By Rob Kerr, Executive Director, Development and Delivery of Total Energy and Environmental Management (TEEM) of Energy Advantage

You Can't Manage What You Don't Measure:

Successful and effective business and public-sector leaders have long understood the meaning of the old adage “you can’t manage what you don’t measure”.

This saying still holds in the rapidly developing discipline of total energy and environmental management. Many organizations are now struggling to elevate the procurement and utilization of energy to an enterprise level as a response to drivers such as energy commodity deregulation, ‘peak oil’, rapidly increasing energy prices and climate change. Furthermore, organizations are dealing with growing pressure from increasing environmental awareness among customer’s and investors and government-led energy and emissions compliance directives.

Energy data and information systems and processes are an important foundation for successful energy management planning, implementation and continual improvement. These systems are also consistent with continuous improvement approaches applied to other corporate priorities such as financial or inventory controls.

The collection and validation of data and information required for an effective energy management program can be a complex task which will only increase as energy end users face an increasing amount of energy-related data and information inputs. For example, deregulation of the natural gas and electricity markets has resulted in highly detailed energy bills. Deregulation has also provided consumers with an array of procurement options that stimulate as much confusion as they do opportunity. Likewise, the advent of electrical interval or “smart” meters, able to track electrical energy use in increments as small as five minutes, will add to the growing pool of data.

Organizations that do not adequately arm themselves with the data and information related to their energy use will not be able to track progress towards their goals and will end up working in an environment that lacks the transparency and accountability required to achieve success. They will also face the very real danger of doing business across the table from providers of energy commodity and energy efficiency technologies that are much more empowered with data and information.

But measuring alone will not achieve and maintain the results that are possible with a good energy management strategy and implementation. Energy-related information quickly loses its value in the absence of aligned management and administrative structures, designed to continually work towards energy management goals.

Why is energy management becoming an enterprise-level challenge? Why is it moving from a “technical” activity assigned to operational staff and moving firmly on to the agenda of CEO’s and CFO’s? There are a number of critical elements that make up a total energy and environmental management approach. The success in addressing each and every one of these elements relies on well-structured and maintained energy data and information systems and procedures.

Corporate Energy Committee:

In the same vein as well-known enterprise level corporate committees, the establishment of a Corporate Energy Committee is an important foundation for an optimal energy and environmental program. The Committee can also be the place where high-level, energy and environmentally related corporate concerns can be addressed, such as risk, image and compliance.

Energy is becoming a larger part of overall risk assessments because of price volatility, supply security and government compliance. The days of ‘greenwashing’ are over as consumers will demand detailed facts and figures and possibly third party verification and accreditation in support of such claims. Governments are getting serious about energy efficiency and greenhouse gas emission reductions, through Ontario’s Energy Efficiency Leadership Act within Bill 21, public agencies must report regularly on their energy use and conservation activities. All of these aspects demand significant data collection and manipulation and enterprise level decision-making.

Energy and Environmental Policy:

Organizations are often highly motivated to adopt energy efficiency and other green policies and promote them to the public. But in the absence of good data and information systems and organizational structures it is very difficult to assess the costs of implementing and maintaining these policies, thus undermining their effectiveness.

Energy and Emissions Baseline:

An energy and and emissions baseline report provides an overview of an organizations energy consumption, costs and emissions for a recent fiscal period and becomes a critical benchmark against which the success of of future energy and environmental policy and programs can be measured. The baseline is entirely dependant on data and information related facilities energy use, energy supplier information, water and treatment usage and relevant facility metrics which affect energy consumption and cost such as production data, hours of operation, facility area etc.

Opportunities Assessment:

A review of every facet of an organizations energy related operations addresses the gap between existing and best management practices. This includes financial, accounting, procurement operations, design, construction and environmental functions. In combination with the baseline report data and information, the opportunity assessment is used identify opportunities for energy efficiency and environmental improvement as well as the potential costs and benefits.

Strategic Plan:

The strategic plan sets out the corporate energy management objectives. It addresses the importance and impact of energy management on the company’s profitability, sustainability and, ultimately, its value. The plan outlines the framework in terms approach, resources, and timeline for implementation. Based on these strategic considerations, more detailed action plans can be developed for each area as described below.

Budget and incentives required to resource energy efficiency and environmental programs are reliant on high quality data and information systems. The budget is typically based on historical consumption and cost data from the baseline report. Access to government programs typically requires detailed analysis of expected results and reporting on the performance post-implementation.

Energy and emissions monitoring and reporting requires relevant data to be captured continuously monitored over time so that periodic reports can be prepared to show how the company is progressing towards its stated objectives and targets, and versus budget.

Diligent commodity management requires reliable data and information in support of monitoring developments in energy commodity markets, assessing direct purchasing strategies, and implementation and management of direct purchases.

Energy efficiency for existing facilities is a fundamental goal of total energy management. This typically involves employee awareness programs and capital expenditures to improve energy-using equipment and systems. Both approaches rely on well structured data systems to assess feasibility, prioritization, calculate paybacks and reporting on expected results.

Emissions and carbon offsets trading are critical components of the federal government’s Turning the Corner plan for emissions reductions. Over time, all organizations will be hampered from participating if they have not established rigorous energy and emissions accounting systems.

Conclusion:

All of the issues listed above, when considered as a whole, are critical management issues that cannot be properly addressed without the appropriate measurement tools and management processes.

“You can’t manage what you don’t measure” is much more than an overused cliché. Organizations that don’t embrace the challenge run the risk of being left behind in the emerging green economy.