6 steps for effective energy management in manufacturing

Anatoli Naoumov, MBA, MSc, CMVP
September 07, 2017
By Anatoli Naoumov, MBA, MSc, CMVP
September 7, 2017 - When it comes to energy management, the key word is “management”, not “energy”. As such, all the rules of management apply, which means everything starts at the top. This reality determines everything.

So how do we achieve effective energy management in a manufacturing setting?

Step #1
Effective energy management requires a C-level champion.

Practically speaking, when none of the top guns care about energy management—or, at the very least, energy efficiency—nothing significant will be achieved.

There can be implementations and installations of energy efficiency projects, conservation programs and initiatives, reports and presentations—even incentives and bonuses—but the company will miss on a major opportunity for reaping strategic benefits offered by effective energy management: differentiation and cost.

Step #2
Energy is everywhere. So should energy management.

Your top gun’s job is to set up a cross-functional team to figure out the role energy plays in the value creation chain, and what changes would create the most bang for the buck. The team must identify current consumption and its key drivers, develop energy use reduction strategies and set targets. Those targets should then be linked to performance evaluation of unit managers.

After all, energy is procured for the production floor, not the corner office.

To make energy efficiency results possible, people on the production floor must have understanding and real-time visibility of consumption. To make efficiency results happen,  people on the floor must also have the means and authority to take action and share benefits from achieved results.

Step #3
Set energy consumption baseline and track usage regularly.

The creation of an energy consumption baseline must be the starting point of any energy management effort. This understanding will direct energy efficiency work and enable actionable evaluation of results.

In the absence of a baseline, how else are you going to determine and report results? Comparisons to last year’s bill is a risky idea, especially for the energy manager’s year-end bonus. I mean, just try predicting your utility bill after the following: high-efficiency motors installed on the production floor; production volume increased by 5%; size of final product changed by 12%; tariffs grew by 5%; reject rate varied between 5% and 8%. Were I in charge of energy efficiency, I would not like my performance evaluated against the utility bill.

Tracking energy efficiency projects results may make the difference between triumph and disaster in the boardroom. Accurate energy consumption tracking alongside recording any changes in factors that drive consumption are the keys to demonstrating results that can withstand any boardroom criticism.

Besides, accurately tracking energy use and acting on deviations not only routinely leads to reduced consumption, but also uncovers operational issues, quality risks and performance losses.

Step #4
Distinguish between utility bill and utility consumption.

Your utility bill is determined by consumption and tariffs, while energy consumption is determined by production needs. Plus, not all kWhs cost the same! Natural gas can be procured at substantially different prices. Consider both energy procurement and energy consumption to find ways of lowering that utility bill. Consider:

• Over-cooling a frozen food warehouse overnight at lower nightly rates will lower consumption during peak times, or reduce peak demand.
• Staged start of major machines decreases demand.
• Accurate forecast of natural gas consumption allows you to buy it in lower-priced blocks.

Step #5
Recognize value beyond energy cost reduction.

Energy does not disappear; it powers up machines that either create value or create waste. Non-energy waste routinely exceeds the cost of wasted energy. Consider these examples of energy trouble alerts at an industrial bakery:

• Increased electricity consumption at freezer may signal loss of insulation or open door. Both may lead to product loss (e.g. production, quality), slippery floor (safety) or mould (sanitation).
• Compressor coming online during non-production hours signals air leaks or unauthorized operations.
• Increased electricity consumption by a dough mixer during stable production may mean wrong recipe (quality) or the need for preventive maintenance (production stoppage).

On the positive side:

• Better lighting results in fewer mistakes in packaging and sorting.
• Stable load extends life of motors and prevents production stoppage.

Energy management measures often create value for businesses even without a reduction in energy consumption. For example, power factor correction can reduce the electricity bill with no changes on the production floor. In the same manner, harmonics do not affect electricity consumption, yet they can disable electronics, leading to costly production stoppages.

Step #6
Communicate results consistently.

Stakeholders and employees pay attention to their company’s environmental standing, so make results public, visible and transparent.

Better yet, engage employees in energy conservation and link results to their paycheques, or maybe offer a $50 “energy conservation” year-end bonus. Proud employees demonstrate higher productivity and lower absenteeism, and stay longer with the company as well.

All this because you embraced the rules of management.



Anatoli Naoumov, MBA, MSc, CMVP, is a managing partner and “chief energy waste buster” at GreenQ Partners, and has been involved in various areas of business analysis and development for over 15 years for companies in Canada, The Netherlands and Russia. He has been certified as measurement and verification professional (CMVP) by The Association of Energy Engineers (AEE) and The Efficiency Valuation Organization (EVO). He can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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