Scrambling for relief from today's high energy costs, many industrial manufacturers are focusing on their energy consumption and finding ways to manage it. Although there is no "one size fits all" program, companies are finding positive ways to integrate energy management practices into their daily operations.

Benefits and impacts

As an organizational process, energy management improves a company's business performance, while energy efficiency describes the practices and standards that are specified by an energy management plan.

Unchecked energy expenditures are like cumulative tax burdens on each stage of production. Thus, effective energy use can directly improve productivity. Aside from lower energy bills, other benefits include greater capacity utilization, reduced scrap rates, compliance with emissions and safety regulations, and enhanced risk management.

The best industrial energy management programs engage human, technical, and financial resources. Energy performance criteria usually reflect input from engineering, maintenance, finance, and utility staff, and all staff are accountable for outcomes. Coordinated energy decision making improves companies' competitiveness and ultimately contributes to its wealth, as illustrated in the diagram.

Ten pathfinders

To better understand effective energy management programs, the U.S. Department of Energy's (DOE) Industrial Technologies Program (ITP) supported a sample study conducted by the Alliance to Save Energy. Ten companies were studied: 3M, C&A Floorcoverings, Continental Tire North America, DuPont, Frito-Lay, Kimberly-Clark Corporation, Merck & Company, Mercury Marine, Shaw Industries and Unilever HPC. Many of them used ITP information resources and software tools in creating their energy management programs.

They cited these reasons for establishing their programs:

  • Energy expense control and management of energy price volatility
  • Control of other expenses, such as capital expenditures
  • Increased revenue potential through identification and replication of capacity improvements
  • Improved product marketing through visible resource stewardship
  • Risk mitigation related to environmental liabilities and operational reliability.

Though some common threads run through the programs, they are all different. Each has noteworthy features and results. For example, both 3M and the manufacturers that purchase its many products know that their markets require goods and materials with low environmental impacts; 3M has reduced its own energy consumption per pound of product at least 20 percent since 2000. Managers believe that resource stewardship simply makes good business sense.

Georgia-based C&A Floorcoverings matches its energy-efficiency initiatives with its business goals. In two years, C&A reduced its annual costs for natural gas, which topped $800,000 annually, by 10 percent by adopting an ANSI-certified standard, "Management System for Energy 2005," as a template for its program.

Energy consultants and in-house management worked together to help a Continental Tire North America plant in Illinois reduce its energy consumption per tire produced by 31 percent. Continental also partnered with an energy services company (ESCO) to incorporate self-sustaining energy management procedures into its operations.

With more than 100 plants in 70 countries, DuPont has made energy efficiency a high priority, applying a "Six Sigma" methodology to energy management. Through 2002, more than 75 energy improvement projects had been implemented, with average annual savings of more than $250,000 per project.

Frito-Lay's energy management focuses on results and requires extensive monitoring, measurement, and communications. The company's efficiency initiatives have yielded a return of more than 30 percent on efficiency investments.

Kimberly-Clark Corporation employs best practices to reduce air emissions, upgrade wastewater treatment, minimize process water use and packaging, and eliminate landfills and toxic chemicals at more than 165 plants worldwide. The company has reduced energy use per ton of product by about 12 percent.

The corporate energy program at Merck & Company holds site managers accountable for reaching performance targets. The company's goal is to cut site energy costs by 22 percent in four years and avoid 250,000 tons of carbon emissions. Energy efficiency was used as a strategy to increase production from existing assets, offsetting the need to make capital investments in new capacity.

Mercury Marine , a marine propulsion systems manufacturer, gives a single manager the authority to make energy improvements, assigns cost control responsibility to production units, and uses information technologies to monitor energy flows and to bill production units for their energy use. A centralized compressed air system has reduced the company's $7 million annual electricity bill by nearly $500,000.

Using DOE plant assessment methods and ITP BestPractices materials, a demand-side engineer at Shaw Industries documented potential energy savings of $1 million per month in the first six months of his tenure. In-house staff members use DOE resources in energy assessment and remediation activities.

Unilever's Health and Personal Care Division's energy management program features a simple budget-to-actual spreadsheet comparing the energy performance of 14 facilities. The spreadsheet information has inspired facility managers to save $4 million in energy costs and another $4 million in avoided costs. This activity has caught the attention of Unilever's Board of Directors.

Some key features of the 10 companies' programs are summarized in the table.

Key Features of 10 Industrial Energy Management Programs

 

3M

Cont. Tire

C&A Floor

DuPont

Frito-
Lay

Kimberly-
Clark

Merck

Merc. Marine

Shaw Ind.

Uni-
lever

Tactics and Approaches

Performance goals and metrics

 

Project-based approach

   

 

Behavioral/procedural approach

 

   

Multiyear planning horizons

   

     

Prominent use of ESCOs

             

A standardized protocol for energy or quality control

   

       

 

Energy stewardship supports marketing strategy

 

         

 

Tools and Functions

Energy performance reflected in budget-to-actual comparisons

     

   

Database to archive energy performance metrics and/or projects

 

     

Routine auditing or self-assessment of energy consumption

 

 

 

DOE analytical software and related reference material used

     

   

 

Corporate energy implementation guide

 

             

Easier financial criteria for energy improvement investments

       

       

Direct billing of energy costs to teams within plant

             

   

Organization and Communications

 

Corporate energy coordinator or "champion"

In-company energy team offers technical evaluation & assistance

Energy performance results released in investor publications

   

     

Energy performance communicated to employees

   

   

   

Plant-level teams and/or supervisors support energy improvements

 

 

   

Participation in government-business collaborations

   

 

   

Improvement suggestions filtered up through staff

   

 

   

 

Internet or intranet workshops, online peer networking

   

   

 

 

Recognition for high-performance plants

       

       

Hold energy awareness events for employees

             

 

Source: Alliance to Save Energy 2005.

Commitment is key

Market conditions, asset management strategies, corporate involvement, a structure of authorities and linking energy performance to business goals all seem to be major factors in effective corporate energy management programs.

More and more companies are tailoring programs to their own particular characteristics and needs. Their approach to energy management reflects their organizational profiles and abilities, and their commitment to improving productivity and profits through more efficient energy use.

This article was adapted and condensed from "Energy Management Pathfinding: Understanding Manufacturers' Ability and Desire to Implement Energy Efficiency," (PDF 221 KB) by the author; presented during "National Manufacturing Week" in Chicago, March 2005. Download Adobe Reader.

About the author:

Christopher Russell is the principal of Energy Pathfinder Management Consulting, LLC, an organization dedicated to the design and implementation of energy management strategies for business organizations. He has evaluated energy management practices at dozens of facilities. An expert in business-oriented energy cost-control, he is often a consultant and keynote speaker at industry conferences (contact crussell@energypathfinder.com).

Read more Energy Matters articles on these topics