This week at VERGE 18, GreenBiz and Siemens are unveiling a new research project on how large companies and government agencies are adapting to a rapidly transforming energy landscape that is decentralized, digitized and distributed. Despite new technologies connecting buildings to the cloud and innovative financing structures opening energy markets, large organizations still struggle to manage energy supply, conservation and generation projects in a comprehensive manner.
What remains clear is that large organizations would benefit from a more comprehensive approach to energy. GreenBiz survey respondents indicated that 88 percent would benefit from a more comprehensive approach to energy. In addition, 83 percent want better data gathering and analysis tools.
This is the third research project for GreenBiz and Siemens conducted over the past five years covering a range of topics related to energy management. So, what’s changed over the past five years in how large companies approach energy management?
Energy is increasingly complicated
Effectively managing a global energy footprint is more becoming increasingly more complicated. Energy managers now encounter more demand and supply side options which require the need to navigate complex, regional energy markets. Advances in connected building technologies such as IoT devices and sub-metering strategies mean there are significantly higher volumes of data to analyze. In addition, technology improvements have changed the project economics and this provides opportunities to leverage new technologies that were not available or affordable just five years ago.
According to Jerry Meek, energy and sustainability senior manager at Genentech, “I see the price of batteries going the same direction as solar PV in the last five to 10 years. We waited on solar PV for the price to come down, and it came down significantly — almost 70 percent in a five-year period of time. I’m looking at the same type of cost reductions over the period of time with batteries. So batteries and solar PV go hand in hand.”
Large users are more aggressive pursuit of goals (and resilience)
In spite of the complexity of the market, GreenBiz identified that many large companies and government organizations are getting more aggressive in terms of goal setting, which leads to implementing more projects at scale. Fifty-two percent of respondents to the web survey indicated they have GHG targets and an additional 15 percent are pursuing the Science Based Targets Initiative.
When the GreenBiz web survey asked about primary drivers (beyond cost savings) for executing comprehensive energy reduction, procurement and generation projects, 71 percent of respondents indicated that their primary driver was “meeting climate/sustainability goals.” The next highest response was “providing resiliency” at 33 percent which suggests that rising importance of comprehensive energy management to bolster resilience needs.
Genentech, for example, has a 30 percent reduction in CO2 from onsite energy use by 2020 and is on track to meet those goals through a combination of energy efficiency, onsite solar and financially attractive green energy contracts.
Continued collaboration and partnership are needed
Today’s new energy landscape requires a higher level of sophistication than five years ago. This also requires that more internal stakeholders be involved, especially when it comes to directly purchasing renewable energy or financing larger, capital projects. Decisions about energy management are no longer confined to the basements of buildings but have moved into the CFO’s office.
There remains an opportunity to engage internal stakeholders across senior leadership, facilities management, sustainability, finance and even IT. However, only 33 percent of survey respondents chose finance and 12 percent suggested that IT should be more involved in decision making of energy projects.
In addition, as companies gain more hands-on experience with energy projects, the “low-hanging fruit” such as LED lighting retrofits are often implemented requiring a portfolio approach to fund projects with a lower payback. Many practitioners suggest using a portfolio approach looking at both financial and non-financial considerations. According to Michael Kruklinski, head of Siemens Real Estate for Region Americas, “For energy efficiency and renewable energy projects, we’re looking at a certain ROI but we also take a portfolio approach across a wide range of non-financial considerations.”
GreenBiz and Siemens developed a “User’s Guide to Comprehensive Energy Management” which includes a set of 10 key recommendations. Click here to download the white paper and click here for an archive of a webcast featuring Siemens, Genentech and University Health Network.