Commercial SEM_BECC_final

/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED1
COMMERCIAL STRATEGIC ENERGY
MANAGEMENT PROGRAM – BEST
PRACTICES AND APPROACHES
OCTOBER 22, 2016
PREPARED BY:
JAY LUBOFF
REBECCA LEGETT
VIJETA JANGRA
ROBERT FIRME

/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED2 ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED2
PURPOSE
Report on best-practice approaches, strategies, designs,
and recommendations for Commercial Building
Strategic Energy Management (SEM) programs
Based on a comprehensive Navigant assessment of
commercial Strategic Energy Management Programs
around the country.

TABLE OF CONTENT
I.
• Introduction to Commercial SEM
II.
• Research Methodology
III.
• Findings: Program Models, SEM Elements, Barriers and Recommendations
IV.
• Case Study: AEP Ohio

DEFINING COMMERCIAL SEM PROGRAMS
• SEM is a focused process to work in-depth with customers to identify and implement energy
efficiency savings opportunities over a long-term cycle.
• SEM integrates capital upgrades, process improvements, maintenance, and employee engagement
to yield deeper, more sustainable savings than addressing any of these factors on their own.
• Process/O&M improvement project examples include:
- Turning equipment off when not needed
- Fixing compressed air leaks
- Compressed air system optimization
- Production scheduling optimization
- Formalizing equipment shutdown procedures
- Improving process yield
and
- Associated capital Improvements

/ ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED5 / ©2016 NAVIGANT CONSULTING, INC. ALL RIGHTS RESERVED5
Preliminary
Research
• Choose interview
candidates (based on
inclusion of SEM
elements, timelines,
focus on commercial
sector)
• Gather initial
information about
programs
8 Program
Interviews
• Include range
of regions,
customer
types, and
engagement
models
• Discuss SEM
program
experience
Develop Program
Design
• Identify best
practices and
successful
strategies
METHODOLOGY
Navigant based its Identification of SEM best practices on a review
of successful commercial SEM programs nationwide.

SEM PROGRAM MODELS
Cohort
Flagship
Top-
Down
Applicable to a market made up of many,
equally strong customers or similar non-
competitors. SEM Planning and customer
engagement occur in multi-customer group
workshops or “cohorts”, over a 4-18 month
period. Customers share insights and results.
Applicable for customers with multiple,
homogenous sites. Program Administrators
help plan, pilot, and successfully implement a
SEM initiative in one site; once successful, the
customer is responsible for replicating the
program across their remaining sites.
Applicable for customers that have a corporate,
“command-and-control” organizational
structure. SEM Program Administrators recruit
customer executives who then mandate SEM
initiatives across their constituent sites.

SEM PROGRAM MODELS
Cohort
Flagship
Top-
Down
Ideal for a market made
up of many, equally
strong customers or
similar non-competitors
Ideal for a market with
fewer customers but
whose customers have
multiple facilities
Ideal for a market with
few customers who are
highly centralized
Market research informs the choice of program model
Mid-sized Commercial Real
Estate/Offices
Schools
Colleges/Universities
Hotels
Grocery chains
Convenience Stores
Large-Sized Real Estate
Companies/Offices
Hospitals
Tech Companies
Government Buildings

SEM BEST PRACTICE ELEMENTS
• Leadership commitment, availability of cross functional team to implement
energy management programs and overall employee engagement are
crucial for continual improvement
People Engagement
• Setting energy policy and goals; and integrating them with the
organization’s existing management policies is essential for sustained
improvement
Customer SEM Policy
and Goal Setting
• Planning and Implementation enables customers to systematically identify
and implement strategic energy management at their company’s facility or
facilities
Project Planning and
Implementation
• Financial incentives encourage participation in the SEM programFinancial Incentives
• Measurement and verification (M&V) demonstrate the value of energy
management programs and may be required by a regulator of the program
administrator to claim savings and issue incentives
Measurement and
Verification
• Proper communication of energy initiatives to customers and stakeholders
is important to enhance brand image and transparency
Marketing and Case
Reports

OPERATION LIFECYCLE OF SEM PROGRAMS
Program
Ideation and
Initiation
Market
Reconnaissance
Early -
Market
Maturity
Phase
Mid - Market
Maturity
Phase
Mature
Market
Maturity
Phase
Market
Transition
Years from Conception
0 1 3-4 8+ 11+
Pre-existing
Program
Potential Third Party Implementer/Contractor Enters Potential Third Party Implementer/Contractor Exits
Initial Customer
Recruitment

Customer
Type
Conv. Center X
Gov’t X
Grocery X
Hospitals X X X X X X
Lab X
Offices X X X
Restaurant X
Retail X X
Schools X X X
University X X
CUSTOMER PROFILE

Best practice findings inform the actions Navigant recommends program managers take to
implement a successful SEM program throughout its life cycle.
Initiation Phase
Operations and
Implementation
Phase
Market
Maturity
Phase
• Maintain customer
relationships
• Look for new
aspects of the
project to develop
• Keep focus on
customer
satisfaction
Market
Transition
Phase
• Transition customer
relationships
BEST PRACTICE RECOMMENDATIONS
• Conduct market
• research
• Identify high potential
customers
• Initiate strong
• customer relationships
• Identify green champions
and executive sponsors
• Select an implementer
that has coaching and
technical expertise
• Build customer
relationships
• Get early wins
• Leverage resources
• Support champion
and identify back-up
if champion leaves

