Effective Energy Management For Manufacturers

The following article recently published in Industry Today. You can access the original article on the magazine's website here.

For more insights from IGS Energy, visit our Energy Resource Center.

A volatile energy market impacts all industries and energy consumers. But for the energy-intensive manufacturing sector, understanding how to best approach energy management is especially critical. Considering how the price of energy has fluctuated in the last couple of years, it’s increasingly important for manufacturers to take a more active approach to energy strategy and take intentional steps toward reducing energy spend.

Your strategic foundation: hedging against market volatility

There are factors manufacturers can’t control – like fluctuating prices- and factors they can – energy efficiency efforts. But, there is an additional consideration for energy decision-makers looking to develop a sound energy strategy: being proactive.

If you’re responsible for a manufacturing business’ energy decisions, you may be wondering if the best strategy is to wait for prices to drop further or to renew your contract before energy prices rise again. In the past, a business might lock in its prices for the year in September and then do so again 12 months later. But now, with longer-term market volatility factors in play, it’s important to take a longer-term approach. This may mean looking out three to five years when making energy contract decisions.

Control what you can through efficiency efforts

It’s advice that may sound too obvious to work, but the truth is the first step toward controlling your energy spend is reducing your energy consumption. In fact, one of your organization’s top priorities should be to run its facilities using as little energy as possible.

As an industry, manufacturing is among the most energy-intensive in the U.S., making energy efficiency efforts even more impactful. These efforts can include replacing outdated equipment, installing occupancy sensors, or retrofitting facilities with LED lighting, which is now even more efficient than it was a decade ago. In general, customers have the most success when they tackle energy efficiency efforts in the following few steps:

Step 1: Involve the right partners

To successfully benchmark your energy data, you should consider involving internal and external resources. Bringing on board an expert in managing and analyzing energy data is tremendously helpful, as is getting the right team members in the room.

Operations and maintenance teams may have insight into your energy usage, but they’re not typically the ones seeing and paying your energy bills. Manufacturers are most successful in implementing energy efficiency efforts and controlling their costs when operations, maintenance, finance and accounting teams work together.

Step 2: Benchmark your energy data

Creating an energy efficiency game plan begins with understanding and then benchmarking your current energy usage.

After your initial energy review, a real-time monitoring program can be implemented to help identify and most importantly, quantify opportunities for energy efficiency improvements. From there, your facilities team can benchmark usage before the improvements and verify the impact of the improvements. With an understanding of where your operations are today, you can determine exactly when and how you’re using energy and the impact it has on your energy costs.

Step 3: Get to know your energy bill

About half of your energy bill is driven by your energy demand. Demand is the measurement of your largest interval of power used during the billing period. Consumption, meanwhile, is the measurement of the total quantity of power you used during the billing period.

The demand your organization is billed for is the peak amount of power used at any one time during the billing period, and you aren’t charged for demand during the times when you’re using less than the peak amount. Energy efficiency efforts typically help you save money by lowering the demand required to run your operations.

Pro tip: Reviewing a year’s worth of interval meter data can identify if the peak demand you’re being billed for happens often. Work with your operations and maintenance teams to determine which equipment and processes are causing the demand.

Exploring sustainable options

If sustainability is a goal for your organization, the most effective first step is to enhance efficiency anywhere it’s possible — replace your outdated equipment, retrofit facilities with LED lighting and install occupancy sensors to start.

Only after taking this first step should a company investigate other sustainable technologies and options with their energy partner, whether that’s buying grid power with renewable energy credits (RECs), investing in hydropower or exploring solar. These decisions, of course, come down to the manufacturing business’ goals: operating more sustainably, saving money or both.