Energy management

Last updated April 27, 2024

Energy management includes planning and operation of energy production and energy consumption units as well as energy distribution and storage. Objectives are resource conservation, climate protection and cost savings, while the users have permanent access to the energy they need. It is connected closely to environmental management, production management, logistics and other established business functions. The VDI-Guideline 4602 released a definition which includes the economic dimension: "Energy management is the proactive, organized and systematic coordination of procurement, conversion, distribution and use of energy to meet the requirements, taking into account environmental and economic objectives".^[1] It is a systematic endeavor to optimize energy efficiency for specific political, economic, and environmental objectives through Engineering and Management techniques.^[2]

Energy efficiency
Base line of energy assessment
Organizational integration
Energy management in operational functions
Facility management
Logistics
Energy procurement
Production
Production planning and control
Maintenance
Energy management challenge
Energy strategies
Potential energy strategies
Energy strategies of companies
Energy strategies of politics
Ethical and normative basis of the energy strategies
See also
References
Further reading

Energy efficiency

Base line of energy assessment

One of the initial steps for an effective energy cost control program is the base line energy assessment, which examines the pattern of existing energy usage by the government or any sub-entity of the government or private organization. This program will set the reference point for improvements in energy efficiency. Energy efficiency can improve the existing energy usage and benchmarking of every individual section such as area, sub-area, and the industry.

Organizational integration

It is important to integrate the energy management in the organizational structure, so that the energy management can be implemented. Responsibilities and the interaction of the decision makers should be regularized. The delegation of functions and competencies extend from the top management to the executive worker. Furthermore, a comprehensive coordination can ensure the fulfillment of the tasks.

It is advisable to establish a separate organizational unit "energy management" in large or energy-intensive companies. This unit supports the senior management and keeps track. It depends on the basic form of the organizational structure, where this unit is connected. In case of a functional organization the unit is located directly between the first (CEO) and the second hierarchical level (corporate functions such as production, procurement, marketing). In a divisional organization, there should be a central and several sector-specific energy management units. So the diverse needs of the individual sectors and the coordination between the branches and the head office can be fulfilled. In a matrix organization the energy management can be included as a matrix function and thus approach most functions directly.

Energy management in operational functions

Facility management

Facility management is an important part of energy management, because a huge proportion (average 25 per cent) of complete operating costs are energy costs. According to the International Facility Management Association (IFMA), facility management is "a profession that encompasses multiple disciplines to ensure functionality of the built environment by integrating people, place, processes and technology."

The central task of energy management is to reduce costs for the provision of energy in buildings and facilities without compromising work processes. Especially the availability and service life of the equipment and the ease of use should remain the same. The German Facility Management Association (GEFMA e.V.) has published guidelines (e.g. GEFMA 124-1 and 124–2), which contain methods and ways of dealing with the integration of energy management in the context of a successful facility management.^[3] In this topic the facility manager has to deal with economic, ecological, risk-based and quality-based targets. He tries to minimize the total cost of the energy-related processes (supply, distribution and use).^[4]

The most important key figure in this context is kilowatt-hours per square meter per year (kWh/m²a). Based on this key figure properties can be classified according to their energy consumption.

Europe: In Germany a low-energy house can have a maximum energy consumption of 70 kWh/m²a.
North America: In the United States, the ENERGY STAR program is the largest program defining low-energy homes. Homes earning ENERGY STAR certification use at least 15% less energy than standard new homes built to the International Residential Code, although homes typically achieve 20–30% savings.^[5]

In comparison, the passive house ultra-low-energy standard, currently undergoing adoption in some other European countries, has a maximum space heating requirement of 15 kWh/m²a. A passive house is a very well insulated and virtually airtight building. It does not require a conventional heating system. It is heated by solar gain and internal gains from people. Energy losses are minimized.^[6]

There are also buildings that produce more energy (for example by solar water heating or photovoltaic systems) over the course of a year than it imports from external sources. These buildings are called energy-plus-houses.^[7]

In addition, the work regulations manage competencies, roles and responsibilities. Because the systems also include risk factors (e.g. oil tanks, gas lines), you must ensure that all tasks are clearly described and distributed. A clear regulation can help to avoid liability risks.^[8]

Logistics

Logistics is the management of the flow of resources between the point of origin and the point of destination in order to meet some requirements, for example of customers or corporations. Especially the core logistics task, transportation of the goods, can save costs and protect the environment through efficient energy management. The relevant factors are the choice of means of transportation, duration and length of transportation and cooperation with logistics service providers.

