For nearly two decades, Energetics has plugged away in a consulting capacity, telling anyone who will listen how to reduce energy costs by applying management principles and what often amounts to common sense.
Even now, CEO Matt Reardon will tell you, many large companies that should know better treat energy as a fixed rather than a variable business cost. "We still hear people who say that their site engineers have all those things under control," says Reardon. "It's head-in-the-sand stuff. Our experience tells us that when companies deal with energy management at a corporate level, they will cut their bills by around 15 percent. "In many cases, corporations have more control over selecting
an office chair than they have over a $10 million per annum energy spend."
But if demand management has been a slow starter for energy, particularly relatively inexpensive electricity, a new product developed by Energetics, combined with not-so-subtle threats by government to apply monetary sanctions for greenhouse emissions, promises a minor revolution in the way large enterprises think about energy.
The product is called Our-e-Manager. It is a software application program that Energetics developed with a $3.6 million federal R&D grant from AusIndustry. Energetics installs the program and rents it to clients, setting up protocols to suit their specific circumstances and the energy inputs they use.
One complication is that utilities in Australia operate a variety of billing and accounting systems. Typically, large businesses that operate multiple sites deal
with several energy retailers. Additionally, some companies selfgenerate
a portion of their energy inputs. Our-e-Manager translates allof this information into standardized data sets. Installation also establishes relevant production data
benchmarks for clients, against which energy inputs may be measured.
Once those protocols are set, Our-e-Manager becomes a powerful tool as it allows direct comparisons between energy inputs and production outputs across all of the client's sites over time.
"Even if a company has several hundred outlets our system allows comparisons between sites on a dollars per square metre or kilowatt hours per square metre basis," says Reardon. "Without this kind of corporate tool companies have to rely on individual managers to do the right thing. Some do this well and some
Corporate-level control also allows labour saving through centralised energy bill payments. When customers log onto Oure- Manager, they upload new data to
the Energetics' host program. Input and output data are downloaded to
clients as graphs and figures. The software incorporates a targetsetting
mechanism, and variations are reported automatically. A red/amber/green traffic light system flags critical information.
"The up-front costs are relatively to give energy pursuing high," Reardon explains, "and we felt that to maximise the product's attraction to customers we would have to absorb these establishment costs." So instead, Energetics
receives revenue through contracted rental agreements, similar to the
way telecommunications companies operate.
"Typically, the people who rent Our-e-Manager spend upwards of twenty million dollars a year on energy inputs," says Reardon. "We tend to deal with companies for whom energy is a big cost but not a top-five item and in our experience,
while most large enterprises recognise that energy input needs to be managed, currently only 30 percent do something about it." Reardon says the cost of Our-e-
Manager to businesses is around one per cent of their energy bills, depending on the number of sites they have.
Energy utilities co-operate in providing the required use and tariff information to clients. "Utilities recognise that customers want to be able to measure what they are buying and, increasingly, customers are saying to utilities that if they cannot provide the required information then they will deal with someone who can."
The program offers a greenhouse module that is a major selling feature for Energetics, as it gives businesses a means of measuring those of their greenhouse emissions that are attributable to the use of energy. "Energy use constitutes 90 percent of the emissions for most of our customers," Reardon explains.
Until recently there has been no need for companies to be aware of their greenhouse emissions. But according to Reardon, a combination of shareholder push and government pull has provided the incentive companies need to track their contributions of greenhouse gases.
The greenhouse module, an optional extra of Our-e-Manager which most clients elect to purchase, tracks emissions by breaking down energy inputs as accurately as possible, including purchases of green electricity, and applying relevant emission coefficients to them.
Clients may also add in non-energy related greenhouse emissions, if they possess that knowledge. "In most cases, companies have never before had the means to report to stakeholders what their emissions are," says Reardon and, in practice, when companies manage their energy inputs down the benefits are twofold they cut costs and they reduce their greenhouse emissions. Both results look good in the annual report.
"The Federal Government has made it clear that it will impose some kind of carbon cost across industry so this will become an issue," Reardon says. At the very least, large companies will have to acquire the means to track emissions and Reardon sees his product as a natural choice for many businesses.
As well, he believes there is an economic trend towards managing all business costs, including environmental ones. "Anyone who spends a few millions on energy each year and who hasn't seriously looked at ways to manage that is
doing the wrong thing, in my view."
It has taken a long time for demand-side management of electricity, in particular, to catch on. Perhaps that is primarily due to its relatively low cost and its invisibility consumption achieves its most visible expression through monthly
Our-e-Manager increases the visibility of energy consumption and provides managers with simple time-based comparisons. When savings are effected the results can be seen.
So far the uptake of the product has been promising and Energetics clearly has a lot of faith in it. Purchasers include several of Australia's top 50 companies including Amcor, Goodman Fielder and a large bank.
Procurement company Cyberlinx recently implemented Our-e-Manager for a customer with 600 retail outlets nationally. CEO Christopher Deane says it was the enabling technology for "an innovative and extremely cost-effective"
energy contract between the customer and a major energy utility. Reardon believes the global market for energy management is potentially worth more than $20 billion and Our-e-Manager is well placed to gain a share of it.