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Corporate Energy Managers Can’t Go It Alone

July 27, 2012 by Lou Carmellini

On Tuesday, a venture capitalist and blogger that I follow named Rob Day (@cleantechvc) tweeted the following:

RT @noesisenergy: Energy Managers Don’t Believe You Can Help Them Manage Energy http://ow.ly/ci6bF  “ª#energyefficiency

The article headline in his tweet immediately caught my attention because it reinforced the premise for this blog, and for that matter, the reason for founding Tangent Energy Solutions.

The embedded link in Robs tweet connected to a survey that concluded, “…fewer than 20% of corporate energy decision-makers believe that suppliers of consulting, automation and controls, technology services and software have strong capabilities to help them improve energy management.”

In other words, more than 80% of corporate energy decision makers do not believe that the existing resources, defined in the report as 62 energy management suppliers, are capable of addressing their needs.  This conclusion was totally consistent with feedback we received from 30 corporate energy managers that we interviewed on the same topic prior to launching Tangent.

Here is a summary of what we heard in our discussions:

A Bias Toward the Utility Side of the Meter

Consultants and technology providers generally target customers high up in the supply chain so costs can be spread across downstream players. In the energy sector utilities are the fountainheads in the supply chain.  The problem is the motives and needs of players on the utility side of the meter are nearly opposite to those of energy customers.  The approach on the utility side of the meter is characterized by systemic solutions that create a rising tide to float all boats. Conversely, energy customers require customized solutions that emphasize individual benefits and competitive advantages.  A big reason why corporate energy customers do not believe that energy strategy, equipment, automation and software providers can help them is because the providers have not structured themselves to do so.

New Challenges, Fragmented Solutions

The energy supply-chain has evolved and requires customers to play a larger more complex role.   Instead of a linear model connecting suppliers to end users, the new model is better visualized as the closed loop of a bicycle drive train.  The big ring represents the utility side of the meter where energy is driven into the system. But as the system becomes stressed energy customers, represented by the rear cassette, fine tune and redistribute power to prevent a system overload (think of tackling high peaks on hot days which works for both scenarios).  These adjustments are accomplished through a variety of customer-side initiatives including efficiency, distributed generation, demand response and other strategies.  Active participation in these initiatives means  energy customers are no longer just connected to the grid — they are a part of it.

Few customers understand how to fulfill this new role, let alone how to optimize it.  But even in this climate of increased complexity energy managers have little faith that existing energy support resources can help.  Why?

Based on our discussions, customers felt frustrated and overwhelmed by the fragmented nature of solution providers that do not consider overall energy issues outside of their specialized silos.  As a result, evaluating a solution has become as difficult as understanding the problem. Like a hospital patient that receives disparate feedback from their surgeon, oncologist and internist; energy managers feel they have to make a life and death decisions without the benefit of an integrated resource that minimizes the risks while maximizing the opportunities.

In closing, corporate energy customers need an ally that views customers as their primary target, and is capable of providing a balanced solution that balances supply and demand within the facility envelope in a way that also maximizes opportunities arising from their increased role as part of the grid.  The good news is that the industry is showing signs of moving toward this next generation energy services company.  Through their unregulated subsidiaries, utilities and energy companies like NRG  have been acquiring demand response and other types of customer facing companies that, when combined with their commodity business and grid expertise might just find a huge untapped market in the 80% of energy managers who do not believe in the efficacy of current solutions.

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