A sound energy business plan

April 10, 2006
The goals is a sustained energy plan that can produce cost-effective energy productivity gains. Use a familiar structure, draw on common resources and pick appropriate pilot projects when building an energy plan.

At a certain point in your progress toward implementing an energy strategy, senior management engagement will be achieved and the organization will be challenged to actually develop, and implement, a plan that delivers sustained breakthrough energy productivity gains.

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This is a high-risk moment where many programs fail. Effective evangelism, external benchmarking and awareness-raising have been the most important skills needed to get to this moment. From now on, success comes from consistent and effective implementation of a sound energy plan.

Step one is to prepare the plan. Managing energy productivity is no different from managing any other resource, such as labor or materials. The more familiar the program is, the easier it is to put together and the broader the acceptance it will gain within the company.

Seek out programs that delivered significant results, are well documented with good process design, and have clear management support. This not only saves time, it also gives the energy plan instant credibility. As examples, Toyota uses its Kaizen-based continuous improvement process. The Owens Corning program I sponsored adapted a program focused on reducing process waste going to landfill, dubbed Mission: Possible, and produced the successful program, Energy Mission: Possible. The cynic in me also says that adapting existing internal programs also saves a lot of money on consulting fees.

Once a suitable project framework has been selected, the energy manager and an appropriate multidisciplinary team should develop the plan. There is an endless supply of consultants ready to support this, and many may bring some valuable insights. However, in the real world, the basic structure and content of all successful energy productivity plans are very similar, and my recommendation is to base the plan on a well-documented public framework.

In the United States, the EPA’s Energy Star program is an excellent source for one set of guidelines. The Energy Star Business Improvement Assessment Matrix and Guidelines for Energy Management are freely available on the Web in a simple, easily understood format. Following them systematically leads the energy team through the steps to develop an energy plan. Joining programs like these also gives useful recognition and benchmarking opportunities.

The plan should have well-defined breakthrough goals, broken down by business unit and individual sites. These should be expressed in terms of both energy use and energy costs. Given the growing importance of climate change, it would be unwise not to have greenhouse gas goals — as described in

“Energy and climate change” (February, page 31), this is a relatively pain-free aspect to implement.

Goals are be meaningless without reliable information gathering and reporting, allowing both usage and cost to be tracked regularly. At a minimum, reliable energy use, cost and greenhouse gas data should be available monthly. Procurement and efficiency goals should be well-aligned and reflected in personal objectives. A miss on the efficiency achievement can have negative cost impacts for procurement.

The scope of the energy management program also must be well-defined. In the early stages, many companies select specific businesses or sites as pilots to work out the wrinkles. My only caution is to make any pilot big enough to be both interesting and representative of the entire company. As an example, one of my major clients is piloting its facilities in its home state plus the manufacturing facilities of a major business unit worldwide. Together, these pilots account for about a third of the company’s total energy costs. As soon as the pilot delivers significant results, the Energy Team should be ready to expand the process to the entire company — nothing is to be gained by unnecessary delays.

Each site should have a clear action plan to meet its goals. The plan must define the technical and behavioral measures to be implemented, and have a realistic allocation of both financial and human resources. In the early stages, the main focus often will be on capturing productivity gains by running the current process at higher efficiency levels. However, at least one or two sites should be selected early on as candidates to evaluate the possibilities of developing a “new game” through long-term rethinking of the entire energy supply, procurement and usage. These sites will develop long-term integrated energy master plans that drill down much deeper, and will become the role models for the long-term deep change that takes energy productivity to genuine breakthrough levels.

Last, but not least, the plan should include a well-defined approach to internal and external communications, performance appraisal, and individual and team rewards. There also must be a process to ensure continuous revision (upwards!) of productivity. As Toyota and others have demonstrated, with a constantly updated plan with ever more challenging productivity goals, a complete culture change over energy use and, ultimately, the sustainability of the entire company, can be achieved.

Peter Garforth is principal of Garforth International LLC, Toledo. Ohio. He can be reached at [email protected].

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