Energy management

Are you managing your business’s energy effectively? Image by Charles Crosbie via Flickr.

Posted by Lauren Pope

Why bother with energy management?

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Wasting energy is wasting money. For every £1 saved on energy costs, most UK businesses would have to make £10 worth of sales to generate the same £1 of profit, according to Carbon Trust calculations. ”

So if poor energy management is wasting a business £1,000 – whether that’s because of being ignorant about where you use it or even a bad business buying decision – that business would have to make £10,000 worth of sales to make back an equivalent £1,000 in profit.

As well as the direct effect on the bottom line, of course, there’s the environment and your business reputation to consider. If you’re wasting energy, you’re causing pollution that could be avoided – mostly through increased CO2 emissions – and this drives climate change and contribute to the problems associated with dwindling fossil fuel reserves.

There is increasing pressure from rising energy prices, climate change legislation and the need to be seen to be environmentally responsible by customers and stakeholders.

A good starting point for energy management is to adopt the Low Carbon Hierarchy, an approach favoured by the Carbon Trust and adopted by many local government bodies.

The Low Carbon Hierarchy

Reduce energy use by both cutting down use and putting energy efficiency measures in place. This should include the design of all goods and services and also the entire supply chain.
Where possible, replace fossil fuels with renewable energy and/or use cleaner fossil fuel technology such as Combined Heat and Power (CHP).
Finally, having reduced carbon emissions by reducing waste, energy efficiency and by using renewable and cleaner sources of energy, neutralise the remaining unavoidable emissions through carbon offsetting schemes.

A good starting point for energy management is to adopt the Low Carbon Hierarchy.

The five steps of effective energy management

Saving energy saves you money; it’s the kind of cost cutting that makes good business sense. To really make an impact on your energy usage, you need to take a structured approach that reaches every corner of your business.

The Government Office for the South West and the Carbon Trust used a simple five step plan, which is easily scalable according to the size of your organisation.

The five steps

Commitment
Understand (establish the facts)
Plan and organise
Act
Control, monitor and review

Step 1: Commitment

Making energy efficiency part of company policy (whether that’s as part of procurement or corporate social responsibility doesn’t matter) will demonstrate senior management's commitment to energy efficiency.

Following this, having an 'energy champion' is crucial. And it’s also crucial that this champion has the support of top management and all necessary resources to be effective.

According to the Carbon Trust approach, the energy champion should:

be the firm's eyes and ears for energy wastage;
be responsible for reading meters and checking fuel bills;
develop a weekly or monthly checklist of duties;
consider forming an action team to report on progress to stimulate further action.

Step 2: Understand (establish the facts)

As the Carbon Trust says, the adage ‘You can't manage what you don't measure’ is especially true for energy management. Invoices alone don’t give enough data to take full control over energy costs.

They suggest regular and frequent meter readings in order to:

spot extraordinary consumption and get to the causes quickly;
check invoices and make sure that you only pay for the fuel actually used;
compare current data with records;
compare all your sites, processes or buildings;
benchmark similar businesses;
look for any seasonal patterns.

Taking these steps will help set improvement targets and pinpoint the areas with the greatest potential for saving energy.

How often you take meter readings depends on how much energy you used, but as a general rule, readings should be monthly if invoicing is quarterly and weekly if invoicing is monthly. And it’s important to take readings at the same time of day and day of the week, particularly if the reading is weekly. Energy use can then be displayed in a graph, which makes makes it easier to detect trends and spot exceptional consumption.

For electricity, there are several ways of paying less for each unit of electricity. These include, for example:

optimise use of cheaper units, especially night-time units;
minimise use of peak rate winter units;
if possible, reduce peak demand;
check the tariffs. If your maximum demand is more than 100kW think of negotiating a contract. Less than 100kW means a standard tariff but there is a wide range, so it’s still worthwhile getting into a conversation with your supplier.
it’s also worth checking with the supplier that there are no unusual characteristics such as a low power factor.

Some fuels and energy sources can reduce your liability for the Climate Change Levy. These include opting for renewable energy sources and, if there’s enough demand for heat, Combined Heat and Power.