The logistics causes more than 14% percent of CO₂ emissions worldwide. For this reason the term Green Logistics is becoming increasingly important.^{[ citation needed ]}

Possible courses of action in terms of green logistics are:^[9]

Shift to ecofriendly transport carrier such as railroad and waterway
Route and load optimization
Formation of corporate networks, which are connected by logistics service
Optimizing physical logistics processes by providing a sophisticated IT support

Besides transportation of goods, the transport of persons should be an important part of the logistic strategy of organizations. In case of business trips it is important to attract attention to the choice and the proportionality of the means of transport. It should be balanced whether a physical presence is mandatory or a telephone or video conference is just as useful. Home Office is another possibility in which the company can protect the environment indirectly.^[10]

Energy procurement

Procurement is the acquisition of goods or services. Energy prices fluctuate constantly, which can significantly affect the energy bill of organizations. Therefore, poor energy procurement decisions can be expensive. Organizations can control and reduce energy costs by taking a proactive and efficient approach to buying energy. Even a change of the energy source can be a profitable and eco-friendly alternative.^[11]

Production

Production is the act of creating output, a good or service which has value and contributes to the utility of individuals.^[12] This central process may differ depending on the industry. Industrial companies have facilities that require a lot of energy. Service companies, in turn, do not need many materials, their energy-related focus is mainly facility management or Green IT. Therefore, the energy-related focus has to be identified first, then evaluated and optimize.

Production planning and control

Usually, production is the area with the largest energy consumption within an organization. Therefore, also the production planning and control becomes very important. It deals with the operational, temporal, quantitative and spatial planning, control and management of all processes that are necessary in the production of goods and commodities. The "production planner" should plan the production processes so that they operate in an energy efficient way. For example, a strong power consumer can be moved into the night time. Peaks should be avoided for the benefit of a unified load profile.

The impending changes in the structure of energy production require an increasing demand for storage capacity. The Production planning and control has to deal with the problem of limited storability of energy. In principle there is the possibility to store energy electrically, mechanically or chemically. Another trend-setting technology is lithium-based electrochemical storage, which can be used in electric vehicles or as an option to control the power grid. The German Federal Ministry of Economics and Technology realized the significance of this topic and established an initiative with the aim to promote technological breakthroughs and support the rapid introduction of new energy storage.^[13]

Maintenance

Maintenance is the combination of all technical and administrative actions, including supervision actions, intended to retain an item in, or restore it to, a state in which it can perform a required function.^[14] Detailed maintenance is essential to support the energy management. Hereby power losses and cost increases can be avoided.^[15]

Energy management challenge

Through the energy efficiency it management is remain the key for the any industrial user across globe, to achieve the energy management goal for the federal government or industry the efficiency of water and energy resources play a vital role

Examples of how it is possible to save energy and costs with the help of maintenance:

Defrost the fridges
Check the barometer of cars and trucks
Insulation of hot systems
Improve leaks in building envelopes

Energy strategies

A long-term energy strategy should be part of the overall strategy of a company. This strategy may include the objective of increasing the use of renewable energies. Furthermore, criteria for decisions on energy investments, such as yield expectations, are determined.^[16] By formulating an energy strategy companies have the opportunity to avoid risks and to assure a competitive advance against their business rivals.^[17]

Potential energy strategies

According to Kals there are the following energy strategies:^[18]

Passive Strategy: There is no systematic planning. The issue of energy and environmental management is not perceived as an independent field of action. The organization only deals with the most essential subjects.
Strategy of short-term profit maximization: The management is concentrating exclusively on measures that have a relatively short payback period and a high return. Measures with low profitability are not considered.
Strategy of long-term profit maximization: This strategy includes that you have a high knowledge of the energy price and technology development. The relevant measures (for example, heat exchangers or power stations) can have durations of several decades. Moreover, these measures can help to improve the image and increase the motivation of the employees.
Realization of all financially attractive energy measures: This strategy has the goal to implement all measures that have a positive return on investment.
Maximum strategy: For the climate protection one is willing to change even the object of the company.

