Energy management boosts competitiveness

March 28, 2007
Energy Saver columnist Christopher Russell advises that you consider all the motives and rewards for managing plant-wide energy consumption.

Many chemical plant managers are quick to point out that they don’t have the time or expertise to manage energy costs. This is true for the vast majority of manufacturers. However, some facilities can and do find time to perform energy management that contributes to their competitiveness.

Companies with successful energy management plans have had their results documented by the Alliance to Save Energy (See These companies link energy management to business performance. They realize that the motives for managing energy in today’s lean competitive environment aren’t just about fuel bills. They include the following:

Plant reliability: Facilities that implement energy efficiency — optimizing combustion firing rates, installing insulation that conserves thermal energy, and using digital controls to monitor and apply power, among other measures — also are gaining better plant reliability and mechanical integrity. They’re minimizing downtime. This enables greater output without investing in new plant capacity. In certain high-value production processes, the time and effort expended to achieve energy reliability is insurance against the risk of system failure and revenue loss.

Speed: In a global economy driven by cheap labor costs, American industry’s competitive edge is predicated, in part, on speed. This means faster process setup and order fulfillment. Good energy management assures unimpeded transfer of heat and power, which contributes to speed. Reliable equipment allows manufacturers to fill orders faster, so that they can fill more orders in a year and make more money.

Flexibility: Energy management also enables a more accurate and ongoing assessment of plant capacity. Poorly managed plants and equipment have an uncertain capacity to fill orders on time. Disciplined energy management gives facility staff an ongoing survey of thermal and power capacity. That knowledge allows managers to more quickly and confidently determine their ability to accommodate new and varied process loads that come with custom orders. Instead of forfeiting productive capacity to waste and inefficiency, plants can use it to make more products that bring in new revenue.

Product quality: Any manufacturer will agree that good products require thermal energy that’s applied at the right temperature, for the right duration and in proper proportion to material inputs. Failure to do so results in wasted raw materials and other costs expended up to that point in production. Manufacturers enjoy lower scrap rates when they control their process through energy management.

The Alliance to Save Energy’s case studies are industrial energy management success stories. They show surprisingly varied motives for pursuing energy management. Perhaps the most obvious is to “control energy expenditures,” although this is far from the only reason. Some companies put a premium on resource stewardship, for both public relations and risk management purposes. Others monitor and benchmark energy use to sustain and replicate operational improvements that would otherwise be lost over time due to staff changes — by doing so, they avoid “reinventing the wheel.”

Chemical plant reliability leads to predictable fuel consumption. Reliability allows chemical plant managers to plan their fuel purchases, making a more deliberate choice between fixed-price contracts and spot markets.  This flexibility allows managers to more accurately budget their fuel expenses.  And by extension, this enhances the predictability of operating income performance.

One immediate benefit of energy flow management is verification of fuel bills. Utility companies can and do make billing errors. Some plant managers never see the fuel bills for their facilities. Effective energy management puts information in the hands of such plant managers who can then compare internal energy use statistics with utility bills.  Resolving erroneous utility charges can add savings over and above any efficiency initiative.

Here’s a summary of motives and rewards for managing energy use:

  • Energy expense control —  reducing consumption cuts costs. Managing energy use is a hedge against volatile energy prices.
  • Non-energy expense control, such as reduced raw material waste attributable to more effective use of heat and power.
  • Increased revenue potential through identification and replication of measures that allow managers to boost production from existing equipment.
  • Improved product marketing through visible resource stewardship. Companies assure their buyers of lowest prices by squeezing resource waste out of the cost of their products.
  • Risk mitigation related to environmental liabilities and operational reliability. The combustion of fuel creates emissions that are subject to regulation. The reduction of fuel waste immediately reduces the volume of emissions.

The bottom line is energy management contributes to business performance in today’s competitive economy.

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