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Using information technology to yield energy efficiency savings -- what many call intelligent efficiency -- seems like a ridiculously easy choice for businesses to make.
Companies track everything using IT, from customer acquisition to supply chain logistics. But why is it still so hard for many companies to invest in technologies that track energy use?
We've outlined a few reasons in these pages. On the software side, there are so many options available from startups with limited track records, the sheer variety of choices can be overwhelming for customers. And institutionally, there's often conflict between what executives want (savings) and what facilities managers want (to keep people comfortable and operations stable).
That can result in skepticism about intelligent efficiency services from people on the operational side of a business. The same is true in the industrial environment where there's a deep culture of "tribal knowledge" when it comes to running equipment, making it hard to integrate anything new.
Ironically, the top challenge in front of intelligent efficiency is the exact problem it can help solve in the first place: the lack of measurement of energy metrics.
The findings below come from LNS Research in its recent survey of more than 100 executives in charge of making energy choices. The survey was focused on industrial efficiency, but in our talks with dozens of intelligent efficiency companies, the same problems consistently come up in the commercial sector too.
The problem here is twofold. First, it can be difficult to pitch an intelligent efficiency product or service when companies themselves aren't properly tracking energy consumption. They may just not know where to start. And second, customers are also worried about the effectiveness of these products -- particularly if integration could disrupt or change operations.
"The number-one reason IEM [industrial energy management] software projects aren't approved is because of the perceived uncertainty in benefits of IEM software due to the dependence on process and leadership excellence," wrote LNS' Matthew Littlefield. "Because its benefits can be indirect and long-term, it can be very challenging to accurately estimate an ROI. As a consequence, companies are much more hesitant to undertake such an investment."
Again, this doesn't just apply to industrial software -- it's also an issue in the commercial sector. Sarah McAuley of EnerNOC blogged on the LNS report as well, correctly identifying the "paradox" this barrier represents.
"In many ways, to not leverage analytic software in this regard is anachronistic to today’s business norms that typically put a tremendous premium on the value of software systems to help drive operational efficiency across virtually every other business function," she wrote. Energy remains one of the largest drivers of operational expense for many different types of businesses, yet there continues to be a double standard when it comes to acceptable hurdle rates for EIS investment."
But it's not necessarily the idea of energy-tracking software that bothers companies. It's that they have so many options available -- more than 200 software vendors in the U.S. alone -- and they're (rightly) skeptical of the claims being thrown out by them about savings. In a space defined by only a handful of well-established juggernauts and hundreds of smaller startups, that skepticism will likely stick around.
On the flip side, there's a positive technological element to LNS' findings. Very few executives said that "integrating with the grid" was a barrier to adoption, and there are no real damning technical hurdles among the challenges outlined.
The real issue is risk, which companies will have to temper with real results, not just good models.