Industrial Utility Efficiency

Seven Sustainability Projects: Project Implementation

This article reviews the 7th of the key elements for Low Cost – High Value energy savings. Each of the previous articles reviewed types of projects which are applicable at many facilities. The projects ranged from simple procedural actions such as turning off equipment when it is not making a product to more complex, like adding a water to air heat exchanger and extracting heat from the coolant loops to provide warmed make-up air.

Seven Key Sustainability Projects

1. Metering 5. Lighting
2. Demand Control 6. Heat Recovery
3. HVAC Optimization 7. Project Implementation
4. Compressed Air


Energy Projects Require Resources Too

Something that is important to remember is that even the simple projects require resources. Resources such as: time, labor, and opportunity. More complex projects require more: engineering, time, labor, opportunity, and capital funds. I often find that energy cost reduction projects are not treated in the same manner as for instance a project to install a new assembly line. When a plant is going to install a new line, formal project management steps often including a detailed tracking program like MS Project. When it comes to energy projects they often seem to be un-organized and the project management skills seem to be left out.

Here are the general steps that I use to analyze a plant with the goal to develop an Energy Cost Reduction Plan that will meet my goal of 10% reduction with projects and actions averaging less than a 1 year payback.

  1. Determine the annual energy costs for electricity, gas, water, and sewer and use 10% of this cost for to set the target. (Example: annual costs total \$450,000 x 10% = \$45,000 savings target)
  2. Perform assessments and collect measurements in the 6 key areas discussed in previous articles: Metrics, HVAC, Lighting, Compressed Air, Demand Control, and Heat Recovery.
  3. From the measured data collected, perform analysis to determine the potential savings for each of the key areas.
  4. Since the goal is to have a payback of less than 1 year, use the savings number to set the maximum cost for the project. (for our example the total implementation costs are limited to \$45,000)
  5. Use this maximum project cost as a “boundary” for developing the action or implementation plan. If you require outside support such as quotes from a supplier, give them this boundary and explain that their quotation must be within the boundary to be accepted. The implementation plan should be as rigorous as a plan for a new assembly line. (remember that all projects require some form of resources, be sure to include the resources required for each project, even the ones that do not require an appropriation request)

When I start a project with a new company one of the first steps is to review the on-going energy conservation projects. What I usually find is that even though there is a corporate goal to reduce energy costs, there is not a sufficient basket-full of qualified projects to meet that goal. My job is to make sure there is a basket-full of projects that when completed will exceed the target goal.

Some important items that should be in all proposed projects include:

  1. A brief description of the project including the current situation, the proposed action, and the expected results.
  2. A clear measurement to show the base line and how you will measure to verify the savings.
  3. Savings calculations including assumptions and unit costs of energy.
  4. Implementation costs including quotes and resources: time, labor, engineering, and opportunity.
  5. A timeline with measurable milestones. Organize the project so the project can be partially implemented for validation and then if the validation met the goals continue the project.
  "Treat energy cost reduction projects with the same level of importance as a construction project or new assembly line. Use the normal project management protocols. Take advantage of government and utility rebates. Make sure your projects include measurement and verification as part of the plan, along with a validation "small step" before diving into a large project."    

Seek Efficiency Incentive Funding

Energy Cost Reduction Projects cost money. Funds are often available to promote projects either for reduction of energy or emissions. Part of the research and planning for a project needs to include checking for available funds. These usually come in the form of a Government Tax Rebate or Utility Funds.

A very good place to start is at the Database of State Incentives for Renewables & Efficiency. DSIRE

DSIRE is a comprehensive source of information on state, local, utility, and federal incentives and policies that promote renewable energy and energy efficiency. Funds are available for energy audits, compressed air projects, lighting, motor upgrades, and HVAC improvements.

As an example: the Wisconsin Focus on Energy Program: a plant that gets an outside compressed air audit can apply for an incentive for 50% of the audit cost up to \$7500. Replacing a primary air compressor with a new VSD air compressor will receive \$25,000 per project. For this program a site would apply for incentive within 30 days of installing the VSD compressor and removing the old compressor. In some cases amounts greater than \$25,000 are awarded, but written approval must be given prior to the installation. Funds of up to \$500,000 are available per Corporate Tax ID.

EPACT 2005 incentives are tax deductions that allow a company to accelerate the depreciation of the capital expense in the current year, which is an advantage for profitable companies paying Federal Tax. The deduction is up to \$0.60/sq ft for projects in interior lighting, HVAC, and building envelope improvements up to a total of \$1.80/sq ft per facility. This program has been extended and is available through 2013 as a part of the American Reinvestment and Recovery Act of 2009. In most cases a properly licensed contractor will be able to certify that a site meets all of the requirements for a deduction.

Note: Your project may not exactly fit under one of the pre-assigned categories but there is quite a bit of flexibility in the utility programs and working together with the utility can get your project approved. In Michigan a plant recently applied for funding of a heat recovery project using a water to air heat exchanger. The utility company approved the project paying 50% because it helped reduce natural gas usage.

Demand Response is another method to receive funding.

Demand Response is a method of managing consumption of electricity when there are conditions of high demand or high prices. Utilities agree to pay a price per kWh to a consumer willing to curtail a certain amount of their load if contacted. While demand response is not an energy reduction initiative, participation can reduce the amount of money spent on electricity. Demand Response is managed by third party providers. These companies install the metering necessary to verify the load level during an event, notify all participants prior to the event, and manage the payments. The approved demand response providers depend upon the specific electric power market for a region.

The rules for participating in demand response vary by region as well. For example, within PJM Interconnect the program runs from June through September. There can be no more than 10 events called with no single event lasting more that 6 hours. In 2010 PJM plans to pay \$174.29/MW per day, which is \$63,615/year payment for a curtailment of 1000kW. This will be paid even if no events are called. In contrast, the TVA program offers 40 hour and 80 hour plans for demand response. In this case there will definitely be curtailment calls. Depending on the specific program within the TVA plan a participant can receive from \$15,000 to \$40,000 for 1MW load. The demand response provider will keep a portion of the payment as agreed in the contract for services, but ranges from 25-40%. If an event is called and a participant is not able to curtail load, for whatever reason, there are penalties. However, typically the demand response provider will cover these penalties. Important points to cover during contract negotiation are the percentage of the payment the provider will keep, how the baseline will be set for measuring the load shedding, how penalties will be handled, and how the metering will interface with your site network. Map of Regions


Treat energy cost reduction projects with the same level of importance as a construction project or new assembly line. Use the normal project management protocols. Take advantage of government and utility rebates. Make sure your projects have measurement and verification as part of the plan along with a validation small step before diving into a large project.


Thomas Mort is a Senior Auditor with Thomas Mort Consulting.


To read the next six Sustainability Projects from this series please make your selection below:


Heat Recovery

HVAC Optimization

Lighting Optimization

Air Compressors

Demand Control