2004-09-27 - Standfirst: Financial directors are often reluctant to fund energy saving schemes, finding other more attractive investment options for the company’s capital. Yet, with the cost of energy due to rise, cutting the energy bill is increasingly becoming a highly profitable option. Steve Ruddell outlines how you can save money by saving energy.
Few doubt the merits of energy efficiency, but mainly, it is seen as somebody else’s problem. It is often difficult to find out who in the company it is that pays the electricity bill. Yet, this bill can be substantial. What is more, it is increasing.
Energy efficiency is often regarded in as a matter of technology and vendors of energy saving devices talk to the engineers who put the technology into use. Energy saving is then part of the overall efficiency of the process – these people may want to cut the energy consumption of an application to reduce the load on the supply, for instance.
Yet, it is the financial department, the people who approve the expenditure and sign the cheques, who really need to take the concept of energy saving to heart and understand the real effect it can have on the company’s bottom line.
The Carbon Trust’s campaign, ‘Lifeblood’, highlights the fact that British small businesses are wasting as much as 30 percent of their energy. SMEs have an overall annual energy bill of £3.5 billion - this 30 percent loss amounts to £1.1 billion or an average of £7,000 per business.
Energy prices have fallen for a long time in the UK, causing energy consumers to assume that they will continue to do so. However, Andrew Parker of energy forecasters Swan Energy, sounds a warning note: “Until last year, electricity was too cheap. Gas has also bottomed out over the last two years but now will inevitably rise.
“The main reason is scarcity of gas resources– essentially the world is running out of sources of gas and it will become a world trade commodity. US gas prices have already risen 50 percent and with increased competition for supplies, I expect the UK to follow suit. As a large proportion of electricity production is gas fired, electricity prices will definitely rise.”
Implementing energy saving measures can be an easier way to increase the profitability of a company than many other measures. Many businesses find that a 20 percent cut in energy costs gives the same benefit to the bottom line as a five percent increase in sales.
Naming the energy wasters
Lighting is one of the easiest ways to save energy. At its most basic, a policy of switching off lights in unoccupied areas can produce great savings, though investing in some inexpensive technology, such as motion detectors to switch off lights when a room is unused and using energy saving bulbs, will back this up.
Compressors can be major energy wasters, yet it is very easy to make savings on them - for every £100 spent on supplying compressed air, £30 could be saved by simple, effective, measures and improving compressed air treatment alone can make average energy savings of 35 percent. Optimizing a compressed air system by repairing leaks and installing energy-efficient compressors can reduce energy use by 20 to 50 percent.
Boilers are not 100 percent efficient – about 20 percent of heat generated is lost, a figure that can rise to 30 percent or more if the boiler is poorly maintained or operated. Check boiler plant weekly to detect any problems.
The heating of industrial buildings is another potential money sink if it is not done correctly. It depends on several factors, one of the most important of which is the internal temperature - for people doing physically demanding work an internal temperature of 13ºC may be adequate, while office workers need temperatures around 19ºC. Areas occupied only occasionally such as stores and warehouses may only need to be heated to a level that guards against frost or condensation.
The biggest energy user of all?
But the biggest user of electrical energy is the humble motor. There are many millions of electric motors in all types of industrial applications. As such, they consume an estimated two-thirds of electrical energy used by industry, so even modest gains in efficiency can produce substantial savings.
One problem here is that many motors run at their full speed all of the time, although full speed is not always needed. They often drive a fan or pump and to match demand, the output of the fan or pump is simply limited with some kind of damper or choke. This is highly wasteful, as not all the output from the motor is being required.
The best solution to this is to use a variable speed drive, which alters the speed of the motor to exactly match the demand.
Because of the physics governing power and flow, a 50 per cent reduction in speed will result in an 87.5 per cent reduction in energy consumption, giving a likely payback time of less than one year - most financial directors are happy to see 24-month paybacks.
A typical user of variable speed drives is General Domestic Appliances Ltd (GDA), in Stoke-on-Trent, Staffordshire, which makes 12,000 cooking products a week for its market leading Creda, Hotpoint and Cannon brands. The company decided to look at the energy consumption of its wet fume plant, which extracts waste vitreous enamel from four paint booths. Some of the booths were not in constant use and were closed off by a mechanical shutter, yet the 132kW fan used to extract the waste enamel was run at a constant speed, wasting energy and money. GDA asked engineering services provider Central Electrical in Liverpool to conduct an energy audit on the plant.
GDA’s Plant Engineer Andy Rowe says: “Central Electrical’s report concluded that the fan would consume £30,000 of electricity per annum if nothing was done. They estimated we would save approximately £16,000 on the energy bill for the wet extraction plant in the first year if we adopted their recommendation of an ABB industrial drive. In fact we saved £17,000 and achieved a payback period of only four months.”
But even in cases where motors need to run constantly at their full rated speed, substantial savings can be made by selecting high efficiency motors.
A UK water company cut its motor electricity costs by 6% following the introduction of a motor management policy, which stated that failed motors should be replaced with high efficiency motors. The utility even found that a fully functional motor could be replaced with a high efficiency unit and still achieve payback in less than two years.
Paying for savings
Energy efficient equipment is eligible for Enhanced Capital Allowances, or ECAs – see the government’s web site, www.eca.gov.uk, for full listings. ECAs enable users to offset the full cost in the year of purchase, reducing the tax burden and improving cash flow.
Energy saving is making greater economic sense every day. Variable speed drives are capital items that sometimes require fairly substantial investment but which can cut energy costs significantly. Payback times can also be very good. Combine them with other quick and easy ways to save energy, and your operating costs can be cut dramatically.
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