Is Strategic Energy Management Going Mainstream?

04.15.13

This January the American Council for an Energy Efficient Economy (ACEEE) published The Frontier of Energy Efficiency: Next Generation Programs Reach for High Energy Savings. In my view, this paper hits the nail on the head. When it comes to energy efficiency, the smart money is being invested in programs that dare to venture beyond simple widget-based rebates. In cataloguing dozens of leading-edge programs around North America, the paper describes a landscape of innovation and nuanced market understanding that is unlocking vast reserves of efficiency potential.

As a designer and implementer of some of these advanced programs, I can attest to the rapidly changing landscape in energy efficiency programs. According to ACEEE, “the common thread of next generation programs is high performance. By applying advances in technologies, marketing, and program design, next generation programs are capable of reaching greater numbers of customers and achieving high savings.”

Challenges for Adopting Strategic Energy Management-like Programs

Utilities and public-purpose organizations have begun to recognize the impressive cost advantage that process improvement and strategic energy management (SEM) programs have. Performance-based incentives targeting O&M energy savings are working. Programs like SEM are generating real and lasting savings because they marry engineering analysis and the next generation of Energy Information Systems (EIS) with end-user organizational development.

However, the authors point out several challenges around industrial program evaluation that we, at Cascade, have also observed:

  1. The long lead times that industrial energy efficiency projects require, can result in loss of corporate memory of program history. This makes it that much more challenging for program participants to accurately recall why they chose to make certain investments, long after the projects were implemented.
  2. The complexity of industrial processes and the many ways energy is consumed as products are produced can make the quantification of true energy savings difficult.
  3. The lack of industrial energy baselines can make the impact of SEM programs difficult to assess.

In our nearly 20 years of administering scores of industrial energy efficiency utility programs and hundreds of corporate-direct contracts, we’ve seen far too many end-users stumble as their energy programs leave the starting gates. Without an effective means of managing energy projects, end-users often failed to gain momentum.

Tools that Aid Strategic Energy Management

This is one of the reasons why end-users should be equipped with next generation EIS platforms. End users need a tool that manages energy activities, enables strategic energy management systems, and gives utilities the visibility necessary for well-timed interventions.

However, effective project management is not enough. Next generation EIS platforms must possess the functionality to track and quantify the savings accrued from both technical and organizational changes. This can be achieved through carefully designed metering plans, sophisticated statistical modeling, and an innovative approach to assessing and tracking organizational change.

Energy Management Assessments (EMA) need to address the third challenge outlined in the paper. EMAs should quantify an end-user’s ability to manage energy according to SEM best practices. EMAs must be accurate in order to be trusted. Many EMAS that are currently on the market are limited in their scope and perspective.

Transition to the Innovative 

My prediction is ACEEE’s paper will serve as a landmark in the history of utility energy efficiency programs. It marks the transition from simple rebate-driven programs to integrated, market savvy programs that rely on a variety of innovations to unlock the full efficiency potential of their end-users’ facilities. Programs like SEM will not only open up O&M opportunities, they will feed the pipeline of traditional capital projects while improving customer satisfaction and respecting program budgets.

Martin Lott

Martin Lott

Martin joined Cascade in 2012 to further his career in energy efficiency program design, market analysis, and strategic energy management implementation. He has been a key innovator in the field of energy management by combining sophisticated energy modeling with leading-edge change management theory, and superior customer service. Martin’s current focus at Cascade is on addressing the needs of underserved markets by providing advances in energy monitoring and innovative market strategies. Martin has a BS in mechanical engineering and an MA in business administration. He worked in the nuclear industry before moving to emerging technology start-ups and on to energy efficiency. He is a Certified Energy Manager with the Association of Energy Engineers.

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