Tuesday, March 27, 2007

Energy Savings: See What You’re Missing!

As of March 2007, there are 83 industrial energy assessments published on the U.S. Department of Energy’s website . These assessments are the product of a program called “Save Energy Now,” which the U.S. DOE launched in response to industry’s need for relief from high energy costs. The purpose of these assessments is to identify cost-effective ways that industrial facilities could reduce energy consumption while still meeting their production goals. So far, based on these assessments, the average facility presents just under $2.5 million in annual energy savings opportunities.

Keep in mind that the published reports have been “sanitized” per the direction of the recipients. This means that recipients withheld any information that they did not want their competitors to see. Consequently, the published assessments very widely in quality and format. Still, with dedicated review, readers will get some idea of the kinds of energy improvements—and dollar savings—that are most often available to industrial facilities.

These reports are also of great value to vendors of energy-efficient products and services. For example, at least one investor group is culling these records to size the market for mechanical insulation products.

The “Save Energy Now” program offered these assessments to industry at little or no cost. While some companies jumped at the opportunity, there were many others who ignored the opportunity, if only because they are wary of “government” programs. These companies can at least look at the published assessments to get some idea of the savings potential that they’re missing.

Tuesday, March 20, 2007

Business Risks for Energy Consumers

Any organization that consumes energy should be prepared to manage a wide variety of energy-related business risks. These include energy market volatility as well as rapidly evolving technologies and regulation. Dealing with these risks involves more than pursuing a “project”—such as capital investment in a big chunk of machinery. Another alternative involves durable management strategies that change the way people in an organization use (and think) about energy.

Energy risk management will require input from a variety of departments and people throughout an organization:

Procurement, budgeting, and finance people will be the first-line in dealing with electric utility deregulation. Companies need to develop strategies for making the best use of the many procurement options that are available in deregulated power markets.

Finance people will lead the pursuit of tax deductions and credits that apply to certain energy improvements such as lighting, heating, air conditioning, and building structural systems.

Engineers will monitor emerging technologies and standards. Companies will ask: What are these technologies? Which ones will provide value for me? How shall I evaluate them? Engineers will also design, commission, and monitor new energy-using equipment and systems.

Operations managers will rethink the dozens of staff decisions made each day, across plant floors or office spaces. Machine operators and office workers are largely unaware of how their every-day choices impact the energy bill. Solutions begin with increased awareness.

Human resource professionals need to inventory their staff training needs, then seek appropriate training opportunities. Maintenance workers and machine operators need to learn “best practice” techniques that save money and boost reliability.

Environmental, health and safety professionals need to monitor emerging regulations. For power generators and manufacturers, energy consumption directly impacts the emissions they produce. Compliance with these regulations puts many dollars at stake in the form of potential fines and penalties. Note that an energy management agenda will closely overlap safety and emissions compliance strategies.

Marketing and corporate strategy people need to understand the opportunities posed by “sustainable” business practices. Energy efficiency is a component of sustainable business practices. Sustainability is also the key to developing new products and services and winning new customers. Look at Wal-Mart: they force their suppliers to squeeze as much waste as possible from their production costs. Companies that sell their products to Wal-mart (and many other like-minded firms) need to be aware of this trend and have a strategy ready for it. To ignore this trend is to risk losing business.

Needless to say, someone needs to coordinate these many players so that they are not working at cross-purposes. This is essentially the role of an energy manager.

Forward-thinking companies respond to energy risk by changing they way they use energy. They often begin by rethinking their work habits and procedures. They quickly discover that energy use is as much a human issue as it is mechanical. To ignore the human component of energy cost-control is to invite business risk. A lack of awareness begets a lack of accountability. And without accountability, companies have no effective response to energy risk.


Tuesday, March 13, 2007

Energy Management: Attempting Progress Without Change?

There’s an old witticism from Mark Twain that works perfectly here: “I’m all for progress. It’s change I object to.”

We are reminded of this in the February 12, 2007 edition of Business Week. “The Right Way to Shake up a Company” is a sidebar to a larger article that describes how one employee attempted some culture change at Wal-Mart. The lessons-learned in that story strongly resemble those learned by people who try to develop energy management programs from scratch. If you are attempting to change the way your organization uses energy, then the major take-aways from the article include these:

There’s nothing wrong with being humble.
“Effective change agents don’t go around shouting about it…. The smarter ones don’t want to seem interesting, but interested.” Implication for energy champions: design energy strategies to fit the company rather than the other way around. ‘Understand and honor the DNA of the organization. The system will reject you otherwise.” (Note from your blogger: maybe this is why so many companies settle for energy projects rather than an ongoing improvement process? And if culture is a handicap for potential energy cost control, what does that say about organizational management?)

Pay attention to formal networks. “It’s not enough to win the support of (top leaders). You also have to convince the opinion leaders—those who influence employees in ways that no organizational chart will reveal... you have to build a network and a case for change.” So who in the typical organization has the communication skills to perform this feat on behalf of an energy management agenda?

Determine a company’s tolerance for change. “It’s important to suss out a few people who can be informal advisors…. Listen to them to understand any symbolic faux pas.” Paving the way for energy management may require knowledge of current hot-button issues. Rather than posing energy management as its own priority, it may be best posed as a solution for, or complement to, those other hot-button issues.

An early success can do wonders. “Don’t try to do everything right away…. Taking a small step first gives you credibility, contains the risk, and, even if you make a mistake, gives everyone the opportunity to learn.”


Wednesday, March 07, 2007

We're Already as Efficient as We Can Be!


