Now, nearly two years later, energy and natural resource efficiency is timelier than ever since current President Barack Obama signed the American Recovery and Reinvestment Act (ARRA) which includes more than $11 billion to create a bigger, better, smarter electric grid. The combined total of these investments will allow for the integration and use of greater amounts of renewable energy, increased utilization of innovative efficiency technologies, and a reduction in the electric congestion that costs consumers billions of dollars each year.

So, amid the challenges facing the U.S. and global economies, a critical opportunity exists to expand prior initiatives and further develop the industries and skilled workforce needed to support a transition to a clean energy economy. The ARRA will create a sustainable, public program that leverages significant private labor-management funds and provides more quality workforce training linked to good jobs that are created by federal renewable energy and energy efficiency initiatives.

However, natural resources continue to become increasingly scarce and expensive. Thus, utilities need to take better control of their business processes to optimize energy and natural resource consumption of enterprise-wide operations (IT data centers, for example) and protect profitability in light of economic volatility.

The dual role of IT
So, like any other industry, IT must also step forward and make itself “green”. Green IT – the reduction of energy use in data centers – can help utilities use a sustainable approach and optimize resources at every stage of the lifecycle: manage (not only account for) carbon emissions; anticipate and meet stakeholder expectations with transparency; and actively engage employees, customers, and partners in these efforts essential to economic and programmatic goals of the entire economic stimulus effort, including in the latest innovations such as advanced metering infrastructure (AMI) and Smart Grid.

Faced with challenging and complex business processes to address sustainability, utilities, like other companies, need – and want – a consistent and integrated business process to address sustainability initiatives. There’s greater opportunity in sustainable business practices to:

•    Reduce cost of compliance and reduced business risk in the face of proliferating local, regional, and global regulation in the areas of people, health, and safety, product safety and stewardship, and environmental compliance. A utility can leapfrog the competition by embracing consistent practices across the business network for competitive differentiation.
•    Protect and enhance brand value, market share, and market capitalization by employing best business practices in sustainability performance management, including risk management and strategy management, and effectively engaging all relevant stakeholders with visible and accessible analytics.
•    Optimize energy and natural resource efficiency of a company’s manufacturing processes for reduced cost and emissions, such as leveraging AMI solutions to optimize customers’ energy consumption.
•    Measure, mitigate, and monetize greenhouse gas emissions and other environmental impacts across internal operations and the supply chain. Using a viable software solution, utilities and their customers can reduce the cost of maintaining a comprehensive carbon emissions inventory, manage regulatory chan­ges, and enhance brand value by providing transparency into sustainability initiatives.
•    Establish Green IT practices to architect and deliver business pro­cesses in the most energy-efficient way possible, for example, creating an environmentally sustainable data center and IT operations that reduce costs, while improving process quality.

However, most utilities already use robust meter, network, and customer service infrastructures designed to support processes and systems for well-defined work routines and functions. Yet in many cases, they use conventional meters with life cycles of up to 40 years – devices that worked well when energy markets were largely regulated and characterized by price regulations, easy access to energy resources, and sufficient infrastructure capacity. In that environment, organizations could rely on manual processes for everything from checking meter readings to determining future demand for electricity, without as much concern about margins, ensuring customer retention, energy efficiencies, and sustainability.

But changes in the utility industry in recent years are making it increasingly difficult to compete using traditional infrastructures and processes. Res­ource and infrastructure capacities are becoming more marginal, while large commercial and industrial utility customers are curbing demand for electricity in response to the
chal­len­ging economic environment. Then there’s a heightened focus on reducing carbon footprints.

In addition, in some parts of the world, new legislatively mandated market rules demand that utilities compete for customers on the open market, so utility executives must find new ways to differentiate their services and capture additional revenue while increasing operational efficiency. And, because customers can switch retailers relatively easily – especially in electricity markets – utilities need innovative processes to improve sales and customer service performance.

The reality is that current assets are aging, and a more adaptable infrastructure is needed going forward. For the near term, utilities must optimize current asset efficiency and availability. Downtimes must be limited to planned shutdowns and necessary overhauls only. Stringent maintenance processes can help ensure high levels of equipment reliability. Additionally, proactive planning can establish a stable, environment where resources such as personnel, contractors, parts, and tools can be optimized.

