strategies for reducing industrial ... - schneider electric · building footprint consists of...

Executive summary Over 5% of the 3.35 Billion square foot US federal

government building footprint consists of “industrial

facilities” used for production or manufacturing. These

facilities are often inefficient and waste energy. The

inherent energy-related process problems are fixable

and solutions are affordable. However, a pragmatic

approach must be adopted to address the cultural,

technical, and financial challenges. This paper reviews

proven strategies for overcoming these obstacles.

by Robb Dussault, PEM and Colonel (retired) Douglas P. Wise

Strategies for Reducing Industrial Process Energy Waste in Federal Facilities

Schneider Electric White Paper Revision 0

The federal government spends over $7 Billion each year1 on energy to power its facilities.

This energy feeds a huge footprint of 3.35 Billion square feet across nearly 400,000 diverse

buildings and helps ensure the mission effectiveness of over 100 agencies. By comparison,

Wal-Mart of America supports approximately 8,500 buildings representing a total of 589

Million square feet. According to the Government Accountability Office (GAO), much of the

federal portfolio reflects an infrastructure based on the business model and technological

environment of the 1950s2 and is therefore inefficient and costly to maintain.

In the domain of federal government facility energy management, low hanging fruit such as

office building lighting, HVAC, and domestic water systems have already been optimized. The

new frontier for further improvement will be blazed by agencies and departments prepared to

take on depots, maintenance facilities, and industrial sites. With an industrial facility footprint

of over 130 Million square feet and energy intensity as high as 100 times the average

commercial building, the potential for positive energy savings and accompanying greenhouse

gas emissions reductions in these buildings is significant.

Surprisingly, the greatest hurdle to achieving higher energy efficiency at these sites will not

be technical, but will be cultural and financial. To break down the built-in energy waste and

ease cost frustrations, strategies must involve three fundamental elements:

1. Tailored methods of measuring, monitoring and reporting energy use

2. Leveraging data as actionable intelligence to make decisions and predict outcomes

3. Innovative approaches to funding projects.

This paper identifies key drivers and common barriers to addressing energy waste within

federal facility industrial processes and offers proven strategies to reduce that waste without

sacrificing quality of output.

Recognition that opportunities exist to foster process energy consumption reduction in federal

industrial facilities is one issue. Successful deployment of an efficiency improvement program

is another question. Several fundamental barriers must be overcome in order to foster real

process energy management changes. Like most successful initiatives, it takes a top-down

approach that begins with awareness and which introduces elements that enable cultural

change as well as a shift from traditional financial and operational paradigms.

The paragraphs below identify common barriers and offer strategies for overcoming those

barriers.

Barrier: Organizational structures

Most energy managers come from a mechanical or facilities management background. They

may not have been given the authority to influence process change and may not have it

defined within their scope of work. Oftentimes energy and facilities managers report through

a different hierarchy than do process managers.

Strategy: Create visible inertia

If energy objectives are established at the highest leadership levels (as they often are), the

organization will need to create a sense of urgency that is felt at the plant level. The energy

manager can help this cause through visibility and reporting. Establishing easily understood

1 Presentation by Cynthia Vallina, OMB/EOB, “Managing Sustainability through OMB Scorecard”, GovEnergy 2011, Aug 2011

2 US Government Accountability Office High Risk Series: Federal Real Property Jan 1 2003.

Introduction

Overcoming program deployment barriers

“The new frontier for further improvement will be blazed by agencies and departments prepared to take on depots, maintenance facilities, and industrial sites.”



energy performance indicators (EnPIs), setting achievable objectives against these

indicators, and making progress visible helps build an energy “culture” that changes behavior.

Larger departments can standardize EnPIs across the enterprise to enable comparison

between facilities, creating a basis for cross-business challenges and best practice

exchange.

Barrier: ROI expectations

Manufacturing organizations are accustomed to capital equipment payback periods of 18 -24

months which can easily be demonstrated through increased production throughput or

reduction in labor hours. Rate of return on energy projects, in contrast, require special

considerations to be able to justify investments

Strategy: Link energy efficiency to gains in production efficiency

Process-related energy efficiency initiatives can be linked to overall gains in production

efficiency. Equipment that runs less often and at slower speeds, for example, will tend to

break down less and cause fewer unplanned work stoppages. Less usage implies less cost.

Process audits can determine if some machines are needlessly running at certain times of the

day or night. Computer generated dashboards that link energy use to production data are

extremely effective at highlighting short and long term ROI (see Figure 1). For more

information on this topic, download the Schneider Electric white paper “Energy Management

Impact on Distributed Control Systems (DCS) in Industrial Environments ”.

