Energy IQ: Why businesses need to unlock value with better energy management strategies

Think your business couldn't benefit from having an energy management strategy? Think again. 

Most successful companies have a marketing, product or supply chain strategy, but there is one more important but often overlooked area to consider when wanting to maximize profit: An energy management strategy. Today, a well-planned energy management strategy can position a company to take advantage of the recent trends shaping the energy markets.

"The days of considering energy costs as a given is long gone for most businesses," said Gino Butera, Vice President of Power Generation at Cummins. "A combination of five macro trends ranging from digitization and de-carbonization to electrification and de-regulation has created opportunities for businesses to be more pro-active with their energy costs." 

Energy use intensity for commercial buildings
Commercial businesses with higher energy use intensity benefit the most from energy management strategies.

According to a 2019 Deloitte study, 88% of businesses have changed their view of energy procurement from simply a cost to the business to an opportunity to create value. Cummins has identified three benefits or values to be unlocked by an effective energy management strategy.

No. 1: Improving the company’s financials

Energy bills (electricity, heating and transportation fuel) are one of the major expenses for many businesses of any size. If you are simply paying the energy bills without seeking the opportunities to lower your bills, you might be leaving money on the table. 

When it comes to electricity and heating costs, there are opportunities ranging from demand response and demand charge management to combined heat and power for your business to lower costs. You can even create a competitive advantage for your business through an effective energy management strategy, depending upon your local cost of electricity. Hawaii's largest craft brewer has accomplished this and created its competitive edge with the ability to estimate the cost of electricity. 

An effective energy management strategy would integrate the latest technologies in intelligent controls and microgrids into your company’s infrastructure, enabling your business to take advantage of financial opportunities. 

No. 2: Protecting the core business from interruptions

Lives, money and reputation. In the case of certain healthcare facilities, interruptions in a business could have disastrous outcomes including putting lives at risk. Even in the least harmful case, an interruption caused by a power outage will still cost your business money in the form of lost business. Both instances could do irreversible damage to the company’s reputation.

Even the most reliable power grids are at risk to fail. For example, electricity customers in the U.S experienced an average of over seven hours without power due to outages in 2017. In some states such as Maine and Florida, customers experienced an average of over 30 hours without power due to outages during the same year. 

An effective energy management strategy would feature a diverse set of energy assets ranging from storage systems to emergency generators to minimize interruptions caused by power outages. A diversity of energy assets would increase the resiliency of your company’s energy infrastructure instead of relying solely on the grid. 

No. 3: Advancing the environmental sustainability efforts

Today, more businesses are not just talking about sustainability but are establishing environmental sustainability goals to keep themselves accountable. One might think this is a trend for large multinational corporations, but in fact increasing number of small businesses also have sustainability goals.  

A business’ environmental footprint gets impacted by a variety of factors ranging from how its facilities are built to how its products are disposed, yet the use of energy gets the spotlight due to its significant impact on overall environmental sustainability. 

Electricity goals for businesses
Most companies have goals to reduce carbon footprint, and use of electricity and natural gas. 

An effective energy management strategy introduces new energy assets that produce less harmful pollutants to displace high-carbon sources such as coal. These new assets, including renewables and storage technologies, help businesses improve preservation of air, water and soil. 

Whether it is improved financials, continuity to serve customers or reducing environmental impact, an effective energy management strategy has multi-faceted benefits for any business. Building an effective strategy requires a consideration of both the company’s future goals and current operating realities. Check out this article outlining how you can start building an effective energy management strategy for your business.  If you are ready to take your energy strategy to the next steps, you can simply get in touch with an expert from Cummins to partner with you

Sign up below for Energy IQ to periodically receive relevant insights and trends about energy management. To learn more about distributed generation solutions Cummins offers, visit our webpage

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References:

1 Deloitte Insights (2019). Deloitte Resources 2019 Study [PDF file]. Retrieved from https://www2.deloitte.com 
 

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Aytek Yuksel - Cummins Inc

Aytek Yuksel

Aytek Yuksel is the Content Marketing Leader for Cummins Inc., with a focus on Power Systems markets. Aytek joined the Company in 2008. Since then, he has worked in several marketing roles and now brings you the learnings from our key markets ranging from industrial to residential markets. Aytek lives in Minneapolis, Minnesota with his wife and two kids.

