Bob Wassman
The private sector offers valuable lessons that can save the Defense Department energy — and thus, money — as it operates its more than 300,000 buildings.
With 1.4 million men and women on active duty, plus 718,000 civilian personnel, the Defense Department is the nation’s largest employer. To house its operations, it occupies more than 2.2 billion square feet of space valued at more than $590 billion. It spends more than $4 billion a year on “facility energy” to power these buildings; so the potential savings are substantial.
Recognizing the need for efficiency, private-sector organizations with large building portfolios have quickly and cost-effectively employed new technology in their infrastructure. The Defense Department needs to do the same.
Two factors drive innovation: motivation and the ability to implement.
In the private sector, the motivation for efficiency is driven by one thing — profit. Every dollar that companies can squeeze out of energy use is another dollar of profit. It’s just that simple.
A business case analysis is performed before pilot-testing a technology at a specific location. If the technology and the business case are compelling enough, a small-scale pilot is in order. If a small-scale pilot test — typically one to three buildings — proves successful, a larger test is conducted before full-scale deployment.
Walmart went through this type of process and in April announced plans to purchase energy-efficient LED ceiling lighting fixtures for new locations in the United States, Asia, Latin America and the United Kingdom. The new fixtures will use 40 percent less energy than lighting sources currently used in stores and will help reduce Walmart’s energy intensity — kilowatt hour [kWh] per square foot — globally 20 percent by 2020.
LEDs have become an integral part of Walmart’s energy-efficiency model and play a key role in achieving energy cost savings; furthermore, these innovations enable Walmart to pass the savings down to customers in the form of lower prices. Lower prices drive sales and sales drive revenue. At an organization like Walmart, performance is measured in terms of revenue, expenses and profit.
The main sales floor lighting represents approximately 90 percent of each building’s total lighting usage, which means this implementation will reduce energy use per store by more than 5 percent in the United States. The change to LED lighting alone will have a significant impact on profit, according to information provided on its website.
So what conclusion can the Defense Department draw from this? Money is motivational, but it has to have an impact at the local level. While recent changes and legislation — such as the Department of Defense Energy Security Act of 2014 — serve as motivation, the Defense Department needs a broader policy that encourages installations to reap similar savings from energy efficiency. The installation commanders need full flexibility to access and use savings realized from energy efficiency projects.
On the implementation side, things get a little more complicated. The private-sector companies that are global leaders have well-established communications channels and procedures to disseminate information about innovative technology, full-time staff to oversee energy-efficient changes and facility-level personnel with authority and accountability for energy efficiency.
The federal government, including the Defense Department, can assess, acquire and demonstrate new energy technologies in a real-world, integrated building environment, but the challenge of communications channels and dissemination of information is real — due in part to the sheer scale of the Defense Department and in part to the recent practices preventing employees from traveling to and attending conferences.
Over the past few years, several important federal energy-efficiency events such as GovEnergy and Environment, Energy Security, and Sustainability conferences were canceled as fallout from the questionable behavior at a single federal government conference. Professional conferences are just one way to disseminate information, but they are an important part of the Defense Department’s communication strategy. It is essential that infrastructure professionals have an opportunity to meet and exchange ideas about innovative, cost-saving technologies.
Several private-sector companies have created tiger teams to facilitate technology assessment and implementation. These teams don’t disband once the technology is selected. Dedicated headquarters personnel work with the facilities-level staff on every aspect of the process from technology identification through implementation.
Google drives down the cost and environmental impact of running data centers by designing and building their own facilities. Google’s in-house–designed data centers use 50 percent less energy than the typical data center. They employ practices and technologies such as smart temperature controls and “free-cooling” techniques that use outside air or recycled water for cooling. They also redesign how power is distributed to reduce unnecessary energy loss. Google calculates the performance of each facility using comprehensive efficiency measurements to establish a baseline upon which they can improve.
Google promotes collaboration and is not constrained by federal policies or practices that restrict travel for federal government employees. Because it believes that industry collaboration drives sustainability in the technology sector, Google supports research and makes a point of bringing thought leaders together to share challenges and best practices.
Google funded a research study, conducted by the Department of Energy’s Lawrence Berkeley National Laboratory, that measured the energy impact of cloud computing. In 2009 and 2011, they hosted events with industry peers that focused on improving data center efficiency, and in 2013, they hosted the “How green is the Internet?” summit to explore the environmental impact and benefits of the Internet. Experts from industry, academia, government, and nonprofit organizations explored questions about the environmental impacts and benefits of the Internet.
There are many success stories throughout the Defense Department where tiger teams or optimization teams have traveled from installation to installation to conduct in-depth reviews, make recommendations and follow up on a yearly basis. It would be great to see service-level energy-efficiency teams, staffed with experts traveling to installations, making recommendations and then helping implant new technology. Best of all, the cost of the trips would pay for itself through the savings that the teams’ findings produced.
A final implementation aspect found in the private sector is that compensation is tied to efficiency and sustainability and that facility-level personnel have both the authority and accountability to maintain energy-efficient facilities. Within the private sector, personnel not only have the authority to implement changes and bring on new technology, their salary increases are tied to the success of their initiatives.
In 2014, the sustainability advocate nonprofit Ceres reported that 24 percent of the companies they analyzed linked executive compensation to sustainability performance, up from 15 percent in 2012. The Ceres analysis looked at how companies link executive compensation to specific sustainability performance targets and determined whether those links go beyond compliance with laws and regulations.
Ceres evaluated 613 of the largest publicly-traded U.S. companies and their progress to integrate sustainability into their business strategies and decision-making. One of the standouts was Alcoa, where 20 percent of executive cash compensation is tied to safety, environmental stewardship, energy efficiency and diversity goals. Investors expect corporate executives to be compensated based on their company’s financial performance, Ceres found in its report, “Gaining Ground: Corporate Progress on the Ceres Roadmap for Sustainability.”
Increasingly, they are recognizing the direct impact that sustainability risks and opportunities can have on business — from the cost savings found through implementing energy-efficient strategies to the reputational risks of sourcing materials from irresponsible suppliers. Given the business case, investors are starting to ask companies to build in incentives for sustainability performance and sustainability criteria into compensation systems, a trend expected to expand further in the future.
While the government’s pay scale won’t change in the near term, privatization would offer a creative Defense Department solution. By incorporating energy-efficient approaches into contracts, the Defense Department can hold the performer responsible and include incentives in to the contract that are tied to energy-based savings. More privatization and paid-for-through-savings contracts will enable the Defense Department to exceed its energy-efficiency goals and provide some relief on the budget pressure.
While its building footprint is massive and innovation abounds within the Defense Department, there are many lessons it can learn from the common-sense solutions tested and proven by the nimble private sector.
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