Thursday, July 11, 2013

What exactly is Enterprise Energy Management Software (EEMS)?

What exactly is Enterprise Energy Management Software (EEMS)?  It's a term increasingly used by companies, vendors and investors and is starting to show up in Request for Proposals (RFPs). It feels impactful for companies and like a promising new market for vendors.

It is also a term that has an evolving definition in the market.  As we update our Energy Management Software vendor report, called "2013 Enterprise Smart Grid and a Corporate Buyers' Guide to Energy Management Software," we had briefings and demos with 38 vendors, most of which had a slightly different definition of EEMS.  Some view EEMS as a energy management solution for multiple sites (i.e., multile sites for utility bill management, BMS or sub-metering) and others view it a having the capability to monitor all IP-based equipment.  Yet other vendors believe EEMS is software that manages and reduces the biggest energy loads (say at manufacturing plants) but not tracking smaller loads or small offices.

Here is our view.

An EEMS is a corporate-level tool that
  • meets the need of senior management (especially the CFO) to achieve stated energy improvement goals (often expressed as energy intensity measures)
  • provides P&L owners with clear visibility into past, current and expected energy use and cost
  • tracks energy reduction projects and expected benefits as a tool to assist capital budgeting and energy goal achievement
  • calculates scope 1 and 2 carbon emissions
  • provide insights from interval data (main utility meter and sub-metering of top loads) at local sites for behavior changes in operations and identification of energy use anomalies 
  • supports the energy governance model of the company, as defined by each company (e.g. Plan-Do-Act-Check, ISO 50001, etc.)
  • optionally, provide energy cost allocation by customers/tenants or by product
Importantly, an EEMS must "foot" with or tie-back to the actual utility bills -- that is, an EEMS is the source of record for both energy use and cost.  But it's more than just a utility bill management.

The EEMS is an essential tool to drive a culture of viewing energy as a variable and controllable expense rather than an uncontrollable, fixed one for all departments.

This later point was reinforced to us this spring by a large organization where the CFO was sponsoring an RFP for an EEMS investment. The CFO told us that they initially were driving energy accountability and savings through quarterly reviews of energy budgets and projects, but discontinued this practice because there was simply too much internal disagreement and confusion about what were the actual energy cost and variances.   

For this CFO, one important benefit of the EEMS is the ability for budget owners and facility managers to look at a single source of truth and to be held accountable for energy efficiency improvements in daily operations and capital allocations.

This does not mean that other energy management solutions, like light controls, building management systems, and demand response systems, do not provide significant financial returns for companies. But to call these later solutions, EEMS, does not meet the genuine needs of senior management to drive a culture of energy accountability and improvement.

A good EEMS enables senior management, budget owners, plant managers and facilities managers to produce or sell more products or to serve more customers with less energy.

What is your view?


Unknown said...

Very nice, this is the clearest definition I've seen in this space. It's comprehensive while maintaining clarity.

Yoram Bernet said...

Paul - thanks - it's really great that you've helped to explain the value of applications that are "higher up in the stack", that pull together the nitty gritty energy data to present a bigger picture that appeals to stakeholders other than engineers and facility managers and that helps "drive a culture". I'd like to see this discusion taken even a step further. In addition to climbing "up" in the stack, let's not forget the value of expanding sideways - of thinking about more metrics than just energy, such as waste, water, travel and all the other more general sustainability data. I discuss this variation on the theme here.