You identified significant energy uses (SEUs) (Task 9 Significant Energy Uses (SEUs)) to focus your resources in the areas where you can achieve the most benefit. When an energy use is identified as significant, you should address a number of ISO 50001 requirements that apply specifically to SEUs, including those related to procurement.

Your organization determines the role energy performance will play in the procurement selection process. For purchases related to an SEU, procurement specifications need to clearly identify any energy performance-related requirements. Communicate these requirements to suppliers and inform them that energy performance is part of the evaluation criteria. Energy performance does not have to be the sole or most heavily weighted criterion, but it is one of the factors you use to make the final purchase decision. Consider leveraging your existing supplier communication processes for this purpose, such as through purchase orders, supplier meetings, and supplier agreements.

Purchased services that will impact an SEU must be identified and service providers informed that energy performance is part of the evaluation criteria for procuring their services. Competency in energy efficiency is a common evaluation factor in procuring energy-related services.

It is important that your organization makes the connection between procurement and its impact on energy performance. At a minimum, energy performance for your organization is determined by the following:

• Energy performance of the significant energy uses
• Significant energy uses relevant variables
• Energy performance indicators (EnPIs)
• Effectiveness in meeting energy objectives and targets through action plans
• Actual versus expected energy consumption evaluation

If a purchase can affect one of more of these key characteristics, your organization must establish criteria for evaluating whether there is a significant impact on energy performance.

Brainstorm other factors that can have a major impact on energy performance, such as controls for SEUs, controls to sustain past energy improvement projects, and energy system maintenance activities.

Significant impact on energy performance can be a specific hurdle or limit, or it can be an evaluation based on your organization’s experience. Be mindful of using cost as a hurdle for determining significant impact, as it can be misleading. For example, buying a few light bulbs on a frequent basis can have a bigger impact on energy performance than replacing one large piece of machinery once over a long time span.

Similarly, a significant impact on energy performance does not have to relate to large items or complex services. It can result from relatively inexpensive maintenance items.

If a purchase can have a significant impact on energy performance, your organization should evaluate the purchase and its energy performance over its planned or expected operating lifetime. Many tools can be used to calculate life cycle cost, and the best one for your organization will depend on the items purchased and their application, as well as the complexity of your accounting system.

To ensure that procurement actions support the EnMS, it is critical that procurement personnel be kept informed about the requirements of the EnMS, including the SEU and the types of items and services that can significantly affect your organization’s energy performance. This information enables them to make appropriate procurement decisions. Procurement personnel must be familiar with the key characteristics of operations that determine energy performance, and mindful that energy performance and life cycle assessment may be part of the procurement decision. Once personnel are aware of their role within the EnMS, it is their responsibility to purchase items in a manner consistent with the EnMS’s requirements.

Procurement in your organization may be handled by a corporate or headquarters function. To satisfy the ISO 50001 requirements you may need to work with the corporate procurement function to implement the necessary procurement processes.

You should define and communicate specifications for purchases of energy supply. The energy requirements for your organization may be adequately addressed by the local supplier(s), and perhaps you do not require special considerations. In this case, the supplier can typically provide the specifications for the energy you are being provided, or it may be specified in your contract, along with the rates.

Your organization may have special needs, or there may be other considerations for selecting and purchasing the energy needed for your site. If your organization has unique energy supply requirements, you may have to develop the specifications necessary to meet your needs.

Specifications you may need to consider for your energy supply can include requirements related to quality, quantity, reliability, and cost.

To help you develop purchasing specifications for energy supply, you may want to use the optional Playbook worksheet. The Playbook worksheet will help you identify important energy supply parameters and formulate suitable purchasing specifications. Because purchasing specifications are dependent on the energy source, this resource includes separate tabs for electricity, natural gas, fuel oil, and solid fuels.

Document the energy supply specifications to ensure the energy source, delivery, price, invoicing, payment, and contracting requirements are known by potential vendors and satisfied by selective purchasing. Consult your procurement specialists for help with delivery, invoicing, and payment requirements, and legal analysts for assistance with contractual issues. Document the specifications for purchasing the different types of energy used by the organization. This can help ensure that initial and future energy supply will meet the necessary requirements. The optional Playbook worksheet can be used to help organize the information needed for purchasing of energy supply.

Where applicable, your organization must define and document specifications needed to ensure the energy performance of equipment and services that have been purchased. First, identify the types of procured equipment and services where specifications are important for maintaining their energy performance. For those, consider possible specifications related to receiving inspections, equipment installation, preventive maintenance, operational controls, procurement of related supplies, etc. If specifications are needed, document them or incorporate them into training activities and ensure there are processes in place to communicate them to the appropriate personnel. If specifications are already in place for energy-using equipment and services, then check that the specifications are communicated to those who need to know them.

