Leadership Challenges in Managing Energy:

The Human Aspects of Energy Management

Energy Efficiency Directive Launched Effective 25 Oct 2012 5 June 2014

24 articles and 15 annexes Exemplary roles of public bodies in energy management, energy auditing, and its implementation Non-SMEs to carry out energy audits every 4 years Energy audit to meets requirements of Annex VI Exemptions if ISO 50001 / ISO 14001 certified Encourage SMEs to carry out energy audits Energy auditor competence

 ... up to 25% energy can be saved with relatively little or no cost plus no significantly changes in lifestyles and business practices. ...

... growing body of evidence demonstrating a potential for 20% energy savings due to measures targeting behaviour ...

Market forces on a business

Lean Manufacturing Total Productive Maintenance OHSAS 18001 Raw Materials

Employees

Waste

Value-based Management

Activity Based Costing

Just-in-Time

Production

Customer Satisfaction

Root Cause Analysis

Sales

ISO 14001

ISO 50001

Value Add

Regulatory Compliance

Reliability

ISO 9001

Energy

Kaisen / Gemba

6 Sigma

Health and Safety

Competition

 60% recognise the need for energy efficiency Rely heavily on applying technology Do not value non-energy benefits

80% have not started to reduce the energy consumed

71% lack of resources Disconnect between C-suite and non C-suite 80% expect regulation to enforce energy reduction

Those that do ...

Corporate carbon footprint commitment

Cost control

Demonstrate CSR

Part of wider productivity, innovation and growth

Part of new product/service expansion

Hedge against energy price volatility

Anticipation of regulations

Others

0%

10%

20%

30%

40%

Source: William Prindle and Andre de Fontaine. A Survey of Corporate Energy Strategies. ACEEE Summer Study on Energy Efficiency in Industry.

Why Energy Reduction Works Fail?

Lack of leadership by policy makers

Energy providers want to maintain status quo

Failure of assess the side effects or consequence Uncertainty over the viability Leadership attitudes towards avoiding new costs Insufficient collaboration among stakeholders Inadequate R&D and funding by governments Corporate cultural resistance to new ideas Financial constraints e.g. high hurdle rates Poor innovation by suppliers & business partners 0% 5% 10% 15% 20%

Source: The Future of Energy. A Harvard Business Review Analytical Services Report.

Unknown outcome for change Continue to do own work No time for reflection, planning, and learning

Tactical survival (attack and defend)

Creates tension and conflict with management and shop floor

Rapport breakdown with management

Employee feel undervalued and stressed

Stop listening Lock in own interpretation of situation

Influence personal emotion

(1) Be Authentic in Intent and in Action

Act with integrity
Show personal interest in employees Deliver on promises Behave in a consistent manner Deliver honest communication Treat people in a fair and consistent manner Do a good job Show their human side Show care for employees Accessible to all levels Present aligned front Give consistent message Handle information confidentially Take time to understand Listen to understand Live their values -20% -10% 0% 10% 20%

Source: Lane4 Performance. A Question of Trust A current look at trust in leaders. White Paper

(2) Communicate in PLAIN ENGLISH ... [1] Use mathematics as shorthand language, rather than as an engine of inquiry. [2] Keep to them till you have done. [3] Translate into English. [4] Then illustrate by examples that are important in real life. [5] Burn the mathematics. [6] If you cant succeed in [4], burn [3]. This I do often. ...

Alfred Marshall

Source: Guillebaud, Marshalls Principles of Economics, Vol. 2. p. 775

(3) Align strategy, objectives and responsibilities early

Financial Customer Internal Processes Learning

Apply energy efficient technologies

Reduce energy consumption by 6%

Reduce water consumption by 3%

Increase plant availability to 90%

Increase strategic competence

Expand revenue opportunities

Increase information visibility

Reduce waste to be disposed

Be the lowest cost producer

Increase product availability

Is there a business model and tactical plan?

Enhance green marketing Zero Raw Material Waste Increase product quality Zero Production Waste Reduce product cost No Safety Incidents

People and change management

Is the objectives Objectives aligned with targets?

