GUIDELINES FOR AN INTEGRATED ENERGY STRATEGY
Helping companies achieve their sustainable energy objectives
How should my company develop an integrated energy strategy?
The typical journey to an integrated energy strategy
Developing an integrated energy strategy is a challenging activity. It takes time to build understanding of the need and value of an integrated energy strategy within your company, and it requires confidence and commitment from executive management.
The typical journey to reach an integrated energy strategy is depicted below. It illustrates how a company’s approach can evolve over time to become more ambitious, more outward looking and more integrated across its value chain. In reality, every company’s journey is distinct; some may progress quickly in their journey – jumping from bottom left to top right.
Who should be involved in strategy development?
Developing an integrated energy strategy must be a collaborative process, involving internal stakeholders from a range of business functions, upstream and downstream stakeholders, as well as other external stakeholders who may not be immediately obvious. The first task is to work with all relevant internal stakeholders to understand which upstream and downstream stakeholders you should engage.
Internal stakeholders: what do you need from them?
|Board and executive management team||Strategic sourcing/ procurement||Energy, environment and sustainability|
|A mandate to invest time and resources in strategy development as well as input to clarify the drivers and business value of an integrated energy strategy.||Support to engage with relevant suppliers as well as develop new criteria and processes to guide sourcing decisions. Relevant suppliers include energy and fuel suppliers, energy consuming plant and machinery, vehicle fleet and other equipment and services that have an impact on energy efficiency and GHG emissions.||Technical advice on energy policy and energy management, appraisal of strategic options across the value chain and alignment with other sustainability commitments.|
|Finance||Major energy user stakeholders from within your company|
|Provision of financial data on energy and fuel consumption, support with building financial business cases using life-cycle costing, forecasting energy spend, review of third party financed products and services||Technical and practical advice on how energy, fuel and equipment is used in business operations, as well as support to evaluate solutions across the value chain for energy efficiency, carbon reduction and making use of the company’s energy outputs.|
External stakeholders: what do you need from them?
|Ideas to shape the options for improving energy efficiency and reducing GHG emissions from the supply chain. Provision of data and information to help evaluate these options. This also includes other upstream stakeholders that support business operations and can have an impact or influence on energy consumption.||Involvement in service and product design to help identify opportunities that will improve energy efficiency, reduce GHG emissions and make use of energy outputs.|
|There will be a wide range of other external stakeholders unique to every company that could be involved in strategy development and implementation, which will depend on your strategic objectives and the opportunities to collaborate Including:
Typical strategy development, implementation and improvement process
Strategy development is characterized by two steps. These aim to define where your company should be and how to get there:
- Diagnose: establish a strategy development team, assess current energy management capabilities, develop a vision and secure a mandate to invest in strategy development.
- Plan: set targets and build an integrated energy strategy that defines how to enhance current capabilities and how to prioritize energy efficiency and low carbon energy consumption – across your operations and your energy-related value chain.
- Do: implement and embed the integrated energy strategy by taking the actions defined in your plan.
- Check: monitor and evaluate strategy implementation and performance referencing the actions defined in your plan.
- Act: use findings from checking to continually improve your integrated energy strategy.
|Strategy development is
characterized by two steps.
These aim to define where your company
should be and how to get there:
|Establish a strategy development team, assess current energy management capabilities, develop a vision and secure a mandate to invest in strategy development.||Set targets and build an integrated energy strategy that defines how to enhance current capabilities and how to prioritize improving energy efficiency and increasing the use of low-carbon energy and fuel – across your operations and your energy-related value chain.|
|Establish a strategy development team
Identify internal and external stakeholders and consider their impact and influence on sourcing and using energy. Create a strategy development team with people who have the greatest impact and influence.
Evaluate your current capabilities and energy performance
Assess how you currently use energy and fuel across your business, the associated GHG emissions and how this has changed over the past years.
Work collaboratively to evaluate your current situation across the six elements of an integrated energy strategy and consider where and why you need to improve.
Get agreement that your approach needs to change
It’s important that your company understands the need and urgency to change. Explain the gaps in your capabilities and the value that is at risk by doing nothing. Explain how you will build an impactful integrated energy strategy to address these risks. With everyone on the same page, it’s easier to build momentum.
Determine what you want to achieve
Defining your vision and targets together with the board/management team will help to focus efforts and ensure there is alignment across the company. Ensure alignment between the integrated energy strategy and your company’s sustainability strategy.
Your vision needs to be communicated and reinforced regularly to create clarity and avoid distractions
|Who needs to be involved in strategy development?
What are the gaps in your capabilities and how are they stopping you from achieving your goals?
How does your company use electricity, fuels and related equipment and what is the environmental and social impact?
What’s your current position in the energy value chain and where are new opportunities to participate?
What are your competitors doing, and in what aspects of your integrated energy strategy are you leading or lagging compared to your competitors?
Would an integrated energy strategy give you a competitive advantage, and do you want to be market following or market leading?
What are the implications of doing nothing?
Is your energy strategy aligned with your company’s sustainability strategy?
|1. A highly engaged board/executive management team that understands the value at risk and the opportunities to be captured.
2. A clearly defined vision for your integrated energy strategy.
3. A mandate to progress with the development and implementation of an integrated energy strategy.
|Take a collaborative approach to strategy development and target setting
The planning phase requires engagement with internal stakeholders, suppliers, customers and other partners to identify and qualify suitable activities and solutions and set targets that support your vision.
Build a fundable and practical roadmap
The planning phase should result in a fundable and practical roadmap to achieve your vision and targets.
Set out the financial requirements and return on investment, then agree on the roadmap’s funding, rather than individual activities, to help bring the overall payback period of the investment down.
Explore the risks and benefits of various commercial funding models, so that all parties understand the financial risks and benefits.
|How can your strategy include your supply chain and customers to identify new ways of doing business?
What opportunities are there for using surplus energy outputs and by-products from a neighboring facility?
Are your suppliers aligned with your strategy and clear on their roles?
What are the priorities for your strategy and what is your implementation plan?
How will your integrated energy strategy add value through operational and financial efficiencies, capture new revenue streams and can it become a self-funding program?
How will success be evaluated, and what tools do you need to make decisions in a changing environment?
|1. Credible and ambitious targets that support your vision.
2. A roadmap that states the activities and solutions that will achieve your vision and targets, with a detailed plan for implementation involving suppliers and customers.
3. A funding plan for decision makers.
4. Success criteria and approach to measurement.
5. Engaged team ready for implementation.
Aligning with ISO 50001
ISO 50001 has guided international best practice for energy management and shows that a company has implemented a systematic and consistent approach to improving energy performance. Given this standard’s credibility and widespread use, it’s a sensible approach to align with. As these guidelines focus on the strategy development process, please refer to ISO 50001 for more information.
- Reducing energy and fuel consumption through energy efficiency;
- Sourcing low-carbon energy and fuel;
Assess your integrated energy strategy using these five tests
- Does your integrated energy strategy define your role in the energy value chain and how you are collaborating with upstream and downstream stakeholders from your company’s wider value chain?
- Does your integrated energy strategy take into consideration the environmental and
social impacts of your energy use?
- Is your integrated energy strategy consistent with a scenario of 1.5°C temperature increase above
- Does your integrated energy strategy cover the consumption of energy from all sources, all business activities and across your value chain?
- Does your integrated energy strategy align with your corporate strategy and leverage the strengths of your company?
- Does your integrated energy strategy support your company’s sustainability strategy?
- Have you built your integrated energy strategy through wellstructured collaboration with stakeholders from within your company and with your wider value chain?
||Energy, environment and sustainability|