ISO 50001 Energy “Performance” Management

Energy Management Systems Driving Financial Results

Don Macdonald, Director of Sustainability UL DQS, Inc.


Quality Systems Demonstrate Shareholder Value
Drive Return on Investment (ROI) across manufacturing & operating silos via Quality Systems
– Process level execution critical to performance – Continuously managed energy processes:
• Reduce exposure to energy costs (Internal hedging and volatility management) • Reduce carbon related emissions without negative effect on operations • Continual improvement of energy intensity • Value both avoidance & savings for internal and external metrics (e.g. emissions, utility credits, reduced labor intensity, CAPEX, etc.)


Why an Energy Management Standard
Energy is a corporation’s ‘currency’ • Strengthens management focus on energy, injects organizational discipline across functional silos • Creates opportunity for cultural shift; encourages commitment across company, beyond ‘low hanging fruit’ • Introduces and sustains a systematic approach to efficiency, wise use of resources • Requires management commitment of resources appropriate to the goals of the EnMS and can be linked QMS / EMS that tie back to profit margin • Based on measurement and verification

and documentation Reporting of progress 4 . verification.ISO 50001 Key Elements • • • • • • • • • • Energy policy Cross-divisional management team Energy review Baseline (s) Energy performance indicators (EnPIs) Energy objectives and targets Action plans Operating controls and procedures Measurement.

Executives Seek Certainty “Specific operational strategy must be the key part of the Energy Policy and M & V Strategy…done properly. Certification or Non-Certification process” 5 Source: McKinsey . will often times lead to a positive ROI on the overall Benchmarking.

Organizational barriers to improving energy management Energy not valued as an organizational ‘currency’ • Continuous monitoring. financial and qualitative benefits (ROI) absent • First costs more important than recurring costs • Disconnect between capital and operating budgets • Technical training lacking • Sustainability “culture” immature • 6 . cultural silo’s • IT data. monitoring and systems Economic performance. metrics and performance measurement absent • • Deep Process quality management systems not embedded • Stakeholders focus on production and not efficient use of energy or resources • Functional silo’s vs.

Harnessing the power of process ENERGY MANAGEMENT STANDARDS Business processes for competitive advantage:  Six Sigma  Lean Manufacturing  Continuous Improvement  ISO 9001  ISO 14001  Plan-do-check-act Formal energy management standards (ANSI. BSI): 40% 35% 30% 25% 20% 15% 10% 5% 0% Energy Management Standard Continuous Improvement ISO 9001 or 140001 Six Sigma Lean JCI. 2011 7 7 .

COMPREHENSIVE ENERGY MANAGEMENT RARE • Training for employees: 76% Many organizations adopting specific practices • Formal review of energy policy: 47% • Incentives for energy efficiency success: 45% • Effective & empowered energy team: 41% • Enterprise level energy data: 29% • Corporate reduction goal: 28% • Energy action plan for organization: 28% • Formal energy policy: 27% • C-level responsibility: 27% • Adopted energy standard: 27% Of the 83 organizations surveyed… 40 35 30 25 20 15 s t z i n a g O f o r e b m u N 10 5 0 0-2 3-4 5-6 Energy Management Score 7-8 9-10 8 JCI JCI 2011 2011 8 .

2011 9 .PIECES OF ENERGY MANAGEMENT WORLDWIDE Evidence from global Energy Efficiency Indicator survey 62% have increased occupant awareness about energy saving opportunities 40% monitor energy usage data weekly or more frequently 30% have a publicly stated carbon reduction goal 30% have sent operations staff to training sessions 19% have energy or climate “set-asides” in the capital budget 13% have hired a dedicated energy manager 9 JCI.

Sustainability & Energy Management System Maturity Benchmark your Organization 10 .

