Where in your organisation should the energy function sit?
This isn’t quite as daft a question as it may sound first time around when you consider the large number of variant functions within “energy” functions – from complex risk management processes to, literally, changing light-bulbs (energy efficient ones of course!).
I’ve seen energy functions reporting into Finance, Property, FM, Engineering, Operations, Production even HR! Within SMEs it’s probably more straightforward in that energy sits, usually, with the person who takes the greatest interest and who shows an aptitude for some of the skills involved or it’s parked with an unwilling victim.
One of the oddities which has developed, particularly within the big corporates over recent years has been the quaint tendency to separate energy demand reduction functions from energy procurement and risk management. I find this very strange as there has never been a more important time to have them in the same place.
Often the procurement activity finds its way to the supposed experts within the organisation’s procurement function per se. I’m sure that CIPS–qualified buyers are very proficient at procuring many diverse products and services but one rarely comes across a structured procurement function which has great expertise in commodity-based activities or indeed the risk management.
The current & future arrays of flexible procurement contracts, PPAs as well as derivative products, require specialist, highly trained personnel to manage them which possibly suggests a line into the financial or treasury area of large companies. The impacts of “getting it wrong” for many companies can affect share price and financial performance. However this can be mitigated by taking the right planning steps to ensure the right personnel are in place and at the right level.
Turning to the demand side – the integration of not only large ranges of complex plant and equipment with increasingly complex operating and software parameters not to mention sophisticated performance tracking systems are matched by rigorous data management and financial reporting requirements which are becoming increasingly mandatory from Government circles.
OK, so back to the original question – where should energy sit? My view is quite radical here but I would see Energy as the lead function to many others. It should, debatably be the prime consideration within many other functions, for example, maintenance, production, operations, building development, fit-outs, architecture, engineering, property acquisition, commodity procurement, renewable power generation, sustainability, carbon management even legal.
I believe organisations should consider making Energy THE key function which has direct control over the areas of the business which influence their bills most. A move like this may help ensure that governance and speed of decision making around energy issues is accelerated and gains buy-in from all areas of the business.
Is it really so radical to take such a pragmatic & maybe futuristic view and hope that there will be many followers across all business sectors?
Mervyn Bowden is the managing director of Intuitive Energy Solutions Ltd and Chair of Judges at TELCA