Earning a Return on Energy
Background on Incentives
For many years, companies, institutions and organizations have rewarded building occupants (employees, students, contractors, etc.) for their good ideas or good results in saving energy. The rewards in some organizations have ranged from acknowledgement, trophies, gift certificates, cash and even vacations. Surprisingly, giving cash does not always result in the greatest reaction and long-term appreciation, as most people use reward cash to pay their personal bills, and then the reward is forgotten. Gift certificates, trophies and things that allow the awardee to experience something special (create a memory) are usually worth more than simple cash. I can personally attest to this because I have a plaque in my office (probably cost them about $12 to make) that I treasure much more than the $12 or even $100.
Some additional barriers to granting incentives have been getting the budget approval to distribute such rewards. Sometimes, (especially in government facilities), there is a distinct difference between operational and capital budgets. For example, I know of a organization that had a “10% reward incentive”, however after an employee went “beyond the call of his normal duties” to help the company save $100,000 via innovative process improvements/energy reductions, management still had a hard time writing a “reward” check for $10,000.
The example just mentioned was a 1000% Return on Investment, yet many government facilities may have no real way to provide that type of incentive due to budgetary process. Unfortunately, with no reward, there often is no action, so who knows how many “untapped” energy saving ideas are floating around. Perhaps “Return on Investment” may not be the best way to think about this problem. Perhaps a new term is appropriate – “Return on Energy”. I will explain.
The idea to write about this hit me during a recent audit of a very large aircraft maintenance facility. The facility has thousands of employees, working in different departments under one roof operating at a 76 degree set-point during the summer months. Employees have gotten used to this temperature as the norm. Each department has productivity goals and energy consumption is not really monitored. Although there is no accountability for energy, this is fairly common in many facilities. There is a written reward policy that an employee could get 3% of the net savings from any idea that they bring to the organization, however the form/rules are complicated and even have what I would call “legal slang.” So the incentive program is underutilized.
Alternative Incentive… “Return on Energy”
Instead of using money as a vehicle for a reward program, we could use (sacrifice) some energy in exchange for a greater savings elsewhere. For example: there could be a reward that gives the employee a more comfortable temperature set-point, in exchange for a specified level of process energy savings.
As an application, the aircraft maintenance facility could make the following offer to the employees: “Currently, in the summer you are operating in an environment that is 76 degrees, but if you reduce your process energy by 20% (while maintaining throughput), you can have 74 degrees in your area.”
I like this idea because it establishes a “Transparent Dashboard”, showing everyone in the plant which departments are doing well in energy (sets up a competitive spirit). I like it because it involves minimal paperwork and everything is oriented towards the operational budget (minimal/no capital required to implement). You would sacrifice some energy (via set-points) in exchange for a greater “return on energy” (in the manufacturing process).
A few caveats: managers doing this would need to:
- Install and maintain some type of energy sub-metering for each department to enable measured performance, but that sub-metering would carry additional benefits to the organization (you could also bill departments for energy consumption- which would motivate departments).
- Establish careful baselines and “targets” for energy consumption to not penalize certain departments that may have already implemented a 20% energy savings.
- Establish production minimums, so that energy saved does not come at the expense of production throughput.
- Make sure the process savings is significantly greater than the energy you would sacrifice by adjusting the set-points (you could also provide other “comforts” to employees such as portable coolers or other perks like longer breaks, etc. Think creative!)
In contrast, some organizations are creating incentives other ways by incorporating energy use as a key performance indicator and part of an employee’s job performance assessment. Other organizations accomplish a “dashboard” by having the plant kW load broadcast to employees when the load reaches a certain level. In many cases, just having people see the data can be enough for them to naturally want to do better or protect their job.
The possibilities are endless. I know of schools and universities who throw quarterly parties for groups that use less energy. College students will do just about anything for a free pizza. Some schools have competitions between dorms and the participation level is very high. A good example of a “dashboard” is Arizona State University’s Campus Metabolism website, where you can see in real time the kW, heating and cooling that is occurring at each building.
The point is that we don’t always need hard cash to create an incentive to save energy. We might be able to provide some things in exchange for others. Let me know your thoughts. I want to create a list of 101 incentives!
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