Step-by-step on energy management software

When it comes to industrial energy and its relationship to the operational excellence model, energy directors and line of business leaders are constantly challenged with the management of energy procurement, use, and reporting

04/26/2013


To effectively manage the flow of energy through an organization, it takes a robust operational excellence program with the right combination of leadership, business process, and technology. Taken a step further, aligning these resources with operational, financial, and environmental objectives, executives can take a measured approach to realizing energy management improvements.

When it comes to industrial energy and its relationship to the operational excellence model, energy directors and line of business leaders are constantly challenged with the management of energy procurement, use, and reporting. These three areas can be considered the sub-categories of industrial energy management software, each with its own respective functionalities and best practices.

When it comes to industrial energy and its relationship to the operational excellence model, energy directors and line of business leaders are constantly challenged with the management of energy procurement, use, and reporting. Courtesy: LNS Research

In comparing and selecting an IEM vendor, there are a few areas on which executives should focus. This article will examine the role of procurement in the LNS Research Industrial Energy Management software framework.

In the area of procurement, there are six key areas of functionality that any industrial company should focus on when selecting an IEM software provider: 

1. Risk management

The energy and manufacturing industries are inherently risky. Prices are clearly subject to volatility, as demonstrated by recent price changes in oil and natural gas. Similarly, the amount of energy an industrial company requires varies as the demand for the goods manufactured varies. Both of these market forces can put energy procurement professionals in a precarious position. They need effective tools for managing the uncertainty of energy prices and energy requirements.

Risk management functionality provides capabilities to model and visualize the risks associated with energy prices and requirements, enabling energy professional to make optimal decisions. Inputs to these models include energy market data from third parties, internal data of energy needs, and demand forecasts. It should also be noted that the use of these tools is often coupled with analysts or consultants from the software company to augment internal resources at the industrial company itself. 

2. Contract management

With the deregulation of energy markets, the emergence of peak load pricing and incentive programs for coordinating the consumption of energy with the needs of the grid are a focal point in energy management strategy. As a consequence, the complexity of energy contracts has become a challenge for many industrial companies. It’s important for companies to have expertise and software that can assist in evaluating different contract structures.

The utilization of incentive programs like demand response or peak load pricing can seem like an instant benefit for an industrial program. However, these contract decisions are often not fully evaluated and better terms could have been negotiated. IEM software can facilitate the integration of contract management functionalities and expertise with other areas of procurement, so, for example, there’s insight into how contract terms may impact risk or a company’s ability to shed peak load before commitments are made. 

3. Billing management

With contract complexity, multiple sources of energy supplying a large industrial facility, and many large industrial facilities selling energy back to the grid, ensuring the accuracy of utility bills and minimizing the internal costs associated with managing billing processes is another major challenge for industrial companies. Billing management solutions leverage a combination of business process outsourcing to replace or augment existing resources.

These solutions contribute to efficiency gains with the use of software that automates the collection of meter data and compares it to billing data, which often exists in disparate financial or ERP systems. The analytics provided as part of this functionality can highlight errors or other irregularities in either billing or consumption. This software is generally integrated with the contract management system and can also contribute insights into the use and efficiency of energy in operations. 

4. Peak load management

Many industrial companies today have moved to an environment where the price of energy depends on the demand of the grid. In these situations, there can be substantial savings in strategically shifting production to periods that have lower energy costs. Of course, there are also challenges to managing this process. Most energy programs today do not include energy on the bill of materials, and planning systems such as MRP do not account for changes in energy costs.

IEM software provides functionalities for optimizing consumption as it relates to peak loads. Data visualization, forecasting, and automation functionalities allow energy professionals to understand where energy is being used, when it’s being used, and how consumption can be altered to avoid premiums associated with peak loads. These functionalities can provide direct impacts to the bottom line.

5. Demand response

Today, most energy professionals have an asset they don’t even realize is available: the ability to curb energy consumption during periods of intense stress on the grid. By participating in demand response programs, large industrial companies can provide capacity (in the form of unused energy) to aggregators that can then be sold back to grid operators at a cost that is substantially less than bringing additional generation capabilities on-line.

There are, however, challenges in dealing with a demand response event. It often requires quick response time and the ability to curb energy use for both critical and noncritical production processes. For the most part, this is still a manual process that requires engineers and supervisors quickly traversing the plant and communicating plans to operators and maintenance personnel.

In the future, more and more companies will be using software for automating energy curbing programs. Building management and automation systems will be able to sense and react to demand response events, eliminating the need to manually alter energy consumption. 

6. Taking a suite approach

Within IEM software, procurement is an important part of the overall process, and a suite approach is critical to ensuring that all stakeholders are aligned with energy management objectives. It’s not out of the ordinary for many of the areas mentioned above to be managed in silos rather than holistically throughout the organization. In fact, this is one of the energy management challenges faced by many manufacturing and industrial organizations.

Standardizing, centralizing, and streamlining the procurement side of energy management with software is a central component to realizing operational excellence. It’s also required to effectively support an organization’s broader enterprise sustainability management initiatives. 

For more information on IEM, read LNS Research’s Industrial Energy Management Best Practices Guide



No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2013 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Leaders Under 40 program features outstanding young people who are making a difference in manufacturing. View the 2013 Leaders here.
The new control room: It's got all the bells and whistles - and alarms, too; Remote maintenance; Specifying VFDs
2014 forecast issue: To serve and to manufacture - Veterans will bring skill and discipline to the plant floor if we can find a way to get them there.
2013 Top Plant: Lincoln Electric Company, Cleveland, Ohio
Case Study Database

Case Study Database

Get more exposure for your case study by uploading it to the Plant Engineering case study database, where end-users can identify relevant solutions and explore what the experts are doing to effectively implement a variety of technology and productivity related projects.

These case studies provide examples of how knowledgeable solution providers have used technology, processes and people to create effective and successful implementations in real-world situations. Case studies can be completed by filling out a simple online form where you can outline the project title, abstract, and full story in 1500 words or less; upload photos, videos and a logo.

Click here to visit the Case Study Database and upload your case study.

Bring focus to PLC programming: 5 things to avoid in putting your system together; Managing the DCS upgrade; PLM upgrade: a step-by-step approach
Balancing the bagging triangle; PID tuning improves process efficiency; Standardizing control room HMIs
Commissioning electrical systems in mission critical facilities; Anticipating the Smart Grid; Mitigating arc flash hazards in medium-voltage switchgear; Comparing generator sizing software

Annual Salary Survey

Participate in the 2013 Salary Survey

In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.

Average salary across all job titles for plant floor management rose 3.5% to $95,446, and bonus compensation jumped to $15,162, a 4.2% increase from the 2010 level and double the 2011 total, which showed a sharp drop in bonus.

2012 Salary Survey Analysis

2012 Salary Survey Results

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.