A common theme in every effective corporate energy program is the way the company effectively and consistently implements continuous improvement processes. This is always a blend of outstanding site energy leadership and teams, combined with high-level management sponsorship and support. Even without major technical investments, such an approach frequently is sufficient to generate energy efficiency breakthroughs. However, technical advances and best practices shouldn’t be underestimated as a key part of the path to enhanced competitiveness derived from a rational use of energy.[pullquote]
A powerful reminder came during a recent meeting at Intel’s headquarters in California. A discussion about the similarities and differences in managing energy in an information-based company versus manufacturing companies turned to data centers and the approach to investing in technological upgrades and adapting energy management approaches. The Intel equivalent of factories is the multiplicity of large data centers around the world. The core technology continues to improve in a number of ways, all of which affect energy in some way or another. The technology is becoming more compact, allowing higher processing capacity in the same or smaller building footprints. It’s also intrinsically more energy-efficient per function, further reducing the energy intensity. Last, but certainly not least, modern servers can operate at much higher temperatures than their predecessors, greatly reducing the need for cooling energy.
As a result of this continuing technological evolution, investment planning routinely includes replacing and upgrading servers every two or three years, as much to capture energy efficiency as to gain operational benefits. While few industries are advancing technologically at the rate of the semiconductor industry, there are some valuable lessons to be learned here. The first is to be constantly aware of the energy savings potential of available production technology. Within a company’s own fleet of plants, there often are dramatic efficiency differences between locations making similar products. This is the first and most obvious place to look. It’s also important to understand the best technologies available in the wider market, especially if competitors are adopting them to gain a competitive edge.
Once the efficiency options are well understood, it’s key to have a decision-making process in place that values the lifetime efficiency of upgraded production technology objectively. This should kick in automatically any time a production line is reconfigured or a routine rebuild is called for, and certainly when a new line is installed. Failure to do this means inefficient decisions will affect underlying productivity for years, if not decades, to come. Manufacturing technology might progress somewhat slower than it does in IT, but the effects of using less energy-efficient options might be felt for much longer.
The investment rules are basically simple and have been touched on many times in this column. It starts with a capital-approval process that requires efficiency to be valued for the expected operating lifetime. This value should be assessed for an agreed higher and lower range of future energy cost risks, including some assessment of the risk of carbon costs. If there’s an alternative with a lower initial cost and a lower efficiency, then the same assessment should be made as to long-term impact.
If the result of this comparison is that the efficient solution meets corporate return targets in the lower-risk case and exceeds the business-as-usual approach in the higher-risk case, the decision should be clear.
This sounds fine in theory, and many organizations pay lip service to this approach. In reality, they all too often go with the option that either is the most familiar or cost the least on decision day. The result is a decade or more of high-risk inefficiency and a frustrated energy team that sees the leadership talking from both sides of its mouth. There’s yet another irony in all this, in that often the more efficient options might not be costlier, even as measured by initial cost. It might still be rejected simply because it’s different or unfamiliar to the local team. Neither are good reasons to make a wasteful decision.
Industry already struggles with implementing best available technical efficiency options. It has an even harder time deploying genuinely new technology, or completely reconfiguring plants to turn wasted energy into a resource for a neighbor. Breakthrough energy management leadership consciously assigns a portion of its energy efficiency budget to exploring and testing new efficient technical options as a matter of course. This both lowers the initial risks and opens up completely new efficiency paradigms.
Effective energy management needs strong day-to-day leadership and support that ensures efficient technical options are evaluated and implemented. The reverse also is true — management not committed to energy productivity will perpetuate inefficient technologies and jeopardize corporate competitiveness.