Up-front market research is necessary to define the scope of the program
MARKET RESEARCH – CHOOSING THE BEST CANDIDATES
Hospital
Commercial Identify sectors that have
high potential impact
Within those sectors,
identify high-potential
customers
Look for the sweet spot
1
2
3
High Level of
Commitment
Large Energy
Savings
Potential
Sweet Spot

BEST PRACTICES: CUSTOMER RELATIONSHIPS
Navigant recommends program managers keep a strong focus on building and maintaining
customer relationships at all stages of the SEM program life cycle.
Initiation
Phase
• Select customers
carefully: Level of
commitment can be
more important than
other criteria such as
annual energy use
Operations and
Implementation
Phase
• Target the decision-
makers: At minimum,
Energy Champion
and Executive
Sponsor
• Incorporate input
from all levels of the
company.
Market
Maturity
Phase
• Keep customers
engaged by
providing
continuous support
• Relationships are a
two-way street:
Educate customers,
but be receptive to
feedback and make
changes to the
program as
necessary.
Market
Transition
Phase
• Work with trusted
market actors such
as channel partners
and/or professional
associations to hand
off responsibility for
customer
relationships

Early success builds momentum for future program success.
• Early program success provides a proof of concept and a foundation to build on.
• A successful start allows for refining methods and iterating program design.
• Case studies can be used for marketing and recruiting if program expansion is desired.
Early
Success
Build
Momentu
m
Learn and
Refine
Program
Expand
Program
Build
Momentum
BEST PRACTICE IMPLEMENTATION: GAINING EARLY SUCCESSES

BEST PRACTICE IMPLEMENTATION: LEVERAGING RESOURCES
Consider leveraging internal and external resources to manage cost and effort.
Account managers are
a key resource for
recruiting and
engaging customers.
Previous programs
can be a source of
customer references,
data gathering
techniques and
software, and
analytical methods.
Internal
Resources An implementation
contractor can bring
previous expertise to
program design and
operation.
A publicly-available or
licensed curriculum or
software package can
cut down on program
design efforts.
External
Resources

BEST PRACTICE PROGRAM DESIGN
Identify Barriers to
be Overcome
Develop Strategies
to Overcome the
Barriers Implement
Activities to
Support Strategic
Goals
Define Short-term, Mid-term and
Long-term Objectives, Expected
Outcomes and an
Overall Vision of Program Impacts

SEM TYPICAL BARRIERS -- PROGRAM ADMINISTRATOR AND CUSTOMER
Program Administrator
Lack of SEM policies and goals
Lack of resources for SEM planning and
implementation
Challenges conducting EM&V
Limited access to qualified contractors with
SEM knowledge and expertise
Customer-Facing
Lack of Awareness of SEM and its benefits,
including lack of executive level buy-in
Lack of motivation among customers to
implement SEM
Uncertainty that energy savings will be
realized
High upfront project costs

SEM
PROGRAM
LOGIC
DIAGRAM

AEP OHIO CASE STUDY
• AEP Ohio’s Continuous Energy Improvement (CEI) Program has been operating for 3 years
2012 2013 2014 2015
Bidding and Contracting
Process:
• Navigant helps AEP Ohio initiate
an RFP for an SEM program.
• Implementer selected due to
success on the west coast, and
is responsible for implementation
of the program.
Implementation of First Cohort:
• 2 - 3 months after the implementer is
secured.
• 7-12 mostly large industrial customers
per cohort.
Program Evolves and Achieves Maturity:
• Additional cohorts are developed (with up to
60 customers each).
• Program expands to small industrial
customers, hospitals, and universities.
• 4 – 18 month engagement time frame per
cohort
• AEP Ohio independently interfaces with
customers not wanting to be in cohorts (e.g.
for confidentiality reasons).
Relate to
elements

AEP OHIO CASE STUDY - CONTINUOUS ENERGY IMPROVEMENT (CEI) PROGRAM
2014 CEI Results
• People Engagement:
• 37 Participants Cohorts 1-4
• Financial Incentives
• Paid $804,460 incentives (@ 2 cents/kWh)
• Savings achieved
• $3,217,835 annual electric bill savings
2015 CEI Results
• People Engagement:
• 37 Participants Cohorts 1-4
• Paid $1,09Financial Incentives
• 1,106 incentives (@ 2 cents/kWh)
• Savings achieved
• $4,377,240 annual electric bill savings (@ 8
cents/kWh)
• Buy in from Executive Sponsor
• Assign Energy Champion
• Form Energy Team
• Conduct interactive workshops
People
Engagement
• Develop Energy Policy and Goals
Customer SEM
Policy and Goal
Setting
• Maintain Opportunity Register
• Conduct Energy Scans and Audits
• Prioritize projects
Project Planning
and
Implementation
• Provide financial incentives
Financial
Incentives
• Analyze Baseline data
• Develop MT&R (Monitoring,
Targeting and Reporting) model
Measurement and
Verification
• Recognize customers
Marketing and
Case Reports
CEI program started in 2012 and implemented all SEM elements Results of the CEI program
Overall improved customer satisfaction!

JAY LUBOFF
Associate Director
(213) 670-2724
Jay.luboff@Navigant.com
REBECCA LEGETT
Managing Consultant
(415) 399-2156
Rebecca.legett@Navigant.com
VIJETA JANGRA
Managing Consultant
(202) 973-3136
Vijeta.jangra@Navigant.com
ROBERT FIRME
Senior Consultant
(415) 399-2145
Robert.firme@Navigant.com

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