Energy Management: From Energy Generation to Production
The law of conservation of energy states that energy can neither be created nor destroyed. It can only be converted from one form to another. Guess what, since the dawn of life on earth, we have been managing energy in one way or another to survive. The human cell, for example, with an efficiency of 38% is far more efficient than any man-made machine (10–30%) [1]. In other words, if the cell fails to function properly — “manage all energy producing activities”, we would cease to exist. The goal of energy management, like every other management activity is to maximize output given limited input resources. Scientists and engineers call this a constraint optimization problem because given the set of constraints, we optimize for the best possible output. Hence, it can be seen as a means to overcome barriers of energy efficiency.
What is Energy Management?
The term has different meanings in different situations because it dramatically varies with resources available and the expected output. In a business within the energy industry, the primary goal is to plan and operate day-to-day activities in a way that:
- Conserves all forms of resources
- Follows practices that result in negligible levels of environmental damage
- Ideally decelerates climate change but realistically does not aggravate it
- Remains carbon neutral
It involves monitoring, measuring, recording, analysing, critically examining, controlling and redirecting energy and material flows through systems so that least power is expended to achieve worthwhile aims across energy production, consumption, distribution and storage. Thus, it is a combination of implementing energy-efficient technologies and processes that enable productive use such technologies. Additionally, having a bigger picture prevents the participants from focusing and sub-optimizing only on the technology instead of both factors [2].
While the broad goal may be the same for all companies, it is a fallacy to expect every company to use identical practices because business dynamics are a complex function of many variables. An oil company in the fossil fuel sector cannot directly use the principles of the energy storage market. The same is very likely not true for an IT company providing software services. In fact, two companies from the same sector selling the same product/service do not operate in the same way because the market conditions are simply different. For instance, the management strategy for a GW power plant is very different from that of a MW plant.
Why Should Companies Actively Focus on Energy Management?
The fundamental aim of any company is to maximize profits and minimize expenses. Again, it is a combination of both, the process of profit maximization may or may not be dependent on minimizing expense. However, expenses driven by market conditions are generally uncontrollable to a large extent.
For example, the price of the primary raw materials of LG Solar, one of the world’s largest solar panel manufacturers is very likely to not be the same ten years from now. In fact, it is may increase and in turn drive the manufacturing cost the panel up. This advocates implementation of potent energy management practices thereby curbing such rising costs to the company. On the hand, if the prices don’t rise as much, the company succeeds in saving energy creating a win-win situation!
Though the above example may suggest that the motivation for implementing energy management practices stems purely from financial reasons, it may not be true. As mentioned earlier, every company is unique and hence the motivation need not be the same.
Effective Energy Management
Due to the lack of commonalities, the emphasis should be on a company specific approach by considering the company’s unique characteristics for effective management. For example, a company in the manufacturing sector fundamentally involves energy in two areas — energy supply and fraction of supplied energy for production purposes. Subsequently, the result is an substantial increase in efficiency when the company succeeds in effectively managing energy in both areas by improving technology, operational activities, etc.
A short list of such activities [2]:
- Extensive support of top-management
- Looking at energy costs based on sub-metering apart from energy costs per square meter or per employee
- Energy competition between different departments within the company
- Ensuring strict adherence to guidelines
- Periodic energy audits and implementation of suitable suggestions
- Storage of high-grade reusable energy
- Adaptive feedback system to prevent wastage of high-grade reusable energy
- Energy balance sheet [3]
- Seeking out consulting services for energy management [3]
- Focusing on the goals as well as motivating employees to change their functioning methodology by providing sufficient time and freedom to make mistakes in the process
Another way to look at the same problem is to reduce negative environmental impact. In simple words, the focus is on reducing the harm than increasing the output. However, please note that the previous case involving increased output does not necessarily imply damage to environment. Although the goal may not be the same, it still requires effective planning without compromising on the company’s business. Moreover, such activities may actually benefit the company as it promotes the brand amongst potential and existing customers thereby escalating sales.
Conclusion
In conclusion, adding the term “energy” before management does not and should not fundamentally change how companies operate. It simply means that the emphasis is on areas involving “energy” without radically affecting other segments of the company. As mentioned earlier, every company is trying its best to make money and implementation of energy management practices should complement it.
Thank you for your time!
References
[1] A. Berezow, “The Cell: Most Energy Efficient Thing on Earth?”, ACSH, April, 2019
