Electric costs are going up and grid reliability is going down. At some point, your business profitability will be impacted. So, what can you do about it? Don’t expect much help from your electric utility. After all, these are mostly Investor Owned Utilities (IOUs – an ironic acronym) that rely on the revenue they gain by selling and delivering electricity to you.
Some foundries have reduced their electric costs by becoming more efficient … always worth the effort, since the cheapest electricity is that which you don’t use. However, often those savings are being neutralized once electric bills increase. Perhaps you should consider something different … a new paradigm.
Distribute Energy Resources
Foundries can reduce their electric utility costs dramatically and reduce their risk from unexpected grid outages by using what is known as Distributed Energy Resources. In fact, the Federal Energy Management Program has been encouraging federal agencies to do just that for several years:
“Distributed energy resources (DERs) — including renewable energy technologies, storage (such as batteries), and combined heat and power (CHP) — can provide a variety of benefits for federal sites. DERs can help agencies meet goals and mandates, deliver cost and energy savings, and provide environmental benefits.
“An emerging application for distributed renewable energy, storage, and CHP is resilience — providing power in the event that a site loses grid electricity.”
However, this description leaves out the salient feature of DER technology: The DER is installed on your site.
The goals of your foundry probably focus on reduced costs and increased reliability of your power. Even the Feds are looking for ways to have power when the grid is down!
DER Equipment
Combined Heat and Power (CHP) is electric-generating equipment installed on your site, with the added feature of being able to use the engine’s heated exhaust for productive purposes. CHP has been available for years but few foundries have been interested because utility power has been cheap and reliable.
Now, the Feds suggest using CHP because it can be the most efficient type of onsite generation. Foundries may prefer basic generation systems because they are cheaper. These are much like back-up generators that some foundries have for emergencies, but usually they are larger and are run for long periods of time. You can generate all, or part, of your electric needs. You save on the cost of your power and have greater resilience from grid outages.
The DER is installed on “your side of the electric meter,” just like your melting equipment, etc. It can be used alongside your power company service, reducing how much power you consume from them. This will reduce the cost of your electric bill and provide for some power if there is a grid outage. With enough DER you also can completely disconnect from the grid, although most foundries see some benefit to remaining connected to their utility.
You could use a variety of DER technologies to generate power, including wind and solar. But due to the high electric needs of a typical foundry, it’s likely you’ll find that generators that use natural gas for fuel are the most appropriate option. It’s all about price / performance and it depends on your cost factors and requirements.
Energy Services Companies
Some electricity suppliers offer what is known as a Power Purchase Agreement (PPA), whereby they purchase, install, and maintain the necessary assets that are required at your location. You agree contractually to pay for whatever power you consume from the DER equipment for a period of some years. Details vary, so review any PPA you may be considering.
Any PPA will include a minimum power-load requirement for the foundry, meaning no vendor will offer a PPA that will not provide it with enough monthly revenue.
Ongoing Savings
An outstanding feature of DER is that it is a source of ongoing savings, compared to electric utility costs. It can dramatically reduce your monthly electricity cost and contribute to a favorable ROI. Once paid for, the DER continues to provide savings every month it is being used. For this reason, you might want to consider outright purchase of the DER.
Significant savings can result from using onsite generation. Since every foundry is different, you’ll need to request price quotes from vendors that include estimated net savings. We can help with that: Ongoing electric savings can contribute to favorable ROI.
One of the largest electric cost items in most foundry electric bills is the Demand (or Capacity) charge. In many cases it is more than half the bill total. Generating your own electricity is the easiest and fastest way to reduce that cost dramatically, with no change to operations or procedures.
Resilience
Onsite generation can ensure a reliable source of power. If you have enough, you can continue operations when the grid is unavailable. Only you can estimate the cost your foundry could incur from a blackout, but for most foundries it’s significant. Perhaps significant enough to pay for much of a DER installation.
Brian Reinke, president of TDI Consulting, is an energy-cost saving consultant. Contact him at [email protected].