20 June 2023 | Global
The science is clear. We need to act on climate change today. In order to implement Net Zero ambitions, organizations must know how to overcome barriers to climate action, roll out a decarbonization program over multiple sites and multiple countries, and identify technological, financial, and procurement synergies.
This podcast explores how ENGIE Impact's Energy Savings as a Service (ESaaS) model can help organizations overcome decarbonization barriers.
Transcript has been edited for clarity
Clemence: Hello and welcome to DecarbonACTION the podcast where we discuss concrete actions, strategies and innovative models to reduce carbon emissions at scale and create a more climate-friendly future.
The science is clear we need to act on climate change today. This podcast series will be all about implementing decarbonization in a company, how to overcome barriers to climate action, how to roll out a decarbonization program over multiple sites and multiple countries, and how to identify technological, financial, and procurement synergies and leverage them.
Today we'll be talking about energy efficiency and more specifically about Energy Savings as a Service. But before we dive in, let me introduce our guests for today. Jean-Baptiste Cossé is a Senior Manager with over 10 years of experience in sustainability, renewable energy sourcing and energy efficiency. He has worked with several organizations to help them reduce their carbon footprint. Welcome, Jean-Baptiste.
Jean-Baptiste: Welcome, Clemence. I'm glad to be here with you. And of course, share my experience with the listeners.
Clemence: Excellent. So I’m sure you already heard this sentence, “the greenest energy is the energy you don't use”. Indeed, reducing energy consumption is the first step and lever to decarbonization. We cannot meet the Paris Agreement goals without energy efficiency. Indeed, reducing energy consumption is the first step toward decarbonization. According to the International Energy Agency, the IEA, more than 40% of the reduction in energy-related emissions over the next 20 years required to meet the Paris Agreement goals must come from energy efficiency measures. But Jean-Baptiste, tell me what we are talking about. What do we mean by energy efficiency, energy savings, etc? Could you give me some examples?
Jean-Baptiste: Of course, Clemence. Good question. Indeed, today companies are facing high stakes regarding decarbonization. What we are talking about ESaaS, which means Energy Savings as a Service. We are talking about LED replacement, replacing fans or motors, compressed air optimization, heat recovery, etc. And then, of course, maintaining those energy conservation measures (ECM) over the lifetime of the contract. But more generally speaking ESaaS is designed to enable companies to overcome the technical, financial and behavioral biases of decarbonization. And on top of that, ESaaS offers an emerging business model, which improves energy efficiency, reduces one's carbon footprint and saves money on energy costs.
Clemence: Excellent. So tell me more about the benefit of these energy projects, how are they accelerating decarbonization?
Jean-Baptiste: Good question Clemence. Decarbonizing a multi-site business can be a complicated affair, ESaaS simplifies it by outsourcing to an experienced sustainable service provider. The energy conservation measure will contribute to the company's decarbonization objectives. The service provider will not only identify the opportunities for carbon reduction but also finance and implement the solutions. And on top of that, follows that up with maintenance and energy management.
Clemence: Okay, so I understand you will both identify the projects to reduce energy consumption, but also finance it? Can, can you tell me more about it?
Jean-Baptiste: Many companies are facing funding issues. That's why in Energy Savings as a Service, we are covering the whole value chain from the financing of the energy-conservation measures to the implementation. That is the main output of an ESaaS project.
Clemence: I understand those projects will generate energy savings and reduce energy consumption. It will also reduce the energy bill, right? It seems very beneficial to do it. Why is it not fully deployed everywhere in all industrial sites or buildings for instance?
Jean-Baptiste: Many companies have started work on energy efficiency. But the problem is more the scalability. Indeed, many companies are facing timing issues, stakeholder engagement and alignment between the headquarter and the sites. With ESaaS we are tackling this issue, including all the stakeholders in a more global project. That's how we embark all the stakeholders of the company in one single program.
Clemence: The type of program you're talking about is ESaaS, which stands for Energy Savings as a Service. Can you tell me more about this type of program that we see and that is offered by ENGIE Impact?
Jean-Baptiste: ENGIE Impact has developed a five-step methodology covering solutions development, project management, and implementation to be applied at a small group of sites in a pilot phase, and then rolled out to an increasing number of sites across geographies. The five steps are: data collection, identification of energy conservation measures (ECM), contractualization, implementation, and maintenance and energy management.
On top of that, the key ingredient to the success of this approach is close collaboration between ENGIE Impact, the client and the local supplier. Continuous stakeholder engagement and governance alignment are part of a successful implementation partnership.
Clemence: So, what are the benefits of ESaaS programs?
Jean-Baptiste: The innovative ESaaS business model relies on a partnership between a contracting client and a service provider that delivers economic and sustainability advantages to both parties. It enables a client to benefit from asset-based energy efficiency measures, without any CAPEX and thus, without incurring any debt. But on top of that, the portfolio effect is also important. More measures will be implemented as quick payback of several energy conservation measures could finance other energy conservation measures which have a higher payback, which finally led to an increase in energy savings.
Clemence: Okay, so you mean that these programs allow us to do more projects and thus achieve more savings than could be done otherwise?
Clemence: Excellent. So concretely, how does it work? Can you tell me about a program you're managing?
Jean-Baptiste: I've led a huge program for our industrial client, our client has partnered with ENGIE Impact to develop a global program in less than two years that can deliver the energy solution they need. In addition to this tight timeline, my client needed an innovative financial mechanism that could help them navigate the tight margins in that sector and also stay off the balance sheet. More precisely, we implemented more than 500 energy conservation measures on more than 100 sites across the world.
Clemence: Tell me more. Why is it beneficial to have such a consistent approach across sites across different countries?
Jean-Baptiste: Very good question. We have a precise methodology for this specific client, but also a methodology for other clients for the time being. We began with the pilot phase. This pilot phase allows us to maximize our chance of success. It means working on the ECM description to test the different ECM on a site basis, but also on working on the contract trial template, the financing model, and the methodology to embark people, which is a very important thing. All those actions performed were great takeaways to scale up on a wider project.
Clemence: I guess that in such programs, you need to embark many different people at the company that you are working with. Who should you embark? What's your experience? How were you able to make sure all the relevant stakeholders were in the program?
Jean-Baptiste: Stakeholder engagement is a key part of those programs' success. We have to embark a lot of different stakeholders. First of all, the headquarters, but also at the site level. This includes finance, procurement and the legal department. But also at the site level with the plant manager, the energy manager and all the people who are involved in the program. Based on our methodology, we recommend having regular communication between the headquarters, the sites and the administrative departments to have lots of alignment. It is important to have clarity on who will make the decisions on specific criteria and on which basis. For our client, we set up a weekly alignment meeting with all the stakeholders to tackle all the major crucial topics.
Clemence: So, I understand some of the key success factors for this program are to start with a pilot phase where you will learn and set up the common biases to work with the company that is deploying the program. And then scale up and have all the relevant stakeholders engaged throughout the deployment of the program. Can you tell me which sectors or companies the Energy Savings as a Service approach can benefit?
Jean-Baptiste: Lots of industrial companies can be interested in decreasing their consumption. To be more specific, sites with around five gigawatt-hours of yearly energy consumption could be a good sample. And Energy Savings as a Service could tackle their Scope 1 and 2 emissions.
Clemence: Thank you so much Jean-Baptiste for all your insights today.
That's all that we have for today's episode. I hope you found the insights and tips on implementing decarbonization programs valuable. If you'd like to learn more about this topic or have any questions, please visit our website at engieimpact.com or listen to other podcasts where we discuss the latest trends and strategies in sustainability and carbon reduction.
Let's work together to implement your decarbonization strategy.