Looking for Cost Savings? Start with Energy

By Sinead Ross, Titan Energy

In the United States, industrial buildings contribute to one-third of total energy consumption, yet a majority lack an implemented energy management strategy. The primary source of energy consumption in industrial buildings is production-related, with costs determined by regional and local utility companies passing on rising power generation costs to industrial ratepayers. The growing industrial energy use strains an already faltering grid system, and utilities and building operators need to work together to find savings in energy demand and costs. Successful building operators navigate market shifts by focusing on long-term energy cost control and leveraging available utility programs to reduce on-site energy needs.

Implementing a well-crafted energy management strategy results in lowered costs and operational efficiencies for industrial building operators. This article delves into specific actions that can be taken to establish an energy management strategy, featuring client stories. Titan Energy, a contributor to this article, is an energy management consultant specializing in helping clients manage both the supply side (procurement of energy) and the demand side (working to reduce energy consumption).

Procurement of electricity and natural gas
When devising an energy procurement strategy, industrial facilities often find tracking energy commodities opportunities increasingly challenging. Over the past three years, natural gas and electricity prices have been extremely volatile, with prices hitting record lows and highs with no sign of normalizing. This type of energy market is prompting industrial managers to seek ways to mitigate risks. In deregulated commodity markets, manufacturers can access products to lock in natural gas and electricity costs for the long term, ensuring immediate savings and long-term budgetary certainty.

Generate energy on-site
The 2022 Inflation Reduction Act (IRA) extended the Investment Tax Credit (ITC) for on-site generation projects enabling industrial facilities to install solar, battery storage, co-generation and fuel cell plants. These projects can be owned by the facility or third-party owned with lowered fixed costs for 20-30 years and no upfront cost.

Utility incentives
Local and regional utilities offer rebates and incentives promoting the purchase of energy-efficient appliances, equipment and fixtures. These incentives can cover up to 100% of project costs and may be financed at a fixed 0% rate for eligible ratepayers. The goal of these programs is to lower demand on the grid while improvements are made for the future.

Responding to grid events
Utilities invite large power users to participate in grid demand programs in return for revenue. Industrial facilities can take advantage of lower capacity demand during peak hours in the summer, shifting work hours to accommodate peak demand without affecting productivity. Incorporating on-site emergency backup, such as a battery storage unit, makes manufacturers integral to local grid operations, enhancing grid resiliency by reducing the likelihood of brownouts and blackouts.

Information control
Administrators can effectively manage and visualize energy usage and spending by implementing an energy data platform integrated with their utility invoicing system. Low-cost, automated subscription services collect utility bills across electricity, natural gas, water and recycling, conducting audits on invoices and benchmarking energy use, sustainability, and emissions data. This capability allows for data-driven decisions regarding production by sorting and filtering based on location, business unit and cost center.

Titan Energy recently worked with two companies facing energy challenges.

Large label manufacturer upgrades
LED curing lamps
Titan Energy was called in by a label manufacturer to analyze, audit and capture utility lighting incentives for a location in the Northeast. The mercury vapor lamps in the press used in the curing process were old and inefficient and needed to be replaced with new high-efficiency LED lamps. Utilizing an audit comparing the old UV curing technology and new UV LED fixtures, the label manufacturer was able to obtain utility incentive funds for a non-routine, hybrid LED processing application by demonstrating a significant reduction in energy use during the printing process.

These incentives covered 45% of project costs and instantly increased the net return on investment. With the new UV LED lighting fixtures, the label manufacturer was able to reduce maintenance downtime and increase label production by 33%, as the fixture increased processing from 600 units/minute to 800 units/minute, while simultaneously reducing energy use.

Custom electricity pricing also was secured to better reflect the facility’s low demand usage, allowing them to take advantage of rate savings. Furthermore, all building lighting was upgraded to LED throughout the facility, reducing operational costs for years to come. These changes result in a savings of $162,841 annually and a reduction of more than 11.08 million kilowatt-hours over a 10-year period.

Manufacturer reduces cost through
energy procurement strategy
An international manufacturer needed to pay closer attention to each of its production sites to meet cost-saving targets, mitigate risk and help enhance a centralized energy procurement approach. Previously, the manufacturer’s energy accounts were contracted on a one-size-fits-all energy procurement approach, but a comprehensive utility bill audit helped establish a solid baseline understanding of the benefits and risks of each energy market and led to an expansion of its network of top energy suppliers across diverse deregulated energy markets.

A request for proposal (RFP) was issued on the customer’s behalf, negotiating the most competitive rates, simplifying the legal review process and onboarding the client onto a data management platform to track costs and savings. A fixed-rate product was locked in until 2024, offering both immediate savings and protection against any future market pricing shifts.

This paid off for its Texas location when February 2021’s polar vortex brought record-cold temperatures to a significant part of the Midwest and Texas. The additional heating demand and transportation issues created scarcity in the natural gas market, skyrocketing natural gas and electricity prices. During this polar vortex, the manufacturer was protected from any market exposure because of the fixed-rate product. Instead of paying an escalating $12.50/kWh (a >300% increase), the client kept paying $0.04/kWh and avoided a $5,000,000 February bill. n

Sinead Ross is the director of marketing at Titan Energy. In operation since 2001, Titan Energy is an independent energy management consulting firm that creates comprehensive energy management strategies backed by data to control and reduce energy costs. For more information, call 860.967.1611, email sross@titanenergyne.com or visit www.titanenergyne.com.