It's all in the data!
Published: 08 January, 2015
What is the energy manager's best-kept secret? Jeff Whittingham, managing director, DONG Energy for Business, tries to answer this question.
Energy is an increasingly political topic these days, as policy makers, business leaders, journalists and consumer champions all weigh in to the debates around cost, security and environmental impact. Alongside this, businesses are feeling the pressure on margins more than ever before, while facing an increasingly complex challenge: make money while supporting the physical and social environments of which they are part. As a major driver of production, costs and environmental impact, energy is key to either the problem or the solution.
Which is it in your organisation? Typically, it depends on how much - or how little - interest there is at boardroom level. In organisations where managers systematically take control by tracking energy consumption and patterns, the results are immediate and visible. Simply by tapping into the right sources, managers can accurately forecast energy usage, calculate input/output ratios, identify inefficient practices and set realistic reduction targets.
Shining a light on energy consumption
For many industries, this is critical because energy can account for a significant portion of the total cost base - so any opportunity to reduce consumption and shift any flexible consumption load to cheaper hours has a positive impact on the bottom line and consequently sustainable competitive advantage. Data can also help to identify anomalies, errors and opportunities for greater focus: ensuring equipment, lights and heating are switched off when not in use, for example. Obviously, advanced meter technology is making this data more accessible but it is also something that energy suppliers can and should help with - data solutions are a key part of the service requirement and customers should make sure they get what they need from their supplier. In this way, energy supply gives way to energy solutions - a full and customised package of supply and services that help to drive down energy costs and increase competitiveness. This requires a focus on the entire supply chain as a key creator of value and an understanding that sustained profitability depends on supply chains competing successfully with other supply chains - rather than companies competing with each other. Clearly, this approach demands a rigorous selection process and involved, long term supply relationships with trusted partners. This is part of a way of working that we call the Climate Partnership approach - a customised package of measures to manage and reduce consumption and achieve agreed savings targets. This includes energy services delivered by expert third parties, sophisticated supply products that enable customers to more accurately balance and forecast their energy requirements and, as we have seen, data solutions. This latter is often overlooked but it is in fact one of the greatest opportunities to make a positive impact on energy costs and consumption.
Clearly, behaviours and processes are important but technological innovation is fundamental. Globally, there is a growing need for a more intelligent and flexible energy system – a Smart Grid – that can provide the optimum balance between energy generation and energy consumption. To support this, DONG Energy is investing in a number of demand-side response solutions. In the UK, the company is about to start trialling the Power Hub, a system that optimises energy producing or consuming processes by leveraging the flexibility that is available to owners of flexible units (such as CHPs) on the open electricity and gas exchanges. To date, the trial has been focused on the Faroe Islands but, once commercialised, Power Hub could offer a significant potential both at organisation and infrastructure levels.
While it is without doubt a transformational initiative, the Power Hub has a limited application (to CHP operators alone) but mass-market innovation is also underway in the form of Automated Meter Reading technology. Once the AMR device has been installed onto the existing meter, managers can track half hourly energy consumption data and bring about those very real and visible impacts we looked at earlier.
When partnership becomes profitability
The energy supply partnership is crucial to increased profitability and efficiency, and suppliers should help customers extract the maximum value from every molecule and electron. Through a much deeper appreciation of the base-load and volatility of their energy consumption, managers can work with their energy supplier in an informed way. By choosing the right product and level of exposure to the market, buyers can minimise the risks - and costs - associated with energy procurement. Furthermore, this level of data accuracy minimises the industry charges incurred. This illustrates how the interplay of purchasing strategy, technology and behaviours can be seen as the foundation upon which business sustainability and growth is built - for energy, but in a broader sense too.
All of these measures are examples of the progressive thinking and appetite for innovation that can effectively counter adversity - in this case, the energy challenge. From behaviour modification and data management to supply solutions and Power Hub, it is clear that real change occurs when the right competencies, assets and talent are blended as part of a supply partnership.
For further information please visit: www.dongenergy.co.uk