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Smart Energy Management Takes More Than Technology

Whether your company is trying to get off the starting blocks, or taking its energy and climate initiatives to the next level, here are proven strategies for getting beyond the low-hanging fruit to the really big savings that energy efficiency can deliver.

Smart Energy Management Takes More Than Technology

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Knocking
down a brick wall by yourself with your bare fists is next to impossible. But
organize a team equipped with sledgehammers and a plan, and it gets a whole lot easier. In other words, when tackling
tough problems, it’s not just about the tools you have, but how you marshal your
assets to break through.

That’s the message to CFOs, sustainability
czars, and energy managers in a new EDF report, “Breaking Down Barriers to Energy Efficiency.” The report offers effective ways to motivate employees, create
accountability for success, identify investment opportunities, ensure funding
for financially attractive projects, measure cost savings, and scale performance
gains continuously over time. The findings were drawn from the EDF Climate
Corps
program, where specially trained MBA
students work in corporate summer fellowships to develop customized plans for cutting
energy costs and greenhouse gas emissions.

Whether a company is trying to get off
the starting blocks, or taking its energy and climate initiatives to the next
level, the report outlines proven strategies for getting beyond the low-hanging
fruit to the really big savings that energy efficiency can deliver.

Some common barriers cited by
participating companies, along with best practices for overcoming them include:
 

Barrier #1: Lack of clear accountability

One of the most common challenges cited
by companies was lack of clear accountability for energy performance. Without
that function written into a senior manager’s job description, many companies
are unable to perform critical functions like setting energy strategy, identifying and
prioritizing energy-saving investments, leveraging internal capital, and
tracking actual energy savings.

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Success
Story
: Distributed accountability at AT&T

AT&T
hired John Schinter in 2009 to serve as the company’s Executive Director of
Energy. Schinter quickly realized the need
to engage facility managers to meet the company’s carbon and energy goals, and
designed a
system of distributed accountability for energy performance across the company, setting clear metrics
and targets, establishing reporting mechanisms, and rewarding success. The
results have been impressive, with AT&T realizing $44 million in annualized
energy savings in 2010.
 

Barrier #2: Lack
of comprehensive energy data
 

Many companies struggle to
collect and aggregate the energy data needed to build a strong business case
for energy investments. Key challenges include ensuring that data is collected
with sufficient frequency, specificity, and consistency to effectively identify
opportunities and verify savings after projects are completed. 

Success Story: Centralized data collection at Shorenstein 

Shorenstein
has deployed electrical meters in all of the buildings it manages.
Shorenstein’s energy management team utilizes real-time metering and 15-minute
historical data to perform daily evaluations of energy use from its entire
building portfolio. The
data are centrally collected and reviewed by Shorenstein’s chief engineers and its engineering managers. 

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Barrier #3: Shortsighted
financial criteria

Energy-efficiency
projects often face financial hurdles for accessing investment capital. While
many projects pay back in the one to three years required by most companies,
others can deliver much bigger savings over four to 10 years. By making
decisions based on simple payback or ROI alone, companies leave money on the
table by prioritizing short-term returns over longer-term value creation.

Success
Story
: Diversey’s portfolio approach to energy efficiency investments 

Jeramy
Lemieux of Diversey, a commercial cleaning and industrial hygiene subsidiary of
Sealed Air,
faced the
challenge of meeting his company’s greenhouse gas reduction goals while
delivering a positive return on investment. Instead of evaluating projects
individually, he developed a model that balances speed of return, volume of
return, and cost of carbon avoided across a range of projects, allowing him to
build a
portfolio
of energy-saving investments
that deliver an attractive return. Applying this approach has
enabled Diversey to triple its greenhouse gas reduction commitment from 8 percent to 25
percent, while reducing the capital requirements from $19 million to $14 million and still delivering the planned $32 million in cumulative EBITDA benefits.

These stories demonstrate that a
clear-eyed understanding of organizational dynamics is even more important than
fancy technological solutions when it comes to maximizing energy performance. Smart
energy management fundamentally changes the way people make decisions, arming
them with sledgehammers to break down their company’s barriers to big energy
savings.

[Image: Flickr user Seth Rader]

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About the author

Gwen Ruta directs Environmental Defense Fund's Corporate Partnerships program. She spearheads its work with leading multinational companies to develop innovative, business-based solutions to environmental challenges and to drive change through the corporate value chain. Ranked #1 among environmental organizations for credible and effective partnerships by the Financial Times, Gwen’s group has kicked off transformations in market sectors from catalogs to shipping to retail to food service. Partner companies have included Wal-Mart; Kohlberg, Kravis, Roberts; UPS; FedEx; DuPont; McDonalds; and Citigroup.

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