Facility level and procurement energy managers are current industry focus leads for these activities. each organization will be unique. Foundational tools for existing and new energy management programs are critical.Energy Investments & Operations Impact on companies will be multi-dimensional. Source: UNIDO 2010 Source: UNIDO 11 .

insurance ratings Cost of Capital – Improve loan characteristics – Energy risk management attracts shareholders which leads to lower cost of debt and equity – Non-disclosure of energy efficiency. raw material & transportation – Extend QMS and EMS systems whether certified or “Self Declared” Sales Growth – Life cycle energy reductions embedded in product and manufacturing – Competitive advantage. raw material substitution • Investment Fixed Capital – Energy process modifications often lead to end-of-the-pipe pollution control facilities Tax Rate – Availability of grants. recycling.Shareholder Perspectives EnMS – Accounting for Value • Profit Margin – Procurement . waste hedging and volitatility management – Product design can embody energy – Supply chain costs . utility program credits. like environmental & CSR corporate performance may have short-term impacts that lead to premium capital costs • • • • 12 .energy. less energy and related raw material processing Investment Working Capital – Reduced excess energy and materials.

Client Impact Coordinating stakeholders for common goals • Framework for: – – – – – – Educating stakeholders Defining goals Budgeting resources Recognizing hurdles Defining accountabilities Identifying rewards 13 .

E.” ISO/PC 242 Chair.Energy Benchmarking ISO 50001 provides a proven model that helps organizations systematically plan. Pinero. benchmark and manage energy use. 14 .

Energy as a strategic GHG & Climate Driver Uncertainty in carbon markets. environmental regulations. concerned investors. climate change policy pose risks that cannot be managed using existing norms and procedures 15 .

Market Adoption Indicators ISO 9001 ROI benchmarks 9-13% • MNC’s mandated or implied Tier 1 & 2 adoption • Competitive advantage & supply chain drivers added further incentives • Operational benefits realized but marginally documented • No real performance metrics ISO 14001 ROI Benchmarks 7-12% • • • • Similar drivers as ISO 9001. plus Environmental responsibility Evolving into CSR & CSV No real performance metrics Information Security Quality Mgmt Environ Mgmt ISO 50001 • Published ROI Benchmark Data Suggests 5-15% range expected • Performance metrics (self-defined) incorporated • Web-based & continuous performance tools • Measured benchmarking • EN 16001 & SEP Procurement Energy Mgmt Risk Mgmt 16 .

Green Buildings & ISO 50001 Real Estate Executives seek to demonstrate LEED Investments LEED conditioned spaces: • Sustainable Sites • Water Efficiency • Energy and Atmosphere • Materials and Resources • Indoor Environmental Quality • Innovation Credits and Design/Build Process “Independent verification of these critical environmental & energy components is a key part of the ISO 50001 M & V process in achieving energy efficiency. Reichel BPT 17 ..measurable sustainability” B. optimization and ultimately..

increases options – Flexible planning in investments.Manufacturing Carbon / Green House Gas & ISO 50001 • Example Goal – reduce GHG impact by 10% over next five years – Traditionally a 10% reduction in mixed fuels consumption might be selected as a target. – However. heating. • • • • Reduce CFC’s & related emissions Energy mix & allocation End of pipe methane or co-generation options Production process changes – cooling. this may restrict organization • Holistic approach based on the problem (impact) rather than the cause. drying • CSR Implications 18 .

$8 in operational costs realized. Utilize proven and documented assessment methodologies. Additional in-direct savings of labor. maintenance.” “IT solutions alone. • Prioritization of investment tasks to secure reduced energy costs and maximize ROI. ultimately can under-perform without the disciplined structure of continuous energy performance combined with IT data certification methodologies”.IT Data Centers & ISO 50001 Observed ROI~ “For every dollar saved. Contributes to requirements for acceptance and ongoing compliance reporting for participant status. etc. Provides consistent reporting to drive development of data center energy efficiency change programs. defers consulting costs for baseline and assessment activities. without validation and verification. • • • 19 . savings of $6 .

Food & Packaging – ISO 50001 ISO 50001 is expected to standardize energy management across the Food Supply Chain Early indicators of benefit support Examples: – Fertilizer and pesticide production – Plastics Packaging Manufacturing – Supply Chain 20 .

sell more product “branding” • Need to reduce energy bills. hedging • Improve bottom line financials • Customer demands it • Modifying major mechanical systems • Retro fitting manufacturing processes • Capturing incentives and rebates. taxes • Expanding or moving the facility 21 .When Does it Make Sense to Look at Energy? • Seeking the opportunities to become ‘green’.

