Companies unprepared for new energy economy: study
February 7, 2018
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A new study released by Schneider Electric reveals that most organizations feel prepared for a decentralized, decarbonized and digitized future, but many are not taking the necessary steps to integrate and advance their energy and sustainability programs.
“We are in the middle of a massive disruption in the way energy is consumed and produced,” said Jean-Pascal Tricoire, Chairman and CEO at Schneider Electric, who was one of the many global business leaders who gathered at the World Economic Forum Annual meeting in Davos, Switzerland to talk about energy and environmental challenges. “The near-universal focus on conservation is a positive. However, being a savvy consumer is only a part of what’s needed to survive and thrive. Companies need to prepare to be an active energy participant, putting the pieces in place to produce energy, and interact with the grid, utilities, peers and other new entrants. Those that fail to act now will be left behind.”
This false sense of security can be attributed to the finding that most companies still take fairly conventional approaches to energy management and climate action. And the gaps in innovation are further complicated by limited coordination between procurement, operations and sustainability departments, as well as inefficient data collection and sharing.
Eighty-one per cent of companies have made efficiency upgrades or plan to, but 30 per cent or less are considering new energy opportunities such as microgrids and demand response
According to the survey of almost 240 large corporations (US$100 million in revenue or more) from around the globe, 85 per cent of respondents said their company is taking action over the next three years to keep its carbon-reduction plans competitive with industry leaders. But the projects that have been initiated or are in development skew heavily toward energy, water and waste conservation. Outside of renewables, few of the organizations represented are implementing more advanced strategies and technologies to manage energy and emissions.
Key findings include:
• 81 per cent of respondents have made energy efficiency upgrades or plan to within the next two years; 75 per cent are working to reduce water consumption and waste.
• 51 per cent have completed or are planning to pursue renewable energy projects.
• Just 30 per cent have implemented or are actively planning to use energy storage, microgrids or combined heat and power — or some mix of the technologies.
• Only 23 per cent have demand response strategies or plan to in the near term.
A primary barrier to progress may be internal alignment. Sixty-one per cent of respondents said their organization’s energy and sustainability decisions are not well coordinated across relevant teams and departments, particularly true for consumer goods and industrial businesses. In addition, the same number of respondents said lack of collaboration is a challenge.
Data management was cited as another obstacle for integrated energy and carbon management, with 45 per cent of respondents stating that organizational data is highly decentralized, handled at local or regional levels. And of the people who identified “insufficient tools/metrics for data sharing and project evaluation” as a challenge for working across departments, 65 per cent manage data at the local, regional or national — not global — level.
Managed cloud services leader iomart is an example of a company that’s taking an integrated, data-oriented approach. It works to coordinate energy efficiency and environmental management across the network of data centres it owns and operates in the U.K.
“Having data and actionable intelligence is essential,” said Neil Johnston, group technical operations director for iomart. “But what happens once the information is in hand is equally important. Our procurement, energy and sustainability teams compare data, and develop shared strategies to manage consumption and emissions, and cut costs. That collaboration has delivered significant savings for the business, and helped us achieve ISO 50001 accreditation and meet Carbon Reduction Commitment requirements.”
The research points to progress in several areas as well
More than 50 per cent of companies represented have initiated renewable energy projects or plan to do so within the next two years, with healthcare (64 per cent) and consumer goods (58 per cent) leading the way. Plus, the C-suite and corporate functions have a high degree of involvement in these and other sustainability-focused programs. Seventy-four per cent said C-suite members review or approve renewables and sustainability initiatives, for instance, indicating this work is seen as a strategic priority.
And while ROI is the obvious benchmark for energy and sustainability initiatives, companies are starting to take a longer, more comprehensive view of investments. For example, more than half of the respondents said environmental impact is factored in to the evaluation process. Organizational risk (39 per cent) is another important consideration.
The study was conducted by GreenBiz Research to identify how businesses develop energy and environmental strategies, collect and share data, and coordinate across departments — a practice known as Active Energy Management. Participants included professionals responsible for energy and sustainability management, from C-suite and board members to individual contributors. Companies surveyed represent 11 primary segments, including consumer goods, energy/utilities, finance, industrial, healthcare and technology.