Energy never used to be a problem. For industrial or manufacturing companies it may have been a major cost, but it was relatively stable and seldom a concern.

That has changed dramatically. Costs are changing all the time, with electricity costs in Ontario slated to be the highest in North America in the next few years, gas and oil are bouncing near record highs, natural gas costs are actually going down, but who knows for how long. Your customers are greening their supply chains and expect you to prove that you are green and getting greener. Utilities are being forced to reduce consumption and expect you to help them. The media is quick to jump on any “dirty” industries that aren’t seen to be doing their part to improve the environment. Even investors want to see quantified energy savings as they fear exposure to potential liabilities.

For these and many other reasons developing an energy management strategy has become a priority for many companies. Whether by plan or by accident, most strategies fall into two main types that I’ll call tactical and strategic. It isn’t a case of one being better than the other, more of what fits better with your goals.

In a tactical approach, the big question is what can I do now to reduce energy use? The usual first step is to have an energy audit performed on your facility. This will identify sources of waste and offer recommendations which most frequently relate to upgrading lighting, HVAC or compressed air systems. These are one time upgrades that are likely covered by a grant through the OPA or other agency, and once they’re done there is no further action. For something like a warehouse/distribution centre, office or light manufacturing facility this might be as much as can be done without making modifications to the building, which can be expensive or just not possible if you don’t own your space.

While the savings can be significant with a tactical approach and you can claim “green” points, there is no long term plan put into place. Behaviours don’t change, there are no ongoing goals or targets to encourage further energy conservation. And if your facility has a complex energy profile with many energy consuming items, it can be difficult to prioritize or see the results of any changes that are made. (See  How an M&T System Can Reduce Equipment Operating Costs)

With a strategic approach, results over a longer time are key. In this case the question is more likely to take the form of how can I reduce my energy use by 10% each and every year? A long term goal which has senior management support and is incorporated into employee annual performance goals can be very powerful. It creates an atmosphere that supports a culture of energy conservation and behaviour change, which has proven to be a far more effective tool than technological changes alone. While the same tools are used as with a tactical approach, the emphasis is on continuous improvement, not just one-time upgrades. Energy conservation becomes a “participation sport”!

Those who are familiar with Lean Manufacturing will see the similarities in approach. An emphasis on continuous improvement and the journey are key.

The best tool to help implement a strategic energy management plan is an Energy Management Information System (EMIS) using Utility Monitoring and Targeting (M&T) software with modeling capability. It allows you to develop benchmarks to identify and quantify current energy usage. By developing models based on production data, weather or any other energy drivers unique to your situation you can track and quantify performance over time as energy management plans are put into place. The cost benefits of changes in activity or capital investments can be quantified before any investments are made so projects can be prioritized to get the best returns. Once implemented, energy savings can be compared to expected results to ensure equipment is working as promised or if additional work or even refunds are necessary. All stake holders both within the company and externally can be shown actual quantifiable and ongoing results to foster confidence in the plan and encourage additional conservation activities.

Whether you take a tactical or strategic approach to energy management depends on your specific circumstances and goals, but “business as usual” is no longer an option when it comes to energy!