Energy management for increased profitability


Courtesy of RTS Consulting Inc.

“The cost of purchasing the energy needed for production by an industrial facility is viewed as managed input and typically receives significant attention, while the use of that energy once it is inside the factory is often viewed as simply the cost of doing business. While this is not true in all industrial facilities, experience has shown that unless the facility actively manages energy use and has a documented plan for doing so, these facilities are significantly less energy efficient than they could be. Without performance indicators that relate energy consumption to production output, it is difficult to measure or document improvements in energy intensity.”

– Paul Scheihing, Technology Manager, Industrial Technologies Program, U.S. Department of Energy

The modernization of BRIC (Brazil, Russia, India and China) and other third world countries has led to a surge in demand for energy. As energy markets have opened up to competition in recent years, fixed pricing policies are becoming less prevalent as governments let market forces dictate prices. In addition to this, legislation to address climate change by reducing greenhouse gas emissions and establishing a price on carbon could create further increases in energy costs and price volatility.

Since many manufacturers have traditionally treated energy as a fixed cost of production, many are slow to take action to offset the effects of higher energy costs through price increases, productivity improvements and cost reduction programs. Obviously, when a manufacturer is not able to manage or offset the effects of higher energy costs, profitability will suffer.

Progressive manufacturers no longer view energy simply as an expense to be controlled or a bill to be paid and are leading the industry in managing energy as a raw material in their manufacturing process. These manufacturers understand the need to track energy as a component of the bill of materials (BOM) or ingredient in their recipes/process so they can manage it carefully in order to sustain a profitable business.

One of the primary tools used to monitor and track a company’s energy consumption, is an Energy Management Information System (EMIS). An EMIS enables continuous, real-time monitoring, and targeting of energy usage. Access to this real-time data provides management with the necessary tools to make more informed production planning decisions to control these direct costs with actionable intelligence.
To be effective, an EMIS must be fully integrated into the Business System, connecting to Plant Maintenance, Quality Management, Enterprise Asset Management, Materials Management, Finance and Carbon Impact. With continuous analysis and collection of data all levels of management, supervisors, maintenance personnel and operators can optimize their operations to manage where, how, and when energy is used in order to harness it when it is least expensive, as well as actively manage their energy as one of many inputs to the overall production equation. If companies view energy simply as plant overhead, they are ignoring the multidimensional aspect of effective energy management: Lower cost, Reduce Consumption and Optimization.

I would love to hear your comments about the Energy Management for Increased Profitability.

Customer comments

  1. By Josh Campbell on

    Energy management is so often looked at as an expense, when in reality it should really be looked at as an opportunity to create savings.One place where going green can create significant savings for an organization is their real estate and corporate resources. Just think of the cost associate with office buildings and the energy it takes to keep them operating. It is true that going out and replacing all of your old equipment and systems with newer more energy efficient equipment can become pricy, but there are other ways your organization can make their operations more green. Organizations can invest in energy management solutions that monitor and control their current lighting and HVAC systems and the usage of rooms and other resources. This doesn’t call for existing systems to be replaced. Instead, an energy management system will assist an organization in getting more efficient use of their existing systems and real estate. Energy management systems have been known to reduce energy costs by 30% or more by simply monitoring and controlling energy consumption. You can learn more at