Milestone for Industrial Energy Efficiency

In retrospect, June 11, 2007 may be a huge milestone in the advancement of industrial energy efficiency. On that day, the National Association of Manufacturers (NAM) announced its intention to promote energy efficiency to its 300-plus member companies. To do this, NAM signed a memorandum of understanding with the U.S. Department of Energy (DOE). This partnership aims “to assist manufacturing facilities to initiate and implement energy management programs, adopt clean energy efficient technologies and to achieve continual energy efficiency and intensity reduction improvements.” The substance to be promoted by this partnership is the vast collection of energy-efficient technologies, diagnostic tools, and reference materials developed or sponsored by DOE.

This is a remarkable event for a couple of reasons. One is the fact that NAM, as a member-driven advocacy association, engages industry at its corporate levels. This means that the energy-efficiency message is being introduced to top-level decision makers, not just engineering and maintenance staff. Another fact to note is that NAM, until now, has remained agnostic about the value of energy efficiency. After all, how many corporate executives are open to the suggestion that energy waste in their facilities has accrued under their watch? For this and other reasons, the NAM has always advocated more energy production as opposed to conservation. The NAM's recognition of the need for efficiency resources is an indicator of just how challenged manufacturers are by today's energy markets.

How effective will NAM's outreach be? The answer to that question varies with the receptiveness of each individual member company. Implementing efficiency means investing some money, making some procedural changes, or both. These things don't happen without leadership. Nor does it happen without untangling the features—mechanical as well as organizational—that allow energy waste to happen. In other words, an organization's ability to become energy-efficient depends in part on understanding what makes waste possible in the first place.

How Did We Get in this Position?

How does a plant become energy-inefficient? Much of it has to do with the degradation of production assets over time, coupled with the emergence of newer, more efficient technologies. The reasons are also human. “That's the way we've always done it” is the justification for long-entrenched work habits that become default procedures. Certain habits that save time and effort may be at the expense of excess energy consumption. These practices had little consequence when energy was cheap. However, the trade-offs between time and money change as energy prices escalate. In most cases, equipment operators never see the bill for the energy they use. Nor do the accountants paying the bill always have an understanding of how energy is used in their facility. Reconciliation of energy costs is usually secondary to a plant manager's need to meet production targets.

A facility's investment in productive assets is a long-term commitment to a certain vintage of technology. Large, fixed assets will operate for years or even decades at a time. This includes equipment such as boilers, furnaces and air compressors. In addition to these assets, most facilities operate complex production systems that employ a wide variety of smaller equipment such as pumps, fans and motors. Compared with the larger assets, these smaller components are more easily replaced. However, the design of the overall system in which they were installed is not as easy to change. Industries typically conduct multi-year planning cycles to organize major facility upgrades and system changes. Planning cycles allow facility managers to avoid frequent disruptions to their production schedules. These cycles take years to conduct and involve a number of considerations, including energy costs. This partially explains why many manufacturers do not respond immediately to proposed energy improvements, even if incentives are involved.

Over time, equipment operators begin to use energy in ways that engineers and other technicians never anticipated. These “services” represent industry's unintended energy demand (and waste). Here are some examples:

• Proof of effort. In today's competitive, cost-sensitive economy, a worker's survival depends on keeping busy, or at least appearing to keep busy. This may explain why many operators prefer to leave certain machines running, even when there is no work in process. Motor drives, pneumatic tools, and other factory machinery all make a distinct racket. A manager can, after a time, detect what machinery is running without having to look—it can simply be heard. The sound implies that “yes, we are busy.” The energy wasted by machines that run unnecessarily is of no consequence to the worker—the energy cost is not reflected in his or her paycheck. However, energy provides a valuable service to the operator who wishes to maintain the appearance of keeping busy.
• Budget defense. Many organizations maintain the fiscal habit of developing next year's budget based strictly on the previous year's performance. In other words, the department that successfully decreases its expenditures this year can actually be penalized with a smaller budget next year. While few managers actively promote waste, many more simply won't challenge it. They can then confidently prop up their funding request for the coming year's budget. In terms of energy use, this again means running machines unnecessarily, using fuel-rich combustion settings, and ignoring losses attributable to steam or compressed air distribution leaks.
• Comfort and convenience. Here's an example: workers may use compressed air, which is a very expensive plant utility, to perform work that could be just as effectively performed by a brush or broom. In some instances, a less expensive utility such as flash steam could supplant the use of compressed air. An egregious example comes from one clever factory employee who “air conditioned” his workstation with streams of compressed air, which he enjoyed by simply tapping several nozzles into overhead air distribution lines.
• Safety. Lighting obviously contributes to the safety of working environments. We also use lighting “services” to make a space more welcoming. We develop a habit for leaving lights on regardless of the space—storage rooms, break rooms, and worse, in rooms that are perfectly lit with natural daylight. As power becomes more expensive, we are forced to rethink these habits. Sensors and programmable controls are readily available to make the decisions that we humans can't (or won't) make.