This means you can focus on other things, because your energy bills are under control. Or are they? I will agree with you only under several conditions:

1. All the past improvements you made remain fully implemented. Staff are not taking procedural shortcuts. All energy data is being assimilated and reacted to in a timely fashion, and you KNOW exactly how much energy you are using per unit of production, per square foot, or hour of operation, etc.

2. Technology and regulation have remained completely static since you became 100% efficient. No new technologies or practices have become available, so there have been no potential improvements to consider.

3. All of your staff with institutional knowledge of energy and utility systems remain in place. They haven't been lost to attrition. New employees come in knowing all they need to know about energy-smart behavior, so they pose no threat to your efficiency whatsoever.

4. Your assets have not been depreciated through use. In other words, your efficient equipment is still sitting undisturbed in the packing grease in which it was shipped.

5. Fuel prices have remained stable since you became fully efficient. That "five-year payback" opportunity is still a five-year payback, and it always will be.

6. For whatever reason, tax credits, deductions, and rebates for energy improvements don't apply to you.

If you meet all these criteria, then your plant IS as efficient as it can be. So as the man says, "I salute you."


Friday, March 02, 2007

Energy Lessons: the Columbia Disaster

On February 1, 2003, the NASA space shuttle Columbia was attempting to complete its twenty-eighth mission when it blew up during re-entry. The events leading up this tragedy, as well as the recovery efforts in its aftermath, generated many lessons that are potentially of great value to industrial facility managers. In no way does this discussion mean to trivialize that event. In fact, because lives were lost, we owe it to those people to learn as much as possible from their experience.

It is not fair to say that mismanagement of facilities will lead to spectacular failures and loss of life (although industrial accidents do claim lives every year). More to the point, a lot of facilities operate with less-than optimal integrity, which absolutely costs money in terms of wasted fuel and productivity. The organizational causes of energy losses and accidents are strikingly similar to NASA’s shuttle experience. Mechanically, there are only a couple of similarities between space shuttle operations and, for example, an industrial steam system: these are large pieces of machinery that generate a great deal of heat and force. The similarities are more pronounced in terms of management priorities, procedures, communication, data interpretation, and professional culture.

Investigation into the Columbia’s demise emerged in the popular press. These compare to catastrophic steam system failures.

1. Clues to failure were available well in advance of the catastrophe, drawing attention to the shuttle’s insulating tiles. Concerns with the integrity of these tiles date back to the shuttle’s initial delivery in 1979. Because the tiles were a source of ongoing but minor concern, decision-makers were apparently lulled into a sense of complacency—it had yet to cause real problems, so why intervene? Think now about those steam plumes and excess venting that many steam facilities endure. “It’s always been like that” is a typical explanation.

2. Perceptions and priorities were divided along professional lines in NASA. On one hand, technical staff focused on data, measurement, and verification, while program managers dealt with budget cutbacks, expense savings, and deadlines. The goals and teamwork between these two very different professional cultures were less than perfect. Many steam utility improvements—especially those with zero-cost—are behavioral in nature. They may be the result of better coordination between utility and process staff. A lot of dollars can be saved just in timing and balancing steam loads in concert with process demands.

3. Failure is often the result of a series of incidents, not just one. A chain of events may involve technology, communication, data interpretation, and the structure of accountability. Analysis of Columbia’s failure was not limited to assembling pieces of the stricken craft. It also involved an audit of email communications among staff. In countless manufacturing plants, steam operators never see the fuel bills that procurement staff process every month. If the data in those documents are not shared, then clues to operating anomalies and run-away costs remain hidden.

Let’s shift now to the recovery efforts in the wake of the shuttle’s crash. This was an effort that covered several states and involved everything from U2 spy planes to scuba divers and sniffing dogs. What was remarkable about the recovery effort was the volume of material it retrieved. Experts said that at best, 15 percent of the structure would be recovered. Through April 22, 2003, teams had in fact recovered almost 40 percent of Columbia’s unfueled weight.

About 130 federal, state, and local agencies had to collaborate to make this happen. Usually, activities that engage authorities across jurisdictions are a recipe for confusion, red tape, and turf battles. This was largely avoided in the case of Columbia’s recovery. What made this successful? And what are the lessons for steam utility management?

There was clear and singular “ownership” of the process. All jurisdictional authority coalesced around NASA’s lead. The lesson here for the steam community: a steam or energy champion is usually vital to the success of energy management efforts. This is an individual with knowledge and authority to act. The “champion” is the visionary, coach, and arbitrator who keeps everything on track.

Clear and simple goals facilitated jurisdictional coordination. Look now at the manufacturing plant where utility, process, financial, logistical, and other managers must be on the same page. Business provides its own rallying cries: Return on investment. Building shareholder wealth. Global competition. To be effective, these managers have to know how their respective areas contribute to a central goal, and then focus their teams accordingly. Shared goals precipitate trust, which then yields better communication.

Skilled workforces bring the highest value. The Columbia recovery effort engaged “the best of the best” from each contributing jurisdiction. In steam as well as any other operations endeavor, the value of training and motivation is underscored by this lesson.

A final thought regards sustainability of effort. The Columbia space shuttle disaster is an episode—a singular event that captured the dedication of staff involved in its closure. A tragedy so visible and of such magnitude naturally evoked focus on the part of recovery teams. Quite simply, there was a vast but finite acreage to cover, and they could declare victory when they covered it all. Manufacturing is not quite the same. Plants will operate year in and year out, and managers never have a true “finish line.” Instead, they have a fluid business environment, and with that challenge also comes the opportunity to periodically adjust the plant’s focus in achieving its goals. Therein lay the dynamics of motivation as well as sustainable energy management success.


Who links to my website?