Prenova A Solid Energy Solutions Provider

Michael Nark, President and CEO of Prenova, explains the different business models this company uses and how the opportunities for assisting companies manage their energy consumption are all over the place.

Full Transcription:

Rasika Ranganathan: So tell us some more about what Prenova is and what kind of work you guys do.

Michael Nark: Sure. Prenova is an energy management services provider, and we refer to ourselves as a technology-enabled services provider who is focused into primarily the retail market segment here in North America. And in that segment, we provide to our client-base is really a total energy management solution for them that spans both the supply and  the demand side of the spectrum as it pertains to energy usage, both affecting on the demand side of the business energy efficiency and on the supply side of the business, basically, the supply costs themselves or the utility cost themselves. And we do that by working in conjunction with our customer base to develop and drive and entire energy strategy for them that allows them to effectively manage and control energy spend throughout a period of time, hopefully, for an extended period of time. And we help them execute day in and day out and maintain that strategy to have the end result being a significant impact on energy spend to either reduce that, maintain its current level or in some cases increase that depending upon what the requirements are.

Rasika Ranganathan: So tell me more about the four different sectors, if I’m not correct regarding Prenova, which is utility management, energy procurement, remote monitoring, and energy consulting, little bit about each one, and if there’s anything else you’d like to add to that.

Michael Nark: Sure. So our business, as I said earlier, spans both the supply and the demand side of energy. And on the supply side of our business, we actually offer two main services associated with that. One is what we call utility management. And utility management at a very high level is really focused around paying utility bills for our client base and auditing those utility bills to make sure that the consumption is at the right level and the rate structures that they’re on is what they’re contracted for. That’s one piece of that business. The second part of that supply side offering is what we call energy procurement. And energy procurement services are associated with Prenova acting in a consulting role to the client base to help them make the best possible decisions about how to procure both electricity and natural gas and to procure them, based on what their consumption requirements are and needs are, to essentially drive the lowest cost possible for them to purchase that for any period of time whether it’s month-to-month, year-to-year, quarter-to-quarter, etc.

The combination of those two make up our supply-side business. On the demand side of our business, what we also have is the opportunity that, based on what we’re doing for that client on the supply side of the business, to essentially drive and maintain operating standards on how they use or consume electricity in their retail operations. Our business is primarily focused on helping retailers drive or maintain energy spend levels. And so our demand-side offering allows us to remotely manage and control in their real-time, essentially when heating and ventilation happens. Lights come on and off. Refrigeration systems come on and off, etcetera. And we also then allow or provide the opportunity to maintain those assets that we’re controlling at a much higher level so that we can drive higher levels of efficiency out of them.

And then I think the fourth piece of the business which is the second side of our demand-side services, what we call our energy consulting business. And that’s where we’re able to actually mobilize an engineering team or a group of engineers who have significant knowledge on LEED certification, energy management, etcetera, and put them out on the field to actually audit, essentially how a building or a store is performing and recommend how improvements could be made or essentially change an operating strategy that would have a positive impact on consumption patterns as it pertains to, again, either electricity or natural gas.

Rasika Ranganathan: Okay. So when you folks are auditing or analyzing your clients’ operating strategies and seeing if their levels are efficient for as far as energy consumption is concerned, if they are not, then what are the next steps that you folks take to correct their situation?

Michael Nark: That’s a very good question. That’s primarily what we do on the demand side of our business. And what it really is that in a retailer usually like to have a more common look and feel to their stores across their portfolio. And as you can expect, they cross multiple geographies and multiple time zones, etcetera.  But what happens over time is that if there isn’t someone looking at or maintaining what that operating environment looks like in a twenty-four by seven type of environment, various locations will actually reduce or change against those operating parameters. And so in essence, you may have a different look and feel of a store in Georgia versus one that’s in Massachusetts versus one that’s in California.

