Sustaining an energy plan
Sustainability – the efficient use of today’s resources to avoid depleting future resources – is still moving past its buzz-word status to be a real strategic initiative. The inevitable link between energy and sustainability remains strong, and now may be the best time to focus attention on the issue.
The startling plummet of energy prices in the last quarter of 2008 may be the only silver lining in the dark cloud of manufacturing’s recession. Costs for oil, natural gas and other non-renewable fuels fell sharply as the recession took hold, giving plant managers one fewer line item to worry about in the short term.
That doesn’t mean the energy issue has lost steam, though. Sustainability, the efficient use of today’s resources to avoid depleting future resources, is still moving past its buzz-word status to be a real strategic initiative. The inevitable link between energy and sustainability remains strong, and now may be the best time to focus attention on the issue.
“Focusing solely on energy conservation can reduce costs and emissions, so it is an obvious starting point,” said Greg Gorbach, analyst for ARC Advisory Group, Dedham, MA. ARC is currently conducting a study on energy use in the process industry, which will be available this spring. “Most manufacturers recognize that low fuel prices are a short-term phenomenon, and while that may cause some delays, it does not fundamentally change things.”
That view is shared by John Murphy, director of global industry and product marketing for the enterprise asset management business at Infor, Alpharetta, GA. “The fact is energy demand is increasing and energy supply is close to, if not at capacity, which leads to continued increases in energy prices,” said Murphy. “Companies that can’t manage and control their use of energy will not be able to compete. Companies that can do it effectively will have an edge.
“Overall, we’re seeing manufacturers place more of the emphasis on reducing energy consumption and related costs, with sustainability and emissions reduction a complementary benefit.” Murphy added. “When more emphasis is placed on sustainability versus cost reduction, the driving force tends to be related to complying with existing or pending regulations, or improving brand equity.”
Gorbach said remaining committed to a sustainability strategy when energy prices are low is driven not by the cost of energy, but by the cost of the systems in place to measure and manage its use. “We have moved from an era when energy was cheap and control technology expensive, to an era where energy is expensive and technology is relatively cheap,” he said.
The Sasol experience
Sasol is a South Africa company involved in mining, energy, chemicals and synthetic fuels. Its effective use of fuel in the manufacturing of fuel, therefore, is a company imperative. The company draws water from a nearby river, treats it and mixes it with recovered condensate to produce steam. When steam demand was high, the most important issue was maximizing production. When the focus was on gas-to-liquid technology, the steam demand fell and the emphasis turned to efficiently producing steam.
“One of the steam business’s key customers is internal electrical power generation. If electrical power generation cannot meet demand, then they must buy electricity off the grid, which can be very costly,” said Russ Barr, director of consulting for Invensys Process Systems, Foxboro, MA. Invensys was the vendor that put together the system solution for Sasol. “To optimize its efficiency and strengthen operations, Sasol set out to find new technologies that could help monitor and manage energy usage in real time, letting technicians know exactly how much power they needed to meet internal needs, as well as how much was available to sell.”
Sasol worked with Invensys to develop both a series of dynamic performance measures (DPM) and loaded those measures directly into the distributed control system.
The DPMs were modeled in the DCS and developed for each individual boiler and steam station. Three station-level DPMs were developed: one which measured variable steam cost; one for total steam cost and for production rate; and one for emissions,” Barr said. “Each of these DPMs was decomposed further. Variable steam-generating cost for each boiler consisted of four major components: cost of coal, cost of electricity, cost of fuel oil and cost of water. Algorithms executed in the microprocessor of the DCS process these variables together at a frequency near to the cycle time of the process. The historical collection happens at a similar frequency.”
The data analysis allowed operators to ensure steam production at the lowest cost, at the right temperature and pressure while maintaining steam production levels. As demand changes, they can adjust the steam output through the system as demand changes.
The impact on profitability and accountability was significant. Costs for energy feedstocks fell 6% in the first two months of operation, and the cost of electricity to make steam dropped 4% just in the first month. Sasol realized more than $400,000 in savings in those first two months, more than the expected annual savings.
Looking everywhere for savings
Gorbach notes there are some similarities in all energy savings programs. “The manufacturers I talk to have taken many different approaches to sustainability, but the ones who take it seriously have implemented an enterprise-wide approach, with metrics, and with a governance plan linked to corporate governance,” he said. “Many of these initiatives are justified individually, and there is a lot of low-hanging-fruit.”