In reality, you usually find hybrid forms of different strategies.

Energy strategies of companies

Many companies are trying to promote its image and time protect the climate through a proactive and public energy strategy. General Motors (GM) strategy is based on continuous improvement. Furthermore, they have six principles: e.g. restoring and preserving the environment, reducing waste and pollutants, educating the public about environmental conservation, collaboration for the development of environmental laws and regulations.^[19]

Nokia created its first climate strategy in 2006. The strategy tries to evaluate the energy consumption and greenhouse gas emissions of products and operations and sets reduction targets accordingly.^[20] Furthermore, their environmental efforts is based on four key issues: substance management, energy efficiency, recycling, promoting environmental sustainability.^[21]

The energy strategy of Volkswagen (VW) is based on environmentally friendly products and a resource-efficient production according to the "Group Strategy 2018".^[22] Almost all locations of the Group are certified to the international standard ISO 14001 for environmental management systems.^[23]

When looking at the energy strategies of companies it is important to you have the topic greenwashing in mind. This is a form of propaganda in which green strategies are used to promote the opinion that an organization's aims are environmentally friendly.^[24]

Energy strategies of politics

Even many countries formulate energy strategies. The Swiss Federal Council decided in May 2011 to resign nuclear energy medium-dated. The nuclear power plants will be shut down at the end of life and will not be replaced. In Compensation they put the focus on energy efficiency, renewable energies, fossil energy sources and the development of water power.^[25]

The European Union has clear instructions for its members. The "20-20-20-targets" include, that the Member States have to reduce greenhouse gas emissions by 20% below 1990 levels, increase energy efficiency by 20% and achieve a 20% share of renewable energy in total energy consumption by 2020.^[26]

Ethical and normative basis of the energy strategies

The basis of every energy strategy is the corporate culture and the related ethical standards applying in the company.^[27] Ethics, in the sense of business ethics, examines ethical principles and moral or ethical issues that arise in a business environment. Ethical standards can appear in company guidelines, energy and environmental policies or other documents.

The most relevant ethical ideas for the energy management are:

Utilitarianism: This form of ethics has the maxim that the one acts are good or right, whose consequences are optimal for the welfare of all those affected by the action (principle of maximum happiness). In terms of energy management, the existence of external costs should be considered. They do not directly affect those who profit from the economic activity but non-participants like future generations. This error in the market mechanism can be solved by the internalization of external costs.^[28]
Argumentation Ethics: This fundamental ethical idea says that everyone who is affected by the decision, must be involved in decision making. This is done in a fair dialogue, the result is completely uncertain.^[29]
Deontological ethics: The deontological ethics assigns individuals and organizations certain obligations. A general example is the golden rule: "One should treat others as one would like others to treat oneself." Therefore, everyone should manage their duties and make an energy economic contribution.^[29]

Related Research Articles

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The triple bottom line is an accounting framework with three parts: social, environmental and economic. Some organizations have adopted the TBL framework to evaluate their performance in a broader perspective to create greater business value. Business writer John Elkington claims to have coined the phrase in 1994.

Corporate social responsibility (CSR) or corporate social impact is a form of international private business self-regulation which aims to contribute to societal goals of a philanthropic, activist, or charitable nature by engaging in, with, or supporting professional service volunteering through pro bono programs, community development, administering monetary grants to non-profit organizations for the public benefit, or to conduct ethically oriented business and investment practices. While once it was possible to describe CSR as an internal organizational policy or a corporate ethic strategy similar to what is now known today as Environmental, Social, Governance (ESG); that time has passed as various companies have pledged to go beyond that or have been mandated or incentivized by governments to have a better impact on the surrounding community. In addition, national and international standards, laws, and business models have been developed to facilitate and incentivize this phenomenon. Various organizations have used their authority to push it beyond individual or industry-wide initiatives. In contrast, it has been considered a form of corporate self-regulation for some time, over the last decade or so it has moved considerably from voluntary decisions at the level of individual organizations to mandatory schemes at regional, national, and international levels. Moreover, scholars and firms are using the term "creating shared value", an extension of corporate social responsibility, to explain ways of doing business in a socially responsible way while making profits.