Energy IQ: Five insights into the future of energy for utility professionals – Part I

Electricity Lines

As our energy infrastructure gets increasingly electrified, it shines a spotlight on utilities to deliver the promise of electrification to their consumers. Utilities are up for this challenge, as the annual investment into electricity networks is forecasted to be 30% higher over the next two decades, compared to the identical annual investments over the last decade.

The International Energy Agency annually releases its World Energy Outlook with an objective of deepening our understanding of the future of energy. This report is over 800 pages and has great insights around the future of energy. In this two-part blog post, , we have summarized five insights every utility professional needs to know when it comes to the future of energy.

No. #1: Two technologies are forecasted to make the biggest gains in levelized cost of electricity (LCOE)Offshore wind technology cost

While building a new coal plant no longer offers the lowest LCOE in many regions, existing coal plants still have the lowest LCOE across most regions today. Meanwhile, there are two technologies that are making big gains to deliver lower LCOE in the next two decades: offshore wind and solar photovoltaic (PV).

Offshore wind is positioned to experience the biggest gains in lowering LCOE and is expected to be even less than solar PV in regions such as China and the European Union. Moreover, offshore wind projects already feature annual capacity factors of 40-50%, which are well above capacity factors for solar PV and approximately the same with gas-fired power plants in several regions. 

No. #2: Utility industry is getting increasingly more capital intensiveEnergy Sector investments

On average about $2 trillion dollars have been invested into energy sector each year over the last decade. This investment is expected to jump to $2.7 trillion per year over the next two decades. The majority of this uptick will be associated with increased investments in electricity networks, renewables and energy efficiency. 

Consequently, the utility industry will become more capital intensive in most regions, driven by an increased use of technologies with zero or low fuel costs, but higher upfront costs per unit of electricity produced. While there is more investment into fuels today, there will be more investments into power in the next two decades, again making the utility industry more capital intensive. 

 

Utility professionals are able to influence and make a difference in the future of energy with their decisions today, by making the right choices when it comes to technologies and fuels. A big part of making the right choices is working with insightful information. This blog post is to share insights about the future of energy, to help you in your everyday decision-making process.

 

Part II of this article will highlight the remaining three insights focused on increasing the need for flexibility, the role of regulations, and on-going energy transition. Sign up below for Energy IQ to receive Part II and other relevant insights about energy management. To learn more about distributed generation solutions Cummins Inc. offers, visit our webpage

Think your friends and colleagues would like this content? Share on LinkedIn and Facebook.

Raise Your Energy IQ

Grow professionally with energy trends and insights delivered to your inbox.

Aytek Yuksel - Cummins Inc

Aytek Yuksel

Aytek Yuksel is the Content Marketing Leader for Cummins Inc., with a focus on Power Systems markets. Aytek joined the Company in 2008. Since then, he has worked in several marketing roles and now brings you the learnings from our key markets ranging from industrial to residential markets. Aytek lives in Minneapolis, Minnesota with his wife and two kids.

Energy IQ : Five insights into the future of energy for independent power producers – Part I

It is forecasted that the world’s installed electrical capacity needs to grow by 80% from 2018 to 2040 to fulfill our increasing need for electricity. There are technologies such as renewables and efforts such as energy efficiency to manage this increase in demand. Meanwhile, independent power producers play a key role in bringing the actual solutions to expand the installed electrical capacity to life.

The International Energy Agency annually releases its World Energy Outlook with an objective of deepening our understanding of the future of energy. This report is over 800 pages and has great insights around the future of energy. In this two-part blog post,  we have summarized six insights every independent power producer needs to know when it comes to the future of energy.

No. #1: Electricity use grows faster than energy demandelectricity vs energy demand

Demand for energy is forecasted to grow 1% a year until 2040, while the electricity use is forecasted to grow twice as fast. While the use of electric vehicles is one of the most highlighted reason for this increased demand, there are three other more impactful drivers of this increase: industrial motors, household appliances and cooling needs. 

