Using Key Performance Indicators To Manage Energy Costs

Abstract

Modern management systems rely heavily on information technol-
ogy to set goals, track performance, and communicate results. Energy
management approaches (such as those offered by the US Department
of Energy and Natural Resources Canada) and measurement and veri-
fi cation protocols (such as IPMVP 2001) often highlight the importance
an information system has in maximizing results. The increasing adop-
tion of energy information systems has led, however, to an interesting
paradox: while it is now cost-effective to collect much more data than
ever before, many energy managers find themselves drowning in the
volume of data generated.
Business information systems faced a similar challenge a decade
ago, and it is now common practice to use key performance indicators
(KPIs) to summarize volumes of data into a few critical “nuggets” of
actionable information. These KPIs provide both the metrics that will be
used to determine the success of a business plan as well as the timely
information managers need to track performance and make adjustments
to ensure success. A similar approach can be used in the practice of en-
ergy management, where KPIs can be designed to measure the success
of key elements in an energy management plan and provide energy
managers with the timely “nuggets” of information they need to ensure
success.
This article describes how to define and use KPIs to track the per-
formance and measure the success of an energy management plan. A
framework is provided to assist in selecting measurable goals from an
energy management plan and determine the raw data and processing
required to generate the associated KPIs.