The Business‐as‐Usual Energy Audit Value • Energy balance • Optimized system model • Menu of specific improvements: Results in one time PROJECTS • Maybe some behavioral changes 22 .

Parallel Agendas • • • • Safety – 18001 Environmental . quality workplace • Sustainability (retail: market differentiation) • New “green” products and services 23 . volunteerism.14001 Capital asset planning Emissions & environmental liabilities (carbon & GHG) • Space management • Sustainability (internal housekeeping) • • • • Waste reduction Supply chain marketability New product/service opportunities Employee engagement.

Who are the Decision Makers 24 .

Targeting the right audience 25 .

account/meter configuration.Possible Outcomes of an Energy Audit • Adopt energy‐efficient technologies – Use less – energy while maintaining the same level of service – Opportunities to upgrade to best‐practice procedures • Diversify energy risk – Identify alternative energy formats and suppliers • Optimize energy expense – Time‐of‐use. demand response… 26 . procurement strategy.

technical language! • Meters. probes. 27 Quality Management Processes drive performance improvement by moving away from individual projects to the system level . formulas… • Opportunities = One time projects PROJECTS. sensors. audit checklists.Classic Energy Audits…(With all due respect) • Technical people. charts.

until recently) Return to business‐as‐usual 28 . Probably not the quality manager! • Focus: system reliability • Audit goals: • • • • Find what’s broken Write a report Fix it (something we have avoided. facilities engineer.The Business‐as‐Usual Audit Client • Plant superintendent.

The Business‐as‐Usual Outcome You get. operating benchmarks. one time benefits: • Energy input/output model or an audit report • Normative energy budget. certification • List of recommended projects • Payback or other cost‐benefit measures • Summary of applicable rebates and incentives 29 .

ISO 50001 Delivers a Systematic Process Improvement With a Disciplined Process you receive: – An evaluation of time & risk posed by recommendations – An explanation of energy solutions in larger business context – Scenarios: “What if you do? …and what if you don’t?” – Alternative paths to implementation – Identification of critical success factors – A compelling answer to “What’s in it for me?” (ROI or time weighted investment decision making) 30 .

Words of Caution • “Audit” has a bad connotation to some/most • Procurement Directors will: – See an audit as a commodity – You must sell value not benefit. not technical terms or referencing a Standard 31 . ‘You get what you pay for’ • “Efficiency” can scare some people – Downsizing? – CHANGE? • Need to identify all stakeholders • Explain energy performance in PLAIN ENGLISH.

Post‐Audit Issues • Which projects do we start with? • How do we compete for capital dollars? • Which department pays? • Which department implements? • Which department books the Quality Management Processes drive savings? performance improvement by moving away from • Verification? individual projects to the system level • Incentives? 32 .

Energy Benchmarking ISO 50001 provides a proven model that helps organizations systematically plan.” ISO/PC 242 Chair. 33 . E. Pinero. benchmark and manage energy use.

What Top Management Needs to Know C. Russell 34 .

and will likely ask you! • What is the benefit to me? – How many dollars? – How quickly do the dollars accrue? – What is the risk of investing? – What is the risk of not investing? • What’s the most I should pay for it? • How does it compare to other ways to use the same money? 35 .What Business leaders want to Know.

To what end: Savings? Productivity? Accuracy? No clear “ownership” of the results • Failure to prepare staff for the idea of an energy audit • Is this a witch hunt. or what? Will the results embarrass me? • A dense.Most Audits End up Collecting Dust on a Shelf: WHY? • Lack of a clear agenda: Lack of focus within scope. technical document that only an engineer could understand • Lack of exit discussion with key managers: • Discuss findings. 36 . weed out options with “political” issues • Link the findings with other business priorities: What’s in it for YOU.

Market Response To Certification Clients will pursue if • Clear Value to bottom Line • Required by corporate management • Required by customers • Necessary to gain traction and overcome organizational inertia • Standard is recognized as a differentiator • Allows them to sell more ‘widgets’ 37 .

Sign up to vote on this title
UsefulNot useful