Enterprise energy management takes a comprehensive look at energy – from procurement to consumption – to find bottom line savings

— By Rita Tatum, Contributing Editor

The buzzword in energy circles these days seems to be “enterprise energy management,” or EEM. As with any terminology that has been only a few years in the making, a precise definition of the term is still being developed. But that isn’t stopping companies from implementing EEM and reaping the benefits.

Whether considered a philosophy, a set of tactics or a systemized approach to energy managing and purchasing, EEM stretches well beyond building automation or energy management systems. Its roots are financial, as a spinoff of Enterprise Resource Planning for managing operational expenses.

“Enterprise energy management is the monitoring of energy consumption in a portfolio of buildings using real-time pricing architecture,” says Jim Lee, president and CEO of Cimetrics, Inc. “It’s more than measuring how much energy is used. It also requires looking at load profiles, aggregating collections of buildings to do power purchases.”

EEM applications began a number of years ago in the industrial sector as a way to manage the third highest expense (behind only salaries and cost of goods) such enterprises had. To put energy in perspective, General Motors estimates that $700 of an automobile’s cost is electricity expenses. Now, commercial and institutional facilities like retail stores and hotel chains also have embraced the concept.

“EEM is managing the money flow,” says Martel Chen, director of utility services and marketing for Siemens Building Technologies. “EEM follows the money being spent on energy to see if there are ways to save it or create new revenue sources.”

Building Blocks of EEM
Unlike EMS and BAS systems, which often are designed to conserve energy, EEM is based on the financial aspects of energy. At its most basic level, enterprise energy management involves baselining and understanding current energy usage across the full corporation. The EMS and BAS systems, of course, can help in gathering that information.

With the baseline data in hand, the next step in the EEM process involves negotiating energy purchases and managing the company’s energy use to take optimum advantage of the contract or contracts. For instance, real-time use is compared to contractual load profiles, so that if loads need to be shed or standby generators need to be used, this occurs before the enterprise’s utility use reaches the contractual limits.

At the third level, natural gas, other fuels, electricity and sometimes even water supplies are grouped together, and the resulting utility section of the company is moved into Enterprise Resource Planning. At this sophisticated stage of EEM, energy actually is being managed as a resource, similar to other financial aspects of the business. That means managing, forecasting and reacting to real-time energy use, while simultaneously tracking weather changes and utility rate structures. Most experts concede that this step in EEM is not a reality yet.

“EEM is a three-step process,” explains Terry Hoffmann, global products marketing manager for Johnson Controls Inc. “The first step is to learn from past energy use so that you can pinpoint energy use patterns. The second step is to understand the present, which is now possible as you bring back the data from thousands of locations to one common point. The third step is to anticipate future energy use by looking at what is happening now and projecting forward.”

The concept of EEM has been developing for several years, says Marty Applebaum, senior vice president of facility automation services for Comfort Systems USA. He calls EEM “a technology-enabled evolution” of energy management.

“A few years ago, energy management was a very narrow slice of facilities management. It primarily meant HVAC control,” explains Applebaum. “As technology evolved and interoperability, integration and Internet accessibility became more common, a broader set of interest groups wanted to extract useful information from the building’s automation systems.”

At this point, EEM is a term in a state of flux. “EEM is a broad term used to express a variety of approaches to energy costs,” explains Dave Weber, general manager of commercial controls for Carrier. “It allows costs planning across the entire corporation rather than on a local or departmental basis.”

EEM is not just centralized temperature control, though that is something the process will allow. “EEM’s concept is to manage the increased operating expenses of the corporation, which may involve effective temperature control in occupied spaces, lighting control, access control, after-hours usage of energy, etc., so that these costs can be billed back to individual tenants,” says Frank Capuano, technical product manager for TAC Americas. “You might begin with one building and then cookie-cutter your solutions using centralized monitoring across multiple buildings. But basically, EEM is a multi-building concept.”

An EEM approach is more than technology. It’s also a mindset — one that has the potential to exert a powerful influence on corporate behavior. That means that people at different levels of an organization will perceive EEM differently. “For a facility manager who is looking to more effectively control the consumption of and demand for energy across a college campus, it probably feels very tactical,” says Kevin Sample, program director/knowledge solutions for Novar Controls. “In this case, enterprise energy management might bring to mind the capability to apply control routines across many buildings as easily as the routines are applied to a single building.”

