Energy management success secrets from Comcast and EDF
Energy management long has been an important aspect of day-to-day corporate operations, but practices have grown more sophisticated, nuanced and strategic in recent years. While the aim of energy management initially was to reduce costs and ensure operational integrity, it has blossomed into a key tool for combating climate change, engaging customers and employees, and generating reliable and predictable savings over time.
Growth in this area has been so significant that the market size for global energy management systems was estimated at $23.05 billion in 2015, and projected at $72.73 billion by 2024.
A GreenBiz webinar earlier this month highlighted strategies for scaling success in energy management. Several salient takeaways emerged:
- Wrangling data is critical.
- The environmental impact of energy projects is increasingly positive.
- Project financial performance has improved over time, but may require larger up-front investment.
Step 1: Get help
The Environmental Defense Fund (EDF) Climate Corps is "a summer fellowship program that embeds trained, custom-matched graduate students inside leading organizations to accelerate clean energy projects and strategy." It has placed fellows at Comcast, Adidas Group, Tiffany & Co., Nestlé Waters and elsewhere to help develop programs to jumpstart energy management solutions.
According to EDF, Climate Corps so far has identified more than 2 million metric tons of carbon dioxide reduction opportunities (430,000 cars’ worth of annual emissions) and more than $1.5 billion in potential energy savings.
EDF Climate Corps typically focuses on large companies, particularly those with substantial portfolios of buildings. It has deployed more than 700 fellows since 2008, and gleaned insight along the way into energy management practices at a broad range of industry players. EDF elected to distill that insight into a recent report, Scaling Success: Recent Trends in Organizational Energy Management (PDF).
When the Climate Corps program launched in 2008, all of the projects it supported were geared toward commercial and industrial energy efficiency. Since then, participating organizations have diversified into a broader set of energy strategy projects. By 2015, half of Climate Corps’ projects fell under five additional categories:
- Sustainability strategy
- Clean energy
- Data analysis
- Financial evaluation and planning
Step 2: Get data
Comcast has had an EDF Climate Corps fellow every year since 2013. David Newman, Comcast’s senior director for environment, health and safety, believes the program has helped the company with efficiency improvements, and hopes to work with yet another fellow in 2017 to build on previous fellows’ achievements.
Comcast’s program covers 1,000 facilities in its northeast division, including more than 500 "headends," which are control centers in a cable television system where various signals are brought together and monitored before being introduced into the cable network.
At the outset, Newman said, Comcast needed to build up data. The company could not design an effective program without first establishing a clear understanding of its existing performance. Comcast started with small data centers, which are energy intensive and produce a lot of heat, even as keeping the headend cool is critical to performance.
The company’s first Climate Corps fellow focused on helping Comcast to understand the basic power use effectiveness (PUE) of multiple data centers, as well as the costs of and opportunities for improvement. Initial efforts were designed to reduce cooling costs, using the PUE ratio to gauge effectiveness.
"For us, data was really the beginning," said Newman. As projects started to prove their value, Comcast brought in new fellows to help continue the work. Subsequent efforts focused on scaling up projects and building the business case around these changes. Among other initiatives, the company worked with utilities to obtain rebates from incentive programs, helping to standardize Comcast’s process for future data center energy efficiency.
Small successes led to bigger conversations about larger projects, but only because everything had been documented along the way. According to Newman, facilities teams now push for energy efficiency on their own, rather than simply reacting to mandates from management.
Shifts in the playing field
The average initial investment in energy management projects has increased steadily since 2008. Ellen Shenette, an EDF Climate Corps analyst, believes the era of no-cost or low-cost projects may be over. But she observes that projects’ net present value (NPV) has increased threefold over the same period, and that simple payback has held more or less steady. Shenette identified one notable exception to the overall trend: The average payback period for the Climate Corps’ clean energy projects has decreased dramatically in recent years.
Meanwhile, Climate Corps projects offer more environmental bang for the buck each year. Average annual carbon dioxide emissions reductions have grown more than fivefold since 2008, and have outpaced the scale of financial investments and returns.
This suggests that if regulatory measures to constrain carbon were to be implemented at some point in the future, the financial value of energy management would jump concomitantly. Even under current circumstances, various forces are driving improvements in this area. For instance, more organizations are using environmental metrics — not just financials — to evaluate projects, and some are even using a shadow price for carbon in their models, noted Shenette.
Barriers to implementation vary by sector, but some are common to all. As noted earlier, limitations of project analysis or insufficient data and tracking can stop a project dead in its tracks. Lack of executive or high-level support can inhibit progress, as well. Comcast’s Newman believes that it is critical to have someone from engineering and someone from facilities on the case with you.
Poor visibility or reporting also can stymie energy management efforts. Newman stressed the importance of making sure that projects are visible to employees, not just "in the boiler room." Comcast features various programs and projects on its employee intranet. Having data and using it to tell a story can be a very powerful tool.
Going forward, all indications suggest that energy management projects will continue to grow in scale and sophistication. According to EDF, some of its participating companies are looking at creating carbon inventories, potentially for use in reporting to CDP and other sustainability data aggregators. Others are working more on tools and resources to obtain internal funding for projects, including capital budgeting models, creative financing structures and green revolving funds. For instance, EDF Climate Corps fellows recently worked with Adidas Group to start that company’s sustainability venture capital fund.
For its part, Comcast is looking to deepen its efforts. Newman emphasized the importance of changing the way the company procures equipment. For example, Comcast has discovered that it can use "free cooling" as far south as Virginia. Free cooling uses outside air or water to cool data center facilities, as opposed to using powered refrigeration or air-conditioning units.
Comcast views this as one of its biggest opportunities for energy reduction. However, implementing free cooling is an engineering challenge unto itself, and requires significant adaptation of processes, equipment and procedures.
For those looking to pursue energy management possibilities in their own organizations, Comcast’s Newman offers a few words of advice:
- It takes a village.
- Engage the utilities early.
- Bite-sized chunks add up.
- Find champions to support your work.
Meanwhile, EDF is accepting applications from organizations that would like to host a Climate Corps fellow in 2017. Between the burgeoning development of company energy management strategies and the availability of skilled assistance, this looks like a good time to launch or deepen organizational engagement in this area.