Energy spend can have a dramatic impact on the bottom line, especially where operating margins are tight. Energy usage and building control data can prove a gold mine of information when harnessed in the right way.
Efficiency and sustainability are critical to businesses today. Rising energy bills, greater price volatility, and stricter regulation concerning energy consumption and carbon emissions are familiar challenges, all adding unpredictability to the cost base. This has ensured energy management is a strategic priority for any business operating multiple sites in the retail, industrial or commercial sector.
Conventional approaches to energy management use meter readings, analytics and reporting to verify billing accuracy and to forecast demand so that energy is procured at a better price point. Although many businesses have successfully achieved a basic level of cost savings year on year as a result, the challenge now is to fine tune to ensure these savings are sustainable and prevent ‘savings drift’ whereby initial efficiency gains are gradually lost due to lack of staff engagement.
At the same time, businesses are taking simple steps to improve the energy efficiency of their sites. Given that buildings represent 32 per cent of total final energy consumption (according to the IEA), typical measures tend to include ensuring lights and heating, ventilation, and air conditioning (HVAC) are switched off outside of business hours. Investing in energy-efficient equipment with low carbon footprints, and implementing building control systems are all important contributors to trimming energy use. However, major benefits can be derived from more detailed and focused management of energy consumption generating significantly more savings.
Ask any store manager where they believe they can save energy and they immediately look up at the lights. Likewise, energy managers diligently monitor usage and bills to bolster their negotiating position with suppliers, but they lack the tools to drill into exactly how, where and why energy is consumed throughout the enterprise. Whilst these are tangible energy saving efforts they are neither focused or managed leading to a guaranteed and sustainable energy reduction program.
What lies beneath
Focusing on energy procurement rather than the causes of inefficiency is false economy. It’s like driving around to find the lowest price for fuel but not servicing the car regularly. A small saving is made on the fuel purchase, but the benefit is lost because more fuel has been burned as a result of the engine running inefficiently.
There are many instances of this disconnect between cost and efficiency within commercial premises. For example, the main operational criterion for refrigeration units (one of the greatest consumers of energy) is to keep goods at a certain temperature to comply with food safety standards. Sensors monitor the units to ensure that the correct temperature is being maintained, but the data from these sensors will not show whether the unit is consuming more energy than it should.
For example, refrigeration units often become stressed due to a faulty pump or blocked ventilation grill, but if their energy consumption is not being monitored locally, the fault would only become apparent when the unit is serviced. Since it is unlikely that the fault would be reported to the energy manager, it becomes a hidden energy cost for the business in addition to an increase in lifecycle cost due to energy inefficiency.
Another common scenario is where automated HVAC controls are overridden in response to sudden changes in the weather, only for staff to forget to enable them again once conditions return to normal. If this scenario is repeated across hundreds of sites for any length of time, the cost to the business can be substantial. Research by the UK’s Carbon Trust suggests that up to 90 per cent of HVAC building control systems are inadequate in some way, costing industry and commerce more than €580 million per year in additional energy costs.
Turning static data into actionable intelligence
Businesses with multiple sites will have hundreds if not thousands of points measuring electricity, gas, and water consumption. They will also employ controls to manage the operation of building services such as HVAC, lighting, and water, while some also have more advanced asset management software in place to help optimize asset lifecycles. These systems generate vast volumes of data, but are typically operated in silos, resulting in a lack of visibility across the site estate.
Despite the fact that building controls and asset management systems were never intended for logging consumption data specifically, the information stored within these systems can provide telling insights into the inner workings of a business. For example, what the building temperature was at an individual site at a specific time and on a particular day, whether equipment has been left on overnight, or where automatic HVAC controls have been overridden.
Similarly, asset management systems contain a wealth of information such as whether the filters on refrigeration units have been cleaned, how regularly coolant is being topped up, and whether the sensors fitted to the refrigerator doors to detect how long they are being left open for are being serviced regularly. Businesses that have been using these types of systems for many years are sitting on vast data mines relating to their energy usage and physical assets.
Correlating energy data across assets gives businesses an opportunity to make informed decisions on how to manage from an energy and ultimately cost perspective. Many companies are now in a position to make operational decisions from an energy usage perspective, a very important approach to reducing cost in the business.
