During Disruption, Energy Managers Rise to the Occasion

The far-reaching effects of the COVID-19 pandemic have turned most short-term business plans upside-down. In a matter of months, organizations across every sector have been forced to respond to disruption and pivot their strategies in previously unimaginable ways.

For many companies with ambitious carbon-reduction goals, this new reality comes with greater complexity and requires strategic management of portfolio-based solutions. Although a shift was already underway, the current crisis has illuminated the growing importance of the role of corporate energy managers to maintain business continuity, resilient operations and sustainability.

How has global market disruption shifted energy management in the short-term?

Before the virus became a pandemic, we conducted a global survey of over 260 corporate energy & sustainability professionals to understand the state of their programs and get insights on several industry trends. As we expected, the vast majority of respondents (87%) agreed that changes in energy markets have led energy management to rise in the ranks as a core business operation. However, in preparing the report, it was impossible to foresee how dramatically what’s occurring in 2020 would reinforce this finding.

Backward oil prices, worldwide uncertainty and volatility, precarious regulatory initiatives, and no clear return to “normal” have combined to make energy management today a tall order. No one knows quite what to predict, and any actions taken in this time of crisis could have ramification for years to come.

In this environment, the pressure is on for energy managers to effectively manage energy costs and efficiency, taking into consideration unprecedented factors such as steep changes in production, consumption, and supply availability, all while continuing to push existing initiatives forward.

What broader trends underpin the transformation of the energy manager’s role?

Energy management once meant coordinating a utility program with a local provider and submitting a monthly bill for invoicing. Since utility bills and supplier contracts have traditionally been rather uniform, the energy manger’s primary focus has been to ensure reliable energy supply while minimizing cost. But, over time, the detrimental effects of carbon-heavy emissions and the volatility of energy prices have motivated executives to revamp their energy strategies and make them more sustainable.

Over the past ten years, we’ve seen companies starting to blend energy procurement with sustainability and resource efficiency. This more holistic approach has escalated the complexity of the energy manager’s role and called for more innovative strategies, spurring the rise of corporate renewable procurement and proliferation of digital energy tools. The demands of the changing energy landscape require a corresponding up-leveling of the energy manager’s skill set.

What’s driving these changes?

As energy markets have gradually deregulated and generation becomes more decentralized, there are new opportunities for companies to take control of their energy strategies. Regulation, distributed assets, globalization, new technologies, and market and price volatility make energy management key to any business’s budget, risk, and sustainability strategy. For example, executives are recognizing the environmental value of renewable energy, with many large companies signing power purchase agreements (PPAs). With these new opportunities, comes new challenges for energy management to adapt to.

Will the effects of COVID-19 have long-term implications for energy management?

Now more than ever, organizations with dedicated energy management roles will be best positioned to respond to market disruptions and capitalize on new technologies and opportunities. In fact, in our survey, we found that respondents whose companies have dedicated energy management, energy efficiency, or energy procurement roles feel more confident in their preparedness to respond to innovations in energy and resource management.

Energy managers are valuable for their ability to predict and address the risks associated with commodity volatility, but they also play an increasingly important role in mitigating greenhouse gas emissions. So the short answer to this question is: yes; but in what ways is yet to be seen. Although the precise impact that disruptions due to COVID-19 will have on energy management are still unclear, energy managers are already playing a critical part in maintaining business resilience during shut downs and other disruptive impacts. This global event has proven that energy markets can change in an instant. This puts an even higher price on the ability of the energy manager (and the organization they serve) to stay nimble, actively reading and responding to the pulse of the market when making decisions, which could have far-ranging financial consequences.

As the world begins to normalize and the prolonged impacts of the pandemic reveal themselves, the duties of the corporate energy manager are sure to remain at the top of business agendas. Whether it’s assessing risk and managing short-term disturbances or building resilience against future disruptive events, energy managers will continue to play a key role in future-proofing businesses around the world.