Making the right choices in sustainable energy management

Sustainable energy management

Sustainable energy management is a key issue for companies today. As long-term strategic thinkers, energy entrepreneurs must be closely involved in these practices. They play an important role in helping their organizations make more sustainable energy choices. Energy entrepreneurs support energy consumption reduction efforts with their in-depth knowledge of energy costs. And they help steer management towards the right decisions for using renewable energy.

Sustainability aims at striking the right balance between a company’s financial considerations and its impact on people and the planet. Energy entrepreneurs can play an important part in increasing profitability while diminishing companies’ environmental impact. Too often, companies shoot from the hip in their sustainable energy management efforts, rather than deploy a well-structured approach. This can lead to sub-optimal investments, with less carbon saved per euro or dollar invested.

Watch our webinar on sustainable energy management

Energy procurement often only addresses sustainability considerations at the very end, when contracts need to be signed. That’s a pity, as involvement from the very start can lead to better choices, with more optimal result for the financial and the environmental bottom line.

Energy buyers are often on the receiving end of the company’s sustainability strategy, receiving instructions from the sustainability department on how to buy greener energy. This is a shame, as energy buyers are often closer to market realities and in a better position to realize your sustainable energy management goals. Strengthen your role as the energy entrepreneur within your company by becoming a key figure in your company’s sustainability efforts.


The different steps of sustainable energy management

Step 1: Set up a sustainability strategy

An energy entrepreneur will always develop an effective sustainable energy strategy to support his/her actions. Sustainability efforts will generate better results if they are based on a sound, comprehensive strategy. These strategies set clear targets and provide a coherent framework for utilizing the appropriate resources to achieve these goals.

A wide-range of different actors and stakeholders have an interest in sustainable energy use, such as: your industry, clients, government authorities, investors, your financial bottom line, current & future employees, NGOs, the local community, suppliers, etc. An analysis of what drives their interest can lead to smarter choices regarding sustainable energy management. For example, think about:

  • Which targets should be set.

  • How to structure and finance your consumption reduction efforts.

  • How to deal with on-site renewable energy generation and cogeneration projects.

  • How to green your remaining off-grid supply.

Some companies will kick off their corporate sustainability efforts by defining a strategy for sustainable energy management. Others have already designed their sustainability strategy and simply need to fine-tune the broader strategy as it relates to energy management. In all cases, a strategy assessment is a good starting point for greening your energy supply in a more effective manner.

Step 2: Identify the most appropriate sustainable energy technologies

On-site solar panels, windmills, biomass projects, cogeneration, and other renewable energy. With a sustainable energy technology “scan”, you can find out which of them make the most sense for:

  • Reaching your sustainability goals.

  • Achieving good rates-of-return on your sustainability projects.

  • Improving your security-of-supply, e.g. in a remote area.

Are you sure that you are investing in on-site green energy production in the right places? A sustainable energy technology scan will allow you to optimize your choices when it comes to deciding where to make your green energy investments. It will scan the potential of your different sites regarding:

  • Economics: investment costs, savings potential on total cost of energy, subsidies.

  • Technical aspects: availability of resources such as wind, solar or biomass, availability of project partners.

  • Regulatory aspects: government obligations and possibilities / restrictions for obtaining permits.

Sustainable energy technology scans create a return on investment by making sure that you pick the low-hanging fruits first.

Step 3: Negotiate self-generation contracts

The negotiation of contracts for self-generation is often neglected. Contracts are signed without much negotiation or market research. The first project developer that walks through the door often gets the deal. This is unfortunate as we have observed time and again that running an RFP and conducting negotiations leads to important improvements in contract terms. And that generates a lot of money, as these types of contracts are often long-term in nature.

It’s even worth taking the professional procurement approach a step further in this process. Before you start talking about a self-generation project, you should first analyze the inputs and outputs of e.g. a cogeneration. This will give you a solid basis for launching a request-for-proposals. This puts you in the driver’s seat. You decide what you want the market to offer to you rather than passively accepting the first proposal that comes through the door.

This more commercial approach to self-generation projects also leads to a different way of calculating returns-on-investment. A good insight into costs and revenues will result in better forecasts, as the increase or decrease of returns produced by the fluctuations of the market is taken into consideration. Too many projects fail to deliver the expected rate-of-return because the initial calculation was based on over-optimistic forecasts of future energy costs or a lack of insight into cost components. E&C will help you formulate a business case for self-generation that is more in tune with market realities: “how do markets need to behave for you to achieve your desired rate-of-return?"

Step 4: Trade green commodities

More and more companies trade green commodities. If you are involved in an emission trading mechanism, you have a portfolio of carbon emission rights that you can trade. And if you produce green energy, you might have certificates that are tradeable. Setting up and implementing a good strategy for green commodities trading can significantly improve the return on your investments. Integrating your green commodities strategy into your broader energy procurement strategy will result in a more business-centered approach to sustainability.

Self-generation can also make you a seller of electric power or steam to the grid or to your neighbours. In such cases, strategies like those used for energy procurement should be deployed to optimize the results of your price fixing/unfixing decisions. A cogeneration unit can result in spark-spread trading, where part of the gas that you buy is used to produce power that is then fed into the grid. This demands an advanced trading strategy.

Step 5: Buy green energy

Greening your energy supply is a decision that is often taken lightly. In many countries of the world, there is a market for green electricity, e.g. by the procurement of certificates of origin. However, the real contribution of the purchase of such certificates to carbon emission reductions can be questioned. As a result, you could risk exposing your company to accusations of greenwashing. In order to avoid this, take a look at the different types of green energy supply products now available on the market. Note however that these will come at a higher price.

Based on the stakeholder analysis of the sustainability strategy, E&C will help you make the right choices when it comes to greening your energy supply. We will then integrate our approach into all your energy contract negotiations.

Step 6: Monitor your carbon emissions

Your sustainability efforts should ultimately result in visible reductions of your carbon emissions. To report on these reductions, many companies are now applying carbon monitoring. E&C can help you with the monitoring of scope 1 and scope 2 emissions. Scope 1 refers to the emissions resulting from on-site energy transformation processes or the use of combustibles on-site while scope 2 refers to the procurement of energy that was produced off-site, as is the case for electricity consumed from the grid.

We will integrate carbon monitoring into your financial controlling activities to ensure the optimal use of the available data. Your ePoint portal will therefore serve as the single source of information regarding all aspects of your energy spend, including sustainability.

E&C, where procurement and sustainable energy management meet

E&C is not an engineering consultancy that can help you with the technical aspects of consumption savings or self-generation. However, as an energy procurement consultant, we can bridge the gap that often exists between the technical outlook of an engineering or sustainability department and the more commercial considerations specific to procurement. We will help you integrate your sustainability efforts into your energy procurement activities and adopt a more procurement-centered approach to sustainability. This will put more emphasis on financial considerations and will lead to a better return per dollar or euro invested, both in financial and in sustainability terms.

This type of Integration is more than just a better way of looking at sustainability. It also affects the way your data is managed. While most of the information that you need to structure your sustainability efforts is readily available, it often never makes it to the decision-makers. You can avoid this by integrating sustainability reports into energy cost reports (blog) generated by the procurement team.

Our focused approach also safeguards our independence. Our consultants aren’t thinking about how they can sell the products or services of another department when giving you sustainability advice. With E&C at your side, you can be sure that every project will be carefully scrutinized for its financial and environmental impact, without any conflicts of interest. This also allows us to give you full transparency, as we will share all of our calculations with you.

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