5 Best Practices to Set a Meaningful Energy Baseline

And 3 reasons to get it right the first time – because the last thing you want is to scrap your energy baseline and start over once you start adding more facilities.

For any company pursuing sustainability goals, the first step is to set an energy baseline. Getting this right the first time makes life a lot easier down the road. The last thing you want to do is scrap your baseline and start over once you decide to add new sites.

A good energy baseline doesn’t just help companies track savings. Importantly, it can help identify areas for improvement. It can also help companies fend off claims of “greenwashing,” and it can even help secure lower-interest loans – but only if the data is trustworthy and accessible.

A good energy baseline doesn’t just help companies track savings. Importantly, it can help identify areas for improvement.

To establish a meaningful energy baseline, consider these five best practices:

1. Set up real-time reporting
2. Baseline specific systems
3. Normalize the data
4. Analyze multiple years
5. Combine multiple utilities

Let’s dig in.

Real-time reporting

Many companies simply tally up their utility bills to get a snapshot of their energy spend. This approach is simple and inexpensive.

The problem is, this type of data isn’t actionable. It does establish a baseline, but it doesn’t set companies up for success. For example, it doesn’t provide any indication of:

●  When energy usage is highest

●  When rates are highest

By using real-time data, companies get a much clearer picture of patterns such as on-shift versus off-shift usage. This helps flag areas for improvement. Large spikes in consumption can point the way to specific improvements, whereas high usage across the board may point to a different strategy.

Similarly, it can be helpful to understand when rates are skyrocketing or penalties are being applied. It may make sense to schedule maintenance during these times, or even shut down entirely. Enabling this kind of flexibility can be very lucrative.

Baselining specific systems

All energy management programs monitor usage at the main meter. This data should never be overlooked, but for industrial operations, it’s not enough.

First, it’s always a smart move to install your own meter alongside the utility’s. The reason is simple: billing errors can happen, and large energy users will want to double check. It’s not uncommon to find discrepancies worth thousands of dollars. This can also uncover power factor and overvoltage issues that can cost money and damage equipment.

Then, it’s especially useful to install submeters to monitor the most energy-intensive equipment within a facility. Baselining systems in addition to whole facilities allows for a much more targeted approach. Baselining the cost per hundred cubic feet of compressed air, for example, enables true performance management.

In short, system-level monitoring doesn’t just provide data for ESG reports. It provides intelligence that operators can use to make better decisions – and accountability to help ensure they follow through.

Normalizing the data

To truly make sense of your data, you need to put it in context.

What if your baseline period coincides with particularly extreme weather? Removing the effects of weather is a common way to normalize the data. This helps create a valid comparison between your baseline and future years.

For industrial operations, it’s also important to understand energy in relation to production. In other words, it’s OK if energy usage goes up – as long as throughput goes up even more. Measuring Production-Normalized Energy Intensity allows businesses to understand the true meaning of their energy consumption.

There are other ways to normalize data too, such as by square footage or by revenue. Some companies may want to break down their data by customer or by product. All these comparisons provide a more meaningful understanding of energy usage – one that can actually be used to drive results.

Analyzing multiple years

What time period to choose as the baseline? There are no easy answers to this one.

The best practice is to average out multiple years. This inherently creates a more accurate baseline, which makes savings calculations more trustworthy. But how many years is enough? No matter how long the time period, there’s no guarantee it will be a representative sample.

And then there’s the question of which year(s) to consider. Note that baselining in the COVID era may not be representative. For companies significantly impacted by the pandemic, the Science-Based Targets Initiative recommends choosing 2019 as a baseline year. Regardless of industry, 2020 is probably not the best choice.

In practice, this question often comes down to availability. If reliable multi-year data is available, use it. Otherwise, use the most recent year – and if you don’t have good data, start collecting it as soon as possible.

Combining multiple utilities

It’s simple enough to baseline electricity and gas usage separately. But what about water or other utilities? At a minimum, you’ll want to baseline each relevant utility individually. Each serves its own purpose, and you’ll want to track it accordingly.

Then, it often makes sense to combine the energy utilities (like electric, gas, and steam) into common units like kBTU or kWh. You can also convert each into CO2 equivalent tons. This provides a more holistic view of your emissions, in addition to the granular view.

Water usage, and any other non-energy utilities, will likely stay separate. A few forward-looking companies are trying to combine various impacts into a single score, but this is far from standardized.

Can you pick and choose? Yes and no.

There is no one right approach, but a good energy baseline has to be robust enough to stand the test of time.

It’s possible to follow some of these best practices and not others. The right mix will be different for every company. That said, there are three main reasons to get it right the first time:

●  Accessibility

●  Usability

●  Scalability

With an open and automated system, the primary data is available to anyone who needs it. This will become even more important for public companies – and anyone who does business with them – in an era of SEC-mandated carbon disclosure. In particular, Scope 3 reporting requirements will necessitate a whole new way of thinking about data accessibility. Wise leaders will enable this before the auditors come knocking.

Wise leaders will enable data accessibility before the auditors come knocking.

A behind-the-meter data collection system with proper normalization is simply more useful than a tally of bills. It’s not strictly required for establishing a baseline, but it sets companies up for success as they do the real work of driving down energy costs. It points the way to the highest-return investments, and it makes it easier to analyze an entire portfolio of facilities and compare results across each one.

Finally, a robust metering and monitoring system makes life easier down the road. Reporting becomes instantaneous; no more manual spreadsheets, and no second guessing. Plus, new sites can easily be added without having to re-baseline or re-normalize. The last thing you want to do is scrap your baseline and start over once you decide to scale up.

With the right infrastructure in place, it’s not hard to set an energy baseline. At that point, you simply use the data you have and draw a line in sand. Then get to work setting targets and saving energy, knowing you can track and trust the results.

For guidance on which metrics to track, see here.