Posts Tagged ‘energy management’

2 Jan 28 2010 @ 10:15am by Matt Smith in energy consulting

Five and a half facts and four and a half fallacies to lower your company’s energy costs.

Here are ten simple ways for an industrial company to lower their energy costs:

1) Energy demand management: reduce your energy bills, but not your energy consumption. By being smarter about when you use energy (i.e. moving energy usage to off-peak times), you can potentially create huge savings.

2) Having twenty employees rubbing their feet on the carpet for one hour to create static can increase the temperature in an average-sized boardroom by 1.5 degrees.

3) Be nice to your boiler. Government regulations require boilers to be inspected each year, but inspection does not mean calibration. Going the extra step and calibrating your boiler can save thousands.

4) Install highly sensitive motion sensors in breakrooms, restrooms, corridors and stairwells. Not only will this conserve energy, it will also keep employees warm due to having to wave their arms around like a crazy person. (A nice little side benefit - turn all thermostats down by 2.5 degrees).

5) Understand your energy charges. If you receive service through your utility, make sure you are being charged the correct tariff rate. If you receive service from a third party supplier, attempt to negotiate a lower rate.

6) Purchase Energy Star products where possible. A collection of three or more Energy Star products means you can apply for an additional bonus tax rebate called the Energy Constellation Cashback Rebate.

7) For a plant / factory, buy electrical-driven machinery rather than compressed air-driven. Cut down on compressed air usage wherever possible. The misconception with compressed air is that it is free (the air is free, compression is not). In effect, 92% of the energy used to power compressed air machinery is lost through transmission. The moral of the story – go for electrical-driven machinery.

8) If you lower your thermostat by one degree a week starting on October 1, employees gradually acclimatize to an ever-dropping temperature. By January 1, their movement may be restricted due to too many layers, at which point you crank up the heat again. By one degree a week. Estimated savings on a 3000 square foot building: $1359. ($59 for the Christmas party kitty, $1,300 to the bottom line).

9) Have your plant undergo an energy audit or a consumption workshop (where your team can be taught how to assess their own energy audit).

10) Adjust the brightness on your monitors lower by 80%. Not only will this save energy, but the darker tone will place less stress on your eyes, which means less vision insurance claims for your company (approximated savings of $843 per 100 employees).  

0 Jan 21 2010 @ 10:55am by Matt Smith in Capital Markets, Natural Gas, Risk Strategy, energy consulting, risk management

What’s the worst that can happen?

bang!‘A cynic is a man who, when he smells flowers, looks round for a coffin’ – HL Mencken

There is nothing wrong with being cynical, and there is nothing wrong with preparing for the worst. And it shouldn’t be a surprise to see this written by someone in risk management; after all, we spend more time assessing downside risk than a professional bungee jumper. 

One of the key drivers of energy risk management, or of risk management of any kind for that matter, is to mitigate risk.  But how do you quantify risk? And why? Lacking a better way to quantify the unquantifiable, a rather unhiply-named gent called Eugene Fama coined the empirical measurement for risk – volatility.

Accurately and consistently quantifying risk (or volatility) in commodity markets is as easy as doing a cartwheel underwater (impossible – just try it), as the extreme movements in natural gas from $13.69 to $2.40 in little more than a year, so dramatically proves. But by equipping yourself with a Batman-like utility belt natureof tools for assessing the potential evolution and volatility of a market - from macroeconomic models and Value at Risk (VaR) to technical analysis - means you can come up with a plan with which you are comfortable. And this plan will be guided by your own tolerance - i.e.  how much risk/reward you are willing to and able to accept when taking a position (or not)  in a market.

So back to the original question: what’s the worst that can happen? The simple answer is we don’t know, because no-one is able to exactly predict the future. But if you have a robust enough risk strategy in place that prepares you adequately for the worst, it doesn’t matter as much what the worst-case scenario will ultimately be; you will be in a strong enough position to defend against whatever the market may throw at you.

0 Dec 10 2009 @ 9:45am by Matt Smith in Crude Oil, Global Energy, Natural Gas, Risk Strategy, UK natural gas

On the twelfth day of Christmas….

On the twelfth day of Christmas,
Summit Energy gave to me -

dashboarDView

Twelve CarbonMaps™,

Eleven consumption workshops,

Ten special market updates,

Nine budget projections,

Eight thousand bill validations,

Seven rates analyses,

Six hedging strategies,

Five new site rollouts,

Four renewable energy portfolio optimizations,

Three French RFPs,

Two Summitized contracts,

And a password and access to DV*!

 


 

In addition to the above ditty, please see below our efforts to keep in Santa’s good books. This year we must be odds on favorites for good presents as we have helped him go green. Click on the image below to see us making sure we don’t get coal the fruits of our labor:

Santa's Energy
*DV is DashboarDView, Summit Energy’s online sustainability and energy reporting platform.
2 Oct 27 2009 @ 4:15pm by Matt Smith in Risk Strategy

Clichés that apply to energy risk management

A stitch in time saves nine – we dive straight in with a classic cliché, and perfect energy consulting risk management lingo: a good hedging strategy ultimately protects. Saving stitches is what it’s all about.

Getting all your ducks in a row – whether you are hedging or simply managing your energy usage, data collection and verification are key. Having correct data is the first step to implementing any type of strategy – from bill verification to budgeting or risk management.

Don’t put all your eggs in one basket – a good risk strategy involves layering in, not jumping into a market 100%. You never know what is going to happen in the future, although identifying and mitigating some of that risk is vital. It is also against cliché law to count your eggs before they are hatched.

Diff'rent strokes

Diff'rent Strokes

odd

Diff'rent Folks

Different strokes for different folks – admittedly this may immediately make you think of Gary Coleman, but is nevertheless a key point in energy consulting. Defining a client’s risk tolerance is the first step to risk management. Understanding a client’s risk capacity and financial adequacy to take on market risk is vital. Without establishing a risk strategy, you do not know whether your client’s goals are to beat their budget or beat the market – two very different things.

Closing the barn door after the horse has bolted - is a classic occurrence when clients ignore advice and believe they know better. While we never profess to be able to call the bottom of the market, if we recommend taking coverage and you don’t, please do not complain when prices run higher. Of course we won’t say ‘we told you so’, but please be aware that our inner voices are screaming it in our heads.

Every dog has its day – yes it does. Complacency is a terrible thing. What’s it good for? Absolutely nothing. Even the most beaten-down commodity has its price level at which to entice bargain hunters. We will try to stop you falling prey to one of the oldest tricks in the book. Say it again.

A bird in the hand is worth two in the bush – once again, perfect risk management lingo. Hedging out some of your uncertainty at a price you are comfortable with should leave you feeling safe and cozy and free to focus on value-adding pursuits for your firm. It’s all about having birds in a hand to save stitching nine of them (or something like that).

You can pick your friends, you can pick your nose, but you can’t pick your friend’s nose – am still trying to work the angle of this one for energy consulting.  But take heed, it is wonderful advice nonetheless.