Easy wins and beyond

At ARC’s recent Industry Forum in Amsterdam, our workshop on energy management again showed how big the gap between industries, regions, and individual players is.

Summarising the results, I would say we are at a critical point in Europe, where first movers [from the energy-intensive industries such as chemicals] are getting to a stage in their initiatives where they have implemented the easy and profitable projects, and need to tackle the next set of projects, which either have longer return on investment periods, or are more complicated or costly to implement.

Meanwhile, second movers [from less energy-intensive industries such as electronics] are just starting with their energy management initiatives.

In the energy management workshop, we had experts from chemicals firms Clariant and Bayer, reporting their lessons learned and sharing their experience. There are lessons from these first movers that could be very helpful for other users.

One was that of measuring without measurement. This means that the first assessment on energy management does not necessarily require a measuring of each part of the plant or factory, but needs to involve interviews with the local experts and operators.

Asking the right questions to the right people can quickly bring results and identify losses. This lowers the capital needed and therefore also the barrier to entry for energy management.

A second lesson was that large benefits can be achieved with awareness only, and without large capital investments.

The right training in combination with adequate targets for the employees can bring savings almost immediately. Only as a second step did the companies invest in new plants and equipment.

A third lesson was to make the targets clear, but at the same time flexible. At first Bayer set its targets to reduce overall energy consumption by 20%. Exploring the potential savings and the related capital costs, it now has a new target of 40% reduction of overall energy costs.

Its energy management programme now goes beyond capital investment to encompass all aspects of energy management. This includes new technologies, process improvements, and operations and maintenance.

The company found that improvements in operations and maintenance often brought large savings without requiring any capital investment.

While for bulk chemical producers such as Bayer, a target in the form of overall energy costs make sense, speciality chemical producers like Clariant need to focus on specific Key Performance Indicators, such as energy consumption per product.

Rather than establishing a company-wide goal, Clariant has linked its energy management goals to individual products, with the objective of reducing water usage by 25%, energy consumption by 30%, wastewater by 40%, and waste by 45% for each product category.

Asking the right questions to the right people can quickly bring results and identify losses. This lowers the capital needed… To achieve these ambitious targets, the company employs an implementation of the ISO 50001 global energy management standard. This uses an ISO 90001-like Plan-Do-Check-Act continuous improvement loop.

The implementation uses a top-down approach from site to apparatus level.

To justify related capital investments, Clariant used a strict 20/80 approach. This means that at every level, from apparatus to site, the company ranked projects according to their potential contribution of energy savings.

Clariant emphasised the role that company culture contributes to energy consumption. As a result, the first measure was not to put meters in place, but involved asking the operators and plant staff to identify the largest consumers.

As with Bayer’s experience, this enabled Clariant to achieve significant energy savings without requiring any capital investment.

Even in Europe, which is somewhat “ahead of the curve” when it comes to industrial energy management, many companies have still not harvested the “low hanging fruit” of energy management by addressing basic operational issues, ensuring pumps and motors are fit for purpose, or installing more efficient motors and/or AC drives.

Looking at the energy as per cent of variable costs, it is clear that the first movers were the industries where energy is among the top cost factors.

These first movers, such as Bayer and Clariant have already successful harvested the easy energy savings and must now move into the next phase and explore new opportunities for further improving their energy efficiency, business competitiveness, and reputation.

However, we are now at a stage where energy prices have reached a level, at least in Europe, where companies with high competitive pressures are also looking at their energy bills.

The European electronics and automotive industries, for example, are exploring programmes and initiatives to reduce energy costs and invest in more efficient technology across the value chain.

Florian Gueldner is European research director at ARC Advisory Group.