SPARK15: Energy Management Passes the Point of No Return

Energy Management Passes the Point of No
Return
Marlene Motyka
U.S. Alternative Energy Leader & Principal
Deloitte

Energy management passes the point
of no return
Deloitte Resources 2015 Study
Marlene Motyka, US Alternative Energy Leader, Principal,
Deloitte Transactions and Business Analytics LLP

Copyright © 2015 Deloitte Development LLC. All rights reserved.
Agenda
Introduction
Resources 2015 business highlights
Resources 2015 consumer highlights
Concluding thoughts
Q&A

Introduction
Resources 2015 is a joint project between Deloitte and Harrison Group, a
YouGov Company
Quantifies customer attitudes and behaviors to inform how to plan for the
future
• National US survey
• Businesses: More than 600 business decision makers responsible for energy
management for their company
• Consumers: More than 1,500 primary or shared decision makers for utilities for
the household
• Online surveys completed March 2015

Energy management has passed the point of no return. Businesses now
see it as not just a core competency, but an essential aspect of corporate
strategy—and there’s no turning back.
• 79% of businesses view reducing electricity costs as essential to competitive
advantage—and 57% have formal energy reduction goals, up from 46% in 2015
• 52% of companies see their efforts as extremely/very successful, up from 42% in
2015
• 93% of businesses say they have invested funds in energy management
programs over the last three years. They are allocating more capital to energy
management (17% of capital budget vs. 12% in 2015)
Resources 2015 business highlights

Energy management motivations are
becoming less about just cutting costs
Q: Which of the following business drivers are primarily responsible for (or facilitated) your
company's decision to implement its resources management programs?
Resource management decision drivers 2012 2013 2014 2015
Desire to cut costs 66 63 67 59
Internal motivations (NET) 56 49 44 48
Employee motivations 31 24 27 30
Executive mandate (i.e., from CEO) 28 27 26 28
Just the 'right thing to do' 49 43 44 40
Betterment of corporation (NET) 42 39 44 45
Part of broader corporate social responsibility
program
32 28 33 29
Desire for some type of certification (e.g., LEED,
Energy Star)
20 21 23 27
Competitive advantage 33 31 35 35
Regulatory requirements (NET) 32 36 34 31
Brand enhancement 21 19 21 22
Supplier/business partner requirements 26 25 19 20
External incentives (e.g., tax credits) 26 21 36 35
Other key drivers rose or remained on par with 2015

Deloitte Energy Management Capability Maturity
Model (CMM) is organized around eight energy
management categories
Vision and strategy
Goal setting and capital allocation
Program measurement & management
Demand and operations management
Supplier and contract management
Cost and risk management
Governance and culture
Reporting, systems, and tools
1
2
3
4
5
6
8
Stage 1
Basic
Stage 2
Engaged
Stage 3
Advanced
Stage 4
Leading
7

Businesses see link between energy vision and business
strategy more clearly
Q: Which of the following best describes
your company’s energy management
vision or mission?
Q: Which of the following best describes
your company’s energy management
strategy?
Energy management
vision or mission
Total
Energy management
strategy
Total
There is a documented corporate
energy vision/mission that fully
aligns with the corporate vision
Energy management is a key element
of corporate strategy. Leadership and
staff, at all levels, have energy
objectives incorporated into goals
There is a documented corporate
energy vision/mission but it is not
fully aligned with the corporate
vision
Energy management is incorporated
into business unit strategy and/or site
goals (but not corporate strategy)
Some business units have an
energy vision and mission while
others don’t
Energy management strategy is in
early stage development
We don’t have a documented
energy vision/mission
There is no formal energy
management strategy in place at a
corporate or business unit level
Not sure Not Sure
43
%
26
%
18
%
13
%
0%
52
%
25
%
13
%
10
%
0%
34%
38%
24%
4%
0%
44%
37%
16%
4%
0%2014 2015
Vision and strategy

Percentage of businesses reporting formal energy management
goals rose sharply
11%
32%
57%
89%
2015
9%
45%
46%
91%
2014
11%
42%
47%
89%
2013
10%
41%
49%
90%
2012
Q: Has your company set any goals, formal or otherwise, with respect to electricity and other
resources management practices?
Yes
Yes,
formal
Yes,
informal
No
Have set goals

