Magazine article Industrial Management

Energy Management Strategy at Its Core

Magazine article Industrial Management

Energy Management Strategy at Its Core

Article excerpt

Energy costs were once considered a relatively nominal expense for many industrial companies. Those same companies are now realizing that increased risk, tighter overall margins and highly volatile prices are tying energy prices more closely to company bottom lines.

In order to manage this increas- ingly important component, many businesses are creating energy management strategies that lower overall costs, and they also are investing in sustainability measures.

Having a well-balanced strategy' that uses data management and analysis to highlight usage patterns can yield positive change in energy'consumption. This, in turn, leads to noticeable cost savings and mitigates the risk of rising energy'rates.

It's important to note that your strategy must focus on the factors that you can control. While it's true that improvements to utility' infrastructure, federal regulations and market speculation contribute to increased costs, most businesses cannot control these factors.

Instead, concentrate on the internal strategies that your organization can control, and then y'ou will reap the benefits of improved productivity, reduced emissions and the elimination of un necessary costs that can slowly reduce profits.

Let's look at some useful tips on creating a successful industrial energy management strategy'.

Set expectations and re-evaluate

Assuming that your energy' bills will immediately decrease by 5 o percent with just a few minor tweaks in your usage or procurement strategy' is unrealistic. The first step to creating a quantifiable plan involves setting realistic yet desired outcomes.

One way to measure your progress properly would be to start benchmarking your energy' and water consumption through the Energy' Star website at www.energystar.gpv. Benchmarking usage is a critical first step because it will allow you to set a baseline for future improvements and measure future progress. Awareness is the first step in making changes to reduce energy usage; and reducing energy consumption is imperative if you want your industrial concerns efforts to have a real impact on cost.

Energy' management is closely linked to risk management, so it's important that your procurement strategy protects you from the volatility associated with the energy market.

Purchasing energy on a fixed cost is a hedge against rising energy'prices. A common misconception associated with energy'procurement is that today's lowest rate will always serve you best. Instead, look at an overall energy budget and pay close attention to the true cost of your natural gas or electricity by asking the following questions in regards to procurement contracts:

* Is any'portion of our company's energy usage (including that outside of historical consumption) priced at a variable rate?

* What happens to the corporate account when the original procurement contract ends?

* Will the company's rate float at a volatile variable index or will company officials have a chance to re-contract to avoid volatility?

* Are there any expected changes in law that might affect the price we currently are paying for energy?

Jump-start your plan

Once a solid procurement strategy has been implemented, you can start to look at low-cost, high-ROI upgrades that will help reduce energy' consumption quickly.

Items such as LED lights are one such upgrade that not only reduce consumption immediately but also lowers demand, which is a key factor in energy' pricing. LED lights also cost less to maintain and have attractive payback periods that often can be bolstered by utility'rebates.

After adding LED lighting, some companies have seen energy'demand reduced by up to 25 percent when compared to their previous incandescent lighting system. Another documented benefit of LED lighting is increased productivity' because the lights provide a brighter, more inviting environment.

And LED lights last up to 20 times longer than incandescent lights, so facilities cut down on maintenance costs. …

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