Key takeaways
You can control the real cost of regulations when you treat them as an engineering and planning problem, rather than just paperwork.
Most plants overspend due to the fact that they respond to rules rather than creating a long-term energy management approach.
The real cost becomes apparent in the downtime, training, quality, and delayed projects, and not just the energy bill.
Good data resulting from an energy audit and real-time monitoring can transform regulatory pressure into energy savings.
Why Energy Regulations Are Important For Your Plant
If you have industrial facilities or support them, you already feel the pressure.
Regulators look to the industrial sector because of the big share of the total energy consumption. In many areas, energy use by industry accounts for around a quarter of the energy used and sometimes more. That is a lot of energy consumption in a concentrated few locations.
In the case of one example I remember walking to a manufacturing facility where the plant manager stated, “We are one of the largest consumers of energy in this county, so we get attention.” He was right.
The U.S. Department of Energy’s Energy Efficiency for Industry program provides a cite-worthy source to be used for this point. It allows your reader to verify this claim with some document that he or she can check.
Rules form tariffs, incentives and penalties. Your energy usage, energy consumption patterns and overall energy strategy now impacts on permits, reporting and even public image.
So the question becomes: do you turn energy use into a fixed cost, or do you turn energy management as something that is part of core operations?
What Is “Real Cost” Looks Like On The Plant Floor
On paper regulations are simplicity itself. Meet a target. Submit a report. Maybe do an energy audit every couple of years.
At the plant floor, the actual cost is different. You have capital tied up in an upgrade to compressors or process heating. You see overtime, during a shutdown. You see operators learning new controls while trying not to hurt throughput.
I worked with a plant that put in new high efficiency ovens in order to improve energy efficiency and to reduce energy consumption. On paper, great. In reality, the scrap rates jumped for three months due to the changing profile of heat. Energy savings were there but quality losses hurt more.
That is the real cost, i.e. direct energy cost + indirect downtime + strategic limits on how fast you can grow or change.
Important Energy Regulations that Impact Industrial Facilities
Most rules fall within three buckets.
First, energy efficiency and building or equipment standards. These touch motors, VFDs, industrial machinery, boilers, lighting, heat, ventilation and controls. You may have to replace older equipment sooner than expected
Two, emissions and carbon programs. If you run industrial operations, regulate fuel burn your regulators are interested in industrial energy and the amount of energy used per square foot or unit of production. Carbon reporting can deter you from electrification or other fuels.
Third, the utility tariffs and grid rules. Time-of-use pricing, demand charges and power factor penalties all allow better energy management to be rewarded and energy sloppiness to be punished.
You have ever had a look at your bill and wondered which line item is caused by regulations and which is by pure energy use. That confusion can conceal a great deal of energy loss by itself.
Direct Impacts of Cost to Industrial Facilities
Direct costs are what your finance team comes in contact with first.
You may need to upgrade to high efficiency motors, drives or compressed air systems to comply with new industry standards. The payback looks good in a spreadsheet, then the project goes on and on and the energy cost reduction comes later.
I saw a dismantling overhaul of compressed air triggered by new rules. The project cut less costs on paper, but the plant underestimated leak repairs and controlled tuning. The final cost came out 20 per cent higher.
Operating costs shift too. New tariffs reward plants that maximize the use of their energy, and punish peaks. Reporting systems, meters and audits cost staff time.
If you do not make these connections, you wind up compliant, but still far from optimizing energy or improving energy efficiency in any real and meaningful way.
Hidden and Indirect Costs You May Be Missing
The hidden costs are often more stinging than the obvious costs.
At the cost of all the downtime every time you schedule a time for a shutdown for upgrades. I worked with a site where the plan was to do a two day line stop to do controls and lighting work. Integration problems made them four days long. The energy savings were real, but production lost a week’s worth of orders.
Quality may be lost during transitions. Small process changes to save energy can change temperature, speed or dwell time. If you fail to incorporate proper process review, you pay for this in scrap and rework.
Then there is training. New automation, monitoring and energy management systems ask operators to think not about throughput, but about how to manage energy. Some embrace it. Others see it as extra work.
If your team isn’t the energy use story, you’ll continue to chase energy waste instead of preventing it.
