By Dan Svejnar, Vice President, Head of Commercial North America, Centrica Business Solutions
March 12, 2019 (San Diego) -- Few businesses actually spend the time to consider the impact a power outage could have on their operations and revenue. When the power goes out, even for as short as two hours, the economic engine stalls for businesses of any size. Without electricity, cash registers are inoperable, and assembly lines grind to a halt.
Now, the devastating fires of 2018 have brought a new wrinkle -- power companies planning extensive power outages to mitigate fire risk. Moving forward, companies without backup power plans will be in the dark, with money left on the table.
In the past, San Diego Gas and Electric (SDG&E) has preemptively shut off power for as many as four days for tens of thousands of customers. In the future, utilities may cut the power as a matter of policy, no matter how close or far away a building is to the threat of fire. Pacific Gas & Electric (PG&E), for example, cites a number of possible factors that may trigger a preemptive power outage including strong winds, very low humidity levels, critically dry vegetation, or observations from field crews. This risk is the new normal for California and businesses that do not adapt will suffer the consequences.
Even if Southern California companies develop resiliency plans and install clean energy technologies that keep the lights on when the grid goes down, many companies overspend or underbuild. They might scramble in the 48-hour window before a preemptive shut-off and find themselves overpaying for generators or build a solar and energy storage project for everyday use but find it inadequate to handle loads over an extended period of time. Others are even shocked to find their net-metered solar system actually shuts off when the power goes out, instead of “islanding” itself from the grid to provide power to the building during a blackout.
It is a near-universal truth that being proactive instead of reactive with energy resilience costs less. A 2018 study estimated that key U.S. market segments forfeit about $27 billion per year due to power outages.
Few businesses can afford to lose $100,000 per hour, but on average that is the staggering cost of 60 minutes of downtime, according to a recent ITIC 2017 Hourly Cost of Downtime and Minimum Reliability Requirements Survey. The firm says since 2008, this average cost of a single hour of downtime has risen more than 25 percent.
The question is no longer what, or how outages will impact business, it’s a matter of when, how disruptive they will be, and how much they will cost the company. These costs take the shape of operational losses, damaged equipment, spoilage of perishable merchandise, lost sales, and damaged customer relationships.
Making 2019 the year your business becomes more energy resilient
First, acknowledge that resilience is an issue and that inaction is a business risk.
Second, understand which parts of your business are critical and what the energy consumption patterns of those areas are. Ask yourself which sites or operations need to be protected most from an interruption to supply.
Understand the differences between brownout and blackout risks. The ability to ride through blips requires a lower level of mitigation and could include on-site energy storage or the ability to switch off non-core systems or operations.
But when worst comes to worst and power from the utility grid fails completely, do you have the ability to power core systems, and for how long?
Then it’s all about formulating a plan: What equipment and processes do you need to put in place to ensure those business-critical systems and operations remain functioning?
The highest level of protection and peace of mind comes from on-site energy generation, which means having the ability to turn your own generation on when energy supplies fail and replacing grid supply for critical assets and systems with self-generated energy indefinitely.
Depending on your predicted cost of loss of power, you can make a financial decision on the scale of the required investment. Consumption profiles may also show areas where energy efficiency can drive savings, and those savings can be used to fund resilience measures – a double resilience bonus.
Finally, all these systems must be maintained and regularly tested as part of a good resilience plan to ensure they are available and functional when supply from the grid is disrupted.
Managers and business owners often worry about how much an energy resilience strategy will cost. While much of energy resilience sounds new and disruptive, the vast majority of these elements can be embedded into existing workflows and are simple to integrate into day to day operations. Moreover, depending on which resiliency measure you choose, they can even be leveraged to generate revenue when the power is on by taking advantage of market mechanisms.
If you start with these steps in 2019, you will join the ranks of 80% of U.S. businesses that plan to take control of their energy use by generating a quarter of their electricity on-site by 2025. Here’s to a prosperous and energy resilient 2019.
Dan Svejnar is the Vice President and Head of Commercial North America, Centrica Business Solutions, an international company providing innovative, end-to-end distributed energy solutions to organizations, enabling them to improve operational efficiency, increase resilience and drive their business vision forward.