Positioning on a strategic level

LAccording to current forecasts, the annual electricity demand in Switzerland in 2050 will be around 85 billion kilowatt hours without appropriate measures. This is around 50% more than the demand in 2010. Accordingly, the topic of energy efficiency is at the heart of the Federal Council's Energy Strategy 2050. Local industrial companies consume around 33% of Switzerland's total energy consumption each year, making them one of the main consumers of electrical energy alongside service companies and households [2]. Energy saving and the topic of energy efficiency are thus also becoming increasingly important for industrial companies. ISO 50001:2011 provides a framework for industrial companies on their way to higher energy efficiency [1]. The generally increasing number of certifications according to ISO 50001 testifies to the cross-industry acceptance of the newly created standard. It also highlights the need for a systematic approach to dealing with the issues of energy and energy efficiency. ISO 50001 is based on the management model of continuous improvement and describes the requirements for an organization to introduce, implement, maintain and continuously improve an energy management system [2]. Thus, the improvement of energy performance, including energy efficiency, use and consumption is to be achieved [3]. The structure is based on already known and established management system standards such as ISO 9001 or ISO 14001, thus enabling both comparability and integration of the topic of energy management into existing systems.

Key factors in implementation

In dealing with changes in organizations and adaptations of a management system, central factors have established themselves in research and practice as decisive for success. This applies not only to the implementation of approaches such as lean management or total quality management, but also to the introduction and sustainable implementation of an energy management system. If one follows the ISO 50001 approach, which is based on the continuous improvement process, these key factors can be summarized above all in the generic terms management commitment, target definition and communication as well as systematic success control. These aspects are also mentioned by ISO 50001 (see Figure 1); however, the study by the Institute for Technology Management at the University of St.Gallen shows that this is not yet done systematically.

management commitment

It is of central importance to position the topic of energy at the strategic level and to have the approval of the management to establish an energy-efficient organization in the future. The implementation in operational goals with concrete action plans as well as the measurement of defined targets is a consequent step towards energy efficiency. In addition to the general requirements, special attention is paid to the Management Review (see Figure 1). A key success factor is therefore to view energy efficiency as a management task and to ensure that appropriate targets are set.

Target definition and target communication

Management by objectives and agreement on objectives, founded by the management thinker Peter Ferdinand Drucker in the 1950s, makes it possible to implement strategic objectives from the perspective of the company as a whole and from the perspective of the employees [4]. In order to be able to manage and administer energy resources and achieve savings, transparency must be created regarding the current status quo. It is crucial to find a way to get the right information with a consistent definition from the organization. On this basis, short and medium-term goals can then be defined, which are achievable in terms of time and personnel under the given resources.

Success control

Only a systematic performance review based on the defined targets enables continuous convergence towards strategic savings targets set for the long term. It allows measures to be taken to continuously improve energy efficiency. An established procedure for systematic success control is the Plan-Do-Check-Act procedure for the continuous improvement of energy management, which is also provided for in this way by ISO 50001.

Implementation: current status

In the course of the study, the topic of energy efficiency in industrial companies was examined in more detail. A total of 119 energy efficiency managers, primarily from Swiss industrial companies but also from municipalities, were interviewed about the status quo of energy efficiency in their own companies, about drivers but also barriers to the implementation of energy efficiency measures.

With regard to the systematic management of energy, so far only 22% of the respondents rely on an energy management system (EMS). 16.3% of the respondents plan to introduce one in the next three years, mainly to provide evidence of the effectiveness of the implemented energy efficiency measures for their own management, but also for the public (see Figure 2). Standards such as ISO 50001, on the other hand, play a somewhat lesser role. Only about half of the companies that are currently planning to introduce an EMS name standards as a driver for improving energy efficiency.

Which are drivers?

The main drivers for energy efficiency measures seem to be financial aspects in particular. When asked about the motivation for implementing energy efficiency measures, 35.5% of the respondents cited the saving of energy costs. Improving the company's image and sense of responsibility followed with 17.8% and 17.5% respectively. Current or upcoming regulatory requirements, on the other hand, are the decisive reason for improving energy efficiency for only 12.4% of the respondents.Management Commitment

Barriers to implementation

The main barriers to implementation are usually cited as classic implementation problems: investment costs that are too high, amortisation periods that are too long, lack of financing options with insufficient equity capital. In addition, many energy efficiency managers complain that simply too few financial and human resources are made available for the implementation of energy efficiency measures. Only 37% of the organisations surveyed are able to achieve their goals with the financial and human resources made available to them.

