Thursday, July 26, 2012

Do You Want Industry to Improve its Energy Efficiency?

Do you want industry to improve its energy efficiency? Two things need to happen:

1. Address energy in terms of outcomes that are important to industrial leaders. That would be MONEY. It's pointless to frame the discussion around electricity or gas. It's also misleading to perceive energy efficiency SOLELY as a one-time capital investment project. Energy viewed through the prism of fuel or project type imposes silos of thinking that are meaningless to corporate leaders who set priorities for their facilities. Regardless of what product they make, these facilities have one thing in common: they are money-making machines that convert valuable inputs into outputs of even greater value. VALUE is the key here, with value defined as the ratio of net wealth created to wealth invested. Value is therefore a percentage-- a rate of return. Look around you: every instance of investment and lending is measured by a rate of return... everything except energy improvement "projects" which are measured instead by simple payback. When you invest in a mutual fund, do you measure its performance with simple payback?

2. Empower facility managers-- the people whose day-to-day decisions impact energy consumption-- to create value through the recapture of energy waste. This means managing energy the same way you manage money, using goals, decision rules, performance metrics, and accountabilities that make smart energy choices part of standard operating procedure.

We ask why industry is cool toward energy improvements. Stop talking about solutions from the vantage point of your silo. Point to the value outcome. Hint: You really should say more than "reduce your utility bill."


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