Future increases in bulk transmission capacity, however, require significant improvements in transmission grid management. A smart grid, for exam­ple, can upgrade the use of capital assets while minimizing operations and maintenance costs. Smart grids precisely limit electricity power down to the residential level. Optimized power flows reduce waste and maximize use of lowest-cost generation resources.

But how can utilities – and consumers – better understand and manage energy use and become “greener”?

Technology leads the way
Because technology in itself is seen as a critical enabler for implementing the Economic Stimulus Plan, with approximately $100 billion in funding to be spent incrementally over the next five years, it can help utilities see,
think, and act more clearly as they develop and execute the necessary strategies to:

•    Optimize energy efficiencies. New energy-grid technologies can help utilities balance supply and demand while improving the efficiency of energy delivery and consumer usage. These metering and data-exchange systems, however, require real-time communications and greater system interoperability.
•    Respond to sustainability concerns. Increasingly, the adoption of sus­tainable energy practices is becoming a business imperative. Today’s utilities are challenged to take a holistic approach to sustainability that simultaneously addresses compliance, globalization, environmental impact, and energy politics. Visibility into all aspects of a utility’s operations and end-to-end process control are keys to success.
•   Develop higher-performing assets. Managing today’s aging infrastructure for peak efficiency while making the energy investments that will deliver maximum value tomorrow are basic tenets of the stimulus program. Utilities must be able to maintain existing equipment, model current and future assets, and analyze complex energy scenarios.

Technology and demand management
With regard to optimizing energy efficiencies, AMI technologies can help utilities and consumers alike better understand and manage energy use. With AMI, energy consumption is recorded at regular time intervals (e.g., every 15 minutes) and then billed at different rates based on peak and off-peak hours. As a result, consumers and suppliers can collectively lower overall energy requirements and reduce carbon emissions.

With these technologies, energy providers can improve the balance between demand and supply. The data collected through AMI helps utilities better profile energy requirements during both peak and off-peak hours and predict energy usage spikes due to environmental changes. Smart-grid technologies are also supported. These improve the delivery of energy by providing greater control over load shedding, energy leakage, and outage management.

AMI technology can also help utilities stay competitive in ways that older metering and data-exchange technologies simply cannot. But without a proper IT infrastructure that enables companies to implement and work with AMI in a cost-effective manner, utilities find it difficult to deliver the flexible pricing options that the market demands. AMI requirements for data management and real-time information exchange call for improved communications and collaboration between customer and utility. It also requires far greater interoperability of systems within the utility’s IT landscape and across enterprise boundaries.

Upgrading metering and data-exchange infrastructure can increase the quality of a company’s sales and customer service processes. In addition, automated business-control processes can help utilities management the variations between peak and off-peak production, thus reducing the overall cost to serve while lowering the cost per kilowatt-hour.

Take, for example, Michigan-based Consumers Energy, the principal subsidiary of CMS Energy. The utility, which provides natural gas and electricity to nearly 6.5 million of Michigan’s 10 million residents in all 68 Lower Peninsula counties, found that its consumers were using eight percent more electricity than a decade ago. So, Consumers Energy decided to become an early adopter of the latest smart metering software that will help the utility improve efficiencies and provide customers with timely information to help them better manage their energy usage. With this installation, Consumers Energy is also creating a platform for a future smart grid and the automation of manual processes.

The path to cleaner energy
As other utilities follow Consumers Energy’s example, the thirst for energy continues to grow around the world, even as traditional sources of energy generation, such as fossil fuels, are waning. And this consumption contributes significantly to climate change and other environmental concerns. A major obstacle utilities face today is how to migrate
cleaner, “greener” technologies in a cost-effective and time-efficient way.

Over the last few years, the global business climate has fundamentally changed. Protecting the environment is no
longer simply a philanthropic or moral issue, but a highly relevant element of the core business. However, the primary factors driving businesses to adopt sustainability are compliance with government regulations such as the U.S. Clean Air Act; cost and profit consdierations, which drive companies to reduce costs through more efficient uses of resources; and reputation, which means companies are redefining their respective brand images to demonstrate social and environmental responsibility, and therefore, appeal to an increasingly concerned consumer base.