This increased demand for electricity will strengthen its position as the second most popular choice of energy in final consumption, challenging oil’s positions at the top. A mix of technologies will fuel this transition, where solar photovoltaic (PV) and wind will take the lead. By 2040, more of our electricity will be through renewable sources than fossil fuels.

No. #2: Demand for power infrastructure flexibility grows faster than the demand for electricity

Renewable technologies bring astonishing benefits in terms of zero carbon emissions, but also introduce the challenge of flexibility . The continually increasing share of renewables in our energy infrastructure gas fired generationstranslates into an increasing share of variable electricity generation. Meanwhile, consumers are increasingly using electricity for cooling and to fuel their cars, changing the electricity demand profile. A combination of these two results in an increased need for power system flexibility. 

As traditional power plants and interconnections continue to be the key levers to deliver flexibility, gas-fired generation grows across most regions. The expanding availability of natural gas and its relatively cheaper price fosters this growth. 

Independent power producers bring to life the solutions to address the increasing demand for energy and electricity. Insights shared in this article aim to help power producers stay current with the changes in the energy landscape, as they make investment and technology decisions.

Part II of this article will highlight three more insights focused on opportunities Africa offers for power producers, forecasted growth in energy storage solutions and how to complement the ongoing growth in solar with other technologies. Sign up below for Energy IQ to receive Part II and other relevant insights about energy management. To learn more about distributed generation solutions Cummins Inc. offers, visit our webpage. 

Think your friends and colleagues would like this content? Share on LinkedIn and Facebook.

 

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Raise Your Energy IQ

Grow professionally with energy trends and insights delivered to your inbox.

Aytek Yuksel - Cummins Inc

Aytek Yuksel

Aytek Yuksel is the Content Marketing Leader for Cummins Inc., with a focus on Power Systems markets. Aytek joined the Company in 2008. Since then, he has worked in several marketing roles and now brings you the learnings from our key markets ranging from industrial to residential markets. Aytek lives in Minneapolis, Minnesota with his wife and two kids.

Energy IQ : Five insights into the future of energy for facility professionals – Part I

Facility professors

Energy is an important cost element for many businesses, but limiting the role of energy in a business to financials would minimize the importance of energy to a business. Energy related decisions  impact businesses’ environmental footprint and the continuity of their operations; and facility professionals are the heart of all these, as they curate energy management strategies for their businesses.

The International Energy Agency annually releases its World Energy Outlook with an objective of deepening our understanding of the future of energy. This report is over 800 pages, and has great insights around the future of energy. In this two-part blog post, we have summarized five insights every facility professional needs to know when it comes to the future of energy.

No. #1: Electricity use grows faster than energy demand

Demand for energy is forecasted to grow 1% a year until 2040, while the electricity use is forecasted to growElectricity and Energy Demand twice as fast. While the use of electric vehicles is one of the most highlighted reasons for this increased demand, there are three other more impactful drivers of this increase: industrial motors, household appliances and cooling needs. 

This increased demand for electricity will strengthen its position as the second most popular choice of energy in final consumption, challenging oil’s positions at the top. A mix of technologies will fuel this transition, where solar photovoltaic (PV) and wind will take the lead. By 2040, more of our electricity will be through renewable sources than fossil fuels.

No. #2: Rise of electricity as a form of energy brings new challenges

The rapidly increasing need for power system flexibility is the first challenge the rise of electricity introduces. The interruptible nature of renewables is the key driver behind this increasing need for flexibility. A wide-array of technologies (including batteries) will be utilized to address this challenge, which will be covered in part two of the post.

Regulations and policies are very prominent in utility markets, and the increasing pace of advancements in connectivity and digitalization brings up a key challenge: can the regulations within utility markets allow businesses to maximize opportunities generated by these new technologies? Regulations on energy storage, flexible generation, demand response and electric vehicle-to-grid interfaces will be the ones to watch  in the upcoming years.

