By Neil Kolwey and Suzanne Pletcher
Many companies with large industrial facilities would like to improve their energy efficiency. But one of the largest barriers to energy savings is simply a shortage of staff time to focus on energy management.
Rocky Mountain Power (RMP), a subsidiary utility of PacifiCorp that provides electricity services in Utah and Wyoming, is one of a growing number of utilities that are tackling this issue with an innovative program that puts a dedicated energy management professional inside an industrial customer’s facility.
The potential for large cost savings from energy efficiency upgrades to industrial operations often justifies the salary of a dedicated energy manager—and some utilities will pay all or most of that salary.
One large industrial company in Utah hired a new energy manager through the RMP program in 2014. After the 12-month performance period, the customer documented energy savings of 4.5 GWh per year, for which it received $113,000 from RMP to pay for the energy manager’s salary. The energy savings reduce the customer’s electricity costs by $270,000 per year.
There are at least five utilities currently that provide funding to help industrial customers hire on-site energy managers. RMP and other utilities find that incentives help industrial customers overcome the staffing barrier can help both company and utility achieve much greater energy savings. Well-designed energy manager funding programs are cost-effective for utilities and can lead to on-going engagement and energy savings from large customers, the paper said.
Most Industries Have Ample Opportunity To Save Energy and Money
Most industrial facilities have ample opportunities for energy efficiency improvements through equipment upgrades and better operating practices: Recent studies estimate 14-22% potential energy savings in the U.S. industrial sector. However, achieving this potential requires an energy manager with skills to:
- Lead the process of identifying energy efficiency opportunities;
- Negotiate for management approval to invest capital in energy efficiency equipment upgrades; and
- Coach and train fellow employees to find and implement operational improvements.
Many companies fail to recognize energy as a manageable cost, and/or are unwilling to devote trained staff to energy management. Without a dedicated and trained energy manager, energy efficiency improvements occur sporadically at best, and most of the cost-effective opportunities are overlooked.
The mining sector can be particularly challenging to engage in energy efficiency programs. However, BC Hydro, an electric utility based in British Columbia, achieved more than 75 GWh of energy savings from its mining customers during the fiscal year April 2014 through March 2015. According to Gareth Clark, BC Hydro’s mining sector energy manager, 100% of the savings came from customers with utility-funded energy managers. Without this type of incentive, he said, mining facilities mainly focus on production and are reluctant to devote staff time to energy efficiency.
Utility Program Design
At least five utilities currently provide incentives for large customers to hire a full- or part-time energy manager. The number of utilities offering this type of program is expected to increase, and discussion about these incentives at industry conferences is on the rise.
Most current programs provide incentives based on actual energy savings achieved, with some funding up front to encourage the customer to hire an energy manager or to free up other staff time to devote to energy management. All of the programs provide up to 100% (or a large fraction) of the energy manager’s salary as long as sufficient energy savings are achieved. Also, all of the programs will continue the funding of the energy manager indefinitely as long as energy savings continue.
Results And Cost-Effectiveness
Because utilities must justify to their regulators their incentives for hiring energy managers, it’s important to quantify energy savings so that these programs can demonstrate their cost-effectiveness.
Examples of quantified results for the same five utilities are shown below:
In addition, all of the programs offer complementary training in strategic energy management (SEM). The training teaches energy managers to identify and implement operations and maintenance improvements as well as capital-based energy efficiency projects. SEM training also helps industries and their energy managers to develop systems for pursuing on-going energy efficiency improvements that continue energy operational cost-savings over time.
Neil Kolwey is an Industrial Energy Efficiency Program Manager at the Southwest Energy Efficiency Project (SWEEP) and author of a white paper on the subject, Energy Manager Co-Funding: You Can’t Manage Without a Manager.
Suzanne Pletcher is Director of Communications at SWEEP. SWEEP is a public interest organization dedicated to advancing energy efficiency in the Southwest states of AZ, CO, NM, NV, UT and WY.