Don't Leave Energy Project ROIs on a Shelf

For every 10 industrial energy assessments, maybe one company actually does a recommended project and carries it through until its results improve the bottom line. "The rest never get anywhere," says Cahal Devlin, ABB's energy efficiency manager for North America.

Devlin's presentation, "Industrial Energy Efficiency Assessments and Accelerated Implementation," at ABB Automation & Power World 2012 this week in Houston began by pointing out that we all know U.S. and global energy demand is rising. U.S. industries are generally more energy-intensive—use more energy per unit of production—than their European and increasingly, Asian counterparts.

We can see the potential for improving competitiveness by controlling energy spend and especially by reducing energy intensity. A recent ABB research report, "Trends in Global Energy Efficiency 2011: An Analysis of Industry and Utilities," says more than 70% of managers recognize the importance of efficiency. But asked whether or not they've invested in it, only 40% of global companies, 34% in developing regions, and just 21% of U.S. companies say "yes."

"Demand and impact are clear, so why so little action?" Devlin asks. He identifies four major barriers:

• Lack of knowledge and awareness of plant and business operators. Energy lacks the visibility of availability, quality or safety. It's difficult to quantify the potential benefits and costs.
• Lack of trust in outside consultants who may lack specialized knowledge of their processes.
• Problems with measurement and verification of results.
• Financing energy projects whose returns are typically 18 to 24 months.

ABB is rolling out a new energy efficiency assessment approach called "energy value acceleration," where Devlin's group in the United States and its counterparts around the world are helping industry "get past the sticking point that projects don't pay until after implementation."

When ABB performs an assessment, along with a list of low- or no-cost improvements ("quick wins") that can be made immediately, it identifies the five or six potential projects that offer the highest certainty of rapid payback. The list includes financing options, as well as performance guarantees. "Typically, the quick wins fund the projects," Devlin says, but ABB will offer a financing plan.

The program includes a behavior and management assessment of the company's policy, strategy, KPIs, measurement/monitoring/reporting systems, etc. to help the company maintain savings and improve for the long term.

ABB has implemented the program at companies including U.S. rubber and monomer plants, a steel mill in the United Kingdom, a paper mill in Finland, and chemical and aluminum plants. "Most facilities realize 15% to 25% savings on site energy spend," Devlin says. "Some less, some more."

Energy efficiency assessments used to pay off for only one in 10 companies, Devlin says. Now, for the other nine companies, "Instead of leaving a dusty report on a shelf, we accelerate implementation."