Penny wise and pound foolish

If you are not already worrying, you should be. The power generation gap yawns while prices climb faster than Bradley Wiggins over the Pyrénées. Electricity supply problems could start as early as 2015 when nuclear stations start going off line. Coal-fired Didcot and oil-fired Fawley power stations will close next year, two years ahead of the original schedule. Until recently, the future of nuclear generation was looking equally grim with Germany's E.On and RWE both exiting the UK market. Now Hitachi has stepped in to build three nuclear plants in their place. But even the most optimistic estimates rule out an operational plant before the mid-2020s. Meanwhile, other potential generators are teetering on the brink, made cautious by the huge capital costs and uncertainty about how much they will be allowed to charge to offset them. That situation is now so acute that the coalition, which once tried to hold the whole nuclear technology at arms' length, is now rumoured to be considering underwriting the costs of the generation programme. And what about renewable sources? Well, even leaving aside obvious issues like virulent planning objections, the sky-high cost of subsidies and the boxing matches between government departments, there's no apparent magic wand. Renewable energy accounts for 6.7% of consumption today and – even with a following wind – will meet at most 30% of our energy needs, and more likely around 15% by 2020. In the latest example of interdepartmental trench warfare, energy secretary Ed Davey has driven approval through for a giant energy-from-waste plant in Cheshire despite massive protests and the loud objections of its MP – who just happens to be one George Osborne, chancellor. It prompts a small, wry smile… unless you happen to live in Cheshire. It certainly doesn't engender belief in a strong government plan. Even the new Green Investment Bank's financial support for biofuels looks ill-thought out when harvests have been so bad worldwide that food costs are rocketing and starvation looms in less blessed zones. On the surface, the entire energy picture is enough to make a pig's breakfast look like a Michelin-starred menu. For industry, however, there is one bright spot. We may all be waiting for the forthcoming energy bill to understand exactly what the PM meant about forcing energy companies to give customers the lowest tariff. But there is a concrete – albeit belated – commitment to help energy-intensive industries before they give up and quit these shores for good. The government estimates that energy and climate change policies could add an average 28% to the electricity costs of large users by 2020. But now business secretary Vince Cable has launched a consultation for all interested parties – not just the large users – prior to announcing a £250 million compensation scheme in the spring. Possibly a drop in the ocean, but it's still worth making your views known via the BIS website: www.bis.gov.uk. It all adds up to one undeniable fact; there are no short-term answers to energy costs. They are hurting now and will hurt even more in the future. What's more, if UK manufacturers want to compete against economies without the same emphasis on curbing CO2 emissions – eg, China, US, India, Russia – they are going to have to use every trick in the book to cut their energy consumption. With unlimited capital investment, it's comparatively easy to cut energy use but – without a clear direction – even easier to spend a thousand pounds to save one. So how do you spot the changes that will really yield savings? Some are comparatively simple. Take Brandauer, a specialist precision component manufacturer, based in Birmingham. At the start of 2011, it undertook an energy survey as part of its commitment to maintaining its accreditation to ISO 14001, the environmental management standard. It flagged up three key areas but, with electricity use accounting for 70% of its total carbon emissions, this was the natural starting point. It cost £36,000 to replace fluorescent lighting with LEDs. "We initially thought we could reduce our emissions by 10%, but 12 months on, we've actually doubled this target," explains Rowan Crozier, sales and marketing director. "This equates to 155 tonnes of CO2 and financial savings across the business have already reached nearly £30,000, with the prospect of this increasing year on year." Feedback from the workforce suggests this type of light also makes for better working conditions: "It has been a real win-win investment for us," he concludes. Other initiatives take a lot more analysis and effort. Interface is the world's largest manufacturer of carpet tiles. Many of its processes are heat-based and therefore pretty energy intensive, yet it is on track to achieve a zero environmental footprint by 2020. "We are proud that we can manufacture in Europe and remain competitive – which we are – but it means you have to be very efficient," says Ton van Keken, senior VP of operations. Interface has made several eye-catching innovations in its European factories. Solar panels installed on the roof of its factory in Scherpenzeel, Netherlands, generate 7,000kWh per year. Sun-trackers use motorised mirrors to direct natural light into the building throughout the day by moving with the sun. This reduces the need for electric lighting by 75% throughout the year. At its site in Craigavon, Northern Ireland, energy-efficient Varimatic lighting reduces energy use by up to 26% and its Eco-Coolers use 15% less electricity than traditional cooling systems. A bespoke building management system – designed and built in-house – controls lighting, heating and compressors