Rewarding a Return on Energy

July 16, 2012

Position yourself for potentially huge energy saving ideas and innovations by incentivizing employees.  The next big energy saver could be within reach for those willing to consider rewards.

Position yourself for potentially huge energy saving ideas and innovations by incentivizing employees.  The next big energy saver could be within reach for those willing to consider rewards.

But rewards can be challenging to implement. For example, I know of an organization that had a “10% reward incentive.” However, after an employee went beyond the call of his normal duties to help the company save $100,000 via innovative process improvements/energy reductions, management still had a hard time writing a “reward” check for $10,000.  Sometimes, especially in government facilities, there is a distinct difference between operational and capital budgets. 

The example was a 1000% return on investment (ROI), yet many government facilities may have no real way to provide that type of incentive due to budgetary process.  Unfortunately, with no reward, there often is no action, so who knows how many untapped energy saving ideas are floating around.  Perhaps return on investment may not be the best way to think about this problem.  Perhaps a new term is appropriate – “Return on Energy.”

Let’s examine a recent energy audit of a very large aircraft maintenance facility.  The facility has thousands of employees, working in different departments under one roof operating at a 76 °F setpoint during the summer months.  Employees have gotten used to this temperature as the “norm.” Each department has productivity goals and energy consumption is not really monitored.  Although there is no accountability for energy, this is fairly common in many facilities.  There is a written reward policy that an employee could get 3% of the net savings from an idea brought to the organization; however, the form/rules are complicated and even have what I would call “legal slang.”  So the incentive program is underutilized. 

Alternative Incentives

Instead of using money as a vehicle for a reward program, we could use (sacrifice) some energy in exchange for a greater savings elsewhere.  For example: there could be a reward that gives the employee a more comfortable temperature setpoint, in exchange for a specified level of process energy savings.

As an application, the aircraft maintenance facility could make the following offer to the employees: “Currently, in the summer you are operating in an environment that is 76 °F, but if you reduce your process energy by 20% (while maintaining throughput), you can have 74 °F in your area.”  

This idea establishes a transparent dashboard, showing everyone in the plant which departments are doing well in energy. It involves minimal paperwork and everything is oriented towards the operational budget. Sacrifice some energy (via setpoints) in exchange for a greater "return on energy" (in the manufacturing process).

A few caveats.   Managers doing this would need to:

  • Install and maintain some type of energy submetering for each department to enable measured performance, but that submetering would carry additional benefits to the organization. You could also bill departments for energy consumption — which would motivate departments.
  • Establish careful baselines and “targets” for energy consumption to avoid penalizing certain departments that may have already implemented a 20% energy savings.
  • Establish production minimums, so that energy saved does not come at the expense of production throughput.
  • Make sure the process savings is significantly greater than the energy you would sacrifice by adjusting the setpoints. You could also provide other “comforts” to employees such as portable coolers or other perks like longer breaks, etc. Think creative!) 
Eric A. Woodroof, Ph.D., is the Chairman of the Board for the Certified Carbon Reduction Manager (CRM) program and he has been a board member of the Certified Energy Manager (CEM) Program since 1999. His clients include government agencies, airports, utilities, cities, universities and foreign governments. Private clients include IBM, Pepsi, GM, Verizon, Hertz, Visteon, JP Morgan-Chase, and Lockheed Martin.

In contrast, some organizations are creating incentives other ways by incorporating energy use as a key performance indicator and part of an employee’s job performance assessment.  Other organizations accomplish a “dashboard” by having the plant kW load broadcast to employees when the load reaches a certain level.  In many cases, just having people see the data can be enough for them to naturally want to do better or protect their job

The possibilities are endless.  There are schools and universities that throw quarterly parties for groups that use less energy. College students will do just about anything for a free pizza!  Some schools have competitions between dorms and the participation level is very high. A good example of a “dashboard” is Arizona State University’s Campus Metabolism website, where you can see in real time the kW, heating and cooling that is occurring at each building. See:

The point is that we don’t always need hard cash to create an incentive to save energy. We might be able to provide some things in exchange for others.  Let me know your thoughts. I want to create a list of “101 incentives”!

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