Energy & Operating Cost Savings

Energy Management: Project or Process?

Ethanol Producer Magazine - as appeared in the May 2012 issue

May 1, 2012

For industrial processing facilities, energy costs are usually among the top three operating costs, making it a prime area to focus efficiency efforts. Production costs like labor and input costs are somewhat fixed, whereas energy expenses can be reduced without sacrificing production capacity or quality. Finally, the risk of increasing energy cost is higher than ever before. Just look at these 2003 statistics from to understand why:

  • Global demand for all energy sources is forecast to grow by 57 percent over the next 25 years.
  • U.S. demand for all types of energy is expected to increase by 31 percent within 25 years.
  • By 2032, electricity demand in the U.S. will grow by at least 40 percent.

To meet this demand increase, new power generation equal to nearly 300-1,000 megawatt power plants will be needed by 2030 and to pay for these new power plants, energy costs will increase. The good news is that companies can reduce overall energy consumption to impact the bottom line.

Opportunities to capture energy management savings are real. If we look at buildings and industrial facilities as a single component of energy use in the U.S., we see some dramatic numbers. The total number of buildings and industrial facilities in the U.S. has grown to over five million with an annual energy cost estimated at $202.3 billion. It is further estimated that at least 30 percent of the energy consumed in these buildings is done so either inefficiently or unnecessarily. Certainly there is both reason and opportunity for energy management.

Anyone with a home appliance is sure to have heard of Energy Star. Energy Star also has a program that focuses on buildings and industrial plants. They have developed focus groups, key performance indicators, and best practices for specific industries, such as corn refining, food processing, petrochemical manufacturing and oil refining. Energy Star's seven-step system has helped many industrial facilities achieve 10 to 20 percent savings on energy costs. With electricity bills easily exceeding $100,000 per month for a large processing facility, a conservative 10 percent savings results in annual savings of $120,000 in electricity cost alone.

Good energy management is a process. Single projects will reduce energy costs, but without a process in place to keep them down and monitor them, the costs will creep back up. The metaphor of low-hanging fruit applies. Basic, quick and easy energy reduction projects produce immediate energy savings, but that low-hanging fruit will grow back time and again, if there is not a process to prevent it from doing so.

7-Step Energy Star Program
There are three things to do first when making a commitment to continuous improvement, the first of the seven steps. Consider appointing an energy director "one with a personal passion for energy management" to take the lead in setting goals, tracking progress and promoting the energy management program. This person is not necessarily a technical expert, but should understand all aspects of your business and how energy management will help achieve both financial and environmental goals. Depending on the size of the organization, the energy director role could be full time or part time. It is common for a facility manager, lead process engineer or a plant manager to fill the role of energy director. Outside consultants could also support this role. With the energy manager identified, form a dedicated energy team to execute the facility's energy management activities and ensure integration of best practices across the facility. Include individuals from all major areas of the facility. Then, institute an energy policy to serve as a vision statement and provide a foundation for future decisions. This policy is the base for setting performance goals and for integrating energy management into the organizations culture and operations.

The second step in the Energy Star program is assessing performance, which requires reliable information. Think about the desired level of detail when considering which data to track. For example, do you want to look at overall service entrance metering for natural gas and electricity or, is submetering specific areas better? Account for all energy sources and uses and gather two years of monthly data, both cost and quantity. In addition, collect facility and operational data such as hours, production, units produced, weather history, anything impacting energy consumption in the two-year time period. The data may be needed to be normalized, especially if multiple facilities are to be compared. Normalization factors include climate zone, facility size, weather history, hours of operation, product type, etc. Establish a system to store and track the information using any number of tools from a simple spreadsheet to an energy management software package. Utility companies are one resource for such tools. Evaluate the tools for the level of detail, the ease of use and maintenance and ease in reporting.

With data in hand, use it to establish baselines, using metrics that effectively express good energy performance for a facility. This might be per square foot or per unit of production. Evaluate progress using benchmarks such as past performance, performance at other facilities, industry averages, etc. Another approach is to benchmark against best practices, a more qualitative approach. Analyze trends, developing a use profile to measure peaks and valleys. Identify areas of high-cost energy use, and identify data gaps. From a qualitative standpoint, gather information and opinions about lessons learned. Ask others what they believe to be the energy hogs. Review policies and procedures to determine if energy management is addressed in all areas. Technical assessments and audits are commonly outsourced. External advisors often have greater potential to see things overlooked by those close to the process. They also have perspective of other industries and facilities that could help improve your facility.

Setting goals is the third step in the Energy Star program, taking your energy management program to a working level using information and research you have assembled to create tangible working goals. First consider the scope of the goals. Are the goals for the entire organization or to a specific facility? What time periods are addressed? A short term or annual goal may be quite different than a long term goal. Focus on making specific goals, estimating their potential for improvement and tied to a defined amount of energy reduction. Some examples of goals would be to reduce energy consumption relative to output by 10 percent or by a specified unit of measurement such as Btu, or to achieve a 20 percent improvement in energy performance within five years.

Action, Implementation
With goals in place, step four is to create an action plan. Use results from any technical assessments and audits to help identify action items and establish a monitoring system. Ensure the right people are in place and given the responsibility to meet the stated goals. Action plans can include repeated energy audits to build momentum and improvement ideas.

The implementation phase in step five is where a program succeeds or fails. Many great plans end up gathering dust on a shelf somewhere. A good implementation plan includes a good communication plan. Identify key audiences, determine the information they need and how to reach them. Celebrate small wins to maintain momentum. Invest in training to help people understand and implement energy changes. When personnel performance is tied to energy goals, and environmental responsibility is included, people respond.

The process continues in step six with regular progress evaluations. A formal review compares results to the action plan, prompting performance reassessments and the updating of goals and action plans. Be sure to share it with others in your company, and do not allow lessons learned to be missed or overlooked. Use what you have learned to establish best practices.

The final step recognizes it is important to let people know that progress is being made. Look for both internal and external outlets for celebrating accomplishment, a great motivator for employees, and a great public relations tool to help outside people understand just how important your company thinks it is to care for the environment.

Energy management is a continuous process, not just a single project. It is realistic to save 10-20 percent on energy bills through hard work that pays off with better margins and profit. It takes time to address any complex issue. Now is the time to get started before energy costs increase even more.