“May I please undergo an audit?” has to rank high on the list of Questions Nobody Asks. Or so you would think.
But when the audit is performed on the utilities at a manufacturing facility, the result isn’t taxes and penalties but rather expense savings.
The United States ranks as one of the world’s top countries for energy waste. For those in the Consumer Packaged Goods manufacturing industries, you know that your market is no exception.
This waste isn’t limited to electrical and gas energy. It also extends to water use and solids being trucked to landfills. Unfortunately, shareholders are left to pay for it with decreased profits.
However, there is good news for manufacturers.
You Can Rapidly Change the Status Quo
As manufacturers, you are likely well-equipped to change the status quo in your factories. The following points illustrate why you can make a difference:
- Utility waste reduction is generally the low-hanging fruit for factory capital improvements. With an accumulation of decades of expansions and renovations, a holistic view of utility usage has never occurred for most facilities.
- Collaboratively, plant managers, engineers and energy partners have the technical know-how to facilitate utility improvements. This team can collectively monitor and calibrate the designed and installed utility controls.
- Boards of directors and shareholders promote sustainability in their mission statements and welcome strategies that reduce utility usage.
- If a reasonable return on investment (ROI) can be demonstrated, your leadership can dedicate capital for utility waste reduction projects.
- Most manufacturers have the size and credit ratings to secure energy reduction financing that will, in some cases, allow you to treat improvement costs as operating expenses instead of capital.
How a Utility Audits Work
While an IRS audit may feel like a nightmare, a utility audit may seem too good to be true. Luckily, it’s not. Executed correctly, it will save much more than it will cost.
Borrowing from experience and great design industry organizations like the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) and the Rocky Mountain Institute, below is a brief step-by-step explanation of how utility audits work.
1. Conduct Preliminary Analysis
Start by engaging an engineering (or design-build) firm to perform a preliminary analysis and walk-through (Audit Level 1) survey of your facility. This can take up to three days. It is largely a visual inspection of the facility and a review of its record drawings and utility bills.
Utility consumption-related facility components that are inspected include:
- Manufacturing process systems
- Manufacturing packaging and material handling systems
- Walls and roof
- HVAC systems (chillers, cooling towers, air handlers, packaged units)
- Hot water and steam systems (boilers, pumps, valves)
- Domestic water
- Compressed air systems
- Lighting
- Plug loads
- Refrigeration systems
- Building and process controls
- Employee and maintenance habits and procedures
- Employee training
2. Identify Improvement Opportunities
Based upon the findings from the preliminary analysis, improvement opportunities are identified for further exploration (Audit Level 2). These targeted opportunities are reviewed in more detail. More data is collected from the plant, and preliminary ROIs are calculated for the potential solutions in this step.
Once this is collected, the improvements that pass the ROI test are designed in detail, a comprehensive cost analysis is performed, and go-no-go decisions are made (Audit Level 3).
3. Select a Firm to Perform Improvements
Some manufacturers begin their process with an engineering firm and implement their improvements with another firm. Without an abundantly clear scope, partnering with more than one firm to implement improvements tends to leave communication gaps.
However, if you select an Engineering, Procurement, Construction (EPC) firm from the beginning, it can perform the audits and the design and installation phases of the improvements. Partnering with an EPC firm greatly reduces risk because it can guarantee the utility reduction impacts of each improvement. It may also facilitate financing to extend payments for a duration that will equalize monthly utility bill reductions.
Home Energy Savings vs. Facility Energy Savings
Consider the small improvements that you know you and your family could make at home. Perhaps you could start using compact fluorescent or LED light bulbs, occupancy-sensor light switches, a smart thermostat, lower water-flow toilets, low-flow shower heads or new weather stripping on doors. Or maybe you could be more disciplined about maintenance and cleaning filters on your HVAC system. Imagine the amount of savings you could create?
Now, take those savings and multiply them by a thousand, or ten thousand. That is the impact you could have by assessing your company’s utility consumption and implementing practical, cost-saving measures.
For more information, email Erik Lightner, Vice President and Division Leader of Haskell’s Consumer Packaged Goods Division, at erik.lightner@haskell.com.
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