Resiliency, sustainability and conservation best practices
Duke Energy helps customers with conservation, sustainability and carbon goals
Energy companies are now providing more than just electricity. The Duke Energy Sustainable Solutions nonregulated commercial brand of Duke Energy helps its customers with energy resiliency, carbon neutrality, energy conservation and more. Plant Engineering recently spoke with Brent Tracy, manufacturing key segment manager for Duke Energy Sustainable Solutions.
An edited version of the interview follows.
PLANT ENGINEERING: Your division focuses on resiliency and sustainability solutions for plants and engineering. Tell us about how you go about doing this. What do you look for? How do you execute those solutions?
BRENT TRACY: We go through the discovery process with the customer to get to know more about their operations. They get to know more about how we can help them. We qualify and scope what we need to study and design to understand their goals. From that discovery process, we’ll take a few items that seem to be a fit, whether it’s a backup generator, or maybe it’s a solar project we’re going to do with them, or some energy conservation measures. Then, we’ll do a feasibility analysis with them.
The discovery process doesn’t cost that much; it’s something we do as the cost of doing business, because nobody wants to waste time going after science experiments. We’ll gauge the interest in initial findings, whether it’s resilient power offerings or sustainable offerings like solar and wind. We’ll develop a strong business case. Once we do that, we do a utility analysis to find out what their costs are. We’ll identify locations for a possible deeper dive. I call that an “investment-grade assessment.”
That’s where we go to their sites and do that deep dive, doing site audits to find out what they need. If its energy conservation or compressed air and lighting. It might be HVAC. It might be that we’re looking at putting solar on their site. Maybe they are interested in a microgrid because they’ve been having power issues.
Then we try to put a framework around what we’re trying to do next. We get into scope development. Once that exercise takes place, we come back with findings reports and preliminary design, cost and estimates, and ask, “How are we going to pay for this?”
There are several ways of doing that. We’ll put together some proformas, and once all that gets worked out, the customer typically says, “This is a great idea. We want to work with you guys.” Then we’ll execute a contract, and everything goes through legal review, and then it goes into the installation phase, and construction services, project managers, buying equipment, etc.
Duke Energy Sustainable Solutions has a design, build, own and operate, maintain model, where we do these services and solutions on what’s called an “as-a-service” offering. Many customers are interested in doing this with us, which goes into more of a support phase. Many folks are interested in sustainable solutions for their businesses because investors are interested in that. People who buy their products are interested in that, so the supply chain is interested in that. The environmental, social and corporate governance (ESG) planning is a big part of that because that’s the driver for why they’re wanting to do certain things beyond just simple payback.
PLANT ENGINEERING: Does your as-a-service model get into the operational or just the maintenance aspects?
TRACY: Both. I’m working on such a feasibility case with one customer. We’re looking at taking over a portion of what they normally did themselves, like their HVAC and their generators. Those kinds of things outside their actual operations. If you make computers, or whether you do food processing, we don’t want to get into their actual business and the secret sauce of what makes their business, their business. But the things that support that business from a utility standpoint, like the electricity. You could call it utility, all the central plant kinds of things. We look for those kinds of opportunities. If you will shift risk from them to Duke, we do that. We offer that as a service.
Instead of the manufacturing plant coming up with its own capital to pay for it, we turn it into more of an operating expense where they pay monthly, and they get all that stuff put in there, and they can use their monies for their capital dollars for something else like a new assembly line — everything that impacts the business.
PLANT ENGINEERING: Talk about trends within the industry and how you’re working with customers to improve their operations and make them more resilient?
TRACY: Most businesses obviously were impacted by COVID-19, which impacted their supply chain. Certain items that came from China or other places, suddenly they’re missing everything from washers to capacitors and resistors to what have you, or raw materials that used to come from somewhere else. Many companies are saying, “We have got to tighten up our supply chain. So, we’re going to reshore some of this stuff. We’re going to start making a lot more of our own things.”
I know we’re suddenly building more chip plants back on American soil versus having to go to Taiwan, Philippines and other places farther than the U.S. That takes a long time to get started here. Labor costs have started rising; shipping costs have started rising. There’s a lot of reasons why companies are starting to reshore operations they sent overseas.
There’s a renewed reshoring effort and all that ties into what we’re doing with the customer in a lot of ways because they’re reshoring imported goods and materials — the infrastructure lacking in other countries. We have better infrastructure here. Now they’re pumping a lot of money back into their plan. They’re also reshoring a lot of capabilities. During the pandemic shutdown, people were saying, “This is a great time to modernize our plants.”
We’re going to add that automation. We’re going to add that 3-D printing. We’re going to add things that used to be done by human hands. Most companies I’ve talked to are reinvesting in themselves and having a resilient power source is now extremely valuable. What’s also tied into this is the cost of downtime, breakdowns, the cost of predictive maintenance and fault detection to make sure their operations run smoothly.
