President Trump withdrew his country from the Paris climate agreement last week, claiming it was a bad deal for the United States. What he really did, was trying to conceal a political decision as an economic one.

The reactions afterwards - whether they came from the 194 remaining signatories or from businesses in the US - show that very few people bought the story. It is indeed remarkable in this day and age - when renewable energy sources are growing spectacularly and their costs are coming down faster than ever anticipated - that removing carbon dioxide caps, drilling for oil and digging for coal would be recipes for success. A quick glance at the latest projections by the Energy Information Administration, for example, shows that the cost for onshore wind is almost on par with the cheapest conventional alternative (closed cycle gas turbines) without taking into account any subsidies. Coal is more than twice as expensive. The same broad trends hold for technologies in energy storage, efficiency and electric mobility, according to the International Energy Agency

This is why Mr. Trump’s actions, however deplorable, do not have all that much impact. Simple and straightforward economics - the kind Wall Street understands - are the real driver for the energy transition. Decisions to consciously manage one’s own consumption, to go for renewable energy or to integrate energy assets like PV panels and batteries, are taken because they make business sense, and no longer just because they are politically mandated. Many major (industrial) energy consumers have discovered that the opposite holds true - not taking action on energy management has become so expensive it negatively impacts on the competitiveness and the profitability of the core business.

The real question for such companies therefore is not whether to engage on energy management or not. It is rather ‘how’ to do so. As it is not the core business for most of them, it is not evident to always consistently tackle the topic. Three disciplines need to be brought together.

  • Capturing and validating all relevant data. There are broadly speaking three categories of data that need to be brought together. First of all, meter reading on consumption and production need to flow in. Apart from the main meters (mostly electricity, gas and fuel - but it could include any commodity), submeters on the main installations or buildings are extremely useful. The key thing is to have a permanent stream of dependable data coming in at regular intervals. Next is the contractual and financial information. Supply contracts, invoices, contracts for delivery (for companies owning their own generation assets, like PV or wind turbines) or grid connection, green certificate allowances - they are all needed. Finally specific inputs on the organisation are the required. They concern the structure of energy flows&conversions; the company structure and the roles&responsibilities of key people.
  • Analyzing and optimizing. Once a company can rely on a consistent and continuously updated dataset - which is a major challenge in itself - it needs to be permanently mined for insights. The raw data need to be converted into meaningful information on the sources and usage of energy throughout the organisation, costs, trends and unexpected deviations. By combining such analyses with outside information on things like market prices, cost of technology and regulation, a clear picture emerges on which actions to take to reduce costs, consumption or emissions.
  • Implementation. Even in companies that have mastered the previous two activities, implementation remains difficult. The stumbling blocks can be many - bringing in the right expertise, allocating budget, freeing capacity for follow-up and reporting to management,.... Projects - even very profitable ones with a minimal payback period - therefore often remain stuck in the planning phase.

Cracking energy management is not necessarily easy, but an increasing number of companies have discovered that it pays off. Initial savings around 10% are common; up to 30% not unheard of. Moreover, the benefits are recurring once it becomes a structural part of an organisation’s business processes. Best of all, the upside will only increase further as the cost of doing nothing will inevitably continue to be going up over the coming years. And that is something not even Mr. Trump is going to change.

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