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Energy efficiency: lessons learned (consultant prospective)

Rafael Herzberg's picture
Consultant energy affairs Self employed

Rafael Herzberg- is an independent energy consultant, self-employed (since 2018) based in São Paulo, Brazil* Focus on C level, VPs and upper managers associated to energy related info, analysis...

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This item is part of the Special Issue - 2019-10 - Energy Efficiency, click here for more

Energy efficiency: lessons learned (from a consultant prospective)

The market is blessed with a robust list of energy related solutions:

  1.  Monitoring consumption online 
  2.  Retrofitting (lighting, motors & drives, thermal insulation, etc., etc.)
  3.  Cost arbitrage (electric power, gas, biomass, etc.)
  4.  On-site generation and cogeneration 
  5.  Off-site power projects
  6.  Behavioral options
  7.  Power contracting (time of use rates, deregulated options, etc.)
  8.  Higher voltage access to the public grid
  9.  Power factor improvement
  10.  Etc., etc.,etc.

But then, what to do?

There are basically two types of approaches. The most common is a for a technical guy to come up with suggestions before a manager. Then a decision is made to go for it or not. The really cost effective and more powerful one is a CEO, a COO or a VP set up a "business case" for the energy account. Come up with a strategic plan and an associated operational plan to "make it happen" and then allocate managers and technical guys to "go for it".

In my experience the latter is the one that really has the potential to achieve and sustain excellence. Simply put because it is associated with a structured decision making process.

The moral of the story, after 30 years as an energy consultant, technically speaking cost reductions are easy to identify. From a business prospective it is about the upper management "commitment" (and not only "involvement") because at stake are technical, financial, risk and management issues to be considered. This is the real challenge - always!


 

 

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Thank Rafael for the Post!
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Matt Chester's picture
Matt Chester on Oct 10, 2019

The most common is a for a technical guy to come up with suggestions before a manager. Then a decision is made to go for it or not. The really cost effective and more powerful one is a CEO, a COO or a VP set up a "business case" for the energy account. Come up with a strategic plan and an associated operational plan to "make it happen" and then allocate managers and technical guys to "go for it".

How often would you say corporations use that second method compared with the first? Is it evenly split, or are way too few taking your advice with the second method?

Rafael Herzberg's picture
Rafael Herzberg on Oct 10, 2019

In my consulting experience, and by far,  the structured decision making process starting with the C level is only found in a small fraction of the market. But when that hapens the results are usually absolutely great. The traditional system ends up leaving most of the opportunities untouched. For a long list of reasons including reactive posture so well established in the corporate environment, the "nasty" taste of energy related issues before the C level and of course everybody is potentially telling that they are already working and a lot and are not in a positions to take another (energy) challenge.

Matt Chester's picture
Matt Chester on Oct 10, 2019

Interesting to hear. It seems like it's an inherent cultural thing within companies, and companies can change their culture but that takes particularly strong leadership

Matt Bowgren's picture
Matt Bowgren on Oct 18, 2019

When you see it come down from the C level, are they typically engineers or former engineering project managers that are familiar with energy projects and the potential for operational improvements while adjusting processes for new technology? I've seen that unless there is an experienced advocate, efficiency is not something that comes to the top of the list of priorities vs. M&A, sales, marketing, or product development - all investments that tend to be more familiar. This is of course at least "sometimes" the case, but I'm curious if you think that is the major reason or there is something else other than familiarity at the C level (and therefore mental bandwidth)?

Rafael Herzberg's picture
Rafael Herzberg on Oct 23, 2019

Hi Matt (Bowgren)

Yes, familiarity (with energy efficiency)  plays a super important role in the decision making process. 
Yes, EE is not a priority as compared to M&A, sales, mktg, product development - that's for user!
But once I was able to stimulate the C level (of a lrge plastic industrial plant) to learn about power procurement strategies in the deregulated power markets - it was an amazing experience! Initially they dindn't have a clue about power procurement strategies but once I showed them the most importa aspects in plain and simple language (no jargons) they understood right away and actually became very enthusiastic and were able to close very interesting deals.
Just to tell the story originally it wass the purchasing departmnet that locked deals about 1 month before the ongoing contract was about to end. I showed them years ago that they should look for power prices for future delivery WELL IN ADVANCE. When there was a sexy offer, then close a deal. 
The C level was able to understand that this was a market driven situation and it was up to them to lock deals when it was interesting. 
Since then they are closing super deals!

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