Easing the squeeze on profitability

03 June 2014

Eric Petela, business consulting director at AspenTech, discusses the benefits of having effective energy management strategy and explains more about how this can be achieved.

Reducing energy consumption and associated greenhouse gas emission is now a recognised business requirement for many process manufacturers and can deliver tangible business benefits. 

Lowering energy consumption is a key factor for commercial profitability and environmental compliance. However, even through it is a significant objective with clear benefits, some manufacturers are still not implementing good energy management procedures. For example, the least efficient refinery may consume up to twice as much energy as the most efficient refinery to produce the same products from the same feedstock. This discrepancy raises natural questions – ‘why does this happen, what factors differentiate the best from the worst and how can refiners close the gap?’

Effective energy management is not a one-off project, nor is it confined to one area of the business. Energy management needs to be an integral part of managing and operating a plant to achieve optimum levels of energy while meeting production goals. However, many refineries and chemicals companies fail to recognise that energy management needs to be an on-going commercial priority. The ability to visualise and analyse actual plant performance in real-time is essential to understand energy usage and emissions and take necessary actions. Energy costs are a variable entity that can eat away profit margins and even affect plant performance. 

By adopting a sustained approach to energy efficiency, supported by integrated processes and managed by leading-edge process optimisation software, companies have the ability to control and significantly reduce energy expenditures. Efficient savings made across the enterprise will positively impact plant profitability and, when margins are squeezed, this capability could mean the difference between commercial success and commercial failure. 

Where are you?
In the process industries, energy is typically the highest operating cost, second only to raw materials. Most chemical or refining processes experience significant variability in energy efficiency as a result of changes in process conditions, different operating strategies and poor control or visibility over wasteful practices. 

When pursuing a comprehensive energy management programme, a basic starting point is to ask – ‘are you doing all you can to drive down energy costs?’ Many companies suffer from a lack of focus with regards to controlling energy usage because other priorities often take precedence. As a parallel example to illustrate this point, we observe what the process industries have accomplished in Health and Safety over many years. Health and Safety has become the most important discipline in the process industries to safeguard both personnel and the plant. Standards have risen dramatically over the past few decades and this is now seen as a vital practice that is embedded within the overall running of the operation. Therefore, what actions can process manufacturers take to elevate energy management to the same priority level and bring an energy management focus to everything that is done?

Plant energy management itself can be divided into two key areas: first, the reduction of energy demand and consumption in production processes; second, the reduction of the supply costs of the energy used to meet the energy demand. An effective energy management plan must address both sides of this energy equation simultaneously and from the initial planning of the operations to the minute-by-minute safe operation of the plant. Energy management must be performed by all key stakeholders and these should, in turn, be given the right tools and procedures for the job in hand. 

Effective energy management
In much the same way that all personnel need to be involved in energy management, companies also need to use every available means to improve energy efficiency and reduce costs. Software technology can make a big contribution in helping companies to design, plan and operate their production facilities in the most energy-efficient way.  

At the first step in the life cycle of any production facility, software systems can help the designer to optimise the plant’s design from an energy efficiency perspective. Many case studies have demonstrated that energy-efficient processes cost no more to build than inefficient ones because an energy-efficient process will require less hot utility (steam, fuel, etc.) and also less cold utility (cooling water, refrigerants or air cooling). As a result, the utility equipment designed to service the production units, such as process heaters, heat exchangers and steam boilers will be smaller and will cost less build and operate. In this respect, the on-going reduced operating cost is a bonus. Energy-efficient companies recognise this and now build energy reviews into each step of their design process.

Once the plant has been built, planning systems can help define both the optimal energy use and also schedule the utility system’s operation to closely match the requirements of the production units, reducing costly and unnecessary standby operations and ensuring the lowest cost purchase of external utilities. During plant operations, real-time software systems can monitor the current plant operation against target, highlighting any deviation and provide timely actionable advice on the optimal changes that could be made and the value of making these changes on user-friendly interfaces, such as DCS screens or web browser. 

For energy-intensive process manufacturing sites, such as an oil refinery, petrochemical or chemical plant, investment in software should not be seen as a cost barrier. In fact, companies of all sizes have experienced enormous energy cost reductions by using energy optimisation software solutions. According to a recent Gartner energy management report, one chemical company stated, "five years ago, it was difficult to make the case with senior executives, even when improvements with good internal rates of return were identified. Today, senior leadership is on board and clearly understands that it needs to fund good energy-efficiency initiatives when they come along."

Many companies have successfully implemented process optimisation software, such as AspenTech’s aspenONE, to achieve best practices for optimising their engineering, manufacturing and supply chain operations. This software is focused on process engineering and design optimisation. Various process modelling analysis and design tools are integrated and accessible through process simulators. Forward-planning tools can help evaluate the trade-offs between production and energy costs, enabling a true optimal operation to be defined. The solution can provide the ability to plan the optimal utilities system’s set up and advise operations personnel on actions they can take on a real-time basis to improve energy performance and the subsequent value of those actions. Advanced Process Control (APC) software is intelligent technology that delivers sustainable, measurable benefits and allows companies to operate their facilities better. APC can increase throughput and improves product quality and energy efficiency, thereby delivering improved financial performance. By applying process optimisation solutions to the lifecycle of production assets, clients can typically save 10 - 30% energy cost while reducing 10 - 20% capital cost investment. 

Prioritising energy management 
Energy efficiency is fundamental to achieving a sustainable business and reducing energy cost should be a key performance indicator for all process manufacturers. As global energy demand continues to increase and environmental regulation is tightening, initiatives to optimise energy efficiency are essential. The difference between those companies who are energy efficient and those who are less so is the commitment to incorporate energy efficiency into everything they do. Consequently, this approach will help differentiate the organisation with best practice and close the gap on the competition.

An effective energy management plan must be tackled holistically and integrated across all aspects of the business. To be truly energy efficient, a clear action plan elevates the importance of energy management, defines the targets and timelines, tasks the workforce to execute the plan efficiently and maintains controls for the operation.

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