By David Arkell
Major financial savings. It’s good
for the environment. Improved corporate image. The primary
reasons for reducing energy usage are impossible to ignore.
So why is the list of excuses for inaction seemingly endless?
Many
companies believe the procurement of energy is the only
viable option to control energy costs. Although an effective
purchasing strategy is important, this is only part of
the equation. Once the energy
is purchased, if usage is not carefully monitored and
controlled, the initial purchasing savings disappear
quickly through preventable, wasteful consumption.
Frequently,
the benefits of energy conservation with regard to the
environment are not linked or used to promote an energy
efficiency culture within or outside the company. If
such a culture of conservation were created, it would
certainly enhance corporate image, in addition to the
measurable environmental benefits from minimizing usage.
Regardless, energy is still not
a priority for many organizations. Despite shrinking
profit margins and the fact that energy is a controllable
variable cost, the bottom-line impact of reducing energy
costs is often ignored. The reality is, with the industry
average profit margin of 1%, every dollar saved on energy
is the equivalent of US$100 of industrial product sold.
Those types of bottom-line savings are substantial; the
return on time and resources spent is measurable and
worthwhile; reducing energy usage clearly makes good
business sense.
Which
is part of the issue. Historically, energy has been addressed
within organizations as strictly a technical issue. Although
technical insight is absolutely essential when making
energy decisions, decision making has lacked a business
acumen and focus through this exclusively technical approach.
There are several
other consequences of a solely technical focus. In terms
of accountability, energy responsibility under this system
has typically been limited to one person or one department.
Often, this one person or department is already so busy
with other tasks that the mandate of complete energy
responsibility can be overwhelming. As a result of this
structure, energy becomes isolated from other critical
planning activities and is not seen as a high priority
for the organization.
A
strictly technical approach will also lead to strictly
technical solutions, usually requiring capital investment.
However beneficial the proposed solutions might be, this
capital hurdle can be insurmountable and can effectively
stall progress. Even if capital projects are approved,
the projected savings are not necessarily proven or continual.
Engineering
may spec new equipment for example, if it has been recommended
by suppliers to save energy. Once installed however,
the equipment is often not monitored to verify the promised
savings. These corporations never know if savings are
actually achieved and energy efficiency is not promoted
within the organization. In terms of the sustainability
of savings, if there is a change in company operations,
the installed equipment may no longer be appropriate.
In these cases, the efficiency benefits of the
new equipment diminish with the change in process and
the cycle of missed savings opportunities continues.
This
is not to say technical expertise is irrelevant when
managing energy. Fortunately, most companies realize
it is absolutely essential to have technical experts
on board; viewing energy as strictly a business issue
would be equally one-dimensional. A business-only approach
would severely lack the imperative technical insight
required and decision-making ability would be dramatically
reduced. In fact, the list of business-only approach
limitations would easily exceed the technical-only shortcomings
described above. The key to success is involving a variety
of technical and business personnel in the energy management
process, ensuring the organizational integration of energy
and the achievement of sustained results.
The challenge for
organizations in the pulp & paper
industry lies in knowing where to begin. This is where
the immortal advice from Julie Andrews in The Sound of
Music, however simplistic, is worth recalling.
“When you read you begin with A-B-C. When you
sing you begin with do-re-mi.” Similarly, when
you manage energy effectively, you begin with an S-E-P:
a Sustainable Energy Plan.
What is a Sustainable Energy
Plan (SEP)? An SEP is a companywide strategy, with both
a business and technical focus, for reducing costs. These
cost savings are achieved through simple management practices,
often requiring little to no investment. A successful
plan typically incorporates customized strategies for
procurement, conservation & demand
management, and perhaps most importantly, making links
with all organizational activities.
Traditionally, the
decision-makers in an organization have not been the
ones who are responsible for using energy. Through the
development of a company-specific SEP, this gap is bridged
by creating accountability and targets for usage at every
level. Developing an SEP is a proven, pro-active, measurable
approach that provides a structure for managing volatile
energy costs.
This is
not to say that an SEP can be bought or that simply copying
a competitor’s plan will be effective.
For the plan to have any value, it must be created internally.
Creating the plan in-house ensures that all team members
take ownership of the plan and subsequently, energy awareness
is raised throughout the organization. Ask your local
utility about expert consultants who can provide training
or coaching during
the development of your plan.
Creating a plan and filing
it away for future reference will be equally ineffective.
By constantly revisiting and revising strategies, the
SEP becomes a living, breathing document. Making a plan
is an important step but failing to implement, monitor,
and follow-up is a guaranteed way to miss your targets.
Making a plan and proceeding to successfully implement,
monitor, and followup is a guaranteed way to reduce your
energy usage, in addition to the increased environmental
benefits and the fulfilled corporate social responsibilities.
As a part of a company-wide
energy plan, making the effort to monitor your energy
usage and to involve a variety of people in the process
can lead to substantial savings, as with Interlake Paper.
With this in mind, Interlake implemented a combined business
and technical approach and was rewarded for their efforts.
By outsourcing
certain tasks of their energy plan and working as team
on others, Interlake was able to focus on core business
activities and capitalize on market opportunities without
sacrificing production. Since the energy team included
the mill manager, operations supervisor, and representatives
from IT and accounting, vital links were made to bridge
any possible business/technical gap.
Through participation in demand response and responding
to events during August, 2006 they were able to schedule
maintenance strategically and achieve over US$500/hr
of savings with demand response payment combined with
curtailment at the most expensive period. Although it
sounds like a small amount, consider this: the results
are for one site, saving US$500, in one hour alone, in
one activity that was merely a fraction of the overall
energy plan. Compared with the industry average profit
margin of 1%, that means Interlake would have needed
to sell an additional US$50,000 of product, in that one
hour alone, to have the same impact. For larger companies,
when expanded to multiple sites, multiple hours of participation,
multiple energy activities, the savings and required
sales equivalent values increase dramatically.
Of
equal importance, Interlake has not overlooked the importance
of measurement and following up. Since that experiment,
the plant’s energy team has maintained
its new practices, using daily power reporting to ensure
new procedures are followed. The team is also continuing
to tackle energy efficiency measures with organizational
integration from all levels of the company. When done
and executed properly, this is not an arduous task that
takes a significant amount of time. It is simply making
all departments aware and accountable so they manage
energy during their day to day activity.
This is just
one example of a company succeeding at addressing energy
as both a technical issue and a business issue. With
a variety of people involved in energy initiatives, measurable
savings are achieved, energy usage is minimized and organizational
objectives are met. To put an end to the excuses for
inaction and failure to implement energy initiatives,
remember the optimal place to begin. The starting point
for this team approach is the development of your SEP;
your site-specific, internally-created, sustainable plan
for managing energy. TW|
David Arkell is , President & CEO of 360 Energy
Inc based in Burlington, Ontario, Canada.