Coordinate with procurement personnel to ensure that they continue to consider the life cycle energy performance and GHG emissions of energy-consuming products before purchasing.  Review internal procurement specifications and update as needed to ensure the specifications are current with energy policies and directives and best practices.

Review energy supply purchasing specifications and modify as needed to optimize energy performance and minimize GHG emissions.

Procurement processes must consider energy aspects when the purchased items can impact energy performance.

Suppliers must know that energy is considered in the purchasing decision for items related to SEUs.

If you do not have an existing 50001 Ready-based EnMS and want to build one that also helps your organization manage energy-related GHG emissions, in addition to the guidance for the energy management system you should:

1. Inform suppliers of energy performance as an evaluation factor for SEU-related purchases.  Ensure your evaluation factors for SEU-related purchases include energy-related GHG emissions factors.  Procurement specifications need to clearly identify any energy-related GHG emissions-related requirements. Review your procurement criteria for purchases expected to significantly affect energy performance.  Determine if additional energy-related GHG emissions-focused criteria are needed and if they are, communicate the changes to the appropriate personnel, suppliers, or contractors.
2. Establish operating lifetime energy performance criteria for purchases.  Ensure that any purchase that can affect SEUs, relevant variables, and EnPIs have criteria established for evaluating whether there is a significant impact on energy-related GHG emissions performance over the life cycle of the purchased product or service.
3. Define procurement specifications for purchases of energy supply. Review your procurement specifications for purchases of energy supply to ensure they include energy-related GHG emissions factors where applicable.
4. Document procurement.  Document any added specifications related to energy-related GHG emissions and, where applicable, incorporate them into training activities.

If you have an existing 50001 Ready-based EnMS and want to adapt it to manage energy-related GHG emissions, you should:

1. Inform suppliers of energy performance as an evaluation factor for SEU-related purchases.  Review your evaluation factors for SEU-related purchases to ensure they include energy-related GHG emissions factors.  Procurement specifications need to clearly identify any energy-related GHG emissions-related requirements. Review your procurement criteria for purchases expected to significantly affect energy performance.  Determine if additional energy-related GHG emissions-focused criteria are needed and if they are, communicate the changes to the appropriate personnel, suppliers, or contractors.
2. Review your operating lifetime energy performance criteria for purchases.  Ensure that any purchase that can affect SEUs, relevant variables, and EnPIs have criteria established for evaluating whether there is a significant impact on energy-related GHG emissions performance over the life cycle of the purchased product or service.
3. Review your procurement specifications for purchases of energy supply. Review your procurement specifications for purchases of energy supply to ensure they include energy-related GHG emissions factors where applicable.
4. Document procurement.  Document any added specifications related to energy-related GHG emissions and, where applicable, incorporate them into training activities.

The guidance for this task is from the following sections from the ERP Framework: ERP Framework Milestone 4.

Inputs to scenarios include building-level measure packages and portfolio-level policies, defined in Task 10 (Improvement Opportunities), as well as how measures are phased over time and estimated changes to the portfolio size. Organizations can consider other inputs to their scenarios depending on specific needs. Most importantly, organizations should align their scenarios with capital planning, reinvestment, major equipment end-of-life, or deferred maintenance planning timelines. The results of the building-level audits should be extrapolated during this phase to estimate impacts across the portfolio. While specific plans and designs may not be created for each individual building during this milestone, the strategies identified during the representative audits can set the general approach to be applied within building categories. The expected savings (energy consumption, GHG emissions, and operating costs) from the building-level measure packages can be used to project savings at buildings within the same category. Portfolio-level assessments can then be layered into savings projections. (Milestone 4)

One of the most important variables in GHG emissions reduction planning is how quickly measures will be implemented across the portfolio. Aggressive decarbonization efforts generally require expedited upgrades and replacement of systems before the end of the equipment’s useful life. These early replacement efforts should be directed toward the electrification of natural gas or district heating systems. Alternatively, an owner may focus on decarbonization projects to coincide with their existing building upgrade plans and refresh cycles. A third option— the least aggressive timing—is to implement electrification- ready upgrades, then plan to replace the equipment at the end of its useful life. (Milestone 4)

Without pre-planning, owners are faced with replacing equipment upon failure, which poses challenges for implementing emissions reduction projects due to the urgency of the replacement schedule. Moreover, relatively recently purchased equipment may not reach end-of-life before 2050 or another critical date established in emissions reduction target-setting. Pre-planning and portfolio-level policies will ensure that the low-emission, best-option retrofits are most likely to be chosen by staff. (Milestone 4)

In many cases, emissions reduction measures can provide other benefits (such as reduced operating costs). Expedited implementation can enable organizations to capture these benefits sooner and demonstrate their climate commitment with action. (Milestone 4)

This task relates to ensuring that procurement practices for energy-using products, equipment, and services consider energy performance.  Similarly, consideration of emissions reduction potential should be embedded in the procurement processes for products, equipment, and services.