to ensure that energy is not wasted, even controlling energy used by vending machines over the weekends. So are these capital projects the prime enablers for Interface's tight control of its energy costs? Not according to van Keken: "Energy efficiency comes from quite a few different angles and we do not just look at what happens within the walls of our plants. We look at the total value chain to determine the energy use and environmental impact of our products." He points out that 92% of the CO2 emissions in the total lifecycle take place outside the plant. So Interface puts a lot of effort into energy reductions in the supply chain; in choosing the right materials; in projects with suppliers; and, within the plant, developing products that incorporate recycled and bio materials. Inside the factories, however, he believes the most important efficiencies come through a business-wide improvement ethos that manifests itself in both tiny, incremental steps and significant projects. "I believe in using very visible techniques to make people aware that even small things add up to major progress." Compressors are a clear example: "A compressed air leak in a line of 1 cm diameter equates to an annual energy cost of €36,000. If you give people these facts and then organise a project to address them, it really mobilises them." He gives structure to the energy reduction programmes by including them in the overall lean manufacturing targets. "Each year we define a baseline for the reduction of non-renewable energy and we measure the improvement which leads to a shopfloor bonus paid quarterly. It keeps the focus and involvement." Some decisions are not based on cost alone. Interface's European plants use 100% renewable energy, some of which has to be purchased from the grid. "Renewables come at a premium," admits van Keken. "Obviously sustainability also has to be economically viable but our investment makes a statement about our beliefs. And yes, there is a marketing payback." The return on investment (ROI) for capital projects is assessed on a case-by-case basis. "Measuring and metering each process step to find out exactly where we use the energy is vital," he says. "Investing in LED lighting gave a clear payback of four years, so we did it." Interface has commissioned a new pre-coat line which, with a big oven figuring prominently in the process, is a major energy consumer. "By using innovative new technology in heat generation, humidity and airflow control, we gain 40% energy efficiency in the process. That's a big step." Ranking Interface's innovations strictly in terms of energy savings, he says the new oven will make the greatest difference, closely followed by moving to coke generation techniques for its steam boilers. "The solar panels and the sun trackers are nice-to-haves. Although their contribution to energy saving is limited, we still go through the process of measuring, assessing and sorting. But they still have a value both in themselves and also as something that lets us be consistent in our mission. But it's important to me that we keep on doing it all – the top-down engineering briefings, step innovations like the new pre-coat line, recycling installations that save energy and material, and awareness programmes for our people." Interface has a mandatory training programme for all employees: "It's all about why sustainability is important, what's our vision and what can each of you can do in your own work. It makes people aware and offers them a structure for improvement, where they can come up with ideas and where they can formulate projects that are then registered and tracked." After nearly 20 years' sustained effort, Interface's culture of environmental responsibility is now virtually unshakeable. "We have a reputation for having the processes firmly in place so people interested in achieving something in that area want to join us," says van Keken. One of the most interesting aspects of Interface's energy focus is its emphasis on balancing the big projects with the small improvements. I vividly recall touring a US factory specifically to see a hideously expensive computerised building control system. The whole visit took place against the gentle background hissing of compressor line leaks. Definitely penny wise and pound foolish but it's not an isolated experience; it happens all round industry. So take a look at a few simple pointers (see box, left) from the experts for saving energy. There's no rocket science here, just a few small considerations that stop manufacturers aiming for the unreachable stars while ignoring the pound notes under their very feet. Keep it simple "In many companies in excess of 30% of air generated is wasted through leaks," says Andy Jones, general manager of compressor manufacturer Mattei. A simple leak detection survey should always be undertaken before installing a new compressor. He points out that in some installations, up to 85% of the heat generated by compressors can be recovered and used for water or space heating. Steve Brambley of Gambica, the trade association for instrumentation, control, automation and laboratory technology, says:?"Installing a variable speed drive (VSD) on industrial motors remains one of the best and most straightforward ways of reducing energy usage. It is worth remembering that 90% of the lifetime cost of an electric motor comes from its energy consumption. If just half of Britain's electric motors were reduced in speed by 10%, it would have the net effect of mitigating the carbon emissions of 9.8 million executive saloon cars every year." Gambica has a calculator to quantify energy savings from VSDs: download from www.gambica.org.uk.