Implement "Lean Manufacturing" Replace faulty steam traps and valves Use appropriately sized air compressor Return condensate to boiler house Recover heat to generate hot water Repair leak Isolate steam to redundant plants Upgrade aging motor Energy and water sub-metering Insulate exposed steam / hot water pipe Standardise cleaning SOP Turn off ventilation fans when not in use Switch off lighting when not in use Use co-generation system Use energy efficient lighting Turn down ventilation rates Turn down excessive pump pressure Recover heat for preheating Use alternative solvents Use renewable sourced heat pump Use dust collector instead of wet fan Reduce unnecessary water circulation Clean fouled heat exchanger

Does this set of targets thoroughly describe the above?

Is the number of objectives achievable within the timeframe?

No objectives help to achieve these targets There are 20 objectives serving this target This objective does not serve to achieve any targets

Who is responsible for each objectives?

Is this plan balanced?

Engage local community

(4) Integrate into Daily Operation

Electricity (HV/MV/LV) User 1 Steam User 2 Hot Water Electrical Substation Boiler House Process Water (Hot/Cold) User 4 Cooling Water User 5 User 6 Refrigeration (Water / Glycol) Compressed Air Process Gases Air Compressors Hot Water Plant CHP Plant Cooling Tower Refrigeration Plant Industrial Gas Vapouriser Water Industrial Gasses Natural Gas, Fuel Oil, Diesel, Renewable

Electricity

User 3

Clean in Place
HVAC User ... Condensate Waste Water Waste

Renewable Energy Plant

Utility Export

Effluent Treatment

Effluent Disposal / Reuse

(5) Integrate into Life Cycle

Start HERE !!!
Business Case Scope Definition SUPPLY CHAIN ??? Concept Design Feasibility Study Detailed Design Procure Fabricate, Construct Transport Install EMBEDDED ENERGY ??? Test Commission Handover / Acceptance Operate In-Service Inspect Maintain, Repair and Replace Modify, Re-rate and Life Extension Decommission Dismantle, Demolish and Dispose

Normally HERE

(6) Tap into the multiplier effect of human capital ... Achieving a goal, accomplishing a task, or resolving a problem often evoked great pleasure and sometimes elation. Even making good progress towards such goals could elicit the same reactions. Teresa Amabile, 2011

Source: Teresa Amabile and Steven Kramer. The Progress Principle: Using Small Wins to Ignite Joy, Engagement, and Creativity at Work.

Quack Cock-a Cock-a Quack quack Quack Cock-a -doo-a-doo quack -doo-a-doo quack -doo-a-doo
Quack quack Cock-a-doo -a-doo

Quack quack

Cock-a-doo -a-doo

Quack quack

Cock-a-doo -a-doo

Quack quack

Cock-a-doo -a-doo

Quack quack

Cock-a -doo-a-doo

Unknown outcome for change

Continue to do own work Inspiring vision that is larger than self Consistent & understandable terminology Tactical survival (attack and defend) No time for reflection, planning, a nd learning

Continual learning & improvement

Creates tension and conflict with management and shop floor

Involve whole organisation

Check

Integrate into life cycle

Rapport breakdown with management Transparent & appropriate performance measure Allocate resources fairly & early Stop listening Lock in own interpretation of situation Influence personal emotion Integrate into daily operation

Employee feel undervalued and stressed

Seriously ... what is a Management System?

Day-to-Day Ways of Working to Manage the Business

... A Management System is an OHSAS 18001 integrated set of processes and tools that a company uses to develop its strategy, translate it into operational actions, and monitor and improve the effectiveness of both. ... ISO 50001 ISO 14001
ISO 9001

Robert Kaplan, 2008

Source: Robert Kaplan and David Norton. Mastering the Management System.

Success in reducing energy Understand the human equation 6 leadership challenges

Focus on being competent

Choose to excel in 1 or 2 elements Balance the hard science with people solutions

Resource Revolution / Efficiency Improving energy efficiency Increasing yields Reducing water and leakage Reducing waste Redesign processes Increasing transport efficiency Reducing land degradation Supply chain collaboration

Leadership Challenge in Managing Energy:

The Human Aspects of Energy Management

Experienced Energy & Environment Manager Author of Energy Management in Business Email: Web: kit.oung@gmail.com uk.linkedin.com/in/kitoung

Future Directions Current research challenge Overcoming embedded energy issues Overcoming the flaws of discounted cash flow analysis Is Monte Carlo simulation the answer? Accounting the future value of sustainability? Paving the way forward CSR giving way to Corporate Shared Value (CSV)? Decentralising CSR to local levels?