From Stop-Gap Solutions to Long-Term Strategy: How to Fully Leverage Energy Efficiency and Keep Operating Costs Low

*this article has been adapted from our recent webinar in collaboration with the American Council for an Energy-Efficient Economy (ACEEE). If you’d like to watch the full webinar, you can do so HERE.

You’ve replaced your equipment with a more efficient model, so you’re done with energy efficiency, right?  

We hear this all the time. And we’re here to bust this myth.  

Energy efficiency does not stop with replacing your existing equipment with a more energy efficient option, whether that’s lightbulbs, boilers, refrigeration, or HVAC systems. Just purchasing more efficient equipment doesn’t necessarily ensure that it’s operating at the most efficient settings. Without optimizing the operational setpoints of the new equipment, you could be leaving significant savings opportunities on the table.   

Cutting energy waste is not a one-off initiative, but rather a continuous improvement program that achieves persistent cost savings and emissions reductions. This article will outline what gets missed when energy efficiency stops at equipment upgrades alone, what you can do to take your energy program to the next level, and what resources exist to help you along this journey. 

What gets missed with equipment replacement alone? 

Many organizations have been completing effective energy efficiency projects for years, whether that’s replacing their lighting with LED bulbs, upgrading the control system in their building, or installing variable frequency drives (VFDs) on motors. It’s understandable to think those are the opportunities, full stop. However, that’s just the tip of the iceberg, and the beauty of pursuing a broader approach to energy efficiency is that it not only reveals the opportunities under the surface, but it braces against more risks as well. 

For a long time, LED lighting projects were an energy efficiency slam dunk for electric utilities and their customers. What we’ve seen over the last five years or so, though, is that lighting standards in many places have caught up to the technology, utilities can’t incent companies for installing lights to-code, and realistically, most organizations have already replaced their lights with LEDs, so this reserve of projects has dried up anyway. Additionally, relying exclusively on capital investments for equipment replacement can be risky in a time of budget uncertainty. Optimizing your existing equipment is even more important when capital budgets are right. Organizations that do this well will come out on top.   

Additionally, without energy management practices to accompany your equipment replacement projects, you can risk losing out on the full value of that replacement. For example, if a maintenance supervisor installs a project that saves 10 kilowatts annually, and that project persists through 2050, the total impact from that relatively small change is going to be about $200,000 of energy cost savings. But let’s say the maintenance supervisor gets promoted after six months without documenting the new setpoint and after his departure, that key set point starts to drift. Without locking in that piece of the project, the replacement is no longer saving energy. 

The savings for those six months were $4,000, meaning $196,000 is at risk. The difference between a six-month project and a 25-year project is a challenge every single energy efficiency project faces. Because of this, instead of ad-hoc, project-level tactics, a more strategic approach is to apply a more holistic energy management process. 

Because buildings and facilities are dynamic, one-and-done replacement projects also often don’t take into account that the optimal energy efficient setpoint will change throughout the year based on weather, production, or occupancy factors. By broadening your approach to energy efficiency, you capture more opportunities, and you get the most out of your investments. This often looks like a continuous retro-commissioning approach within buildings or industrial facilities – reevaluating your energy-using systems throughout the year and ensuring they’re running as efficiently as possible all the time.  

“There’s always something to optimize and taking advantage of that and documenting that is very worthwhile,” said Joe Mihalcik, chief engineer supervisor for a 1-million square foot facility in Connecticut. 

Lastly, energy management helps brace against more macro-level risks as well. Current pressures such as significant load growth in the electricity sector, rising natural gas prices, and looming decarbonization regulations can all be mitigated through a more holistic perspective on energy management.  

Take the case of making progress on decarbonization. Creating a culture of energy management is a great starting point for a successful decarbonization strategy for three reasons:

1. Energy management puts processes in place to measure and report on energy performance, which directly ties to measuring and reporting on emissions performance, because Scope 2 emissions are typically dominated by utility-provided electricity. Setting up the infrastructure to report on these energy KPIs gives an immediate head start to measure emissions KPIs. (But, may we recommend you continue communicating to your teams in KPIs they already measure and have control over, like kWhs and therms, and you can convert the information to metric tons of CO2 for the audiences that understand and care about that.) 
2. Besides reporting processes, emissions reduction efforts require many of the same organizational processes as an energy management program. There’s a lot of stakeholders, competing priorities, complex systems, and multi-year planning, among others.  
3. There’s good consensus among experts that cutting energy waste is the most cost-effective way to start decarbonizing, and bundling energy efficiency with capital decarbonization projects takes you even further. Capital decarbonization projects like installing a heat pump can be difficult to justify economically on their own, but the math can work a lot better if you bundle it with energy efficiency. For example, optimizing the energy being used within the facility will allow you to select a smaller heat pump, which reduces your initial capital investment and lowers your operating costs. 