Advanced energy management systems have therefore evolved to combine, standardize and analyze this data in a user-friendly way. They employ easy to understand graphical dashboards that allow users to cross-reference a rise in energy consumption – known as an energy exception – with building controls and asset information, in order to identify the root cause and decide on a response or action. In other words, energy management has gone from being an information-based analytical platform, to a more action-orientated intelligence platform.
Tracking and sustainability
Energy dashboards include an array of options for compiling and presenting information to enable companies to view and track energy performance at asset, site or estate level. They allow staff to track and benchmark the energy performance of their site against multiple locations in their region. Are they in the top or bottom 10? Knowing where you stand in comparison to your peers drives behavior and attitude towards energy management. KPI selection criteria are available including comparison of similar-sized locations, performance against previous years or normalization parameters such as store size, footfall or outside temperature. Moreover, the fact that energy management information can now be accessed from almost any device at any time empowers staff to become the energy manager at their own site or store.
With this level of global visibility, users are able to unlock the hidden patterns in their organization’s energy consumption and improve business performance. They can uncover both major areas for change and the granular details where individual actions can make a big difference. For example, identifying that the reason for a rise in energy consumption is due to doors on the refrigerators being left open for 60 hours in the last week rather than the usual 45 hours, and asking staff to ensure they are kept closed.
Gathering diagnostic data from an end location, combining it with other information to create an energy exception, and then providing a set of actions according to asset type provides users with a much more intensive and interactive energy management engagement than conventional systems. This is essential to achieving sustainable savings, since real-world experience shows that efficiency programs lose momentum without constant attention and savings can dip by 2-4 per cent annually as a result.
Keeping track of actions and outcomes is also vital to sustaining energy savings. This is why businesses need to ensure that energy management is accompanied by project tracking tools that can quantify success and ensure continuous savings are made. This is particularly important in tracking ROI where large capital investments have been made in projects with forecasted efficiency savings.
Why it pays to be a bean counter
Energy management touches many different areas and innovation continues at pace. Some organizations are providing energy data on flat screen TVs in staff areas, and making graphs and metrics available on mobile and tablet devices to help individual workers, store managers and business units work together to achieve a sustainable energy reduction programme.
Priorities differ according to local market needs, but the primary goal for businesses is to mitigate the impact of energy cost on profit margins and minimize financial risk. Those that have not yet implemented an energy management program can achieve significant savings straight off. A fashion retailer in Europe has realised savings of just over 5 per cent on a five-store pilot, simply by ensuring that the lighting and air conditioning was switched off out of hours, something that only became visible from the energy profile. Following full implementation, payback was achieved in less than 12 months.
Such efficiency gains can have a direct impact on the bottom line for established companies with energy management aspirations; with energy costs generally tracking a company’s size, savings can run into € multi-millions.
Think about it, save a €1,000 of your energy bill and with an operating margin of 2% it’s equivalent to having to sell €50,000 of merchandise. Imagine asking a store manager to deliver additional sales of this magnitude or focus on engaging staff with energy saving measures using dashboards. One retailer did exactly this, deploying across 2,000 stores and delivering savings in the region of 1.5-2.5 per cent.
There are plenty of additional opportunities to be found using an action-orientated and joined-up approach to energy management. There are advanced users who are currently working at a 25-30 per cent energy reduction on their baseline through actions they have taken over a number of years. Others are successfully extending the lifecycle of assets and maximizing the efficiency of their maintenance contracts using the energy intelligence their systems provide.
Businesses have traditionally approached energy consumption as a fixed overhead, but the real opportunities lie in approaching it as a variable cost that can be tightly controlled to increase the competitiveness and effectiveness of operations and the business as a whole.
Spencer Rigler is responsible for Energy Management globally within Elster. Elster is a world leader in Energy Management and Smart Grid solutions delivering a comprehensive portfolio of products and services to organizations across the globe.
Spencer has over 20 years’ experience within the telco and energy sectors where he has held positions in Asia and Europe. Spencer now works internationally with corporates providing energy management solutions enabling visibility and actions to reduce energy and waste and ultimately cost and carbon output across their business.