ABSTRACT As pressures mount to further reduce costs and carbon emissions, most industries seek to increase energy efficiency through sustainability programs. In fact, an attendee survey at the 2010 International Dairy Show revealed that ‘sustainability’ is the top issue facing their companies.1 Another recent survey conducted by the Aberdeen Group found that 80 percent of manufacturers cited reducing costs as the top driver behind sustainability efforts.2 However, actually achieving these goals presents a variety of challenges. For many manufacturing companies, substantial results from energy and carbon reduction program remains elusive; for others the savings achieved are often short-lived. Faced with these challenges, it is important for manufacturers to understand the obstacles that prevent companies from achieving their sustainability objectives and to learn and implement proven best practices already being deployed at successful companies. With extensive experience in helping manufacturers curtail carbon emissions and increase profitability through greater energy efficiency, Ameresco has discovered several key factors for success in overcoming the barriers to achieving long-term sustainability goals. This paper identifies actionable best practices among industry operations that can enable manufacturers to reduce energy use by as much as 25 percent and significantly reduce carbon emissions. IMPORTANCE OF SUSTAINABILITY Energy (gas, electricity and water) is typically a significant portion of a manufacturing company’s operating expenses. Since most companies currently face pricing pressures, finding ways to reduce the cost to manufacture their products has become increasingly important. In addition, manufacturers face increased social and regulatory pressures to track, report, and reduce greenhouse gas emissions. The demand to be a good corporate citizen practicing sustainable manufacturing is now woven into the fabric of our culture. Consumers want to feel good about the products they consume. Likewise, shareholders see energy efficiency and sustainability as indicators of long-term success. Several of the largest retailers now factor in the carbon footprint of products when evaluating and selecting which ones they will carry. And the potential for more stringent government regulations on manufacturers is also looming. For all of these reasons, curtailing energy consumption and decreasing an organization’s carbon footprint is a reality that manufacturers must now address. 1|Page COMMON BARIERS TO SUCCESS WITH SUSTAINABILITY Manufacturers typically encounter common challenges when formulating and implementing a corporate sustainability plan, including: • • • Cultural / Organizational Barriers – A disconnect between the objectives of executive management vs. plant operations Informational Barriers – A lack of actionable, detailed knowledge on actual energy use; lack of common measurement metrics; insufficient up-front financial payback information; inability to accurately measure and track results in real-time Resource Barriers – In adequate funding, time and/or expertise The good news is that these challenges do not have to be roadblocks. Proven industry best practices can be implemented to overcome these hurdles. KEY SUCCESS FACTORS: Breaking Through the Barriers to Sustainability Cultural Barriers Organizations already stretched thin on time and resources may experience conflicts between corporate and plant-level objectives. At the corporate management level, increasing energy efficiency, reducing greenhouse gas emissions, complying with regulations and measuring/reporting to approved standards are priorities. At the plant-level, where maintaining production schedules and quality are paramount, the additional time and resources that may be required to meet the sustainability objectives can present a dilemma. As a result, they may be given lower priority or even ignored at the operational level. Overcoming Cultural Barriers Top performing companies understand the importance of focus, culture and organization with regard to implementing sustainability programs and take specific steps to address them. • First, best-in-class companies view energy as a vital resource, one to be managed for return on investment, like any other resource. They make the efficient use of energy both a priority and a core business strategy, establishing realistic, quantifiable goals for this resource and then communicating them throughout the organization. • Second, best-in-class companies specifically focus on alignment of objectives between the headquarters and the manufacturing plants by involving both parties early on in the development of a 2|Page Corporate Sustainability Plan. They also understand that goals must be set up individually for different plants as formalized metrics – where sustainability is tied to performance and operations objectives at all levels. • Third, measurement should use a common metric that is understood throughout the organization and ties back to the bottom line, such as energy cost-per-unit or production. Best-in-class companies develop key performance indicators (KPI) that enable standardized performance and productivity measurement against goals and across disparate operating units. • Fourth is the implementation of a system for consistent monitoring, tracking and rewarding success. In summary, a best practice approach to overcoming cultural and organizational barriers dictates a corporate strategy and system that enables measurement of resources (electricity, gas, water and wastewater) across the enterprise, all the way down to energy-intensive