OPS Q&A ENERGY MANAGEMENT— WITH SAVINGS ASSURANCE Dan Kubala, director of business development, Siemens Retail & Commercial Systems Why should retailers automate their energy operations? While retailers understand the importance of energy management to meet cost- reduction targets, limited access to corporate capital and uncertainty around achieving the promised reductions can deter many from deploying an energy management system (EMS). Dan Kubala, director of business development for Siemens Retail & Commercial Systems, spoke with Chain Store Age about how retailers can now save energy through a new service agreement structure backed by savings performance guarantees. An EMS should be the cornerstone of any corporate energy management program. We see immediate savings averaging 15% to 20%, and through advanced extensions, process inte- gration and continuous improvement, we can increase those savings to 30% to 35%. Further, the EMS serves as a platform for measuring and managing the impact of other initiatives, such as lighting upgrades, maintenance management, on-site solar, refrigeration equipment or demand response. We’ve proven this model time and time again with dozens of leading retailers such as Big Lots, Michaels, DSW Shoes, Big 5 Sport- ing Goods and 24 Hour Fitness. livers the promised savings with the Siemens Site Controls EMS. Our client services group works closely in partnership with retailers to help them with process integration and iden- tifying opportunities for additional savings. We offer continual improvements to system capabilities, notably with our recent launch of the Site Controls Enterprise Portal. To address staffing issues, we have a man- aged services offering, which outsources the day-to-day system administration to Siemens experts. And to address the problem of limited access to capital, we have introduced a new way of paying for the entire program without requiring capital investment called an Energy Management Service Agreement (EMSA). What challenges do retailers face in justifying an EMS investment? How does the EMSA differ from a traditional EMS capital investment? One obstacle is skepticism concerning whether the EMS will actually deliver the promised energy savings. Many retailers have been burned by poor performance of past projects and don’t want to make the same mistake again. Another concern is that energy and facility teams often don’t have the bandwidth to manage the day-to-day operations of an enterprise EMS. Finally, there is the substan- tial challenge of gaining access to corporate capital. Often, an EMS project must compete with other potential investments, such as POS upgrades or even new store construction. In a traditional capital purchase, a retailer pays cash up front for the EMS equipment and installation, and then recoups that in- vestment over time through energy savings. There may be small fees for data access or call support that are paid for out of expenses on a monthly basis. In this scenario, the equipment becomes part of the balance sheet as a capital asset, and such metrics as return on investment, net present value and internal rate of return are used to evaluate the attractiveness of the investment versus other alternatives. In contrast, with a service agreement there is no upfront investment, but rather a single monthly service fee payment for a comprehen- sive set of services. The service fees are typi- What is Siemens doing to help retailers address these challenges? First, we offer an integrated system that de- 28 cally viewed as an expense item and are offset by energy and maintenance savings. Therefore the program is immediately self-funding, ac- cretive to current earnings and frees up limited corporate capital for other projects. What elements are included in the EMSA? The program is based upon the use of the Site Controls EMS platform, which is installed at each location. The services include installation program management, EMS equipment upkeep due to normal wear and tear, access to the Site Controls En- terprise Portal, regular software upgrades, EMS call support, client services, and managed services to proactively identify and resolve issues to increase savings over time. The offering bundles all of the key items required to drive significant and sustained savings for the long term. What is the savings guarantee? As part of the comprehensive agreement, the EMSA includes savings guarantees that are backed by Siemens to ensure that the program is cash flow positive from the beginning. Our objective is to stand behind our equipment and our services, and es- sentially make this a no-risk proposition for the retailer. Siemens currently guarantees billions of dollars in energy savings in other industries, such as education and large commercial — the EMSA leverages this expertise to help retailers solve their energy management challenges. JUNE/JULY 2015 / CHAINSTOREAGE.COM