1. THE ROLE OF PROFESSIONAL RISK
In Implementing Industrial Energy Improvements
Christopher Russell,
Principal
Energy PathFINDER .com
(443) 636-7746
2014

2. CHRISTOPHER RUSSELL…
• Principal, Energy Pathfinder Management Consulting, LLC
• Visiting Fellow, American Council for an Energy Efficient Economy
• Energy Manager for Howard County, MD, 2010-2012
• Director of industrial programs, Alliance to Save Energy (1999-2006)
• Author: “The Industrial Energy Harvest”
• MBA, University of Maryland
• Master of Arts – Urban Studies, University of Maryland
• B.A., McGill University
Connecting the dots between
energy choices and business success.
2©2014 Energy PathFINDER.com

3. “The beginning of knowledge
is the discovery of
something we do not
understand.”
-- Frank Herbert
1920-1986
Author of “Dune”
3©2014 Energy PathFINDER.com

4. Background: Industrial Energy
• One third of the US energy pie, 12.5% of GDP
• Efficient use offsets need for regional utility infrastructure
investment
• No energy, no production, no revenue
• Cost of doing business (tax deduction)
• Energy managers in the cost bulls-eye
• Spend money to save money?
4©2014 Energy PathFINDER.com

5. U.S. Department of Energy, Advanced Manufacturing Office). 2012. Manufacturing Energy and Carbon Footprint, NAICS
31-33). Washington, DC: DOE http://www1.eere.energy.gov/manufacturing/resources/footprints.html
5

6. Industrial Energy: Gross to Net
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7. Risks …and Opportunities
• Technical risk
• Accountability risk
• Measurement risk
• Investment risk
• Management risk
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8. Methodology
• Casual distillation of 80 interviews of industrial energy
practitioners & experts, 2012-14
• No hypothesis– only a review of evident trends
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9. “Opportunity is missed
by most people
because it is dressed in
overalls and looks like
work.”
-- Thomas Alva Edison
1847 - 1931
American inventor and businessman
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10. Technical Risk
• Fugitive energy: destroys physical assets
• Real time energy data = pulse on operations
• Failure to M&V = accepting risk of failure
• Monetize energy + non-energy benefits
• No energy assessment? IAC database
10©2014 Energy PathFINDER.com

11. Industrial Assessment Database
http://iac.rutgers.edu/database/
15,000 Energy assessment results:
Recommendations, costs, savings
Sort by plant size, type and location
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12. Accountability Risk
• Competing priorities: output comes first
• Invisibility: no performance metrics for energy
• Reluctance to change what’s not broken
• Energy waste = small percent of expenses
• Delegation to unempowered staff.
• Bias for hardware over soft/human issues
• Energy choices: shaping cash flows for years, decades
• Energy manager: Inside or outside hire?
• Convert recommendations into implementations
• Map the decisions: coordinate with/support other agendas
12©2014 Energy PathFINDER.com

13. Measurement Risk
• Quantify: energy savings, investment rates of
return, participation/support
• Ill-chosen metrics? Failure to measure?
• Good metrics:
• Easy to collect on an ongoing basis
• Easy to understand
• Link to staff accountabilities
• Subject of regular management discussion?
13©2014 Energy PathFINDER.com

14. Investment Risk
• Profit = retained earnings = capital.
Capital has to go somewhere…
Compare investment options?
• Common justification = short payback
• Benchmark = return on invested assets
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15. 15©2014 Energy PathFINDER.com
Payback vs. Rate of Return

16. Management Risk
• Energy management: conceived in isolation
• Top management support? Yeah, but…
• Sideways, incremental victories
• Departmental affinities, complementarities
• Departmental turf issues
• Budget stand-off?
• Monetize: cost, benefits, cost of doing nothing
• Document, communicate, celebrate
16©2014 Energy PathFINDER.com

17. Energy Management è Change è Risk & Reward?
17©2014 Energy PathFINDER.com
High
YIELD
BUSINESS PLAN:
PLAN-DO-CHECK-ACT
• Monetize energy position
• Document costs to do/not do
• Seek mutual affinities
SYSTEMATIC VALUE HARVESTING
COMPONENT APPROACH
• Driven by breakdowns, rebates
• Compete for capex
• Address symptoms, not root causes
FEAST OR FAMINE PROJECT HUNTING
Low
YIELD
EMPHASIZE BEHAVIOR,
PERSONAL CHOICE
• Authority? Moral suasion?
• Accountability? Burn out?
SPRAY & PRAY
DON’T MANAGE ENERGY
• Minimal change, low hassle factor
• Absorb energy price, tech risk
DENY & DEFLECT
Low RISK High RISK

18. “Change is not compulsory…
[but then] neither is
survival.”
-- W. Edwards Deming
1900 - 1993
American statistician, professor, author, lecturer and
consultant
18©2014 Energy PathFINDER.com

19. ENERGYPATHFINDER.COM
CHRISTOPHER RUSSELL
INFO@ENERGYPATHFINDER.COM
@ENERGYpathfndr
THANK
YOU!