3.6.1 ENERGY MANAGEMENT PROGRAMS
Fischer et al. (2007) reported that around 57% of industry’s primary energy inputs are lost or diverted before reaching the intended process activities. Estimates from several studies indicate that on average, savings of 20% to 30% can be achieved without capital investment, using only procedural and behavioral changes. Industry’s energy consumption can be cost-effectively reduced by 10% to 20% through well-structured energy management programs that combine technology, operations man-agement practices, and energy manman-agement systems.
A strategic approach to energy management can result in signifi cant energy sav-ings for all types of businesses, including food processors. The “Energy Star” pro-gram developed jointly by the U.S. Department of Energy and the Environmental
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TABLE 3.5 Financial Analysis for a Loan with a 20% Down-Payment at an APR of 12% End of Year
PaymentPrincipal OutstandingTaxable IncomeSavingsDepressionPrincipalInterestTotalTaxATCF 0300,0001,200,000−300,000 1480,000150,000188,892144,000332,8921,011,108186,000 65,100 82,008 2480,000270,000211,559121,333332,892 799,550 88,667 31,033 116,075 3480,000216,000236,946 95,946332,892 562,604168,054 58,819 88,289 4480,000172,800265,379 67,512332,892 297,225239,688 83,891 63,217 5480,000138,300297,225 35,667332,8920306,033107,112 39,996 5′700,000552,900147,100 51,485 648,515 1,500,000Net present value at 15% 295,588
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Protection Agency is one of the existing energy management programs. The Energy Star Program has more than 450 industrial participants including Anheuser-Busch, Ben and Jerry’s, Cargill, McCain Foods, Sargento Foods, and Weaver Potato Chip Company. Management principles like Lean, Total Quality (TQ), Six Sigma, ISO 9000, and Theory of Constraints have been widely used to achieve high performance in different industries. The energy management program will complement these management principles. Lean management program deals with the issues of over-production, unnecessary transportation, inappropriate processing, production of defective products, and waiting. However, these issues also involve energy waste.
Efforts to manage energy are consistent with reducing waste. TQ, Six Sigma, ISO 9000, and ISO 14000 have been widely used in the food processing industry to improve the quality of all processes. These programs provide many tools to build an effective and high-quality energy management program. The Theory of Constraints is based on the concept that the improvement of a few capacity constraint resources in a production system will have the greatest impact on the bottom line (Caffall, 1988; Witte et al., 1988; Wulfi nghoff, 1999; Mull, 2001).
An energy management program requires (1) commitment from leadership, (2) training, (3) continuous improvement through strategic goals and action plans, and (4) communication as shown in Figure 3.3 (CIRAS, 2005).
3.6.2 COMMITMENTFROM LEADERSHIP
An effective energy management program starts with the support and participation of the company’s leaders. The leaders should make the energy management program to be part of the corporate strategic plan and associate the program with corporate fi nancial environmental goals. The best way to convince leaders and obtain their commitment is to show them facts and statistics. An initial measurement and assessment
2.
Training 1.
Commitment
4.
Communication 3.
Continuous improvement
FIGURE 3.3 Energy management diagram. (Reprinted from Center for Industrial Research and Services (CIRAS), Iowa State University. 2005. Energy-Related Best Practices: A Source-book for the Food Industry. Available at http://www.ciras.iastate.edu/publications/Energy BP%2DFoodIndustry/. With permission.)
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of energy performance are necessary to understand energy cost structure and current energy usage and trends including end users and fuel types. An important step in energy management is to determine the exact sources of energy consumption. The end-use patterns can be determined by an energy audit as discussed in Chapter 2. The data, which are collected and tracked, can be used to establish energy standards.
Energy productivity index, energy cost index, and productivity standards should be developed to measure whether the energy purchased is productively utilized. Once energy accounting is established and standards are set, management should begin to compare actual performance to the standards.
Company leaders must commit resources including time, talent, and money on an ongoing basis. Since one person may not have all the talent necessary for a suc-cessful energy management program, an energy management team should be formed.
Accountability should be clearly established. Energy management is an agenda item at all regular leadership meetings. The energy policy is evaluated regularly and updated as needed. Adequate budget is provided annually for effective energy management (CIRAS, 2005).
3.6.3 TRAINING
After top leaders in the organization have made their commitment to an energy man-agement program and after current energy performance has been assessed and stan-dards are set, it is time to provide training for all company personnel. Sharing information and increasing the knowledge level of employees are prerequisites to a successful energy management program. Every employee will need some training on topics such as awareness of the corporate energy policy, current usage and trends, basic energy management terminology, and energy measures. More specifi c topics in energy management should be provided to smaller identifi ed groups. A training cal-endar should be established, and all staff should be scheduled for the training they need. Follow-through is critical in establishing awareness of employees to energy management. It is important to determine the effectiveness of the training. Learning objectives in each session should be evaluated. The feedback should be used to make changes to training sessions.
3.6.4 CONTINUOUS IMPROVEMENT
There are two important factors of potential energy projects: (1) the potential impact of a successful project on company fi nances; and (2) the investment required for implementation. Goals need to be set. These goals should be achievable, measurable, and specifi c. A good strategy is to start with no- or low-investment energy conserva-tion projects that have moderate or high potential for energy savings. Every food processing facility has a few good energy saving opportunities. Examples may include (Capehart et al., 2006) the following:
Repairing steam leaks
•
Insulating steam, hot water, and other heated fl uid lines and tanks
•
Installing highly effi cient motors
•
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A signifi cant portion of the savings generated by these projects should then be budgeted to fi nance the investment in more costly projects. No matter what method of fi nancial analysis is used, it is critical to carefully account for not only the savings that come directly from a project, but also any measurable returns that are caused by the project or made possible because of it. We should also consider all impacts including the potential negative impacts when making a strategic choice of projects. The steps needed to achieve improvement should be carefully planned and, at a minimum, should include the following (Capehart et al., 2006; CIRAS, 2005):
Clear statement of de
• sired outcomes and success measures
List of resources that are and are not available
•
Sequential list of steps involved
•
List of key milestones or intermediate indicators of success
•
Expected completion date
•
Clear explanation of reporting requirements (frequency and scope)
•
Rewards if successful (i
• f applicable)
The success of implementation against the established should be evaluated. The eval-uation will indicate problems and adjustments should be made to the action plan.
3.6.5 COMMUNICATION
Company leaders expect and need data that will help them make better decisions.
Employees need to see that their efforts are appreciated and that they make a differ-ence. The centerpiece of communication is reporting energy performance. Everyone in the organization should be continuously aware of the current facts and fi gures on energy performance. It is thus important to provide the appropriate information in the most understandable format to each level throughout the company. Information on energy performance should also be shared with those responsible for planning training. This will help them identify the training that is needed during the ongoing process (CIRAS, 2005).