subsystems (refrigeration systems, air compressors, steam boilers) as the amount of energy used to produce one unit of product (a pound of cheese, for example). Informational Barriers Comparable to any corporate-wide initiative, a sustainability plan requires careful and thorough planning in order to be executed effectively. Creating a good plan that delivers significant and ongoing energy reductions requires a solid knowledge base, including the following critical information: • • • • A centralized view of energy usage, enterprise-wide, down to the sub-system level Upfront financial data on what efficiency projects will cost, and the projected return on investment (ROI) An automated structure to measure, track and maintain energy savings Ability to quantify payback Yet many companies lack some or all of this information. At a minimum, companies should be collecting and auditing the data available on their utility bills. This service is offered by Ameresco and a number of other companies, and it provides a macro understanding of monthly cost and use, as well as a number of other services such as bill payment, budgeting, accrual reporting and utilities-based carbon reporting. Unfortunately, the data contained in utility bills does not help companies understand and quantify energy usage at the subsystem level, or in real-time. Like basic information systems tied to individual pieces of equipment at a plant, utility bills are unable to communicate the information in a common language understood by all departments and in a format that ties back to the company’s bottom line. Nor do they identify the greatest potential for targeted energy savings across the enterprise. Overcoming Informational Barriers One key to overcoming informational barriers is to develop a common corporate energy language as part of the Corporate Sustainability Plan to enable clear communication. Another key is knowing how and where energy is used across the entire enterprise. But gathering data is not enough. Transforming a broad spectrum of data into relevant, targeted and actionable information, delivered 3|Page at the right time and in the right context enables better decisions about where to focus time and resources for the greatest payback on energy efficiency projects. Best-in-class companies have developed the following best practices: • First, the use of an automated energy data collection system was identified in a recent study by The Aberdeen Group as a key differentiator deployed by successful best-in-class companies. Such systems provide visibility throughout the enterprise, enabling users to easily compare usage across the systems and plants. • Second, according to Aberdeen, automated data collection also becomes a strategic best practices tool that strengthens continuous monitoring capabilities, enabling companies to maintain and enhance their energy efficiency and savings programs over time. • Third, utilizing tools within the energy and carbon management system such as Dashboards, Alerts, Event Management and Analytics was another common practice among best-in-class manufacturing companies surveyed in the Aberdeen study. These features enable organizations to understand and act on the critical information they need to reduce their energy usage and carbon emissions in real time.3 It is worth noting that many companies find just the fact of having an enterprise-wide energy management system in place raises awareness of energy use among their employees, resulting in more efficient use of their resources. In summary, an automated enterprise-wide energy management system helps manufacturers better quantify and report efficiencies, savings and carbon emissions in order to meet industry standards and their own productivity goals. Greatest Challenges to Implementing Energy Efficiency Strategies 4|Page A quality enterprise-wide energy management system goes beyond just information. It provides true “Energy Intelligence.” Energy Intelligence transforms a broad spectrum of data into targeted, actionable information at the right time and in the right context. It provides a real-time view into energy usage, cost and carbon emissions during different production shifts at different times and days, across the enterprise and down to the sub-system level. With it, manufacturers can impact process relationships, more optimally allocate resources, and make better energy management decisions to achieve maximum efficiency. Resource Barriers According to a recent report from the Pew Center on Global Climate Change, manufacturers cited a lack of funding for projects as the greatest challenge they faced when attempting to implement energy efficiency measures. Almost as prevalent was the lack of time or expertise within the organization to develop projects. However, the report also noted that many of the companies were surprised at the level of employee enthusiasm and motivation for the project.4 Overcoming Resource Barriers Manufacturing companies are faced with squeezed profits, lack of adequate skilled staff, increasing global competition and aging facilities competing for scarce capital for needed improvements. Manufacturing companies on the forefront of energy management and sustainability recognize the need to have resources with energy management expertise in place to ensure the success in sustainability. The good news for “stretched-thin” manufacturing companies is that the resource issues become less of an obstacle through the use of automated energy and carbon management systems. Such systems can greatly reduce the amount of time required to oversee and implement sustainability