Barrier: Production priorities

As operators of federal industrial processes are continually pressured to increase output,

quality and, in some cases profitability, energy projects are often misunderstood as

“distractions” from these goals, and in some extreme cases, are thought to actually serve as

a barrier to advances in productivity.

Strategy: Establish and leverage meaningful metrics

The current metrics that underpin federal and executive order goals are based on energy use

per square foot of facility. This metric does not lend itself well to raise awareness, drive

cultural change, or make a business case for industrial energy and water conservation

Sample dashboard collects

energy data across the

building and centralizes

information in one or more

user interfaces



investment. A suggested metric to help focus industrial energy and water conservation efforts

is one that is based on dollar cost per unit of industrial output. This metric can help drive

conservation and efficiencies across all product lines within the industrial sector and help

substantiate many energy and water conservation projects.

Metrics such as KWh per widget, per gallon or per ton are how typical production materials

and labor are measured. The same concept applies to energy. Meter data and production

data, already available in Supervisory Control and Data Acquisition (SCADA) systems or

production databases, are linked together. In the composite processing operation example

depicted in Figure 2, energy is expressed in kWh per ton of material produced.

With the view in Figure 2, the energy manager can quickly and easily detect a problem which

would not normally be apparent using standard energy metrics. In the case of Figure 2, more

energy is being consumed, per ton of material produced, for the past 2 weeks than in weeks

prior. The site‟s overall energy may actually be lower over this time period because

production rates are lower, which would have normally prohibited this problem from being

detected until the end of the fiscal year. With the view in Figure 2, the problem is immediately

apparent. The energy manager can quickly diagnose issues using similar graphs to detect

energy use by raw material source, work crew, or any other process variable.

Barrier: Lack of visibility into process energy usage

As the old saying goes, “You can‟t manage what you don‟t measure.” Many sites lack proper

metering and visualization tools. Other sites or individual buildings may be metered, but they

lack the granularity necessary to pinpoint specific process inefficiencies within the larger

scale production.

Strategy: Meter and Audit

Data is required to substantiate the fact that energy and water conservation is needed. A

simple way to collect this data is to expand the implementation of facility audits and

installation of meters. Meter installation will allow the accurate collection of energy usage

within specific industrial areas to help determine opportunities with the highest ROI. This

Figure 2 Operational level dashboard

displaying energy in the

context of production output



includes audits and metering of major industrial processes. Focused industrial audits will

standardize identification of energy and water conservation opportunities.

Installing meters and providing operators and stakeholders with visibility into energy usage,

has proven to drive behavior change and can generate savings. This is attr ibuted to the

“Hawthorne Effect,” a phenomenon whereby individual behaviors may be altered as a result

of the individuals knowing that they are being studied. These savings quickly erode if the

individuals realize that the meter data is not being used. To maximize energy savings, the

meter data must be used to drive action.

Barrier: Budget constraints

Federal budgets operate at many levels and most have limitations and restrictions on how

much can be spent on facilities, infrastructure, and equipment. Under some circumstances,

leadership can interpret efforts to improve energy and water conservation as contradictory to

their mission of providing products to their customers (i.e., energy and water conservation

efforts will only slow down their throughput of mission-critical assets). In addition there is the

impact of sequestration, which, when enacted in March 2013 resulted in 7% across the board

cuts to federal discretionary funding (which represents approximately $85 Billion in fiscal year

2013 and a total of $1.1 Trillion if it remains in effect through 2021).

Strategy I: Institute a financial line item for energy waste

The financial controller, who is always interested in cost savings, should be enlisted as an

active supporter of energy reduction initiatives and not be viewed as a potential obstacle to

project deployment. A first joint step would be to establish a “line item” for energy waste

within the financial tracking reports. Use the overall efficiency metric from the energy

assessment and apply it to the energy budget. These budget entries should be divided into

two lines: Budget for Energy Used and the Budget for Energy Wasted. The Budget for Energy

Wasted provides not only accounting and management visibility, but becomes a mutual target

for reduction. The energy manager can then propose projects based on ROI standards that

are different from other investments.

Strategy II: Leverage private sector financing The challenge of launching energy initiatives within government organizations and agencies

can best be summarized in the phrase “It takes money to save money.” This paper presents

several strategies and techniques for reducing process energy waste, but most of these

solutions must somehow be funded.

A critical solution to address this issue, in this era of declining discretionary budgets, is to

pursue private sector financing. The federal government has identified several financing

mechanisms associated with infrastructure improvements to help alleviate the capital costs

that are often necessary to realize energy efficiencies. Energy Savings Performance

Contracts (ESPCs) are one such common vehicle. For more information on how these

contracts benefit energy efficiency initiatives, see the Schneider Electric white paper entitled

“Leveraging Performance Contracts to Reduce Process Energy Use in Federal Facilities” .

