How to deal with volatile energy pricing

Manufacturers face the long-term prospect of rising energy costs combined with volatile energy pricing. One approach to meeting this challenge is to "desensitise" production operations from both the volatility in energy pricing and incurred surcharges.

Manufacturers often attempt to address this by selecting higher efficiency electrical systems. However, in itself, electrical energy consumption is an insufficient metric. Manufacturers must also factor productivity improvements into the overall energy cost analysis to make the optimal choices in production equipment. 

The goal is to identify the capital equipment expenditures that will minimise overall facility energy costs. Manufacturers need to determine whether equipment retrofits or new capital equipment expenditures are the optimal choice when trying to insulate the business from the volatility in energy pricing.

This decision requires a holistic view of energy costs that also looks at the upstream and downstream processes that can be incorporated in new capital equipment. Equally important, are the productivity improvements that would enable manufacturers to determine the ROI of the investment. 

A session at ARC Advisory Group's World Industry Forum in Orlando, Florida in February featured speakers from leading machine builders and manufacturers that are deploying holistic strategies aimed at reducing energy consumption in their operations.

Some of these initiatives target specific objectives. For example, some organizations are responding to government mandates for minimum energy efficiency performance such as use of IE3/IE4 Class energy-efficient motors, which largely apply to applications dominated by induction motors such as used on conveyors, pumps and mixers.

These case analyses demonstrate that some industrial organizations have looked beyond the isolated piece of machinery and now apply a holistic approach, which evaluates the potential energy savings in the upstream and downstream processes affected by investments in capital equipment.

Larry Trunek, Manager of Manufacturing Systems at Millers/Coors, presented his justification for investing in permanent magnet motor (PMM) technology as a substitute to the standard induction motor. The higher cost of PMMs has inhibited adoption of these motors in the majority of the manufacturing and machinery applications.

This is because most organizations tend to look only at the initial cost of the capital equipment.
Miller/Coors uses an alternative approach in which it subjects the capital equipment expenditure to an ROI analysis prior to making the investment.

Using ROI, the company could justify using energy-efficient PMM solutions in applications such as packaging lines, bottling lines, and material handling conveyance.

Rather than limiting this analysis to new equipment purchases, the company is also evaluating its installed base of induction motors for possible retrofits. The company can often justify replacing induction motors with PMM motors for equipment that already use variable frequency drives (VFDs).

Manufacturers seeking to benefit from migrating to PMMs should look beyond energy efficiency alone, since their dynamic performance, compact size, and lower maintenance costs, provide additional benefits. However, to reap these additional benefits, companies must apply a mechatronic system approach to eliminate inefficient gear boxes and belts that prevent the system from performing optimally.

Brian Jones, Electrical Engineering Manager with Mark Andy, offered the OEM machine builder perspective on how productivity improvements can help drive energy efficiency in manufacturing operations. According to Jones, the latest flexographic printer systems help push productivity and capacity utilisation to the limits.

The latest designs incorporate enabling technologies such as automation controllers, servo drives, and synchronous permanent magnet motors.

While the latest flexographic printer systems can cost more than twice as much to purchase as earlier models, they can displace multiple machines, reduce waste, and increase overall throughput of the printer operations in a consumer package goods operation.

According to Jones, using a holistic energy analysis, the benefits of his technology reduces HVAC and lighting in the plant, reduces operating time, and eliminates material waste. Higher productivity helps reduce the running time of high-energy-consuming auxiliary equipment such as curing systems and hot air dryers.

Over 80 percent of the energy consumed by the flexographic printing press can be attributed to these two auxiliary systems. The company estimates that the energy consumed to produce printed material can be reduced by 45 percent when the ROI analysis incorporates downstream, upstream, and operational improvements. 

Dr Allabaksh Naikodi, Integrated Engineering Solutions Manager for Mahindra Satyam, discussed the energy-savings potential of using direct drive motors. Direct drive motors incorporate the power electronics along with the motor housing, which also reduces cabinet requirements.

Naikodi presented the example of using direct drive motors in an industrial washing machine. This required a custom-engineered solution that allowed the machine builder to eliminate gears, belts, and pulleys widely used in earlier designs.

While an off-the-shelf solution would have resulted in lower initial design costs, he argued that the ancillary benefits far outweighed the increased cost. According to Naikodi, these benefits included higher energy efficiency, superior performance, and lower operational and maintenance costs. 

Integrated direct drive technology has potential in a wide range of industry applications where "green" values and energy optimisation have emerged as dominant issues. New emerging technologies can help machine builders and users realise the benefits of direct drive solutions across a select number of qualified machinery applications.

Direct drive technology brings compactness, improved reliability, energy savings, and a reduced carbon footprint by eliminating complexity in machine design. The applications for direct drive technology are limited only by the form factor of the motor, which tends to be larger in size and have a limited amount of control at lower speeds.

The direct drive approach is generally advantageous for machine builders embarking on new machine designs using a mechatronic approach to leverage emerging motor technology that reduces mechanical complexity. Overall, users benefit from machinery that is highly productive, requires less maintenance, and consumes fewer resources in the facility.

Optimising the use of capital is increasingly complex for manufacturers and other industrial organizations as the volatility in energy pricing must be factored into capital expenditures. Determining the value proposition of either retrofitting equipment or investing in new capital equipment requires a holistic view of an operation's energy costs.

Technology improvements alone cannot solve the problem, but incorporating upstream and downstream processes provide greater benefits.

Sal Spada is Research Director, ARC Advisory Group[Sal Spada is Research Director, ARC Advisory Group.]

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