A New Approach to Energy Management

July 16, 2009
The increasingly volatile nature of energy prices is prompting manufacturers to take a creative approach to understanding how prices are measured and optimized.

When the Internet took off 15 years ago, it wasn't by accident. The Web boom was the byproduct of computers, which had grown increasingly sophisticated yet less expensive, and faster communication links around the world.

According to several experts, a similar pattern is emerging today in energy management, as more efficient and environmentally friendlier systems for overseeing the way energy is being measured and utilized become available. With the use of software and more advanced controls, companies can better harness an increasingly volatile cost to their operations.

But just as important is what's happening on a conceptual level. Companies are changing the way they think about energy. Instead of it being a fixed cost -- and one that is increasingly rising -- new trends suggest a greater push toward understanding energy costs and the different ways in which those costs can be measured, optimized, automated and sustained.

Industry has been wrestling with energy management for far longer than phrases such as "sustainability" and "carbon footprint" have been in vogue. According to Peter Martin, vice president of performance measurement and management for automation provider Invensys Process Systems, tremendous amounts of cost and effort were put into energy programs over the last 10 to 15 years. The problem is that those programs no longer work because the energy equation has changed.

"The problem is very subtle," says Martin. "Most energy management initiatives have been geared toward reducing energy consumption overall, which means cutting back and using different fuels. But the premise of looking at consumption is that the price of energy is fairly stable over long periods of time.

Lighting is the No. 1 source of energy consumption in any building, says energy management specialist Schneider Electric. It also represents one of the easiest sources of savings.

"The big change that I see going on today, is the price of energy -- meaning, the actual amount of money per unit consumed -- is changing multiple times per day," he says. "So you have two real-time variables: real-time consumption and real-time pricing."

Rethinking the way a company uses its energy also means gaining a firm understanding of its energy practices. Schneider Electric, which offers energy management products in power, industry, buildings and IT, suggests it all begins with a thorough audit.

"Understanding what the cost is represents probably the biggest hurdle to jump," says Amy Huntington, COO at Schneider Electric. "By doing the audit, you see a lot of things that pop up as opportunities for improvement, starting with how you buy energy, the infrastructure that distributed energy, and the ability to meter and understand how you use energy. From there, you have a pretty good idea of how to fix the basics."

Schneider Electric breaks the energy management equation down into four key principals: auditing and measuring how energy is used; optimizing a facility through automation upgrades, such as installing drives on HVACs, motors, lighting controls; applying upgrades to a building, such as the windows, insulation, addressing leaks, etc.; and then monitoring and maintaining those improvements.

The other side of the issue is the actual hardware. Most facilities, says Rod Ellsworth, vice president of global asset sustainability for
Infor Global Solutions, aren't running their equipment at peak energy

As an example, Ellsworth cites motor-driven systems, which he says constitute 65% of energy consumed in the industrial sector.

Implementing lighting controls can provide immediate returns on investment.

"Think of a normal 100-horsepower motor," says Ellsworth. "Every manufacturing plant in America has these -- sometimes hundreds of them. Those motors cost about $10,000. If it's a 95% energy-efficient motor and it has a five-year life extension, and let's say with 10 cents a kilowatt hour, it's going to end up costing that manufacturing company over $300,000 in energy to run it."

Facing the cost of new equipment is never easy, but the savings can be significant in the long term. "A new motor only has to be 1% more efficient, and it pays for itself in a matter of months just by its energy differential," says Ellsworth.

Energy costs never might become stable, but that doesn't mean they can be contained. All it takes is an aggressive approach and creative thinking.

"What companies need to do is step back and think about the problem a little differently," says Huntington. "There's so much inefficiency today and if you address it immediately, energy can be very controllable -- more controllable than some of the other things we spend resources on."

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