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Key Steps to Making Industrial Energy Management Work to Save More Money

April 10, 2013 By Nate Altfeather

Nate Altfeather

Managing energy can be one of the most rewarding and quantifiable components of business sustainability.  However, when trying to start and sustain an energy management program, many businesses encounter challenges  like insufficient allocation of resources, lack of an energy team to share the work, and poor understanding of energy and power.  Luckily, there are feasible methods to overcome these barriers and help kick start a sustainable, results-oriented energy management initiative within your facility.

Gain Management Support

For non-energy-intensive industries, energy is often less than 5 percent of total operating costs, which can make it hard to get management to allocate resources towards energy management.  To catch management’s attention, try framing energy costs in terms of lost revenue. For example, if a company spends $500,000 each year on energy, and the company has a profit margin of 10 percent, then the energy bill represents $5 million in negative revenue each year.  Energy should be managed with the same resources that would be assigned to a division within the company of similar revenue size.

Establish an Energy Team

Once management agrees that energy should be managed and is willing to commit resources, the next and most critical step towards sustained energy managment is to establish an energy team.  An energy team brings together people from different areas of the company to meet on a regular basis and review the company’s energy performance.

Initially the energy team should not focus on a specific goal of energy reduction but should focus on  simply understanding and becoming comfortable with the company’s energy use and what opportunities exist.  Setting a target for savings too soon can create unrealistic goals and set the team up for failure.   When it is time to establish a goal, consider establishing an energy performance indicator such as therms per pound of production, or kilowatt hour perwidget as opposed to a goal of reducing overall energy consumption by a certain percent.

While the time commitment for the energy team does not need to be substantial,  it is important that the team meet regularly to establish energy efficiency as part of the company’s culture.  At each meeting the team should review energy consumption, costs, and the status of any energy-saving opportunities that are currently being investigated at the facility.  Any action items should be broken  into small tasks to be completed before the next meeting.  A task should be distributed to each member of the team. Tasks might include looking up energy billing history, contacting a vendor regarding an opportunity, contacting a utility rebate program, gathering data from the plant, or bringing in a guest speaker.  Distributing tasks amongst the team members reduces the burden on any one member and increases the likelihood that the team will persist.

It is important to establish an energy team before looking for specific energy efficiency opportunities.   Without the energy team framework, many companies fall into the “one-and-done” cycle of reacting to energy opportunities one at a time, sometimes years apart.  Achieving optimum efficiency and greatest savings is achieved through continuous, proactive energy management.

Energy Training

Many people work with energy and power without ever truly understanding how to calculate the energy consumption and energy cost of a piece of equipment or process or how to understand utility billing.  The energy team members should all be given basic training on understanding energy and power, how to calculate energy consumption, and how to read a utility bill.  This will greatly enhance the team’s ability to identify priority areas of the business to investigate and give the team confidence dealing with contractors and vendors during discussions around project opportunities.

Prioritize Systems/Areas of Focus

Once the energy team is trained to understand energy use and costs, the team will quickly be able to identify the areas of major energy consumption within the manufacturing plant and process.  The next step is to investigate those areas for specific opportunities and quantify those returns on investment.

Most companies will rely on outside vendors to assist with this task initially, but the energy team will quickly catch on and begin identifying opportunities independent of outside assistance.  Keep in mind even the best vendors need to make a living by selling their product, so it is always smart to get a third-party opinion before making major energy efficiency investments.  Utility efficiency programs can be great free resources that can provide this third-party validation of savings, and sometimes rebate money too. See a list of utility programs in every state at www.dsireusa.org.

Foster an Energy Culture

The energy team will quickly become fluent in the art of seeing the world through “energy-colored glasses,” and the awareness of energy throughout the business will become second nature.  Identifying, quantifying and evaluating energy opportunities will become a regular part of every business decision, requiring less and less time and effort.  Energy management will spill over to others throughout the company, including the employees on the plant floor who many times have the greatest insights into energy savings opportunities.

Having a well-seasoned energy team opens up opportunities for internally training more company employees on energy basics and cementing energy awareness into all corners of the company culture.  It all starts with buy-in from management and the commitment from a small group of people to meet regularly to review the company’s energy performance.  Remember: saved energy is annually recurring pure profit.

Nate Altfeather is an energy efficiency program design engineer at SAIC. He has assisted with program design in multiple states and specializes in industrial energy efficiency. He also serves as a lead technical reviewer for energy efficiency projects. Altfeather has a master’s degree in biological systems engineering with an emphasis on energy analysis and policy from the University of Wisconsin – Madison.



2 comments on “Key Steps to Making Industrial Energy Management Work to Save More Money

  1. Thanks for a great article. I agree with all the steps. However, could you please explain how $500k in electricity costs represents $5M in negative revenue. Thanks.

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