Utility Energy Service Contracts (UESCs), GSA Schedule 84, and ESPC ENABLE are also

vehicles that have been developed to support and encourage government based energy

efficiency initiatives.

Since the energy crisis of the 1970s, congress and presidents have recognized the need to

curtail energy costs of federal agencies. The goal has been to not only reduce the burden on

American taxpayers, but also to promote environmental stewardship, and to lead the nation

towards energy independence. Over the years, federal policy has continued to expand,

transform, and focus on conservation within federal facilities. Two main pieces of legislation

Key driver for change: Consumption targets

“The federal government has identified several financing mechanisms associated with infrastructure improvements to help alleviate the capital costs that are often necessary to realize energy efficiencies.”



drive energy and water conservation in federal facilities: the Energy Independence and

Security Act (EISA) of 2007 and Presidential Executive Order (EO) 13514. Table 1 below

highlights some of the key requirements of these two policies. For more information on these

and other policy drivers see the Schneider Electric white paper, “Enacting an Energy

Management Lifecycle Approach in Federal Facilities”.

Despite multiple efforts and projects, government facilities have only achieved 21% of the

EISA 2007 target as of 2012 (target is 30% by 2015). Over the past three years, most

government agencies have fallen well behind and are continuing to trail the 3% per year

improvement goal. Significant opportunities exist to conserve and realize additional monetary

benefit through process energy-related savings.

A large portion of federal facility energy consumption results from operation of non-real

property assets. This includes energy and water consumed by process energy (PE) assets,

which the American Society of Heating, Refrigerating and Air-Conditioning Engineers

(ASHRAE) defines as follows: “Energy consumed in support of manufacturing, industrial or

commercial processes not related to the comfort and amenities of building occupants.”3

Industrial facilities are a subset of process energy assets and are defined by the Federal Real

Property Council as “buildings specifically designed and primarily used for production or

manufacturing, such as the production or manufacture of ammunition, aircraft, ships,

vehicles, electronic equipment, fish production, chemicals, aluminum, and magnesium.”

Included are buildings that house utility plants or utility system components such as pump

stations or valves.4 The Federal Energy Management Program (FEMP) defines industrial

facilities or industrial energy (IE) as “High-intensity processes or mission-critical applications

that are not the traditional creature comforts of the building (e.g., heating, cooling, lighting,

domestic hot water, etc.).”5

Specific examples of industrial energy applications include assembly / disassembly, avionics

testing, engine testing, composite construction, chemical / parts cleaning, heat treatment,

painting / paint removal, plating, metal working, non-destructive inspection, foundries, welding

shops, controls / electronics testing and repair, loading, assembly, and packing of munitions.

3 ANSI/ASHRAE?IESNA Standard 90.1-2001 Energy Standard for Buildings Except Low-Rise Residential section 6.3.3.1.

4 FY2010 Federal Real Property Report, Appendix B – Predominant Use Categories and Definitions for Buildings

5 Federal Energy Management Program: http://www1.eere.energy.gov/femp/news/news_detail.html?news_id=11696

Goal EISA EO 13514

Reduce energy intensity (BTU / sq ft) vs. 2003

3% / yr (begin 2008)

30% by fiscal year 2015 -

Reduce industrial water intensity -

2% / yr vs. 2010 base

20% by fiscal year 2020

Increase building performance standard for new buildings and major renovations

Reduce fossil fuel use 50% by fiscal year 2015 and 100% by fiscal year 2030

New buildings in design beginning fiscal year 2020 must be net zero; Must meet federal high performance memorandum of understanding (MOU)

Reduce GHG Emissions -

By fiscal year 2020,

Scope 1& 2: 28%

Scope 3: 13%

Table 1 Federal government

energy and water

conservation targets



These environments are commonly found in US Navy shipyards and platform depots, the

Army‟s munitions, helicopter, and heavy vehicle / tank depots and arsenals, the US Air

Force‟s platform depots and wind tunnels; and the Department of Energy‟s industrial

complex, just to name a few.

Volatile energy prices and their impact on production costs are key drivers for process and

energy efficiency in industrial environments. Energy sources most often used in industrial

process facilities face a risk of short-term price volatility. For example, natural gas wellhead

prices increased 4-fold from 2000 through 20066 (see Figure 3)

Processes that are powered directly from natural gas, or from electricity that is generated via

natural gas, would suffer proportional swings in operating costs. Similar risks are evident with

other fuel sources, such as oil or coal. Electricity prices have also been known to fluctuate as

much as 10% year-to-year7 (see Figure 4). These swings may be triggered by foreign

incidents, economic crisis, or natural disasters, few of which can be predicted or controlled.