How Regulations Can Improve Your Bottom Line If You Plan Properly
I believe regulations can help you, if you consider them as design constraints.
When compliance with reliability and safety in a plant are bundled together, projects begin to reward with . For instance, an upgrade of lighting that complies with new codes can also result in better inspections and fewer accidents. That is operational efficiency and energy saving in one step.
Incentives matter too. Many utilities provide utility rebates for efficiency improvements in motors, HVAC, compressed air, and controls. I have seen projects in which incentives accounted for 20 to 40 percent of the cost, changing a five-year payback into two.
Regulatory reporting can be fuel to your energy management strategy. Instead of simply filling out numbers, you can monitor energy use by line or area and find areas for improvement for both compliance and cost.
Real-cost Of Energy Regulations A Practical Step To Be Taken
If you want to save energy cost without giving up sleep, start with organization.
There are a few different types of energy audits. A concentrated energy audit that examines electrical, thermal, steam, and compressed air provides you with a baseline. One of the clients found that one process line accounted for nearly 30 percent of site energy use. That insight altered their plan for capital.
Next, you need to map your regulations and tariffs. List what’s applicable, when deadlines come due, what systems that each rule touches. You will soon get a good idea of where you need to upgrade and where you can wait.
Then prioritize. Rank projects by payback, risk and impact on industrial operations. Bundle work so that you only have areas that you close down only once.
And talk to operators. Ask where they see the energy use out of control? They usually know.
The Role Of Industrial Electrical Services In Managing Compliance
Some of the hardest work is inside your electrical infrastructure. This is where industrial electrical services really matter.
You may need load studies, power quality studies or distribution upgrades before you add new drives or electrify a process. I have seen plants skip this and constantly fight nuisance trips for months.
Good partners can help you specify code compliant gear, integrate controls, and work with utilities on demand response. They are also in support of periodical testing, infrared scans and tuning, to allow you to optimize and reduce energy without compromising reliability.
One site that I worked with combined the electrical upgrades and submetering. They finally were able to see real-time information by area and reduce peak demand enough to actually noticeably lower their utility bill.
Building A Long Term Energy and Compliance Strategy
Short term fixes keep you out of trouble. A strategy is one way to actually optimize the usage of energy.
The ISO 50001 – Energy management systems framework from the International Organization for Standardization reveals how regulatory pressure can be transformed into formal energy performance indicators, baselines and continuous improvement cycles, to formalize energy management. Many industrial facilities use ISO 50001 to coordinate compliance work with long-term cost reduction and performance goals instead of considering each rule as a one-off project.
Set meaningful metrics: kWh per unit, peak demand, CO2 per unit, maybe energy performance per square foot. Use them to determine where there are inefficiencies and where it will be possible to use the least amount of energy without compromising throughput.
Plan capital to have a 5 to 10 year view of industrial energy rules For instance, if you know electrification is coming, you are not going to buy equipment that you are going to replace early.
Culture matters too. Simple dashboards, real-time monitoring, and small recognition programs keep energy management in front and center. When people see that there are progress they start pushing the ideas of efficiency measures by themselves.
Over time, you step away from the pursuit of compliance and truly work toward improving energy and finding ways to minimize energy consumption throughout the facility.
Frequently Asked Questions Related to Energy Regulations And Industrial Facilities
What is the most expensive part of regulations?
Often it is not only the upgrade itself, but the combination of downtime, integration work and long term maintenance on new systems.
How would you know if you are spending too much on compliance?
If you scramble around projects near deadlines, pay lots of penalties or have the same findings on audits, then your approach to energy management is likely to be reactive.
Are Energy Audits Required or Just Helpful?
Some programs require an audit while others do not. Either way, a good energy audit helps you to reduce energy, reduce costs and identify energy areas for improvement.
How often do you review the tariffs and rules?
At least on an annual basis, and anytime you make major equipment or process changes that involve energy consumption or total energy consumption.
When to bring in the outside experts?
Bring help before big expansions, major upgrades or when power quality issues and energy usage problems keep coming back.
Used well, regulations can guide you to better energy management, real cost savings, and more resilient industrial facilities.
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