When I need a reminder of why RBS/Citizens Financial Group is investing in energy efficiency, I take a step outside and experience the summer of ’10 for myself. To borrow (and slightly bend) a phrase from Tom Friedman: three words describe exactly what is going on -- it is hot, costly and crowded out there.
According to the National Oceanic and Atmospheric Administration (NOAA) the first six months of 2010 were the hottest on record since the agency began recording temperatures in 1880. Moreover, many in the Northeast have experienced a record breaking July. In Providence, RI, where Citizens Bank is headquartered, the average temperature at T.F. Green Airport has been 74.8 degrees since June 1, which is the highest average temperature on record for that period of time, and over 4 degrees hotter than the normal average.
The 12-state operational footprint of RBS/Citizens encompasses some of the most expensive electricity markets in the United States. According to the latest data from the Energy Information Administration (EIA), the average price of electricity this April was just over $0.17 per KWH in the Northeast and just under $0.16 in the Mid-Atlantic. The prices are approximately 45 percent and 35 percent more than the national average, respectively. Furthermore, peak prices for electricity can be 30-40 percent higher than off-peak prices in some areas. Therefore, a 2 percent increase in energy costs due to a prolonged period of hot weather could pose a risk to the bottom line of a company with an energy budget of tens of millions of dollars that keeps thousands of employees and millions of customers cool during the summer months.
In both New York and New England, the organizations that manage the regional power grids (NYISO and ISO-NE) reported near record highs of demand for electricity earlier this month. On July 6th, as thermometers spiked above 100 degrees across the east coast, AC units snapped on and electricity meters spun faster. That day, New England experienced the 4th highest demand for electricity in its history and New York came within a degree or two of their own electricity demand record. In short, the hotter the temperature, the closer we push the power grid to its limits. In the near term, only by lowering the consumption of electricity at peak hours can we reduce the risk of a wide spread power outage in the region.
In order to respond to these dramatic changes in temperature and rising energy costs, RBS / Citizens has undertaken a number of initiatives to reduce overall electric consumption.
- The company is developing a more advanced system to budget, track and project energy costs and consumption at individual properties in the US. With this improved data, internal decision makers can set more accurate internal targets for energy consumption and costs and then benchmark their performance against industry standards. In addition, RBS/Citizens analyzed how to optimize the use of office space in order to consolidate the company’s operational footprint. This resulted in more effective use of office space, a smaller energy budget and more cohesive and geographically consolidated teams of employees.
- Since the majority of the bank’s energy use is concentrated at its larger facilities, energy audits have been conducted at seven of the largest facilities, resulting in some 4.5 GWH of identified energy savings. In one facility alone, we will be able to reduce our peak demand by more than 100 kilowatts. This is the equivalent of removing two average-sized Citizens bank branches from the grid. We are now in the process of conducting seven more energy audits at critical facilities in order to continue that effort
- In order to address the energy use of smaller facilities, we are working with regional property managers to conduct free energy efficiency audits at a number of bank branches and smaller office buildings. In order to reduce the transaction costs of doing a large number of smaller projects, RBS/Citizens is working to develop and enhance partnerships with electric utilities, energy efficiency auditors and building performance contractors. In the past few weeks, I’ve identified a number of programs offered by the utilities to provide free energy audits for smaller commercial buildings in New York and Connecticut, reached out the program managers and energy efficiency auditors and began supervising energy audits at these smaller properties.
Increasing energy costs have always held the attention of leaders of the company. It is also becoming clear that addressing the challenges associated with these costs in an effective manner will require the company to make investments in energy efficiency. In a world that is hot, costly and crowded, record breaking temperatures make the return on those investments look even better.
Stuart DeCew is a 2010 EDF Climate Corps fellow at RBS/ Citizens Financial Group and a member of Net Impact. He is a candidate for joint MBA/MEM degrees at the Yale School of Management and Yale School of Forestry & Environmental Studies at Yale University. More coverage of the Climate Corps program is available at GreenBiz.com/edfclimatecorps. This content is cross-posted at Vault and the Environmental Defense Fund Innovation Exchange Blog.