In Part 1 of this topic, we outlined the multitude of risks an organization would face without a systematized approach towards managing their energy data. While getting your internal data organized goes a long way towards developing an energy strategy, there are external data considerations that must also be factored in. Most notably these are: 

  • Energy Market Trends 
  • Renewables Landscape 
  • Utility Rates and Filings 
  • Energy Incentives and Programs 
  • Regulatory Factors 
  • Energy Grid Conditions 

Actively cultivating and integrating sources of data and information from these domains will contribute towards much more effective management of your overall energy spend and planning and implementation of your energy initiatives and objectives. 

Energy Market Trends 

Effectively managing energy sourcing and power and gas price risk management requires knowing what products are available, how to structure a deal, and the right time to procure  

To that end, smart buyers look at market trends, perform fundamental analyses on spot vs. forward market performance, and conduct detailed technical analyses to identify potential risks.  Additionally, in many markets Capacity and Transmission demand charges change every year, and understanding these trends allows organizations to develop both, their operations and procurement strategies. 

Each element is critical in not only developing a sound product structure, but also a timing strategy to execute a new contract or renew an existing one. The most significant factor to ensure success, however, is in developing a data strategy that allows for detailed analysis to yield the insights needed.  

Renewables Landscape 

With key stakeholders requiring actionable commitments regarding sustainability, many organizations have developed roadmaps towards their decarbonization goals. Unfortunately, the actual supply of economical renewables is still at a shortfall, causing implementation delays and organizations to continually reevaluate their objectives and commitments.  

Many organizations fail to continuously refresh their view of the renewables landscape, which prevents them from updating their financial and carbon emission metrics. This often leads to a recently developed strategy becoming stale very quickly, causing unwelcome surprises at execution time. Effective organizations need to keep their strategy nimble through updates to the renewables landscape, continuously evaluating the status of off-site renewables projects, as well as renewable energy certificates (REC) and carbon offsets markets trends. 

Utility Rates and Filings 

Every utility tariff is unique and has buried nuances that could be of value or potential risk to organizations. Operating under the wrong rate or tariff could cost your organization hundreds of thousands of dollars every year, if not more. It is essential that organizations periodically conduct detailed assessments of utility tariffs to determine if the correct rates and tariffs are being applied or at minimum, if they are eligible for a rate change. Additionally, staying on top of utility rate filings can also help you design your energy strategy by staying abreast of potential rate class changes that may significantly affect your business. 

Energy Incentives and Programs 

One of the most basic things that every organization should be aware of is the availability of energy incentives and programs for their facilities. This includes everything from utility provided incentives for energy efficiency measures, to local, state and federal incentives for renewable energy and load management programs offered by Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs). Knowledge of these incentives and programs will not only help you prioritize your energy efficiency or renewable energy initiatives, but they could also be a source of revenue and savings that make previously undesirable projects feasible. 

Regulatory Factors 

State regulations often dictate how certain energy cost components are being billed and thus being managed. For example, regulatory policies may dictate how transmission is being billed or if there are any savings for self-assessment of energy taxes. Furthermore, planned regulatory changes for renewables and energy efficiency, including tax breaks or grid connections, can affect the timing of many of your planned projects. Being aware of these factors and planning accordingly provides organizations with a significant advantage in getting ahead of the competition. 

Energy Grid Conditions 

Knowledge of energy grid conditions, in terms of load availability and other planned upgrades, may help plan for unforeseen price increases as well as potential demand related curtailment events.  Additionally, tracking weather conditions have evolved from knowing when to pack your umbrella, to planning carefully how to conduct your operations. Regional weather trends affect energy usage and pricing tremendously, and weather predictability can influence an organization’s risk appetite for energy product selection. It is no surprise that many sophisticated organizations study near and long-term grid and weather trends to make their energy related decisions, and those that do can typically avoid unwelcomed price spikes or reliability issues in the event of major weather events. 

Data analysis is an ongoing optimization 

To summarize, as we discussed in Part 1, data organization is the key first step that every company needs to take in effectively managing their energy usage and costs. However, it also requires you to take a proactive approach to understanding and accounting for external factors. By continuously monitoring these and adapting strategies accordingly, organizations can not only optimize their energy costs but also align with sustainability goals and mitigate risks. With the right data strategy in place, businesses can make informed decisions, stay agile, and ensure long-term success in their energy initiatives.  

Interested in learning more?   

Here at OnSite Partners, we are always available to assist you in every aspect of your energy journey. If you’ve found this blog informative and would like to learn more, please contact us online.