Energy Master Planning as a Corporate Strategic Resource

Companies That Don’t Manage Utilities Strategically Are Throwing Money Away

Harvard Business Review, March 22, 2016. Image credit: Unsplash

Managing utilities has also become more complex as the energy landscape has evolved. There are all kinds of new energy providers (especially in U.S. states with deregulated power markets) and technologies (e.g., solar and home batteries) for businesses to consider. And as companies face increased public and regulatory scrutiny over environmental concerns, finding ways to manage utilities effectively has become more urgent; it will involve starting to manage energy as a strategic resource instead of as an expense.

One solution is to appoint a Chief Utility Officer, who can centralize decision making around utilities and rethink its role to support strategic corporate goals. The role would focus on cutting costly inefficiencies, figuring out how to use energy to deliver business outcomes, and then implementing these approaches.

In a 2012 study, Notre Dame researchers found that green buildings saved money and increased revenue. Branches of PNC bank that were LEED-certified generated over $3,000,000 more in consumer deposit balance and over $900,000 more in loan balance per year than those that were not LEED-certified. The authors concluded that when consumers have an option, sustainability can become a competitive differentiator.

Forward-looking companies have already begun thinking about this kind of holistic utility management and how to leverage it for their competitive advantage. For example, Rice Fergus Miller, an architecture firm, redesigned their own headquarters to meet aggressive energy and water savings targets and earned a LEED platinum rating. As a result, they garner more businesses from clients who share the same values. Compass Housing Alliance, a provider of affordable housing and homeless shelters in Seattle, realized that reducing their wasted energy could free up valuable resources to focus on their vision: housing more homeless people. And some universities, including Harvard, have created revolving green funds that invest endowment dollars into energy efficiency. Based on their track record, the funds have consistently beaten market rates, earning more than 20% annual return on investment. In effect, these companies, through better resource management, have received top-line benefits to their revenue.

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