Energy management goals extend well
beyond electricity usage
*Changed from “Transport Fleet” in 2015 Study
**Asked as part of natural resource consumption goals in 2011 and 2012
Q: In which of the following areas has your company set goals?
Q: What natural resource consumption areas do these goals target?
Have Goals 2012 2013 2014 2015
Electricity
Natural gas
Carbon footprint
Transport fuels
consumption*
Water**
88
%
64
%
57
%
59
%
70
%
89%
58%
56%
51%
59%
91%
69%
49%
62%
73%
89%
59%
46%
53%
66%
Water, transport fleet, and carbon footprint goals resurging

Companies are allocating more time and
capital toward their targets
Q: Approximately how much total capital has your company invested in energy management programs over the
past 3 years and what percentage of your company’s total capital budget does that represent?
91% 93%
9% 7%
Yes
No
Invested funds in energy
management over past four years
Represents 12% of
total capital budget
20152014
Represents 17% of
total capital budget
Time to
reach goals
(years)
Electricity
Natural
gas
Transport fuels
consumption
Carbon
footprint
Water
Average
(2015)
4.5 4.5 4.4 4.9 4.6
Average
(2015)
4.2 4.3 4.1 4.9 4.3
Average
(2013)
3.8 3.6 3.7 4.2 3.6
Average
(2012)
3.7 3.8 4.2 3.8 *

More than half now report having some form of onsite electricity generation
*Was not asked in 2015 Study
Q: Does your company currently generate any portion of its electric consumption (excluding “emergency”
backup generation) through onsite generation, cogeneration or renewable supply systems?
Q: Approximately what percentage of your company's total energy supply is provided by onsite generation,
cogeneration and renewable energy sources, and what percentage is provided by other sources?
35% 33%
44%
55%
65% 67%
56%
45%
2012 2013
Yes
No
2014
Have on-site
electricity generation
Provided by:
% of supply
2015
% of supply
2017 (projected)
Electric power from
electricity
companies
On-site generation
Renewable
sources (wind,
solar, etc.)
Cogeneration
Fuel cells
Other sources
(Specify)
Sources of electricity
(Among those who are generating on-site)
52%
15%
13%
9%
9%
2%
47%
17%
16%
10%
9%
1%
2015

Companies of all sizes are gaining maturity in
measuring energy management performance
Performance measurement
and management
Total
Less than
$100MM
$100–$499MM $500MM+
Measurement is performed
across functional areas
against goals and KPIs
It is extremely/very difficult to
monitor our performance
against our energy
management goals
All projects adhere to
rigorous measurement and
verification methodologies
41%
33% 37%
49%
28% 29% 30% 26%
34%
26%
36% 40%
Program measurement and
management

Energy performance is increasingly factored
into operations planning
Q: Does your company incorporate energy into any of its operations modeling or
forecasting?
Q: Which of the following best describes how energy considerations are aligned,
if at all, with your company's inventory/operations management?
Energy performance and operations
models/forecasting
Total
Energy alignment inventory/ops.
management
Total
Yes - Operations are modeled to
account for energy performance
across a range of scenarios
Operations and inventory planning
incorporate energy as a key
planning parameter
Somewhat - Historic data is used
to predict future operation levels
and energy impacts
Energy costs are frequently
considered during large scale
capital acquisitions only
Occasionally - Some historic
analysis is performed to identify
potential improvement areas
Energy costs are occasionally
considered but are generally
limited to inventory and materials
considerations
No
Energy considerations are not
aligned with inventory/operations
management
Not sure Not sure
28%
45%
22%
4%
1%
35%
45%
14%
4%
2%
24
%
41
%
25
%
8%
2%
30
%
43
%
19
%
6%
2%
2014
2015
Demand and operations
management

