Start your energy-management program with the first steps in mind

Peter Garforth says developing a strong baseline will make the energy management program credible, long-lasting, relevant, and effective.

By Peter Garforth

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Any company embarking on a new corporate energy management program needs a clear understanding of the company’s energy baseline. This is the essential starting point against which future performance will be measured. My experience is that this is an undervalued and underresourced step. In the enthusiasm to get started with future energy management efforts, the time and effort to understand the starting point are all too often shortchanged.

Developing a strong baseline will make the energy management program credible, long-lasting, relevant, and effective.

A key first step is to align on the headline measures the company aims to use to track its energy performance. These define not only which data need to be captured to create the baseline, but also which data will need to be accurately and consistently captured going forward. The most common measure is an absolute reduction in total energy use or energy cost as measured by utility and fuel bills. Getting this together in a large, complex company can be a challenge, even for baseline purposes, highlighting possible future tracking challenges. The seamless and timely capture and update of billing data is a nonnegotiable fundamental of all energy management programs.

The next most common headline measure is to relate energy use and cost to production volumes. In a multi-product or multi-divisional company, this requires alignment on which units of production will be used for ongoing energy performance tracking. Selecting too many units causes undue complexity; too few may not be representative of the company’s processes. This is always a challenging exercise. However, the baseline can’t be established without this alignment.

If unit energy efficiency or productivity is selected as a headline measure, reliable production data must be available for the baseline and for future tracking. This requires the energy team to reach across the organization to make sure this happens and may require higher level management support. A decision to track unit energy performance often raises a basic data timing issue. Utility bills and production tracking are typically time shifted by one to two months due to the metering and billing cycles. Before locking down the baseline, the energy team has to either reach agreement that these timing anomalies are acceptable or come up with a method to eliminate them.

Unit energy performance also raises interesting challenges when two product families are made in the same plant. If the plant doesn’t have its utility bills split by production line, the team will need to have an agreed process to allocate site energy use or commit to immediate submetering investments.

Increasingly, either total or unit greenhouse gas emissions are a headline measure of an energy program. The energy team needs to very specifically define how this will be measured. The approach must be a valid measure of emissions for possible regulatory use and be credible to various stakeholders and the wider community. However, it must not be so rigorous that it demands data that is difficult, time-consuming, or even impossible to obtain on a regular basis. In principle, it isn’t that difficult to track and capture energy-related emissions; in practice, it’s often made excessively complicated.

Peter Garforth heads a specialist consultancy based in Toledo, Ohio and Brussels, Belgium.Peter Garforth heads a specialist consultancy based in Toledo, Ohio and Brussels, Belgium. He advises major companies, cities, communities, property developers and policy makers on developing competitive approaches that reduce the economic and environmental impact of energy use. Peter has long been interested in energy productivity as a profitable business opportunity and has a considerable track record establishing successful businesses and programs in the US, Canada, Western and Eastern Europe, Indonesia, India, Brazil and China. Peter is a published author, has been a traveling professor at the University of Indiana at Purdue, and is well connected in the energy productivity business sector and regulatory community around the world. He can be reached at peter@garforthint.com.

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A major decision will be the geography and organization levels that will be regularly reported. Will the program track and report every site worldwide, or only by divisions, countries, or regions? The final choices will again define the information needed for the baseline and the ongoing process.

A solid baseline contains not only reduction and energy consumption data. It also documents current and possible future energy risks facing the company. These will be some combination of reliability, costs, and environmental factors. They will be different by key locations, in turn affecting the energy-management priorities at a local level.

The baseline should also capture the current company policy, accountabilities, investment decision making, and internal organization associated with energy management. This will frequently underline the historical lack of a systematic approach and be the frame for the future policy, process, and organization changes needed to build an effective program.

Time spent at the beginning asking these questions and making sure the answers are incorporated into the baseline accelerates the rollout of a successful energy management program. By getting all of the definitional debates, priorities, and measurements on the table up front, the efforts after rollout will be focused on execution, not clarification and managing organization confusion and misinformation.

If your energy management program has already started and lacks a rigorous baseline, it might make sense to circle back and fix it. If your energy program used a baseline that is proving to be overly complex and difficult to track against, some reprioritizing might be in order.

If the program is getting ready to launch, make sure all the most important baseline and tracking decisions have been made. If not, consider a small delay in getting started in order to capture acceleration later. Poor energy baselines are weak energy-management foundations.

Read Peter Garforth's monthly column, Energy Expert.

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