Energy as resource for optimal profitability
August 1, 2010
Facility monitoring, production monitoring, capturing energy, modeling, controlling, responding and scorecarding can help manufacturers to avoid peak usage penalty fees and achieve desirable power factors.
This is a time of unprecedented complexity for manufacturing: Managing production operations while balancing regulations, supply, pricing, retailer requirements, consumer demands, operational efficiencies, and other demands is extremely challenging. While energy usage has the potential to be a new frontier in cost savings, it has become one of the most elusive and hard-to-manage costs in manufacturing, with high levels of variability and volatility. Crude oil prices, for example, skyrocket to a record $140 per barrel one day and plummet to $63 just a month later.
As developing countries become more industrialized and apply pressure on energy resources, manufacturers face the very real possibility that water, gas, oil, and electricity may simply not be available when needed. For example, less than 1 percent of the world’s water is available for human use; yet consumption is estimated to increase by 40 percent over the next 20 years. These risks and uncertainties can wreak havoc on a company’s operations, its ability to estimate and
deliver goods, and ultimately on its bottom line. By understanding and managing energy consumption, you can better defend yourself against these threats.
Some energy is used for facility operations such as heating, cooling, and lighting the building. Typically, however, most of the energy coming into the plant is used to power machinery, to convert raw materials into intermediate products, to generate steam, or to facilitate production.
Traditionally, industrial energy consumption has been seen in one dimension as an unavoidable, unmanageable cost of doing business. But, in fact, managing energy is actually a three-dimensional challenge: reducing consumption, accessing lower rates, and optimizing use. Fortunately, you can make behavioral and programming changes to use energy more productively.
Reduce Consumption. You can use less energy—for example, by taking advantage of more efficient equipment, designing improvements such as reuse of waste heat into your processes, or scheduling production intelligently to minimize energy-intensive changeover procedures.
Access Lower Rates. You also can use cheaper energy—by managing where, how, and when energy is used to harness it when it is least expensive, such as during off-peak times.
Optimize Energy Use. The third, most sophisticated dimension—and the one that will ultimately have the most impact on financial performance—is optimizing energy use to achieve production goals in the least expensive, most profitable way while balancing the many variables inherent in manufacturing. In other words, you can actively manage your energy as one of many inputs to the overall production equation, rather than simply as plant overhead.
|Energy Management Program Checklist|
|Does my company:||Yes||No|
|Conduct ongoing energy assessments?|
|Have companywide energy reduction programs and incentives in place?|
|Incentivize employees at various levels for reducing operating costs?|
|Leverage price incentives for load management?|
|Understand demand for each line and machine?|
|Have a historical view of energy usage over a set period of time, including variations in weather and seasons?|
|Modify production schedules according to energy demands, leveraging off-peak times?|
|Predict energy loads before reaching peak?|
|Have energy-efficient power control technology in place, like variable-frequency drives?|
|Leverage emission credits as a company asset?|
You can leverage seven capability pillars to invest energy strategically into your production processes. Be sure to implement an ongoing program of energy assessments to help you identify changes, establish the scope of your program, and define key metrics (see energy optimization diagram).
1. Monitor the Facility. Before you can begin to manage the energy consumption in your facility, you first have to gain insights into what your energy usage and quality patterns are. After all, you cannot manage what you cannot see.
Chances are you already measure your energy consumption at some level. However, some manufacturers know only what their utility provider tells them regarding total energy usage in the entire building. To expand that knowledge, you can also monitor the facility’s metering infrastructure to collect data about all energy resources—water, air, gas, electricity, steam—relative to equipment usage and environmental conditions (see lead photo). You can then log and time-stamp this data in an energy historian software program to establish obvious trends or discrepancies in energy quality and consumption and establish benchmarks for future improvement.
With a big-picture view of your facility’s overall energy use, you can identify and make operational changes to help reduce energy consumption and costs. This might include shedding loads or lowering power levels for a few minutes when the facility is approaching peak use.
The information gathered at the facility-monitoring level also can help you understand and manage power quality. With a log of historical data, you can identify power quality issues such as voltage sags or harmonics that can damage plant equipment or lower your power factor. As a result, you can protect your equipment better and also avoid penalty fees imposed by utility companies for low power factors.
Monitoring usage should be an ongoing effort, rather than a one-time event, to help identify variables such as how seasons might affect production and whether previously implemented improvements are performing as planned.