And what we then are able to do is just come in and essentially impact those and bring those stores back to standard operating procedures, if you will, so that that look and feel is maintained. The result and impact of that then is obviously a reduction, hopefully, in the amount of energy that they’re consuming in those particular stores that were off-standard if you want to think about it that way.

Rasika Ranganathan: Okay. So your clients, you’ve mentioned, are mostly retail business. Do they span nationwide since some of them can be franchises, and how do they contact you? Are they usually whatever’s locally in Georgia and if they happen to be franchised, then is that how you go about….

Michael Nark: Our business model is an America-focused business model, and retail is our market segment. And where our approach to that market is to be able to help drive a standard energy strategy and energy plan for a retailer who typically has the common problems of locations that are geographically disbursed, cover multiple geographies, time zones, weather zones, etcetera. And our approach is to deliver a unified solution for them so that they can get a view of how all those stores are operating from one central area. And we typically provide that view to them through an energy portal that we call Energy Analytics. And that allows them to essentially see what’s happening across their entire portfolio at any point and time that they want to see that.

Today, we manage about sixty-five thousand or touch about sixty-five thousand retail locations across North America. And, again, that geography is disbursed all the way from the northern regions of Canada down to Central America in some cases and, of course, east or west in terms of the U.S. borders.

Rasika Ranganathan: Okay. Can you give us some examples of some of the clients you’ve worked with in the past?

Michael Nark: Absolutely. We have many strong clients, of course, and hope to have many more in the future. But a couple of mention is Doughertry is a big user of our services. Home Depot is a very large user. Dress Barn and several others that are worth mentioning. Burger King is actually a very good user of our systems as well. So we span both what we consider small box retailers all the way to large box retailers and including restaurants or quick-serve restaurants as well.

Rasika Ranganathan: Based on the business strategy and cost structure, do your clients find that they can actually strike a balance between efficient energy consumption and their cost effectiveness?

Michael Nark: I think they can today. I will say honestly I think most of the drivers is typically around cost savings first or cost containment first. And that’s usually what drives folks to look at or clients look to Prenova as a solution provider. But it typically is driven cost first and as they understand the levers, if you will, if they can pull or manipulate, they understand the balance that has between cost as well as business strategy, environmental needs and requirements, consumption patterns, etcetera. But make no mistake that the initial response is clearly around cost driver first.

Rasika Ranganathan: Okay. Can you maybe provide an example of perhaps a client that you were working with that had to change maybe their business structure or their energy efficient plan in order to reach a particular goal?

Michael Nark: Sure. There’s many examples in our portfolio that do that and the most simple one to address or look at that hits home for all of us is that I’ve talked earlier about various portfolios that a client has or stores that a client has in maintaining operating standards across that. And a simple example of where a benefit that we provide would be is that as we go in to looking at those stores, they typically have what they call standard operating set point for when the store is inhabited or open. And that may be seventy-one or seventy-two degrees. The first thing that we’re able to do is ensure, first of all, that all of those locations are maintained at seventy-one, seventy-two degrees at set point.

And then the second part of it is we made a recommendation in one client’s particular case who had a desire to drive down energy cost or energy spend that the impact of a one-degree reduction in their occupied set point in the winter hours or wintertime versus in summertime, increasing it by one degree. Actually, had an impact of almost a half a million, a little more than half a million dollars to their energy spend on an annualized basis. So that’s an example of something that we would actually recommend.

And I think on the supply side of the business a lot of the opportunities exist where we can actually deliver a different approach for how that client procures natural gas or electricity. They may be very, very risk averse and want t lock in. And we’re actually able to work with them to say that may not be the best strategy given what you’re doing in a marketplace today and arrive at a better rate structure for them than what they were currently at. And in some cases, that can be as much as to two cents to three cents per kilowatt hour of usage which, depending upon the number of locations, where impacting can add up very quickly. Again, be hundreds of thousands of dollars in terms of benefit.

