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How to use long-term thinking when choosing near-term energy solutions

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Aerial view of warehouse. Image courtesy of Getty Images.

This article is sponsored by Shell Energy.

Large organizations in the commercial and industrial (C&I) sector might allocate millions of dollars to their annual energy budgets. Many also struggle with disruptive outages, and there is also mounting pressure to reduce emissions from regulatory bodies, investors, customers and internal stakeholders alike. As a result, C&I leadership must make increasingly complex, critical decisions about how to power their operations. 

At Shell Energy, my team and I connect these leaders with power supply and energy solutions to meet their pressing needs — with the foresight required to support the long-term energy transition. And let’s be clear, finding a fit-for-purpose solution is critical when looking at these kinds of decisions.

The Shell Energy team doesn’t blindly advocate teardowns and massive overhauls, because we understand that business decisions must balance cost, risks and value, and that end-to-end decarbonization will require many layers of solutions, including technology that is not yet available or economically viable at scale. And not only that, but in some instances a company might already have some good infrastructure in place that we can work to build on.

Instead, we consider a phased, tailored approach — one that considers current business priorities, regulatory requirements and financial risks against long-term success. 

What does this approach look like in practice? Shell Energy can offer renewable energy supply and associated renewable energy credits (RECs) as well as behind-the-meter energy solutions such as onsite or infrastructural assets that can give facilities greater control over energy consumption, emissions and costs. This large scope helps us assist C&I customers wherever they may be in their decarbonization journey. 

When discussing which energy solutions businesses should prioritize, we apply this three-phase approach.  

First, maximize efficiency

Key efficiency upgrades can significantly reduce a facility’s overall energy consumption immediately upon installation. As a result, these upgrades can pay for themselves in cost savings in a matter of months. 

Reduced consumption is likely to have a snowballing positive impact on future energy costs through a number of mechanisms:

  • Innovative financing: As-a-service/subscription payment models make it possible for energy efficiency upgrades to be paid for out of operating expenses rather than capital expenditures without upfront costs. In many cases, our energy efficiency customers have seen cost savings more than make up for the monthly operating expense. 
  • Lower taxes: C&I kilowatt hours are taxed by volume, so less consumption means lower taxes. And some businesses may qualify for tax credits for certain investments.
  • Less emissions to be compensated for: If a customer makes a decision to seek RECs to mitigate their carbon impact, shrinking the overall load diminishes the number of RECs that must be purchased to compensate.

Second, manage the megawatts

We use this phrase to describe energy solutions that grant organizations greater visibility or control into how energy is being used at their site(s). These insights set baselines, inform long-term goals and highlight areas of opportunity.  

More advanced measures include the ability to shift energy consumption to off-peak hours. The cost and carbon intensity of energy drawn from the grid varies with different times of the day. Off-peak hours are when energy generally costs less and is less carbon-intensive. 

Solutions to "manage the megawatts" might include:

  • Submetering: A key part of onsite energy strategy, submetering reveals detailed insights into which systems use power, how much and when, identifying flexible loads so they can be moved outside of peak grid pricing. 
  • Energy management: Energy management systems enhance oversight and visibility into real-time and historical energy use (even across multiple facilities) with automated controls and advanced analytics. 
  • Demand response: In areas where demand response programs exist, businesses can leverage load-shaping techniques to help stabilize the grid and better manage energy costs during peak demand periods and earn statement credits or revenue from the grid provider for their efforts. 

Third, assess future needs and emergent priorities

After the first two phases, the business or organization has a solid foundation from which to set goals, assess priorities and make forward-thinking energy investments. They are also likely to have the foundational submetering or energy management technology in place to help maximize the value and fully enable some of these solutions. 

This stage is an advantageous time for evaluating options such as:

  • Backup generation: Backup generation allows facilities to remain functional in the event of an outage via natural gas generators that provide an alternate power supply. Secondary power options are most important in areas where the grid is subject to frequent outages, at mission-critical businesses such as hospitals/healthcare sites, and industrial locations (such as cold chain facilities) where lapses in power are particularly costly.
  • Onsite renewable generation: Often used in conjunction with energy storage or microgrids, onsite renewable energy can help optimize energy costs, reduce dependence on the grid, and meet decarbonization goals. 
  • Electric vehicle charging: Transitioning to EVs or EV fleets eradicates tailpipe emissions, which can be a significant source of C&I Scope 1 emissions. EV transport solutions provide comprehensive planning, installation, configuration and maintenance — and once installed, the charging infrastructure can often integrate with larger load shaping strategies. 

What about energy supply?

Renewable energy supply, carbon credits and RECs are also key factors in the decarbonization equation. These supply solutions go hand-in-hand with the onsite solutions mentioned so far. 

Even if your organization wishes to power a facility or business on 100 percent renewable energy, there is still value in this three-phase approach. Maximizing efficiency and setting clear benchmarks alongside renewable supply offers potential benefits such as cost savings, accelerated decarbonization and improved environmental, social and governance (ESG) report metrics. 

Shell Energy can help you navigate the complexities of the energy transition. Discover how we can create a path to a better energy future together at ShellEnergy.com.  

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