Energy Management Increasingly Seen as a Source of Competitive Advantage

Deloitte’s 2015 Resource Study found that business increasingly views an active energy management program as a way to create and maintain competitive advantage. The study, first conducted in 2011 and update annually thereafter, is based on a survey of over 600 corporate energy management decision-makers. Fully 44% (up 10% from 2014) of respondents identified energy management as integrated into corporate strategy, while 37% said energy management is integrated at the business unit or site level. Reducing electricity costs was identified as a key goal:

  • 79% identified reducing electric costs as important to financial competitiveness
  • 77% identified reducing electric costs as important to image/brand competitiveness

The latter suggests that companies are motivated by more than just cost-cutting; they are also taking into account external stakeholder views.

Businesses are spending capital to achieve their energy management goals. Goals have been set around electricity (88%), natural gas (64%), transportation fuels (59%), carbon (57%), and water (70%), with approximately one-quarter of goals across all five areas being targeted reduction goals.  Ninety-three percent of businesses indicate they invested capital over the last five years to achieve energy goals, totaling around 17% of overall capital spending.

The most popular technologies and strategies for achieving energy management goals in 2015 were:

  • 55% timers/sensors to control when equipment is powered on
  • 53% motion sensors
  • 47% building energy management systems
  • 41% demand response programs
  • 39% onsite generation technology such as solar panels
  • 34% energy recovery systems
  • 26% batteries for load shifting and peak shaving

New technologies will continue to drive increased corporate energy efficiency. A 2015 study by McKinsey & Company finds that operational improvements can improve energy efficiency 10-20%, but investment in new technologies can increase the savings to as high as 50%. Overall, the study finds that adoption of innovative technologies could save industry over $600 billion per year globally. The report outlines new technologies for the following nine sectors.

  • Advanced Industries (e.g. semiconductors, electronics)
  • Cement
  • Chemical
  • Oil Refining
  • Consumer Goods
  • Mining
  • Power
  • Pulp and Paper
  • Steel

The full report can be found here — Greening the future: New technologies that could transform how industry uses energy.

REAP: Rural Renewable Energy & Efficiency

The Rural Energy for America Program (REAP) was created by Congress in the 2008 Farm Bill. Administered by the U.S. Department of Agriculture (USDA) the REAP program provides grants and guaranteed loans to agricultural producers and rural small businesses for renewable energy projects or energy efficiency improvements. In August, the USDA announced $63 million in loans and grants for 264 renewable energy and energy efficiency projects so far in 2015. Several of U.S. Energy’s ethanol clients have made applications to the REAP program to support their energy efficiency improvement efforts.

Applicant Eligibility

Agricultural producers may be in rural or non-rural areas as long as they derive at least 50% of gross income from agricultural operations

Small businesses must be in an area other than a city or town with a population of 50,000 or more. Small businesses can check if they are in an eligible rural area here.

Project Eligibility

Renewable Energy Systems – funds may be used for purchase, installation, and construction of systems. Examples of eligible renewable energy systems include:

  • Biomass
  • Geothermal
  • Hydropower
  • Wind
  • Solar

Energy Efficiency Improvements – funds may be used for purchase, installation, and construction of improvements. Examples of eligible efficiency improvements include:

  • Lighting
  • Insulation, doors & windows
  • High efficiency HVAC
  • High efficiency motors and pumps

Funding Types

Grants and loan guarantees are available through the REAP program and individual projects may apply for one or both. Combined grant and loan guarantee funding cannot be more than 75% of the total project cost.

Grants

  • Grants up to 25% of total project cost
  • Renewable energy system grants range between $2,500 – $500,000
  • Energy efficiency grants range between $1,500 – $250,000

Loan Guarantees

  • Loan guarantees up to 75% of total project cost
  • Minimum loan amount of $5,000
  • Maximum loan amount of $25 million

Energy Audits and Assessments

When applying for energy efficiency improvement (EEI) funding an energy audit or assessment is also required as part of the application package. For EEI projects with a total cost greater than $200,000 an Energy Audit must be conducted. For EEI projects with a total cost of less than $200,000 an Energy Assessment or Energy Audit may be done. In general, the Energy Audit requires more in-depth analysis of the proposed EEI, such as detailed specifications, measurement plan, and calculation of direct and indirect costs.

REAP Resource Links