Energy costs in a climate of change

The latest npower Business Energy Index (nBEI) reveals that 40% of major energy users, like those in the process industries, do not consider reducing CO2 to be a business priority and, of these, 64% say it never will be.

This suggests that large numbers of industrial firms are not motivated into reducing energy consumption by the environmental benefits that such action brings about. This is despite the fact that under the Climate Change Levy and EU Emissions Trading Scheme, high energy users will be financially penalised — and companies with a positive environmental performance and a small carbon footprint will enjoy a better corporate reputation and competitive advantage.

Why then, given the fact that energy efficiency is a topic that has long been discussed in the industrial sectors and that climate change has never been higher on the news agenda, is there such apparent lack of support for carbon reduction measures?

The Energy Index offers some clues. The npower Business Energy Index is an independent, annual report canvassing opinion from a wide range of companies on energy issues. A key focus of the latest nBEI was the Low Carbon Economy; what this meant to businesses and what priority was placed on reducing CO2.

The seeming reticence to adopt climate change initiatives appears less bleak when considered against the growth in energy management, which emerges as a key discipline within businesses.

The number of companies actively seeking to improve the monitoring and management of energy is at its highest level since the nBEI began over two years ago, currently 93.5% of respondents. More and more firms are deploying energy management equipment and appointing full time energy managers to collate accurate and meaningful data on energy use.

So it seems that many companies have increased investment in energy efficiency measures as an attempt to mitigate high energy prices, rather than for long-term efficiency gain or to bring about greenhouse gas reduction.

There is, meanwhile, a tendency for companies to only adopt measures that provide a quick return on investment and make a minimal impact on cost and resources. It appears that a major barrier to further improvements is the short payback that businesses demand on investment of typically one to two years. Based on this approach, the investment available to make long-term improvements in efficiency will always be limited.

While no one would argue against the fact that businesses must deliver on the bottom line, that lowering cost and reducing emissions are viewed as two separate disciplines under the energy management banner suggests significant moves are still required to forge greater links between cost and environment.

The concern is that as long as business continues to operate on the single bottom line, rather than triple bottom line — environmental and socially accountability, as well as financial — as soon as energy prices shift, energy efficiency becomes a low priority.

If cost savings are not required, why save the energy? In the last few months there has been movement in energy prices as a result of changes to the wholesale cost. The effects of this on energy management are likely to be seen in the next nBEI and it will be interesting to see if the number of firms actively managing energy usage drops.

A determining factor will be how many firms will have been influenced by recent movements in Government legislation and have started making stronger links between environmental and cost risk.

Are the risks associated with large 'carbon' emissions now such that they bring about management change? The hope is that they are, as it is vital that a drop in energy prices does not instigate a drop in energy efficiency measures, as has happened before.

After the oil shocks of 1973 and 1979, when oil prices quadrupled, energy management began to develop as a separate and systematic discipline. The elements of successful energy management programmes were identified as establishing policy, management support, monitoring and targeting, development and implementation and staff awareness training.

Large organisations had energy managers, even energy teams with capital budgets, and generated significant energy savings. In the 1990s, as energy prices declined in response to privatisation, these teams largely disappeared and saving money on energy became simply a matter of better procurement.

This time, however, there are more than just profits at stake. If companies do not start considering the emission reductions offered by improved energy efficiency, as well as the cost benefits, then it is possible that we will not mitigate the risks of climate change.

On a positive note, the regulation that now exists to encourage businesses to reduce emissions did not exist in the previous price peaks and troughs. The emission targets set out in the Climate Change Bill, the EU ETS, Climate Change Levy and, more recently, the Carbon Reduction Commitment, put forward in the Energy White Paper, combine to create a framework to encourage lower emission operations.

While, yes, a commitment will be required from business to operate under this framework, the indications are that there are commercial advantages to be had from reducing CO2 emissions, both in terms of cost and reputation.

Clearly lower energy use means lower energy costs, but there is potential for the benefits to extend beyond this. In a 'low carbon economy', those businesses demonstrating a commitment to reduce their carbon footprint will enjoy better relationships with customers and suppliers as a result of the reputational benefits of a positive environmental performance.

The retail giants, including M&S, Tesco and Sainsbury's, all realise this and have made high-profile declarations about their intention to reduce emissions and run a more sustainable business.

These companies recognise that a strong reputation is as important to business as a strong bottom line. There is every reason to believe that this will be felt keenly in the process industries, as the bold moves from the retailers begin to filter down the supply chain.

Food manufacturers will be called upon to provide information on the carbon emissions impact of individual products and measure the sustainability of their own supply chain. Many will know their overall emissions data from their membership of the EU ETS, but will currently lack the resources to understand this on a product-by-product basis.

Institutional investors are, meanwhile, becoming increasingly concerned with a company's environmental performance when selecting investment opportunities, as evidenced by the number of companies now listing on the FTSE4Good index. While at present this may only apply to large firms, it is likely this will become the norm.

