How Manufacturing Companies Can Use Energy as an Advantage
When it comes to energy procurement and management, U.S. manufacturing and industrial facilities face a unique challenge. By nature, these companies consume a vast amount of energy. According to the Energy Information Administration, industrial facilities account for 60 percent of all energy consumed in the United States.
Business leaders must purchase this energy in a market where prices continually rise and fall. For instance, over the course of 2016, the highest and lowest monthly natural gas prices for industrial users differed by 49 percent. While the difference between the highest and lowest monthly electricity prices was less drastic — about 12 percent — these fluctuations can create cost uncertainty.
While energy procurement and management can be challenging, it also represents a significant opportunity for manufacturing leaders and energy managers to turn energy into a competitive advantage.
Achieving more with less
B.L. Downey Company is an innovative provider of custom coating for fabricated metal products. It uses a unique process to develop a cost-effective and environmentally friendly alternative to liquid paint for components used in a range of industries, including agriculture, automotive, manufacturing, medical, military and transportation.
B.L. Downey Company’s equipment was prone to wasting energy, which drove up monthly expenses. However, upgrading the equipment would incur significant costs. By working with Constellation, the company was able to make $1 million in upgrades with no upfront capital investment, including adding automated oven controls, which improved the quality, consistency and efficiency of its production.
Those upgrades allowed the company to reduce energy use and achieve its efficiency goals, as well as eliminate 4 million pounds of carbon emissions from its environmental footprint each year.
What you can do
Your manufacturing company can benefit from strategic energy management, too. The key is to hone in on the considerations of demand, market volatility and efficiency.
Demand: It is not enough to know that your company consumes “a lot” of energy. You need answers to several other important questions, including:
- Exactly how much energy do you use?
- Does demand fluctuate throughout the day, night or production process? When? By how much?
- Is one of your locations outperforming the others in terms of energy? Why?
Consider conducting a comprehensive energy analysis to thoroughly understand what’s impacting your company’s energy consumption. With that kind of in-depth information, you can develop an energy management plan precisely tailored to your company.
Procurement: There are a number of proven strategies to manage risk when buying energy in typically volatile markets. For example, you can layer procurement by regularly buying smaller portions over time rather than purchasing the full load all at once. This smooths out market highs and lows, and reduces the likelihood of purchasing when prices are the highest. This can help promote cost certainty and truer budgeting.
Make sure you know what strategy your company is using to purchase energy, and consider if there’s a smarter method you could be using to your advantage.
Efficiency: Are your systems as efficient as possible? Manufacturing facilities are responsible for spending $200 billion every year to power facilities and waste nearly 30 percent of that energy. By conducting an energy audit, you may be able to identify potential upgrades that could increase your energy efficiency and reduce consumption.
Learn more about B.L. Downey Company’s success with its energy management strategy by downloading the full case study . To learn more about how your company can use energy as a competitive advantage, contact us.