Energy Usage in Manufacturing: The Current State of Energy

In part one of this three-part series, we partnered with Michael Lewis, Senior Client Advisor for APPI Energy, to highlight how the usage of energy in manufacturing is shifting. Michael entered the renewable energy industry in 2006 when he transitioned from the housing construction industry to installing solar systems for big box retailers in California. During that time, Michael oversaw the growth of a turn-key solar and racking innovator from 4 to 50 employees who built projects across California and the U.S. By 2013, he founded his own solar EPC, engaging directly with solar module and racking manufacturers, property management companies, and public works entities, building solar projects across the western United States. After successfully growing his own company, Michael transitioned to the management and development of utility scale solar farms. Michael consulted on over 1GW of utility scale solar farms from land acquisition and feasibility studies, off-taker negotiations, design, permitting, planning, construction, grid synchronization, and the long-term O&M of these assets. Michael focuses on renewable energy, EV infrastructure, and sustainability, is a licensed electrical contractor, and enjoys reading about everything sustainability, technology, and energy related. In his free time, Michael practices hot yoga, runs regularly, makes time to surf, and enjoys getting out into nature. Michael graduated from the College of Charleston in 2003 and resides in his hometown of Richmond, Virginia.

In part one, we will touch on the current state of energy usage in manufacturing. 

What is the current state of energy in the U.S.? 

The current state of energy in the U.S. reflects the market forces we’ve been experiencing over the past year and a half, which is to say, energy costs are going up. Electricity markets typically lag cost increases in other areas, but increases are on the horizon if they haven’t already been realized. The price of natural gas has fallen from highs experienced a few months ago, and thankfully we’ve been seeing a mild weather winter. But weather patterns change, and we could see large spikes in the price of natural gas. The price of electricity typically follows the price of natural gas, historically. That said, even with the pullback in natural gas we’ve seen over the past few months, electricity price increases will continue across North America. 

Market forces have decided to reduce investments in fossil fuel extraction and pushed heavily into renewable energy sources. While the rise in COVID has reduced demand temporarily, demand will eventually increase and outpace supply. The increase to our energy costs looks like it will stay elevated for the foreseeable future. The good thing is that now we have a host of technologies and methods available to counter these increased energy costs. 

Where do you see the opportunity in manufacturing to plan for and mitigate cost increases in energy?  

The first step is always to reduce consumption through energy conservation measures (ECMs) where possible. The cheapest kilowatt hour is always the one that is never consumed. Not only is it cheaper for the manufacturer when they consume less energy, but utilities have also realized that it is more cost-effective for them to subsidize energy efficiency upgrades than it is to build new power plants. This opportunity exists around the low hanging fruits of energy efficiency rebate programs now available through local utility companies across North America. Specific rebate and incentive amounts vary by utility. 

What are some examples? 

Some examples of this low hanging fruit are LEDs, VFD motors, installing occupancy sensors and time clocks on equipment, and potentially reclaiming waste heat to apply in other areas of a facility. In many cases, incentives cover a large amount of the out-of-pocket costs to invest in these measures. 

Can you provide some specific things that any manufacturing company can do right now to reduce its energy demand and usage? 

Gaining a better understanding of the utility bills is the first step to reducing demand and usage. We see utilities adapting to changing markets with time-of-use charges that make energy more expensive during the peak part of the day (generally weekday afternoons). Billing demand charges most often boil down to the highest 15-minute average demand during business hours. Manufacturers can consider what high-demand/high-energy processes may be setting their billing demand or consuming a lot of energy on peak. A detailed load analysis can determine the best way to mitigate billing demand; however, if an energy intensive process can be completed overnight, then it is generally best to do so to reduce utility charges—even if the same amount of energy is consumed either way.

What tools or systems are currently available to companies that can be implemented to help address energy usage and demand? 

One way to reduce these demand charges is by implementing sub-metering equipment to track the energy consumption of major equipment across the facility. Once the timing of these peak demand spikes is understood, it may be possible to shift the start-up of this equipment so as not to coincide with peak usage of other large equipment. Larger facilities will invest in automated building energy management systems to handle this process automatically. 

Are there opportunities where a manufacturing company can reduce its current need for energy? 

Evaluating all available ECMs is the most economic means to reducing energy needs. After this is complete, a review of all renewable energy technologies, on-site generation, is the next option for reducing energy. Yes, this just replaces the electricity from one source to another, but on-site generation can be produced for less than energy from the grid in many cases.