By Sinead Ross, director of marketing, Titan Energy
In the United States, industrial buildings contribute to one-third of total energy consumption, yet a majority lack an implemented energy management strategy. The primary source of energy consumption in industrial buildings is production-related, with costs determined by regional and local utility companies passing on rising power generation costs to industrial ratepayers.
The growing industrial energy use strains an already faltering grid system, and utilities and building operators need to work together to find savings in energy demand and costs. Successful building operators navigate market shifts by focusing on long-term energy cost control and leveraging available utility programs to reduce on-site energy needs.
Implementing a well-crafted energy management strategy results in lowered costs and operational efficiencies for industrial building operators. This article delves into specific actions that can be taken to establish an energy management strategy, featuring client stories.
Procurement of Electricity and Natural Gas
When devising an energy procurement strategy, industrial facilities often find tracking energy commodities opportunities increasingly challenging. Over the past three years, natural gas and electricity prices have been extremely volatile, with prices hitting record lows and highs with no sign of normalizing. This type of energy market is prompting industrial managers to seek ways to mitigate risks. In deregulated commodity markets, manufacturers can access products to lock in natural gas and electricity costs for the long term, ensuring immediate savings and long-term budgetary certainty.
Generate Energy On-Site
The 2022 Inflation Reduction Act (IRA) extended the Investment Tax Credit (ITC) for on-site generation projects enabling industrial facilities to install solar, battery storage, co-generation and fuel cell plants. These projects can be owned by the facility or third-party owned with lowered fixed costs for 20-30 years and no upfront cost.
Utility Incentives
Local and regional utilities offer rebates and incentives promoting the purchase of energy-efficient appliances, equipment and fixtures. These incentives can cover up to 100% of project costs and may be financed at a fixed 0% rate for eligible ratepayers. The goal of these programs is to lower demand on the grid while improvements are made for the future.
Responding to Grid Events
Utilities invite large power users to participate in grid demand programs in return for revenue. Industrial facilities can take advantage of lower capacity demand during peak hours in the summer, shifting work hours to accommodate peak demand without affecting productivity. Incorporating on-site emergency backup, such as a battery storage unit, makes manufacturers integral to local grid operations, enhancing grid resiliency by reducing the likelihood of brownouts and blackouts.
Information Control
Administrators can effectively manage and visualize energy usage and spending by implementing an energy data platform integrated with their utility invoicing system. Low-cost, automated subscription services collect utility bills across electricity, natural gas, water and recycling, conducting audits on invoices and benchmarking energy use, sustainability and emissions data. This capability allows for data-driven decisions regarding production by sorting and filtering based on location, business unit and cost center.
Manufacturer Reduces Cost Through Energy Procurement Strategy
Titan Energy has worked with companies facing energy challenges.
An international manufacturer needed to pay closer attention to each of its production sites to meet cost-saving targets, mitigate risk and help enhance a centralized energy procurement approach. Previously, the manufacturer’s energy accounts were contracted on a one-size-fits-all energy procurement approach, but a comprehensive utility bill audit helped establish a solid baseline understanding of the benefits and risks of each energy market and led to an expansion of its network of top energy suppliers across diverse deregulated energy markets.
A request for proposal was issued on the customer’s behalf, negotiating the most competitive rates, simplifying the legal review process and onboarding the client onto a data management platform to track costs and savings. A fixed-rate product was locked in for several years, offering both immediate savings and protection against any future market pricing shifts.
This paid off for its Texas location when February 2021’s polar vortex brought record-cold temperatures to a significant part of the Midwest and Texas. The additional heating demand and transportation issues created scarcity in the natural gas market, skyrocketing natural gas and electricity prices. During this polar vortex, the manufacturer was protected from any market exposure because of the fixed-rate product. Instead of paying an escalating $12.50/kWh (a >300% increase), the client kept paying $0.04/kWh and avoided a $5,000,000 February bill.
Sinead Ross is the director of marketing at Titan Energy. In operation since 2001, Titan Energy is an independent energy management consulting firm that creates comprehensive energy management strategies backed by data to control and reduce energy costs. For more information, call 860.967.1611, email
sross@titanenergyne.com or visit www.titanenergyne.com.
Reprinted with permission from Plastics Decorating (www.plasticsdecorating.com).
