Manage Energy by Setting Goals. New research sheds brighter light on the critical link between goal setting and energy management success.

Transcription

1 Manage Energy by Setting Goals New research sheds brighter light on the critical link between goal setting and energy management success.

2 Manage Energy by Setting Goals New research sheds brighter light on the critical link between goal setting and energy management success. A growing number of organizations worldwide are setting energy reduction goals. In 2013, the Institute for Building Efficiency s Energy Efficiency Indicator (EEI) survey identified a clear increase in the percentage of organizations in the commercial, industrial and institutional sectors that set goals for energy and carbon reduction, whether for internal purposes or announced publicly, and found that 73% had set energy reduction goals, compared to an average of 71% in 2012 and 58% in 2011.¹ The trend is global. According to the EEI survey, large majorities of decision-makers in every country surveyed from 71% in Australia to 93% in India considered energy management very or extremely important to their organizations. The survey also found organizations worldwide were paying a lot more attention to energy efficiency by 10% versus China saw the single greatest leap in those who said they were paying a lot more attention to energy efficiency this year. According to the EEI survey, large majorities of decision-makers in every country surveyed considered energy management very or extremely important to their organizations. What s behind the increased global focus on energy management? A 2013 study conducted by the Deloitte Center for Energy Solutions indicates a shift in motivation. According to the study, cutting costs is still the primary motivation for energy management activities, reported by 63% of respondents, followed by internal motivations (49%) and just the right thing to do (43%). However, these percentages have dropped from the 2012 study and in contrast, regulatory requirements are gaining momentum, being cited by over one-third (36%) as a motivating factor, compared to 32% in last year s study and 24% in 2011.² No matter what drives the pursuit of energy management initiatives, more than two-thirds of organizations surveyed are beginning to apply some level of formality to their energy management programs. And despite being the most funded part of a facility manager s budget, a 2013 Johnson Controls Building Efficiency Panel survey on building operation and maintenance constraints indicates the vast majority are motivated or very motivated to reduce energy spend. While the trend toward an increased focus on energy management continues, the Johnson Controls survey echoed what other research has found: As many as 30% of organizations surveyed still have no formal or fully integrated management and measurement practices in place. As regulatory requirements are gaining momentum around the globe, formalized measurement and validation is becoming increasingly important in contrast to the reality of practice. Manage Energy by Setting Goals p. 2

3 None We have no current goals or programs around managing energy. Informal We have energy management at the department level, focused on individual goals. Semi-formal We have energy management at the facility level, with targets to reduce energy usage. Formal We have energy management at the facility level, with formal targets and measured performance. Fully integrated across organization Energy management is integrated into our business measurements, including a sustainability program with clearly defined metrics and goals. STATUS FOR IMPLEMENTING ENERGY MANAGEMENT PRACTICES 8% 22% 40% 19% 10% 0% 20% 40% 60% 80% 100% For organizations that have not yet established formal goals, the EEI survey suggests the greatest barrier to pursuing more energy efficiency initiatives is lack of funding. But barriers differ by market, and technical capacity to evaluate performance remains a significant barrier. Industry leaders have an obligation to help organizations overcome the barriers. In research conducted by Johnson Controls and others, a critical factor is beginning to emerge: the link between goal setting and energy management success. Studies conclude that setting formal energy-reduction targets will help organizations achieve their goals in three significant ways: By setting a formal goal, return on investment can be measured. Those who set formal energy management goals are more likely to take action. Achieving energy efficiency goals helps to create a competitive advantage. 1 By setting a formal goal, return on investment can be measured. There is tremendous pressure to verify return on investment and demonstrate the value of energy management initiatives. Not surprisingly, the Johnson Controls Operation and Maintenance Constraints survey showed that the higher the program cost, the greater the expectation for structured measurement and verification. Manage Energy by Setting Goals p. 3