programs. In addition, some companies are able to address the resource issue by working with an energy management system provider that offers energy experts who serve as an extended team. These skilled resources monitor the information coming from the manufacturing facilities and communicate directly with the teams at the plant to ensure the appropriate actions are taken to guide implementation of specific best practices. The funding resource issue can also be addressed in many cases once a company has an automated energy management system in place. In many organizations, the lack of funding for sustainability projects is a result of insufficient information to justify these initiatives. An energy intelligence solution that can identify the projects with the highest potential energy savings and also quantify the ROI and payback period for these projects can help manufacturers overcome the justification hurdle. Best-in class energy management/sustainability solutions offer these capabilities and the ability to monitor and tie the actual results back to the original projections for the specific project. By continuously monitoring and accurately tracking savings, these solutions ensure initial goals are met and maintained. With this level of information, manufacturing companies can have a much greater degree of confidence that their sustainability initiatives will deliver the results to justify the financing of these efforts. 5|Page CREATING AND EXECUTING A WINNING PLAN BEST PRACTICES: Holistic Approach, Systematic Implementation, Standard Evaluation Metrics To achieve and maintain significant results in a Corporate Sustainability Program, it is imperative that companies begin the process with the proper focus and approach. • First, pursuing an enterprise-wide approach presents the best opportunity for greater and more permanent savings. Although seemingly more daunting than focusing only on individual plant projects, an enterprise-wide approach provides the opportunity to make intelligent, informed decisions that can be applied across the company for more substantial results. • Second, a sustainability program needs to be a systematic approach that is implemented and delivers results over time. A properly executed energy and carbon reduction program can be complex. In order to maintain results over time, a clear path with a systematic process is required. This process must be broken into sequential steps, applying a best practices mindset for both energy management and overall sustainability, focusing on prioritized areas that are identified to yield the most financially compelling results. • Third, all efforts and initiatives should be evaluated based upon a common metric – in particular -- on ROI. This is important so that an organization can ensure they are truly directing resources to the highest priority areas that are pre-determined to deliver the greatest payback. When financial and manpower resources are stretched thin and there may be dozens or hundreds of potential areas for energy or carbon reduction efforts, a standard/common ROI-based metric to decide where to focus to get results is essential to optimizing resources for the greatest results. An automated data collection system is the critical underlying technology that enables an organization to take a systematic, enterprise-wide approach that pinpoints the biggest opportunities and helps focus resources. Such systems can typically be set up in a short period of time to gather, analyze and deliver enterprise-wide data, enabling manufacturers to see usage levels and patterns across common equipment at various plants. Areas of greater efficiency can be identified and studied, and the knowledge gleaned can be applied to lower-performing areas. This energy intelligence also facilitates better decisions about where to focus the company’s limited time and resources. Proof of Concept With the proper enterprise-wide energy intelligence system in place, pilot or proof-of-concept projects at select locations are an effective way to start the process. This approach helps companies keep the project 6|Page manageable at the beginning, and builds greater support for expanding the sustainability effort more broadly throughout the entire organization over time. Case Example: A leading US diary producer provides a good example of this approach. The company faced pressures to reduce its carbon footprint in order to maintain shelf space at a leading retail customer. As a result, they sought to lower energy usage throughout their facilities and set a goal of 20 percent reduction in carbon emissions over the next five years. This aggressive objective requires employee participation at every level of the organization. As a starting point for this effort, a four-plant pilot program was initiated using Ameresco’s xChangePoint® automated data collection and energy management software. The dairy company began collecting electric, water, natural gas and weather data. They quickly discovered several immediate opportunities to lower energy and water use at the four facilities. Specifically, with the new information the company was able to determine that: • • • The utility’s water metering system at one of their plants was calibrated improperly and was overstating consumption. The meters were properly recalibrated, resulting in significant monthly cost reductions. The plants were overusing boilers on weekend shifts; this was quickly identified by correlating natural gas use with boiler feed water use. The company subsequently stopped this unnecessary waste. The company could reduce their energy usage and bills by