P.

BIRKELAND 2010-09-27

M a n a g e m e n t a s if E n e r g y
M a tte r e d
Paul Birkeland

 
 
 
Paul Birkeland is the  
founder and principal of  
Integrated Renewable  
Energy in Seattle. He  
develops Strategic Energy  
 
Management Systems for
 
government, commercial,  
and industrial organizations  
through Integrated  
Renewable Energy. Here he  
discusses the evolving sector  
 
of Energy Management   !
within business.  
  !
If your firm has navigated the  
recession this far, it’s a pretty good  
bet that you’re managing your
finances like a Border Collie does
his sheep. And I’m willing to guess released a report encouraging firms energy efficiency manifest in the
that your firm is also managing its to actively address their energy use organization’s operations. If done
workforce, its product inventory, or face devastating price spirals and properly, it can also energize your
and its materials inventory pretty uncertainty when the global economy workforce, and lead to organizational
closely. All these things matter to a more fully recovers. Their report said gains in reduced turnover, lower
firm’s viability. bluntly, “Businesses which prepare absenteeism, and higher productivity.
for and take advantage of the new
But I’m also willing to bet that one energy reality will prosper - failure to Many efficiency proponents believe
key facet of your firm’s operation is do so could be catastrophic.” that if you show the projected dollar
still escaping close scrutiny and savings or payback for energy
active management - your energy So what is Strategic Energy improvements, top managers will
use. This is a good bet because Management and how does one go accept these proposals. That’s not
strategic energy management is about it? always true. Organizational size and
just now maturing. Managers are complexity pose formidable hurdles
just now recognizing energy use as Strategic Energy Management is an to capturing efficiency opportunities.
something to be actively approach to proactively managing an Manufacturing enterprises have
addressed, an opportunity to organization’s energy use, and, more organizational structures,
become a proactive user of energy importantly, to bringing about change accountabilities, and incentives that
rather than a passive victim of within the organization so that energy are designed to make products and
energy bills. And the future is only awareness is a self-sustaining part of get them out the door, not reduce
going to amplify energy’s the culture. It is a way of making energy use.
importance to your bottom line. management’s commitment to

