The energy industry is complex, competitive, and constantly changing. Operational efficiency and cost savings are common goals, but often, changing markets and conditions lead to confusion. Facility managers aren’t always able to stay abreast of the latest technology and alternative energy solutions, such as renewables, battery storage, or the development of combined heat and power (CHP) applications.
Energy consultants do just that. They monitor the markets constantly. They know where the markets have been trading and where they’re likely to go. Many energy consultants come from engineering backgrounds and have management experience. They are knowledgeable and experienced, and can provide sage advice.
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Call for Help
At what point do you need a consultant? Facility managers should examine their knowledge and objectively assess how much help they need. “There are so many options. Which is the right one?” asks Ben Edgar, president of White Harvest Energy. “You want a consultant to narrow down the options and choose the right one.”
Hiring a neutral, third-party consultant who isn’t on the company payroll and doesn’t require company-paid training can be a money-saving move. But even while turning to a consultant is often a beneficial step, it can also be a bewildering one.
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Perhaps the first step in selecting an energy consultant is to determine their impartiality. Some companies provide advisors billed as consultants. It’s important to keep in mind that they are plugging their product or service and may not be objective in providing suggestions. “A consultant should be agnostic to technology and products,” states Michael Bakas, senior vice president of Ameresco’s renewables division.
“Ask yourself, ‘what is their real motivation?,'” cautions Edgar. “Lots of equipment companies do some consulting. Look for people and organizations you can trust. Check industry trade journals. Start there and then cross-reference.”
An independent perspective based on research should provide the optimal solution. Remaining independent of all energy suppliers imparts the added benefit of providing a consultant with access to the entire market, allowing them to procure the best energy contracts for their clients. Maintaining relationships with all the suppliers (beyond the “big six”) opens up options with smaller suppliers who may offer better deals.
Defining The Terms
Determining which kind of energy consultant is best matched to your needs can also be confusing. An energy management consultant is the broadest category, says Ecova’s Ian Brown. “Their role is strategic—to lay out plans and suggest technology that will reduce energy, costs, and carbon emissions.”
Considering energy management as an umbrella, Bakas says an energy management consultant incorporates the demand and supply side in solutions. “First, look at the demand. You need to reduce consumption through increased efficiency. Next, identify consumption—battery storage.”
More specifically, Edgar elaborates, an energy management consultant evaluates how the facility uses equipment, how it generates and consumes energy, and what energy needs to be generated. “Then they will select equipment or [propose] the best integration of equipment.”
The consultant’s task differs from an energy audit, in that an audit sets a baseline of how things operate today and assesses the condition of the equipment, whereas a consultant “sees missed opportunities; executes projects; looks not just at what’s there, but at what’s possible and what should be there, as well as what’s in the best interest of the facility, finances, and goals,” explains Edgar. “A consultant provides options.”
An energy efficiency consultant “looks at equipment to perform the same functions in the same way,” says Edgar. If necessary to generate energy more efficiently, equipment may be replaced or enhanced. For example, a consultant might suggest changing the lighting or HVAC, or installing variable-speed drives to pumps and motors.
Most energy efficiency consultants will have a specialty, Brown indicates, such as retrofitting or deploying lighting and HVAC.
Another way to look at the difference, suggests Doug Edgar, vice president of operations at White Harvest Energy, is that energy managers have multiple facilities; efficiency managers have a single facility. “The difference between businesses is how important energy is and what it means to have a power outage,” he continues. “How you generate and use power are two different things. What is the best way to supply it with minimal impact? For a critical business, it may be worth paying a premium for energy.”
The energy storage consultant is a new term for a niche market, Brown says. “Consultant firms help with storage as one big topic, like if a utility wants to buy large storage projects or a substation, or change high voltage to low.” An energy storage consultant is a specialized subset, Ben Edgar says.
All consultants should be specialists. Choose one with experience in your industry, whether that’s hospital, industrial, or commercial, Brown advises. “Look for a company with that specialty. They should know about your business and theirs. They should know the appropriate technology.”
Ecova manages energy cost and consumption for nearly 1,500 inpatient and outpatient healthcare facilities, which rely on their resources to mitigate the cost impact of rising electricity, water, and sewer expenses that collectively account for approximately 81% of healthcare facility budgets.
Research the consultant to determine if they are qualified to deliver the service you need. Look past marketing slogans. Find out who owns the company and who works for them. Is the consultant a leader in the industry? Does the company attract top talent or is the company losing them? Check job postings for frequent vacancies. Find out if they’re hiring experienced people or recent college grads. “A consultant company is only as good as its people,” notes Bakas.
Is the consultant up-to-date with knowledge of the latest technology, regulations, tax laws, and market opportunities? Does the company have resources to turn to if it needs support?
References can provide a gauge. Track record, length of time in the industry, and number of clients can provide insight into a consultant’s success. In some states the Public Service Commission or Public Utilities Commission provides a certification process for those working in natural gas and electricity. Being certified or licensed by state regulators ensures a facility manager that the consultant has the managerial, technical, and financial knowledge needed to provide energy counseling.
Check a consultant’s references on similar projects in the same field and ask in-depth questions about the consultant’s role and performance. If possible, talk to clients who weren’t listed as references; sometimes they can provide the most valuable information.
Experience matters. It should include demand and supply, Bakas insists, and if the project is at a mission-critical facility, the consultant should have understanding and knowledge of the specific requirements involved.
