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4 Tips for Better Energy Budgeting and Forecasting

September 8, 2014

It’s that time of the year again…that wonderful time when finance departments traverse every corner of the organization collecting data, tracking trends, analyzing needs, and developing the spreadsheet models needed to assemble all of this information into a coherent, forward-looking story. It’s budgeting and forecasting season.


As you’re collecting information to inform budget scenarios around labor costs, capital expenditures, new market opportunities, sales pipelines, and other important factors, be sure not to overlook energy. Whether you’re dealing with 4% of operational costs or 40%, energy is a significant portion of your expenditures and a complex line-item that should be scrutinized and considered carefully before reaching a final forecast.


Energy spend can be difficult to get a handle on, especially for enterprises with geographically dispersed operations: utility bills are typically stored in all corners of the organization (if they’re even managed at all), there’s little visibility into enterprise-wide usage and costs, and there’s often a lack of understanding for historic and projected facility performance. Today’s savvy energy managers, CFOs, and sustainability managers are relying on energy intelligence software (EIS) for the tools they need to forecast energy cost with greater accuracy, while simultaneously leveraging it to reduce costs and benefit your bottom line.


Here are a few tips for how to streamline energy budget and forecasting using EIS.


1. Know what data you need.

The first thing to consider when developing an energy budget is what level of organizational granularity is needed. Is annual energy cost a single number or should it be broken out by month? By division? By commodity? All of the above? Understanding what level of information is needed will help you identify the right source and means of data collection.


2. Get it all in one place (and socialize as necessary).

Once you understand these principal organizational requirements, the next step is gathering historic cost and consumption data as an initial budgeting building block.


Energy intelligence software makes all of your energy data available through one platform and can be quickly analyzed across different time periods, divisions, commodity types, regions, etc. It’s just a matter of selecting the right parameters and hitting “go”. If you want total trailing twelve-month energy costs, organized by month, division, and commodity, you’ve got it.


Once the right analysis has been run, you can export the data to excel or email it to a colleague – making it easy to incorporate this data into broader corporate budgeting and forecasting documents.


3. Use data-driven insights to inform your forecasts.

Accessing historical data is a good start, but it only tells part of the story. While some organizations take historical data and add some level of inflation, more sophisticated companies want to understand what these numbers will look like moving forward, and that requires more energy intelligence. Energy intelligence software provides that level of insight. When projecting energy costs into the future, here are three important factors to consider: 1) projected baselines and seasonality, 2) energy efficiency investments, and 3) operational changes and their impact on energy consumption.


i) Projected baselines and seasonality.

Tracking true energy performance within an enterprise requires detailed visibility beyond just monthly bills. With Enel X EIS, interval data allows us to analyze how your buildings should be operating under normal conditions, adjusted for things like weather, occupancy and other variables. The result is a baseline specifically tailored to each individual building and how it operates. What we are then able to do it project that baseline moving forward using typical meteorological year data. This gives you a forward-looking understanding of how energy consumption at each site will likely vary from month to month, taking seasonality into account. With this, your annual energy budget can include more detailed monthly projections, which is important if you want to accurately track cost vs. budget on a monthly basis.


ii) Energy efficiency investments.

Investing in energy efficiency programs and new equipment can put a sizable dent in an organization’s monthly bill. Enel X customers that have implemented energy efficiency measures can track performance relative to their baseline to determine the savings associated with those measures. While this gives you great information in hindsight and in real time, it can be valuable for estimating future performance as well. For instance, let’s say your organization invested in an energy efficient lighting project across 10 buildings and the baseline indicates that this project yielded a 5% average decrease in energy usage across those buildings. If you’re planning on replicating this project across the rest of your buildings, the projected baseline will give you the site by site forecasted consumption on which to apply this 5% decrease (taking month by month seasonal variance into account).


iii) Operational changes and their impact on energy consumption.

How much energy your organization is going to use in the future is to a large extent driven by changes in operations. Newly opened or closed sites, increased production, the addition of employees – these changes will all impact the amount of money you spend on energy. Energy intelligence software will help you turn those projected operational changes into relevant energy costs. To give an example, you know that the number of employees working at your company’s headquarters is expected to increase by 150. So how would you translate that change into added energy costs? Easy: run an analysis looking at how much energy is spent at the corporate headquarters on a per Full Time Employee (FTE) basis. If that building accrues $65 in cost per FTE per month, than the projected energy cost associated with adding 150 new employees is $117,000… not unsubstantial.


4. Track your progress.

Once you’ve taken all of these items into consideration to determine your organization’s energy budget for the year, you can use Enel X’s executive dashboard to track real-time performance against that budget as well as how you are estimated to perform through the end of the year based on the projected baseline described earlier.