Facility professionals shape the future of energy for their businesses. Their energy related decisions yield outcomes in many areas including the environment, economics and reliability. Insights shared in this article are aimed to keep the facility professionals’ perspective of the future of energy fresh and current.

Part II of this article will highlight the remaining three insights focused on increasing the need for flexibility and the technologies that are forecasted to make the biggest gains in levelized cost of electricity. Sign up below for Energy IQ to receive Part II and other relevant insights about energy management. To learn more about distributed generation solutions Cummins Inc. offers, visit our webpage

Think your friends and colleagues would like this content? Share on LinkedIn and Facebook.


 

Raise Your Energy IQ

Grow professionally with energy trends and insights delivered to your inbox.

Aytek Yuksel - Cummins Inc

Aytek Yuksel

Aytek Yuksel is the Content Marketing Leader for Cummins Inc., with a focus on Power Systems markets. Aytek joined the Company in 2008. Since then, he has worked in several marketing roles and now brings you the learnings from our key markets ranging from industrial to residential markets. Aytek lives in Minneapolis, Minnesota with his wife and two kids.

Energy IQ : Five insights into the future of energy for energy consultants – Part I

Wind Farm

We are forecasted to experience one of the most significant transitions in the energy industry over the next two decades, as electricity challenges oil’s role as the most popular form of energy in final consumption. 

This on-going transition creates the need for businesses to re-visit their energy management strategies and capitalize on the associated opportunities. Energy consultants play the thought leadership role as businesses seek to optimize their energy management strategies during this transition.

The International Energy Agency annually releases its World Energy Outlook with an objective of deepening our understanding of the future of energy. This report is over 800 pages, and has great insights around the future of energy. In this two-part blog post, we have summarized five insights every energy consultant needs to know when it comes to the future of energy.

No. #1: Electricity use grows faster than energy demand

Demand for energy is forecasted to grow 1% a year until 2040Electricity use vs energy demand, while the electricity use is forecasted to grow twice as fast. While the use of electric vehicles is one of the most highlighted reasons for this increased demand, there are three other more impactful drivers of this increase: industrial motors, household appliances and cooling needs. 

This increased demand for electricity will strengthen its position as the second most popular choice of energy in final consumption, challenging oil’s positions at the top. A mix of technologies will fuel this transition, where solar PV and wind will take the lead. By 2040, more of our electricity will be through renewable sources than fossil fuels.

No. #2: Two technologies are forecasted to make the biggest gains in levelized cost of electricity (LCOE)

While building a new coal plant no longer offers the lOffshore wind technologyowest LCOE in many regions, existing coal plants continue to have the lowest LCOE across most regions today. Meanwhile, there are two technologies that are making big gains to deliver lower LCOE in the next two decades: offshore wind and solar (PV).

Offshore wind is positioned to experience the biggest gains in lowering LCOE and is expected to be even less than solar PV in regions such as China and the European Union. Moreover, offshore wind projects already feature annual capacity factors of 40-50%, which are well above capacity factors for solar PV and approximately the same with gas-fired power plants in several regions.

 

Energy consultants play a key role in shaping our energy future by acting as guides to their customers and partners from commercial to industrial markets. Insights shared in this article are aimed to keep the energy consultants’ perspective of the future fresh and current.

 

Part II of this article will highlight three more insights focused on increasing the need for flexibility, scalability of renewables and how subsidies for renewables compare with subsidies for fossil fuel consumption. Sign up below for Energy IQ to receive Part II and other relevant insights about energy management. To learn more about distributed generation solutions Cummins Inc. offers, visit our webpage

Think your friends and colleagues would like this content? Share on LinkedIn and Facebook.

Raise Your Energy IQ

Grow professionally with energy trends and insights delivered to your inbox.

Aytek Yuksel - Cummins Inc

Aytek Yuksel

Aytek Yuksel is the Content Marketing Leader for Cummins Inc., with a focus on Power Systems markets. Aytek joined the Company in 2008. Since then, he has worked in several marketing roles and now brings you the learnings from our key markets ranging from industrial to residential markets. Aytek lives in Minneapolis, Minnesota with his wife and two kids.

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