4 IMPORTANCE OF VALIDATING ENERGY SAVINGS Not required Visibility on expected savings for measures implemented (minimal added cost) Structured measurement & verification (high added cost) ENERGY PROGRAM COST >$100K $25 to $100K <$100K 9% 28% 63% 8% 54% 37% 30% 63% 7% 0% 20% 40% 60% 80% 100% The good news is, advancements in technology make readily available today the data required to both identify improvement measures and validate energy savings. The bad news is, decision-makers often find themselves drowning in data. The past decade has brought significant changes in the type, detail and, perhaps most importantly, the volume of data on energy consumption from the individual device level all the way to building systems or across a portfolio of buildings. For some, the bombardment of data may be causing analysis paralysis. The 2013 EEI survey found that nearly one-third of organizations report decision-makers continue to analyze the data on a quarterly basis or less frequently. This indicates that as a practice, energy analysis may lag behind other management priorities. ENERGY DATA COLLECTION AND ANALYSIS Global data management practices not showing significant change. 100% 5% 5% 3% 5% 5% 4% 12% 11% 13% 75% 37% 30% 32% 29% 29% 40% 50% 25% 0% 44% 45% 43% 56% 54% 43% 15% 20% 19% Measure & Record In the majority of your facilities, how frequently does your company/organization measure and record its energy usage data? Review & Analyze How frequently do decisionmakers at your company/ organization review and analyze energy usage data? Don t know Quarterly Monthly At least weekly Manage Energy by Setting Goals p. 4

5 To the extent that facility professionals may not have the time, tools or skill to make sense of the volumes of data available to them, advanced software now gives them reliable, sophisticated results automatically and proactively without requiring them to be experts in measurement and verification. Industry best practices are embedded into the software, and perhaps most importantly, today s tools bring information to life in a way that s understandable, meaningful and relevant. They offer: Data Interpretation: Graphical representation of data provides context and relevance, making it easier to make informed decisions. Images, pictures, colors and maps all help users make sense of information and clearly convey performance and trend information like time, distance, speed, direction, order and importance. Today s energy management tools are designed to be userfriendly, making it easier than ever for facility professionals to spot areas for improvement, prioritize efforts, document progress and report the results confidently. Prioritization: As fault-detection tools become increasingly sophisticated, the volume of data being generated about building system performance can be overwhelming. Today s top-tier software solutions sift through identified faults and prioritize them, so decisions-makers can easily see which efforts will have the greatest impact. Monetization: The most sophisticated measurement and verification tools not only identify and prioritize faults; they also calculate the actual cost of the faults, providing facility professionals with demonstrated return on investment. While sophisticated, today s energy management tools are designed to be user-friendly, making it easier than ever for facility professionals to spot areas for improvement, prioritize efforts, document progress and report the results confidently. 2 Those who set formal energy management goals are more likely to take action. The 2013 EEI survey reported a direct connection between an organization s goals and its actions. It compared the actions taken by organizations with no goals, internally communicated goals and publicly stated goals. The survey found that organizations that set goals, whether the goals are communicated internally or to the public: Invested more in energy efficiency or renewable energy: 95% of organizations with public goals invested in energy efficiency or renewable energy in the past 12 months compared to 55% of organizations with no goals. Manage Energy by Setting Goals p. 5

6 According to the U.S. Environmental Protection Agency (EPA) ENERGY STAR program, most organizations can achieve annual energy savings of 2% to 10% through better energy management. Adopted significantly more energy efficiency measures in the past 12 months. Planned to increase investments: 72% of organizations planned to increase investments in energy efficiency or renewable energy in next 12 months compared to 26% of organizations with no goals. Have stronger energy management practices across a variety of metrics including benchmarking energy performance and establishing an action plan to implement energy projects. 3 Achieving energy efficiency goals helps to create a competitive advantage. The impact of successful energy management programs cannot be overstated. Efficiency boosts the bottom line, contributes to profitability and helps to build a loyal base among employees, customers and shareholders. Cost savings: According to the U.S. Environmental Protection Agency (EPA) ENERGY STAR program, most organizations can achieve annual energy savings of 2% to 10% through better energy management.³ And while the reduction of electricity use is often a primary goal, today s facility professionals are broadening the scope of energy management to achieve even greater cost savings. The 2013 Deloitte study showed two-thirds (69%) of companies have set goals related to natural gas consumption in 2013, up from 58% in the 2012 study. Sixty-two percent of companies say they have goals to improve the energy efficiency of their transport fleets, compared to 51% in the 2012 study. Nearly three-fourths (73%) have set goals related to water usage. Manage Energy by Setting Goals p. 6

