Energy Wise: The risks of a big-ticket approach to industrial energy management
By Anatoli Naoumov
By Anatoli Naoumov
“We will first do all we can with our big energy users,” a plant manager once told me, “and then proceed to an energy audit.”
In the world of industrial energy management, this decision is in line with conventional wisdom, which recommends addressing the biggest ‘trouble’ first.
In a perfect, abundant and rational world, this approach may be the best way forward—but in the real world, I think the ‘big-ticket’ approach to energy management may hurt business and responsible managers. The following are four reasons for my opinion.
- Capital expenditures
The approval of a big project calls for a big capital expenditure (capex), often without any track record of similar implementations. This may prove problematic.
Capital, after all, is usually scarce. Any failure to secure sufficient investment for a big change can kill the organization’s appetite for energy management altogether.
Many vendors promote the big-ticket approach because it is highly visible and helps them reach their sales quotas.
- High visibility
Even when there is enough capital, the future of energy management at an industrial plant will be doomed if the big-ticket project ends up being considered an underperformer.
It is common for even a decent project to be called a failure when expectations are not aligned, real-world energy management experience is in short supply and corporate politics come into play. When a big project is deemed unsuccessful, this judgment will affect competition for future capex funds.
- Competing projects
The effect can go both ways. When a company starts one big energy management project without first establishing a general plan, the performance of that project can end up being affected by other projects later on.
By way of example, if a building’s HVAC system is upgraded before a lighting retrofit, then a new, efficient chiller may be forced to work in an inefficient mode, to meet a lower cooling load, and so its expected savings are never realized.
A similar situation arises when upgrading an air compressor prior to fixing leaks and making other demand-side adjustments. The smaller projects will reduce demand, causing the new compressor to operate inefficiently.
Instead, small projects should be undertaken in a way that makes bigger projects more profitable—or even unnecessary. With a lighting retrofit completed, a new chiller can be smaller. And with small compressed-air projects done, a smaller compressor will likely meet the required load.
- Long payback periods
While big projects typically entail long payback periods, creating energy management momentum within an organization requires some ‘quick wins’ to establish initial trust in the boardroom.
Small, co-ordinated projects also allow an organization to develop a documentation and reporting system, which will come in handy when addressing bigger projects.
As the famous Chinese proverb goes, “a journey of a thousand miles begins with a single step.” And that first step can only be taken from where you already are now.
In the context of energy management, where starting with a big project may be irrationally risky, the best first step on the long journey is a comprehensive energy audit. This will clarify where the organization stands, create a map of opportunities, assess their interconnections and rank them by profitability.
The process itself saves no energy, but without it, an organization risks making costly, avoidable mistakes. This is why an audit is a great investment.
Anatoli Naoumov is a managing director and ‘chief energy waste-buster’ at GreenQ Partners, which helps identify, implement and report energy-saving projects. He has been named a Certified Measurement and Verification Professional (CMVP) by the Association of Energy Engineers (AEE) and the Efficiency Valuation Organization (EVO). For more information, contact him at email@example.com.