Energy Conservation Fund: Helping Corporations Develop Energy

Conservation Strategies and Reducing

Utility Costs

Presented by:

Gary A. Swanson, PE

And

Bill F. Houston

Energy Management Solutions

(612) 819-7975

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Why Consider?

Most conservation projects compete with

production projects

– Conservation never wins

Reducing energy costs goes directly to

bottom line and continues

Reduce Greenhouse gases

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Profits ($100,000)

Production

– May require $300,000

in capital

– May require

$1,200,000 in sales

(12/1)

– May not be profitable if

market conditions

change

Energy Reduction

– May not require an

investment

– Goes directly to

bottom Line

– Continue year after

year

– Reduce Greenhouse

gases

1,366 tons (electric)

835 tons (gas)

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Building Blocks

Corporate

Commitment

Set Goals

Develop a Plan

Implement Plan

Track and Verify

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Need a Corporate Commitment

Team of energy advisors

– Including corporate, plant mangers,

maintenance and employees

– Include outside energy experts who are

independent

Need total company buy in to succeed

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Set a Goal

Need to set a reasonable goal

– 5-6% per year is easily attainable

– Several years should be minimum

Need a budget

– Many projects can be implemented with

paybacks of 2-3 years

Benchmark is very important

– Set electric, gas and water benchmarks

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Plant Energy Assessments

Visit all plants to develop an action plan

– Include local employees

– Let everyone know at the plants the plan so

they can provide their ideas

Develop a project list of opportunities

Combine projects for all plants and

prioritize opportunities

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Three Distinct Areas of Focus

Demand Management

– Reduce consumption

– Energy efficient equipment

Supply Management

– Reduce unit cost

Price Risk Management

– Reduce volatility

Consider short and long term

“Be Socially Responsible while reducing your bottom Line”

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Supply

Analyze consumption (Firm vs. Interruptible)

Review tariffs annually

Evaluate transportation today and tomorrow (DON’T LOSE CONTROL)

Create Competition

Procurement

What will be done in-house vs. out-sourced

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Supply

Generation options

– Use to lower costs or negotiate rates

– Wind can be installed as low as $.035/kWh

– CHP

Pipeline bypass options

– Use to lower costs or negotiate rates

– Alternate fuel sources

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Wind Map Color $/kWh

$ 0.0300

$ 0.0380

$ 0.0430

$ 0.0500

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Price Risk Management

What is your Risk Aptitude?

Market has been volatile

– Crude - $28 to $55 (96%)

– Natural Gas - $4.80 to $8 (67%)

Wild Card Events

– 65% of declared oil reserves in Persian Gulf

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Price Risk Management

Determine Hedge Process

– Physical Forward Price

– Physical swap

– Commodity Futures Merchant (lowest cost)

Need to make informed decisions

– Fundamentals

– Technicals

– Corporate objectives

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HVACLighting

Compressed Air

Motors

Gas Process

Energy Usage Profile

Complete an Energy Assessment

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Energy Conservation

Why look at this now?

– Gas costs have tripled 6 year payback is now 2 years

– Electric costs have gone up dramatically

– New technologies are helping reduce payback

– Corporations are developing conservation programs (CSR)

All leading to new opportunities to reduce energy costs

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What to Look at?

Lights/controls

Compressed air

Motors and associated equipment – Drives

– Synthetic oil

– Synchronous belts

– Gears

Refrigeration

Steam/hot water systems

HVAC

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Other Areas to Investigate

Turn equipment off when not needed

(Night walk-through)

Utility Programs

Demand management

Sales tax exemptions

Utility infrastructure costs

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Maintenance and Employee Training

Best practices must be maintained to

continue with savings

Employees need to be trained to help

keep systems operating as intended

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Track and Verify

Projects should be tracked and energy

savings verified

Greenhouse gas reductions

Reevaluate project list and plan as market

conditions change and new technologies

develop

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Any Questions?