Sometimes I go into writing a rant with a blank slate. I’m not fired up about anything. It’s true. Then I reach for a report in my pile and start to read the executive summary. The ideas start falling off the shelf into my cart. This week’s post is actually sponsored by the Department of Energy: Industrial Energy Efficiency: Designing Effective State Programs for the Industrial Sector (I think they could use some help with pithier titles).
A few weeks back, I wrote about nonsensical reasons industrial customers want to opt out of energy efficiency programs. That was specifically in regard to the state of Indiana. But desire amongst industrial end-users is shared in many states, including neighboring Ohio and Michigan, both of which have opt-out provisions. Taking a swipe from that earlier rant, I summarize the folly of industrials being allowed to opt out. A super summary:
- They are the heaviest users requiring some of the greatest loads on infrastructure everyone pays for.
- Their sector is most cost effective for energy efficiency. This is parroted by the DOE report above. Thank you.
- They can easily get more out than they contribute to programs – a financial case for, not against, participation.
- It adds to their profit and utilities like profitable industrials because they stay in business and expand.
These could be considered external factors – meaning, if the industrial customer has all the tools and knowhow to successfully pursue and implement the most cost effective and profitable measures, they will. However, any objective observer, including the C-suites of industrial customers, knows they could do better.
Good grief; we, at Michaels, could do better at what we do for sure. So, imagine a business-funded program that makes available consulting experts for our business – energy efficiency consulting – for “free”. OMG! I would never believe it! But this is what successful industrial programs do for industrial customers!
At our company, we are already members of a certain industry consultancy that serves utilities and consultants alike. We pay dearly for information they may provide for us. They are like the librarian at a library (for millennials – a library is a place that housed bound books and periodicals, before Google). For this service, we only get information – stuff that could probably all be found with Google and painstaking searching, sifting, and digging. Advice, consulting, management, and expertise with writing proposals and so on, is strictly not provided.
Taking this a step beyond the librarian, I think I know our strengths and weaknesses. And as Donald Rumsfeld put it, there are known unknowns and unknown unknowns. My view of our strengths and weaknesses are the known unknowns. I would want to know the unknown unknowns, AND to fix the unknowns of all stripes; which ones to fix; which ones are most cost effective; which ones will provide the greatest returns – wealth! I would like services that parallel those provided by decent programs to industrial customers.
Messaging from some large users of energy includes “we already know where all the opportunity is”. Sure. So do I in my business – NOT. I’m obsessed with learning more, and no one is offering free consulting here.
I can only remember one case where a large industrial user was not sufficiently assisted by the “local” program. This was a $25 million annual energy user (steel mill). They paid us directly to help them assess their progress toward their corporate goal of 10% energy reduction. Per the customer, the available program, by which we were not paid, sorely lacked the knowhow to deliver. The thing that was frustrating for me, as an energy efficiency freak in this one, was that this customer fairly easily had accomplished their 10% requirement; but there was at least another five or ten percent savings with incredible ROI that they just stranded on the shelf. Even so, this was a case of telling the customer that their “knowns” are correct – or at least add up to what they think they add up to. There is value in this too.
From knowledge, to plain old time to make things happen, programs should provide an easy, huge return on the industrial customer’s investment into these programs, including:
- Expertise to identify figurative infernos of wasted energy and cost effective means to put out these fires.
- Energy calculations for identified projects to give internal champions the ammo to get projects approved by management.
- Time needed to navigate the program services and incentives.
- Time required to manage contractors and projects.
- Time and expertise required to facilitate the internal energy management program.
- Expertise to optimize solutions and apply technology fit.
Great Rant
Energy efficiency is rarely in the wheelhouse of most plant managers unless energy costs are a significant part of cost of sales. The upside is that it is a controllable expense irrespective of size that can be effectively managed just like other controllable expenses most managers do pay attention to. Energy efficiency can be positioned in multiple ways
A part of a cost reduction effort, a part of a sustainability program, a part of a work force development program.
Unless the serving utility is acting like a consulting resource that leverages this positioning to help manage this, the two will most likely not connect.