Inside the emerging role of corporate energy managers
In the run-up to this year’s VERGE series of events that kicked off in Boston in May and continue in Paris on June 26-27, we worked with Groom Energy to launch our VERGE Energy Management research program. (To participate in our quarterly energy management research, click here.)
What we found is that, much like the emergence of sustainability executives, there has been a steady increase in companies dedicating a full-time resource to focus on corporate energy management. These sustainability and energy management roles complement and reinforce each other’s mission. However, while the ancillary benefit of a corporate energy management program is to reduce greenhouse gas emissions, the primary motivation for these energy managers is to reduce costs and increase operational efficiency.
Creating an echo effect
We asked more than 3,800 members of the GreenBiz Intelligence Panel to forward our survey to the person responsible for energy management within their company. We received 158 responses, 63 percent of which came from energy managers at companies with revenues greater than $1 billion. The results also reflect responses across a wide range of industries, primarily headquartered in the United States.
As illustrated below, the steep rise in the number of corporate energy managers parallels the rise in full-time sustainability executives (for more about the traits of sustainability executives, see our “State of the Profession” report, downloadable here). Since 1990, the number of full-time sustainability and energy managers has increased by twenty-fold (23 times and 20 times respectively). The growth rates aren’t the only similarity between these two roles as their governance structures use a cross-functional team to helps carry out strategy.
Since 1990, the number of full-time sustainability and energy managers has increased twenty-fold.
There are also significant differences between the roles. Sustainability departments may report into almost any functional area within a company, ranging from marketing to supply chain to legal. The energy management function tends to report into real estate/facilities (39 percent), the sustainability office (18 percent) or a dedicated corporate energy function (18 percent). Another difference between the two functions is that CFOs are more likely to be directly involved in overseeing energy management than they are global sustainability efforts. Our survey respondents noted that 23 percent of CFOs were very actively involved in overseeing energy management efforts while 43 percent monitored those efforts. Only 35 percent said that energy management was not a priority for the CFO.
Image by Peshkova via Shutterstock
We asked how important energy management is in 2013 compared to the previous year. Nearly all respondents replied that it was about the same (61 percent) or more important (35 percent). But when it comes to strategy, 20 percent of those surveyed indicated that their company did not have a formal strategy in place, and 18 percent indicated they had not set annual targets. That can be contrasted to the 64 percent of respondents who have set annual targets and communicated them publicly.
Monitoring and measuring are critical to a successful energy management program and our survey identified the top three key performance indicators that get tracked by senior management, either monthly or quarterly. They are energy intensity by facility (54 percent), overall energy cost year to date compared to previous year or budget (45 percent) and, to a lesser extent, production-related intensity such as energy per production unit (23 percent). But with all that tracking, only 26 percent or respondents said that improvements are reflected as part of the bonus compensation for senior management.
The year ahead
Dramatic changes don't appear to be in store for corporate energy managers in the next six months. Staffing requirements are minimal, with just 11 percent planning to add personnel to the energy-management team.
Projects planned for 2013 include energy-efficient lighting (74 percent), building automation such as HVAC improvements (61 percent) and energy demand-management projects such as smart metering and heating/lighting controls (57 percent). Energy managers are funding energy software and services that can improve performance in one of two ways: either identifying project savings and then searching for funding (35 percent), or having the sustainability group make an initial investment (28 percent) as a proof of concept.
When it comes to the software used to track and manage energy spending, 45 percent of those surveyed said they have the necessary software tools and 18 percent will invest in additional software for other plants and facilities. Twenty-three percent indicated they will purchase software to monitor and manage energy at their facilities for the first time this year.
A source of savings and innovation
Given their direct bottom-line financial impact, the number of companies dedicating full-time resources certainly will increase. Much like the role of sustainability executives in business, however, corporate energy managers won’t be building out large staffs with large budgets to implement their programs. When it comes to energy savings, there is still a lot of low-hanging fruit to be plucked, but this is also a time of great innovation when it comes to energy management. Our series of VERGE events will continue to focus on how the role of corporate energy managers continues to evolve and the new tools and technologies that help them continue to make an impact at their companies.
Image by OhiShiapply via Shutterstock