Energy Conservation Fund: Helping Corporations Develop Energy
Conservation Strategies and Reducing
Utility Costs
Presented by:
Gary A. Swanson, PE
And
Bill F. Houston
Energy Management Solutions
(612) 819-7975
2
Why Consider?
Most conservation projects compete with
production projects
– Conservation never wins
Reducing energy costs goes directly to
bottom line and continues
Reduce Greenhouse gases
3
Profits ($100,000)
Production
– May require $300,000
in capital
– May require
$1,200,000 in sales
(12/1)
– May not be profitable if
market conditions
change
Energy Reduction
– May not require an
investment
– Goes directly to
bottom Line
– Continue year after
year
– Reduce Greenhouse
gases
1,366 tons (electric)
835 tons (gas)
4
Building Blocks
Corporate
Commitment
Set Goals
Develop a Plan
Implement Plan
Track and Verify
5
Need a Corporate Commitment
Team of energy advisors
– Including corporate, plant mangers,
maintenance and employees
– Include outside energy experts who are
independent
Need total company buy in to succeed
6
Set a Goal
Need to set a reasonable goal
– 5-6% per year is easily attainable
– Several years should be minimum
Need a budget
– Many projects can be implemented with
paybacks of 2-3 years
Benchmark is very important
– Set electric, gas and water benchmarks
7
Plant Energy Assessments
Visit all plants to develop an action plan
– Include local employees
– Let everyone know at the plants the plan so
they can provide their ideas
Develop a project list of opportunities
Combine projects for all plants and
prioritize opportunities
8
Three Distinct Areas of Focus
Demand Management
– Reduce consumption
– Energy efficient equipment
Supply Management
– Reduce unit cost
Price Risk Management
– Reduce volatility
Consider short and long term
“Be Socially Responsible while reducing your bottom Line”
9
Supply
Analyze consumption (Firm vs. Interruptible)
Review tariffs annually
Evaluate transportation today and tomorrow (DON’T LOSE CONTROL)
Create Competition
Procurement
What will be done in-house vs. out-sourced
10
Supply
Generation options
– Use to lower costs or negotiate rates
– Wind can be installed as low as $.035/kWh
– CHP
Pipeline bypass options
– Use to lower costs or negotiate rates
– Alternate fuel sources
11
Wind Map Color $/kWh
$ 0.0300
$ 0.0380
$ 0.0430
$ 0.0500
12
Price Risk Management
What is your Risk Aptitude?
Market has been volatile
– Crude - $28 to $55 (96%)
– Natural Gas - $4.80 to $8 (67%)
Wild Card Events
– 65% of declared oil reserves in Persian Gulf
13
Price Risk Management
Determine Hedge Process
– Physical Forward Price
– Physical swap
– Commodity Futures Merchant (lowest cost)
Need to make informed decisions
– Fundamentals
– Technicals
– Corporate objectives
14
HVACLighting
Compressed Air
Motors
Gas Process
Energy Usage Profile
Complete an Energy Assessment
15
Energy Conservation
Why look at this now?
– Gas costs have tripled 6 year payback is now 2 years
– Electric costs have gone up dramatically
– New technologies are helping reduce payback
– Corporations are developing conservation programs (CSR)
All leading to new opportunities to reduce energy costs
16
What to Look at?
Lights/controls
Compressed air
Motors and associated equipment – Drives
– Synthetic oil
– Synchronous belts
– Gears
Refrigeration
Steam/hot water systems
HVAC
17
Other Areas to Investigate
Turn equipment off when not needed
(Night walk-through)
Utility Programs
Demand management
Sales tax exemptions
Utility infrastructure costs
18
Maintenance and Employee Training
Best practices must be maintained to
continue with savings
Employees need to be trained to help
keep systems operating as intended
19
Track and Verify
Projects should be tracked and energy
savings verified
Greenhouse gas reductions
Reevaluate project list and plan as market
conditions change and new technologies
develop
20
Any Questions?