Management position

The study also shows that for more than half of the respondents, the topic of energy efficiency already has a high strategic and economic significance in their own company. According to the experts, this trend will continue to grow in the future. However, whether the topic of energy efficiency is on the management agenda is another question, as the study also cites a lack of management knowledge and a lack of expert knowledge as barriers to implementation. This is particularly interesting as in most organizations it is the management that initiates energy efficiency measures (see Figure 3) and thus energy efficiency initiatives tend to be top-down.

The study also found that the willingness of companies to invest in energy efficiency is significantly lower than for investments in their core business (see Figure 4). This is also a clear indication that the efficient use of energy is often not yet given the necessary priority by many companies that is required for consistent implementation. In addition, it appears that the financial and regulatory pressure from outside is not yet high enough. Many companies are particularly deterred by the financing of larger measures, because when asked whether the willingness to invest in energy efficiency measures would be higher if the financing of energy efficiency investments were taken over by third parties, 53% of the respondents answered in the affirmative.

"External funding is rarely used"

At the same time, the study makes it clear that third-party financing has hardly been used by industrial companies to date. Only 18.2% use the possibility of external financing by banks and suppliers of infrastructures and plants. The vast majority (81.8%) still rely on financing from their own resources.

Lack of objectives

As already mentioned, in order to implement energy management systematically, a clear definition of objectives and continuous controlling are required. This is reinforced by the specifications and criteria for achieving ISO 50001 certification [1]. According to the survey, however, a large majority of Swiss organizations currently do not have defined energy savings targets (thermal energy, gas, electricity). This can lead to a decisive obstacle to certification and thus to the dissemination of ISO 50001 in Switzerland. In the case of thermal energy, only 21% of the respondents stated a defined savings target and in the case of gas, the figure was only 22%. Even in the electricity category, only 39% defined clear savings targets. For companies that have defined clear targets, the average annual savings target for electricity is 7%, based on total consumption. For gas and thermal energy, the targets are much lower. This can be justified in that electricity is expected to have the highest price increases. However, the lack of a target definition only allows this target to be implemented to a limited extent.

Conclusion

Setting targets is undeniably an important point for the successful implementation of energy efficiency measures. In order to be able to check the achievement of these goals and to sustainably improve energy efficiency, continuous and systematic controlling of energy efficiency measures and general energy consumption is required. Energy management systems can help to implement systematic energy management in the company. However, before companies take the step towards energy management systems, the organisational and structural prerequisites should be created. This includes, in particular, raising the awareness of the management team for the topic. This creates a certain degree of awareness for important key factors in systematic energy management and lays the foundation for the corresponding management commitment. By positioning the topic of energy efficiency at the strategic level and breaking it down into concrete action packages, improvements can then be brought about gradually and systematically. Resources can be planned in a targeted manner and made available to a sufficient extent. In this way, it becomes possible to achieve the set energy efficiency targets systematically and in the long term.

To overcome existing financing obstacles, companies can also resort to new, external financing models. Both suppliers and private equity funds offer these alternative forms of financing for energy improvements to buildings, industrial plants and public infrastructure. These are based on the concept of participation in the energy savings achieved. Certainly, external sources of financing are not suitable in every case, but they should be included as a complementary, alternative instrument in investment decisions.

Sources:

1. International Organization for Standardization (2014), "Management Standards", taken from: www.iso.org/iso/ home/standards/managementstandards/iso50001.htm
2. Swiss Federal Office of Energy (2013), "Overview of energy consumption in Switzerland in January 2012", taken from: www.bfe.admin.ch/themen/ 00526/00541/00542/00631/index.html?dossier_id=00867
3. International Organization for Standardization (2011), "Win the energy challenge with ISO 50001", taken from: www. iso.org/iso/iso_50001_energy. pdf.
4. Drucker P.F. (1998), "The Practice of Management", Econ, Düsseldorf