The push for sustainability is being seen across all levels of government and in every economic sector. For example, many U.S. Environmental Protection Agency initiatives are underway to promote more efficient energy use and to improve environmental quality without disrupting energy supplies. These efforts include programs to explore renewable energy sources and advance the sustainable production of biofuels.

Federal agencies are also helping states and local communities foster urban sustainability by supporting such initiatives as:

•    Smart-growth projects that include sustainability metrics for urban development;
•    Green building and infrastructure design; and,
•    Energy efficiency in homes and commercial buildings.

 Businesses can take a proactive approach as well. Many companies now participate in international committees working on global standards for calculating environmental impact. The Greenhouse Gas Protocol Initiative (GHG Protocol Initiative, Scope 3), for example, is drawing up a set of standardized guidelines for measuring carbon dioxide emissions for individual products and services – an initiative that has the support of the World Resource Institute and the World Business Council for Sustainable Development.

Transforming energy transmission
With utilities maintaining and/or retooling aging infrastructures to make them more adaptable to advanced technologies, utilities need to address assets in the future context.

Harmonizing local distribution with inter-regional energy flows and transmission traffic can further reduce grid congestion and bottlenecks, ultimately resulting in consumer savings. Such improvements can help create an open marketplace where alternative energy sources from many distant locations are sold easily to consumers wherever they are located. Intelligence in distribution grids can enable small producers to generate and sell electricity at a local level using alternative sources, such as rooftop photovoltaic panels, small wind turbines, and micro-hydro generators.

However, intermittent power sources require sensors and software designed to react instantaneously to imbalances to ensure system quality with such distributed generation strategies. In additional, operators and managers must have the right tools to effectively and efficiently operate a grid with an increasing number of variables. Technologies include visualization techniques that reduce large quantities of data into easily understood visual formats, software that provides multiple options when operator actions are required, and simulators for operational training and “what-if” analysis.

What lies ahead
As utilities develop and execute the necessary strategies that can help them see, think, and act more clearly to wisely spend the approximately $100 billion in economic stimulus funding over the next five years, they need to execute those strategies decisively and effectively to endure the current environmental conditions and emerge in a stronger, more competitive stance. To gain this clarity, utilities need visibility to refocus business strategies and streamline operational execution and transparency to demonstrate compliant and sustainable business practices.

Such “clear” utilities understand what is going on in every aspect of their business and business networks. They operate with increased speed, relevance, and accuracy. They are prepared for risk and uncertainty and can adjust operations nimbly as market conditions change. In short, they are transparent and accountable, lean and agile, and customer-centric and collaborative.

Emerging as such an enterprise improves every aspect of managing a utility and helps it survive and thrive -- not only in the near term, but also over the long haul. Sustainability, for example, presents both significant risks and new opportunities to improve profitability. But being sustainable is more than just knowing a carbon footprint. It requires real-time knowledge of the business and business network as well as having the confidence to share this information with customers, stockholders, and other stakeholders

So, if a utility is just beginning a sustainability plan or tweaking an existing one, the following steps may help it get the most from these efforts:

•    Assess the organization and make a plan. Get a basic understanding of what a business case for sustainability for the utility must comprise. It should combine social, environmental, and economic considerations. With that basic understanding, a utility can see where opportunities exist for improvement and be most effective.
•   Measure business activities. Set a baseline of data for current activities to know when and where improvements are being made. Include the utility’s network of partners and suppliers in the measurement process to increase the footprint of the efforts. Customers and their usage can also be included.
•  Take action. Execute the plan and measure every step, which includes involving employees in engagement programs, thereby making them part of the effort.
•  Monitor and adjust. Learn from experience and look for additional means of achieving sustainability throughout the utility and its ecosystem.

With broader insight, and more flexibility, utilities will act with greater efficiency and sustainability to face whatever challenges this dynamic environment brings. But the journey toward a sustainable future has only just begun – and green IT is but one logical step along the way.

About the Author
Maureen Coveney is Industry Director and Senior Principal for the Utilities Industry for SAP AG, headquartered in Walldorf, Germany.