shutting down non-critical loads. These simple corrections alone resulted in a 20 percent savings in natural gas, a reduction in energy demand at one plant by as much as 200-300kW, yielding up to $3,000 in monthly savings, as well as a refund from the water utility for overcharges from the improperly calibrated meters. To corporate leadership, the ROI for the energy management system became quickly apparent, as well as the fact that the issues identified could not have been effectively addressed by using only traditional audits. Based on the success of the pilot project, the sustainability program and energy intelligence system were rolled out across the company’s 50 largest plants. BEST PRACTICES IN USING ENERGY INTELLIGENCE Once a manufacturing company begins to implement an energy intelligence system, where do they start? What information should they collect and how should they use it? Step 1: Establish a Baseline The starting point is to establish a baseline to fully understand the company’s current usage. It should provide: 7|Page • • • A breakdown of current “as is” energy expenditures on gas, electricity and water (company-wide, by plant, and at the sub-system level) A current “as is” carbon emissions measurement by energy type and by production process A per unit-of-production energy cost analysis To measure the baseline correctly, companies need to make sure that their primary sub-system level equipment at their plants is metered so that the data can be collected by the energy intelligence system. Once this information is collected, the company will know its energy use and carbon emissions prior to starting any initiatives to reduce them. This is important for measuring progress over time. In addition, the company will be in a position to understand the energy profile of its operations, specifically, which equipment, sub-systems, processes and plants consume the most energy and produce the largest carbon emissions. Armed with this information, the company is ready to develop its sustainability program. It can identify which equipment, processes and plants should be addressed first, based on their proportion of the total energy profile. Step 2: Appropriate “Best-in-class” Goals Once a company has quantified its baseline usage and identified the most energy intensive areas to focus on, the next step is to determine the target goals for the sustainability initiatives. At what level should that refrigeration system or those boilers be operating? What is the reasonable target for energy usage-per-point of product manufactured? To determine the appropriate targets, companies can begin by gathering performance standards from the equipment manufacturers, and in some cases from the Department of Energy. However, published standards are only a starting point; they do not typically answer how different pieces of equipment can be or should be performing in each operating situation. It is important to set realistic targets on data gathered from a company’s own top-performing equipment, factoring in the processes, use, interfacing sub-systems, and temperature and humidity conditions. The energy intelligence system can deliver much of the critical information needed. By profiling actual, real time data from each plant’s equipment and processes, intelligence gained through automated data collection helps identify disparities between higher and lower-performing systems across the enterprise. With this information, the company can determine the reasons for the differences and whether the performance metric of the equipment at the most efficient plant within the enterprise is a realistic and attainable target for other plants within the system. Step 3: Focus First on Low or No Cost Opportunities To gain traction and maximize internal support and enthusiasm around the sustainability initiatives, start with projects that enable quick improvements. These typically involve only process or behavioral changes that can provide measureable and immediate payback, with little or no investment, and without impacting production. 8|Page The energy intelligence system is needed for identifying any simple, low or no cost opportunities that can provide quick solutions with immediate payback. Robust systems enable companies to view the full range of potential projects at plants across multiple manufacturing facilities. And they can identify best practice initiatives that can be implemented at multiple plants simultaneously, thereby achieving faster and greater results than would be possible if only viewing and making decisions for each plant individually. Additionally, a solution that leverages the experience of energy experts helps prioritize the potential projects so that valuable manpower and budgetary resources are focused on the ones that will deliver the greatest and fastest return. As an example of these low or no cost projects, many food and beverage manufacturers can realize significant reductions in energy use from adjusting and/or recalibrating refrigeration systems, boilers and compressed air systems. Refrigeration typically uses the most energy and can represent up to 60 percent of the total load in many companies (with the exception of beverage companies where refrigeration is used primarily in the carbonation process vs. in cooling or storage). For example, food and beverage companies can expect to achieve a six to eight percent energy savings by adjusting or recalibrating heavily used equipment. In one successful example, a large regional food manufacturer identified a simple opportunity for significant savings and greater efficiency through an air compressor