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


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


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


EXPENSES, INTEREST,

OR INFLATION

CAPITAL IS ALWAYS IN MOTION

ECONOMY (opportunity)

PLACE OF LOW

RETURNS

PLACE OF HIGH RETURNS

CAPITAL IS NEVER AT REST


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?


(c)2009 Energy Pathfinder Mangement Consulting, LLC

www.energypathfinder.com 8

MONEY MONEY FUEL &

ELECTRICITY HEAT, PRESSURE

& MOTIVE POWER PRODUCTS

TO SELL

BUSINESS RATIONALE FOR ENERGY MANAGEMENT

WE TRACK MONEY. WHY NOT ENERGY?


STRATEGY

UP HILL:

Proclaim “reduced utility bills” as your purpose.

DOWN HILL:

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


STRATEGY UP HILL:

Approach energy management as a project.

DOWN HILL:

Approach energy solutions as an investment.


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.


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


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


ORGANIZATION UP HILL:

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

DOWN HILL:

Organize leadership and skills in cross-departmental teams.


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.


COMMUNICATIONS

UP HILL:

Assume everyone already knows what you’re talking about.

DOWN HILL:

Manage expectations through education.


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

©2013 Energy PathFINDER.com 17

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


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.


Ask not how much energy management shall take from

current resources.


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.


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


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


You should not have to defend superior rates and magnitudes of

investment returns.


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.


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


“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.


YOUR FACILITY…

CAN BE AN ATM MACHINE.


CONCLUSIONS

• Demystify

• Don’t save… CREATE!

• Monetize

• Collaborate

• Document and celebrate


YOU-TUBE: search “Energy Pathfinder Investment Calculator”

Energy PathFINDER .com

Christopher Russell

@ENERGYpathfndr

Feb 2008 June 2010

THANK YOU!

energy efficiency risks and opportunities for your business and your career

Technology