7 Reasons for Investing in an Energy and Utilities Management System

Submitted by Bruno Santos Pimentel on Fri, 01/18/2019 - 17:08
7 Reasons for Investing in an Energy and Utilities Management System

Learn the main benefits for your company of investing in an energy and utilities management system.

 

When we talk about a Management System we are actually talking about a whole set of processes, metrics, and tools applied to managing a certain function in an industrial or corporate context. The term “system," often confused with “software system” or computerized system," is thus much broader in scope than its common use implies.

ISO 50001 proposes that an energy and utilities management system have the objective of improving energy performance, including energy efficiency, use, and consumption. A software system that supports this concept has precisely the goal of offering its users effective productivity gains in the performing energy and utilities management functions.

Below we discuss 7 aspects that make investment in an energy and utilities management system a good deal.

1. Energy Efficiency

One of the main results delivered by an energy and utilities management system is gains in energy efficiency. A natural path is to identify processes and equipment that represent significant offenders in terms of energy consumption and performance, and to analyze, in depth, physical and chemical phenomena and constructive aspects involving operations of interest. Its implementation comes through investments consistent with increasing efficiency, whether for sustainment or transformational, that necessarily imply a reduction of energy consumption.

In fact, recent data from EUROSTAT demonstrate that investments in energy efficiency pay for themselves quickly – a cost of about 1 euro cent to save 1 kWh, versus 12 euro cents to consume the same kWh.

The availability of quality data with good analysis and prediction models – elements necessarily present in a good energy and utilities management system – is therefore fundamental for achieving ever more challenging energy efficiency targets.

2. Cost Reduction

Perhaps one of the most effective arguments for investing in energy and utilities management systems is the potential for cost reduction. In a similar way to gains in energy efficiency, management systems can assist their users in identifying opportunities for reviewing physical and managerial processes, OPEX or CAPEX investments that have the potential to reduce energy consumption, and consequently reduce associated costs.

This can be fully realized by reducing the total energy consumed by a given process or organization, and also relatively by reducing the amount of energy needed to generate a production unit.

Another path is to establish efficient energy purchasing contracts in the Brazilian Regulated Contracting Environment (ACR) and in the Brazilian Free Contracting Environment (ACL). Energy purchasing contracts are commonly based on parameters such as contracted demand and seasonalization, for example. Contracts with poorly defined limits, that is, with narrower bands for the upper and lower limits of contracted energy, may increase the incidence of penalties due to excess consumption or payments associated with take-or-pay clauses.

A good software system for energy and utilities management should necessarily support the organization in the management of complex contracts, recommending correct decisions on the execution of these contracts for each consumer unit, thus contributing to reducing the unit cost of energy.

3. Emissions Reduction

Achieving greater levels of energy efficiency also implies direct reductions in the environmental impact of operations. If the engine for economic development is based on the increase in production and consumption indices, sustainable development necessarily presupposes ever greater efficiency levels, and consequently reduction of waste emissions, effluents, and greenhouse gases.

However, if the environmental argument is not sufficient, it is still possible to invoke the economic argument. In its analysis of the North American market in 2017, the Centre for Sustainability and Excellence (CSE) shows that organizations with better sustainability indicators showed significantly higher financial performance than other organizations with worse sustainability indicators.

4. Eliminating Waste

Traditionally, much of the effort of management systems is directed toward reducing losses and waste. This involves the application of techniques and tools focusing on operational efficiency, whether on the factory floor or in the corporate offices.

The premise here is that long before thinking about investments aimed at energy efficiency, organizations of any size and nature should focus on identifying and eliminating any sources of losses – leaks, suboptimal control loops, and lost energy, among others.

Efforts at eliminating waste are closely related to Lean concepts and their variants (Lean Thinking, Lean Manufacturing, etc.) The central idea is the identification of any source of waste, its elimination, the evaluation of gains achieved, and the continuous and progressive incorporation of a culture oriented towards method and result.

5. Greater productivity of energy and utilities management teams

A fundamental premise of the value delivered by good energy and utilities management system is the facilitation or even automation of important functions that often take up valuable time for management teams.

With the delegation of elementary tasks to a management system – for example, data collection, calculation of energy performance indicators, and processing of energy invoices, among others – analysts can devote themselves to activities that have greater possibilities to create value for the organization.

This dynamic sets in motion a virtuous cycle of analysis, result, and maturity that contributes directly to competitiveness and to supporting the company's results. In fact, the ISO 50001 standard applies directly to the systematization of this cycle, facilitating the evolution of maturity of energy and utilities management teams.

6. Digital Transformation (Energy 4.0)

The topic of digital transformation currently permeates every type of business, and energy and utilities management is no different. The opportunities for gain by applying hardware and software systems are diverse and come with high chances of success.

The computerization of products, services, and processes is not new, but by gaining strategic importance it propels companies to achieve performance standards not yet imagined – or even survive the breakdown of traditional business models.

The term Energy 4.0 comes to represent digital transformation in the energy and utilities industry – an industry that has only recently received greater attention and investment. In view of increasing complexity of energy systems – increasingly diversified matrices, distributed generation, free contracting markets – technological solutions to support management are not only useful, but essential to enabling value capture.

7. Greater Competitiveness

Finally, any investment in an energy and utilities management system will only make sense if it is undertaken with the final objective of achieving gains in competitiveness.

Competitiveness generates wealth that, if invested sustainably, increases capacity and efficiency, and consequently promotes greater competitiveness. Another virtuous cycle that finds fertile ground and great opportunities to create and capture value in the management of energy and utilities.

Modern energy and utilities management systems should be able to advance the digitalization of energy management from the level of monitoring and analysis of performance indicators to the levels of planning, execution, and increasing efficiency. In particular, they should implement functions that facilitate the institutionalization of processes and practices, as well as the creation and support of a culture oriented to competitiveness in energy efficiency.

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Product Manager, Viridis

Viridis Product Manager, with more than 20 years of leadership in innovation and technology programs in large industrial organizations. PhD and masters degree in computer science from UFMG, bachelor’s degree in mechanical engineering, innovation and sustainability fellow at Sloan School of Management, MIT. Extensive experience in project management and open innovation teams with industry, academia, and startups, applying digital technologies and analytics to challenges in productivity, strategy, and sustainable development.

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