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In-House Energy Management vs. Outsourced Energy Management

August 15, 2016 / by Max Dworkin

Making the choice to invest in strategic energy management is a huge step in the right direction, but it’s not enough. How do you choose whether to hire an in-house energy management professional or to outsource your energy management efforts? Or if you already have an in-house energy manager, should you look to grow that team or seek outside resources to augment your capabilities?

Cost Comparison

Hiring an in-house energy manager is a costly proposition. There are around 14,000 Certified Energy Managers in the U.S. currently, which of course is only a small fraction of how many buildings there are that are in need of building energy management solutions. What this means is that energy managers are in high demand, which translates to low availability and high salaries. According to Payscale, a CEM with 5 years of experience can expect to make an average of $80,000 per year, with salaries going up from there as experience increases -- and that average isn't even fully loaded. Add in benefits, employee tax, and other hiring expenses, and that number gets even higher. Also keep in mind that the salary of an energy manager goes only towards that person and does not include the costs of any upgrades or changes you may end up making to your facility in the name of energy management.

There are different ways to outsource energy management, including engaging with a company that offers Energy Management as a Service (EMaaS) like Correlate. In the case of Correlate, the initial cost for launching a strategic energy management program, including a business energy assessment, is zero. While costs are incurred over the life of the relationship, by starting off with no initial investment you are able to value almost immediately. In contrast, the ‘start up’ costs of hiring a new employee can be sky high, from potentially paying fees to executive recruiters to the weeks (or even months) of new employee onboarding when you are paying your new energy manager a salary but seeing little in terms of returns.

Power in Numbers

If you hire an in-house energy manager chances are that will eat up your entire budget for energy management personnel. A CEM can have a vast range of knowledge to pull from, but they cannot possibly know everything. This limitation can make it easy for in-house energy managers to be biased towards certain building energy management solutions and recommendations, and can severely limit the options you think you have.

On the other hand, outsourcing or enhancing your energy management to a company like Correlate means bringing on a team of experts. Because no single person is working full time for your company, you do not have to pay the salaries of experts from across the country who can help to craft a strategic energy management plan that is specific to your business goals.

Long Term Considerations

To go from paying for energy as a cost of doing business to creating a strategic energy management plan and executing on that plan takes time. There can be  a great deal of heavy lifting early on and the process timeline will vary dependant on the size of your operations and organization.  Regardless of this,  with proper commitment and execution, a multi-year horizon for strategic deployment is fair.   As part of your energy strategy, once operational items are considered the behavioral measures along with measurement and verification come into play.   After that initial period of operational improvements, a company that hires an energy manager still has the cost of keeping her on board and finding new projects that will benefit from his expertise.  Behavioral work is incredibly valuable as well as measurement of verification, but within the last 5 years the emergence of software and advanced metering systems now allow for this work to be done in far more efficient and cost effective way.  Think of it similar to security systems and fire management, once your setup, it is all about monitoring and maintenance.  Most companies don’t keep inhouse firemen or security.  These are more cost effective when outsourced.

Outsourced energy management can work with your company over the span of years, creating a strategic energy management plan, helping you to execute that plan, and fine tuning any changes you make to your facility in order to maximize savings while supporting continuous improvement methodologies.  And as a nice element of flexibility,  once your facility is under control and as efficient as possible, it is easy to disengage from your outsourced team and free up that capital for other business investments.  Unfortunately, this is not commonly the case for in house staff.

You’ve already made an important choice by deciding to pursue strategic energy management, now it is just a matter of deciding the best way to do it.

Trying to decide if an energy audit is a good place to start? Check out our free energy audit cost calculator below for unique insight.  

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Topics: energy management, energy consumers

Max Dworkin

Written by Max Dworkin


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