Mitigating energy dependency, can offer significant cost control advantages.

6 http://www.eia.gov/dnav/ng/hist/n9190us3m.htm

7 http://www.eia.gov/forecasts/steo/report/electricity.cfm

Key driver for change: Impact of energy cost prices Figure 3 Some energy sources like

natural gas are both more

volatile in price and more

likely to be utilized in

industrial environments

Figure 4 Fluctuations in US electricity

prices will also impact

production costs. Energy

efficiency initiatives help to

mitigate the effects of

volatility



Energy costs can represent as much as 14% of production costs8. A significant

portion (80%) of energy used within surveyed government industrial facilities was found to be consumed by the production equipment, and not the facilities

9 (see

Figure 5).

The US Navy manages shipyards, dry-docks, and intermediate maintenance facilities across

the country. These facilities repair and maintain their ships, submarines, and Unmanned

Underwater Vehicles (UUV). They also oversee numerous armament, ordnance, vehicle

maintenance, and repair facilities. All of these facilities and industrial processes can cut costs

by implementing energy and water conservation improvements.

As an important first step, the US Navy completed an extensive analysis of their energy

consumption by category code and climate to establish benchmarks. As an outgrowth of this

assessment, it was discovered that 50% of their energy consumption fell within the domain of

maintenance facilities. The assessment also identified other facilities with high energy

reduction potential. These include metal fabrication, avionics, and painting / stripping facilities

(see Figure 6).

The US Army oversees a large industrial complex; 23 installations exist as part of the US

Army‟s organic industrial base, which includes 14 government-owned plants and 2 arsenals.

This industrial base includes energy-intensive processes, such as nitrocellulose production,

rubber products, and metal plating. The plants manufacture and repair ammunitions, and the

arsenals manufacture and repair ordnance material. Work completed at these locations

includes manufacturing, maintenance, and repair to gun tubes, gun mounts, other weapon-

related items, and repair and upgrades to US Army vehicles and tanks. In addition, numerous

tactical and equipment maintenance facilities (TEMFs) are operated by the US Army to

service and repair operations on different types of vehicle assets.

8

US Census, Annual Survey of Manufactures: General Statistics: Purchased Fuels and Electric Energy Used for Heat and Power by Industry Groups and Industries (http://factfinder2.census.gov/faces/nav/jsf/pages/searchresults.xhtml?refresh=t)

9 Energy Information Administration, “Manufacturing Energy Consumption Survey” End Uses of Fuel Consumption, Table 5.3, 2006 End Uses of Fuel consumption, 2010. For industry codes 327, 331, 332, 333, 335, 336. comparing "Direct Uses-Total Process" with a combination of "Direct Uses-Total Nonprocess" and "Conventional Boiler Use"

Examples of federal industrial processes

Figure 5 Electricity use in relevant

industrial facilities: Process

vs. non-process end use



Over 60% of these facilities and related infrastructure were built in the WWII era. Though this

industrial complex is well maintained, significant inefficiencies exist. Equipment is past its

useful life, and there are considerable opportunities to upgrade the industrial infrastructure

and to realize energy and water conservation savings.

The US Air Force‟s industrial complex includes three Air Logistics Complexes (ALCs), or

depots, that complete maintenance, repair, and upgrades to the various platforms in their

inventory. Other industrial facilities include some of the country‟s largest wind tunnels, hot

and cold-weather test facilities, and service and repair depots for vehicle assets. The three

ALCs consume over $90 Million in utilities annually with 60-80% of this load being process

energy and up to 50% of that directly tied to industrial energy use within the depots.

Unmetered consumption estimates of one of the ALC‟s industrial complexes reflects that 74%

of the electrical, 67% of the natural gas, 74% of the potable water, 83% of the steam, and

64% of the chilled water is consumed by industrial activities. In addition, the ALC produces

100% of the industrial waste water effluent.

A minor reduction of energy and water consumption in any of these areas greatly impacts the

base-load for the installation. As an example, a recent project at one ALC resulted in a $2.7

Million per year energy savings and 330,000 gallons per day water savings. As these

industrial complexes are major consumers of energy and water, their conservation efforts not

only significantly impact the installation‟s utility bills, but are also „needle movers‟ for federally

legislated and energy optimization goals.

