Friday, December 3, 2010

A Primer for Navigating the Energy Management Landscape

Corporate energy and sustainability leaders increasingly are involved with companywide or multiple-site energy management programs and tools. Yet understanding the vendor landscape can be very confusing.

This column details nine categories to help you visualize and organize the 100+ energy management vendors in the North American market, not including residential solutions.

The bottom line represents the biggest reason to examine the vendor landscape as achieving energy cost savings through better corporate-wide processes and tools becomes more important. Senior management has realized that energy and carbon are the flip sides of the same coin, and reductions in energy directly help meet stated carbon reduction goals. CFOs also understand that energy costs may be the second fastest growing expense after healthcare costs, and are learning the value of driving energy use visibility and accountability into the organization.

In the current difficult business climate, which often doesn’t offer much revenue growth, margin enhancement through energy savings is a critical use of corporate time and capital.

Companies are responding by establishing or strengthening corporate energy management and asking sustainability teams to become involved with energy reduction.

Maturity of the process and tools, however, varies.

Although energy management as a process has been around for decades, maturity fluctuates significantly across industries and firms. Sophisticated energy management operations are typically companies where energy is a large portion of operation costs (e.g. steel or airlines) and these energy-intensive firms have a president or VP of energy, use sophisticated energy management tools (at least for their production or fleet operations), and use contracts to hedge against energy pricing volatility.

Other companies localize energy management and let local plant or facility managers determine the appropriate tools and processes.

Regarding tools, the vast majority of software solutions developed over the last 30 years have been for a single facility, process or group of similar facilities or processes, and many companies use spreadsheets to manage and track energy use and costs. Most offerings are sold as a service or as a contract based on savings, but some vendors offer a software-only option.

Dividing Energy Management Vendors into Nine Categories

At a high level, energy management offerings can be organized into nine categories.

In the list below, the energy management vendor categories are arranged from consumption to demand/procurement to outsourcing.

The vendors listed below are only representative and not exhaustive.

Utility Bill Management and Payment
Business Problem: streamlining utility bill management for many facilities, detecting billing errors, reducing late payments, and sometimes payment
Typically purchased by: finance or accounts payable
Representative Vendors: AdvantageIQ, Entech, NISC, Pace Global, Summit Energy
Notes: These solutions are a great source of energy use information for company footprint and leading firms now offering enterprise carbon accounting (ECA) modules.

Manufacturing -- Operations Support / Process Automation
Business problem: providing real-time information on manufacturing processes so operators can make adjustments to keep lines running and save money. Data are typically gathered from meters or sensors and solution may include human machine interfaces (HMI) and work order capabilities.
Typically purchased by: plant operations
Representative vendors: Emerson, EPS, GE, Invensys, Rockwell, Schneider, Siemens
Notes: Solutions are very process specific or industry specific.

Industrial Controls
Business problem: sophisticated building and industrial control systems using PLC and other devices
Typically purchased by: operations or facilities, typically as part of larger purchase
Representative vendors: Johnson Controls, Honeywell, Siemens
Notes: Solutions have been typically hardware-specific, but this is slowly changing.

Building Management Systems / Facility Management Systems
Business problem: lower building operating and occupancy costs through controlling building mechanical and electrical systems
Typically purchased by: facilities
Representative vendors (many vendors): Cisco, EnerNoc, Interval Data Systems, Johnson Controls, Site Controls (Siemens), Verisae, Tririga

Enterprise Energy Management (EEM)

Business problem: software tool to track enterprise-wide view of energy spend and usage
Typically purchased by: CFO, CIO, VP Operations
Representative vendors: (many vendors), AdvantageIQ, eComponents, EnerNOC, EnergyCAP, ENXSuite, McKinstry, SAP Energy Data Management, Pace Global, Site Controls (Siemens), Summit Energy, Verisae
Notes: Data capture through meters or bills remains hardest part of the problem.

Demand Response
Business problem: Earning money by curtailing energy use at peak times based on trigger events
Typically purchased by: operations
Representative vendors: EnerNoc, Constellation(C-Power), Comverge
Notes: Not available in all areas.

Energy Procurement/Sourcing
Business problem: reducing energy cost through improved energy contract and purchases
Typically purchased by: procurement
Representative vendors: Co-eXprise, Delta Energy, Prenova, Summit Energy, World Energy
Notes: Some solutions are specific to commodity (e.g. natural gas) while others run auctions and offer hedging contracts.

Energy Service Companies (ESCO)
Business problem: Achieving energy reduction through performance energy contract, thus avoiding large outlays of capital
Typically purchased by: CFO in municipalities, universities, schools, and hospitals (MUSH)
Representative vendors: Johnson Controls, Siemens
Notes: Typically 5-15 year contracts with shared savings.

Outsourced Facility Management
Business problem: outsourcing entire process of facility management
Typically purchased by: CFO or VP operations
Representative vendors: Cushman & Wakefield, Grubb and Ellis, Johnson Controls, Jones Lang LaSalle,
Notes: Long-term contracts for building owners.

• Other vendor categories include fleet operations and data center/green IT.

As the need for corporate-level visibility and management of carbon emissions and energy spend continues, corporate sustainability and energy leaders will need to sort through these different vendors to determine the appropriate energy management for their company.

Expect more innovation over the next 24 months in this area.

1 comment:

Mary Burgoon said...

Thanks for including Rockwell Automation in your list of energy management vendors. I’d encourage your readers to check out our free energy evaluator tool to learn more about how their energy management practices stack up against their peers, and where they might have opportunities for improvement.