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ISO 50001: How Manufacturers Manage Energy

April 9, 2012
As the first energy management standard available to U.S. manufacturers, ISO 50001 can help them be models of energy and operations efficiency while improving service to their supply chains.

Looking back over the last 30 years, energy prices have risen significantly (the chart below shows that crude prices have risen 300% since 1983).

Meanwhile, our global thirst for energy continues to grow and energy experts project that global energy consumption will continue to increase by as much as 49% between 2007 and 2035. With this in mind, there is no better time to look within your own organization and commit to managing your energy consumption and costs.

The Basics of Energy Management

There are two different approaches to managing energy and improving energy performance. The first is the traditional approach. Using this method, someone within the organization recognizes high costs and decides to implement one or two simple, cost-effective energy savings activities. Unfortunately, after the bonuses are spent and the recognition luster wears off, the organization loses focus on the matter, costs creep back up and the cycle continues. In this traditional approach, there is little to no awareness of the value energy management provides. The company is very busy selling and making product or offering services and no specific energy plans are developed by anyone accountable for meeting goals or targets. This type of approach yields some results but usually less than a 5% reduction in overall energy costs.

The second approach is the current model for best practices in energy management. As you might expect, this approach is very structured and organized, and requires:

➤ Support from top management;

➤ Commitment to resources and budget;

➤ Active energy manager and energy team;

➤ Detailed energy efficiency audit;

➤ Set policy, objectives, targets and action plans; and

➤ Accountability for success.

The Benefits of Energy Management

Even though more effort and investment is required to take this approach, it is structured because of several significant benefits. Arguably, the most important benefits are financial. A best practices energy management organization will see larger initial energy cost reductions. It is common for an organization to realize a 10% to 20% reduction initially through the identification and then the commitment to invest in more lucrative measures.

Furthermore, with a structure in place that fosters continuous improvement, the organization continues to drive down energy costs and can enjoy additional energy cost reductions of 3% to 5% for many years. Other benefits include:

➤ Creating enthusiasm and awareness for energy conservation and corporate responsibility, improving employee morale;

➤ Reducing the carbon footprint;

➤ Potentially improving the corporate image in the community and marketplace; ➤ Providing a framework for continuous improvement. Suggested First Steps

Whatever approach an organization feels makes the most sense for them, the first steps to beginning an energy initiative are the same.

➤ Establish an energy baseline;

➤ Conduct an energy management review;

➤ Perform an energy efficiency assessment.

In establishing an energy baseline, the organization needs to gather and compile the historical energy and production data, including information for at least two years, but preferably three years for each of the buildings under the scope of management. The monthly energy data will include consumption, cost and demand for all major sources of energy (i.e., electricity, natural gas, steam, coal, chilled water, etc.).

In addition, the monthly production data for the same historical time period will be collected. A baseline year will then be chosen and the energy consumption for that baseline year will typically become the reference for measuring energy performance improvement. Since production is usually proportional to energy consumption, it is helpful to develop a metric, such as Btu per pound of production output, as a way to normalize the measurement for production. You can then use this metric in developing specific targets for energy performance.

The second suggested step is to conduct an energy management review. This is, in practicality, a gap assessment that evaluates where your organization is today in its energy management practices compared to a best practices approach. Management practices such as procurement, level of executive support, policy making, organization, awareness activities and many other elements are examined. By way of this review or assessment, your organization can determine where you are, the financial value of moving forward with a structured energy management program (or system) and where you might want to be, from an energy management perspective.

The third and very important step is to perform an energy efficiency assessment. Different from the energy management review, this is a detailed on-site audit of the energy systems within the facility or facilities. The audit examines and models all of the major energy systems (e.g., compressed air, steam/boiler, process heating and HVAC) to determine their overall contribution to energy consumption in the plant.

Most importantly, it also describes and quantifies the most economically beneficial energy savings measures within the plant. This provides the organization with 10 to 20 activities or projects that yield lucrative energy savings that range from immediate payback to those with a four or five year payback.

A comprehensive audit will include the installation of data logging instruments on significant use equipment with data recorded over several days or weeks. Solid estimates for cost, savings and ROI/simple payback are also provided along with descriptive pictures, tables and graphs. Other less comprehensive and detailed audits can be performed and are of some value but are not best practices.

Energy Savings Tips

A comprehensive energy efficiency assessment will identify energy saving measures to help your organization increase energy performance while reducing overall operating costs. Many of these operational and capital improvement projects yield attractive paybacks and should be considered if not already implemented. Two common areas of focus are lighting and compressed air systems.


Lighting may not represent the largest energy consuming system for manufacturers, but it remains one of most apparent changes to any facility and its employees. The installation of energy efficient lighting systems not only reduces overall energy consumption, but it can increase the productivity and safety of employees.

Several studies have shown that people generally respond better to lighting when it closely matches that of daylight. For example, metal halide fixtures can be replaced with T8 or T5 fluorescent fixtures in a high bay setting. These more efficient fluorescent fixtures will provide lumen output similar to the metal halide, better color rendering, and a higher color temperature that will closely match that of daylight. In addition, the fluorescent fixtures can reduce lighting energy consumption by up to 50% compared to the metal halides. These significant savings can be further increased when used in conjunction with lighting control systems, such as occupancy sensors.

