- Nov 6, 2018 5:17 pm GMT
This item is part of the Special Issue - 2018-10 - AESP EE Day, click here for more
By Kristen Brewitt
The utility industry has typically taken a key account-based approach to managing its relationships with strategically vital commercial and industrial (C&I) customers. This model has by and large proven successful for utilities and their customers. But this model is increasingly under pressure to evolve. New technologies, regulations, and customer expectations are driving the need to build even deeper utility-customer relationships. New rules around carbon and emissions in particular, while challenging, also provide an opportunity to take the utility-C&I customer relationship to a new level—as strategic partners in achieving business objectives in a lower-carbon economy. Regulations like the Clean Power Plan (CPP) in the United States help provide utilities and their customers alike with more certainty around technology and market developments already shaping a lower-carbon grid future. And advances in analyticspowered energy intelligence offer utilities a framework to forge the deeper customer relationships needed for continued success. First let’s take a look at C&I needs-drivers and what they want from their utilities. Then we’ll highlight how utilities are already positioned to quickly and cost-effectively deliver shared value.
Business Needs are Intensifying
The clean, affordable energy mandate is intensifying for utilities and posing real business challenges for large energy consumers. Utilities want to adapt to keep ahead of the evolving playing field while continuing to deliver safe, reliable service and managing increasing cost pressures. C&I customers want more control over their energy costs to stay profitable and competitive. A Forbes Insights report notes that a large C&I organization can spend upward of three to five percent of its revenue on energy.There are a daunting array of energy management choices available to C&I customers, some 400 companies now compete in the building energy management systems space alone. They don’t always know the best path forward and/or don’t have the internal resources they need to get—and stay—on track. Larger customers in particular are aware of mandates like the CPP and they expect to benefit from increased incentives and offerings from their providers. This is an expectation that utilities can meet with vigor as their C&I customers look to them for guidance.
They’re Embracing Energy Management…
A range of regulatory compliance, financial drivers, and energy disclosure laws have propelled carbon management to become a mainstream business issue with financial implications. C&I customers have mandates of their own to adhere to and track over time, such as ENERGY STAR® scores, and are conscious of their own needs to save energy. And not just for cost-cutting reasons. Many C&I customers under shareholder pressure to shift their corporate missions are focusing corporate responsibility and triple bottom line strategies to manage business risk.
C&I customers at the C-suite level are embracing energy management as a strategic business objective. Executives increasingly view energy management, along with clean energy solutions, as cost effective, innovative means not only to reduce costs, but also to drive investment, competitive advantage, and increase corporate performance. They’re setting their own clean energy targets, allocating budget to energy management goals, generating their own electricity, and publishing sustainability reports. Despite this elevated focus on energy management, C&I customers are still struggling to realize their objectives. There are a number of reasons why this is so.
... But Struggling with Complexity
Combined with the pressures from key stakeholders, even the best run organizations are struggling to deal with the growing complexity of energy management. The biggest challenge is that energy management touches many different functions across a business—from procurement to finance to operations and sustainability. This poses any number of internal challenges to overcome, which differ from company to company.
Ultimately successful energy management for large energy consumers hinges on having dedicated energy managers to not only shepherd technical measures to fruition, but also to champion the organizational and behavioral change management initiatives needed to achieve lasting results. Few C&I customers have the tools and team in place to achieve the goals they set out. And energy decision-makers, while highly knowledgeable, often lack the time needed to distill raw building-level data into insights on which operational decisions would yield the highest returns.
Here’s where the emergence of CPP rules presents an opportunity to kill two birds with one stone. Energy efficiency is expected to play a central role in how states meet their reduction targets, and demand response can also count as a compliance tool. By helping C&I customers better manage energy management complexities, utilities can build new opportunities to cost-effectively manage the transition to a lower-carbon grid. This takes engaging and empowering C&I customers with actionable energy use insights and holistic energy management solutions that they want and need to thrive.
Deliver Mutual Value with Energy Intelligence
C&I customers have always been a significant and critical market for utilities. Today, it’s impossible to deliver power reliably and meet energy efficiency and demand management goals without their participation. Continuing to deliver on utility objectives in a carbon constrained future means taking these relationships to the next level of engagement—closer, collaborative partnerships. What does it take to get there? Energy intelligence.
A recent Deloitte study finds that energy management has passed a tipping point and “deliberate, intelligent energy consumption” is critical for C&I customers to get ahead. While the principles of effective energy management—plan, optimize, verify—haven’t changed, the options have. Standard energy management practices, like spreadsheets, decentralized departments, and traditional project-by-project equipment upgrade strategies fall short on delivering on the promise of “deliberate, intelligent” energy use.
Utilities are in the best position to help C&I customers navigate this paradigm shift. They own the energy management expertise, experience, and customer relationships needed to deliver on both business and grid benefits. Yet this can seem to be a daunting undertaking for many utilities. After all, C&I customers require high-touch support and custom solutions—a typically expensive and time-intensive proposition. Fortunately, utilities already have the customer data needed to quickly, and cost-effectively, step up their C&I customer relationships. It all comes down to creating and delivering meaningful energy intelligence from data through analytics.
Utilities can apply data analytics to their own existing data now to translate mounds of energy data into meaningful insights for C&I customers. There are three “flavors” of analytics that help make energy data easier for C&I customers to use and act upon: descriptive to gauge performance and motivate action; predictive to identify factors contributing to energy spend; and prescriptive to better manage energy spend.
There’s no reason to wait until 2022, when CPP reduction targets need to be met, to start realizing more demand-side results and transforming your C&I customer relationships. Advancements in cloud-based energy intelligence software (EIS) enable utilities to bring these analytics to life for C&I customers—expressing information in dollars and cents while delivering the data visualizations, alerts, and energy management and collaboration tools that engage and build trust. The more utilities can empower business decision makers to act in real-time, the better they can improve energy productivity and deliver meaningful, persistent results.
Kristen Brewitt is the Senior Marketing Manager for Utility Solutions with EnerNOC, a provider of cloud-based energy intelligence software.
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