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Reaping the Benefits of Energy Efficiency: Part 1

World Cement,

The cement industry, along with other industries, is undergoing major challenges with respect to energy. Energy costs continue to rise, energy markets are volatile, future energy availability is unknown and environmental regulations due to climate change present unprecedented pressure on manufacturing. All of these factors amount to an uncertain future for energy supply and pricing. Efficient energy consumption and management with a long-term corporate energy strategy are necessary in order to mitigate many of the challenges that face the industry and impact on manufacturing costs.

While cement manufacturing facilities in the US have made significant progress in becoming more energy efficient over the past several decades, there is an opportunity to accelerate and expand these efforts with investments to reduce energy use through more efficient manufacturing processes and facilities. Accelerating these investments can improve the competitiveness of manufacturing, lower energy costs, and free up future capital for businesses to invest in other areas.

Guidelines for a successful energy management programme

It is very important for companies to establish an energy efficiency culture by applying the fundamentals of energy efficiency through executive leadership. The US Environmenal Protection Agency’s voluntary programme, ENERGY STAR®, developed Guidelines for Energy Management outline these fundamentals. These guidelines recommend companies develop metrics, track energy consumption, benchmark, set goals, create an action plan, evaluate progress, and create energy awareness throughout the organisation.

Following the ENERGY STAR® guidelines enables companies to integrate energy efficiency into their existing management system for continuous improvement and to achieve the traits of a highly energy efficient company.

Overview of utility incentive programmes

Many utilities provide financial incentives to organisations that implement renewable energy or energy efficiency projects. A utility incentive programme can often fund up to 75% of a qualifying project. These programmes have been in existence for many years, but only recently have the utilities recognised the need to reach out to consumers as industrial energy use continues to grow. Integrating these incentive programmes into a company’s energy management programme and learning how to streamline the application process and receive incentive funds can be a substantial help when justifying many projects.

Most incentive programmes are established by a public utilities commission or regulatory body. The requirements of a programme can vary according to the utility’s specific intent, such as demand side management and energy generation requirement and regulatory requirements such as renewable energy standards. Many programmes result from a long-term planning process that examines the utility’s future loads and the resources required to meet those loads. Funding a conservation or efficiency project is one of the lowest cost strategies a utility can employ to help meet future resource needs.

The exact process for each utility programme is varied, but most utility programmes follow similar steps for participation as shown below:

  • Application: customer provides proposal or project details to utility.
  • Analysis: utility evaluates the project against programme criteria.
  • Approval: utility formalises contract and executes agreement with customer.
  • Baseline: measurement of pre-project energy consumption.
  • Implementation: customer completes project and informs utility.
  • Verification: verification of project completion and savings by third party.
  • Incentive release: utility reviews verification and releases incentive payment to customer.

Incentive amounts are generally set by the local regulatory body, such as a public utility commission. Determination of appropriate incentives for a project is normally based on established goals for renewable energy projects or cost benefit analysis based on energy and/or demand reduction in the case of electrical energy efficiency projects. Some utilities conduct industrial efficiency audits, provide technical assistance, and participate in the financing of the efficiency improvements.

Every utility will have different types of incentive programmes, but in general there are two types of incentives. Standard incentives are for small projects (residential, small commercial, etc.), wherein the amount of incentive is fixed or based on a standard formula. The other type of incentive is custom or calculated incentive. Most industrial projects come under this category, with the amount of incentive being linked to project cost and savings achieved. The incentive amounts vary significantly from project to project and company to company.

It is very important to engage with the local utility company representative from the start of a project concept; have a well-defined project scope and baseline, knowledge of baseline and verification requirements, and maintain a record of the performance in order to maximise the incentive amount.

Written by Bhaskar Dusi, Corporate Energy Manager, and Kevin Kelley, VP – Process Technology & Sustainability, Cemex, USA. This is an abridged version of the full article, which appeared in the October 2013 issue of World Cement. Subscribers can view the full article by logging in.

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