Companies of all sizes making strides with
respect to supplier and contract management
Supplier and contract
management
Total
Less than
$100MM
$100–$499MM $500MM+
Financial analyses for energy
management evaluated
against well-defined and well-
communicated policies and
procedures for all energy-
related services
Our program is
comprehensively
communicated and suppliers
are tracked via metrics
Standard energy services RFI
and RFP processes are in
place and applied consistently
across the organization by
trained employees
KPIs are in place for all
energy related suppliers,
enterprise wide
27%
19%
27%
33%
33% 30% 32% 36%
37% 30% 33% 43%
34% 27% 34% 39%
Supplier and contract management

Active tracking of all corporate entities and
energy types on a monthly basis rose
Q: How active is your company in tracking energy spend information across the business?
Q: Which of the following best describes how your company uses external business intelligence to
support developing mid- and long-term energy forecasts?
Q: Does your company have an understanding of its energy supply and price risk position?
Tracking spend information Total
Very active - We track all corporate entities and energy
types on a monthly basis
Somewhat active - We track some regions and/or
business units, on a monthly basis
Occasionally active - We perform periodic collection for
the company's largest energy users and energy types
Not active
Not sure
29%
44%
23%
3%
1%
38%
40%
17%
4%
1%
2014 2015
Cost and risk management

Employees are slowly embracing the merits
of energy management
Q: Which of the following best describes how engaged and empowered your
employees are when it comes to energy management?
Q: Do you believe your company has sufficient energy management talent to
execute its current energy strategies and future needs?
Employee
engagement/empowerment to
energy management
Total
Company has sufficient energy
management talent for future
needs
Total
There is a corporate program
for employees at all levels
Yes - We employ a Center of
Excellence to integrate knowledge
and support decisions throughout the
company
Local programs are in place
Somewhat - Regional or business
units share information on energy
management and strategies
No formal programs are in place
Not really - Pockets of experience
exist scattered throughout the
company, no formal collaboration
There is limited/no focus on changing
employee behavior towards energy
No
Not sure Not sure
28%
46%
21%
4%
1%
34%
43%
19%
3%
1%
25%
48%
23%
3%
1%
31%
47%
17%
4%
1%
2014 2015
Governance and culture

More companies are using advanced analytical
tools or focused on quality of energy data
Q: Does your company place a focus on the quality of energy data?
Q: Does your company use data extract/analytical tools to support energy management?
Focus on quality of data Total
Data extract/analytical tools
to support energy
management
Total
Yes - High quality energy data
and data management exists
across the company
Yes - Advanced analytical
tools are deployed across the
company
Somewhat - Energy data
quality and data management
varies across the company
Somewhat - Basic analytical
tools are deployed across the
company
Occasionally - Key energy
data is tracked but not centrally
collected
Occasionally - Functional
groups use some data extracts
and analytical tools
No - We don't have any energy
data management capability
(i.e., we collect billing data only)
No - No data extract and
analytical tools are available
Not sure Not sure
22%
45%
22%
10%
1%
28%
44%
18%
9%
1%
20%
43%
23%
12%
2%
27%
40%
21%
9%
3%
2014 2015
Reporting systems and tools

Consumer attitudes and behaviors generally held
steady, with a few notable developments in 2015:
• Consumers worry a little less about electric bills, but
they do not expect to use more electricity in the
future—lessons of the recession are entrenched
• While consumers continue to take steps to reduce
consumption, many who had intentions to do more
have not followed through
• More consumers report receiving tips on saving
energy, and social media is more often the source
than in previous years

• Consumers increasingly support renewables, not so
much to save money, but to “do the right thing”
• Despite growing support for renewables, consumers
still hesitate to install solar panels, due largely to
cost or uncertainty about performance
• Consumers are more optimistic about US energy
resource abundance, and their desire to end US
dependence on imported oil is strengthening
• Consumers view the information in their electricity
bills as more trustworthy than in previous years, and
interest in sourcing other services from their
electricity providers rose sharply

Consumers continue to take steps to reduce
household electricity consumption
Q: Please use the scale below to indicate how much you agree or disagree with the following
statements about your electricity consumption
But a larger percentage admit they could be doing more
83
77
81
69
83
68
80
64
I/Our family took steps to reduce our electric bill over
the past year
I/Our family is already doing everything we can to
keep our electric bill down so there isn't really
anything incremental we can do to cut costs further
2012
2013
2014
2015
% Agree strongly/somewhat

