Energy Management Should Be a Priority for Every Manufacturer
This article appeared in 2024 MMA Operations Conference event program. Learn more about MMA events.
Once upon a time, energy was considered too cheap to meter and there was relatively little initiative to spend resources controlling its use. That situation is long gone and now it is a significant expense for virtually every manufacturer and it is about to get significantly more expensive.
Still, energy often takes a back seat related to the various other issues which occupy the time of management, including budgeting. As energy costs go up each year, it becomes more and more important to take steps to minimize utility costs. Yet this needs to be done without materially affecting operations and the payback for any actions taken or measures implemented must be competitive with other opportunities available. Fortunately, this is a goal which can be met — and needs to be met.
As 2023 came to a close, the Michigan Legislature passed into law a series of bills aimed at addressing global warming. These bills are aimed at virtually eliminating fossil fired generation. This will not be done without a substantial investment which will be ultimately recovered in electric utility rates.
If Michigan manufacturers are to remain competitive with manufacturers in other states and around the world, energy cost must be kept at a minimum. It can’t be business as usual. Energy management needs to become a priority in the planning and decision-making process of every firm.
Before considering investments in energy saving measures, it is important to take stock in how your firm uses energy and how it is managed. Someone should be regularly reviewing utility bills to determine if usage or cost has changed significantly from what had been expected. Someone familiar with plant operations should be charged with determining the cause.
Utility rate increases, changes in utility bill components, weather and changes in plant production are all potential impacts on utility costs. So is equipment beginning to fail or not being operated as planned along with changes in operating schedules. No major changes to plant operations should be made without considering how energy use and the utility charges designed to pay for it are affected. Significant changes sometimes result in a utility rate change being in order. Many manufacturers are served under utility rates with a peak demand charge component. If a manufacturer does not have enough average usage such that it is a significant portion of this peak charge then a very high bill is likely to the result and the facility would be better served on a simple kilowatt hour utility rate.
Governmental entities as well as Michigan’s utilities want all users to conserve energy as it is good for the environment, and it is far cheaper than building new generation. They are also good for the manufacturer’s bottom line. There are measures with short paybacks available such as LED lighting and compressed air efficiency improvement that are readily available. Michigan utilities offer rebates to help pay for the measures as an incentive to encourage installation including custom rebates which make change to any item of equipment which saves energy to be eligible. There are also inhouse generating measures such as solar and CHP (otherwise known as cogeneration) to consider. There are also demand response measures which can generate significant revenue.
Much can be achieved if manufacturers take the first step by making energy management a priority.
About the Author
Don Johns is EnStar Energy’s Founder and President. He is a legend in the energy field and worked at the Michigan Public Service Commission for 22 years before founding EnStar with a group of partners. He may be contacted at mmaenergysavings@enstarenergy.com.
Don Johns was a speaker at the 2024 MMA Operations Conference. Learn more about MMA events.
EnStar Energy LLC is an MMA Industry Member and has been an MMA member company since May 2014. Visit online: enstarenergy.com.