The take-away is this: attempts to control energy use will almost always run afoul of someone's dependence on the service that energy provides. Managers attempting to reduce energy waste must recognize and overcome the need to use energy for unproductive reasons.

Okay, How Do We Improve our Energy Position?

Energy management starts with delegation. Many plant managers will put the energy burden squarely on the shoulders of one person, as if that individual can do it all. How can one person control energy costs when consumption reflects the daily decisions made by operations, maintenance, engineering, and finance staff? The energy manager might get great ideas from workshops, conferences, trade press, and professional networks, but no one else from the facility is picking up the same messages. The energy manager easily becomes a maverick, swimming against the tide of a facility's disinterest (or worse).

This underscores the need for teamwork. A major hurdle to overcome is the interdepartmental rivalries that are usually fueled by competition for budget dollars. Energy managers must somehow overcome the “silos” of departmental authority. For example, it's not uncommon for a procurement director refuse to pay $10,000 for an energy audit that will identify many times that amount in potential savings.

The key is for the energy manager to demonstrate to other department managers “what's in it for them” should they cooperate with a facility-wide energy management effort. More specifically, this means demonstrating how energy efficiency's net benefits will filter down to a facility's bottom line. This means overcoming departmental resistance to spending a dime that in reality will result in the entire organization's saving a dollar. The successful energy manager's agenda becomes a hub from which win-win solutions are distributed to the departmental silos. The management team then works collectively, creating a whole value that is greater than the sum of the parts.

Just as industrial engineers can use tools developed by the DOE and others, top managers have a “tool kit” at their disposal. These tools are risk, time and money. You can minimize the use of any two of those three, but it will be at the expense of the third. For example:

• Minimize your investment of time and money? This means you assume greater risk by simply not dealing with the root causes of energy waste and volatile energy prices. It means doing little, cheap, one-time projects, and switching fuels or fuel suppliers. In other words, by doing as little proactive energy management on your part as possible, you remain at the mercy of forces external to your organization, including changing technology, regulations, and volatile energy markets.
• Minimize your risk and investment of time? You can do this primarily by pursuing big, capital projects (assuming that new equipment can do the work so people don't have to). But of course, the big project approach takes big money.
• Minimize your risk and investment of money? You can do this if you are prepared to invest a lot of time. If for some reason the budget won't support the purchase of new, more efficient equipment, then you need to focus on the way people use and maintain current equipment. In short, this approach requires culture change. Be prepared to spend a lot of time boosting staff awareness of the energy cost consequences of their daily work habits. Be prepared to encounter resistance ("But that's the way we've always done it.") You'll need to persuade and influence people, fostering and promoting success stories whenever they can be cultivated.

Forward-thinking companies respond will respond to NAM's promotion of energy efficiency by changing they way they use energy. They will often begin by rethinking their work habits and procedures. They will make an inventory of the “gap” between the efficiency of their current assets and the best available. A business plan will establish financial energy metrics, monitored as least once per month, to guide the timing and amount of their investments. They will document and replicate their success stories, and demonstrate their direct contribution to the bottom line of their business.

Top managers will quickly discover that energy use is as much a human issue as it is mechanical. To ignore the human component of energy cost-control is to invite business risk. Awareness begets accountability. And with accountability, companies have the motivation to actively manage energy risk.