retrofit. By installing variable frequency drives (VFDs) on two large air compressors, fixing compressed air leaks and eliminating the constant cycling of the compressors, the retrofit achieved an energy savings of nearly 920,000 kWh per year, delivering a payback in less than one year. Step 4: Target Capital Equipment with a Compelling ROI After pursing the more significant low and no cost opportunities, the next step involves identifying the biggest energy offending capital equipment and either upgrading, repairing or replacing it. Here manufacturers can typically achieve a six to ten percent savings on energy usage. However, this step involves capital expenditures and many companies confront funding challenges. As a result, companies need a way to pre-determine the ROI and length of payback to repair or replace capital equipment with a high degree of certainty. Having the right people in place is critical at this point, specifically those with the industrial energy experience required to accurately quantify the ROI of repairing or replacing capital equipment. With an advanced energy intelligence system in place that combines software technology with human expertise, companies are able to calculate these expected returns in advance and track their actual savings against the pre-set goals. When evaluating capital equipment projects, it is also important to take an enterprise-wide approach to get the greatest return on investment. Specifically, companies should look at equipment replacement or repair opportunities at multiple plants, rather than focusing on an individual system at one plant. Taking a broader approach can provide better pricing through scaled procurement. And, the program will likewise see a greater level of success through increased energy savings, enabling companies to more quickly gain cultural buy-in and achieve their sustainability objectives more rapidly. Partnering is critical to successfully implement equipment repairs or replacements at multiple facilities. For an enterprise-wide implementation, it is best to work with a broad-scale energy solutions provider that has a proven track record of managing and implementing multi-plant projects at manufacturing facilities. The 9|Page partner should employ a holistic approach to the project, meaning they can understand how the equipment to be replaced interfaces with, and affects, other equipment and processes. The partner should be vendor neutral, so they will recommend the best solution for a specific need, not the brand they represent or that offers them the highest commissions. They must be able to quantify the expected savings and ROI for the entire project, along with producing a detailed implementation plan and schedule. Finally, they must stand behind their estimates before the company commits to making the investment. With this type of provider in place, manufacturers also gain the benefit of working with a single entity for the entire sustainability project, as opposed to a host of contractors working independently. With more centralized management and responsibility, projects can be handled more efficiently with greater levels of success. BEST PRACTICE: Continuous Monitoring A benchmarking study conducted by Lawrence Berkeley National Laboratory demonstrated how energy efficiency in buildings can erode over time as a result of equipment and/or human entropy5. Equipment and controls change over time, influenced by alterations in environment, the addition or removal of equipment, and degradation in calibration or optimization. Personnel change can also lead to further entropy due to lack of experience with equipment calibration, insufficient maintenance or simply inadequate attention. As a result, companies aiming for ongoing energy efficiency and sustainability savings must remain persistent in closely monitoring their equipment and procedures once operational changes are firmly in place and sub-systems have been repaired, replaced or recalibrated. An effective energy intelligence system must therefore include continuous monitoring capabilities, ensuring that companies attain and maintain increasing levels of sustainable savings – beyond that of a one-time project or process enhancement. Systems that incorporate continuous monitoring provide real-time alerts that let plant operations teams know when a sub-system in the plant is starting to operate at levels below its target efficiency threshold or requires maintenance so they can address problems or abnormalities in a timely manner. Having a formal ongoing monitoring and reporting process also instills the perspective that energy is a core procured material resources – one that needs to be managed closely on a regular basis. This works to raise awareness and counter the danger of unnoticed degradation of equipment performance over time, and it establishes the foundation of continuous improvement. 