Effectively managing energy across multiple buildings
A step-by-step guide for improving efficiency, reducing overhead costs, and increasing sustainability in multi-site operations.
Effective multi-site energy management
The combination of revenue shortfalls, new state regulations, fluctuating electricity prices, urgent environmental issues, and public pressure have organizations across the U.S. reexamining their energy management and sustainability practices. And for good reason. On average, commercial buildings waste 30% of the energy they consume, and they consume 42% of the nation’s energy – more than any other sector.
Taking a "Big Picture" approach
The choices an organization makes regarding energy sourcing and consumption can profoundly influence its reputation and bottom line. In response, forward-thinking organizations are investigating energy efficiency, generation, and sustainability opportunities that will increase profitability and brand reputation while balancing any operational and financial constraints.
Managing energy can be particularly challenging for organizations with multiple buildings or sites. Some buildings may be old, some new, some are large and complex, some are small and relatively easy to upgrade, Some have modern digital controls and others have none.
Implementing efficiency opportunities for buildings separately from one another is a time-consuming process that frequently results in missed efficiency opportunities and unnecessary additional costs.
A holistic, enterprise-wide approach to energy management bundles efficiency, generation, and sustainability solutions together, aligning corporate business objectives with facility-level operations to maximize results. For example, multi-site organizations can leverage the benefits of bulk purchasing to improve project performance and reduce implementation costs. Grouping projects that require fewer upgrades and deliver immediate savings with more extensive projects that tend to have longer ROIs allows companies to achieve more, while still providing a favorable ROI for stakeholders. The same principle applies to bundling new equipment purchases with software implementations and coordinating energy efficiency projects with other infrastructure upgrades.
Considerable research has been done on best practices for effective implementation of enterprise-wide energy management strategies. The steps outlined below describe the tactics various multi-site organizations have used to maximize results and minimize risk.
1. Secure organization-wide buy-in
The first step on the road to effective energy management is to identify and engage key executives and stakeholders from all levels of the business. When executives and stakeholders have clear information about energy inefficiencies within their portfolio of buildings, and are offered solutions to track and improve performance, they are more likely to support and champion an enterprise-wide efficiency plan.
Once stakeholder approval is secured, organizations should assemble a cross-functional team of employees. This team will be responsible for developing the company’s energy management strategy and guiding implementation.
2. Reward Success
To be successful, enterprise-wide energy management needs to be an operational priority. Effectively communicating how energy management will benefit the company, employees and the community, and providing training on new practices and procedures outlined in the plan, helps boost support for initiatives and ensure greater success. Organizations should keep employees informed on progress against established goals. – and milestones achieved should be celebrated.
Incentives, based on pre-determined key performance indicators, should be developed to motivate all employees to embrace the team’s energy management strategies. For example, GE conducts “treasure hunts” where employees participate in organized facility ‘hunts’ to uncover energy and other resource waste and recommend possible improvements. To date, the Treasure Hunts have resulted in $150 million in savings.
3. Benchmark energy use for every building
Many companies across the U.S. lack a clear understanding of exactly how much energy they consume and waste – and the vast majority lack the systems needed for accessing energy data in real-time, and in a form that provides actionable information. Monitoring and analyzing energy use at different sites will reveal operating issues that affect costs, performance, and quality. Establishing a baseline against which future reductions will be measured is an important first step in tracking progress. This benchmarking should include an analysis of the following:
- How much energy does each building/site currently consume
- The cost of energy for each building and the total cost to the organization
- The effect that the total cost of energy has on other financial indicators such as the company’s cost of goods and services
- Is the organization taking advantage of renewables and federal/state-issued incentives
- The organization’s current carbon footprint. And, how does that footprint align with customer and investor expectations?
4. Link energy management goals to high-level organization goals
Strategic energy management is rarely an end in and of itself. Rather, organizations invest in energy management to further other business goals. Accordingly, it’s important to align energy management efforts with high-level business objectives. The goals established by the energy management team will, naturally, vary by organization. But, generally, specific goals are set for each building (or building type group) and tend to include all or any of the following:
- Decrease energy use by X% over the next X years
- Reduce energy costs by X% over the next X months
- Increase renewable energy production by X%
- Reduce maintenance costs by X%
- Reduce downtime by X%
- Reduce greenhouse gas emissions by X% over the next X years
Goals should be realistic, assignable, time-bound, and measurable. Many organizations find it useful to establish two-goal parameters: threshold goals define the minimum acceptable level of performance, and stretch goals define levels that exceed the minimum. Stretch goals are normally used as an added incentive for greater achievement.
More and more companies are also requiring that their suppliers commit to meeting their efficiency goals as well.
