Commercial and industrial facilities are increasingly embracing strategic energy management (SEM) to reduce their energy use, thanks in part to new programs from several utilities. SEM is the systematic, continual improvement approach to energy management. Originally conceived as a way to integrate energy efficiency into industrial facilities, SEM practices are expanding, building on lessons from early successes and now helping businesses and municipal governments save more energy than ever before.
Programs quickly expanding
Utility-sponsored programs supporting companies’ SEM efforts have been critical, and at least four more have begun since we published a January 2019 report on SEM programs across North America. Last year, the District of Columbia Sustainable Energy Utility (DCSEU) started two SEM cohorts: one for federal buildings and another for colleges and universities. These groups of similar customers participate in workshops and receive technical assistance conducting energy assessments and developing energy use models. These efforts will help building owners meet the city’s new building energy performance standards.
In 2019, Vectren South introduced its SEM program to large energy users in southern Indiana. The utility assigned energy managers to participating customers, working with them over an 18-months period to provide personalized energy management training and services. Also in 2019, National Grid built on its past experience with SEM by launching SEM Demonstration for industrial and manufacturing customers and beginning a three-year commitment to improve business energy management. Similarly, Puget Sound Energy rolled out an evolution of its Resource Conservation Manager Program for industrial customers. The I-SEM offering, piloted in 2018 and becoming an ongoing program in 2019, offers customers collaborative learning opportunities, energy assessments, and support in developing energy models.
Notably, Southern California Edison, Pacific Gas, and Electric, and San Diego Gas and Electric collectively rolled out SEM programs for their customers in 2018. In an evolution to the Continuous Energy Improvement program, the utilities joined together to issue the California Industrial SEM Design Guide, which outlines customer objectives and goals to establish an energy management system.
Today, more than 30 utilities offer SEM programs that serve a mix of industrial and commercial customers from sectors that include manufacturing, healthcare, and education as well as various municipal facilities. We expect continued growth as more companies, cities, and states set science-based targets for emission reductions (targets working towards greenhouse gas emissions reductions of 80% or more); the energy savings achieved through SEM can deliver a significant portion of these reductions, typically with relatively low capital expense. There are about 200 large utilities in the United States and Canada, presenting an opportunity for significant SEM growth.
Since utilities and other program administrators started incorporating elements of SEM into industrial energy efficiency offerings more than a decade ago, we’ve had plenty of opportunity to see their success. Focus on Energy’s SEM pilot resulted in net annual electric savings of more than 21,000 MWh and nearly 4 million therms from 2015 to 2018, equilavent to roughly 4.5% and 10% respectively of the total savings from its Large Energy Users Program during this time period. It was also credited with a 1.8 MW reduction in power. Focus on Energy now has two SEM offerings, one for industrial facilities and another for healthcare facilities.
‘Fishing’ for energy savings
In SEM programs, utility customers are taught to “fish” for energy savings with a combination of coaching, technical assistance and, in many cases, incentives for improving their energy performance. The energy management practices are intended to result in persistent energy savings. When the discussion shifts from what to do—rather than whether to do something—many customers engage in other utility energy efficiency offerings. Participants reduce energy waste, cut costs, and improve productivity.
Strategic energy management provides a significant opportunity for energy savings. A 2015 ACEEE analysis estimated that SEM could be applied to 20% of commercial load and 50% of industrial load in the UnitedStates. In the absence of utility-run SEM programs, companies should leverage other resources that help improve energy management practices, including state and federal programs such as the Department of Energy (DOE) Better Buildings, Better Plants initiative.
Companies face a dual need to reduce emissions and remain competitive. As calls for corporate climate action increase and more companies set science-based targets for emission reductions, SEM can play a role. Since the development of the International Standards Organization energy management standard (ISO 50001) in 2011, companies have been able to formally adopt SEM practices on their own. However, U.S. facilities have not achieved the same level of certification as those in other major economies such as Germany where a combination of incentives and mandatory certifications were used to drive adoption.The 50001 Ready program administered by DOE is a self-attestation program designed with ISO 50001 energy management elements that lower barriers to full ISO implementation.
Municipal governments, too, can use SEM to reduce energy use and emissions across their buildings and operations. Not only can SEM help them meet their internal climate goals, direct support for SEM can complement state and local policies such as energy efficiency resource standards and building energy performance codes. For example, North Carolina sponsors an 50001 Ready industry cohort, which started in 2020. A recent ACEEE analysis shows that expanding SEM practices could save nearly 1% of the 2040 forecasted electricity sales in North Carolina.
National and regional organizations have helped accelerate this growth through collaborative efforts to improve program design, evaluation, and performance. We expect to see SEM programs continue to grow in number and impact as they are offered by more utilities, and as companies, cities, and states work to cut costs, energy use, and emissions.
The North American SEM Collaborative, a project for ACEEE, supports the SEM community of practice by engaging stakeholders and providing thought leadership. The NASEMC will soon offer a professional membership for organizations and individuals that want to be on the leading edge of this expanding community. For more information on membership and the benefits of SEM, please contact Andrew Whitlock at awhitlock@aceee.org.
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