But the impact of an EEM can be much more far-reaching. “The corporate energy manager may see enterprise energy management as a strategy, one that guides the development of a comprehensive plan for managing both energy consumption and energy procurement,” says Sample. “For the CEO or CFO who has always viewed energy expenditures to be a relatively fixed operational cost, however, understanding the concept that there is such a thing as enterprise energy management may represent a fundamental shift in corporate philosophy. This shift might very well raise the profile of energy management investment.”

Global Benefits
On a facility-by-facility basis, EEM may not appear to have much impact. But the big picture is another matter, according to Phil Bomrad, senior marketing manager for Tridium. For instance, a reduction of 1 percent in 500,000 government buildings across the globe could save $80,000,000 annually, based on Department of Energy estimates.

“When each building is managed separately, the people managing the building rarely have the time or the skills to perform detailed energy analyses, and the savings available from a single building may not justify the effort,” explains Steve Tom, director of technical information for Automated Logic. “When the energy management is being consolidated across the entire enterprise, however, the potential savings are much greater, and it makes sense to have a few, highly talented individuals focusing on this as their full-time job.

“In addition to saving money, they can often spot problems that are causing uncomfortable working conditions, poor environmental control of manufacturing processes and similar situations that offer savings that go beyond just the energy dollars,” Tom says.

It’s important to remember that EEM requires a broad look at energy considerations. “Energy measurement and verification are critical components of enterprise energy management,” says Tom Crews, president and CEO of Pentech Solutions Inc. “Whatever energy saving measures you implement under EEM, you need to consider the total cost of ownership. For example, you may be saving $1 on energy on one side, but at the same time increasing costs three-fold somewhere else. With EEM, you must demonstrate that the dollar you are spending today is going to save you $4 in a few years.”

Peter Jowaisas, director of marketing for Notifact, sums it up: “Enterprise energy management means being able to manage your energy resources that much better.”

Internet’s Role
Companies have been practicing EEM even before the widespread use of the Internet. But they needed to manage energy information using modems, phone lines and wide area networks. And that was only the buildings’ part of the picture.

Using the Internet not only means that information is available at any time, but also that facility executives can contact utility companies or have the utilities contact them when curtailment or load-shedding options are available. They also can use the Internet to contact maintenance firms if repairs are needed to keep a facility running. Even the local weather forecast may be essential information, because it could determine what equipment needs to come online and when to start it.

“The technologies developed to make the Internet work are enabling corporate intranets to accomplish EEM,” says Jay Behhken, manager of national accounts, building automation systems division of The Trane Company. “People are already familiar with Web browsers, so incorporating that format in EEM allows them to access information in a format they already are familiar with.”

“When companies use the Internet as their information backbone, the enabler is a common set of data definitions,” says Lee of Cimetrics.

Available Data
What functions are available with EEM? The answer is all functions available in traditional building automation and energy management systems are available using EEM, just on a more sophisticated level. Instead of watching one building’s performance, all buildings can be monitored.

As with any newer technology application, available functions vary widely from one manufacturer to the next, according to Rick Fellows, regional sales manager for Alerton.

“Some companies focus more on energy monitoring and reporting,” says Fellows, “while others also include automatic demand limiting as a built-in function of the building automation system. Web-enabled BAS systems that are now being installed allow total integration of the energy reporting functions and energy control through the temperature control system.”

For example, Albertson’s retail food and drug chain is using EEM to take advantage of the California Public Utility Commission’s 30-minute window for participating in a curtailable load rebate program for about 30 percent of its California stores. At 250 locations across California, the supermarket chain is using the Internet to remotely control lighting systems. The real-time communications allows the company to turn lights on or off at any or all locations covered by the EEM system. Albertson’s also received a grant for installation of the equipment this summer through the commission’s demand load reduction program.

A wireless transceiver connects directly to the energy management and control system in Albertson’s stores and allows the company to configure and send commands to the system using a standard Web browser, Palm Pilot or WAP phone.

More sophisticated applications of EEM resemble building automation and energy management systems, but on a multiple buildings and locations scale.

“When this function is applied to an enterprise system, the concept is the same, but the potential savings to be realized by scaling back the demand of, say, an entire college campus is enormous,” explains Tom. “This in turn can be a very useful incentive when negotiating contracts with utility companies. Applying traditional BAS functions to an enterprise system also makes alarming and maintenance management much more practical. On an enterprise level, companies can afford to have a 24-hour alarm center and can nip potential problems in the bud before they result in energy waste and lost productivity.”