Green computing, green IT, or ICT sustainability, is the study and practice of environmentally sustainable computing or IT.

<span class="mw-page-title-main">Material efficiency</span>

Material efficiency is a description or metric ((Mp) (the ratio of material used to the supplied material)) which refers to decreasing the amount of a particular material needed to produce a specific product. Making a usable item out of thinner stock than a prior version increases the material efficiency of the manufacturing process. Material efficiency is associated with Green building and Energy conservation, as well as other ways of incorporating Renewable resources in the building process from start to finish.

A sustainable business, or a green business, is an enterprise that has a minimal negative impact or potentially a positive effect on the global or local environment, community, society, or economy—a business that strives to meet the triple bottom line. They cluster under different groupings and the whole is sometimes referred to as "green capitalism". Often, sustainable businesses have progressive environmental and human rights policies. In general, a business is described as green if it matches the following four criteria:

It incorporates principles of sustainability into each of its business decisions.
It supplies environmentally friendly products or services that replace demand for nongreen products and/or services.
It is greener than traditional competition.
It has made an enduring commitment to environmental principles in its business operations.

An ethical bank, also known as a social, alternative, civic, or sustainable bank, is a bank concerned with the social and environmental impacts of its investments and loans. The ethical banking movement includes: ethical investment, impact investment, socially responsible investment, corporate social responsibility, and is also related to such movements as the fair trade movement, ethical consumerism, and social enterprise.

Sustainable procurement or green procurement is a process whereby organizations meet their needs for goods, services, works and utilities in a way that achieves value for money on a life-cycle basis while addressing equity principles for sustainable development, therefore benefiting societies and the environment across time and geographies. Procurement is often conducted via a tendering or competitive bidding process. The process is used to ensure the buyer receives goods, services or works for the best possible price, when aspects such as quality, quantity, time, and location are compared. Procurement is considered sustainable when organizations broadens this framework by meeting their needs for goods, services, works, and utilities in a way that achieves value for money and promotes positive outcomes not only for the organization itself but for the economy, environment, and society. This framework is also known as the triple bottom line, which is a business accounting framework. The concept of TBL is narrowly prescribed, and even John Elkington, who coined the term in the 1990s, now advocates its recall. Indeed, procurement practitioners have drawn attention to the fact that buying from smaller firms, locally, is an important aspect of sustainable procurement in the public sector. Ethics, culture, safety, diversity, inclusion, justice, human rights and the environment are additionally listed as important aspects of SPP.

In energy conservation and energy economics, the rebound effect is the reduction in expected gains from new technologies that increase the efficiency of resource use, because of behavioral or other systemic responses. These responses diminish the beneficial effects of the new technology or other measures taken. A definition of the rebound effect is provided by Thiesen et al. (2008) as, “the rebound effect deals with the fact that improvements in efficiency often lead to cost reductions that provide the possibility to buy more of the improved product or other products or services.” A classic example from this perspective is a driver who substitutes a vehicle with a fuel-efficient version, only to reap the benefits of its lower operating expenses to commute longer and more frequently."

An environmental enterprise is an environmentally friendly/compatible business. Specifically, an environmental enterprise is a business that produces value in the same manner which an ecosystem does, neither producing waste nor consuming unsustainable resources. In addition, an environmental enterprise rather finds alternative ways to produce one's products instead of taking advantage of animals for the sake of human profits. To be closer to the goal of being an environmentally friendly company, some environmental enterprises invest their money to develop or improve their technologies which are also environmentally friendly. In addition, environmental enterprises usually try to reduce global warming, so some companies use materials that are environmentally friendly to build their stores. They also set in place regulations that are environmentally friendly. All these efforts of the environmental enterprises can bring positive effects both for nature and people. The concept is rooted in the well-enumerated theories of natural capital, the eco-economy and cradle to cradle design.

