One of the most unique aspects of Chevron Energy Solutions is that its largest customer is essentially itself — parent company Chevron Corp. Jim Davis, the energy group’s president, is quick to report that the relationship is mutually beneficial — and the cause of sustainability.
Chevron Energy Solutions is one of the largest installers of solar power in the U.S. public sector, including a recent innovative sustainability program involving the city of Livermore, Calif., expected to reduce its energy costs and save taxpayers nearly $10 million over the next 25 years.
That kind of savings is exactly what Davis and Chevron Energy Solutions have been working toward.
Earlier this year, Smart Business caught up with Davis at the EY Entrepreneur Of The Year World Awards in Monaco to discuss sustainability efforts within the energy industry and the U.S., as well as how the company remains innovative.
Invest in sustainability
To date, Davis and Chevron Energy Solutions have helped customers save a collective $1 billion in energy costs — and those solutions also include cost efficiency for Chevron itself.
“Chevron has roughly a $7 billion annual energy spend running our worldwide operations,” Davis says. “Not only do we make a lot of energy, we use a lot of energy to make that energy. We go all around the world to our upstream and downstream operations and look for ways to reduce our energy footprint.”
Since 1992 Chevron has improved the energy efficiency of its own operations by more than 30 percent. Had the company not done that, its energy spend would be around $10 billion instead of $7 billion.
“Our company is growing rapidly, and we’re making huge capital investments in new projects, so our energy spend is always going to be increasing because of the growth of the company,” he says. “It’s really important that we manage our existing operations, as well as make sure that we build into the new projects.”
While Chevron itself is Davis’ single largest customer, Chevron Energy Solutions also offers those same services externally.
“We go out into the communities where we do business, and we leverage our expertise around energy efficiency, power system reliability and renewable power to help those communities lower their cost of energy, improve aging facilities and look for innovative ways that we can help impact what those entities are faced with every day,” Davis says.
Companies, towns and cities have to address sustainability efforts whether it’s due to internal or external pressures. If these organizations are not aware that climate change is a real phenomenon, they are being made aware by shareholders and stakeholders.
“At Chevron we see sustainability as a core part of every initiative that we do,” Davis says. “One of the largest projects that Chevron has is our large natural gas project off the west coast of Australia, a highly sensitive environmental area.
“There are tremendous natural gas deposits there that we can develop safely and environmentally friendly and sell to the Asian markets where they have a voracious appetite for energy, and natural gas is the cleanest burning natural gas there is.”
What made the Australian government invest in this project despite its environmental concerns for that sensitive area is that it’s going to become the largest carbon sequestration project in the world.
“We are going to capture all the carbon that’s emitted from producing the natural gas and inject it down so there is a minimal environmental footprint,” he says.
Another aspect of energy that Davis and his team are focused on is power reliability, especially in emerging countries.
“Power reliability is a challenge that every emerging country goes through,” he says. “In the United States, our electric grid is probably the most reliable in the world, but it’s now aging and in need of upgrades and infrastructure.
“We’re working on the opposite end of the spectrum. Emerging countries like different African nations need the basic infrastructure to provide high-quality, reliable power so they can attract manufacturing and technology companies.”
While the U.S. has one of the most stable electric grids in the world, it still lags behind some other countries.
“We’re probably behind a few other developed countries that either for price needs or other drivers might be slightly ahead, but the United States is a huge nation geographically,” Davis says. “Some of the countries that may be ahead of us are much smaller in terms of geographic footprint. Therefore, the challenges of meeting some of those sustainability efforts are easier.”
Focus on innovation
As any business goes through its various stages of growth, the leadership has to use different sets of skills. This year marked Chevron Energy Solutions’ 13th year as part of Chevron.
“In the startup days, you have to be very innovative, hire and retain talent, refine your business as you deploy in the marketplace, and you learn things from it,” Davis says. “You also have to be the steady hand, the calm in the storm, as you create this business and exude the leadership and confidence that this business will be successful.”
Today, with a solid track record of business success, Davis can focus on what’s next and think more strategically and longer term than he could in the early days.
“I think more about developing people, successors for key positions and recruiting and developing future talent, he says. “I think about execution of our projects and our business to make our company as successful as possible.
“In the long term, I’m thinking about innovation and new growth opportunities for the business. My style has evolved as the business has matured.”
As Davis has grown in experience, he has learned how to remain disciplined and focused on the core things in his business versus stretching too far.
“When you’re an entrepreneur, you feel like you have never met a deal that you didn’t like,” he says. “You only have limited resources and limited time to be successful. You have to stay disciplined and focused and being able to say what we are not is every bit as important as being able to say what we are.”
That ability has led Davis and Chevron Energy Solutions to remarkable success and won him the EY Entrepreneur Of The Year 2004 Northern California Award.
“We didn’t build a business to win an award, but what I found was that winning the award was meaningful to our employees,” he says. “It was a source of pride to our employees that we were recognized externally for the great work that they were doing.”
Attending events such as the Entrepreneur Of The Year Awards gives Davis opportunities for networking that he normally wouldn’t have.
“I run in energy circles, and it’s rare for me to meet the CEOs of companies in consumer products,” he says. “In many cases, those connections have led to unique business opportunities for us.”
Those kinds of opportunities, while beneficial, are a small percentage of how Davis drives innovation at Chevron Energy Solutions.
“There’s a real creativity to the solutions we provide to our customers, our engineers are looking at creative ways to solve our customer’s biggest challenges around energy,” Davis says. “At the same time, our customers want us to keep them on the proven edge of technology and the proven edge of innovation as opposed to the cutting edge.”
With other technologies, you make a decision to buy a product you may have to replace in just three to four years, but energy infrastructure has to work for decades.
“We want to innovate, but we want to make sure there’s going to be the long-term performance there,” he says.
One of the ways that Davis encourages innovation is through partnerships with technology startup companies.
“We look for alliances and what’s next in technology that can drive improvements and enhancements in our industry,” he says. “When we see a technology that’s promising we’ll start working with them and provide them with real-world market feedback.
“Secondly, as those technologies become ready for demonstration projects, Chevron will host those and try them out ourselves. That gives us experience with how those technologies perform and how to install them and operate them. That gives us the data and confidence to help them get to commercial deployment.”
Once those technologies are viable and ready, Chevron Energy Solutions can act as a built-in sales distribution channel.
“Our people are always looking for innovative ways to do things with the discipline of knowing that at Chevron we have to represent our brand and stand behind everything that we do and our customers expect us to keep them on that proven level of technology,” Davis says. ●
- Focus on sustainability in all aspects of your business.
- Change your leadership style and skills as your business matures.
- Find new innovative opportunities in your industry.
The Davis File:
Name: Jim Davis
Company: Chevron Energy Solutions
Education: Bachelor of science degree in business administration from The Ohio State University.
Items of note: Since 2000, Jim Davis has built Chevron Energy Solutions into one of the world’s leading energy efficiency and renewable energy services companies and the largest developer of solar power solutions for education facilities in North America.
The company was named a Top 50 firm by Fast Company in 2009, and in 2004 Davis was recognized for his achievements as the Northern California winner of the EY Entrepreneur Of The Year Award for social responsibility.
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How to reach: Chevron Energy Solutions, (415) 733-4500 or www.chevronenergy.com