Energy consumption used to be viewed as a fixed cost and the domain of middle management but today’s rapidly changing business and energy landscape now requires attention at the C-level. Historically, leaders have viewed energy management as an endeavor that offered cost savings too small to impact the financial bottom line, but emerging technologies create potential for meaningful profitability in this common top-five corporate expense category. A strategic approach (or lack thereof) will impact a company’s cost structure, risk profile, and resilience.
Changing Landscape
Technological breakthroughs non-intrinsic to the energy industry such as big data analytics and connected devices provide heightened visibility and control over the performance of systems. Energy data is no longer limited to a monthly utility bill; real-time monitoring allows immediate insight into energy consumption and allows for action.
Beyond the broader trend towards improved monitoring, energy-specific technology has changed the industry in every aspect from production to consumption. First, the cost of renewables is decreasing and they are now easier to integrate both on and off-site. Incentivized financing means that companies can immediately start saving money by investing in renewable energy such as solar and wind. Energy markets are also evolving in substantial ways. Today there is increased flexibility in deregulated markets to negotiate with energy providers when procuring energy. In regulated markets, demand response programs, on-site generation, and storage technologies give customers options for when and how much energy to buy from the grid to avoid costly charges.
In addition to capitalizing on direct opportunities, there are also new risks introduced in the changing landscape which provide indirect business value if mitigated strategically. The rapid integration of renewables into the grid is driving structural changes in the baseload power mix, which can increase volatility in price and continuity. Improved data granularity allows utilities to offer new and more complex tariffs which may catch up to heavy users of energy during peak times. Alternatively, understanding these tariffs and shifting loads accordingly can provide cost savings especially when combined with new incentives and financing structures.
How to Respond
Acting on these changes requires a centralized data system that allows you to measure your current state and energy use patterns and seek opportunities to capitalize. Additionally, ownership of the energy strategy should be centralized and managed proactively just like every other major operational line item is managed. The strategy should be led at the C-level with common key performance metrics to create accountability and alignment between energy stakeholders such as operations, accounting, procurement, and sustainability. Achieving energy efficiency goals will require that each team has accurate data to make decisions and report progress across the enterprise.
Conclusion
Savvy organizations understand the value of energy and manage it proactively across the business from the top down. When a company is unified behind a common energy management strategy, they develop a competitive advantage to obtain higher profits, reduce risk, and heighten innovation capabilities. Those which see energy as just cost center are missing opportunities to improve performance and profit in the short, medium, and long terms.
For more information on how to strategize using an energy management system, contact info@energyhippo.com.
