Scope: Electricity and fossil fuel consumption can result in high costs and big carbon footprints. Energy management has become a hot new niche service sector in outsourcing. Business organizations have incentives to be frugal consumers of energy resources due to climate change, changing energy price models, incentives for energy economies, rebates for capital expenditures of energy saving devices, global rethinking of the safety of nuclear power and the inflation and scarcity of oil supplies.
Outsourced energy management services comprise several components:
- inventory of current sources and uses of energy;
- consumption profile and needs analysis;
- development of a comprehensive energy management strategy;
- establishing a realistic energy budget with accompanying strategy for meeting the budget;
- comparing and contrasting the time-weighted costs according to accounting methods, including fixed costs (capital investment), block pricing, index pricing, and shaped variable costs and fixed variable costs (fixed energy block float).
- integration of energy management into product design and value chain analysis;
- utilization management
- property and facilities management;
- “smart grid” measurement of consumption and allocation of consumption to lowest-cost, most energy-efficient suppliers;
- procurement management
- identification of alternative suppliers;
- development of IT-enabled procurement procedures for optimizing pricing and availability of energy supplies;
- writing RFP’s and specifications for purchase orders;
- exploitation of energy trading platforms for purchases for future delivery;
- energy audits;
- billing audits (particularly for leased real estate where the tenant has agreed to pay for electricity and operating expenses on a pass-through basis);
- incentives management
- identification of opportunities for taking advantage of governmental and energy-producer incentives for reduced consumption, new capital investment and energy conservations metrics;
- timely claims to incentives before expiration;
Technical Requirements: Energy management requires technical expertise in procurement systems, regulation of energy production and consumption and overall energy utilization management.
Benefits: Owners and managers of real estate, factories, and transportation providers can cut costs by energy management. Further, long term benefits can accrue to the business organization, its image as a leader in environmental preservation and its role in promoting a sustainable and socially responsible economic model.