Strategic Planning

Through much of the twentieth century, low cost energy has been a fundamental fact of economic life.  Ample sources of oil, coal, natural gas, and nuclear fuel have provided the drivers for growth in the economy as a whole.  At the dawn of the twenty-first century, two major factors have changed this paradigm.  The first is the awakening of large-scale demand for energy in the new market economies of Asia and other parts of the developing world. The second is the accelerating depletion of global oil reserves coupled with a lack of sufficient new discoveries that can not only provide a replacement for the depleted reserves, but also meet the added demand.

The practical result of this emergent situation is that energy is in the process of becoming more expensive for the business and commercial organization.  This is true in an absolute sense, as well as in a relative sense, where energy and utilities for many organizations move to become leading budgetary items.  This changed situation, however, presents the facility owner/operator with the opportunity, and challenge, to develop strategic plans for energy management and cost control.

This process might begin with an assessment of the facility energy consumption profile.  What is the age of the facility?  What is the age and condition of the capital equipment such as heating, cooling, or process equipment?  This can be done informally, or as a part of a formal energy audit.  Utility distribution companies often have programs whereby the utility will provide a business with a minor energy audit for free.  The results can be used as a basis to determine whether there are any significant issues, or as a beginning point for strategic planning.

At this point, the facility staff can begin to assess long-term needs.  This can be the beginning of energy infrastructure capital planning.  The critical point to bear in mind is that the long-term picture is one of increasing costs.  This is where the advice of informed energy experts can be of value in terms of identifying future cost drivers and the set of options that are available to mitigate them.  At this point also, the use of financial modeling to examine the total future costs and benefits of different options can be of tremendous use in the planning process.

This type of modeling can also lead to the examination of options such as renewables that may have been considered too exotic or expensive, but may, over the long term, make sound financial and environmental sense.  Strategic planning allows the facility owner/operator to treat energy and utilities as costs that can be effectively managed.