By Andrew Winslow | Wed, September 22, 21
Strategic Energy Management is a holistic approach to managing the energy use in (but not limited to) commercial and industrial (C&I) facilities, some of the hardest to reach building types. This approach emphasizes increased operational efficiency of the building through three main types of non-capital savings as well as support from staff up and down the chain of command. In the Northeast and across the United States, SEM has largely been implemented in the form of utility programs or the Department of Energy’s 50001 Ready program, a self-guided checklist of measures a facility can practice to implement more efficient energy management systems.
In the NEEP region, Vermont, New York, Massachusetts, Rhode Island, and Connecticut operate utility (or program administrator) run SEM programs. While SEM has seen moderate adoption, it is not enough to assist states with their aggressive carbon reduction goals. Even given the fact that SEM has been proven reduce energy usage and that C&I buildings are important to target on the path to decarbonization, the question remains: How can we accelerate the adoption of SEM?
To explore this topic, NEEP convened the SEM Market Transformation Research and Strategy Advisory Committee. From these conversations and further research, we identified six strategies to accelerate the adoption of SEM – whether that be through enhanced utility program design, bundling with other programs, or something entirely different. Here are some strategies.
Incentivizing the Adoption of Energy Management Systems with Federal Tax Rebates
While the SEM philosophy is largely focused on low- to no-cost energy saving measures, these can add up, and no one said larger capital investments couldn’t also be incorporated. It is no secret that financial incentives are effective at accelerating the adoption of nascent technologies and energy saving devices. Federal tax rebates have been used to spur the development of electric vehicles and solar panels and could be used encourage energy intensive C&I businesses to participate in SEM programs. This could help provide capital for bigger ticket energy efficiency measures like HVAC upgrades or provide for staff training and retrocommissioning of equipment.
Mandatory SEM adoption to take advantage of EE incentives
When companies deploy SEM, many of the energy efficiency measures that they implement involve the upgrading of fixtures and equipment, refurbishments, systems optimization and retro and re-commissioning. Since most utilities offer these improvements as part of separate programs, SEM could serve as a gateway to access them. If companies would like to participate in and reap the benefits from programs that incentivize energy efficiency, SEM program participation would be mandatory.
SEM as a Pathway for Achieving Building Performance Standards
SEM has traditionally been a standalone program, however, the changing policy landscape has created opportunities for SEM to be bundled together with other programs and ordinances. One such ordinance is the appearance of building performance standards (BPS), a policy that requires direct action by building owners to meet city-mandated performance improvement targets for their properties. These targets become stricter over time, thus driving continuous, long-term improvement in buildings. Washington D.C. and New York City passed such standards and many others are looking to implementing their own. SEM shares two big themes with BPS: a focus on large buildings and long-term continuous improvement. SEM could be a part of a proactive suite of resources for building owners that specifically helps large C&I customers comply with this new type of building policy.
Mandatory Commitment to Continuous and Sustained Improvements in Energy
Until now, it was common for SEM programs to operate with a voluntary opt-in model. A different strategy might include mandatory requirements for the largest consumers of energy. These programs can create their own accreditation system to reward companies that have achieved a pre-defined amount of energy savings, or there could be a requirement for companies to commit to achieving 50001 Ready Certification.
Education and Workforce Development
Building owners are more likely to participate in an SEM program if a trained intern/employee is onsite to help lay the groundwork for SEM implementation like performing assessments, identifying opportunities, taking measurements and monitoring progress. Given this market signal, SEM could be baked into education curricula and paired with workforce development programs. In an ideal scenario, government workforce programs will pay for utilities (who will then pay implementers) to train interns to work with customers to implement SEM. This would benefit all of the parties involved.
Energy Management Systems as Part of Investors’ Assessment Checklist
More and more investors are choosing to do business with companies that prioritize energy efficiency as part of their own commitment to corporate
sustainability. For these investors, the ability to assess the robustness of a company’s energy efficiency program would be a key step in their decision making process. SEM provides a pathway to demonstrate a building’s energy efficiency. SEM programs establish energy management systems to manage and measure energy usage within a building. Investors can leverage this information and even make energy management systems an investment prerequisite. Communicating the value of SEM to investors can lead to longer term adoption and add more financial incentive for building owners to participate.
These six strategies connect the dots between SEM and other mutually beneficial financing schemes, policies, and programs. By changing perspective and breaking out of traditional models, SEM could see major adoption and play a significant role in state carbon reduction targets. A report by ACEEE estimates that SEM has the potential to save seven terawatt hours in the commercial sector and 24 terawatt hours in the industrial sector by 2030. NEEP is currently expanding on the topic of new strategies to accelerate SEM adoption in a report to be released this fall.