Energy forecasting and predictive analytics

As contextual energy data is compiled, the data can be best leveraged by creating an energy

forecast model. Production throughput can be compiled with energy use to automatically build

a forecast dependent on future production schedules. Being able to accurately anticipate

future energy consumption enables the prediction of the peak demand. Energy procurement

contracts can then be adjusted to lower the peak demand threshold (represented by the solid

horizontal line in Figure 7), potentially reducing the cost of every kWh consumed.

Turning data into knowledge and action

Figure 6 Facilities such as painting

and stripping depots have

been targeted for energy and

process efficiency

improvement



Once the predictive model is established, the operational energy management system can

enable the detection and analysis of energy events. An energy event is a condition that

causes the actual energy to exceed the desired consumption level, even for an instant. The

energy management system captures not only the time and date of each event, but also all of

the relevant process variables associated with it. Within a short time, enough energy events

are captured to perform a meaningful analysis with tools such as the chart in Figure 8.

When analyzing Figure 8, it becomes clear that energy events in this particular

manufacturing process are most often correlated with a process condition known as “High mill

loading”. Further analysis, using similar tools perhaps in combination with a manufacturing

execution system (MES), may reveal that the mill is being loaded improperly by a specific

work crew, which has adopted an unconventional work habit. Without analysis tools such as

these, it would never be apparent that this practice is increasing real operating costs in the

form of energy consumption.

Figure 7 Control of peak demand

threshold based on energy

forecast

Figure 8 Pareto analysis of energy

events by cause



Implement five process demand functions

Traditional facilities-based energy management programs are easy to understand and

visualize. Lights can be seen, air leaks can be heard, and steam temperature can be sensed.

Energy efficiency for production systems, however, is more elusive, because automated tools

are required for gathering and analyzing data. These systems, however, are easy to deploy

and help to make energy consumption of process systems tangible and measureable.

The management of actions to control and reduce energy usage and cost within an industrial

process can be summarized as five process demand functions:

Energy Event Management: Detection and analysis of process changes that cause

consumption to exceed forecast

Peak Demand Management: Minimization of peak demand that triggers higher rates

Scheduled Demand Management: Reduction of costs by shifting demand to low cost

time periods

Idle State Management: Minimization of energy draw during idle process conditions

Demand/Response Management: Distribution of energy capacity back to the grid per

request in exchange for incentives

For more information, see the presentation “The Role of Dashboards in Managing the Energy

of Production Systems”, published for the Industrial Energy Technology Conference (IETC)

2013.10

Fine tune production and central utilities to reduce energy use

Visualization and interpretation of data across multiple levels of an organization represents a

best practice for maximizing production while minimizing energy use. Installation of such tools

can occur without radical changes in the existing process and without having to replace / or

retrofit existing equipment. The data analysis capability can also help to evaluate

opportunities to refine and retrofit existing processes and equipment in order to further reduce

energy consumption. This approach also helps streamline central utilities production and

distribution by right sizing and optimizing central systems that serve industrial processes such

as steam plants, chilled water plants, and compressed air plants.

10

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Industrial energy initiatives are one of several types of process energy programs that are

leading a new wave of conservation measures. The challenges are real, but the strategies

and techniques to address these challenges are tested and proven. Process efficiency is a

largely untapped savings resource that aids in the effort to meet government department and

agency production, financial, and energy goals.

Prudent steps for launching an energy initiative include the following:

Identifying a trusted energy partner and advisor (recommended within1 month)

Assessing existing processes for potential energy waste reduction and efficiency

opportunities (within 3 months)

Soliciting qualified contractors for best-value proposals (within 6 months)

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Robb Dussault, PEM administers the Energy Management Solutions portfolio for Schneider

Electric‟s US Industry Business Unit. He has 20 years of experience in technology development,

application engineering, product/service management, global strategic account support and

commercial deployment for Industrial Automation and Energy Management systems. He holds a

B.S. in Electrical Engineering from the University of Massachusetts, a Master of Science in

Management from NC State University, and maintains a Professional Energy Management

Certification from the Institute of Energy Professionals. Colonel (retired) Douglas P. Wise , is a former US Air Force officer who has served in a wide range of civil engineering positions at base level, major command, and in the joint/combined environment and has extensive deployment experience. He holds a Bachelor of Science degree in Civil Engineering, Montana State University, Bozeman, MT, and a Master of Science degree in Engineering and Environmental Management, Air Force Institute of Technology, Wright-Patterson AFB, Ohio. *Acknowledgements

Special thanks to our additional white paper contributors: Ellen Kotzbauer, BEP, US Federal

Government Segment Manager, and Garrett Sloman, PE, CEM, Schneider Electric Technical

Writer

Conclusion

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