Fundamentals of Strategic Energy Management
Jul 5, 2017
Fundamentals of Strategic Energy Management (SEM)
The concept has been around for a few years, but now that building automation, monitoring and energy management processes are more affordable and ubiquitous, we are seeing renewed interest in Strategic Energy Management (SEM). In this blog I go over the fundamentals of SEM for anyone giving a second look to this methodology.
In a Consortium for Energy Efficiency (CEE) paper summarizing 2016 SEM, the CEE defines SEM simply as “taking a holistic approach to managing energy use in order to continuously improve energy performance, by achieving persistent energy and cost savings over the long term. It focuses on business practice change from senior management through the shop floor staff, affecting organizational culture to reduce energy waste and improve energy intensity. SEM emphasizes equipping and enabling plant management and staff to impact consumption through behavioral and operational change. While SEM does not emphasize a technical or project centric approach, SEM principles and objectives may support capital project implementation.” (from CEE’s “SEM Minimum Elements”)
At minimum, elements of a SEM approach include customer commitment, energy management education, and the measurement of energy performance.
First, let’s go over some basic terms used in this discipline.
Energy Management puts in place an energy management system (EnMS) that follows the Deming Plan-Do-Check-Act (P-D-C-A) framework that has been successfully applied within manufacturing facilities for quality, environment, and safety continuous improvement initiatives. (from ISO 50001 Energy Management Standard)
Energy Management System (EnMS) is a set of interrelated or interacting elements to establish an energy policy and energy objectives, and processes, procedures and people to achieve those objectives. (from ISO 50001 Energy Management Standard)
Energy Management Information Systems (EMIS) are software tools that store, analyze, and display energy consumption data. The EMIS is useful for feeding actionable energy information to the right people so that they can make better decisions to manage energy consumption. (See ACEEE’s “Industrial EMIS for SEM Applications”)
Energy Performance Indicator is a quantitative value or measure of energy performance, as defined by the organization. Indicators can be expressed as a simple metric, ratio or more complex model. (from ISO 50001 Energy Management Standard)
Why consider SEM?
As a consultant, I work with both utilities designing energy management programs for their customers, and with customers themselves. From a utility perspective, SEM can be a way to achieve savings for their portfolio without incurring high customer acquisition and savings acquisition costs. In addition to incentivizing customer investment in new technologies or solutions, utilities can also help customers eliminate waste and optimize operations to reduce energy consumption. Moreover, providing this kind of expert assistance, utilities expand their relationships with their managed accounts – an added bonus for today’s customer-centric utilities.
From the customers’ perspective, there are benefits to their triple bottom line. They can significantly reduce their energy costs with low- to no-cost investment in SEM services that realistically optimize building performance, occupant behavior and operational processes. Along the journey, customers also improve productivity, since energy efficiency translates into operational efficiency. The attention to building operations also makes for happier facilities managers and building operations managers. Beyond the positive impact on profits and people, SEM is a foundational way to achieve desired results for any business meeting sustainability and/or stewardship goals.
How does SEM play out?
Three elements work iteratively in an ongoing SEM process:
Policy and Planning – Conceptualizing your system, team structure, and policy development
Action - Performing assessments, developing opportunities, conduct monitoring & measurement, internal audits, and corrective actions
Review - Conducting management review and adjusting your system based on the outputs from the management review process
When Nexant works with customers, we typically begin by helping customers develop their energy policies and goals. We then help customers form in-house Energy Management Teams devoted to refining, carrying out and optimizing the SEM plans. As a foundation for tactical activity and measurement, we create an Energy Baseline and Energy Performance Indicators. In the Action phase, we work with Energy Management Teams to implement process solutions and install and operate energy management systems (EnMS). Then, we iterate by continuously monitoring performance against our baseline and KPIs, engaging in regular management review, and making continual adjustments to optimize the combined performance of automation, behavioral and process changes.
Here is a sample of the kinds of energy performance indicators we consider:
Typically, it takes a couple of years for SEM to really change the culture of operations. However, once management is aligned about committing to SEM, basic energy management systems can be installed and improvements can be made to facilities management that will yield immediate benefits.
(Source: DOE presentation “Introduction to the Superior Energy Performance Program” July 2016)
Energy Management Models
There are generally two main models for energy management that are applied to SEM projects: ENERGY STAR® and ISO 50001.
(Sources: Energy Star and ISO)
The rigor of the approach and models used will determine the outcome of an SEM initiative. The process described in the Energy Star flow above is a good launching point, but does not necessarily have the same level of accountability that you would get with ISO’s model. By implementing ISO’s more rigorous monitoring and documentation activities, a facility will be better able to operationalize energy management for longer term benefit.
In an SEM approach, a certified Superior Energy Performance (SEP) trainer can help a facility to make the transition from the foundational work of an Energy Star initiative to the more robust level of effort and investment required for the ISO 50001 initiative. An SEM trainer certified in DOE’s Superior Energy Performance approach would educate facility managers in all the principles of SEP, helping and equipping facility managers to coordinate and manage EnMS and EMIS installations, document processes, and measure and report on results.
(Source: DOE Presentation)
A note about savings incentives
In many utility programs, we offer incentives to help motivate customers to remain engaged. The ongoing incentive, however, is the continual gains in operations and management savings. If a customer is operating an EnMS properly, savings should not just be lucky breaks – they will be planned, understood, and strategically engineered. This is where evaluation is important; proper and rigorous measurement and verification tactics will distinguish and accurately attribute savings to demonstrate ROI, benchmark performance, and validate incentive claims.
Are you an ideal candidate for SEM?
Characteristics of successful SEM participants include:
Large energy users
Senior management support to improve energy performance
Experience with continual improvement processes
Additional metering capability is a plus
Willing to make a commitment
ACEEE has a series of papers making the business case for Strategic Energy Management programs and offering case studies of effective practices:
The Second Generation of Strategic Energy Management Programs is authored by contributors from AEP Ohio, Efficiency Vermont, and National Grid.
Accelerating the Adoption of Strategic Energy Management through Stakeholder Engagement is authored by contributors from Idaho Power Company and Cascade Energy
Strategic Energy Group’s Kevin Collins and Ed Birch assessed Strategic Energy Management Maturity and Its Impact on Savings and Savings Persistence. (They misused an apostrophe in their actual title, but we forgive them because of the solid impact analysis they conducted.)
Energy.gov has a resource page devoted to data-driven, strategic energy management, with even more links to energy management planning and retrocommissioning guidance from both the Department of Energy and ENERGY STAR®.
Across the pond, UK consulting company Priva has written a good briefing for facilities managers and building managers on how to take a more structured approach to energy management using modern monitoring and building automation solutions.
If you aren’t ready to embark on building automation and monitoring, you can still be smart, strategic and structured. Nexant experts have helped many facilities to focus on the right management process improvements and retrocommissioning projects that would yield the most returns on investments. Contact an expert at firstname.lastname@example.org and ask for SEM expertise in your subject line.
Stay tuned for PART 2 our blog series on SEM, where we will hear from Matt Millage, a Certified Trainer for the DOE’s Superior Energy Performance Program