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The Future of Energy and Sustainability Management

The energy landscape is rapidly changing. Renewable generation is growing faster than coal, gas, and nuclear combined. For the sixth consecutive year, it has outpaced fossil fuels for net investment in power capacity additions, fuelling a major surge in green electricity across several continents.

The shift towards global decarbonization is happening in parallel with two other energy mega-trends: decentralization and digitization. More local generation of electricity not only reduces transmission losses but lowers carbon emissions, helping to boost the security of supply.

With up to 50 billion connected devices predicted by 2020, the Internet of Things (IoT) and big data are also an increasingly important part of efficiency, and sustainability planning and initiatives. Smart connectivity can enable real-time monitoring of energy assets for more informed decision-making – such as linking energy use to user behavior.

A Verdantix survey of 250 global energy decision-makers, for example, found that 37 percent rated ‘IoT sensors to capture non-energy information’ as an investment priority over the coming year.

Increasingly, these ‘3Ds’ – decarbonization, decentralization, and digitization – are accelerating the convergence of how organizations buy energy, use energy, and operate sustainably. For switched-on managers seeking to drive ever greater cost and carbon efficiencies, taking a multi-dimensional perspective that encompasses all aspects of supply, efficiency and sustainability are becoming critical.

Philippe Diez, vice president of Energy & Sustainability Services (ESS) at Schneider Electric, believes the future of energy management lies in exploiting the value this convergence can offer. Speaking at the company’s client conference in Barcelona, he said companies need to start thinking in terms of active energy management.

“Corporate energy management is comprised of three domains, which are often disconnected — managed by different departments. Active energy management changes this paradigm. It allows organizations to manage all three together so they can optimize the parameters of cost, efficiency, and sustainability strategies simultaneously, in a near real-time manner,” he said.

According to Diez, companies are at different stages of this transformational journey. The ESS business works with around 4,000 clients globally and Diez estimates just one-fifth of them are leading the way on this agenda. “Some of these companies at the advanced level, mainly multi-nationals, are already doing active energy management in terms of balancing these three priorities.”

Examples of active energy management include energy procurement and sustainability coming together to buy green energy. Or energy management, procurement, and sustainability collaborating to remotely monitor energy use and price data in real-time — to further reduce cost and CO2 emissions. Integrating energy management activities within the wider CSR agenda is considered commercially beneficial. “On the sustainability side, these companies view it as a differentiator for business,” Diez said.

One Schneider Electric customer, Sanofi Group, is adopting this approach across its sites. The pharmaceutical manufacturer runs a large network of 100 sites and its annual energy use accounts for around €200 million (euros) in direct spending. The company’s head of strategy, Francois Beloeuvre, says the figure rises to €500 million (euros) when taking into account other indirect costs like maintenance and investment.

“It goes beyond large investment,” he told delegates at the conference. “This is something we are very keen to be at the forefront of because energy is very much linked to the way we manage our processes.”

According to Beloeuvre, working towards active energy management benefits the company’s manufacturing operations in a number of ways. “Energy is a very good lever for us, first in terms of process management – the better we manage the process, the better the output regarding not just energy, but water and waste. We also use energy as a soundbox for transformation. It’s a good way to learn about big data.”

One of Sanofi’s priorities is to obtain a deeper understanding of the global energy market, in particular assessing future trends around the price, logistics, and policy, to enable more strategic decision-making. This involves deploying dedicated energy managers across the company’s manufacturing network.

“Our manufacturing teams have to be very prepared around these issues,” he says. “It needs a collaborative approach. We had to break out of our silos and get different teams around the table, such as procurement, sustainability, engineering, and industrial performance leaders to drive this integrated decision-making.”

To achieve active energy management, companies will need to harvest more granular data from connected systems and devices. Rodolphe d’Arjuzon, managing director and global head of research at Verdantix, told delegates it was important to ask the right questions about this data in order to extract value from it.

“What’s the business problem it’s trying to solve? Don’t buy great-sounding technology, buy great solutions that solve your tangible problems — whether that’s remote diagnostics or management, or contextual data on asset performance, which could inform maintenance regimes.”

He underscored the point with an example: “In energy terms, better weather data helps me understand whether I should pre-cool my data center the night before, pumping a load of cold air into it. That’s only feasible if I’ve got two great sets of data — I know how my data center works and I’ve got excellent weather data.”

For those companies just starting out on the journey towards active energy management, Diez says it’s important to recognize it’s a step change. He points to one of Schneider Electric’s U.S.-based clients, which began with a baseline and basic awareness of what could be achieved.                                 

 “They were sourcing gas and electricity from different suppliers, doing a little bit of risk management. Then they operated in Europe and found they could benefit from selling back some energy to the grid, which also helped reduce exposure to volatile energy prices.”

The resulting savings were reinvested by the company into new initiatives, such as on-site renewables, fuel cells, and energy storage units that generated further dividends.

“This gave them a clearer policy on energy management so they moved towards a more established level.”

The company then set global sustainability targets, some of which were dependent on increasing green energy use. As a result, their energy consumption management approach became more strategic, both at a micro level (individual sites) and at an enterprise-wide level. Moving between the three different stages of active energy management — from ‘aware’ to ‘established’ to ‘leading’ — not only requires commitment, but often new skill sets and a change in mindset.

According to Diez, “If you want to go from aware to established, the big change is that you have to put a greater emphasis on data mining and analysis. To move from established to leading is about strategy, networks and collaboration. It represents a sea change at the board level.