Safety in numbers

It takes two, as Marvin Gaye crooned in his Motown classic on the astounding benefits of pairing up. And the powers of partnership could be as influential in scoring the best energy deal as fulfilling life's dreams, according to manufacturers at WM's Energy Report roundtable debate. Collective energy buying is on the rise as businesses try to counter double-digit price hikes revealed in WM's research. "I work on a big industrial estate where we pull in a huge number of kilowatts per hour," said Mick Straw, operations manager at Hi Tech Mouldings. "We already share training resources and now we're considering collaborating on energy to get a better deal." The team approach could transform Hi Tech Mouldings' buying clout from a standalone SME with a £500,000 spend to a co-op worth several million. It doesn't take an economics degree to see the resulting discounts. "I've seen examples of co-operative buying. In theory it could happen," replied Mike Capper, product development manager at EDF Energy, though he added a cautionary note. "It's dependent on the nuts and bolts of a contract. Contractually, who are you up against and who are you contracting to? Those things need to be considered." Unfortunately, pooled energy buying isn't as simple as chipping in and waiting for the cashback. Factories might share the same postcode but individual energy demands can be worlds apart. That disparity can derail the group discount, explained Steve Mortimer, risk analyst for EDF. "If you're putting together an arrangement with your neighbours, unless your demand shape is absolutely complementary with all the others, it's going to be complicated," he says. In layman's terms, a business with steady energy demands could end up paying for a neighbouring site where use spikes at peak hours. "If you're going out to market on a collaborative basis then it's likely somebody will be cross-subsidising somebody else," added Mortimer. "So long as you can demonstrate you're all getting value from merging your shapes, then everybody is a winner. It's just that some will win more than others." There's no 'I' in team, came the response from manufacturing representatives. Co-ops could consider staggering their energy use to ensure the optimal energy profile for the group, delegates said. EDF again sounded a cautionary note. Capper pointed out: "The challenge you'll have – and this is one of the reasons why it's not taken off – is you will have to commit to using x units and so will your colleagues over a given number of years." Not a problem for team Hi Tech, according to Straw. "We've got data showing our use every month, every day, every hour. I know my usage and my five neighbours want to do it." Armed with the will and the way, a co-op like Hi Tech's has a great vantage point for brokering a deal. Others may not find the model so easy. The odds are against finding a sizeable number of local firms who power up and power down to your schedule. And that those neighbours are willing to share commercial data. Those drawbacks mean buying co-ops may struggle to hit the critical mass that could open up really big discounts. A far better bet, according to some quarters, could be for manufacturers to apply the co-op approach to harnessing energy efficiency. "You can see the benefits in some sectors where energy's not necessarily seen as a competitive advantage," said Capper. "A lot of organisations will have energy and facilities managers talking to each other and learning from one another." Vauxhall, UK subsidiary of global car giant GM, is one advocate of shared expertise, revealed the company's John Hickson. "That's exactly what we do,"said the firm's facilities and site utilities manager. "In the North West we'll meet with colleagues at JLR and Bentley to discuss what technology is out there that we've had real-world success with... We're all trying to comply with the same legislation, we're all trying to address the same challenges." Item one on the agenda at any group manufacturing get together on energy is likely to be the perennial problem of shopfloor support. But the momentum for winning over employees has never been greater, according to Hickson. "We think it's a golden age for inspiring the shopfloor because everybody is becoming more aware of rising domestic bills. There are things that can be done in terms of shutdown of processes and having that awareness. It's linked to our business plan deployment. A key metric is megawatt per hour per vehicle; it's bred into everybody." Facts and figures on energy costs are a catalyst for convincing the shopfloor, agreed Simon Shubrook, lead engineer at Croda Consumer Care. "I host a utilities process deployment group and I broke down the factory running costs for gas, water and electricity per hour. The figure ran into several hundreds of pounds per hour and I said to my group: 'If your home bills were this high, you'd want to do something about it.' It's helped us get enormous buy-in." That's fine at large corporates where energy stats are familiar furnishings on staff noticeboards. But finding those figures can be more of a struggle for SMEs. "Who is the first port of call for energy saving?" said Bob Tunks, owner at BK Tooling. "It's okay for these big companies who can call on vast teams, but what about me?" Manufacturing support bodies like MAS are a good start point, advised Hi Tech's Straw. The company loaned comprehensive metering kit from the support body for a fee in the thousands, he explained. "We had 91 sensors on all our machines. Every three seconds they were downloading data and it gave us a fantastic benchmark." And some fantastic savings, revealed Straw. "We found one machine that was costing us £5,000 in electricity because it was set up incorrectly." Knowledge is power, as the adage goes, and with energy efficiency that power can translate pretty quickly to pound savings. "It's very difficult to justify £60,000 to £70,000 on monitoring equipment," reflected Gary Wearing at Oxford Instruments. "But we found we were using 25% of energy between 11pm and 3am because a compressor kicked in at night. Knowing where energy is used points you in the right direction." Energy suppliers are also on hand to help, Capper stressed. "When we understand how you guys use energy, it makes it easier for us to deliver a better service. The better we can forecast your energy consumption, the less risk we have in delivering that product which means we can deliver a better price." The service, of course, comes at a price and that leaves small companies like BK Tooling with a dilemma. Tunks remarked: "I hear all these great things but I've got a small number of employees. Someone has got to devote resources and time is my most precious commodity." Not for long. The Syrian crisis, an expected blip in UK power generation this decade and eurozone uncertainty means energy will become the costliest commodity in years to come. The case for achieving maximum value is going to be hard to ignore. The rationale for joining forces with like-minded manufacturers or power companies – employing the power of two – has never been greater. Power play: ways to beat rising energy bills

