The Role of Benchmarking in Promoting Strong Energy Management Systems

1. The Role of Benchmarking in Promoting Strong Energy Management Systems Walt Tunnessen US Environmental Protection Agency ENERGY STAR Industrial Partnership May 21, 2010

2. Evolution EPA Efficiency Initiatives Early ’90 - Green Lights – Technology Focus Mid ’90s - ENERGY STAR - Performance Standards & Labeling Shift Focus to whole buildings and organization management Late ’90s - ENERGY STAR Building Benchmarks & Labels Partner of Year Award focused on “Program” vs “Project” Early ’00s - ENERGY STAR Guidelines for Energy Management Mid ’00s - Industrial Plant Benchmarks / Multiple Building Benchmarks Late ’00s – ENERGY STAR Challenge for Industry

3. Issues in the market • Upgrading the technology did not always improve performance. • U.S. companies tended to focus on selective projects rather than continuous improvement. • Efficiency gains from improved O & M and “behavioral” changes overlooked or discounted • Uncertainty in gauging performance

4. Management Systems Approach Focuses on • Organizational practices • Team development • Tracking & Measurements • Capital & behavioral projects • Communication & employee engagement ENERGY STAR Guidelines for Energy Management

5. Standardization of Energy Management • ISO 50001 - Energy Management Systems underdevelopment • ANSI MSE 2001:2008 – Energy Management Standard • European Energy Management Standards • ASTM standards being developed for: • Compressed systems, motors, steam systems, etc.

6. Why Energy management systems? Companies with strong energy management programs: • Achieve greater results • Identify & implement better projects • Focus on continuous improvement • Have greater access to capital • Establish energy efficiency cultures • Sustain energy savings over time Most companies and sites do not have strong programs: • Many companies lack formal energy programs. • “Managing energy” is done through ad hoc projects

7. The role of benchmarking An energy management system without good benchmarks is like a ship at sea with out a compass! Benchmarks are the waypoints towards improved performance!

8. Barrier Uncertain bearing on efficiency Solution Provide a benchmarks as an objective measurement method of performance A barrier to greater efficiency

9. Benchmarking’s place in energy management ENERGY STAR Guidelines for Energy Management • Can be based on comparison of management practices or energy data • practice benchmarking gives an idea of where to improve by identifying best energy management practices • energy data benchmarking informs how well an entity might perform and improve and the position of that entity in terms of energy performance • Benchmarking confirms if improvement projects have had an effect

10. Types of benchmarking • Internal • compares performance against internal baseline or benchmark • External • compares performance against a metric “outside” of the organization • identifies “Best in Class” performance • Quantitative • data-driven; compares actual numbers • Qualitative • based on best practices; compares actions

11. Qualitative Benchmarking Energy Program & Facility Assessment Matrixes Used to evaluate energy program practices & identify gaps

12. Objectives shape benchmarks

13. Metrics shape approach • Absolute • Intensity • Source vs. site energy • Normalized intensity • Ratings

14. Fuel Efficiency: MPG Energy Efficiency: 1 - 100 The Energy Performance Score Answers: “If all plants in the industry use energy as this one, what percent of plants in the country would be better, and what percent would be worse?”

15. ENERGY STAR scores • External • Define “best in class” for an industry or building type • Sector Specific • Industry sector-specific at 6 digit NAICS code (or more refined) • Whole facility / building level • All fuels and energy sources • Source energy intensity • Intensity based on production • Normalized for key variables • Performance ranked on a scale of 1 to 100

16. ENERGY STAR Benchmarking Tools • 2 Formats: Energy Performance Indicators (EPIs) - Industrial • Portfolio Manager – Commercial Buildings

17. Industrial Focus Collaborative initiatives to develop resources for the industry

18. Plant Energy Performance Indicators • Spread-sheet based tools • Enable a higher level of energy management • Provides industry wide comparison • Enables better goal setting • Empowers management to require greater energy performance from plants • Provides opportunity for EPA recognition • www.energystar.gov/epis • www.energystar.gov/industrybenchmarkingtools

19. Reward & Learn Invest & Tune Tune Invest 100 1 25 50 75 Application of benchmarking results Best investment opportunities are in lower quartiles - greatest potential for improvement RCx & O&M improvements yield savings and label candidates High scorers provide lessons learned and label candidates Energy Performance Score 19

20. ENERGY STAR Label • Must have an Energy Performance Rating of 75 or higher • Must pass an environmental compliance screen • 55 ENERGY STAR Industrial Plants have earned the label • Auto Assembly • Cement • Wet Corn Milling • Petroleum Refining • Pharmaceuticals • Food Processing • Glass Manufacturing

21. Distribution of Plant Labels

22. Gauging Sector Performance EPA’s Experience with the Automobile Assembly Sector: • Based on ENERGY STAR benchmarking of auto assembly plants, EPA has seen fuel usage in the industry improve by 12 percent over a five year period. • The level of inefficiency has also dropped by 1.0 mmBtu/vehicle. • The range of performance has also narrowed. • This means that while the best auto assembly plants have improved, the others have more than "kept up" with this improvement.

23. ENERGY STAR Benchmarking: Auto Assembly 2000-2005 EPA, Duke University

24. Preliminary analysis, EPA, Duke University ENERGY STAR Benchmarking: Cement Plants, 1997 - 2008

25. Promoting internal benchmarking ENERGY STAR Challenge for Industry • Plants establish an energy intensity metric; • Select an energy tracking system; • Create an Energy Tracking Planif their company does not have existing procedures. • Set a 10% improvement in 5 years goal. • Register their baseline annual intensity • Verify savings if goal is achieved. • Helps plants establish a culture of benchmarking that drives performance • Facilitates stronger management practices

26. Results First sites to achieve the ENERGY STAR Challenge for Industry

27. Summary • Empowers industry to shift the curve of energy performance • For most companies, the ENERGY STAR EPI is the first time they are able to see how their plants’ energy performance compares to that of their industry • Enables companies in the benchmarked industry to set competitive goals for plant improvement • Enables EPA to gauge improvement of an industry’s energy performance over time

28. Contact Walt Tunnessen National Program Manager ENERGY STAR Program US EPA (202) 343-9965 Tunnessen.walt@epa.gov All resources found at: www.energystar.gov/industry