Energy Management

Energy Management

Executive Summary

Energy management is defined as "...the judicious use of energy to accomplish prescribed objectives." (Turner, 2005, p. xviii). The purpose of our presentation is to increase the awareness of the significance of energy management, to provide some real examples of successful companies applying energy management programs, and to provide information about governmental incentives in regards to this issue.

Energy management falls under the big umbrella of social responsibility and the narrower category of pollution control and environmental management. Today, managers are paying more attention to their company's impact on and responsibility towards the environment. Therefore, energy management is gaining considerable importance among corporations and managers.

The Environmental Protection Agency has established guidelines for superior energy management. These guidelines provide seven steps, including make commitment, assess performance, set goals, create action plan, implement action plan, evaluate progress, and recognize achievements. Following these steps is just a start for businesses to become environmental leaders.

To help implement energy efficiency, the US government has created many programs to help facilitate this process. One widely known program, ENERGY STAR, is a government-backed program helping businesses and individuals protect the environment through superior energy efficiency.

ENERGY STAR has created a manual illustrating five stages to maximize energy savings. This manual is essential to companies that seek to implement energy management within their organization. For example, lighting consumes a tremendous amount of energy and financial resources. It accounts for approximately 17 percent of all electricity sold in the United States. According to ENERGY STAR, they estimate that if efficient lighting were used in all locations where it has been shown to be profitable throughout the country, the nation's demand for electricity would be cut by more than 10 percent. This could save nearly $17 billion in ratepayer bills and result in annual pollution reductions. Clearly, the manual created by ENERGY STAR is a helpful guide for substantial savings for business, as well as society.

Governmental agencies do not only set guidelines, but they also reward companies for their effort. Every year, the US Environmental Protection Agency and the US Department of Energy commemorate businesses that have contributed to protecting the environment by using energy management. Energy Star awards companies that "Sustain Excellence and Corporate Commitment" towards energy management. In 2005, two of the companies that were awarded were Hewlett Packard and Lowe's. Since the first company is a manufacturer and the second, a retailer, these companies implement different energy management programs. However, their common objectives are to save the use of energy and to reduce the impact on the environment.

There are three methods to set up an energy management program: In-House Implementation, External Consultants, and Energy Performance Contracts. The three of them have advantages and disadvantages. For example, the In-House Implementation avoids consultant fees but may jeopardize objectivity and technical depth. The External Consultants provide good skills at fixed cost, but little accountability. The Energy Performance Contracts can deal with risk and finance issues, but have high levels of obligations.

Because of these disadvantages, some companies do not implement energy management programs. Therefore, in order to encourage businesses to manage and save energy, the U.S. government has been using many types of incentives