Take charge of your energy bills
Demand-control technology supports multiple approaches for taming energy costs without sacrificing production efficiency.
By now, most manufacturing managers fully understand the business case for conserving energy in the production process. However, many still struggle with finding the right energy-conservation strategies.
The biggest challenge continues to be striking the proper balance between the twin corporate mandates of cutting energy costs and meeting customer-focused metrics such as high product quality and on-time delivery.
The inherent need for precision when building products to specifications adds a level of complexity to the energy-management equation.
No matter what you’re making—an electronic circuit, a wooden piece of furniture, a plastic toy, or a massive piece of metal equipment—parameters such as the amount of time or the temperature at which each operation is performed are crucial to delivering products that customers are willing to buy. And maintaining those exact parameters requires the use of specific amounts of energy.
Manufacturers’ quest to be cost-efficient energy users has become even more complicated in recent years as utilities have instituted billing practices that penalize heavy energy consumers. These programs are especially harsh on those who consume large amounts of energy during times when demand on the power grid is highest, which historically has been right in the middle of most manufacturers’ workdays.
Importance of energy management
Navigant Research argues that efficient energy management will soon be as important as product quality in determining manufacturers’ competitive position within their respective industries. That importance, according to Navigant, is reflected in the compound annual growth rate for industrial energy management software and services.
At its current growth rate, the global market for industrial energy management solutions will nearly double over the next 7 years, going from $11.3 billion in 2013 to $22.4 billion in 2020, according to a recent Navigant study.
Naturally, the large industrial automation equipment suppliers, such as Rockwell Automation, Siemens, Invensys, and Schneider Electric, among others, will be major beneficiaries of this rapid growth. However, Navigant believes there are potential opportunities for other players as well.
For instance, major IT companies like IBM and SAP, with expertise in handling large data sets and sophisticated real-time business analytics, could make inroads, along with smaller niche players who are able to offer unique products and a special level of customer service.
When it comes to the niche players, Navigant argues that their ultimate success will be tied to their ability to link their unique solutions to the energy-management ecosystems already being built by the larger players.
Seattle-based Powerit Solutions fits Navigant’s profile of a smaller vendor that’s poised to prosper from the impending industrial energy management boom.
“Our technology is aimed at providing energy management solutions for industrial users,” Patty Solberg, product marketing director for Powerit Solutions, said in a recent interview.
Powerit offers software applications that address three aspects of industrial energy management:
- Peak-demand management
- Automated demand response
- Automated participation in real-time pricing programs.
Powerit has packaged its solutions in one software suite called Spara DM (Demand Manager).
Avoid pricing penalties
The peak-demand management application, called Spara Demand Control, helps companies avoid the pricing penalties associated with using large amounts of energy when there’s heavy demand on the power grid. And it does so without forcing users to lower production throughput, Solberg said.
“We have more than 180 installations of demand-management technology across North America, with a proven track record of reducing peak demand charges in industrial facilities anywhere from 10% to 30%,” she said. “That translates to a reduction in utility bills of 5% to 10% or more, depending on the size of the facility and its specific demand charges.”
Spara Demand Response, the second application in the Spara DM suite, equips companies to become active participants in a utility company’s demand-response program. Under a demand-response program, an industrial user can reap substantial financial benefits by agreeing to severely limit consumption during periods in which there’s extreme stress on the power grid.
The benefits can be discounts on energy bills, or they can be cash rebates if the user engages the services or a company that specializes in aggregating power and managing energy curtailment programs for groups of users.
It’s nearly impossible for manufacturers to achieve the full benefits of a demand-response program without the aid of sophisticated technology. That’s because these programs require users to reduce consumption whenever the utility announces a “demand-response” event.
While utilities, through their own use of technology, typically can predict when a demand-response event will occur, there are times when program participants get little advance warning of the need to cut power usage. Most utilities try to give users at least 24 hours to respond to a demand-response event. However, the reality is that as the world’s appetite for power grows, the instances of shorter notices—sometimes only a matter of minutes—are becoming more frequent. And those short notices can cause major problems for manufacturers who are trying to maintain production schedules while holding the line on energy costs.
That’s why manufacturers wishing to participate in demand-response programs need solutions like Spara Demand Response. The application allows for mapping energy consumption across an entire production network, providing the insight necessary to determine which operations can be idled to accommodate any demand-response event without jeopardizing critical production schedules.
Finally, Spara Dynamic Pricing helps companies make intelligent choices about cutting energy use if their utility operates a dynamic pricing program, which causes prices to change constantly based on market conditions. These programs typically offer users even less warning of price changes than they would get from a demand-response event. Under dynamic pricing, the price of energy could change multiple times in one day. However, companies that participate in these programs find them worthwhile because they can yield rate discounts of 20% to 40% when compared to traditional metered rates.
Spara Dynamic Pricing currently is the least used of Powerit’s three applications because utilities have been somewhat slow in rolling out dynamic pricing schedules. “Today, we’re seeing a lot of interest around demand control and automated demand response,” Solberg said.
Regardless of the specific applications being used, the setup and configuration of the Spara technology is the same.
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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.