By Steven Horowitz
The Green New Deal has focused a lot of overdue attention on building energy efficiency, but while we weren’t looking, states, cities and companies have set their sights on aggressive targets for reducing building energy use. Just two examples: the California city of San Jose is demanding that all commercial buildings be net carbon neutral by 2030, and Procter & Gamble has pledged to cut emissions in half at all manufacturing facilities by 2030. These are challenging goals, and our experience with global enterprises shows you can dramatically reduce energy use across a portfolio with today’s technology — and save money doing it.
The case is clear: The average Energy Star–certified commercial building saves 35% in energy costs. LEED-certified buildings saved owners about $1.2 billion in energy costs between 2015 and 2018, according to the U.S. Green Building Council. HVAC optimization, which contributes to both Energy Star and LEED certification, can save up to 8% of total energy use in commercial buildings just on its own. As the need to reduce climate changing emissions grows more urgent, large organizations are under increasing pressure from customers, employees, shareholders, and governments to take the lead.
The question is how can these organizations maximize their energy efficiency across their entire portfolio, and do it in a way that is, well, efficient? Implementing complex energy efficiency projects across a global (or even regional) building portfolio can raise so many challenges that efforts stall out, sometimes before they even get off the ground.
Judging by our firm’s work with 10 Fortune 50 companies at sites in 11 countries across North America, Europe, and Asia, the ones that surge ahead tend to share a set of approaches that encourage stakeholder buy-in, provide sustainable financial support, and ensure positive outcomes across all sites.
1. Evangelists with power create momentum
Any corporate project needs a champion, and when ambitions span multiple facilities across multiple geographies, it’s essential. Even word from on high may not be enough to make a pilot project happen, much less roll out a successful pilot across the portfolio. Often the evangelist is an internal energy manager who can introduce new technology to different teams and facilitate communication across sites. A good advocate has the authority to make big decisions while also remaining close enough to the ground to see what’s happening on a day-to-day basis.
We’ve seen the best- and worst-case scenarios. One U.S.-based champion we worked with leveraged knowledge of his company’s international landscape to help us as well as his internal teams navigate projects at sites in China and Malaysia. With another, the initiative got great initial results but stalled after the pilot due to insufficient visibility into the rest of the organization.
2. Ongoing funding strategies fuel sustainable initiatives.
As with most projects on an enterprise scale, companies typically begin HVAC optimization and other efficiency upgrades with a pilot project at a single site and then expand across their facilities portfolio when the value is proven. When there’s no funding source lined up beyond the pilot, though, successful implementations often don’t spread. We’ve seen three effective approaches to funding energy efficiency initiatives: portfolio, program, and project funding.
The portfolio approach bundles solutions together to maximize results. Grouping projects with a lighter touch and speedy ROI with more capital-intensive projects that tend to have a longer ROI allows you to achieve more while still providing an overall return that is attractive to the finance team. The same principle applies to bundling new equipment purchases with software implementations, and coordinating energy efficiency projects with other building retrofits.
Another approach treats energy efficiency as a self-funding program. When the University of Texas at Austin, one of the largest universities in the U.S., expanded its campus, it invested in HVAC optimization to mitigate the increased energy consumption of new facilities. It planned an eight-year program so that savings from the first project could pay for the next. As savings grew, the university expanded its optimization program.
A third option is a dedicated central fund that pays for energy efficiency projects or other sustainability initiatives at corporate sites, so projects don’t affect budgets at the sites making improvements. One of our Fortune 50 customers has a separate fund that enables sites to go over their annual capital spending budget for energy projects approved by the corporate energy team. This allows sites to tackle projects at any time rather than having to fit them into a particular fiscal year. Organizations that understand the long-term impact of reducing their energy spend and then budget accordingly will come out ahead from both a sustainability and financial perspective.
3. Consistency is the mother of enterprise adoption.
Companies that are most successful at implementing enterprise-wide building energy upgrades prize consistency. That means standardizing as many project elements as possible, including vendors, deployment strategy and internal teams.
Stable teams are important on both the corporate side and the vendor side. Corporate project managers with a bank of experience can apply learning on previous projects to new ones, and they are better equipped to navigate around site-specific roadblocks. On the vendor side, we’ve seen the benefits of putting the same team to work for one enterprise on 42 sites in six countries: the knowledge transfer to each corporate site was significant, and we’ve been able to shave ramp-up time. Readily available documentation and one set of rules for all sites also help to make each new project go as smoothly as possible. And having a master services agreement that spells out how companies and their vendor partners work together also helps speed up rollout and reduce costs in the long term.
These project approaches aren’t silver bullets—many other factors are in play as well. But when these elements are in place, it’s much more likely that an enterprise will be able to reap the full benefits of energy efficiency projects across its site portfolio. These real-world savings by a global customer tell the story: our first HVAC optimization project delivered $96,000 a year in energy savings for the pilot site. Three years later, 19 sites saved the corporation $3.3 million. In 2018, 42 global sites delivered $8.3 million in energy savings. Without strong, consistent processes, the project might have left those millions (and nearly 4,000 metric tons a year of CO2) on the table.
Horowitz is director of business development at Optimum Energy, where he leads enterprise-level account acquisitions, marketing and product licensing. Based in Seattle, WA, the firm enables campuses, hospitals, pharmaceutical plants, high-tech manufacturing facilities, data centers, and other commercial operations to cut energy costs and meet sustainability goals by optimizing HVAC systems.