Step 3: Plan and organise

As we’ve said, getting the buy-in of the whole organisation is step 1. In smaller businesses this might start and finish with the owner, so all that’s needed is a simple policy statement setting out the main objectives, together with the performance targets that need to be met.

Once objectives and targets are decided upon, a plan of action is needed. Borrowing from the Carbon Trust, “a good action plan should:

have management approval;
relate actions to particular objectives;
assign actions to individuals;
allocate resources to each improvement.

Making people accountable can be the difference between success and failure. If different business units are required to account for the energy use in their areas, they will have an incentive to practice good housekeeping and to implement energy-saving measures. You might even want to set up an internal league to incentivise local ownership.

Another important tip is to raise staff awareness. Although the energy champion has overall responsibility for energy efficiency, the involvement and commitment of all staff is crucial to achieve success, so appointing local champions can help.

Whether it’s through the noticeboard or the intranet, by incentive schemes or poster campaigns, if the whole team is behind an energy-efficient culture, the greater the chance to succeed.

Step 4: Act

A good way of identifying waste initially is to stage an energy walkabout.

The usage patterns use will vary throughout the day, so vary walkabout times to match, for example:

when the cleaners are in;
at lunch;
at night or over weekends (if your meter readings indicate that there is unexpectedly high energy use during these periods).

From these walks, identify where energy is being wasted and the possible reason. Is it a lack understanding, are procedures being overlooked, is repair or necessary to reduce energy costs, or there is a need for capital investment, for example?

Step 5: Control, monitor & review

Energy management should be a process of continuous control and improvement, not a one-off blitz.

In order to identify further areas to work on and to check that targets are being met it’s important to set up recording and monitoring systems.

Use Step 2 to watch progress and compare results with targets and performance indicators. Monitoring and Targeting (M&T) – the process of continuous recording and monitoring of energy use against consumption targets – has been shown to be an effective management tool in many organisations.

Once companies do stop monitoring their energy regularly, however, slippage sets in and, waste starts to occur – often at least 10% in a relatively short time – largely because problems arise (failed or wrongly set controls perhaps) , procedures change and the effect on energy consumption goes unnoticed or unexplained.

M&T is not a substitute for steps 1-4, though it can offer useful information when implementing these steps. Where there’s already an information-based quality improvement programme already in place, energy M&T most probably share data, for example from the management information systems.

Energy management tools

Most business energy suppliers offer energy management tools and products, so first stop should be your own supplier.

Additionally, there are an increasing number of energy management applications on the market. Research from independent sustainability analyst, Verdantix, identifies the following 10 providers as leaders in this field:

CA Technologies – http://www.ca.com/us/default.aspx
CarbonSystems – http://www.globalcarbonsystems.com/
Enablon – http://enablon.com/home.aspx
Enviance – http://www.enviance.com/index.aspx
Hara – http://www.hara.com/
IHS – http://www.ihs.com/products/oil-gas-information/index.aspx
ProcessMap – http://www.processmap.com/
SAP – http://www.sap.com/index.epx
TRIRIGA – http://www-01.ibm.com/software/tivoli/welcome/tririga/
Verisae – http://www.verisae.com/

Verdantix used live product demonstrations of about 28 different applications to create this list, and more than 99 different assessment criteria were considered. Those applications were picked from suppliers that had at least five named customers from the enterprise business category (companies with more than $1 billion in revenue).

Ask the experts

If you want more advice or guidance on energy management, we suggest you contact:

The Carbon Trust – an independent body that provides advice to businesses and the public sector on energy management. As well as a series of guides and publications on energy management, they can also offer help on getting employees on board. For energy management reports and publications, go to:
The South West Energy Management and Environmental Groups are independent organisations serving industry, commerce and the public sector. In conjunction with the Carbon Trust, they have produced a comprehensive energy management guide, which can be downloaded at:
A transatlantic flavour of advice is available from Energy Star, a joint programme of the US Environmental Protection Agency and the US Department of Energy that offers energy and money saving products and practices at: