Across America, utilities use energy rebate programs to provide industrial users with incentives to reduce compressed air energy consumption. In the worst case, energy rebate programs merely help compressor manufacturers sell higher-cost, so-called more efficient compressed air equipment. The sales are based on theoretical savings projections or “free audits” a salesperson provides, rather than on the savings realized after the equipment is installed.
This practice, along with users’ misconception that variable-speed-drive compressors always save energy, has led to the overselling of variable-speed drive (VSD) compressors. There are many systems where installing a VSD compressor can actually increase energy costs, so never assume a VSD compressor is the silver bullet that will reduce your compressed air energy costs. In addition, so-called free audits often overstate the savings available from installing a VSD compressor.
For example, a recent Plant Services article (“Unwinding the spin: A critical look at variable-speed-drive air compressors”) stated, “Often, the free audits exaggerate paybacks by including savings the end user can achieve without purchasing a VSD compressor.”
Often the structure of energy rebate programs generates a flurry of activity, which produces many potential projects that forecast millions of dollars in annual energy savings. A later review of these projects often finds that the user never implemented the recommendations, and that a substantial portion of the projects that were implemented provided neither the projected energy reduction nor a sustainable reduction in energy use. There are myriad reasons for these dismal rebate program results, including:
- The rebate program paid for the compressed air system audit or leak survey without requiring a capital investment from the industrial user.
- The rebate program promoted installing test equipment such as orifice meters to measure compressor performance, system demand and leak rates.
- The rebate program offered a rebate for leak repair.
- Rather than basing the rebate on actual savings, the program used the projected savings from theoretical projections or free audits.
- The rebate program didn’t include follow-up to ensure that the user is sustaining the gains.
- The rebate program helped pay for equipment that the user installed into an inefficient system.
- The user didn’t integrate the equipment into the system properly.
- The user didn’t have enough capital to implement the recommendations.
- The energy rate is too low to give the user enough incentive to sustain the savings.
Rebate program administrators often overlook the sustainability of compressed air system improvements, particularly when it comes to reducing the leak rate. Most of the time, lower leak rates are unsustainable and shouldn’t be included in energy rebate programs; however, this isn’t always the case.
For example, a user can argue, and rightfully so, that a lower leak rate is sustainable because the plan is to replace barbed pushlock fittings with compression fittings.
If a utility desires to include air leak surveys and leak repairs in its rebate program, then it should spread the rebate over three years and require annual baselining to ensure that the user is sustaining the lower leak rate.
We find that if the user doesn’t invest cash in the process, there’s little incentive to implement any recommendations. Therefore, users should expect to pay for a compressed air system audit or leak survey. The rebate program should help defray the cost of implementing the recommendations from the compressed air system audit, and only those recommendations that the rebate program administrator deems sustainable. The positive aspect of a rebate program is that it can reduce the simple payback or the capital cost to a level that makes financial sense for the user.
Finally, because anyone can claim to be an auditor, better rebate programs provide you with a list of qualified auditors. In addition, a rebate program administrator should be wary of free audits because some compressor manufacturers have developed black boxes, the only purpose of which is selling equipment. Such devices lack objectivity because their solutions are always equipment-based.
Energy rebate programs that take one of the following approaches will generate long-term energy savings if the rebate program administrator focuses on sustainable improvements.
Based on implementing audit recommendations
It’s beneficial to have a qualified auditor conduct a compressed air system audit because the audit provides both the user and the rebate program administrator with a roadmap to success. If upgrading compressed air equipment can reduce energy costs by 2% to 10%, retrofitting the system can reduce energy costs by 10% to 60%. Therefore, the energy rebate program should focus on the system rather than only on equipment. To capture every opportunity, a compressed air system audit should include an audit of both the supply and demand sides.
The main benefits of a compressed air system audit are the initial baseline data, present and projected demand profiles, an estimated project cost and a projected simple payback. To ensure that the projected savings are sustainable, the rebate program administrator must ensure that the auditor based the projected demand profile on sustainable reductions. Projecting energy savings from an actual demand profile assures both the user and the program administrator that the savings are actually available. The initial baseline allows the rebate program administrator to compare before and after system efficiency and then provide a rebate based on actual savings. An estimated project cost and simple payback provides the user with the information needed to secure project funding.