10 | P a g e ALTERNATIVE ENERGY For many companies, shifting to alternative energy is the final remaining component of their sustainability strategy once the other energy efficiency steps mentioned earlier have been implemented. The most viable sources of alternative energy for manufacturers include: • • • Biogas – Methane fuel generated from anaerobic digesters that process waste by-product from the manufacturing process. This can be particularly relevant for companies in the meat, dairy and food processing industries, where disposal of by-products can be a significant operating challenge and expense. Cogeneration – Natural gas to produce electricity and steam, with hot or chilled water as a byproduct. This can be an effective solution in areas of the country where natural gas prices are low and/or utilities offer significant incentives for on-site generation. Photovoltaic and Thermal – Producing electricity and/or hot water from the sun’s energy. This form of alternative energy is not just for homes – it can be appropriate for some manufacturing facilities as well. These three options offer potential environmental benefits. This requires that companies do a thorough analysis of the potential savings versus costs involved in adding an alternative energy capability to their individual manufacturing facilities, taking into account local energy costs, utility incentives and performance requirements for the plants. Case Example: The brewing industry is on the forefront of using biogas as a clean, renewable fuel source and offers a good example of how alternative energy can be a part of a company’s overall sustainability program. A brewing company was able to successfully convert waste from the manufacturing process at one of its Southern California facilities to renewable energy. Working with Ameresco, the brewing company built an anaerobic digester to convert waste beer from the manufacturing process into biogas. The company also installed a biogas-powered cogeneration plant to generate electricity and heat to be used in the brewery. The new biogaspowered cogeneration plant provides the brewery with 1MW of power each hour. The system provides between 25-33 percent of the plant’s normal requirement for electricity and provides more than 90 percent of the daily steam and hot water demand. This reduced the amount the brewery needed to purchase from the utility, shrank the company’s carbon footprint through a lower emissions rate and helped curtail the cost of disposing waste by-product. Additionally, the brewing company received a million dollar rebate check from the local utility, making the project both environmentally and financially compelling. 11 | P a g e CONCLUSION Making Energy and Carbon Savings Sustainable An enterprise-wide commitment that recognizes energy as a core resource and the efficient use of it as a primary goal is a critical foundation for the long-term success of a corporate sustainability plan. Knowledge of how and where energy is used and the emissions generated, down to the sub-system level, is essential. But just “gathering data” is not enough. To effectively sustain significant and measurable efficiency levels requires true energy intelligence using an automated energy and carbon data management system. Real-time visibility combined with expert analysis is they key that enables best-in-class manufacturers to optimize operational performance, make informed energy management decisions and reduce energy use and carbon emissions on a continuing basis. When starting a sustainability program, acknowledging and understanding the common informational, cultural and resource barriers and approaching the initiative with the proper mindset is crucial. They key to achieving sustainability goals on a consistent basis is to apply a measured, systematic best practices approach that establishes baselines, set goals, and identifies and prioritizes projects based on ROI. It starts with low or no cost opportunities then moves to financially compelling capital expenditures and finally to renewable energy sources, where appropriate. Using common metrics that address the bottom line and communicating project successes across the entire organization works to overcome cultural barriers. Automated energy management systems that capture the real-time energy use and carbon emission information, and also incorporate the expertise of experienced energy analysts, helps overcome informational and resource barriers. And finally, automated continuous monitoring increases visibility and helps ensure savings do not erode over time. ABOUT AMERESCO Founded in 2000, Ameresco, Inc. (NYSE:AMRC) is a leading independent provider of comprehensive services, energy efficiency, infrastructure upgrades, asset sustainability and renewable energy solutions for facilities throughout North America. Ameresco’s services include upgrades to a facility’s energy infrastructure and the development, construction and operation of renewable energy plants. Ameresco has successfully completed energy saving, environmentally responsible projects with federal, state and local governments, healthcare and educational institutions, housing authorities, and commercial and industrial customers. With its corporate headquarters in Framingham, MA, Ameresco provides local expertise through its 66 offices in 34 states and five Canadian provinces. Ameresco has more than 900 employees. For more information, visit www.ameresco.com. 12 | P a g e REFERENCES 1. International Dairy Show 2010; online attendee registration survey 2. Shah & Littlefield, Aberdeen Group, “Energy Intelligence: Creating Data-Driven Efficiency,” January 2010 3. Shah & Littlefield, Aberdeen Group, “Energy Intelligence: Creating Data-Driven Efficiency, January 2010 4. Prindle, “From Shop Floor to Top Floor: “Best Practices in Energy Efficiency:, Pew Center on Global Climate Change, April 2010 5. Mills & Mathew, “Monitoring-Based Commissioning: Benchmarking Analysis of UC/CSU/IOU Projects”, June 2009 For more information, please contact us at 866-AMERESCO or visit our website at www.ameresco.com. © 2013 Ameresco, Inc. Ameresco and the Ameresco logo, the orb symbol and the tagline “Green. Clean. Sustainable.” are registered in the U.S. Patent and Trademark Office. All rights reserved. 13 | P a g e WP-5371-00-1/13 05 1.0
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