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Total Energy Costs ‘Far Exceed Utility and Fuel Spend’

The total cost of ownership related to energy is often 150 to 200 percent of a company’s commodities spend, and offers a savings potential of between five and 20 percent of operating profit, according to Jason Smith, manager of sales engineering at sustainability software provider Hara.

Smith was speaking to participants in Environmental Leader’s latest webinar, Identifying Hidden Energy and Sustainability Costs. (Click the link to listen to a recording of the webinar.)

He said that energy spend is often mistakenly viewed as simply the total cost of electricity, natural gas and other natural resources. But to this total, companies should also add operations and maintenance expenses, capital spend, risk management and other costs related to their total energy footprint, Smith said.

These costs are often siloed at many points throughout the organization, and buried in overhead costs. But finding them can lead to real savings: total cost of ownership for energy can represent one to five percent of total revenue and between five and 30 percent of operating profit for non-energy-intensive industries like food and beverage, commercial goods, retail and real estate, Smith said.

Tom Harrington, senior program manager of workplace services at Intuit, said the company has tried several systems to track and manage its energy use and carbon emissions. An early system had many omissions and duplicates and took more than a year to collect the relevant data.

Intuit then started using the EPA’s Energy Star portfolio manager, which helped it capture energy use and cost. But the product is more of a skeleton than a full-blown energy management system, Harrington said. In 2009 the company added a tool owned and operated by an outsourced facility management team, but Intuit staff didn’t find the tool user-friendly.

For the last four fiscal years, Intuit has used a Hara system (pictured). Harrington says this delivers better root-cause analysis, modeling of proposed efficiency investments and the ability to drill down into campus- and building-level data.

The system helps Intuit identify its worst performing buildings – usually data centers. A cross-functional team of operations engineers and energy managers meet with Harrington once a week to go through a list of initiatives being undertaken for each of these energy-intensive sites.

One thing Harrington says he would have set up differently, in retrospect, is the system’s geographical structure. Intuit spent time developing city, state and country level analysis for its buildings, but didn’t do this for commuting or business travel. This would have been useful to discover where users are driving alone the most, or doing a lot of corporate travel, he said.

Intuit will also likely update the system to reflect the energy mix of each of its individual utilities, to provide more accurate emissions data for each of its sites. Its future plans also include transitioning to Hara for workflow management, from today’s proprietary software set up by the company’s facilities management team.

Savings isn’t the only reason why companies should start tracking energy use now, Harrington said. He argues that in the next ten years, every organization with more than five employees in the U.S. will be required to report on its carbon footprint and energy consumption.

To listen to a recording of the webinar, Identifying Hidden Energy and Sustainability Costs, click the link.

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2 thoughts on “Total Energy Costs ‘Far Exceed Utility and Fuel Spend’

  1. Intuit’s Tom Harrington is undoubtedly far out on a limb when he makes his prediction regarding the U.S. regulatory environment for greenhouse gases by the year 2022. A business case for such regulation has never been attempted, and reading a ‘scientific’ case for its validity would be entertaining indeed.
    One hidden energy cost not mentioned in the article is the “cost of compliance”. One hopes that cooler heads in the public policy arena will reduce or eliminate that line item.

  2. How do we maintain and care for this earth, In fact if we have the view that we are currently living on earth just deposit it. We are on the earth today only nenerima deposit of our children and grandchildren. How do we keep the consignment was to have an intention so we can keep and preserve it for our children and grandchildren live. We have had many laws and regulations to reduce emissions of carbon dioxide gas. Co2 is currently the largest contributor to environmental degradation whose effects we feel now is global warming. If not now when will we act. Levels of Co2 in the air current is greater than nature’s ability to absorb / neutralize it. The only effort is to reduce the use of materials that trigger the Co2 released freely in the air and planting as many trees. Is a natural neutralizer leaves, which utilize CO2 to produce energy for the photosynthesis process of plants and release O2.
    Do not cut down trees and many are planting trees. That effort most effectively and quickly restore the damaged environment.

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