For businesses, there has never been a better time to review your energy strategy to ensure maximal resilience, cost optimization, and increased sustainability. From external pressures, incredible incentives, pent up capital ready to be deployed, enhanced technologies, new revenue schemes, smart tariffs and operational cost-savings, your business can take advantage to boost your bottom line, improve energy performance and support the transition to a net zero economy. But the key to maximizing benefits and reducing risks is taking informed, supported and actionable steps today!
As we transition from a Web1 to a Web 2 Energy industry and position for a Web 3 future, below are some thoughts on how best to optimize your business’s energy strategy today! In a perfect world businesses globally would go through this process in order, but it is not essential and each step can be completed in isolation or out of order. That said, for maximum impact, consider the following.
Monitor Your Energy
Energy is one of the most significant operational costs incurred by companies. Still, it’s one of the costs that’s often not monitored closely, it becomes a single line item in our operational expenses – and it keeps going up! As a hangover from our Web 1 world where we have been passive consumers of energy, many companies lack the right systems for accessing their energy data quickly and in a way that provides actionable information.
Monitoring your energy use is essential if you want to understand how your organization currently uses energy and inform your strategy moving forward. It is estimated that over 100 million smart meters were installed in the US alone in 2020. Smart meters installed by utilities enable your business to view your energy load profile (energy consumed in 15, 30 or 60 min increments) – this provides valuable overarching insights into how much energy you consume and when.
That said, to most effectively position your business for a successful energy transition today and a Web3 future (see next articles) it is now possible to obtain real-time data down to a device level. This enables businesses to monitor their energy usage, identify areas of inefficiency and gain a deeper understanding of their energy strategy to leverage energy flexibility to reduce costs, or create new revenue streams.
Monitoring alone can reduce energy costs, improve efficiencies, support predictive maintenance and reduce downtime and inform behavioral changes across your organization. Most importantly, data enables you to move to take action and progress through the following steps. At VECKTA we can support you to deploy such devices and dashboard your energy use with actionable insights.
Now you know how much energy you are consuming and when, possibly down to a device level, leading businesses then take advantage of energy efficiency – energy efficiency simply means using less energy to perform the same tasks – that is, eliminating energy waste. With your monitoring data, the next most effective step it to leverage it to implement an energy efficiency strategy. Why pay for energy you don’t need or why design future strategies around an energy consumption profile that could/should be lower. Such energy efficiency retrofits to your business can include:
- Upgrading heating and cooling systems.
- Deploying building management systems (may be a part of your monitoring solution above and will be critical to you being proactively positioned for a Web3 energy future) – to align the building’s energy needs with occupancy and use – dynamic scheduling, load sensing, occupancy sensing etc.
- Upgrading lighting systems.
- Electrifying equipment and in the future, selecting equipment with built in energy storage and connectiveness to participate in a broader Web3 energy strategy.
- Building envelope upgrades such as insulations, radiant barriers and more.
RMI found that a deep energy retrofits could achieve energy cost savings upto as much as a 50% reduction. Depending on your companies strategy and financial history it is possible to get such retrofits installed by companies who will front all the capital and share in the energy cost savings through a performance-based contracting approach. Additionally, there are lots of incentives out there for retrofits such as this. It really can be a high return on investment step in your energy transition journey.
Onsite Energy Strategy
Now you have reduced your energy consumption as much as possible and have the intelligence to understand when and how you are using the energy, the next step is to assess the opportunities for deploying an onsite energy system (other terms you may have heard are distributed energy or microgrid, for a deeper understanding of the differences and definitions check out this blog). Onsite energy is a solution that generates or stores electrical and/or thermal energy from resources at or near the point of end use and is often coordinated by a controller. The controller is the brain of the system that optimizes the deployed energy solution to be able to operate entirely or partially off-grid, coordinate storage, load, energy generation (solar, wind, gas, diesel, fuel cells), EV charging and more. Today both hybrid (combination of renewables and conventional generation) and renewable energy solutions are cost competitive with many utility rates with significant operational benefits.
Unlike the other steps discussed in this article, Onsite Energy is the only solution that enables business leaders to achieve the three primary business objectives we see:
- cost reductions/certainty
- operational resilience and security by generating and managing your own energy (at minimum for critical loads which you never want to lose).
- emission reductions relative to your baseline operation today.