It really is all tied together. You could almost call this one conversation that has a gazillion different paths. Trends like reshoring, Industry 4.0, automation — all of that has to do with, again, coming back to Duke. We’re trying to provide a resilient power supply or source different ways we can do that. One of them is with battery storage. Another is with special generators and flywheel technology. If there’s a power bump on the grid, it won’t matter because that flywheel keeps it going, and it won’t upset their computers and electronics. Downtime is expensive. We’ve talked with several folks, and their shutdown costs — even for an hour — ranges from an annoyance to more than $100,000 because they must clean out their tools, damage to materials they’re mixing and chemical processes, etc. They must dump the ruined materials. They must get rid of it and get everything going again, then they have to reboot all the computers and the automation. And it’s just a process. That’s something that’s driving the energy resiliency offering from Duke.
PLANT ENGINEERING: What is environmental social and corporate governance (ESG)? Does ESG apply to all businesses or just industries? How does ESG work?
TRACY: ESG goals are huge right now. Some companies are mature. They’ve analyzed their operations and their culture. It’s part of a company’s annual report. When you look through ESG plans, you will find items like recycling and supply chain initiatives. They’ll have goals that put demands on external supply chain partners to have the same goals they have. Walmart is famous for this. If Walmart has this as an ESG goal, they then tell their suppliers, “You have to have the same goals, or we’re not going to stock your product.”
It has a ripple effect throughout an organization. GM just came out with similar goals. If you’ve seen some of the articles on them, they’re going to require their supply chain to match their goals as well.
I would say it will affect all manufacturing from the perspective of who you sell to, who you buy from and who’s investing in you. The reason why I’m bringing up investments is there are people who invest the way they believe. I think more than 72% of manufacturers have these additional policies and goals. Energy resiliency, carbon neutrality and energy conservation are those three main areas that we look at.
When we concentrate on those as Duke Energy, when we’re having discussions with our customers, and I specifically work with manufacturers, we’re talking about those things. “Have you done all of your LED lighting upgrades in your plant to help increase your energy conservation goals? Have you put in any solar, any renewables?”
Some people even have small gensets on hydroelectric. They’re lucky to have such a situation. Some companies even have their own wind turbines. It’s regional, and the way things operate from how people invest it, and then our electrical markets are different. PJM in the Northeast has different rules and regulations than, let’s say, ERCOT in Texas. A lot of those things also affect some of the goals our customers have.
Some of our manufacturing customers have not yet begun their ESG planning. But as you probably see in the news, a lot of our governmental criteria is going to shape that for them, or they may end up going out of business. Those are some of the trends in manufacturing I’m seeing beyond what type of automation people are using, where people are sourcing their goods or things that have to do with labor. Mostly, I concentrate on things that have to do with energy.
PLANT ENGINEERING: How are you working with companies to reduce their carbon footprint?
TRACY: We’re helping companies reduce their carbon footprint with things like onsite solar, wind and battery storage. We’re also helping them with their carbon footprint. Offsite where we have what’s called the “virtual power purchase agreement,” where we build big solar arrays in places like Texas and wind power in Wyoming. We sell to our customers a share in that, and they get renewable energy credits that help with their carbon neutrality goals. We also help them with their energy conservation; their LED lighting and HVAC building controls help them make them more efficient.
On the Duke side, one of the things we are doing to address climate change is we’re changing how we generate power. We’re trying to deliver a renewable, affordable and reliable power to our customers. We have our own goals. When we talk to our customers, one of the things we say to them is, “We’re looking to partner with customers who have goals like ours.”
We’re trying to reduce our carbon by 50% by 2030. It seems like a lot of companies have that same goal by 2030, they want to reduce carbon by 50%. And we want to be net-zero by 2050. And that’s the same goals I’ve noticed with a lot of other customers I’m working with.
We tell them, “You can achieve that goal, but there are several things you have to do to get there. It’s not just one thing.”
The first thing they have to do is advisement spending to find out what they can actually do onsite. They might do some infrastructure things to help improve their expenses, like their HVAC, some things on their electrical side. What they do with energy storage, what they do with resiliency on renewable energy, they could do rooftop solar, they could do park canopy solar, they could do ground-mounted solar. They could do the virtual power purchase. That mix of everything I just described is how they can get to the 50% reduction goal. They must put together a plan and start moving down that path because how else are they going to do it? And you can turn everything off. I don’t think off is the answer, though. Off, you could get to 100% carbon reduction. You just turn it off.
Duke Energy is working with these companies and we’re telling them about things we’re doing. We have set the goal of achieving 16,000 megawatts of renewable energy by 2025, which is a combination of our regulated and nonregulated business. That means we must build a lot of solar facilities and wind power sites to be able to reach that. Heavy investment is going on in renewable energy and energy storage. We’re also helping with customers’ individual needs with microgrids. They can detach from the grid during power outages or times when they could even sell it back to the grid.