Energy efficiency for resilience: four things to consider
August 2, 2022
When I talk to my clients, energy supply and security are high on the list of things keeping them awake at night.
It’s with good reason.
Russia has historically supplied more than 20% of Europe’s oil and 30% of its gas. Several European countries are 50-100% reliant on Russia for their oil and gas imports. The knock-on effect is unprecedented for businesses as well as consumers.
What’s more, the magnitude of the energy supply and security crisis is affecting the business models of many sectors; anecdotally, clients operating in consumer goods or industrials are seeing their energy costs spiral from roughly 1-2% of their operating costs to 6-10%.
Meanwhile, the energy transition is not moving fast enough to stave off the climate crisis.
Against this backdrop, I’m counseling my clients to double down on their best tool for resilience and decarbonization—cutting energy demand through energy efficiency. And the outcomes are compelling.
Even better, the approaches we already have can deliver impact within weeks and months, as part of a longer-term, accelerated switch to new technologies and processes.
Let’s look at why energy efficiency is a big opportunity for leaders.
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It’s a topic that used to be only on the sustainability agenda. And that still matters more than ever, with the net-zero imperative looming large in the decade to come.
But CEOs are talking about it now, because getting it right impacts financial health profoundly. It offers the chance to de-risk against supply shocks.
It’s little wonder the International Energy Agency calls energy efficiency the “first fuel”—the cheapest method to drive sustainable impact, as it costs nothing not to spend money on or use energy. All the necessary technologies to support it are mature and scalable, and they work across all demand sectors.
So, since it’s the way to go, how do you do it? Here are some actions to consider.
Digitization can have a dramatic impact on buildings and manufacturing. Think automation, IoT sensors and smart networks across organizations’ operations, to drive down inefficient energy usage. To learn more, read our related blog on net-zero buildings.
These approaches are bearing fruit beyond industry, with cities also greening the path to data-driven operations.
Take our work with Metro de Madrid. We deployed an optimization algorithm using vast quantities of real-time data. We modelled variables including station architecture, air temperature, train frequency, passenger load and daily electricity price. It helped identify opportunities to cut energy usage.
By predicting conditions 72 hours ahead--and using machine learning to teach the system over time--Metro de Madrid saved 25% in energy consumption by ventilation, while improving passenger comfort.
How’s that for efficiency?
More generally, digitization is also supporting energy equity and affordability. It’s the ultimate win-win.
With Accenture’s help, a large utility is driving toward a net-zero and equitable energy transition by bringing its electric demand response program to the next level, centered around a behavioral Demand Response program. The company introduced Peak Time Savings (PTS)—a residential demand response (DR) program that leverages smart meters. It allows customers to respond to DR signals to reduce energy use during peak hours of the summer.
PTS is enabling customers to earn bill credits, avoid CO2 emissions and improve grid reliability. Over five years, program participants have grown by more than 400% while achieving over three million kWhs of energy reduction.
It also pays to unpick your processes and supply chains to improve efficiency gains. Where are the soft points where waste can creep in? And how can you correct them?
Improving efficiency comes back to digitization and embracing the technologies that can help. One of them may be digital twins to get under the skin of plant operations, find and correct that wastage.
How? A multinational integrated oil and gas company, for example, views energy management as a key pillar of its goal to achieve net-zero by 2050. To reach this goal, the company wants to pool industrial data sources to visualize plant energy usage using equipment sensors, thereby enhancing monitoring and energy efficiency.
Accenture helped them bring this to life at a pilot refinery plant, using leading-edge, cloud-based analytics and visualization. This shortened the insight-to-action loops, in line with regulatory compliance. In the process, the estimated savings are in the range of millions € per year, for each industrial plant.
And remember the company’s net-zero goal? That cost equates to serious greenhouse gas (GHG) emissions reductions, too.
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We know cloud adoption at scale drives reduced energy consumption and emissions.
Accenture’s Cloud Continuum research states: “Our global survey of about 4,000 global business and IT leaders found nearly 65% of respondents saw up to 10% in cost savings, on average, from moving to the cloud.” But that’s just one upshot.
Within the same research, we identified a group of high performers who outpace the energy savings of others: they are 3x more likely to use cloud for at least two sustainability goals. Examples include using green energy sources, designing for lower power consumption and using servers better for a lower energy footprint.
But crucially, these high performers are also using cloud as a source of innovation and re-engineering. They’re achieving up to 2.7x greater cost reduction than those just looking to migrate workloads.
It means it’s time to embrace the full potential of cloud as a new way of doing things. Think designing more efficient and circular processes; innovating and cycling through new ideas in a “fail fast or take to production” mindset; or being agile and adapting as conditions change.
If you want to save energy, the quality and availability of your data is paramount, plus the analytics to make sense of what it all means and how to respond.
I’m asking my clients to reflect on questions such as: Do you know what your energy demand and consumption patterns look like? Do you have the right data to tell you where to look to improve energy usage? Do you know what your key sources of wastage and inefficiency are?
It comes down to prioritizing your data foundation and treating data like an asset in its own right.
Doing so can pay huge dividends, particularly when it comes to the enormous impact behaviors can have.
For example, a global retailer worked with Accenture to analyze energy waste across its stores. We applied AI to the data to identify and fix store-level behaviors leading to wastage. The project delivered a 15% decrease in energy consumption, saving approximately 15% on energy costs. It’s a compelling example of shoring up resilience, de-risking and driving for meaningful GHG emissions reductions, all in the same breath.
It also serves as the perfect challenge to organizations who have historically thought energy efficiency is for energy-intensive industries only. Clearly it isn’t—with savings like these, these strategies can deliver enormous benefits for health networks, bank branches and others with similar “store style” models.
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The magnitude of the energy supply and security crisis is affecting the business models of many sectors; anecdotally, clients operating in consumer goods or industrials are seeing their energy costs spiral from roughly 1-2% of their operating costs to 6-10%.
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With energy efficiency as a key lever for resilience, embracing its full potential can not only reduce risk, but also enable companies to plan for a better future and protect consumers. There are a number of short-term actions that business leaders across industries can begin taking today. These will help to address the challenges the energy and climate crises are having on their organizations.
Please reach out if you’d like to learn more about the work we’re doing to help leading companies reduce energy demand, from strategy, to digitization, to demand management. We look forward to discussing how we can help your business further increase energy efficiency to strengthen resilience.