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Turning Electrical Loads Into Revenue Generators

Sept. 11, 2008
Industrial manufacturers consume roughly one-third of the power utilized in the U.S. This fact is not lost on utilities and energy service providers. Lucrative programs and new incentives exist today for industrial companies as power ...

Industrial manufacturers consume roughly one-third of the power utilized in the U.S. This fact is not lost on utilities and energy service providers. Lucrative programs and new incentives exist today for industrial companies as power providers try to find ways to tap into the demand side and create more capacity. With new control technology solutions available and good strategies for implementation, it is now possible for foundries to take advantage of these opportunities to improve their bottom line.

Traditionally, utilities have operated from a “give the donkey a carrot and the stick” mentality, and that is still true. The emerging “carrot” are incentive programs like “demand response,” by which power providers offer to pay an end-user to curtail power during brief, capacity-constrained hours. Usually with 10-minute, 1-hour, or 24-hour notices, the user is asked to reduce its electrical load for a few hours and is paid handsomely for every kilowatt-hour of reduction it delivers. The “stick” is appearing as painful increases in peak demand-based charges on the monthly bill. In the future it may be very expensive to operate at high levels of demand during times when utilities need the power the most.

Metalcasters face opportunities for minimizing the impact of increasing demand charges, while at the same time positioning themselves to take advantage of lucrative earning incentives for demand response. What has been a risky and difficult prospect can be an operating advantage for foundries using the right technology.

Intelligent energy management
Foundries are not the same as commercial buildings. Limiting electrical demand without the right controls in a typical office building may result in a room getting a little too warm, but it certainly cannot be called a critical event, whereas curtailing equipment in a melt shop without the proper automated controls in place can be devastating to the process, and therefore to the business.

Many industrial facilities use automation to control their processes and increase their manufacturing efficiency and reliability. In most cases, these same facilities use only manual procedures, if anything at all, to control how power is used. It is a surprising number, but less than 1% of all commercial and industrial companies use automated technology to measure and manage their use of power. Typically, the reason companies do not use energy management to reduce peak demand is the risk. Many site managers are not confident the actions taken will produce benefits that will outweigh the risks being taken.

Now, “intelligent” foundry energy- management can remove that risk and provide great efficiency, much as when foundries automated various other manufacturing processes. With intelligent energy management systems:

• Energy savings actions are consistent; the human factor (with manual reductions) is controlled; • High-level calculations determine the exact action needed; only the exact power needed to meet goals is shed, no more. • Facilities receive instant access to energy data to make more informed decisions and gauge program success. • The user predefines how the system will act under certain production situations, moving the decision to a financial one instead of emotional. • Payback usually happens in less than 18 months and results are very measurable.

Lowering system-wide demand
The energy-automation technique used in a manufacturing plant, especially a foundry, should be suited to its environment and needs. The construction of the solution, from the controller to the I/O devices, to the interface should be industrial grade and specific for foundry applications. New technologies for reducing installation costs such as wireless I/O and standard interfacing protocols (for communicating with existing automation) will keep the payback very enticing. The system itself and the company providing it should be integrated not only with expertise on utility billing and rate scenarios but also with the specific needs presented to a foundry. One of the best ways to evaluate this is to look for examples that match your application and talk to the folks who have used it.

For a foundry, energy is one of the top costs of doing business. It only makes sense that managing this cost is a good business decision. In addition to creating cost savings, there are now ways for foundries to earn money by making strategic load adjustments.

Demand response is the concept of end-use customers modifying their electric energy usage in response to changes in rates or incentives provided by utility companies. The goal is to lower system-wide demand during peak times through controlled loads rather than building additional power-generation infrastructures.

Although it’s been around for years in the form of curtailcurtailable rates, demand response is emerging now as utilities’ most promising method for dealing with increased pressure on their supply during high-usage periods, such as summer peak hours. It is less expensive for utilities to create incentives for industrial and commercial users to lower their energy demand during peak times than it is for utilities to produce additional electricity and sell it to those who cannot alter their energy-consuming behavior. Programs and rate-schedule adjustments are being designed to promote participation in demand response.

The ability to join these demand-response incentive programs and take advantage of the payments offered is an opportunity for revenue that can be significant. Again, using automated technology available today to carefully manage these activities can balance the desire to achieve the benefits with controlling the risk to an acceptable level, providing a significant advantage over those companies that pass on these opportunities. Also, many utilities will offer innovative financing and grant programs that pay for some or all of the necessary technology investment, preserving valuable cash.

We have entered a “perfect storm” for investing in these types of energy opportunities. In a market where uncontrollable costs such as energy, fuel, and raw materials continue to escalate, technology once again has risen to the occasion, offering a chance to make some (much needed) progress.

Bob Zak is the president of Powerit Solutions, which supplies “intelligent energy management solutions” for industrial customers that allow demand response, reduce ongoing peak energy demand, and generate cost savings. Contact him at [email protected], or