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Developing and presenting the energy management program


                                        Kenneth J. Kogut, P.E., C.E.M

Until the mid-1970's, the management of energy - in the classical mode of management - was for all practical purposes, nonexistent.  It became quite evident that when energy costs began to increase energy management activities provided opportunities for reducing operational costs in the commercial, institutional, and residential sectors.

In this article, we will be discussing the elements of developing and presenting an energy management program.  If you recall in Part 5 - The Energy Audit: A Sample Application - we presented an example of how energy savings, capital cost measures, and simple payback energy statistics can be presented.  We will now take the resultant presentation and build upon the concepts leading up to the presentation of the resultant energy management program.

Program Development
One of the goals that should be emphasized in an energy management program is to focus upon the overall operation of your client's or customer's facility.  The primary goal is to operate the facility in the most economically efficient manner possible, without compromising reasonable levels of comfort for the building occupants.  It must be emphasized that an energy management program must be a part of the overall management plan for any facility.  An energy management program, developed by you, should address the following questions for each of your client/customer facilities:

bulletCan energy conservation opportunities (ECO's) be identified for the purpose of reducing facility energy consumption?
bulletAre the identified ECO's economically feasible?
bulletDoes the client have available funds to implement identified ECO's?
bulletIf multiple client buildings are involved in the energy review, which building offers the greatest energy savings potential?

Energy conservation and management is like any other management endeavor with one exception - it is a blend of many technical fields and management roles.  The blend, which must be contended with, will vary according to each client's operation.

The benefits which result from implementing an energy management program are often overlooked.  However, in developing and presenting an energy management program, benefits which flow directly to the client/customer should be emphasized, whenever possible.  Every client operation depends on energy.  Some of the combined energy conservation/management benefits which should be addressed in your overall program include:

bulletReduced operating costs
bulletIncreased equipment efficiency
bulletIncreased competitive edge
bulletImproved equipment life
bulletImproved equipment reliability
bulletSavings that provide more working capital
bulletImproved overall management
bulletReduced Equipment downtime

Each client's energy program should be aimed at optimizing the energy usage within existing and planned facilities.  The optimization is accomplished in many ways.  It can range from simple, inexpensive changes brought about by informal discussions and recommendations for the energy committee, to detailed engineering studies which would produce recommended modifications to facility equipment.  These recommendations result from conducting facility energy surveys.

Conducting an energy survey
As discussed in earlier articles, an energy survey is one of the most important steps in developing an energy management program.  The energy survey involves the following objectives:

bulletDevelop and energy inventory (facility equipment and electrical/gas loads)
bulletPinpoint specific operational and system inefficiencies
bulletIdentify energy-saving opportunities
bulletCalculate the specific cost savings
bulletEstablish priorities for various projects

The results of the energy survey can only be as accurate as the data collected.  In addition, system operations must be understood, and energy savings and priorities determined.  Therefore, it is recommended that this portion of the energy management program be followed very carefully, preferably with the assistance of an energy professional.

Organizing for energy management
Before an energy management program can be proposed and developed for a facility, it is necessary to obtain initial cooperation.  The first step in an energy management program is to gain the client's confidence and to have them officially support the idea of energy management.  This is needed not only to obtain the commitment and assistance required for initial tasks; but also, to lay the foundation for the cooperation that will be needed to implement the full energy management program.  As with any management endeavor, it is strongly suggested that maximum effectiveness of the overall approach can be obtained only when one executive is selected in the beginning to represent the client in dealing with you.  To fragment authority at the top is to confuse the lines of authority and communication stemming from above.  This could have an adverse effect on the coordination and cooperation required to implement and continue the program in an effective, expeditious manner.  Energy management must focus on specific individuals, functions, and systems; and, at the same time, be facility-wide by encompassing all activity.

How can this be done?  The practical approach is to have the client form an energy management committee with representation from company officers.  Ideally, a senior official from top management should be chosen.  In effect, the energy management committee builds a framework  whereby detailed, day-to-day tasks of energy management take place.  The committee supports and validates the following energy management activities:

bulletAdvertises top management's commitment throughout the company
bulletProvides and coordinates a two-way dialogue with energy end-users
bulletEvaluates the company-wide effect of proposed energy-savings ideas

The energy management committee is a means, not an end in itself.

The energy committee recommends company-wide policies, plans, and procedures to save energy and reduce costs.  The committee, as a whole, is kept informed of day-to-day activity.  It should consider soliciting energy-savings suggestions from all employees.  Most importantly, all employees should be made aware that a serious formal energy management program is under way.

Establishing energy conservation goals
The nature of effective management and energy management is such that goals have been established to provide direction for the undertaking, a means has been developed to measure the results, and a guidance or feedback mechanism has been established for redirection of efforts.  A fundamental aspect of energy management requires that managers establish energy conservation goals.  The most generally accepted way of doing this is to state goals in terms of a reduction of energy use over previous established levels.  To do this, of course, it is necessary to establish exactly what the previous levels were.  Studies and proven energy management programs have shown that the most effective way of stating previous levels is in terms of Btu's per gross square foot, for commercial facilities.

In order to be in a position to set initial conservation goals; a database must be established.  This base could be developed by taking the previous year, two years, or three years (preferably) of energy consumption data, and establishing an energy consumption pattern for a facility.

Initial goals may be set in terms of a quantity - for example, a 10-20% reduction.  This is based upon the energy conservation opportunities selected from the prioritized list of ECO's presented to the client.  The reduction is typically expressed in terms of energy consumption and not energy costs.  It is possible to reduce consumption but still experience an increase in energy costs if rate increases are significant enough.  Key factors that should be considered in the overall presentation include:

bulletClient's business objectives
bulletClient's personnel resources
bulletExisting methods of building operation and maintenance
bulletExisting uses of energy
bulletEstimated installed costs for recommended and analyzed ECO's
bulletEstimated energy savings (in both energy consumption - Btu's, Kwh, therms, and associated energy dollars)
bulletEstimated simple payback
bulletPrioritization of recommended ECO's

In general, goals and energy targets will vary from year to year because it is difficult to conserve the same amount or same percentage of energy each year, based upon the reference year.  Therefore, ultimate energy conservation goals and targets involve maintaining the highest degree of energy efficiency possible and ensuring this level by a continuing review of the data collected, and ECO's implemented.  This feedback is required for an effectively implemented energy program.

In the final analysis, the presentation of an energy management program or plan should be directed toward the decision-maker within the client's management structure.  The key factor the decision-maker is interested in is "how fast will my investment pay back."  His or her evaluation of your presentation is the only avenue the client is considering for investing and spending their money.  Thus, bottom-line statistics are always the best way to present your energy savings calculations by an independent professional will also add credibility to the overall presentation.

Next month, my colleague will be centering upon prospecting and developing new business.  If you have been following our series to date, our emphasis on new business will center on putting to use what you have learned up to this point.

RSC November 1985



Last modified: 09/21/05