Energy Costs Presented by: Gary A. Swanson, PE President - Energy - PowerPoint PPT Presentation

10 Strategic Steps to Reducing Your Energy Costs Presented by: Gary A. Swanson, PE President - Energy Management Solutions - (612) 819-7975 And Matt Haley President - Matt Haley & Associates – (612) 598-8743

10 Step Summary 1. Supply Services 6. Manage Demand 2. Price Risk 7. Data Management Management 8. Equipment 3. Energy Purchases Conservation 9. Maintenance 4. Minimize Energy Programs and Usage Training 5. Utility Programs 10. Utility Infrastructure Costs Energy costs may only be 5% of your total costs but energy cost savings go directly to your bottom line and increase profits 2

Energy Components Supply Side Demand Side 3

Supply Services Review Tariffs – 23% on incorrect tariffs – Can change with operation changes – Economic development rates – May be able to collect savings from the last year Aggregate meters – Can save customer charge and demand – Combined could qualify for large volume tariffs Saved one customer $500,000 by utilizing EDI rate 4

Supply Services Review Bills – Large bills are generally hand billed Found $180,000 billing error for one customer Sales Tax Exemption – Changes with operational change – Recover past funds in some states Saved one customer $138,000 5

Energy Supply Procurement – Deregulated state (12 active) – Other State Rules (2 MW MN) Negotiate With Utility – Need viable threat Gas bypass Generation Expansion at other site or moving facility 6

Energy Supply Self Generate – Cogeneration Need good steam or hot water load May be able to generate for $.07/kWh Government organization may be able to provide free audit – Wind Generation May be able to generate for $.04/kWh with no capital cost – Needs to be installed before 12/31/05 – Will not replace current supplier but can supplement more expensive power 7

Color $/kWh Wind Map $ 0.0300 $ 0.0380 $ 0.0430 $ 0.0500 8

Price Risk Management Hedging is not speculation – Provide guaranteed price Meet budget Future pricing of products Lock in profit Speculation is taking a risk in hopes for an unknown reward Not hedging is speculation 9

Price Risk Management Many Ways to Hedge – Local utility – Marketer – Commodity broker (lowest cost) – Physical vs. financial Need Information to Make Educated Decision Need to Evaluate Technicals as Well as Fundamentals Aggregate Facilities all Over the Country Need to Evaluate all Options to See Which is Right for Your Facility 10

Energy Usage Profile Motors Gas Process Compressed Air Lighting HVAC Complete an Energy Assessment 11

Energy Conservation Why look at this now? – Gas costs have tripled 6 year payback is now 2 years – Electric costs have gone up dramatically – New technologies are helping reduce payback – Corporations are developing conservation programs (CSR) All leading to new opportunities to reduce energy costs 12

Energy Conservation Lighting (50%) – New high bay fluorescents can save 50% – Lighting control – Rebates – Many projects less than 2 year payback Saved $145,000 for one customer and received $125,000 rebate, with a 2 year payback 13

Energy Conservation Compressed Air (35-50%) – Fix leaks yearly – New ASD trim machines – Regenerative dryers – Lower air pressure – Adequate storage – Tie units together Saved over $250,000 per year by adding controls to tie four units together and eliminate a 500 HP unit 14

Energy Conservation Motors (10%) – Premium efficient or Ultra efficient motors – Adjustable speed drives – Synthetic oil – Synchronous belt drives – Buying programs (save 15%) One facility had 100 - 7.5 and 10 HP motors that saved over $150,000/yr. 15

Energy Conservation HVAC (25%) – Energy Management Systems – Night set back controls – Exhaust fan timers – Waste heat recovery – Economizer control 16

Energy Conservation Refrigeration (20%) – Control compressors – Synthetic oil – Drives on compressors, evaporators and pumps – Defrost sensors Saved one customer $148,000/yr. by adding a control system 17

Minimize Energy Usage Turn equipment off when not needed – Lights off at night – Equipment off during breaks and lunch – Dust collection system (drives with valves) – Control aux. equipment when equipment is off – Turn off idling equipment Shift usage Night and lunch walk through useful Saved a customer $54,000 by turning off lights in Mezzanine Saved another customer $120,000 by turning off injection molding grinders 18

States With Utility Incentives Also Iowa 19

Utility Programs Customers pay into program today Goal is to get more money out then you put in Audits/Studies One customer received $330,000 rebate for a process improvement 20

Manage Demand Can represent 30-50% of your electric bill Everyone has control options (10%) Control strategies depend on your rate structure – Control plant load – Control with utility signal Need interval load data – Review peaks and minimum load 21

Load Profile 22

Data Management Review usage (gas, electric and water) Compare to other plants Track Btu per unit produced Track Greenhouse gas savings 23

Electric Reporting Electric Cost Per Month Electric Usage Per Month 2,000,000 $84,000 $82,000 1,500,000 Cost ($) kWh $80,000 1,000,000 $78,000 500,000 $76,000 0 $74,000 Oct-02 Apr-03 Aug-02 Dec-02 Feb-03 Jun-03 2 2 3 2 3 3 0 0 0 0 0 0 - - - - - - t r g c b n c p e u e u O A A D J F Month Month Energy Rate per Month $0.056 $0.054 $0.052 $/kWh $0.050 $0.048 $0.046 $0.044 $0.042 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 24 Month

Benchmarking Benchmarking - kWh Per Ton 100 80 kWh/Ton 60 40 20 0 Aug-02 Nov-02 Mar-03 Apr-03 May-03 Sep-02 Oct-02 Dec-02 Jan-03 Feb-03 Jun-03 Jul-03 Month 25

Purchase Energy Efficient Equipment Energy Efficient Options Utility Rebates Engineering Studies Utilize Existing Best Equipment Practices New Technologies 26

Maintenance Programs and Training Can reduce usage through new equipment but also need to maintain equipment Properly maintained system can save 5% of energy usage – Compressed air and steam leak checks (yearly) – Steam traps (25% failed in 3 yrs.) Cost $4,000 per trap – Boiler tune up twice a year (1-2%) Unfortunately this takes a back seat to running plant 27

Minimize New Utility Infrastructure Costs Negotiate with utilities to reduce or eliminate infrastructure costs required for expansions and changes at plants Reduced infrastructure requirements from $3,000,000 to $1,200,000 for one client 28

Any Questions? 29