Recently we have seen some very enthusiastic public statements from leaders in the business community voicing their continued commitment to lowering greenhouse emissions through the adoption of renewable energy and sustainability programs.
Beneath the headlines, what is driving our country’s largest energy users to adopt climate-friendly energy practices? Just ask the Energy Managers. They’re the ones tasked with managing the growing number of energy programs and initiatives for their companies.
Today’s increasingly complex and dynamic energy market can directly impact a company’s operational performance — and its bottom line. Energy risks abound and they often go unnoticed.
Why? Because most companies don’t have a holisitic approach to managing energy, nor the organizational model to benefit from a strategic view. And that means more changes ahead for the energy manager as companies broaden their focus beyond energy efficiency programs and start treating energy as the strategic asset it really is.
The role of the Energy Manager is more critical than ever. What began as the person responsible for interacting with the local utility for quality of service and delivery has evolved into a key leadership role with direct contact into the C-suite.
Factors driving this expanded role parallel a dynamically-changing energy industry, including regulatory changes across multiple regions and markets, supply and demand-side planning, sustainability programs, and new technology adoption to name just a few.
Let’s look at how this role has changed over time.
Energy Manager 1.0
Reflecting a simpler time, the central job function focused on interfacing with the local utility for service at the facility’s location. This decentralized approach left the Energy Manager fighting with other departments and regions for energy improvement budgets.
Energy Manager 2.0
Today, the role of Energy Manager has evolved into a more centralized function with the capability of providing a consolidated view of energy spending. According to the 2015 ReD Associates Energy Decisions Study, it is estimated that 73 percent of Fortune 500 companies have a centralized energy team, but this function still struggles with getting approval for cost-saving energy programs, since they must compete for capital programs with other core company functions.
The prevailing attitude remains that energy is not considered strategic to a company’s mission. Energy risks are not understood by key departments, such as Treasury, or by the CFO. Data is latent — or not available at all – that would enable companies to make more informed decisions that would in turn reduce energy risk and help meet sustainability goals.
Energy Manager 3.0
The Energy Manager’s role now takes on added significance within a company. The Energy Manager 3.0 is an active participant with the C-suite. Energy is treated as a strategic asset, and its use is viewed holistically:
- The organization is aligned to support an enterprise-wide view of energy;
- Data analytics inform the optimization of energy procurement, cost-saving programs, sustainability and resiliency programs; and,
- Energy supply, capital investments and operations are all aligned organizationally to optimize energy use throughout the company, in all of its diverse geographies and regions.
In fact, the Energy Manager title itself is now Chief Energy Officer, reporting directly to the CEO.
The energy market is undergoing profound structural changes. Companies are now exposed to an extremely balkanized, dynamic and even volatile energy market, for which most are ill-prepared. As a result, companies are falling behind the competition, spending too much for energy, cannot provide visibility for the investment community, and are losing an opportunity to create more brand equity and thought leadership. Something has to change.
This all circles back to the pubic aspirational statements by leaders in the business community on remaining steadfast in their commitment to meeting their GHG and sustainability goals, in spite of what happens in Washington.
Getting there will require changes in the way their companies procure, use and manage energy across their enterprise.
One thing we know for certain: the Energy Manager will play a critical role in helping to achieve these important goals.