Vendere l’efficienza energetica alla direzione aziendale

Often, industrial facility managers must convince upper management that an investment in system efficiency is worth making. The problem is that sometimes communicating this message can be more difficult than the actual engineering behind the concept. A corporate audience usually responds more readily to cash flow impacts than to a discussion of best efficiency points. By adopting a financial approach, the facility manager can relate system performance and efficiency to corporate goals and “win over” the senior management who make the final decision on capital investments in system upgrades.

In order to overcome the obstacles often encountered in the process of convincing upper management that a given investment in energy efficiency is worth making, you should consider the following points:

1. Gain some insight on/understand corporate priorities

Corporate officers are accountable to a chief executive, a board of directors, and an owner (or shareholders, if the firm is publicly held). These officers must generate revenue that exceeds the cost of owning and operating the facility. Plant equipment—including system components—are assets that must generate an economic return.

Plant capacity regularly has top priority, relate process improvement to capacity increase possibilities.

Finance officers seek investments that are most apt to demonstrate a favourable return on assets. When faced with multiple investment opportunities, these officers will favour options that lead to the largest and fastest returns.

This corporate attitude might lead industrial decision makers to conclude that system efficiency is a luxury that they cannot afford. This difference frequently exists between purchasing (equipment) and plant operation.

Many organisations consider only the initial purchase and installation costs of a system. However, plant designers and managers will benefit from evaluating the life-cycle cost of different solutions before installing major new equipment or carrying out a major overhaul. Plant operations can be a significant source of savings, especially because energy efficient equipment can minimise energy consumption and plant downtime. Make use of the concept of “total costs of ownership”.

It is also important for the company/corporate management to subscribe to Responsible Care/Sustainability principles; to be truly engaged in meeting environmental standards; and to be serious about OSHA aspects, among other things.

2. Measure the cash flow impact of the system efficiency

System efficiency and performance improvement projects can move to the top of the list of corporate priorities if proposals respond to corporate needs. Corporate challenges are many and varied, and this in turn opens up more opportunities to “sell” system efficiency as a solution. Opportunities for upgrading existing systems can be found in the inefficiencies that develop over time—such as changing system requirements, routine wear and tear, and poorly optimised controls. Once selections are made, the task becomes one of communicating the proposals in corporate (cash flow) language.

The first step is to identify and evaluate the total cash flow impact of a system efficiency measure. One proven way to do this is through a life-cycle cost analysis, as stated earlier. The result— a net gain or loss on balance—can be compared with other investment options or with the anticipated outcome of doing nothing.

The various aspects of plant efficiency interrelate. Energy efficiency , degree of automation, operational procedures, yield on raw material and waste production, process control, all these have their own and interrelated impact on plant efficiency. The best projects are those that combine these aspects.

3. Present the finances of system improvements

A simple (and widely used) measure of project economics is the payback period. This is the period of time required for a project to “break even” in terms of costs—the time needed for the net benefits of an investment to accrue to the point where they equal the cost of the initial outlay.

The simple payback equals the initial investment divided by the annual benefit. It is not an exact economic analysis as it doesn’t consider the time value of money, but is easy to use and understand. More sophisticated analyses take into account factors such as discount rates, tax impacts, and the cost of capital. One approach involves calculating the net present value of a project, which is defined in this equation:

Net present value = present worth of benefits – present worth of costs

Another commonly used calculation for determining the economic feasibility of a project is internal rate of return (IRR). This is defined as the discount rate that equates future net benefits (cash) to an initial investment outlay. This discount rate can be compared to the interest rate at which a corporation borrows capital.

Many companies set a threshold (or “hurdle”) rate for projects, which is the minimum required IRR needed for a project to be considered viable (if you don’t know this, it is important to find out before presenting your case for investment). Future benefits are discounted at the threshold rate, and the net present worth of the project must be positive in order for the project to be a “go”.

Besides the payback criteria, other arguments can be used to put a project up for approval, e.g. permit requirements, safety issues, product quality, etc.

4. Relate system efficiency to corporate priorities

Saving money in itself should be a strong incentive for implementing an energy efficiency project. Still, that may not be enough for some corporate decision makers. Some suggestions for interpreting the benefits of energy cost savings include the following:

  • A new source of permanent capital: regardless of how the investment is financed—borrowing, retained earnings, or third-party financing—the annual savings will be a continuing source of funds.
  • Added shareholder value: shareholder value is the product of two variables: annual earnings and the price-to-earnings (P/E) ratio. Multiplying the earnings increment (annual savings) by the P/E ratio yields the total new shareholder value attributable to the system efficiency improvement.
  • Improved reliability and capacity utilisation: the efforts required to achieve and maintain energy efficiency will largely contribute to operating efficiency. By improving system performance, the facility manager can improve the reliability of plant operations.
  • Improvement in the bottom line: energy savings are cost reductions and thus improve the operating profits of the company.