7 Improved resource allocation: Energy is the most funded and least constrained part of a facility manager s budget, yet reductions in energy spend won t always be reallocated within the budget, a reality identified in the Johnson Controls Operation and Maintenance Constraints survey. But by creating efficiencies, building management teams are often freed to focus their efforts on developing proactive strategies, rather than reacting to building system issues. DEGREE OF BUDGET CONSTRAINT Energy Retrofit/Replace Maintenance/Repairs Administration/Security/Cleaning Most funded Somewhat funded Not constrained 3% 11% 9% 14% 15% 15% 21% 24% 23% 26% 27% 31% Somewhat constrained 27% 36% 36% 40% Most constrained 2% 5% 7% 27% 0% 10% 20% 30% 40% 50% Brand value: By achieving energy management goals, organizations send a positive message to customers, shareholders, employees, recruits and the community. And while communicating successful results clearly enhances a company s reputation and increases brand value, it also creates market value. In a 2012 study published in the Journal of Business Ethics, researchers found that the net income of firms with reputation for sustainability leadership has a higher valuation by the market, when compared to firms without such reputation. 4 Property value: According to the Institute for Building Efficiency, most available data shows increased value for ENERGY STAR- or LEED-certified buildings in the U.S. compared to standard buildings. 5 That conclusion is based on data covering 1.5 billion square feet of LEED-certified space and 2.5 billion square feet of ENERGY STAR-certified space in the U.S. today. In comparison with conventional buildings, studies in the U.S. have found that certified buildings have: Rental rates higher by 2 to 17 percent Resale value improved by 5.8 to 35 percent Occupancy rates higher by 0.9 to 18 percent Manage Energy by Setting Goals p. 7

8 The role of energy management in achieving organizational goals Energy management continues to be an important focus for decision-makers in the commercial, industrial and institutional sectors worldwide. As recent research has shown, organizations that achieve energy management success are likely to share one common attribute: They set energy reduction goals and have formal mechanisms to measure results and track progress. The benefits of a well-executed energy management plan extend well beyond the wall of the facility manager s office. Efficiency helps to create the best value environment and can be a significant contributor to reaching broader organizational goals. Property is worth more. Brand reputation is enhanced. Worker productivity increases. A number of studies point to the relationship between improved thermal comfort, indoor air quality and ventilation rates and worker productivity suggesting that by taking these measures, organizations may increase productivity by 5 or more percent. 6 These benefits, along with potential energy savings of 2% to 10%, combine to build a compelling case for the implementation of formal energy management programs. To learn how Johnson Controls can help with your building efficiency goals, visit johnsoncontrols.com/buildings. For additional insights and research, visit johnsoncontrols.com/whatspossible. ¹ Institute for Building Efficiency, Retrieved from Green-Building/multiple-studies-document-green-buildings-add.aspx ² DeloitteCenter for Energy Solutions, Deloitte resources 2013 Study The Power Shift: Businesses Take a New Look at Energy Strategy, Retrieved from Dcom-UnitedStates/Local%20Assets/Documents/Energy_us_er/us_er_reSources2013Business_ July2013.pdf. 3 EnergyStar, The Business Case for Energy Efficiency. Retrieved from energystar.gov/buildings/about-us/how-can-we-help-you/build-energy-program/business-case 4 The Value Relevance of Reputation for Sustainability Leadership, Isabel Costa Lourenc o Jeffrey Lawrence Callen Manuel Castelo Branco Jose Dias Curto, Retrieved from usp.br/dcms/uploads/arquivos/ppgcc/paper%20jbe%202013_apresentacao_isabel.pdf 5 Institute for Building Efficiency, Retrieved from Green-Building/multiple-studies-document-green-buildings-add.aspx 6 FacilitiesNet, Studies Relate IAQ And Productivity Retrieved from Manage Energy by Setting Goals p. 8