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March 28, 2016

Sustainability and the Energy Manager

By Edison Energy

Sustainability has become an increasingly important business goal to many large commercial, industrial, and institutional energy users, and that conversation is focused more and more explicitly around the impacts and opportunities of how companies source and manage energy. This is providing energy managers with both new challenges as well as unprecedented opportunities to provide bottom-line value to their organizations.

The number of companies engaging around sustainable energy — renewable energy and energy efficiency — has exploded.

  • More than 450 companies — including a dozen from the Fortune 500 — have already moved to 100% renewable energy (Source: U.S. Environmental Protection Agency’s Green Power Partnership).
  • Through the RE100 Initiative, 100 of the world’s largest companies have committed to 100% renewable power by 2020.
  • In just the past 18 months, U.S. companies have executed more than 3 gigawatts of renewable energy power purchase agreements (PPAs).
  • More than 1,000 companies across the globe now put a price on carbon in their internal accounting (Source: Carbon Disclosure Project).

This interest is being driven by a combination of factors. Certainly, external stakeholder interest in sustainability and companies’ positions on climate change and climate change risk is at an all-time high. There were more shareholder resolutions advocating sustainability in 2015 than ever before according to E&E Publishing (3/9, Subscription Publication, 705).

The other major driver is economic- and risk-management value. Properly identified, evaluated and structured, renewable energy reduces electricity costs. Companies that are relying exclusively on grid-mix electricity are 100% exposed to volatility risk. Renewables offer long-term price stability and protection from utility-cost volatility.

The challenge for energy managers is how to deliver this new value while maintaining reliability and service. Energy managers have to evaluate and manage a wide array of new technologies and potential suppliers, a varying landscape of local utility and incentive markets, and a complex set of economic and risk analytics. Market research by ReD and others has helped describe this challenge:

We set this big audacious goal for sustainability and then found ourselves scrambling to find a way to achieve it.”
~ Energy manager, global financial company

Sustainability is a ‘black hole’.  We don’t know how to integrate it into our energy plan.”
~ Energy manager, high tech company

At Edison Energy, we’ve found that many companies appear to be struggling with how to rationalize these drivers and challenges into a forward-moving process. Fortunately, there are a few initial steps that energy managers can take to start driving towards solutions:

  1. Map out and build your internal team: Make a list of all the people and job titles that will be needed to execute a renewable energy process. Typically, this will include staff from Energy, Facilities, Sustainability, Finance, Operations, Legal, Tax/Accounting, and Procurement. While each stakeholder won’t need to be involved at each step, each stakeholder will have a role to play. Consider where each function will slot into the ultimate approval process. Engaging them early and often greatly increases successful outcomes.
  1. Gather your data: It will be helpful to have between 12-36 months of electricity and natural gas facility-level usage data. You need to know what you use, where you use it, and when.
  1. Understand company goals: Does your company have a greenhouse gas emissions goal? A renewable energy goal? Carbon Disclosure Project reporting? Cost control goals? Green Power Partnership rankings? Renewable energy will provide significant benefits across many of these. Knowing what goals are in place or may be pending will inform timing, scope and scale considerations.
  1. Consider on-site and off-site renewables: Start to consider your specific facilities portfolio early and think about what facilities may or may not work for on-site applications; leased v. owned space, roof condition, etc. This will help clarify some basic strategic blocking for your company’s renewables effort.
  1. Bring in specialized expertise: Very few energy users have the direct experience necessary to navigate the full suite of specialized requirements of project identification, analysis and execution. A renewable energy advisor service can greatly reduce execution risk while accelerating the implementation timeline.

We will be writing more on Sustainability and the Energy Manager here. We would love to hear your thoughts.

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