Efficient energy use, or energy efficiency, is the process of reducing the amount of energy required to provide products and services. There are many technologies and methods available that are more energy efficient than conventional systems. For example, insulating a building allows it to use less heating and cooling energy while still maintaining a comfortable temperature. Another method is to remove energy subsidies that promote high energy consumption and inefficient energy use. Improved energy efficiency in buildings, industrial processes and transportation could reduce the world's energy needs in 2050 by one third.

Corporate sustainability is an approach aiming to create long-term stakeholder value through the implementation of a business strategy that focuses on the ethical, social, environmental, cultural, and economic dimensions of doing business. The strategies created are intended to foster longevity, transparency, and proper employee development within business organizations. Firms will often express their commitment to corporate sustainability through a statement of Corporate Sustainability Standards (CSS), which are usually policies and measures that aim to meet, or exceed, minimum regulatory requirements.

Supply-chain sustainability is the management of environmental, social and economic impacts and the encouragement of good governance practices, throughout the lifecycles of goods and services. There is a growing need for integrating sustainable choices into supply-chain management. An increasing concern for sustainability is transforming how companies approach business. Whether motivated by their customers, corporate values or business opportunity, traditional priorities such as quality, efficiency and cost regularly compete for attention with concerns such as working conditions and environmental impact. A sustainable supply chain seizes value chain opportunities and offers significant competitive advantages for early adopters and process innovators.

Environmentally sustainable design is the philosophy of designing physical objects, the built environment, and services to comply with the principles of ecological sustainability and also aimed at improving the health and comfort of occupants in a building. Sustainable design seeks to reduce negative impacts on the environment, the health and well-being of building occupants, thereby improving building performance. The basic objectives of sustainability are to reduce the consumption of non-renewable resources, minimize waste, and create healthy, productive environments.

Sustainable products are products who are either sustainability sourced, manufactured or processed that provide environmental, social and economic benefits while protecting public health and environment over their whole life cycle, from the extraction of raw materials until the final disposal.

ISO 50001Energy management systems - Requirements with guidance for use, is an international standard created by the International Organization for Standardization (ISO). It supports organizations in all sectors to use energy more efficiently through the development of an energy Management System. The standard specifies the requirements for establishing, implementing, maintaining and improving an energy management system, whose purpose is to enable an organization to follow a systematic approach in achieving continual improvement of energy performance, including energy efficiency, energy security, energy use and consumption.

Green logistics describes all attempts to measure and minimize the ecological impact of logistics activities. This includes all activities of the forward and reverse flows of products, information and services between the point of origin and the point of consumption. It is the aim to create a sustainable company value using a balance of economic and environmental efficiency. Green logistics has its origin in the mid-1980s and was a concept to characterize logistics systems and approaches that use advanced technology and equipment to minimize environmental damage during operations.

Energy balance, in terms of energy economics, is concerned with all processes within an organization that have a reference to energy. It derives from the ecobalance and has the ambition to analyze and verify the emergence, transformation and use of energy resources in an organization in detail. Energy balances serve as a major statistical data base for energy policy and energy management decisions. They contain important information such as the amount and composition of energy consumption, its changes or the transformation of energy.

In commerce, global supply-chain management is defined as the distribution of goods and services throughout a trans-national companies' global network to maximize profit and minimize waste. Essentially, global supply chain-management is the same as supply-chain management, but it focuses on companies and organizations that are trans-national.

Sustainable energy management in the wastewater sector applies the concept of sustainable management to the energy involved in the treatment of wastewater. The energy used by the wastewater sector is usually the largest portion of energy consumed by the urban water and wastewater utilities. The rising costs of electricity, the contribution to greenhouse gas emissions of the energy sector and the growing need to mitigate global warming, are driving wastewater utilities to rethink their energy management, adopting more energy efficient technologies and processes and investing in on-site renewable energy generation.

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1 2 Johannes Kals: Business Ethics and Corporate Energy Management, in: Karczewski, Leszek; Kretek, Henryk (eds): Odpowiedzialny biznes i konsumerysm wyzwaniem XXI Wieku (Responsible Business and Responsible Consumerism as a Challenge of the 21st Century), Polen, Raciborz 2012, p. 6.