Efficient lighting systems, such as fluorescent and LED, also produce significantly less heat than the systems they tend to replace. It is not uncommon to see a 2 kWh reduction in HVAC energy consumption for every 5 kWh reduction in lighting.

Compressed Air Systems

Compressed air systems should always be monitored and reviewed for any efficiency improvement opportunities. Many organizations do not truly realize the energy wasted when compressed air systems are not working as efficiently as possible.

For starters, you should proactively search for compressed air leaks and address them immediately as air leaks affect your operation losses by reducing line pressure and increasing the cycle frequency of the compressors. If you were to find and repair a 1/16” diameter air leak at 100 psig, you could save more than $500 annually. Ultrasonic leak detectors are now reasonably priced and should be incorporated in your maintenance program to systematically locate and eliminate any air leaks.

Every organization should also examine the air compressor unit itself as a potential source of increasing energy performance. There are several compressor types, specifications and operating modes that can provide adequate pressure for various operations. However, it is important to clearly define your compressed air requirements and develop a system that will meet these needs while optimizing performance and efficiency.

For instance, if you currently have a constant speed compressor that operates in load/unload mode, it may be beneficial to look at a variable speed drive unit. The VSD controlled unit will be more efficient by varying the speed of the motor to meet demand rather than frequently loading and unloading. Other areas to examine for improving compressed air system efficiency are increasing the size of the air storage reservoir and lowering the system air pressure. Once again, it is important to get a clear picture of your compressed air requirements prior to making any significant capital equipment changes.

Sustaining Improvements

Earlier it was mentioned that one of the benefits (and characteristics) of a best practices energy management approach is that it provides the framework for continuous improvement. This framework is developed by adopting the best practices we listed, and once in place it effectively forces the organization to be responsible and to implement the stated plans and to meet the targets.

Often, it is a good idea to implement projects that are no or low cost first to gain confidence in the program and to confirm to management that their support and investment are worthwhile.

This should be followed as quickly as possible with the projects requiring a capital investment that have low estimated simple paybacks. Sometimes, there are energy efficiency projects that may have a relatively long payback but are direly needed for production or operations purposes. Obviously, these projects will be given a high priority as well. Once a project is implemented, it is important to measure and monitor the performance of the project. With this in mind, it is important to incorporate some additional cost in the budget for instrumentation costs and to ensure that measurements of the particular equipment or system are measured before implementation. Finally, it is important that the progress, results, and accomplishments be well documented and communicated and to reward those involved with the initiative.

ISO 50001: The Framework for Energy Management

Over the last four years, energy management practitioners from around the globe have collaborated and written a new global standard for energy management that aligns all of the best practices in energy initiatives to date. This standard, written by a body known as the International Organization for Standardization (ISO), was released June 15, 2011. ISO 50001 provides organizations with the instrumental guidelines to develop a comprehensive energy management system to increase energy efficiency and performance while ultimately reducing overall cost.

The new standard incorporates the recognized and industry proven PDCA (Plan, Do, Check, Act) continuous improvement approach synonymous with other familiar standards, such as ISO 9001 and ISO 14001. Thus, ISO 50001 can be launched as a self-standing program or seamlessly integrated with any other management systems. ISO 50001 provides the framework to manage and improve energy performance. In the short period since its release, ISO 50001 has already been well adopted internationally by numerous organizations spanning the globe from China, France, Korea, and Germany. It is expected to be very popular in the United States, as the first energy management standard of this kind and as organizations are encouraged to use it to develop a best practices energy management organization.

Driving Performance and Results

With ISO 50001 bringing unprecedented global structure to energy management, there is now a heightened awareness and focus on energy. The United States Department of Energy has partnered with the United States Council for Energy-Efficient Manufacturers (U.S CEEM) to develop Superior Energy Performance (SEP). SEP is slated for release in October 2012 and will provide industrial facilities with a roadmap for achieving continual improvement in energy efficiency while maintaining competitiveness.

Members of the U.S. CEEM, such as Toyota, Ford, 3M and Dow, are acting as champions of energy efficiency for the U.S. and helping to drive efforts to improve energy intensity for U.S manufacturing. Many industry leaders, such as Procter and Gamble and Wal-Mart, are also utilizing sustainability scorecards for suppliers.

Just as suppliers were suddenly asked to calculate and monitor their carbon footprint, it may soon be required to measure your organization’s energy performance. In addition, being ISO 50001 compliant and certified could prove to be the difference in becoming a preferred supplier and leader amongst industry peers.

It is widely recognized that energy is a significant fraction of the total cost required to manufacture goods. Second, manufacturers have an opportunity to reduce carbon and GHGs and establish their organizations as leaders in energy initiatives. Although the rising cost of energy is not something controllable within the walls of an organization, the effects on budgets and costs are manageable through adoption of an energy management initiative that offers real solutions and continuous improvement.