When it comes to energy-efficiency projects or green initiatives designed to reduce your facility's dependence on fossil fuels, sometimes it takes money to save money. And therein lies the rub. While few manufacturers dispute the importance of such green measures, not all businesses have the dollars to dole out for such initiatives, or at least believe they have the upfront dollars required for a payback that may be a ways down the road. Still, 71% of respondents to a recent survey commissioned by the International Facility Management Association and Johnson Controls reported that they are paying more attention to energy efficiency than they were one year ago. And of organizations that have made public carbon commitments, 45% have identified energy efficiency in buildings as their top carbon-reduction strategy.
That said, funding, or more specifically a lack thereof, likely puts a damper on energy-efficiency projects. According to additional results from the Energy Efficiency Indicator survey, which queried more than 1,400 North American executives responsible for energy use in their facilities, 42% of respondents said limited capital availability for projects is a barrier to their efforts to save energy. Another 21% cited unattractive paybacks as a barrier. And nearly 50% require payback periods of fewer than three years. On the other hand, 44% said utility or government incentives are very or extremely influential in making energy-efficiency decisions. That's up from 38% in 2008.
Clearly, energy-efficiency and other green initiatives are getting done. Capital budgets, operational budgets and yes, continuous improvement budgets, are many manufacturers' primary funding sources for such endeavors. But for organizations willing and able to do the required homework, utility and government incentives can ease the burden of funding internal energy projects.
A Strategic Approach to Energy Management
CalPortland Co. spends more than $100 million per year on energy. That cost alone would explain the interest this Glendora, Calif.-based producer of cement, concrete and asphalt has in energy efficiency, but it doesn't tell the entire story. Environmental regulations are another factor in CalPortland's efforts. Less fossil fuel energy usage translates to fewer greenhouse gas emissions, points out Steve Coppinger, director of energy services. "The third [reason] is to do the right thing and be conscientious about the communities where we work, where our businesses are."
CalPortland takes a strategic approach to managing energy. Its energy portfolio includes wind to help power its Mojave, Calif., cement plant.
The CalPortland director of energy services says the manufacturer's energy management approach includes taking advantage of energy resources and incentives available in the locations in which it operates. For example, it has partnered with several California utilities to jointly conduct energy-efficiency plantwide assessments at two locations. The first of the two week-long plantwide assessments was performed at no cost to CalPortland as a pilot program, while the company shared costs on the second assessment, which was conducted by a third party.
"We identified $3.7 million in potential energy savings, and it cost us about a total of $10,000 to come up with those numbers," Coppinger says, "We've worked on many of [the opportunities] and completed several of the projects that were a result of the assessments." Not only that, part of the service provided by the third party that conducted a plantwide assessment included filling out applications for rebates on projects that had been identified. "As a result of that we've gotten some very substantial rebate money from the utility," he says.
Coppinger says it was a desire to identify energy opportunities that drove the plantwide energy assessments. But, "once you've identified the opportunities, then in order to justify the projects, having the rebates available in some cases can make your payback much better."
Coppinger says energy projects currently compete with other capital dollars for funding. "We typically require a three-year payback or less," he says. "It is sometimes difficult to justify projects on energy savings alone so typically there are other advantages in addition to energy savings."
An example of a project for which CalPortland received a rebate was the installation of a new grinding mill system that replaced multiple old systems. The rebate on that project, which cost more than $30 million, was $550,000. The project reduced energy consumption per ton by 40%, Coppinger says.
Beyond the utilities, Coppinger says CalPortland also has been the recipient of a grant from the U.S. Department of Energy to perform a plantwide assessment. And other funding opportunities for energy efficiency projects "are definitely out there." As another example he cited his company's involvement in a research project on motor efficiency -- a project CalPortland learned about from one of its motor vendors. Coppinger says the company was given eight "substantially sized" motors for free. In exchange, CalPortland had to send back the old motors, install a meter on the new motors and provide readings from that meter about four times a year. "They were all premium efficiency motors that replaced older motors that were in the plants for many years," Coppinger notes.
How does CalPortland learn about these energy incentives of which it has taken advantage? Some of it is happenstance, Coppinger says, but he also learns about the programs via energy meetings with industry groups and Energy Star. "They're very good at helping you manage your energy better through your organization."
Potential Sources of Energy Efficiency Funding
Through its Industrial Technologies Program, the U.S. DOE promotes Save Energy Now, a national initiative whose aim is to drive a 25% reduction in industrial energy intensity in 10 years. For manufacturers that qualify, the program offers manufacturing facility energy assessments at no cost to the manufacturer.
Many state-level government agencies provide funding and other resources for energy-efficiency initiatives as well. One example is the New York State Energy Research and Development Authority, or NYSERDA. This organization has programs both for new and existing facilities, explains spokesperson Sal Graven, and provides financing help by means of incentives and loan programs for energy efficiency projects that meet its requirements. Past manufacturing recipients of funding from NYSERDA include an Anheuser-Busch brewery in Baldwinsville, N.Y. The New York agency shared in the cost of a study to evaluate opportunities to reduce fuel consumption at the brewery. Through one of NYSERDA's programs, Anheuser-Busch also was awarded funding to help replace several heat exchangers. In another example, NYSERDA provided an $185,000 incentive to offset some of the energy-efficiency project costs associated with a Frito-Lay distribution center located in the state.
And what about dollars associated with the American Recovery and Reinvestment Tax Act of 2009? Many of those dollars are slated for developers of renewable energy and other energy technologies, as well as funding research and development and demonstration projects. That said, there is about $6.3 billion from the DOE's Office of Energy Efficiency that will go to state and local governments, who will determine how those funds are distributed.
Even with large chunks of federal and state dollars aimed at developing clean energy technologies, Coppinger sees benefits for users. "These incentives, for example the wind . . . the nice thing is that [the incentives] get passed along to us. It allows [producers] to make a competitive proposal to us. We get the benefit," he says. Indeed, what can't be missed at CalPortland's Mojave, Calif., cement plant is the eight wind turbines that provide about 35% of the facility's electricity in the course of a year. The turbines are owned by Oak Creek Energy, and CalPortland purchases the power. However, Coppinger says the deal both allows his firm to lock in pricing and meet its goal of growing its renewable energy use.