“Some companies are expert in hospital design, but not in the energy field,” speculates Ben Edgar. For others, the reverse is true. He believes it is important to get someone who has worked in your industry.
“Pick an organization used to that industry,” urges Edgar. “A lot of consultants deal with hospitals. They focus on technical solutions, but not hospital business. You need to be aware of the impact of generators and climate control on business. Hospitals have to cancel procedures because they only have backup generators. That’s their largest source of revenue. A consultant who understands that may configure differently to allow procedures to continue.
Choosing a consultant with experience in your field can improve the quality of the work, reduce costs, and help avoid problems that can arise when a consultant works in an unfamiliar area. If the consultant has worked in your industry and knows the key players, that experience is likely to improve the results and decrease the length of the project, which will help reduce costs.
“Analyze the consultant’s past projects and experience,” suggests Bakas. “Ask about their approach and the technical know-how of the people on the project. Get referrals, look at case studies, do site visits.”
“The type of consultant matters,” indicates Ben Edgar. “But, the sophistication of the staff, the size of staff, the size of the facility, and the location of the facility also matter.”
Ecova focuses on large corporations with lots of different needs and energy sources, Brown says. “We find the best opportunities for efficiency, solar, off-peak alternative rate structures.” As an Energy Star partner, Ecova’s strength is commercial, retail, buildings with people, and some manufacturing. “With 51 utility clients and over 900 multi-site business clients, we serve a multitude of industries with their energy and sustainability management needs.”
When assessing candidates, it’s important to keep in mind a consultant’s role. The role of a consultant is to supplement your knowledge so that you can make better, more informed decisions. “The goal for the consultant is to educate the customer,” states Bakas.
The consultant should provide accurate and reliable information that is easily understood. Choose an effective communicator with connections within the industry and an understanding of the business. A consultant should be able to translate the company’s requests to make sure the manager gets what he technically needs, Bakas says.
Most consultants “know a little about all aspects of the industry,” believes Edgar, but he says they should carefully look at how energy is used by the client. “We don’t sell equipment. Our strength is to ask questions and study the situation. We know what to ask and where to get information. We ask the right questions: how do you use energy?”
White Harvest provides project development to show energy companies and customers the easiest ways to deploy the best new distributed generation technologies to serve their customers, their communities, and their bottom-line. They use feasibility and optimization studies, emissions impact studies, and financial and economic analyses to provide resource and strategic planning, financial modeling, risk analysis, and cost-benefit analysis.
“Given usage and the cost of energy, we are able to discern what is the best option for each client,”
says Doug Edgar, adding that all costs—equipment, design, labor—vary significantly from region to region, so it is important to know regional customers. “We know what works in regions. A good consultant navigates whom to use for design in different parts.”
Hiring a consultant is not a substitute for responsibility, however. Facility managers shouldn’t abdicate decision-making to the consultant; it remains their role and responsibility. It is also their responsibility to be educated. “Honestly evaluate what you know and how much help you need,” summarizes Ben Edgar.
“Many facility managers are very savvy,” observes Bakas. “The more educated the facility manager is, the more effective the consultant can be . . . but a good consultant can bridge the gap.” He believes in the benefit of bringing in a third-party consultant that does this.
Bakas also believes that a facility manager should “Try to find a consultant you have high regard for and let him solicit solutions from vendors.” It can be advantageous to have someone come in early to help choose a vendor. The consultant should be able to see the challenges of the job and provide a list of pros and cons.
As Ben Edgar says, it’s important to look at the consultants and determine if they’re offering your solution or their solution. A consultant should provide a customized solution, he says, not one-size-fits-all.
For example, Edgar explains that hospital chains are large energy users, whereas small local hospitals are not, so the solution for all hospitals is not the same, even though both are considered mission-critical energy users. It’s also important to note differences between a new building and a retrofit.
Be sure to know what a consultant’s proffered solution entails . . . and how much it costs. A transparent written agreement should detail the services provided by the consultant, the timeframe, and the fees. Know what the consultant is selling and how much support is being provided.
Know what and how they charge. Some charge a direct, one-time fee. Others include their commission in the rate offered from the supplier. Charges can be fixed or performance-related, which is more complicated, especially if the benchmarks or target do not reflect reasonable, achievable market goals.
Promising services for free is a red flag. More than one-third of businesses believe their consultant is providing a free service, according to a 2013 report from Cornwall Energy. However, a fee is almost always incorporated somewhere in the agreement.
Being paid by the supplier is another warning sign, indicating that a consultant is not impartial. If a consultant earns commission by recruiting customers for a supplier, it’s proof that he is offering his solution, not yours.
Another thing to keep in mind when considering consultants is to check to see that their website is updated and informative. It should include a description of services, current company information, and photos.
Find out how long their average customer relationship lasts and how they attract and retain customers. Similarly, find out how many suppliers they have established relationships with, and how long those have lasted.
The Bottom Line, The Bottom Dollar
An experienced, knowledgeable, third party energy consultant can be financially favorable for companies. “Companies are always looking for ways to reduce costs,” states Bakas. “The most abundant form of renewable energy is efficiency—and it does not require subsidies like solar and wind. Efficiency has a good payback.” He adds that the “efficiency business” is recession-proof and can even get better during a recession.
But be cautious in choosing a consultant, Ben Edgar concludes. Do your due diligence. “The industry is supply-focused, not customer-focused.” He says the urge to change that is what drove him and his brother—who have energy consulting backgrounds with utility-scale power—to become independent consultants.