Tuesday, November 13, 2007

Managing Energy as Currency and Wealth

Energy is simply another form of currency that embodies wealth. Currency creates wealth if it is used properly. Fuel and electricity, like currency, are expended by a business to create new value. A well-run business controls its currency and the wealth it represents. That "currency" can and should include energy.

Consider how currency is used in business. Every business transaction represents some exchange of wealth. Sales, receivables, operations, payables, bank deposits, dividends, and investments—all of these represent a value that is contractually recorded and carefully tracked according to well-documented accounting procedures.

Think now about energy, which is expended at every step of a business operation. Wealth, in the form of money, is used to purchase fuel and power. In factories, energy purchases are converted to heat, pressure, and motive power that convert inputs into finished products. Those products are sold to generate income, which accumulates again as wealth. In commercial and institutional settings, energy improves indoor climates so that staff and clientele are made comfortable and productive—to create wealth.

Many organizations still perceive energy as something less than wealth. Machines are left running unnecessarily. Combustion processes are not regularly optimized. Steam and compressed air leaks allow energy to escape because no one is held accountable for the losses. If energy is handled as anything less than wealth, no one measures its contribution to value added. After it is wasted, no one tabulates the value of potential wealth that is lost. When companies direct their revenue into buying more energy to replace what has been lost, they direct money away from income that would have created more wealth. A large organization may have an army of clerks who track $20 taxicab receipts, yet no one can clearly account for the wealth created by its $20 million in annual energy expenditures.

Energy management establishes the means for managing the wealth that energy represents. Energy, like currency, can be invested, preserved, and positioned to grow a business. Companies that understand this will manage energy like cash, tracking what they consume, waste, recover, and apply to the creation of wealth.



Post a Comment

<< Home

Who links to my website?