“This solar solution looks like a great deal! Any reason we shouldn’t pursue it?” Given the budget pressure of the “new normal” it can be hard to answer “no” to a question like that. If your CEO is asking you to incorporate one-off renewable energy solutions, the proposed financial benefits make can it tempting to rush to implementation.
Why is it critical to take a strategic approach?
You can better help your organization achieve its goals, however, by offering a strategic approach to energy portfolio management. While it can be especially tempting to rush to solutions in these unprecedented times, developing a strategic planned approach to energy decision-making - including incorporating renewables – provides a solid framework for decision-making – now and in the future. There can also be added benefits to incorporating energy management through a group purchasing organization to help you achieve your goals.
Here are some key steps to developing a strategic plan for your organization.
⇒ Situation Analysis: Gather your Energy Portfolio Data
Before identifying where you want to go, you will need to identify where you are. Start by assessing two to three years of energy use data from past invoices.
Consider using the free ENERGY Star® Portfolio Manager tool to compile North American energy use and emissions data. This tool offers a step-by-step approach, customized by industry, that simplifies the process of benchmarking your property’s energy use and emissions.
Whether you use this tool or calculate your portfolio data independently, when pulling energy use information from invoices, you should include data regarding consumption of all the types of energy used. This should include direct emissions from sources owned or controlled by the organization (i.e. gas boilers, furnaces, processing of materials or chemicals, fleet vehicles, etc.); and indirect emissions from generation of energy purchased and consumed by the organization (i.e. electricity, steam, district hot water, etc.).
Slice it and dice it – once you have compiled your energy use and the emissions your organization is generating, assess it from a macro and micro level to identify your pain points. You can identify energy use cost intensity and emissions from an enterprise level down to a facility-specific level to learn where you are spending the most and where your organization can become a better environmental steward.
⇒ Team Up to Identify Your Goal
Identify a cross-functional team to help you move forward on your strategic energy plan once you have your energy profile confirmed. Include representatives from your organization’s critical departments such as finance, marketing, supply chain, sustainability/EHS and legal. Set a regular meeting cadence and let them know that your goal is to develop a company-wide strategic energy plan, including the energy profile you would like to achieve moving forward.
Once you have assembled the team, work with them to identify organizational objectives that you want to achieve. In targeting your goals, consider the following:
- Ensure that sustainability objectives include what green building professionals recognize as the three pillars of sustainability, (also called the “triple bottom line”): environmental, social and economic.
Make sure the objectives you identify include your entire business portfolio footprint from the enterprise to facility level, country, type of source and activity. Some regions or facilities may have different opportunities from local utilities and government to reduce emissions. Trane®, a business of Trane Technologies, for example, has joined other Trane Technologies businesses in launching the Gigaton Challenge to reduce 1 gigaton of carbon emissions from its customers’ footprint by 2030 and has identified other goals as part of its three pillars of sustainability. If your organization has not set an objective, start with a science based target initiative. What targets do you need to lower your organization’s contribution to a 1.5 degree temperature rise trajectory?- Prove the efficacy of your plan with third-party organizations like the Global Reporting Institute that provide standards for measuring your emissions. Leverage reporting tools provided by third-party organizations like the Carbon Disclosure Project, Global Reporting Institute and RE100 to show progress to stakeholders.
⇒ Map Your Plan to Achieve Your Goal
Once you have identified your sustainability goals, work with your cross-functional team to identify how you will achieve it. Drastic changes may not be necessary. Consider options that start moving your organization up the sustainability scale, For example, an organization may switch from combustion fuels to all electric, convert and retrofit equipment or employ behavior changes[i].These emission reduction strategies can help meet the triple bottom line:
Environmentally – helps decarbonize
Social – Positively impacts the community
Economically – lowers energy costs for your organization
Make sure to consider both behind the meter solutions – which are technologies used at your building, and “in front of the meter” solutions, which are those located at your utility. In the front of the meter solutions can be more cost effective with lower return, while behind the meter may have higher costs with higher return. Evaluate your approach from a fiscal and environmental perspective.
For example, adding thermal energy storage is a “behind the meter” solution that can help you improve how the power supply is managed, creating a more resilient energy system for greater sustainability and profitability, while reducing grid dependency. They can even help you increase renewables utilization by up to 50 percent[1].
A virtual power purchase agreement (VPPA), also called a Contract for Difference, is an example of a solution that is “in front of the meter.” It incorporates renewable power generated remotely from your location. As the purchaser, your company agrees to pay a fixed price for every megawatt hour generated. However, you won’t physically receive the energy; instead, the generator sells the power into the wholesale market.
As part of a VPPA, your company receives or sends periodic settlements, depending on whether your contracted price was above or below the wholesale price. You can use the settlement received to manage escalating electric prices and claim the environmental benefits of the project in the form of Renewable Energy Credits (RECs). These RECs can be used to offset local energy consumption and report sustainability progress with certainty.
⇒ Partner Up
Consider reaching out to an energy service company, like Trane, to help you gather energy consumption data into a Co2 equivalent and provide the best mix of solutions to help you reach your objectives. An energy service company can provide a depth and breadth of options and experience that can help you complete your plan with more assurance and efficiency.
⇒ Leverage the Benefits!
Once your plan is completed, approved and set into motion, your organization can start reaping the fiscal, social and sustainability benefits. And, should your CEO ask you to review a one-off solution like a new solar option, you will be prepared to strategically assess it against your current plan, and provide an informed answer.
Trane partners with OMNIA Partners® to provide a comprehensive energy management program. For additional information, visit an overview of Trane energy supply services.
[1] ASHRAE Research Paper RP-1607. 2018.
This is for informational purposes only and does not constitute legal advice. Trane believes the facts and suggestions presented here to be accurate. However, final design and application decisions are your responsibility. Trane disclaims any responsibility for actions taken on the material presented.
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