New Metrics

#SustyGoals 4:
Math Not Myth – Energy Points’ Ory Zik on Normalized Energy Target Setting

By Bill Baue | Published 10 years ago | About a 7 minute read

At SB's third annual #NewMetrics Conference at the University of Pennsylvania in September, the need for next-generation sustainability goals — which measure progress toward real-world goal-lines such as carbon budgets, water tables, and living wages — emerged as a key theme. To dig deeper, #NewMetrics channel co-curator Bill Baue discussed this question of “endzone” goals with prominent voices in the field, including Andrew Winston, author of the forthcoming book, The Big Pivot*; Bob Willard, GE's Gretchen Hancock and GISR's Allen White.*

Companies committed to sustainability typically set amitious energy use goals in order to reduce their environmental impacts while also enhancing financial savings — but given the host of variables involved, accurately measuring and tracking such performance represents a major challenge. Late last year, Cambridge-based Energy Points, an energy resource management firm, relaunched its Software as a Service (SaaS) Platform to specifically address this challenge. The new version of the platform enables companies to set and track energy goals on a user-defined, normalized basis. Normalizing measurements based on building attributes, production volumes, corporate KPIs, employees, even weather, allows companies to analyze their entire supply chain and achieve more precise energy efficiency and cost savings.

As part of the #SustyGoals series, Bill Baue recently chatted with Energy Points CEO Ory Zik.

Bill Baue: What benefits does the new Energy Points Saas Platform offer corporate users, specifically when it comes to setting and tracking energy consumption-related goals and targets?

Ory Zik: Using Energy Points SaaS platform, organizations can, for the first time, set energy-related targets from the source through the site in an integrated way. This means that, using Energy Points, organizations can optimize their environmental and financial performance.

Today, organizations cannot know what is the impact of water consumption in Phoenix versus Boston. What is the local impact of energy efficiency in relation to distributed generation? What is the impact of wind turbines made in the US — meeting strict environmental standards — versus those made in China with polluting coal while emitting effluents to the nearby river? There are many more questions one needs to answer rigorously with math, not myth, if we want to be serious about mitigating climate change.

Without Energy Points, the industry is setting goals using metrics that are fragmented, inaccurate and incomprehensible

Baue: Why do you say current metrics are fragmented?

Zik: Because, before Energy Points, the industry measured energy and water, for example, separately. But we know that energy, water, fuel, waste and other environmental resources are connected. They have to be measured in a unified way to allow optimization. Think about trying to run your business with different currencies without a currency converter. It is impossible to optimize. This is the situation in environmental and energy goal-setting, before Energy Points. The Energy Points SaaS platform normalizes all resources to one unified metric. This holistic approach — the only one in the market today — allows organizations to set goals and optimize across all resources.

Baue: Why do you say current metrics are inaccurate?

**Zik:**Because, with the state of the art before Energy Points, organizations had to measure only what is billed — what they consume within the four walls of their facilities. For example, electricity is measured in kWh, whether your plug is fed by coal, solar or hydro. You are what you measure. The utility bills you for the kWh that enters your facility. You measure kWh and you try to optimize it, although it doesn’t tell the story of what happens outside of your facility — where your environmental performance is actually determined. Outside of your facility emissions are polluting the planet and the real environmental impact occurs. If you have a site that consumes electricity from coal, it warrants a different energy efficiency plan than a site that consumes electricity from solar. You will not know this if you just focus on what happens ‘inside the box,’ within your facility.

Similarly, water in Phoenix and water in Boston are different, and measuring how many gallons your facility consumed without factoring in the energy that went into producing those gallons is a very limited approach that will not take you far in your attempt to set environmental and resource goals. The Energy Points SaaS platform takes massive geospatial data (more than 1.8 billion of data points) and uses applied math and physics to take into account local generation mixes, emissions, water scarcity, contamination etc. and make your site measurement meaningful all the way to the source.

This means, by the way, that energy decisions will not be based on adjectives such as ‘green’ or ‘renewable.’ Renewable energy has to be quantified for its life cycle impact, compared to other sources and be put in context. Your energy goals need to take into account where you would like to get off the grid with renewable energy to maximize the environmental benefits of a limited budget, and where the same budget can be deployed in a more effective way.

Baue: And why do you say current energy metrics are incomprehensible?

Zik: Because most decision makers are not trained to think in kilowatt hours, BTUs, mega joules and other engineering units. The electrician may think in kWh ,but if you run an organization and would like to set and meet energy and resource consumption goals, these goals better be in units that are meaningful to you. Preferably units that relate to a known cost. Most people don’t know the cost of a BTU (do you?) To allow organizations to effectively set and meet goals, the Energy Points SaaS Platform converts all resources to a simple unit which we call an Energy Point, or EP. An EP is equivalent to a gallon of gas. People understand gas gallons and mpg and have a notion about the cost. This puts an end to the ‘emperor is naked’ presentations where the energy manager explains that we have saved 10 million kWh and installed 500kW of renewable energy and the audience is too shy to say, “We don’t really understand what these numbers mean.”

Once you have a system that is simple, unified and accurate from the source through the site (such as the Energy Points SaaS platform) you can:

Compare yourself to your industry benchmark
Set and meet corporate goals
Normalize those goals to your industry’s performance indicators
Identify the outliers in your portfolio
Choose what projects to implement to maximize performance
Track the success of these projects and improve performance as you go

Baue: Can the platform help goal-setting that normalizes performance compared to external realities, such as operating within planetary boundaries?

Zik: To improve their environmental performance, organizations need to analyze all their resources (electricity, water, waste etc) at the source, outside the walls of their facilities or in other words — behind the utility meters andwith a unified metric. This is where most of their environmental impact is actually determined — at the source, as explained above.

Once this is done, there is another factor at play — how can the manager know that the environmental performance is improving across all resources, independent of the business cycles (sales, production)? For example, production may go up and so will environmental impact. The right way to look at it is normalize per product. Many other platforms allow the manager a per product (normalized) analysis of one resource. The Energy Points SaaS platform is the only one that provides a normalized view across multiple resources.

Similarly, how can the manager know where is the organization relative to other similar business units or companies? The normalization capability in the Energy Points SaaS platform allows manager to do this, across resources, for the first time.