“For example, maybe your corporation manages a number of hotels across the country,” explains Joseph Klotz, president and CEO of Teletrol. “At 2 a.m., the energy information coming from the Kansas City hotel is way ahead of its projected energy expense. Maybe someone left the whirlpool on or something else is going on. You can contact Kansas City and correct for it.”

EEM also enables facility executives to perform sophisticated energy balancing acts. “One of the unique benefits of EEM is that even if you need to increase energy use in Florida because it’s a hot and humid day, you may be able to raise the temperature of your building in San Diego, where it also is warm but dry, without affecting the comfort levels of the end-users in either location,” explains Bob Klein, vice president of sales for Andover Controls.

Obstacles to Widespread Use
The biggest obstacles to application of EEM are size, the ability to take immediate action, the scarcity of qualified energy managers, legacy equipment in many buildings and return on investment.

“For smaller companies, EEM is like putting the carriage before the horse,” says Chen. He believes EEM demands an infrastructure investment to support energy management. And, for some companies, the return on investment may not justify adding dedicated lines and the other elements necessary. But the real limitation that Chen sees is the scarcity of energy managers who know how to buy energy competitively.

“With natural gas, you pretty much have one price for each month,” notes Chen. “But electricity is not like that. The price changes every hour. So, if you’ve signed up long term (10-year or 20-year contracts), as some companies in California have at 8 cents per kilowatt hour, and the current price is 3 cents or 4 cents, that’s painful.”

Over a 10-year or 20-year contract, was 8 cents a smart decision? That’s forecasting, and no one really knows, but Chen and a number of other experts, including Lindsay Audin of EnergyWiz, think it may be better to ride the rollercoaster market, paying more than 8 cents in some periods and significantly less than 8 cents in others.

Because many people besides the energy manager within the organization need access to the data, security can be an issue as well as the wide area network’s capability to handle so much data.

Despite the obstacles to wider deployment of EEM, experts have little doubt that the strategy will be coming soon to many multisite operations.

Each BIBB defines a level of capability for a device. For example, a very simple application-specific controller may have a need to share data with another device. To do that, the BIBB responsible for allowing the controller to communicate in this way would be specified. Specific BIBBs will be combined to build the functional requirements for a device in a specification.

BIBBs are part of a change to the BACnet standard formally known as Addendum d to ASHRAE/ANSI Standard 135-1995, BACnet — A Data Communications Protocol for Building Automation and Control Networks. That change also defines several typical building control devices — including workstations, building controllers, application-specific controllers, and smart sensors and actuators — and indicates which BIBBs are needed for each device. The idea is to provide specifiers with examples of how to use the BIBBs in specifications.

“The original tools in the BACnet standard have been confusing to specifiers, making it difficult to prepare clear, precise BACnet specifications,” says Steven Bushby, chairman of the BACnet committee.

Two other changes to the BACnet standard were also approved by ASHRAE. Addendum c is designed to make it easier to integrate fire and life safety systems with other building automation and control systems. Addendum e provides a way for building professionals to go online and easily identify manufacturers or organizations that have provided extensions or additions to the BACnet devices.

In other BACnet developments:
n The ASHRAE BACnet committee is looking into a new application to make it easier for building systems and utility providers to communicate. The application — which would make the protocol capable of transporting utility information without customized gateways — would facilitate strategies like real-time pricing and load management.

“Recent increases in utility rates and efforts to deregulate the electric utility industry have stirred a great deal of interest in new tools for communication between building systems and utilities as part of an overall strategy for managing energy consumption,” says Bushby.

n Work continues on a proposed standard for testing conformance to BACnet. The proposed standard has already been adopted by the BACnet Manufacturers Association (BMA) and the BACnet Interest Group - Europe. The two groups have used the proposed standard to design programs to certify that specific products comply with BACnet.

BMA has set up the BACnet Testing Laboratory to test products for conformance to the standard and to list those that pass the test. The laboratory is now accepting applications for testing and expects to list the first set of products this fall, says Jim Butler, manager of the laboratory. “We will begin by testing simple BACnet devices like application-specific controllers. We will then expand to more sophisticated controllers and workstations.” Listings for the latter products aren’t expected to be ready until early in 2002.

Source: ASHRAE

Rita Tatum has covered facility management and technology issues for more than 25 years.