2. Monitor Production. To understand energy consumption at the plant floor or production unit level, work with your automation provider to identify useful data collection points across machines and lines, and program your information systems to store and analyze that data. Once a system is in place that extracts energy information from the plant floor, you will be able to separate operations consumption data from facility consumption data.
In this pillar, you gain a clearer view of exactly how much of the company’s total energy use is consumed by the manufacturing process versus how much is consumed by operational functions such as data centers. This more detailed level of monitoring allows you to track and project energy expenditures according to actual use rather than by square-footage allocations.
You can then view this information in a reporting dashboard that can help pinpoint variable energy costs on the plant floor, and begin to consider ways to improve profitability. For example, it is common today for software systems to preclude operators from turning on equipment that they are not qualified to use. With visibility into peak demand systems, a manager can similarly preclude an operator from turning on an energy-intensive machine, or at least warn of the risk of doing so, when the facility is close to reaching peak demand.
This knowledge could also add a new dimension to operational equipment effectiveness (OEE) equations that currently take into account only product quality, equipment uptime, and production output rates. By gaining a clearer understanding of energy consumption at the plant floor level, you can modify your OEE calculations to include energy efficiency.
3. Capture Energy Consumption on the Production Bill of Materials (BOM). Once manufacturing energy consumption data is stored and analyzed in the information system, you can begin to see clear trends in how energy has been used among various historical events such as a specific product cycle or batch.
Capturing that knowledge also promotes future improvement: You will no longer have to guess what energy consumption will be for similar production runs in the future. You will be able to project in advance how much energy will be required for similar loads or batches. In doing so, you move to a new pillar of the energy management methodology in which energy requirements are included in resource planning and scheduling decisions in the same way that raw materials are considered on the production bill of materials.
Empirically tying energy consumption requirements to the production BOM helps you make proactive production decisions and better manage energy investments in a way that will generate a greater return.
4. Model. Once you have insight into how much energy is required to run a specific production cycle, you can leverage simulation software tools to input variables such as peak and off-peak energy costs, raw material costs, labor and projected emissions, and pretest “what-if” scenarios to see how production outputs and costs will change as a result of modifications.
Within this pillar, you can optimize production assets and forecast the most economical way to manufacture your products, using energy as one of the variables. For example, by knowing that certain batches require more energy, you can move those batches outside peak energy windows.
Looking beyond individual production cycles, you also can forecast the full sequence of production scheduling to optimize overall production.
For example, a North American packaging company used plant floor energy consumption data to model energy usage across all three shifts. The company resequenced key operations to take advantage of work-in-progress (WIP) as a method to store lower-cost energy. By batching energy-intensive operations outside their demand window, they were able to save $66,000 in one year because of reductions in peak demand charges.
5. Control. With all the manufacturing applications and automation on the plant floor generating data, the next pillar in the energy management approach takes advantage of having all data sets in a common automated system that can identify, model, visualize, and pre-sent control options or automatically control production changes.
This capability automatically implements decisions without unnecessary intervention on your part. Furthermore, these decisions can extend beyond simple plant floor production variables to include others that you are not directly measuring, such as last-minute staffing changes or urgent orders placed by key customers on short notice.
6. Respond. With a strong foundation in place, your company can include external market and regulatory influences in its overarching energy management strategy. It is possible to shift the perspective back outside of the facility and begin to focus on how to make intelligent economic decisions based on altering energy consumption in response to market fluctuation and regulatory demands.
7. Scorecard. Finally, many envision an imminent future when governments and even consumers will demand “sustainability scorecards” on products, such as carbon or energy “footprint” labels. Many manufacturers are concerned about their readiness to comply and how they might optimize their scores—not only to support their brand reputation and sales, but also to support their own corporate responsibility initiatives.
Such possibilities may seem unattainable to many. Fortunately, thanks to the real-time access to vital energy consumption data you can obtain, you can be confident that the pillars of energy management put in place over time will establish a firm foundation for meeting such challenges.
Phil Kaufman is business manager, industrial energy management, and Marcia Walker is global market development manager, sustainable production, for Rockwell Automation, 777 E. Wisconsin Ave., Suite 1400, Milwaukee, WI 53202-5302, 414-212-5200 begin_of_the_skype_highlighting 414-212-5200 end_of_the_skype_highlighting, email@example.com, firstname.lastname@example.org, www.rockwellautomation.com.