5. Develop an energy management action plan
Once the organization has a clear understanding of current energy use, waste and impacts, it can develop an action plan for achieving the approved goals. The strategic planning process should begin with both opportunity and organizational assessments. While the opportunity assessment quantifies potential energy efficiency and generation opportunities the organizational assessment appraises the capacity of the company to effectively implement the action plan. This combination of assessments ensures that goals are effectively quantified and assigned. Strengths, weaknesses, opportunities and, external challenges should also be included.
Organizations should also determine the degree to which consultants, service providers, vendors, and other product providers will be used. Some organizations may choose to outsource entire aspects of their action plan, while others may only want to contract with specific vendors for limited projects.
The plan should detail an integrated approach to achieving all energy management goals, including short- and long-term reduction and generation strategies. Many organization find it helpful to divide the action plan into four primary parts:
- Specific, measurable goals and objectives to be achieved within a specific time frame
- A listing of the individual initiatives aimed at achieving those objectives
- Recommended strategies for ensuring specific initiatives are be maintained over time
Specific metrics for measuring the effectiveness of each initiative.
6. Integrate Energy Procurement and Management
Most multi-site organizations recognize the risks associated with relying on a single source of energy to run their operations. Despite this many still use a siloed approach toward energy management. Separate departments exist to manage procurement and sustainability. There is no cohesive strategy for buying, managing and monitoring energy. An integrated energy management strategy can help companies make the most of their efforts by merging procurement with sustainability.
7. Consider a pilot project
Beginning the process with a pilot project helps organizations test and evaluate the results of proposed energy management strategies on a manageable scale, thereby minimizing risk. Testing strategies on one building or site will provide the energy team to examine the benefits and value of every recommended strategy and uncover any unexpected results or complications. Naturally, if the results of the pilot are good, stakeholders are more likely to approve enterprise-wide implementation.
8. Group Similar Buildings
Empower individual sites to identify building-specific challenges and energy savings opportunities. Look for common denominators, and group buildings together that will benefit from similar efficiency and procurement solutions. Enterprise deployment of successful efficiency upgrades shortens timelines and increases the scale of energy savings, especially in homogenous portfolios.
9.Integrate renewable energy
Solar power is a renewable source of energy generation that works by absorbing sunlight and converting it into electricity. Installing solar photovoltaic (PV) panels enables businesses to unlock value from existing assets like their roof, parking lot, or ground space and generate their own efficient energy supply instead of drawing more expensive energy from the grid.
The power that the solar PV panels generate can be used directly onsite, stored for later use to lower energy costs during peak times or, in some cases, fed back into the grid to create an additional revenue stream. This power is 100% sustainable, reliable, and cost-effective – ideal for organizations that want to reduce both energy costs and carbon emissions. Consider the benefits solar can deliver to your organization:
- Lower electricity costs by reducing your organization’s electricity consumption from the grid.
- Reduced reliance on the grid by generating your own electricity on-site, regardless of the weather conditions.
- Improved budget stability through predictable electricity costs and accurate forecasting of operating expenses.
- Increased revenue by selling excess solar energy to the grid through programs like net metering.
- Reduced demand costs by using stored solar energy when charges increase and can be up to half of your bill.
Organizations that fail to incorporate renewables and other energy-saving technologies are overlooking important benefits and exposing themselves to an array of risks.
10. Prioritize and bundle initiatives
Evaluate the costs versus benefits of all energy management options (energy efficiency, renewable energy generation, energy storage, etc.) and prioritize based on those that save the most money at the lowest cost. Bundle longer-payback efficiency projects with shorter-payback projects to get deeper energy savings with more favorable returns.
11. Explore new funding options
While the cost of clean energy technology is falling, and the benefits of enterprise-wide energy management are obvious, it’s not always easy for organizations to make the commitment. Doing so requires a sophisticated understanding of the financial and risk implications of various purchasing options. Fortunately, there are a wide variety of funding options available now, such as Power Purchase Agreements, Energy Performance Contracts, and Energy-as-a-Service options that supplement or eliminate capital investments and mitigate financial risk.
Now's the time
Until recently, energy management solutions for commercial buildings have been complex, costly and disruptive to daily business operations. Committing to an enterprise-wide energy management strategy was hindered by complex organizational structures, lack of human resources, technical expertise, and limited access to capital. Even when capital was available, it could be difficult to gain stakeholder buy-in for energy efficiency projects over other competing business priorities. The result was that many large companies have taken a project-by-project approach to energy management which, unfortunately, just isn’t efficient.
Fortunately, new energy management technologies and funding options can reduce or eliminate those obstacles. In fact, optimizing energy performance can open up new cash flows, as opposed to draining existing ones.