1. Measure your use: Kitting the factory out with sensors has multiple paybacks. Not only can you spot and remedy energy-sapping machinery, but data allows you to negotiate a more tailored and hopefully cheaper deal from suppliers.
2. Convince your shopfloor: Man rules over machine when it comes to influencing total energy spend, from switching machines off idle to turning off the lights. So rather than just spending money on new kit, you might want to start by linking employee targets to keeping bills down.
3. Team up: Some operators are seeking safety in numbers in the face of widespread utility price rises. Energy buying co-ops open up better pricing deals through their combined spending power, but be warned: your energy demands need to be similar or you could end up cross-subsidising a neighbour.
4. Produce off peak: If you have the freedom to schedule your energy-intensive production periods to a period of low demand for the National Grid, then you could qualify for a cheaper tariff. Peak hours are 4pm-7pm and you pay a premium. Speak to your energy supplier to find out more.
5. Make your own: Goods out isn't the only place you'll find reams of valuable exports. National Grid will pay manufacturers for energy exported to the grid during periods of high demand whether it's from a site generator or more sustainable energy sources.

Quotes of the day "Over the last two years we've had to increase prices to customers. That's a reflection of all commodities, but energy has certainly contributed to that." Mark Elliott, factory manager, Memco "The challenge is that lots of things come first before energy – health and safety, people, job security…particularly in SMEs. Although it's one of the biggest costs from an optimisation viewpoint it's at the bottom of the list." Michael Hill, enterprise asset management solution sales manager, Infor "We get information through to us saying it's the middle of winter, Coronation Street is about to come on there's going to be a spike in demand. We'll then use the PA system across the site to shut down any unnecessary equipment."John Hickson, facilities & site utilities manager, Vauxhall UK "Improving energy efficiency is all about employee buy-in. Not just from the top down but getting everyone thinking do I need that light on or run that machine flat out?" Simon Shubrook, lead engineer, Croda Consumer Care "I'm not sure if co-ops are feasible. If you have half a dozen companies my size that are spending £30,000 a year, there just doesn't seem enough clout. Where does someone like me go with limited resources? I just have to live by my wits and that's how most of us get by." Bob Tunks, owner, BK Tooling "There's a misnomer that energy companies are sitting there selling out to domestic and industrial companies at £60 per mega watt hour and raking it in. They're buying it at £50-£60 per megawatt hour and passing it on." Stephen Mortimer, risk strategist, EDF Energy "The reality is that while energy is a commodity, it's a necessity...you have to switch the machines on or you don't produce what you produce." Phil Ballance, enterprise asset management solution sales manager, Infor "We found one brand new energy-efficient machine costing us £5,000 a month in electricity because it was set up incorrectly." Mick Straw, operations manager, Hi Tech Mouldings