Taking your energy management program to the next level 

Given these risks and opportunities, building on existing energy efficiency efforts to create a full-fledged energy management program that supports continuous tracking, improvement, and persistence is paramount. Through working with corporations to create effective energy management programs for the last two decades, we have seen several strategies pay dividends.

1. Create an energy team. Establish a group of four to seven people who will lead, track, and champion energy activities to support accountability and persistence, and reward those members for their work. 
2. Get executive buy in. To secure financial support for energy projects and build a company culture that supports energy management efforts, there’s no better strategy than engaging and gaining support from leadership at the outset. 
3. Invest in training and workforce development for your staff. Participate in a utility strategic energy management (SEM) program, support your staff in gaining the Building Operator Certification, or pursue other training opportunities that increase the capacity of your team. 
4. Be intentional about persistence strategies. Energy savings will not persist on their own. You need a plan to make savings stick. This includes strategies like developing accountability for results, celebrating successes, establishing annual energy efficiency budgets, and paying attention to projects or processes you can replicate and implement elsewhere. 
5. Tie energy successes to core business goals. Make the case in the units that matter most – whether that’s tying energy efforts to operational cost reductions, emissions reductions, production increases, equipment lifespan, or employee quality of work – energy management efforts that are directly tied to core business goals have a greater chance of success. 

To see this in action, let’s look at what happened at the facility where Joe Mihalcik is chief building engineering supervisor: 

“When I first came here, energy management wasn’ta big thing even for the executive leadership team. Then, we kind of started this perpetual motion machine about saving energy.

We joined an SEM program through the local utility, we kind of usethat a starting point. We engaged everybody. We engaged our building engineers, we engaged our landscapers, we engaged our janitorial staff to look for any kind of energy savings, always asking‘hey, are we wasting something here?’

And sure enough, two months later, our landscape foreman came in and said, hey, we’re over watering this area. It’s not kilowatts, but we can save water there. Our janitorial staff who’s in the building at nighttime, they notice the areas where the lights aren’tshutting off.

We basically engaged everybody. I run a team of 11 guys – engineers, electricians, etc. – and they’re all energy people now. We would go on treasure hunts and then evolved it intowhoever came up with the best idea per quarter, we would give them a $100 gift card to engage them.

Six years later, we’re talking about energy literally here every day. Somebody’s bringing something up every day like, hey, what about this? It may not be kilowatts, maybe it’s water, maybe it’s some other type of waste. This summer, we participated in 40 demand response events and leadership saw the cost savings from that.

Like I said, every day here we’re talking about energy as compared to when I first started when nobody really wanted to hear anything about it.”

Resources to make it happen 

Whether you’re just starting out or have ongoing energy management efforts at your organization that you’re looking to improve, there are many resources available to help you along the way. 

1. The US Department of Energy’s 50001 standard and 50001 Ready program help organizations build a culture of structured energy improvement that does not require any external audits or certifications.
2. Research the energy efficiency incentives and programs available through your local electric and gas utilities. Utility programs will often fund or incentivize retro-commissioning and capital upgrades. 
3. State energy offices frequently have funding and resources available for energy management and energy efficiency efforts within the state. 
4. Industrial Assessment Centers at universities offer lower-cost or free resources to help private organizations with energy management projects. 
5. The Industrial Heat Pump Alliance is a collaboration between ACEEE, the National Electrical Manufacturers Association, and the Renewable Thermal Collaborative that helps organizations pursue industrial heat pump projects, including pre-installation energy efficiency and other engineering analysis to maximize the efficacy of any investment. 
6. The Renewable Thermal Collaborative is a global, buyer-led coalition focused on decarbonizing thermal energy with renewable solutions that provides additional resources. 
7. For emissions reporting and reduction support, look into the resources available from the leaders in your supply chain. Many of these companies, such as Walmart or Sysco, have resources to help the companies in their supply chain report and reduce their emissions, because it helps them address their own Scope 3 emissions. 
8. Outside consultants like Cascade can provide a variety of support, including connecting you with local utility programs and other financial resources as well as helping you devise an actionable energy management roadmap.  

Getting the most out of your energy efficiency projects requires keeping an open mind. It requires believing that there’s value in asking, what else could we do? What more is out there?  

Energy efficiency is a continuous improvement process where there are always new opportunities to find.  

Expand your opportunities and squash your risks. Reach out to us today to learn more about taking energy efficiency to the next level.