Gone are the days when energy budgets were just about buying electricity or natural gas at the “best price.” With so many advancements in energy technology, a heightened awareness of energy fuel types, and a desire to reduce carbon footprints, today’s commercial energy strategies must dig deeper to uncover insight that goes well beyond low-cost commodity procurement.
Asking the right questions can change everything. Most businesses want to know, “Which energy initiatives and solutions will provide the greatest positive impact?” It’s an important question. Understanding energy usage and consumption across the entire organization will help you make data-driven decisions and improve efficiencies. The answer lies in the analysis of your energy consumption over time, or what we refer to as your “load shape”.
How Your Load Shape Impacts Your Energy Costs
Your load shape, or load factor, is the curve that is formed by your consumption of energy for a specified period of time, typically a 24-hour period, although seasonal load shapes are also used. When a supplier prices your electricity, they are doing this based on your load shape. Your load shape impacts what you get for a commodity price, your capacity costs, and other ancillaries.
The graph below shows an illustrative case of what your hourly energy consumption could look like on a peak energy day. The grey bars represent the cost in dollars per megawatt-hour (MWh) for each hour in the day. During the peak usage hours, prices will rise, sometimes several magnitudes over the average price. A typical fixed price contract lets you pay an average cost per kWh over the course of the contract. Embedded in that average price are higher cost hours and lower-cost hours. By focusing on the top 10 or largest energy-consuming devices in your facility, you can potentially reduce the energy that you consume in the high-cost hours and lower your overall average energy cost as a result. Coupling this detailed understanding of your energy consumption with energy initiatives such as solar, lighting upgrades, and participation in demand response and sync reserve markets, facilities have the potential to significantly reduce their overall energy costs.
The example in the graph above demonstrates that if you can change your load shape (reduce your hourly load) during the more expensive hours of the day by implementing various strategies that you can significantly reduce your energy costs. It is also important to note that you’ll need to have the right type of electricity supply contract in place to be able to benefit from these strategies.
This relatively simple example illustrates how, by making data-driven decisions, you can change your load shape to reduce energy costs and your facility’s carbon footprint. It also demonstrates the importance of taking an integrated and innovative approach to energy procurement and other energy initiatives.
Looking at energy efficiency, procurement, and sustainability as independent silos can create long-lasting, unnecessary, and costly mistakes. If you want to experience measurable, financially rewarding change, it’s time to break open those silos and leverage integrated analysis for a more holistic perspective.
The Integrated Energy Optimization Approach
Cost-effective energy management now requires commercial energy optimization from three primary areas that have historically been managed in silos.
- Energy Procurement: How your company buys power
- Energy Efficiency: How your company uses energy to power operations
- Sustainability: How your company uses resources and manages its carbon footprint
Conducting a forward-looking analysis that incorporates a variety of energy options allows you to prioritize, plan, and execute an optimized energy strategy. Once you understand the potential cost savings and sustainability benefits of certain actions, you can then take a deeper dive into your operation, facilities, and energy usage data to develop a road map. Each of the actions you undertake will have an impact on the economics of subsequent actions (remember our load factor example above) so it’s a good idea to evaluate energy efficiency, demand response, and distributed generation applications together with an overall energy procurement strategy.
With your energy-optimized roadmap in hand, you can make better-informed decisions and source energy procurement and management solutions with confidence.
Introducing Commercial Optimizer
Large organizations are already taking an integrated, data-driven approach to energy procurement and management, and so can you. If you’re ready to break open those silos to access greater insight, you don’t need to hire an energy management team or invest tons of capital to do so. At Usource, we’ve developed Commercial Optimizer, our innovative analytics tool that reveals which energy solutions and projects you should focus, on and in what order, to achieve your company’s financial and sustainability goals. This tool uses your unique and specific data to produce highly-customized results.
Whether your customized results call for energy efficiency, renewables, demand response, different supply contract structures, or all of these things, Usource can be your trusted partner to analyze and source your ideal solutions. Contact us today to request your Commercial Optimizer consultation.