Taking Charge Of Energy Costs


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One week, energy prices are up, the next they are down, making budgeting, at the very least, challenging, and leaving facility executives and CFOs unsure of what to do to mitigate and keep production costs more predictable. Energy costs can make up as much as 20 percent of a manufacturer’s operating costs, yet this expense continues to hold significant opportunities for cost savings. According to an Ohio Manufacturers’ Association member survey, more than a quarter of the participating manufacturers responded that they could experience reductions in production and/or employment because of energy costs and supply shortages.

The International Profit Association reports that rising energy and fuel costs is the number one issue affecting small businesses. The 2005 Interland Business Barometer actually named energy costs and supply shortages as a top threat to business.

Sure, making equipment modifications and installing new, more energy-efficient equipment is one method to reduce energy costs. However, capital expenditures may not be feasible, especially for small manufacturers or ones that are already experiencing financial difficulties. Another energy reduction method that is gaining interest is the no-cost energy management techniques. The U.S. Department of Energy estimates that, on average, industry can reduce energy consumption by 20 percent, and approximately 30 percent of those savings can be achieved without capital investment using simple procedural and behavioral changes done in a systematic fashion to provide continuous energy improvement.

Management System Philosophy: Similar to ISO 14001, an energy management system provides checks and balances to ensure that the efforts initially implemented are not neglected and that energy management knowledge is not lost through employee turnover or lack of documentation. The Envinta energy management principles originally developed by Energetics of Australia used the ISO principles of Plan-Do-Check-Act to provide a framework for developing an energy management system to sustain energy savings. TechSolve (Cincinnati, Ohio) helps organizations do this work properly.

Plan: The first element of an effective energy management program is leadership, which includes top management commitment, an energy policy, and an appointed energy manager. Top management needs to support this system, provide the necessary resources including labor and financial resources, and endorse the system to ensure that it can be effectively implemented and maintained. Without this commitment, the system may be established, but the long-term benefits of sustaining the best energy management practices will not be realized. Assigning a single individual to oversee the energy management system and assigning accountability through personal incentives and goals will help to drive the management system and ensure its continuity.

Understanding the process parameters and energy-consumption allows an organization to identify energy- saving activities. This is accomplished through a baseline facility-wide technical audit that identifies projects with quick payback savings. By quickly demonstrating that the energy savings are possible through improved management techniques, the more likely employees will readily adopt the new energy management system. The key is to sustain energy savings by continuously seeking additional opportunities and developing a strategic plan to coordinate future energy projects.

Do: Implementing energy saving activities and procedures involves the entire facility to some degree. Making all employees aware of the company’s desire to save energy and how they can participate in that effort—even minor changes such as turning off lights and computers when not needed—is a good start and simple to accomplish.

Reminders such as posters, energy awards incentives, and time set aside in meetings for energy discussions help to reinforce those concepts. Developing an energy committee or using an existing committee to drive energy idea exchange will increase employee buy-in if the committee represents all areas and levels of the plant, especially including maintenance and operation employees, which have the most control over equipment operating efficiency. In addition to basic awareness training, certain facility workers will need more in-depth training to enhance their current job skills and develop new skills sets. Two of the primary candidates for job training are operators and maintenance. Operators should be trained to efficiently operate the equipment at maximum energy efficiency and be able to identify and have authority to shut down equipment as needed to conserve energy. Likewise, maintenance will need to be trained to identify and address energy-saving opportunities and be able to adjust and maintain the equipment to achieve maximum energy efficiency.

The skills set of internal personnel once established and documented will help determine the resources needed by external sources to address energy issues. Planned major energy-related projects will be more easily implemented by having a professional review project design to ensure energy efficiency is incorporated into the initial design. Defining the energy efficiency criteria for major equipment will aid in the replacement and retrofit of this equipment for use by maintenance. New technologies and energy-saving techniques are solicited from staff during energy brainstorming sessions and committee meetings. The industry norm for energy efficiency is known for the major equipment through trade associations, equipment vendors and consultants, and publications.

Check: Having a means to measure the energy performance of equipment and processes allows for the ability to determine both optimal and out-of-specification conditions in terms of energy efficiency. This task is accomplished through establishing set points or levels for both of these conditions and providing instructions to operations and maintenance on how to address the issue when limits have been exceeded. Information on the incidents which caused the out-of-limit conditions is reported to the energy manager to take action to prevent future incidents.

Act: Establishing targets and goals to reduce energy and to conduct energy-related activities such as awareness and training provides a driver for improvement. Top management establishes these targets and goals with technical staff to provide a measure to gauge progress. Evaluation of the status of meeting targets and goals, progress towards energy projects, and changes needed to improve the energy management system are discussed in management meetings to determine changes needed in the system and resources needed to be allocated for improvement.

State of Ohio/TechSolve Partnership: The State of Ohio has funded activities to improve the competitiveness of local industries through improved energy efficiency and management practices. The Ohio Department of Development (ODOD) has also made available grants and loans to develop energy management system plans, technical audits, and equipment upgrades to save companies money and keep jobs in Ohio. TechSolve has partnered with ODOD to deliver these services to more than 120 Ohio manufacturers.