Achieving improved energy efficiency for industrial and manufacturing businesses is an ongoing challenge. Operational managers and engineering teams are ultimately measured against productivity – and rightly so – as opposed to chasing energy cost savings. As much as the management team or the company’s executives might expect the engineering team to manage both objectives, it isn’t always feasible without the time, resources or specialist skills being available internally.
When I meet with prospective manufacturing and industrial clients regarding energy efficiency, it’s either someone in management who has a strategic goal in mind, or it’s the engineering manager (or equivalent operational person) who has been mandated to find energy savings for the business. Our role is often one as a consultant undertaking an Energy Management Assessment first, to identify the potential savings of a facility and recommending the solutions, and hopefully implementing them.
The value in a specialist undertaking both the assessment and the implementation of the recommendation is that the supplier of the equipment is kept honest. This results in savings upfront by sizing and costing the solution correctly with a detailed financial analysis to motivate the project.
A good example of this is an Energy Management Assessment Terra Firma Solutions undertook for a cosmetics manufacturer based in Cape Town. This was a relatively straightforward assessment with some quick and easy interventions identified. The study itself took 3 months and required walkthrough site visits, measurement and hours of analysis.
An immediate opportunity identified was the installation of Power factor correction (PFC). PFC was implemented on three incoming transformers to the facility to reduce the maximum demand (kVA) of the facility by 121 kVA per month. PFC units monitor the reactive power within a system and activate capacitor banks to reduce the reactive power and therefore the maximum demand.
For the non-technical: it is a common, tried and tested solution to save money by reducing the maximum demand charges faced by some manufacturing and industrial sites, depending on the electricity tariff they are on. The PFC opportunity was identified with one week’s worth of data and another week of analysis and specification. Smart metering was also installed throughout the facility. Other recommendations under consideration are a lighting retrofit.
This project would likely not have seen the light of day unless a specialist had had the time to do the site visit, measurement and analysis of the savings opportunities. Implementing the PFC project was relatively straightforward with the specialist PFC supplier and client preparing for a shutdown to complete the installation.
The project financials are summarised in the table below:
|Power Factor Correction Project||Value|
|Project Cost||R 417 996|
|kVA Saving||121 kVA|
|Financial Saving||R 435 771|
|Payback Period||0.8 years|
|1st Year Return on Investment||104%|
|Net Project Value (10 years)||R 3 234 658|
|Internal Rate of Return (10 years)||112%|
You would think that with such great financial performance, the PFC project would have been implemented almost immediately. As it turns out, it took a year almost to the day, to install the PFC project from when we initially started the assessment. The decision-making process was slow and savings of over R400k were not taken advantage of. Once the PFC was installed, however, the savings easily paid for the initial consulting fees many times over and created the budget for installing permanent metering at the site.
The delay in implementing the project was not a wilful act to delay, but rather the typical time some larger organisations take to make decisions. In the end, savings have been enjoyed and would likely never have seen the light of day unless the client recognised that having a specialist in energy efficiency assist them would generate results sooner. Asking their own technical team to undertake the assessment and implementation could have negatively impacted their primary role of managing production.
We love finding energy efficiencies in business. If you want to know what an Energy Management Assessment might cost your business, contact us for a free proposal.