The guidance for Task 19 is found within the following sections of the ERP Industrial Framework:

Milestone 3:

Conduct a portfolio-level GHG emissions reduction assessment to identify, quantify, and prioritize ERMs that are implemented, led, and/or approved at the portfolio level, such as strategic energy management, clean energy procurement, demand management/load flexibility, circular economy strategies, or strategic business changes. This can also help companies understand the risks and opportunities associated with transitioning to a low-carbon economy. Some examples of portfolio-wide ERMs include:

• Cross-cutting energy efficiency improvements such as upgrading HVAC systems, lighting, compressed air systems, steam systems, and insulation, or implementing a corporate-level strategic energy management plan.

• Clean energy from purchased clean electricity via power purchase agreements, green energy tariffs, renewable energy credits, and other mechanisms. On-site clean energy may also be handled at the portfolio level in some cases.

• Low-carbon transportation options for fleet vehicles (on- and off-site use) such as electric or green hydrogen fuel-cell vehicles.

Milestone 4:

Scenario inputs to develop multiple scenarios – Inputs to scenarios include facility-level ERMs and corporate-level cross-cutting strategies (both defined in Milestone 3), as well as how measures are phased over time and estimated changes to the portfolio size (e.g., addition or closure of facilities). Organizations should align their scenarios with capital planning, reinvestment, major equipment end-of-life, or deferred maintenance planning timelines. Other inputs may include estimated timelines for technology development or cost reduction, supply chain projections, or possible future regulations/policies related to GHG emissions.

Milestone 5:

Update organizational standards and procedures – Review and update existing organizational standards and procedures (e.g. standard operating procedures, procurement practices, project evaluation criteria, and training programs) to align with the selected ERP pathway. For example, GHG emissions may become a key evaluation criteria for all capital projects. Create new standards and procedures as needed to encourage implementation (e.g., an internal price of carbon).

Define financing and project deployment schedule – Decide on preferred financing mechanisms (and their phasing) to fund ERMs. This may depend on project type and organizational preference, and should account for annual budgeting cycles and financing availability. There are a variety of options, including operation and capital funds, traditional financing/loans, performance contracting, and green bonds. Investigate utility, state and federal grants (such as those established by the Inflation Reduction Act and the Bipartisan Infrastructure Law), rebates, and incentives as well. Project deployment schedules may also depend on technology availability, projected grid emissions, and other factors.

Design and procurement methods depend on the needs and complexity of each project. Consider developing standard boilerplate equipment specifications that target water-efficient products, so they are automatically purchased for retrofits, renovations, and new construction. Refer to FEMP Water Manual section 4.4. (Design Solutions and Procure Equipment) for more guidance.

Consider developing equipment specifications that target water-efficient products, so they are automatically purchased for retrofits, renovations, and new construction. Also, when installing new equipment, you can choose EPA WaterSense or ENERGY STAR-labeled models. For a complete list of procurement options review FEMP’s Energy- and Water-Efficient Product Efficiency Programs website.

Rather than developing new procurement practices, seek to integrate energy performance-related requirements into existing practices.

You should use this task to help incorporate the needed requirements for energy-efficient products into their EnMS. This can include determining criteria for purchasing these products, the products impact on your operations, proper maintenance procedures for these products, financial implications, and properly communicating to personnel associated with procurement and product dealers.

Organizations with ISO 14001:2015 and/or ISO 9001:2015 systems have processes in place to both determine and communicate the requirements that need to be met in their procurement actions. When implementing ISO 50001:2018, the existing procurement processes should be evaluated and leveraged as appropriate as the potential starting point for meeting the procurement requirements of ISO 50001.

Consistent with a life cycle perspective, determination of environmental requirements for the procurement of products and services are part of an ISO 14001:2015 system. These processes for determining environmental requirements could be leveraged to help meet the ISO 50001 requirements for life cycle criteria in procurement actions that can significantly impact energy performance. ISO 9001:2015 systems provide processes for control of externally provided products and services that could provide another starting point for implementing ISO 50001 procurement requirements.

Step 4.2 of the ENERGY STAR^® Guidelines for Energy Management briefly mentions identifying internal roles, including those related to supply management. ISO 50001 has more specific requirements related to the role of procurement in energy performance, with guidance provided in this task.