18% 25% 24% 31%
52%
53% 55%
50%
30% 22% 21% 19%
More consumers are receiving energy saving
tips—primarily from electric utilities, with social
media rising
*Among those who said Yes, several or Yes, a few
Q: Have you ever received good tips on how to save energy?
Q: From whom have you received good tips on how to save energy?
Electricity provider
Relatives or friends
Newspaper or
magazines
Television
advertisements
Neighbors
Co-workers
Social media
Other
2012 2013
Yes,
several
Yes,
a few
No, not
really
56%
37%
33%
24%
14%
13%
NA
10%
55%
46%
41%
22%
17%
17%
NA
13%
58%
44%
36%
20%
18%
16%
19%
10%
67%
37%
39%
20%
13%
15%
28%
10%
Source of tips
2014
Received tips
2015

Consumers focus on same tactics, but not
following through on others Doing Now
Top 5
Future
Top 5
Future
Lighting
201
4
2015 2015 2014
Turn off lights when you're not using them, even for just a few minutes 85 85 65 64
Install compact fluorescent light bulbs (CFLs) and other more efficient lighting
technologies when your older incandescent bulbs burn out
65 63 43 43
Managing consumption
Set your thermostat a few degrees lower in the winter and a few degrees higher in
the summer 69 69 52 53
Conserve hot water (e.g. shorter showers, turning down hot water heater) 49 48 37 37
Shut down electronics when they are not in use 71 70 59 59
Energy efficient appliances
Replace old appliances with new more energy efficient appliances 48 45 45 46
Insulating home
Install energy efficient windows and doors 38 35 40 41
Better insulate your home to keep heat or cool air from escaping out of the house 42 40 46 47
Timers/sensors
Use a "smart" power strip that senses when appliances are off and cuts
"phantom“ energy use 14 14 37 35
Use a timer on water heaters (that turns off during sleeping hours) 8 8 23 24
Bigger investment
Get a smart energy management application to control and reduce your energy
consumption 5 5 23 21
Install solar panels that provide electricity for your home 4 5 28 27
Q: Which of the following are actions your household regularly does specifically to conserve electricity (if any)?
Q: And regardless of whether you currently use these options today or not, which do you view as the top five things that you could see
yourself personally doing to save even more electricity in the future?

What does this mean for businesses?
• Businesses have moved up the maturity curve,
deploying new energy management tools and
technologies
• With foundations laid, the pace of change will likely
accelerate, opening opportunities for companies to
drive agendas forward for competitive advantage
• Businesses need to understand their positions on the
maturity curve to better evaluate the best path forward
• Maturity scores will help businesses identify strengths
and weaknesses and provide insight into broader
industry and category excellence
• Business as usual is no longer an option

What does this mean for electricity providers?
• Opportunities are ripe to re-segment business
customers (e.g. by industry or maturity level) and
target them with customized energy solutions and
incentives
• This may require new business models, such as
offering smart energy management technologies or on-
site generation installation and maintenance
• While consumers are increasingly aware of provider
messaging and are interested in new products and
services, they still hesitate to act
• Social media and online campaigns may help move
them off the dime, especially younger generations

How can you leverage the Deloitte Resources
2015 Study?
• The Resources Study is a living tool to assist companies with
business decision-making. The Study’s expansive database
allows Deloitte to help companies examine the findings in
much greater depth in the context of their business goals
and strategies
• Companies can use the Capability Maturity Model to help
build the business case necessary to establish priorities and
gain support for proposed initiatives, or to provide solid data
for new directions
• For more information, to schedule an appointment, or take a
“deeper dive” into the Study data, please email us at
DeloitteResourcesStudy@Deloitte.com

This presentation contains general information only and Deloitte is not, by means of this
presentation, rendering accounting, business, financial, investment, legal, tax, or other
professional advice or services. This presentation is not a substitute for such professional advice
or services, nor should it be used as a basis for any decision or action that may affect your
business. Before making any decision or taking any action that may affect your business, you
should consult a qualified professional advisor. Deloitte shall not be responsible for any loss
sustained by any person who relies on this presentation.

About Deloitte
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