Energy- it’s what keeps the manufacturing process and plant equipment going, the computers powered and even keeps the lights on. Energy production to run production facilities is one of the biggest expenses operators face…as high as 40% in some industries. And yet, in many cases, no one at the executive level is in charge of it.
There are major benefits to have energy management as part of the C-Suite decision making. And that is how the other “CEO” – namely the Chief Energy Officer – can serve an important role for the Board of Directors, stakeholders, the C-Suite, and the overall business. Energy management is, and should continue to be, a strategic priority for businesses.
Studies show that for Top Quartile Performance energy managers, a properly managed Energy Management Information System (EMIS) can result in energy cost savings of 5 to 15 percent, which can equate to millions of dollars saved annually. Best-in-class performers achieved 13 percent year-over-year reduction in energy consumption and 12 percent improvement in operating margin, while laggards suffered 17 percent increase in energy consumption and 2.5 percent decrease in operating margin.
These types of systems help manage energy across different plants, buildings, and other energy sites with real-time information. This timely evaluation of energy use can identify intermittent patterns or gradual changes that indicate opportunities for reducing energy consumption.
Typically, energy systems are managed on a plant-by-plant basis. However, corporate ownership of plants has been consolidated through acquisitions. Enterprise-wide management approaches make sense for several business areas from HR and financial departments, to risk management and occupational safety. Energy management can and should follow suit.
The Business Roundtable previously conducted a study of the different energy management approaches to better understand more about energy systems and its connection with the C-Suite. This study examined initiatives involving sustainability, energy efficiency, traditional energy production and renewable energy, to name a few. It cited studies from the Rockefeller Foundation and Electric Power Research Institute on the large amount of energy savings that can be gained through energy efficiency retrofits. This Business Roundtable study also provided policy recommendations to improve energy efficiency innovation, including on the need for research on cost-effective technologies.
Having an EMIS in place fosters growth with financial and environmental payoffs. An enterprise-wide energy management approach can provide a substantial return on assets. Energy managed across all facilities can build and support energy-saving behaviors while also tapping into an aligned business corporate culture. By appointing a Chief Energy Officer, there are opportunities to:
- Establish and maintain site energy targets
- Gain better visibility with site energy performance
- Share information on energy performance with key stakeholders
For example, a paper and pulp mill worked with Emerson to better understand its energy usage and to identify ways to improve efficiency. The mill’s team harnessed wireless technology from Emerson and was able to reduce energy demands with this technology, resulting in a savings of $350,000 for the first year.
With the “other CEO” in place, it is possible to achieve solutions to existing and potential energy problems. While the path ahead isn’t easy, with the help of energy management leaders, there are approaches to anticipate and plan for energy price increases, environmental regulations, and operating cost reduction. The energy leader will help support the path to better energy management with an enterprise-wide energy standard. Strengthening the connection between energy management and the C-Suite through an enterprise energy management system can help benefit the bottom line by optimizing assets and saving money on energy costs.