No less an authority on risk than

Lloyd’s of London recently
 
 P. BIRKELAND
While most companies will express
a desire to “reduce costs,” energy
inefficiency is not fully recognized
in day-to-day practice. Control of
energy waste requires cross-
functional authority and
communications that don’t exist in
most facilities. Given this reality,
energy waste often continues, no
matter how financially attractive a
project looks on paper. That’s
where a formal Strategic Energy
Management System comes in.
Energy management fits into each
firm’s management practices
differently, but there are some
basic components that you will
have to put in place.
• Management Commitment – It
all starts with a clear, written
commitment - to the program
and to specific goals - from
management, preferably as a
formal policy statement.
Management commitment
aligns departments and
liberates resources. It is the sin
qua non of Strategic Energy
Management components.
Management should also
publicly name an Energy
Leader. This need not be a full
time job, but the entire
organization should know who
the Leader is and what his or
her charge is.
• Energy Baseline – You will
need to access and analyze
your firm’s energy bills for at
least three years, more if you
can get them. You will need to
choose a baseline year for
some logical reason such as a
new facility, new equipment,
new processes, or whatever.
But your baseline needs to be
relevant to today’s operation.
• Energy Performance
Indicator – This is the most
technical aspect of energy
management, but a very
important one.
Using your baseline year, you
must derive an Energy
Performance Indicator, called
an EnPI. The EnPI is an
“energy intensity” value. That
means that it is the total
energy used divided by some
measure of your firm’s output,
usually cases or tonnes of
product. The reason for this is
that production variations will
totally mask your actual
progress on energy efficiency
if you don’t take them into
account. Tracking energy use
by itself is misleading. You
need to track your EnPI. You
will also need to take into
account the weather during
your baseline year since, for
example, a cold winter will
drive up your heating
requirement, and may even
impact your production energy
in some way. Weather, too,
masks your actual progress.
• Itemize, itemize, itemize -
Develop an ordered list of
Energy Usages based on
engineering estimates of the
amount of energy used by
various pieces of equipment.
You may want to submeter the
larger pieces of equipment, but
estimates can be made based
on electrical rating and use
profile. You can also develop a
list of Energy Opportunities
based upon an engineering
assessment of how easily a
given energy use can be
improved or a Return on
Investment (ROI) estimate.
This gives you your project line
up for the next year or so, and
should be updated
periodically.
• Engage Your Workforce –
Equipment uses energy, but
so do processes. And the best
way to tap into insight into your
processes is to engage your
workforce. Let me give you an
example. At one firm I know,
2010-09-27
they decided to save energy
by turning the thermostat down
in the plant. No surprise, they
received some complaints
from workers feeling cold. But
the facility engineer noticed
that all the complaints came
from about the same location
on the assembly line. Upon
talking with those individuals,
they found that it was not so
much the lower temperature,
as it was a draft in that area
that made it feel colder. By
adjusting one of the fans and
some duct blades, they
eliminated the draft and the
complaints. They are now
saving over $100,000.00 a
year in heating costs. But
without engaging their
workers, they might never
have been able to do it
comfortably.
• Make a Plan, Carry It Out -
Not every proposed project will
get funded, of course. But
management is being held to
certain goals, and having an
overall plan for energy
upgrades based on ROIs and
your prioritized list will make
implementation more likely.
• Track Your Progress – Make
sure there is a clear
responsibility to record energy
use data as it comes in, and
track and report energy
intensity reduction. This is the
best way to keep management
and workforce engaged.
• Repeat – Set periodic intervals
for checking your progress and
workforce training and
engagement. Set longer
intervals for updating your
Energy Usages list. And even
longer intervals for updating
your EnPI, Baseline, and
Goals. These cycles are the
key to ongoing energy use
reduction.
 P.BIRKELAND
Setting up a Strategic Energy
Management System is not a trivial
undertaking. But they have proven
effective in such leading firms such
as 3M, Ford, DuPont, Frito-Lay.
According to the Alliance to Save
Energy, 3M’s Energy Management
System resulted in reducing energy
consumed per pound of product by
20 percent between 2000 and 2005.
The Kimberly-Clark Corporation, a
multinational paper products firm,
uses a series of five-year energy
management plans. Their first plan
(1995-2000) led to a corporate-wide
11.7 percent reduction in energy use
per ton of product. Smaller firms can
benefit as well. C&A Floorcoverings,
a small flooring manufacturer in the
State of Georgia achieved 10 percent
savings on an annual natural gas
expenditure of $824,500 by
implementing a Strategic Energy
Management System.
There is resistance to energy
management for a variety of reasons.
Most industry decision-makers
believe the solution to reducing
energy costs is to seek the lowest
available energy prices. Too often,
managers fail to grasp the
opportunities offered by energy
management, which focuses on both
consumption and prices.
Energy management also has no
traditional place in the typical
2010-09-27
manufacturer’s chart of organization,
job descriptions, and performance
accountabilities. But recognition of
energy management is growing.
A year and a half ago, the
International Standards Organization
(ISO) fast-tracked a new standard on
Energy Management Systems, ISO
50001, aiming to get it drafted and
published in two years rather than
the typical three. It is considered that
important by the participating nations
– UK, US, China, Brazil, and a host
of others. It’s due out in the second
quarter of 2011. This will be a
watershed in energy awareness.
Not everyone should ‘go ISO’ of
course. Historically ISO certification
is used to show management’s
commitment to stakeholders – a
Board of Directors, shareholders, or
even customers. But the process
mapped out in the ISO, which I
outlined above, is thoroughly Paul Birkeland lives in Seattle, WA,
adaptable to many smaller firms with US, and develops Strategic Energy
or without certification. Management Systems for government,
commercial, and industrial
As economies pick up, the tightness organizations through Integrated
of energy supplies will again become Renewable Energy.
apparent. Managing energy reduces www.IntegratedRenewableEnergy.com
costs, mitigates risk, and lowers
carbon emissions. It can even
energize your employees in the
process. It’s time to start managing
as if energy mattered.