So with the benefits seemingly clear, how do process firms improve energy management?

Traditionally in energy management, opportunities to invest in efficiency have been in retro-fit, add-on and projects such as improved lighting, better heating controls or variable speed drives.

Today, these should be considered the basics and should be fully implemented in all situations. A sensible capital spend for these kind of measures needs to be established and maintained over two to three years to achieve optimum results. Businesses must also undertake audits of their current energy use to understand the current size of their footprint. Only by understanding current status can targets for reduction be set and, crucially, measured.

A more sustainable approach to energy management presents the best opportunity to combine economic and environmental concerns in the current climate. In this scenario, the focus switches to more wholesale approaches to re-engineer complete energy systems. This includes focusing on optimising whole systems instead of just components.

The evidence is that this approach produces a step change in reducing emissions through more efficient energy use and maintenance costs, 50% or more in many cases. It is not yet widely understood or taught and manufacturers are more interested in using larger capacity equipment which, although highly efficient itself, may not be the optimum choice if a more holistic method is employed when selecting new plant and equipment.

The recent Climate Change Bill underlines how the environment will be central to political thinking in the years ahead. This will be echoed by changing consumer and business demands.

A sustainable approach to energy will garner reductions in carbon and cost, and rather than feeling under attack from all sides, companies can gain significant competitive advantage in the low carbon economy.

Energy saving in the process industry

Cleaning

The way in which plant is cleaned is an often-overlooked candidate for review when considering options for energy saving, according to Mike Watson, CEO and technical director of Tube Tech International.

"With traditional cleaning methods and schedules well established, it will often not occur to plant and shut-down managers and maintenance engineers that they could reduce energy expenditure if key plant components operated more efficiently, as the result of being cleaned better than ever before," said Watson.

Watson cites how Tube Tech has seen all kinds of plant deliver remarkable performance gains when treated to advanced cleaning techniques, such as the UK-based CCGT power station, which was restored to 12MW output from an 8MW low, simply by cleaning the ACC fin-fans properly.


Wireless

Many process facilities are simply not fitted with enough sensors to provide the data that forms the basis of effective energy management. Wireless mesh sensor networks, however, can dramatically reduce the cost and time required to retrofit monitoring sensors in all types of situations and offer flexibility and scalability.

Adaptive Wireless reports on a proposed project for a company running large baking ovens that showed how wireless monitoring could deliver large potential savings, including up to 10% reduction in gas consumption. This would be at around half the cost of a wired solution and be much less disruptive to the sensitive environment of a food plant.


Remote

New technologies for the remote monitoring of steam traps can individually test thousands of steam traps in a matter of seconds, warning of malfunctions almost immediately. According to ARI-Armaturen, the latest systems allow early detection of malfunctions such as leakages, which cause significant energy loss and blockages. These include calorimetric sensing-based technologies that identify and report faults immediately and monitor the steam traps individually and continuously — therefore significantly reducing energy losses from the plant.


Steam

A steam-system survey at Aesica found that around 10% of the steam traps at its Ponders End site in North London were failing open. This was resulting in 8,900 tonnes of steam being lost each year, at a cost of £67,200.

In response, the supplier of active pharmaceutical ingredients installed 200 GEM steam traps from Gardner Energy Management across the facility. The project has delivered a 28% energy saving in just 12 months and a 3,000 tonnes/year cut in CO2 emissions by preventing blocked steam traps from impacting on production and returning condensate back to the boilers.


Air

Hull-based Orvec International achieved a 42% drop in its annual compressed air energy costs through installing a frequency-controlled screw compressor. The new Boge SF60 unit, which Orvec financed with a Carbon Trust Energy-Efficiency loan, is set to reduce the company's energy consumption by over 64,000 kWh per annum.


Monitor

Automatic monitoring & targeting (AM&T) devices and smart metering provide users with an understanding of where and how much energy is being used, but do not help managers to deliver comprehensive energy-saving programmes.

Newer energy management packages add control to AM&T systems via features such as a built in logic controller, said Lisa Wilkinson, business development director, at t-mac Technologies. This capability enables users to control equipment in-line with changing conditions and co-ordinate suitable 'on' times in response to requirements.


Trading

The Neta (New Electricity Trading Arrangements) have brought many benefits to customers, but have also introduced significantly more complexity and more risk exposure to the vagaries of global energy markets. In response, many businesses have out-sourced their energy procurement to specialist independent energy consultants, notes Haden Freeman Energy Services. These services can be provided at a lower cost and without binding an organisation to any long-term contract commitments, the Manchester-based company points out.


Drives

Paper maker James Cropper saved around £20,000 a year in energy costs through the installation of ABB variable speed drives to match changing demand at its mill near Kendal in Cumbria. The project also delivered a return on investment within one year and enabled the company to reduce the number of pumps to meet the required duty from two 55kW units to a single pump to supply medium-pressure water to processes across the mill.