Industrial customers get a grip on energy use
When their cost structure for energy started to fluctuate, managers at three of Canfor's pulp mills realized it was time to get strategic about energy management.
But their costs weren't buffeted by international oil prices. Canfor's Prince George, Intercontinental, and Northwood mills run almost entirely on self-generated electricity, using forest residuals as their fuel.
"The cost of our fuel was historically very low, and self-generation was very economical," says Sotirios Korogonas, Canfor's Manager of Strategic Capital and Energy. "With the collapse of the sawmilling industry, the value of the residual material – which was historically a byproduct or a disposal issue for the sawmills – became a commodity. All of a sudden we were paying market value and commodity pricing on something that was in the past a refuse issue. So energy costs started to come up on our radar."
That underscores one of the key messages in the practice of energy management: with today's fast-paced economy, the era of treating energy as a fixed cost is over.
"One of my colleagues says companies view energy like taxes – they just don't think they can reduce it," says Mark Hamilton, principal with Strategic Energy Group. "They think about energy management as a procurement activity – "maybe we can buy it at a cheaper rate" – but they don't take that next step and say, instead of trying to buy it for less, maybe we can use less. And energy has historically been pretty inexpensive, so these customers haven't had to develop a business mindfulness of efficiency."
Hamilton works with BC Hydro to conduct energy management assessments (EMA) with industrial customers. The workshops typically include five to 10 senior managers from across a company's functional areas.
"It's important to understand that an EMA is not a technical assessment. It's a management assessment, to learn where you're currently at with your energy management activities, and to get your managers to a point of common understanding," says Hamilton. "If you don't know where you are, you don't know where you're going."
Hamilton uses a tool in the workshop called One-2-Five® Energy, a product of Envinta, a developer of energy and environmental management solutions. The tool uses a series of questions that help a company benchmark its energy management practices against peers in its industry, providing a gap analysis for practices. It also gets companies started on taking action. (BC Hydro provides different EMA workshops depending on a customer's size and energy consumption.)
"They need to establish some sort of management commitment, whether that means a policy, or establishing responsibilities, or setting up a team. Getting the organization ready to implement energy efficiency improvement is the first step," says Hamilton.
"There has to be some sort of continuous communication around trying to reduce energy use and costs. For example, putting energy on the agenda at management meetings, putting it on the agenda at shift meetings with the hourly staff. Management really sets the tone for what is allowed or not allowed in the organization. If management allows waste, that's what everybody is going to do."
Hamilton says one of the most common realizations industrial companies reach during an EMA is that energy management is not about taking on technical projects, or even a series of them.
"It's about management activities – setting goals, assigning the appropriate resources where they need to be, ensuring proper communication throughout the organization," he says. "Variable speed drive projects, or compressed air projects are important to do, but that's not a sustainable energy management program."
"Doing the EMAs was a valuable investment," says Canfor's Korogonas. "Our managers got versed in what we need to look at, and it gave us something to measure back to. There were lots of eureka moments where folks said, 'hey, I can apply this to my department or crews.'
"Once they started to think about all these examples where people could have influence over energy costs, they started to think of it as a variable to work with. Really, it's learning new language." Canfor is now working with BC Hydro on a Strategic Energy Management Plan [PDF, 364 KB].
Hamilton says a company that hasn't been paying much attention to energy consumption can expect a 5% to 15% savings on energy costs "pretty easily" with the actions identified through an energy management assessment.
"If a company takes energy conservation seriously, there's significant low hanging fruit to be had," he says. "Some say it's not low hanging – it's rotting on the ground. The energy management assessment is a small but very important first step in your overall continuous improvement process."