Monday, May 27, 2024
Insights

Overcoming the barriers to better energy management

In the past, energy use was taken for granted. Despite being a significant overhead, most organisations didn’t give much thought to exactly how, when or where they used energy.

However, as energy costs have continued to rise, the need for better energy management is increasingly being discussed in boardrooms. Yet, it is often difficult for internal advocates to justify the ROI of such projects due to the insufficiency or inaccuracy of the data available. So much so that Gartner suggests that ROI and conflicting priorities are seen as the top two challenges faced by over 40% of cases.

Being seen to be green

In addition to wanting to reduce costs, one of the major catalysts for better energy management is the desire to be seen to be green. So much so that environmental accountability is now top of mind for more than two-thirds of business leaders. With almost eight in ten (79%) saying they have either already entered into a renewable energy power purchase agreement or plan to do so within the next two years.

As well as wanting to move to green tariffs for ethical reasons, I fully expect organisations to increasingly move towards using energy at cheaper times of day. We are already seeing savvy manufacturers aligning manufacturing processes to times of day when prices are lower and there are a higher number of renewables in the mix.

A three-step strategy

The problem of energy cost and availability is not going to go away. Almost half (46%) of organisations admit that the availability and cost of energy has caused moderate to significant disruption to their business activities during the previous 12 months.

For those looking to make the change towards better energy management there should be a three-step strategy to ensure an optimum outcome. Firstly, the business should look to reduce their overall load as much as possible. Then they should look at what their fixed and variable load is. Before finally looking at how they can move the load to cheaper times of day.

The need for data visibility and reliability

Whatever the catalyst to better energy management may be, there is no doubt that data can be the proof point required to get such a project off the ground. While digital technology is not seen as a major barrier, data visibility and reliability often is. Whilst there is more data within digital technology than ever before, it is now about producing the right data.

It is important that the industry does what it can to provide accurate energy consumption data and information management strategies that will support a business to deliver its cost reduction programs and environmental management goals.

Creating goodwill

Luckily, through the latest technology suppliers can help. Through the advent of artificial intelligence and machine learning, they have more intelligence than ever before to provide insight into when and where a business uses energy and how much they could save by moving this load to a different time of day. Because the cost of energy to the supplier themselves is different at different times, this saving can be passed on. In fact, it is in the supplier’s best interest to do so to create goodwill and loyalty.

The reality is that whilst energy prices have started to come down, they are still significantly higher than they were in 2022. This is continuing to expose businesses to serious financial and operational challenges. Because of this, they are treating energy as a controllable resource.

Make sure you are following suit

The desire to reduce energy usage and improve sustainability goals has led to a significant shift in attitude with businesses changing their behaviours and strategy through a diverse set of long-term investments and activities to manage energy consumption. So much so, that three-quarters say they have already started reducing their energy usage through optimisation activities, and another 19% plan to do so within the next two years.

Unfortunately, businesses wanting to make a change are still facing significant hurdles internally. It is important, therefore, that the energy industry is aware of them and does what it can to align itself with organizational priorities so that they can help them execute at a lower cost point and unlock additional opportunities.

Matt Tormollen

Matt brings over 20 years of executive leadership in global, venture-backed businesses. His experience in building high-performing teams that deliver demonstrable customer value in downstream energy through scalable cloud solutions drives POWWR’s strategic focus. He has a Bachelor of Science in Information Systems Management from the University of Maryland, Baltimore County.