Watts Up | Every Company Can Benefit from an Energy Management Plan

October, being Energy Action Month, presents a perfect opportunity for all businesses to learn about and begin taking action to become more energy efficient. Developing an energy management plan will help your company reduce its energy use, costs, and impacts. 

When I talk with business owners—especially of small or medium sized businesses—about their energy use and impacts, a typical response is:

1. We’re small so we don’t use much energy.
2. We don’t manufacture things so we don’t use much energy.
3. We rent our space so we can’t do much to reduce our energy use.
4. Our greenhouse gas emissions don’t really contribute that much to climate change.
5. All of the above

 
When I ask two follow up questions—how much energy does your company use each year and how much does it cost—very few have even a ballpark guess. One other question I’ll ask, especially to small or startup business owners – what would you do with an extra few thousand dollars to advance your business?
 
Yes, being a sustainability professional often involves being a gadfly and asking a few pesky questions. A core part of the job is to help businesses be more financially successful – spending their precious cash flow on strategic pursuits rather than on unproductive energy costs that don’t contribute to the company’s success. The old adage ‘you manage what you measure’ is just as true today as when it was first spoken and applies to energy bills as well as other inputs and outputs.
 
While a large business can save hundreds of thousands (if not millions) of dollars a year by becoming more energy efficient, smaller companies also have an opportunity to reduce operating costs. While the savings scale may be smaller, the impacts can be priceless.
 
Startup companies—especially those in clean tech or energy sectors—have a unique opportunity to bake in energy efficiency (and other sustainable practices) from the earliest days when cash flow is scarce. Robust energy efficiency has the added benefit of demonstrating management excellence to prospective investors, lenders, customers, and employees.

​The financial benefits from energy efficiency can also accrue to sustainable businesses such as B Lab Certified B Corps, benefit corporations, or other social enterprises. And, energy efficiency has the added benefit of contributing to the company’s commitments on reducing its environmental footprint.  Actively managing the company’s energy use, costs, and impacts, can also help companies be more accountable and transparent with their stakeholders.

​The good news (apart from the whole saving money and the environment thing) is—this isn’t rocket science. All businesses can reduce their energy costs with a little focus and persistence. Small actions really can add up.
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Here are five steps to get your business started on an energy management plan:

1. Learn how much energy the company uses, how much it costs, and what impacts that creates. 
​Gather all the energy bills that the company pays directly to your utilities (e.g., electricity, natural gas, fuel oil, other). Many utilities allow you to download historical usage and cost data into spreadsheet applications. If you don’t already haven an online account, sign up for one. 
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If your utilities costs are embedded with your rent payment, seek the information from your building owner or property manager.
 
If you can’t obtain the actual data on your company’s energy use, the table below provides some average US energy data to help to estimate your company’s usage and cost. The table below provides the energy use and cost for an average commercial building in the U.S. Note: the building(s) your company leases may not use all these energy sources. 

​For example, if your company leases (or owns) 10,000 square foot of commercial space (e.g., office, retail, warehouse), your estimated annual energy cost is about $19,000 ($1.90 x 10,000). These data come from the U.S. Energy Information Administration’s (EIA) 2012 Commercial Buildings Energy Consumption Survey (CBECS for shorthand), Table C14 (purchased electricity). Table C24 (natural gas), and Table 34 (fuel oil).
 
You can also use the CBECS data to develop a more refined estimate based on the variables of your company’s commercial space (e.g., geographic region, type of building, age of building, number of floors, principal activities). Or, if you have your company’s direct energy usage and cost data, you can use this table (and/or the underlying CBECS data) to benchmark your company’s usage and costs against national averages.
 
If the environmental impacts are also critical to your business mission and/or stakeholders, you can also assess the environmental impacts from the energy used in your facility. The greenhouse gas (GHG) emissions and other impacts are highly variable based on the company’s energy sources, including where any purchased electricity comes from. Developing a precise GHG emissions inventory can be very complex.
 
The U.S. Environmental Protection Agency (EPA) provides a simple tool in which you plug in the company’s energy usage units to roughly calculate the associated emissions. Note: for a building’s energy use, the tool can only calculate units of purchased electricity and natural gas (i.e., no heating oil).
 
The following table shows the results from the EPA GHG Carbon Calculator, applying the CBECS average annual usage for the sample 10,000 building referenced above.

​EPA’s calculator also provides some more tangible equivalents to help contextualize otherwise amorphous figures. For example, 129 metric tons of CO2e is about the same emissions from driving an average passenger car about 315,000 miles.
 
Another visualization technique I frequently use to provide a more concrete illustration of the otherwise unseen emissions: 1 pound of GHG emissions fills 1 exercise ball. And, a metric ton equates to almost 2,205 pounds. So, the energy to light, cool, heat, and power that average 10,000 square foot commercial space spews out about 285,000 exercise balls of CO2e each year.
 
That image alone usually makes me go hunting for wasted energy.

2. Plan, pledge, and reduce your company’s energy use and costs.
Once you know how much energy the company uses (and how much it costs financially and environmentally), you can develop a plan to reduce. Set a goal to reduce and a timeframe (both base year and target year). You can try the always popular “20 by 2020” goal. That means committing to using 20% less energy (e.g., kWh of purchased electricity, and/or therms of natural gas, gallons of heating oil) by 2020 (for example, compared with calendar year 2016).
 
So for the above sample 10,000 sf space, the target would be to reduce purchased electricity use to 116,800 or less kilowatt hours in 2020. The 20% energy use reduction for this space would:

• reduce operating costs by about $3,800 a year, and
• avoid about 57,000 exercise balls of CO2e emissions.

