Challenge The

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Let’s say a facility has yet to adopt energy-efficient technologies, behaviors and procedures. This means that it habitually buys more energy than is actually needed, because waste is built into its operations. The budget account for energy, then, is inflated to accommodate these inefficiencies. For example, energy losses add up to about 40% of the total energy delivered to U.S. manufacturing facilities as a whole. Stated differently, the typical manufacturing facility must inflate its energy procurement budget by a factor approaching two-thirds to account for energy that is both used and wasted.

A possible solution
Break down annual energy expenses into two separate line items. One represents the value of energy that actually will be applied to perform useful work. The second line item represents energy that will be wasted. How do you allocate energy expenditures into these categories? The answer is to conduct an energy audit that thoroughly evaluates energy inputs, uses, losses and potential consumption improvements. While industry averages are generally helpful, the most reliable indication of any single facility’s energy flow depends on a proper energy audit—the more thorough the better. Without distinguishing between energy applied and energy wasted, department directors often conclude that they “don’t have the money for energy improvements.”

The account for energy waste (a budget artifact directly related to past performance) is, in reality, an account from which energy improvements should be budgeted. The energy waste line item also brings attention and urgency to the issue at each and every monthly budget review.

Managers can use the “energy waste” account to either MAKE energy savings or BUY energy that ends up being wasted. Dollars from the “energy waste” account are devoted to energy improvement projects when the cost to save a unit of energy is less than its purchase price per unit. This is one line item that actually forces managers to look forward, and not in the rear-view mirror, when planning energy consumption.

Updated weekly, Christopher Russell’s energy management blog can be found at http://energypathfinder. blogspot.com