Quantifying those savings is an important way to bring the issue in front of the enterprise, and to make the point directly. Take the case of something generally unseen such as synchronous belt drives. Denver-based Gates Corp. took a look at energy savings in a recent white paper, and reported significant energy savings.
“As an example, a 40-hp motor, running at 89% efficiency, 24/7, with energy costs at 10 cents per kilowatt-hour, has an annual energy cost of $29,290. Converting to a synchronous drive improves motor efficiency by 5% for an annual energy savings of $1,464. Payback on the drive investment is less than a quarter of a year,” the white paper noted. “When the annual dollar savings amount is multiplied by the number of similar motors in a plant, and added to the savings from motors of all other types, a facility’s overall energy savings impact is clear.”
Another area of energy loss is at the plant’s front door: The dock area. “Loading docks can have a significant link to energy loss, safety and operational efficiency, which are important elements of LEED certification,” said Michael Brittingham of 4Front Engineered Solutions , which manufactures dock and loading solutions. “Not only does the manufacturing process or logistic operations begin and end at the dock, but if dock equipment is not applied and maintained properly, energy can escape through gaps in the dock doors, trailer door hinges and gaps around the dock leveler pit.”
Whatever the source, the savings can be significant as long as there is a plan. “We’ve seen a range between approximately 5% and 20% savings derived from an asset sustainability program that focuses on energy efficiency,” said Murphy. “We are working with customers to understand the savings they have realized or expect to realize through asset sustainability. Related studies, such as one by Texas A&M on continuous commissioning, which focused on energy efficiency of HVAC systems across more than 130 buildings, reports a 20% savings is on the table.”
The push to institute an energy savings plan extends beyond motors, pumps and electrical equipment to the maintenance department. “Companies are leveraging technologies to track and compare actual energy use of equipment against target or expected efficiency targets. This practiced is used to measure energy waste, the amount of excess energy an asset is consuming to perform its job,” said Murphy. “Maintenance practices are then applied to specific “underperforming assets” to restore energy efficiency to its designed performance characteristics. Some companies are taking this a step further by analyzing the energy consumption data in real-time and generating alerts to notify maintenance and drive corrective actions to further minimize excess energy use.”
Setting a global energy management standard
Energy and sustainability experts at the
The effort has implications for the public and private sectors alike, providing a process for managing energy use and implementing sustainable practices that would help hold down costs and minimize environmental impacts. This first-ever international energy management system standard, to be known as ISO 50001, would also level the playing field for companies competing in the global marketplace.
“Effective implementation of an energy management system standard often yields resource and cost savings, as well as risk avoidance,” said Bill Meffert, manager of energy and sustainability services at Georgia Tech’s Enterprise Innovation Institute. “Reduction in the use of non-renewable fuels provides environmental benefits to the nation, improves security and leads to use of more sustainable sources of energy. Process and behavioral changes from targeted energy management projects frequently result in reduced raw materials usage, less waste generation and disposal, and lower air emissions.”
Georgia Tech was heavily involved in developing the existing
Georgia Tech’s Enterprise Innovation Institute is administering the U.S. Technical Advisory Group for ANSI. The group is composed of many energy management experts and helps shape the U.S. position for the international standard.
Organizations interested in participating should contact Deann Desai at (770) 605-4474 or (deann.desai(at)innovate.gatech.edu).
Best practices in sustainability
John Murphy at Infor offers a few basic tips on creating and maintaining an asset sustainability program:
Measure energy use at the asset level. The adage you can’t manage what you don’t measure applies here. This practice is fundamental to any impactful asset sustainability program.
Understand the carbon footprint of assets, products, product lines and the ability to compare or benchmark performance across like assets.
Incorporate energy efficiency into asset lifecycle practices. Another key step of the asset lifecycle is the disposal step, and companies are striving to factor energy usage and costs into the repair/replace decision to improve financial performance of their assets.
Continuous improvement. Sustainability is on-going and iterative. We see it as becoming part of a company’s DNA.
“Companies are being very pragmatic in their approach to sustainability, focusing on areas where they can achieve benefits quickly and with impact on the business,” Murphy said.
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2012 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.