplies will again become

apparent. Managing energy reduces

costs, mitigates risk, and lowers

carbon emissions. It can evenenergize your employees in the

process. Its time to start managing

as if energy mattered.

Paul Birkeland lives in Seattle, WA,

US, and develops Strategic Energy

Management Systems for government,

commercial, and industrial

organizations through Integrated

Renewable Energy.

www.IntegratedRenewableEnergy.com

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Management as if Energy Matters