A new era of energy management
We’re in an era in which optimizing energy use is an integral part of nearly every corporate strategic plan. Yet corporations still face major hurdles when it comes to successfully implementing a comprehensive energy management program.
The biggest hurdle for most corporations can be summed up in two words-systems integration. A September 2011 report from Verdantix, an independent analyst firm focused on energy, environment, and sustainability issues, concluded as much.
"Optimizing enterprise-wide energy consumption… is a big prize that firms are waking up to," Verdantix stated. "But the vast diversity of energy-consuming assets- lights, security systems, HVAC, boilers, elevators, servers, routers, and manufacturing equipment-means no single application will collect the data from all energy-consuming end points."
Manufacturers face a particularly daunting task when it comes to executing comprehensive energy management programs, largely because their business revolves around the use of complex production equipment.
"The biggest challenge facing manufacturing is dealing with legacy systems. Not just multiple systems from multiple suppliers, but also systems from different generations," notes Feras Karim, senior systems engineer on the energy management team at SAIC.
To execute a true enterprise-wide energy management strategy, manufacturers must be able to simultaneously monitor all energy-consuming components-from the systems that heat, cool, and light the offices to the most sophisticated production machines. That’s where the need for systems integration comes in.
New solutions bring new problems
Recognizing the obvious demand for energy-management solutions, technology vendors have flooded the market with products fitting that description. There are, however, two problems with this development:
- Most of these products are capable of solving only a single piece of the energy-management puzzle.
- Many of these products are built with proprietary technology that doesn’t easily mesh with solutions from other vendors that may solve other pieces of the puzzle.
When it comes to software alone, Verdantix has identified eight categories of energy-management solutions that can be applied in 12 corporate usage scenarios.
The chart outlines the software categories and usage scenarios.
All 12 usage scenarios-which range from simply collecting accurate data on energy consumption to devising strategies for using less energy during peak demand hours, when costs are the highest-would prove beneficial to a manufacturer wishing to develop a comprehensive energy management program.
Such a manufacturer also would be a likely buyer of all eight categories of energy management software, which range from applications for making the most efficient use of heating and cooling equipment to solutions that assist in managing contracts with utility companies to programs that monitor and report how much energy is consumed by computing equipment.
The future of energy management
It’s unlikely that any company would be able to commit both the financial and human resources required to implement all these solutions at one time. However, there is ample evidence that corporate executives recognize the potential benefits of managing energy on an enterprise-wide scale.
In May 2012, Verdantix released a report titled "The Future of Energy Management" based on a survey of 210 corporate executives from around the globe with responsibility for making decisions about corporate energy use.
The survey subjects represented companies with at least $250 million in annual revenue in 21 industries. Nearly half the respondents said they plan to make "significant" changes in the way in which they manage energy over the next two years. The survey also revealed that 35% of corporations already have a global energy strategy that revolves around central decision making.
That’s a major shift-especially in the manufacturing sector-from the long-standing practice of allowing corporate divisions, or even individual plants, to make their own energy-management decisions. In fact, 40% of the companies represented in the Verdantix survey still make those decisions at the national level, while 21% still make them at the local level. But it’s clear that those numbers are changing.
"Corporations really are catching on to the strategic importance of energy management," declares Janet Lin, a senior manager at Verdantix and co-lead of its energy practice. "They also are realizing that central decision making is the foundation for strategic energy management."
As companies move toward strategic energy management, Lin says they ultimately will find themselves adopting new technology, and they would be well served to heed sound IT project management practices when doing so.
Chief among those practices is determining exactly what the organization wants to accomplish before purchasing any new technology. When it comes to energy management, Lin advises companies to "first look at their usage scenario and pick the category of software with the appropriate functionality." That method is likely to lead to an incremental approach to implementing comprehensive energy management, starting with the scenarios and solutions that provide the quickest payback.
Proceed with caution
Because of the nature of the energy management software market, this method also will eventually lead a company to undertake some sort of integration project. This is the time to proceed with extreme caution.
"Integrating systems is the only way to get the most value from energy management solutions," Lin says, "but the more systems a company needs to integrate, the more potential pitfalls they will encounter."
The potential pitfalls include technical and organizational challenges. The technical challenges are fairly obvious-choosing the right solutions and laying out a proper integration strategy. As Lin points out, however, none of that can be done successfully without a true organizational commitment.
This realization is causing something of an evolution of roles within corporations seeking to practice comprehensive energy management. "We are seeing changes such as facilities managers being given the title of energy director," Lin says. "In some cases, IT directors are becoming CIOs and given responsibility for centralized organizations that include energy management resources."
The bottom line is that energy management is becoming a central component of corporate strategy.
The key to making this strategy work, however, remains successful integration. Lin says companies would be wise to at least consider working with a systems integration firm, though she cautions mistakes also can be made in choosing such a firm. "The best approach would be to choose an integrator with expertise in the category of software you’re using."
Feras Karim, SAIC senior systems engineer, contends the best integrators offer vendor-agnostic services, which means they look for the right solutions to meet the needs of each individual customer. Of course, he also says SAIC fits that bill. "We look at what systems customers have in place, and what their plans are going forward," Karim explains. "Then we look at helping them from a true systems integration perspective."
In the manufacturing sector, Karim says, companies typically have two goals: reducing energy usage and cutting greenhouse gas emissions. Helping manufacturers achieve those goals usually involves installing and linking systems that can collect and manage data generated by the broad range of equipment used in the typical manufacturing facility. The proprietary nature of most manufacturing equipment historically made this a difficult task. The good news, according to Karim, is vendors recently have developed a number of "intelligent appliances" that make it easier to integrate proprietary systems.
"We can now work with protocol gateway translators," Karim says. "So if you have systems that talk BACNET, LON, Modbus, Modbus TCP OPC, or other major protocols, you can have a single point to coordinate between different types of devices for a reasonable cost. Previously, if you couldn’t afford an expensive system, you couldn’t do this type of integration."
Even the gateway appliances can prove troublesome for manufacturers who don’t ask the right questions. In their quest to maintain revenue streams, Karim says some vendors employ restrictive licensing agreements that prevent users or independent third parties from working on their devices. That means a company installing such a device may find itself having to employ that same vendor if its energy-management strategy calls for connecting new systems to that device at some point in the future.
Karim concedes that not every company will consider that a negative, but he believes it is something all companies should know before installing any vendor’s appliance.
One way to avoid that problem is to engage with a systems integrator on a managed-services model. Under that arrangement, the integrator would not only select the devices and systems to install, it would manage them as well, relieving the manufacturer of any worries related to connecting new devices in the future.
Karim notes that SAIC currently is monitoring energy usage in approximately 30 General Motors facilities under a managed-services agreement. "The model is that the system itself is totally open-protocols, hardware, servers," he says. "There’s nothing proprietary. We could turn this entire system over to GM without any problem."
Regardless of how a company engages in comprehensive energy management, the potential payback is big.
"Just a simple building tune-up, making HVAC equipment more efficient, can render savings of 5% to 15%," Karim says. "When you go beyond that and start doing things like data mining and making adjustments to implement best practices in scheduling facility and production equipment, you can yield up to a 45% reduction in energy use."
The best part, Karim concludes, is that improvements in technology-such as the new intelligent appliances and new secure wireless networks-are making it easier to grab those savings.