 
Goals can be absolute or normalized on an intensity basis. Two common intensity-based measures that many businesses use are:

• kWh (and/or MT of CO2e) per $ of revenue
• kWh (and/or MTof CO2e) per employee

 
Publicizing your reduction goal provides additional incentive to reach the goal and helps engage support from the company’s partners.

Here are three systemic areas to reduce your company’s energy use and costs:

• What you buy (and lease): Look for energy efficiency in all the company’s purchases (and leases) that use energy—from the biggest energy users like the building space, manufacturing equipment, or data centers. To the company’s less energy intensive items like computers, monitors, TVs, lights, multi-function imaging devices, tablets, cell phones, lights, and appliances. The Energy Star label is the gold standard in energy efficiency for buildings and lights, appliances, and electronic equipment. Seek it out. It will save money during the life of the time the company owns/leases the item. Buying (or leasing) durable, well-made products will also reduce maintenance, repair, and replacement costs. Where feasible, seek to assess the full cost of ownership.

• ​How you use/operate things: Buying and leasing energy efficient buildings and products is a great first step. You’ll further optimize your savings if you also take advantage of available control settings and adopt efficient practices when using (or not using) them. Four key practices to employ:

1. Apply the “when not in use, turn off the juice” mantra – particularly applicable to lights, computers, monitors, and imaging devices. Make it a company slogan.
2. Activate energy management settings – many appliances and electronic devices have energy management settings (e.g., monitors turn off after 30 minutes not in use, imaging devices hibernate overnight). Here’s a link that shows how to activate the settings on most computers. Installing sensors and other controls (e.g., motion or occupancy sensors, photo/light sensors, dimmers, timers) to make your existing lighting more efficient can be easy and pay for themselves very quickly. In addition, wisely regulating the temperature setting controls can also impact your energy bills – for buildings/HVAC’s, individual heating/cooling devices, fridges, freezers, and data centers.
3. Have the right quantity – for example, many companies buy/rent more printers/copiers than needed. This costs more for the equipment itself and the energy required to power them.
4. Keep in good repair & delay replacement – follow the maintenance guidelines to ensure optimal operations and a long life.

• How you dispose of things: While proper disposal after a product’s useful lifetime won’t directly save your company money, reusing and recycling reduces energy use (and raw natural resource extraction) across the broader society.

 
If your company has already tackled (or has a plan to reduce the energy use in the company’s facilities), you can try more advanced energy and emissions management by assessing and addressing things like energy associated with: employee commuting, business travel, waste management, and the company’s supply chain.
 
And, if the company decides to also measure and reduce the environmental impacts from its energy use, it might make sense to explore renewable and other clean energy options.

3. Engage with your employees (and other stakeholders).
To successfully implement an energy management plan, it’s important to identify roles and responsibilities for:

• Measuring and monitoring energy use, costs, and impacts,
• Assessing and pursuing energy efficiency projects and practices, and
• Setting and achieving reduction goals.

 
Also, once you decide to actively manage your energy use and budget, don’t forget to engage all your employees! They are critical to reducing usage. 
 
One fun exercise is to conduct an energy treasure hunt (and October is the perfect month do to one). These are based on the kaizen practices made famous by Toyota. Kaizen is Japanese for continual improvement. Energy kaizens can be designed to be very comprehensive and technical audits (even lasting several days for larger, more complex businesses) or short, focused, and fun team building (and money saving) exercises.

4. Keep measuring and monitoring (and reporting).
Set a regular schedule to measure the company’s energy use and costs. Most companies will conduct an annual assessment on a calendar year or fiscal year basis. For companies that spend more on energy, a quarterly (or even monthly) check in may pay off. The data collection process may be a bit cumbersome the first couple times, but should become more efficient over time.
 
Be sure to document what energy efficiency steps the company takes. Track the date(s), cost(s), activity(ies), and location(s) of your efficiency action(s) to ensure you can (1) measure the delta from the “business as usual” costs and impacts and (2) share your successes and lessons learned.
 
Most companies will also calculate the GHG emissions on the same cycle and in conjunction with the company’s energy measurement.
 
How your company reports and shares (internally and externally) its energy management activities should reflect the reasons you’ve engaged in the journey. Many of your company’s stakeholders will benefit from learning about your energy efficiency (and any associated emissions reduction) efforts and progress. As stated earlier, investors, supply chain partners, customers, and employees value energy efficiency as a very concrete demonstration of your management prowess.

5. You Too - Companies That Lease!
If your company leases all of its building space and other real estate – don’t fret, you too can and should pursue an energy management plan! The green buildings movement (e.g., spurred by improved state building code requirements, Energy Star, LEED, Green Globes, The Living Building Challenge) is helping to transform America’s building stock. Buildings are becoming more energy efficient and healthier places more conducive to a highly productive workforce.
 
Unfortunately, there are still institutional barriers and disparate incentives between building owners and tenants that leaves many buildings needlessly wasting energy. Usually, it’s the tenant companies who are stuck paying the costs of the inefficiency. According to the EIA CBECS, for example, there’s a clear difference in the energy use and costs between owners and tenants.

​It’s incumbent on and in the best interest of companies that rent real estate to actively engage on the building’s energy performance. Fortunately, there are emerging advances in “green” lease terms that are helping tenants have more of a say in the energy performance of their leased space. And, more and more property management companies and building owners are interested collaborating with tenants to improve energy efficiency.
 
I’ll be posting another article later this month with more in depth information about green leases and how tenants can take more control over their energy costs. In the meantime, give us a call if you are interested in help developing an energy management plan or conducting an energy treasure hunt.

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Thank you for reading this blog post. Here at Corporate Sustainability Advisors LLC blog and on LinkedIn and Medium, I regularly write about organizational, community, and personal sustainability. If you would like to read my future posts then please subscribe via the adjacent link. Also, feel free to connect via Twitter and Facebook.