Use a multifaceted approach to manage your energy costs

Feb. 12, 2007
One or two tools alone won’t allow you to maximize results, but this list of six common tools will help, according the Christopher Russell in this month's Energy Saver column.

Energy cost control isn’t a one-time event and requires more than one tool to achieve ongoing progress. Too often, though, plant managers focus on a single approach. While this can lead to some gains, it doesn’t achieve anything near what’s possible from making a broader assault on energy costs.

A number of tools are available and each potentially has value. So, here we will look at the six most common tools and discuss the pros and cons of each.

  1. Energy procurement. Purchase some or all fuel using futures contracts to offset the risk of fuel price volatility.

    Pros: predictable fuel bills from month to month, with protection from big price spikes, like those experienced after the 2005 hurricane season.

    Cons: Purchase contracts involve a premium. Also, fixed price contracts are a disadvantage when energy spot markets fall below contract values. Finally focusing solely on price does nothing to reduce energy waste.

  2. Consulting engineers. An outside expert identifies potential improvements, usually focusing on discrete hardware projects.

    Pros: Well-chosen “projects” can cut energy costs. Also, the consultant often will provide technical assistance as-needed for a fee or retainer.

    Cons: Consultants tend to stick with what they know best. They often bring “solutions looking for a problem” rather than the reverse. Also, they usually focus on hardware, ignoring managerial or procedural improvements — yet paybacks on hardware/technology solutions often may depend upon implementing appropriate training and operating procedures.

  3. In-house “energy champions.” A few scattered, self-appointed employees take the initiative to control energy costs at a departmental level.

    Pros: An empowered, knowledgeable champion can be effective locally for leading in-house energy improvement efforts.

    Cons: Champions normally focus on a single aspect (e.g., engineering or procedures or training or purchasing). Without corporate support and without maintenance, operations and finance people all on the same page, effectiveness is limited.

  4. Training programs. Government agencies and utilities strive to boost awareness of new technologies and best practices via one-day workshops, diagnostic software, Internet websites, site demonstrations, etc.

    Pros: Lots of comprehensive information is available at low or no cost.

    Cons: Trainees tend to be non-managerial staff not empowered or  interested in making procedural or managerial changes. This leads to a bias towards small, quick, easy “projects” with limited and temporary impacts on energy costs.

  5. Equipment rebates, grants and finance programs. Utilities or government agencies promote the installation of new, more-efficient capital equipment.

    Pros: Can help companies with scarce investment capital. Stimulating demand for new technology can lower the unit cost of such hardware through extended production runs.

    Cons: Hardware focused, usually with little consideration of a plant’s ability to make procedural changes and measure impacts. Utilities work collaboratively to pick “winner” technologies — which may or may not be what a particular plant needs. Paybacks may depend upon appropriate staff training and procedural changes.

  6. Energy service company (ESCo) partnership. The chemicals maker partners with a company that provides on-site energy management functions for a contracted period of time. The ESCo establishes a business plan for energy improvements that recognizes procedural changes, training needs and capital projects to be implemented.

    Pros: Plants obtain results more quickly and more thoroughly when partnering with a good ESCo than by muddling through on their own. Savings accrue faster than with the do-it-yourself approach, which involves a learning curve.

    Cons: A portion of the savings, or a fee, go to the energy management partner. A plant can make it too easy for the energy service company if it doesn’t first capture large, easy savings pointed out by an initial energy audit (see Take the right first step to manage your energy costs).

The bottom line: A number of people, both at a site and outside it, can contribute to effective energy management. It’s a process that must have both a business plan — to identify not only the tools, but the starting point, the goal, and the players that make results happen — and management support.

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