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Sustainable Plan for Energy: a Very Good Place to Start

Many companies believe the procurement of energy is the only viable option to control energy costs. Although an effective purchasing strategy is important, this is only part of the equation. Once the ...


April 1, 2007
By Pulp & Paper Canada

Topics

David Arkell

Many companies believe the procurement of energy is the only viable option to control energy costs. Although an effective purchasing strategy is important, this is only part of the equation. Once the energy is purchased, if usage is not carefully monitored and controlled, the initial purchasing savings disappear quickly through preventable, wasteful consumption.

Frequently, the benefits of energy conservation with regard to the environment are not linked or used to promote an energy efficiency culture within or outside the company. If such a culture of conservation were created, it would certainly enhance corporate image, in addition to the measurable environmental benefits from minimizing usage.

Regardless, energy is still not a priority for many organizations. Despite shrinking profit margins and the fact that energy is a controllable variable cost, the bottom-line impact of reducing energy costs is often ignored. The reality is, with the industry average profit margin of 1%, every dollar saved on energy is the equivalent of $100 of industrial product sold. Those types of bottom-line savings are substantial; the return on time and resources spent is measurable and worthwhile; reducing energy usage clearly makes good business sense.

This is part of the issue; historically, energy has been addressed within organizations as strictly a technical issue. Although technical insight is absolutely essential when making energy decisions, decision-making has lacked a business acumen and focus through this exclusively technical approach.

There are several other consequences of a solely technical focus. In terms of accountability, energy responsibility under this system has typically been limited to one person or one department. Often, this one person or department is already so busy with other tasks that the mandate of complete energy responsibility can be overwhelming. As a result of this structure, energy becomes isolated from other critical planning activities and is not seen as a high priority for the organization.

A strictly technical approach will also lead to strictly technical solutions, usually requiring capital investment. However beneficial the proposed solutions might be, this capital hurdle can be insurmountable and can effectively stall progress. Even if capital projects are approved, the projected savings are not necessarily proven or continual.

Engineering may spec new equipment for example, if it has been recommended by suppliers to save energy. Once installed however, the equipment is often not monitored to verify the promised savings. These corporations never know if savings are actually achieved and energy efficiency is not promoted within the organization. In terms of the sustainability of savings, if there is a change in company operations, the installed equipment may no longer be appropriate. In these cases, the efficiency benefits of the new equipment diminish with the change in process and the cycle of missed savings opportunities continues.

This is not to say technical expertise is irrelevant when managing energy. Fortunately, most companies realize it is absolutely essential to have technical experts on board; viewing energy as strictly a business issue would be equally one-dimensional. A business-only approach would severely lack the imperative technical insight required and decision-making ability would be dramatically reduced. In fact, the list of business-only approach limitations would easily exceed the technical-only shortcomings described above.

The key to success is involving a variety of technical and business personnel in the energy management process, ensuring the organizational integration of energy and the achievement of sustained results.

The challenge for organizations in the pulp and paper industry lies in knowing where to begin. This is where the immortal advice from Julie Andrews in The Sound of Music, however simplistic, is worth recalling.

“When you read you begin with A-B-C. When you sing you begin with do-re-mi.” Similarly, when you manage energy effectively, you begin with an S-E-P: a Sustainable Energy Plan.

What is a Sustainable Energy Plan (SEP)? A SEP is a company-wide strategy, with both a business and technical focus, for reducing costs. These cost savings are achieved through simple management practices, often requiring little to no investment. A successful plan typically incorporates customized strategies for procurement, conservation and demand management and, perhaps most importantly, making links with all organizational activities.

Traditionally, the decision-makers in an organization have not been the ones who are responsible for using energy. Through the development of a company-specific SEP, this gap is bridged by creating accountability and targets for usage at every level. Developing an SEP is a proven, pro-active, measurable approach that provides a structure for managing volatile energy costs.

This is not to say that an SEP can be bought or that simply copying a competitor’s plan will be effective. For the plan to have any value, it must be created internally. Creating the plan in-house ensures that all team members take ownership of the plan and subsequently, energy awareness is raised throughout the organization. Ask your local utility about expert consultants who can provide training or coaching during the development of your plan.

Creating a plan and filing it away for future reference will be equally ineffective. By constantly revisiting and revising strategies, the SEP becomes a living, breathing document. Making a plan is an important step but failing to implement, monitor, and follow-up is a guaranteed way to miss your targets. Making a plan and proceeding to successfully implement, monitor and follow-up is a guaranteed way to reduce your energy usage, in addition to the increased environmental benefits and the fulfilled corporate social responsibilities.

As a part of a company-wide energy plan, making the effort to monitor your energy usage and to involve a variety of people in the process can lead to substantial savings, as with Interlake Paper (Cellu Tissue, St. Catharines, ON). With this in mind, Interlake implemented a combined business and technical approach and was rewarded for its efforts.

By outsourcing certain tasks of their energy plan and working as team on others, Interlake was able to focus on core business activities and capitalize on market opportunities without sacrificing production. Since the energy team included the mill manager, operations supervisor, and representatives from IT and accounting, vital links were made to bridge any possible business/technical gap.

Through participation in demand response and responding to events during August 2006, they were able to schedule maintenance strategically and achieve over $500/hr of savings with demand-response payment combined with curtailment at the most expensive period. Although it sounds like a small amount, consider this: the results are for one site, saving $500, in one hour alone, in one activity that was merely a fraction of their overall energy plan. Compared with the industry average profit margin of 1%, that means Interlake would have needed to sell an additional $50,000 of product, in that one hour alone, to have the same impact. For larger companies, when expanded to multiple sites, multiple hours of participation, multiple energy activities, the savings and required sales equivalent values increase dramatically.

Of equal importance, Interlake has not overlooked the importance of measurement and following up. Since that experiment, the plant’s energy team has maintained its new practices, using daily power reporting to ensure new procedures are followed. The team is also continuing to tackle energy efficiency measures with organizational integration from all levels of the company. When done and executed properly, this is not an arduous task that takes a significant amount of time. It is simply making all departments aware and accountable so they manage ener
gy during their day-to-day activity.

This is just one example of a company succeeding at addressing energy as both a technical issue and a business issue. With a variety of people involved in energy initiatives, measurable savings are achieved, energy usage is minimized and organizational objectives are met. To put an end to the excuses for inaction and failure to implement energy initiatives, remember the optimal place to begin. The starting point for this team approach is the development of your SEP; your site-specific, internally-created, sustainable plan for managing energy.

David Arkell is the President & CEO of 360 Energy Inc. He has over 20 years of experience in the energy industry, working with a diverse range of organizations both domestically and internationally.