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By Peter Garforth
More companies are digging into their cost structures to seek out ways to gain competitive advantages. Ongoing cost management is nothing new and has generally been an incremental process taken one small step at a time. This approach is changing as information technology continues its dizzying increase in capability and cost reductions. Capturing and analyzing energy data in near real time facilitates attacking this element of a product’s cost structure.
“These energy maps allow us to zoom from site to production areas to equipment levels. ”
Traditional cost management is being redefined. These include logistics, materials and waste, human resources, and automation. As each gets squeezed, the remaining energy cost component becomes increasingly visible, often exacerbated by price uncertainty. A small, but growing section of senior management is beginning to ask new energy questions. Their challenge is to redesign the energy fundamentals to dramatically cut energy use, cost, and risks.
The most common reaction to a challenge like this is a stream of energy audits focusing on the efficiency potential of the individual parts of the plant. These are then stack-ranked, usually by nothing more than simple payback based on current energy tariffs. A few high-yield projects are completed, and the rest disappear into the archives. Some efficiencies are achieved, which is positive. However, the outcome is a long way from the breakthroughs sought by management.
|Peter Garforth heads a specialist consultancy based in Toledo, Ohio and Brussels, Belgium. He advises major companies, cities, communities, property developers and policy makers on developing competitive approaches that reduce the economic and environmental impact of energy use. Peter has long been interested in energy productivity as a profitable business opportunity and has a considerable track record establishing successful businesses and programs in the US, Canada, Western and Eastern Europe, Indonesia, India, Brazil and China. Peter is a published author, has been a traveling professor at the University of Indiana at Purdue, and is well connected in the energy productivity business sector and regulatory community around the world. He can be reached at firstname.lastname@example.org.
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The focus on relatively small stand-alone projects with high nominal returns does not address core energy infrastructure and manufacturing processes. If these are not attacked, energy breakthroughs will rarely occur. The classic recommendation to resolve this conundrum is to treat the entire site as a single energy system and develop an integrated energy master plan covering at least a decade. This plan creates a multi-year investment portfolio valued on the overall return and risk reduction. This is the only rational approach to changing the factory’s energy fundamentals.
However, anyone who has tried to create an integrated energy plan knows it is sometimes easier said than done. It begins with the perception of what constitutes a good energy plan. We are so used to the sub-project audit approach that has been reinforced over years by government and commercial ESCO models that a conscious education step is needed to truly understand the integrated approach.
The next barrier is the low expectations most management have around energy. Goals are usually set based on what seems immediately possible, rather than what is competitively needed. In my experience one of the most important steps in developing an integrated site energy plan is to establish clear framing goals for efficiency, portfolio investment return, carbon footprint, and risk reduction before detailed work begins. This way, the need to explore wider and deeper energy strategies is on the table from the start.
Planning starts and other barriers appear around understanding the flow of energy in the plant. If a clear picture of where energy is converted, used, and wasted is not available, it is impossible to start developing an integrated plan. Rarely does a plant have effective approaches to track all energy–related commodities flowing through the plant. These include obvious commodities such as water, gas, and electricity, along with the less obvious ones such as heating, cooling, steam, and compressed air. Interestingly, when the knowledge of the local teams is combined with information available in process control systems, under-utilized sub-metering, and some incremental sample metering, most sites have much of the information needed. However, the sheer volume of information in a complex site almost immediately overwhelms the planning team, creating a tendency to revert to the sub-project approach.
Mapping commodity flows through the major equipment and production steps is an essential first step and one that is rarely developed. High-level maps visualizing energy use and waste, environmental impacts, and costs are invaluable tools to engage employees. They communicate powerfully to non-technical managers and enable them to become a valuable part of the decision-making process. They even challenge the assumptions and preconceptions of the technical teams, pushing their planning efforts to areas of high waste or high risk.
The humble Sankey Diagram, first used in 1898 by an Irish engineer, Captain Matthew Sankey, to summarize energy flows in a steam engine, remains one of the best ways to visualize energy flows.
Despite the obvious communication and decision support values, Sankey energy diagrams are rarely used. Developing these manually has been traditionally a laborious time-consuming effort. This is no longer the case, and we should probably dust off our ideas. For a few hundred dollars, Sankey software that can map complex processes at many resolution levels is widely available.
These energy maps allow us to zoom from site to production areas to equipment levels. Use and waste, emissions and costs are clearly located. Armed with these overviews, our energy strategies and subsequent investments can be targeted for maximum effect. Maybe it is time to go back to the future and start getting serious about site energy mapping before we make investment recommendations.