5. Approach

A proposal for a system improvement project can be made attractive to corporate decision makers if the facility manager does the following:

  • Identifies opportunities for improving system efficiency
  • Determines the life-cycle cost of attaining each option and which external requirement will benefit from the action
  • Identifies the option(s) with the greatest net benefits or prioritise the options
  • Collaborates with financial staff to identify current corporate goals
  • Generates a proposal that demonstrates how the energy efficiency benefits will directly respond to current corporate needs
  • It will also work the other way around : from the opportunities in the process on one side and the various demands on the other plant manager can choose beforehand which projects they should start giving the available staff and money
Annunci

Kick Off Your Energy Management Program

When you walk into a big industrial plant, it is easy to be overwhelmed by the question “where on earth is all the energy going?” When I was a young engineer, I certainly was overwhelmed and I spent a lot of time doing detailed work on unimportant things. With most things in lifethe 80/20 rule is true and it is true for energy usage as well.

If you are adopting a systematic approach to energy management, you need to know:

  1. how much energy you buy in (your energy sources) and
  2. what is your end-use of that energy, and in particular, your significant energy uses (SEUs)

When you know the end uses of your energy in industrial processes or in buildings, you are in a position to make very dramatic energy reductions – instead of tinkering around in the utilities building.

In an ideal world:

  • you would like to plot your Sankey (energy flow) diagram
  • then identify your biggest energy saving opportunities by focusing on the significant energy uses

For example:

  1. In a breakfast cereal plant, we found that 70% of all of the energy was used in the drying of finished cereal. This made us focus on energy saving opportunities around the recovery of heat and latent heat from the dryer exhaust.
  2. In a high-end pharmaceutical manufacturing plant, we found that 80% of all of the end-use energy was used for climate control of clean rooms. This caused us to focus on HVAC, scheduling of clean room operation and re-examining regulatory requirements.
  3. In a university, we found that energy use was very widely fragmented and that most energy use was under the control of staff in local departments. This caused us to focus the energy management program around training and communication activities for employees and students.
  4. In a supermarket chain, we found that only 2% of energy was used for lighting of outdoor car parks. Before this analysis, some supermarkets had been investing time and effort on energy reduction in car park lighting because customers had complained about apparent energy wastage. After the analysis, the supermarkets re-focused on the bigger energy uses such as refrigeration, chilled displays and interior lighting.

When it comes to figuring out your end-use energy, the two common approaches are:

  • Calculation – by energy specialists using the equipment power ratings, operating schedules, advanced calculation techniques, sometimes including simulation
  • Metering – designing, tendering and substantially investing in automated metering systems

Both these approaches require a substantial investment of time and/or money – and this can delay your start on taking energy-saving actions.

The question is this: would you get better value for money by focusing on the most important energy uses from the start, rather than making an equal distribution of time and money across the entire plant?

If you are hiring energy analysis specialists, you could focus them on the biggest energy consumers.

Regarding metering, too many people “over- meter” too early and with the result that they have poorly designed and unbalanced metering systems – and they spend too much money on the wrong thing. For example, I very often see industrial plants that have hundreds of electrical meters and only one or two thermal meters – even though electrical /thermal energy use is split 50-50!

What is the value of guesstimation and visualization?

For different sectors within industry and buildings, there are research results available which will give a rough first estimate of the energy breakdown for your sector. So, why not search for results on the web and then apply the percentage breakdown to your site.

Or:

If you are in a very specialized industry, perhaps it is you who is the expert. Perhaps you have a rough idea yourself, from your experience.

Here is a Sankey diagram which shows all energy uses and clearly highlights significant energy uses (it also shows which of these are metered).

sankey diagram enerit

Now, can you visualize it? When you see your breakdown clearly, you can see what energy is “unaccounted” – i.e. you do not know where it is used! For example, I know of a manufacturing operation with long experience of making project-based energy-saving improvements. Only when they did a Sankey-style energy balance did they discover that 30% of their energy was being used in their water treatment plant at the back of their site (and “unaccounted”) – this demonstrates the importance of a top-down analysis of their energy use!

When you visualize, you can also decide which energy streams need extra metering and which ones just need an improved estimate – and depending on the size of the energy flow.

When you visualize, you can motivate your management by showing graphically key areas of energy cost reduction.

Bottom line: Yes – guesstimation will save you time and money. So, make your first guesstimate now, find a way to visualize it, and get focused on key areas for: saving energy now; improving your estimates; and investment in metering!

Paul F. Monaghan, Ph.D., is CEO of Enerit. Paul is a 30-year veteran of energy management throughout North America and Western Europe. As Enerit CEO, he is responsible for setting the strategic direction of Enerit energy software products. Enerit is a global leader in delivery of innovative systematic energy management system (EnMS) software to support Energy Star, ISO 50001, SEP and all EnMS based on the ISO 50001 approach. Enerit EnMS software is complementary to and integrates with monitoring and energy reporting software. Enerit software includes dynamic Sankey diagrams to make it easier to get started with a systematic EnMS approach.