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Interval meters key to energy savings
Older technology may not yield best results
By Dan Pastoric
In the recent 2004-2005 Management Issues Survey conducted by Canadian Manufacturers and Exporters, the single biggest strategic challenge for the next three to five years was increasing business costs. Also, executives stated that energy costs would be the greatest contributor to the deterioration of overall business conditions.
In Canada, natural gas has been deregulated since the 1980s, allowing corporate buyers to shop around for the commodity of natural gas and have it delivered through their traditional distribution companies. Corporate buyers are very accustomed to working with agents and suppliers for the purchase of their annual natural gas needs.
However, natural gas isn’t the only form of energy that has been deregulated. Various provinces have now opened their electricity markets to competition: Alberta in January, 2001, Ontario in May, 2002 and recently, New Brunswick for its very large users. Statistics now show that in North America, electricity is the most volatile commodity ever traded.
In the manufacturing sector, as in others, it’s important to understand what can be done to reduce energy costs. Energy management, in general terms, is the management of all aspects of energy, including price and usage.
Costs=usage x price
Quality improvement guru Edward Deming once said, “if you can’t measure it, you can’t improve it.” Many businesses have worked on understanding how and when they use energy as well as how prices and charges are applied to their usage. Electricity prices are established every hour of the day and will increase or decrease due to demand and supply conditions (see Figure 1). Historically, electricity prices increase during the business day [7am to 11pm] and drop off during the late evening and early morning hours [11pm to 7am].
A business’s energy bill is calculated on the summation of each hour’s usage multiplied by that hour’s energy price. It’s important to understand how a business uses energy each hour of the day.
Many businesses currently don’t have the appropriate metering to evaluate the hour-by-hour interval changes in usage. These hourly interval meters have also been dubbed “smart meters” as they provide greater intelligence.
Hourly rates
Cheaper, older meters provide only a single monthly energy usage total, rather than individual hourly details. The total monthly kilowatt-hours usage information is used by the utility to create a proxy profile for each business. This profile is created by weighting the monthly data by the local utility’s own hourly usage pattern, which is called a utility’s net system load shape (NSLS). This shape may not reflect how a business uses energy.
If a manufacturer reduces energy usage, either through implementing more efficient equipment or turning off redundant equipment, it may not see the full benefit of the action. In most cases, as businesses have the older technology to meter their usage, the meter reads the volume for the month but does not indicate the time period it occurred. This means the true impact of the reductions is diluted.
Interval metering is a key step of managing energy costs. These meters directly tie the action to reduce energy to the period in which it occurred. In Figure 1, notice a reduction in hour 19 (priced at 15.5 c/kWh) would have cut costs more than a reduction spread over the full 24 hours (priced at 5.77c/kWh).
To control costs, install an interval meter to obtain hourly profiles and determine what processes and loads are running at different times of the day. Place “temporary” metering equipment on your utility main service.
Usage management takes many forms: load reduction, load shifting to off-peak hours and peak clipping load in peak hours. To reduce usage, you must know what equipment contributes to your usage profile and understand the financial impacts.
Another major step in controlling electricity costs is an energy plan or strategy, which combines the understanding of the business’s usage, market prices and industry experience to counter uncertainty of electricity costs. This action plan may be “price-focused,” such as a fixed price contract for a set term to eliminate pricing uncertainty and increase the business’s ability to budget. Or it may be “usage-focused,” geared to reduce non-essential equipment use in times of high electricity prices.
The key to putting a successful energy strategy in place is knowing what you use, when you use it. b2b
Dan Pastoric is vice-president of energy procurement consulting firm, ECNG Inc., in Oakville, Ont. He may be reached at (905) 825-8877; e-mail: dpastoric@ecng.com
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