energy efficiency risks and opportunities for your business and your career

ENERGY EFFICIENCY: Risks and Opportunities for

Your Business and Your Career

Christopher Russell, Principal

Energy PathFINDER .com (443) 636-7746

Or…

If energy efficiency were a rock,

would you prefer to roll it

UPHILL

or

DOWNHILL?

2 ©2013 Energy PathFINDER.com

About Christopher Russell, C.E.M., C.R.M. Independent consulting since 2006

Principal, Energy Pathfinder

Visiting Fellow, American Council for an Energy Efficient Economy, 2012+

Energy Manager, Howard County, MD, 2010-2012

Director of Industrial Programs, Alliance to Save Energy, 1999-2006

Comm. & Indus. Program Manager, American Gas Association, 1995-1999

MBA, M.A., University of MD; B.A., McGill University

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About Christopher Russell

TODAY’S PURPOSE:

Reveal the

RATIONALE

STRATEGY

ORGANIZATION

COMMUNICATION

& PHILOSOPHY

…of industrial energy management

as it applies to career and business development

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ENERGY IS ALWAYS IN MOTION. Energy that doesn’t create wealth destroys it.

WEALTH DESTROYED

HEAT, FRICTION, & CHEMICAL REACTIONS

DESTROY PLANT & EQUIPMENT, CREATE LIABILITIES

WEALTH CREATED

TRANSFORMATION OF INPUTS INTO FINAL PRODUCTS HEAT,

PRESSURE, & MOTIVE

POWER

FUGITIVE ENERGY

COMMITTED ENERGY

FUEL & ELECTRICITY

Technical Rationale for Energy Management

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EXPENSES, INTEREST,

OR INFLATION

CAPITAL IS ALWAYS IN MOTION

ECONOMY (opportunity)

PLACE OF LOW

RETURNS

PLACE OF HIGH RETURNS

CAPITAL IS NEVER AT REST

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THE INDUSTRIAL FACILITY IS A MICRO ECONOMY

FACILITY (opportunity)

WEALTH INPUTS

WEALTH CREATED

EXPENSES, INTEREST,

OR INFLATION

Who will get superior returns from your facility assets? YOUR BUSINESS or the UTILITY COMPANY?

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(c)2009 Energy Pathfinder Mangement Consulting, LLC

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MONEY MONEY FUEL &

ELECTRICITY HEAT, PRESSURE

& MOTIVE POWER PRODUCTS

TO SELL

BUSINESS RATIONALE FOR ENERGY MANAGEMENT

WE TRACK MONEY. WHY NOT ENERGY?

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STRATEGY

UP HILL:

Proclaim “reduced utility bills” as your purpose.

DOWN HILL:

Proclaim a vision for supporting core business goals through strategic energy management.

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STRATEGY UP HILL:

Approach energy management as a project.

DOWN HILL:

Approach energy solutions as an investment.

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STRATEGY

UP HILL:

Use an ENERGY AUDIT to determine a list of projects.

DOWN HILL:

Develop BUSINESS PLAN that provides a roadmap to business results.

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STRATEGY

UP HILL:

Evaluate proposed efforts for their cost to do.

DOWN HILL:

Evaluate proposals…

• for impact on overall invested capital performance

• in comparison to the cost of doing nothing

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PURSUING ECONOMIC OPPORTUNITY

1. Benchmark current capital performance

2. Perceive opportunities for superior performance

3. Estimate investment risk/return

4. Reinvest capital

5. Continuous improvement. See Step 1.

For the ECONOMY… For the FACILITY…

DYNAMICS ARE THE SAME

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ORGANIZATION UP HILL:

Delegate all energy matters to a single department (silo).

DOWN HILL:

Organize leadership and skills in cross-departmental teams.

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ORGANIZATION UP HILL:

Allocate budget, skills, and time commensurate with energy’s proportion to total expenses.

DOWN HILL:

Fund efficiency efforts proportionately to the magnitude and speed of cash flow that it creates.

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COMMUNICATIONS

UP HILL:

Assume everyone already knows what you’re talking about.

DOWN HILL:

Manage expectations through education.

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ENERGY COST CONTROL What Your Business Leaders Should Know

• PRICE MANAGEMENT & PROCUREMENT

• BEHAVIOR – Education & awareness

– Make good choices with current assets

• O&M PROCEDURAL – Optimize current assets

– Leak & loss repair, PM routines

• CAPITAL EXPENDITURE – Replace & upgrade

– Invest in new technology

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1-2 YEARS

2-5 YEARS

5+ YEARS

PRICE/PROCUREMENT

AWARENESS & BEHAVIOR

O&M/PROCEDURAL

CAPITAL INVESTMENT

SAVINGS POTENTIAL OVER TIME* *Author’s Summary of Industry Knowledge

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COMMUNICATIONS

UP HILL:

Address mechanical performance. Explain everything in techno-speak. Describe results as energy saved.

DOWN HILL:

Address capital performance. Articulate outcomes and rewards as they accrue to the agendas of other departments.

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Ask not how much energy management shall take from

current resources.

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Ask how much (and at what rate) energy management shall create new wealth.

COMMUNICATIONS

UP HILL:

Execute without informing, persuading or collaborating.

DOWN HILL:

Declare amnesty for past practices; seek, encourage, and reward compliance.

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COMMUNICATIONS

UP HILL:

Perceive energy management as a distraction from standard operating procedures

DOWN HILL:

Fold energy performance criteria into existing business metrics and accountabilities

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COMMUNICATIONS

UP HILL:

Use simple payback. Results describe HOW LONG it takes for a budget to replenish itself.

DOWN HILL:

Use rates of return.

Describe the RATE and MAGNITUDE of capital:

(1) Created via your agenda , or

(2) Destroyed through inaction

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You should not have to defend superior rates and magnitudes of

investment returns.

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Detractors need to defend the rate and magnitude of capital destruction caused

by DOING NOTHING.

DEFENDING ENERGY MANAGEMENT?

PHILOSOPHY UP HILL:

Confuse energy efficiency with environmentalism.

DOWN HILL:

Perceive energy improvements as business opportunities.

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PHILOSOPHY

UP HILL:

Perceive energy management as a cost center. Facility assets are a cost to be minimized..

Success = no unusual expenses; don’t get noticed.

DOWN HILL:

Energy management = profit center.

Success = creating cash, improving return on invested capital, get noticed for supporting other departmental agendas

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“Yeah, but…”

UP HILL:

Keep pushing the same buttons… and keep getting the same results.

DOWN HILL:

Apply some of the ideas from this presentation.

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YOUR FACILITY…

CAN BE AN ATM MACHINE.

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CONCLUSIONS

• Demystify

• Don’t save… CREATE!

• Monetize

• Collaborate

• Document and celebrate

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YOU-TUBE: search “Energy Pathfinder Investment Calculator”

Energy PathFINDER .com

Christopher Russell

@ENERGYpathfndr

Feb 2008 June 2010

THANK YOU!