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Savings Sans Capital Expenditures Purchasing Strategies and Administrative Vigilance Deliver Energy Payoffs
November, 2008
By Ryan Lang
Through the LEED (Leadership in Energy and Environmental Design) certification process a building can be built extremely well, while taking into account energy efficiency and conservation. With appropriate retrofits, almost any building can incorporate variable speed drives, lowered lighting power density, higher thermal resistance through the roof and walls, and other projects aimed at reducing energy demand and consumption.
Nevertheless, physical and technological attributes must be in harmony with one of the most prominent aspects of energy management - purchasing it effectively. Obviously it's impressive if an organization can save thousands of kilowatt-hours or cubic metres of natural gas, but savings can be squandered if energy is not purchased and managed correctly.
PLAN & PRIORITIZE
It's a good idea to begin with a plan encompassing energy data and supply management, equipment efficiency, facility efficiency and organizational integration. This is a vital document that will assist purchasers in creating a concrete action plan, leading to ongoing cost avoidance and/or savings.
In the past, it was not uncommon for managers to treat energy as a fixed cost. However, the deregulation of the energy markets across the nation has led to major price fluctuations. Treating energy as a variable cost will enhance budgeting and improve awareness of rising costs.
For example, customers still paying the price the gas utility dictates (which, on average, changes every three months) are likely not managing costs as proactively as possible. There are alternative options to purchase this commodity from other sources, or to purchase long-term and lock in prices.
If it were possible to know where the market would be in the future, all energy traders would be on the Forbes list of the 400 richest people. Obviously, no crystal ball exists, but certain products will provider budgeters with 100% certainty, while also capitalizing on market price declines.
Building a knowledge base about energy usage and the market will help support better energy management decisions. A lot of organizations have all kinds of energy information at their disposal. Unfortunately, it's either a) inaccessible to the people that need the information or b) not useful due to incomprehensible formatting.
Energy management strategies are most effective when everyone in the organization is on board. Organizations can successfully motivate their members by demonstrating the measurable benefits of company-wide involvement in energy reduction activities.
AUDITS UNDERPIN IMPROVEMENT
For this, energy audits are a must. Whether this is a simple walk-through or a more in-depth diagnostic audit of a particular area, it is an important function in identifying opportunities for savings.
Recommended solutions often include significant capital investment with long payback periods so it may not be surprising that more than 70% of audits end up on the shelf and are rarely acted upon. That could be a major lost opportunity since it has been proven that more than 50% of energy savings can be achieved without capital expenditure.
Potential energy-reducing activities can typically be categorized into three areas: processes, programs and projects. This can be further refined into five pursuits: energy data management; energy supply management; energy use in facilities; equipment efficiency; and organizational integration.
Processes are typically the so-called low-hanging fruit - solutions that are easy to recognize and can be performed quickly with little effort and no cost. Typical savings are in the 1-4% range. For example, monthly energy bills should be verified for accuracy by the people responsible for using the energy instead of the being sent directly to accounts payable. This simple exercise allows a company to assess and compare energy use within a facility and against other company facilities, outside competition and industry standards.
Programs are no-cost to low-cost initiatives that may require a nominal amount of resources. Savings of 5 -10% are typical. This could be something like an update of operational procedures to include energy or begin to capture daily load profiles to evaluate energy use and cost.
Finally, projects are more time intensive and call for greater capital investment, but yield savings in the range of 10-25%. This might be sub-metering and energy management software to gain access to real-time data that reveals usage within facilities, systems and cost centres.
This kind of technological flexibility coupled with up-to-the-minute pricing information can be invaluable when deciding what to shutdown if prices reach a certain predetermined threshold. In addition, by getting tenants involved, the potential for increased savings rises exponentially. It's been proven that if energy is charged to those who consume it, energy reductions of 10-25% are not unreasonable.
REVIEW & REASSESS
Energy plans should be regularly reviewed and reassessed to determine strengths and weaknesses and uncover new areas that need to be addressed. It is a live document that must respond to a changing market so it must be updated frequently to ensure continuous improvement.
Kick-starting the implementation of an energy plan should be coupled with an employee awareness program. Having the right information is key to any successful initiative, but having the information in the right hands is paramount. Within an organization, many people know how much energy costs, but don't know how much is used. On the flip side, some may know how much is being used, but be largely oblivious to the costs.
Ryan Lang is a Project Manager with 360 Energy Inc., an energy management consulting firm providing procurement, sustainable energy planning, energy reporting and energy efficiency services. For more information, see the web site at www.360energy.net.
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