Rasika Ranganathan: Okay. Out of curiosity, especially the clients that you work who are part of a franchise, is it true that before something is standardized the particular client forsees if it is in fact effective or is that something completely different?

Michael Nark: No, I think we’re fortunate enough that we have enough of a portfolio under management today that a lot of times you don’t have to go through that test or trial period. But there are certainly prospects and new customers who do ask that question and want to go through that. Historically, probably, one or two times a year would we be asked to essentially go into a bit of a pile-up performance period before we actually would do a continual rollout or a total rollout to the portfolio. As the marketplace becomes more educated about the benefits of controlling and managing electricity, more and more folks are doing it. So less and less are requiring to prove it first before it gets rolled out to concept.

Rasika Ranganathan: Okay. In your opinion, are businesses becoming more responsible with their energy consumption  nowadays?

Michael Nark: I think they are. By and large, they are. I think they’re finally realizing that energy is a controllable expense for a long period of time and prior to the volatility that we had in the marketplace a year and a half or so ago, there was a perception out there that it is what it is. I have to deal with it. I can’t do anything to change it. And as the advent of technology has come along, and we’ve seen that disruption, if you will, in the marketplace late the year before last, that’s opened up a lot of eyes that says I can’t actually manage that. And the result in the fact being, I can’t actually save dollars and improve my balance sheet.

Rasika Ranganathan: Okay. Would you say it’s wiser for a company that’s just now starting up to contact you beforehand so that they can make sure that they’re energy efficient from the start or is it better that they have a solid business structure before contact you?

Michael Nark: Both. It’s not a requirement for us to do one or the other. We certainly believe we can help both of those examples of potential clients. I think on the front-end side where a new customer or new prospect may just be looking at what to do, our involvement can be from day one helping them define and roll out that strategy such that it meets the driver that they’re trying to influence in the marketplace and obviously in their business. And in the latter stages where a client has actually started through deployment of some type of a  energy strategy, we can actually pick that up for them and drive that through the remaining portion of their portfolio. And based on our expertise and historical knowledge, be able to impact that probably a little bit more indefinitely than they could on the year-over-year basis or a month-over-month basis if you want to think about it that way.

Rasika Ranganathan: Okay. Are there any important take-home messages you have for our audience?

Michael Nark: I think there are. The first thing, we mentioned earlier, is that energy is controllable. It is indeed a controllable expense, and you should begin to look at it that way. And from that, you can actually see some fairly significant benefit in terms of your operating costs if you work proactively at trying to drive down energy costs. And the good thing about actually working on energy costs is that if you can reduce it, it really is a very good financial barometer to driving operational improvement or efficiency. And clearly from that you can obviously add value to the business overall because you’ve reduced operating expense.

Rasika Ranganathan: Okay. Is there anything else you would like to elaborate that I didn’t touch on?

Michael Nark: I think so. We talked a little bit about the market and the fact that folks are now realizing that energy cost or energy spend is controllable. I think as we look in the future, one of the unique things that Prenova drives into that market or into that opportunity is the fact that we span both the supply and demand side of the spectrum. And with that, we have a unique value proposition that we can bring to the marketplace. And what enables that more so than in the past years has been much of the folks are on the smart grid and the improvement actually, if you will, of the distribution or the transmission of electricity for locations that are out there. And as that smart grid gets more and more deployed, it becomes more and more intelligent tools and services and solutions that a company like Prenova offers become much more attainable and much more usable and much more value-added to the potential marketplace in such that it allows us, as a supplier of services to integrate even more so a supply-demand energy strategy and plan for a client base that  has the ability to make moves in a near dynamic environment where you’re changing your operating parameters and your electricity consumption patterns in fifteen to twenty minute increments versus historically that’s been done probably on a month-to-month basis at best. So there is tremendous opportunity out there to leverage the infrastructure that’s being built. And, of course, the tools and suppliers that exist on top of that infrastructure to help, again, drive down or more specifically control and maintain energy spend as you want to as an operator out there in the marketplace.

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