There are many factors that go into optimizing an onsite energy solution to meet your specific business objectives, including but not limited to; current energy situation today, energy load profile, location (for renewable potential, fuel prices etc.), available space, technologies to be considered, outage durations, critical loads, business priorities, waste streams , finance situation and more. There are actually 100,000s of variables to consider and it is only in the last few years that software enabled technologies have provided us with the capabilities to consider such complexity and assess both the technical and financial merits of a project. Don’t try and use a spreadsheet to figure this out!
The solution set is immense, and capital, technologies and services are available and hungry to support businesses to deploy such solutions. The first step is to assess across your portfolio of facilities where you will gain the greatest return on investment and impact and develop a strategy across your facilities to deploy the right solutions at the right time. Then you want to ensure you develop the right business case, system design and contract with the right partners (capital, construction, equipment and operations) – as you will be utilizing the solution for the next 15-20+ years, smart decisions now will pay dividends for a long time to come.
With utility energy prices increasing in double digit percentages, reducing reliability (the cost to businesses in the US as a result of energy outages last year was $150B) and pressures to reduce emissions, combined with the many incentives including the Inflation Reduction Act (ability to get up-to 60% tax incentives on projects), onsite solutions are becoming very attractive. Additionally there are organization that will finance your system and agree an energy as a service contract with you for the life of the asset – no capital investment and fixed energy costs!! Aligning with the Web2 energy industry and the ability for 2 way interactions, in some jurisdictions and likely in many more as the industry matures, it is possible to generate revenue from your onsite energy assets by supporting utilities (and in the future your peers) to supply energy (to the grid or to another offtaker, such as a bitcoin mining data centre – Joel Fulford lets get an article from you to add to this series particularly as the next articles move into Web3 territory), shed load requirements, sell carbon credits and more.
Onsite energy and distributed energy assets are and will be critical to a successful energy transition and key to a Web3 energy world, and what is exciting about such systems is they can largely be plug and play – you could start today with one system design and then upgrade and modify it as business models change, new technologies come online or prices reduce. With the technology we are developing combined with your real-time monitoring data it will be possible to continuously assess how your system can be further optimized. The key is to starting the journey and leveraging the technology available today to deliver on your objectives.
Offsite PPAs/VPPAs & Carbon Credits
You have the data, you have reduced your energy consumption as much as possible and deployed an onsite energy solution, you are crushing it and your business is thriving!! You may have some remaining emissions that need to be offset to achieve your business objectives – you have two primary options:
- A (Virtual) Power Power Agreement – where by you procure energy from an energy generating asset that is not on your premises, in fact it can be thousands of miles away. You are not utilizing the actual electrons generated but through a financial vehicle you are purchasing the energy on paper. If this energy is solar/wind generated you can then report and market that you are utilizing green energy.
- Purchasing renewable energy or carbon credits – credits created by entities who are preserving or net generating carbon reductions.
Up until now, PPAs and Carbon Offsets, have largely been the first option for companies as it has been “easy” to implement, but it is not a sustainable solution – the cost of PPAs and Carbon Offsets are increasing and will continue to as the number of projects available will not meet demand. To learn more about this topic check out this article.
This aspect of the energy industry is ripe for disruption and acceleration through Web3 – Voluntary carbon markets are expected to be worth about $50 billion by 2030 as more companies strive to reach net zero. However, the offsetting market operates under different standards and procedures. There is a lack of consensus, integrity or assurance on what constitutes a good project. Through web3 and its underlying blockchain, the voluntary carbon market can thrive creating; standardization, accountability, transparency and integrity. Further it will make the industry even more accessible and lower transaction costs. Stay tuned as we explore this further in the next articles.
Conclusion For Your Energy Strategy
That concludes the Web2 aspect of this series. We are living in very exciting times where the capital, technologies and capabilities exist for businesses globally to take control of their energy future to drive more profitable and sustainable outcomes. If you follow the roadmap above you will be a leading business that customers will want to buy from, suppliers will want to work with, capital wants to invest in and employees want to work for!
At VECKTA we are here to support you on this journey, to place you in control and empower you to make the optimal data-driven business decisions in the most cost effective, accurate and timely manner.
What lies ahead with a Web3 energy future is even more exciting and could be a defining moment in the energy industries evolution. We will explore what Web3 is and then how it could relate to the energy transition, while acknowledging that we have a lot to learn – game on! Follow us here and keep an eye out for the next blog.