Harvard Business Review:
The benefits of smarter utility consumption go beyond just a smaller bill. Eliminating the 30% of unnecessary consumption can improve profitability, reduce equipment downtime, become a competitive differentiator, and lower carbon emissions. The marginal effect on profit through reducing utility costs can be significant. Every dollar saved in utility costs becomes an additional dollar of net profit.
One solution is to appoint a Chief Utility Officer, who can centralize decision making around utilities and rethink its role to support strategic corporate goals. The role would focus on cutting costly inefficiencies, figuring out how to use energy to deliver business outcomes, and then implementing these approaches.
As a technology advisor, the CUO would understand the benefits of different energy innovations and be able to make smart purchasing decisions. This would result in better equipment that would reduce maintenance costs, minimize downtime, and free up valuable staff time so they can serve customers instead of servicing equipment.
The CUO would also hire, train, and lead a cross-functional team responsible for creating energy policies and procedures that are aligned with the organization’s goals. They would also help other departments better understand how their energy use impacts the company. These practices not only cut down on waste and reduce energy costs but also improve the productivity of the business and help improve profit margins.
Forward-looking companies have already begun thinking about this kind of holistic utility management and how to leverage it for their competitive advantage. For example, Rice Fergus Miller, an architecture firm, redesigned their own headquarters to meet aggressive energy and water savings targets and earned a LEED platinum rating. As a result, they garner more businesses from clients who share the same values. Compass Housing Alliance, a provider of affordable housing and homeless shelters in Seattle, realized that reducing their wasted energy could free up valuable resources to focus on their vision: housing more homeless people. And some universities, including Harvard, have created revolving green funds that invest endowment dollars into energy efficiency. Based on their track record, the funds have consistently beaten market rates, earning more than 20% annual return on investment. In effect, these companies, through better resource management, have received top-line benefits to their revenue.
A CUO can turn these one-off wins into a systematic approach that unlocks vast economic potential. The Director of Facilities could be a good candidate for or even evolve into the CUO role. A similar transition happened several decades ago when the Director of IT evolved into the CIO role in order to strategically manage information technology resources for better business outcomes. When companies suddenly faced an influx of new technologies in the 1990s, CIOs were tasked with understanding them, purchasing them, designing the right team to manage them, and creating policies that advanced company goals.
By using budgetary processes, managing multi-disciplinary teams, and focusing on outcomes, the CUO can reduce overspend on utilities, improve the bottom line, increase operational efficiency, and minimize environmental impact. At the end of the day, the CUO’s job is to reinvest that $100 billion of wasted utilities into productive economic output.