3 misconceptions that may be causing your facility to spend too much on electricity
3 misconceptions that may be
causing your facility to spend
too much on electricity
The way that food processors pay for electricity is changing. The rapidly shifting and increasingly complex connection between electricity usage and costs has left many food production and operations managers with outdated notions about energy management. Here are some of the most common and costly misconceptions.
Assumption: Energy keeps getting more expensive.
Fact: Energy rates have actually decreased, but demand charges are on the rise.
Due to factors such as inexpensive natural gas and widespread adoption of renewables, the cost of generating electricity has actually declined or stayed flat in recent years. As a result, the rates charged for each unit of electricity consumed have generally trended downward. But if rates are lower and the facility isn’t using any more energy, why do utility bills keep going up? The answer lies not in the cost of electricity, but in the cost of the system that delivers it. The electric grid must be built and maintained to deliver the maximum amount of power demanded at any given time, so businesses pay separate charges for energy used during short periods of peak demand. These are called demand charges.
Demand charges are based on the single point during each billing cycle when your energy use is the highest. Since grid infrastructure is aging, its capacity remains constrained during peak times and so utility companies have raised demand charges in order to cover their fixed delivery costs. For many food processors, demand rates have increased by more than 75 percent over the last decade. Thus, while the cost of energy is declining, the cost of demand is rising. This means that simply reducing total energy consumption may not be the best way for facilities to reduce costs. Instead, production and EHS managers may need to consider ways to lower peak energy usage, thereby reducing demand charges and overall costs.
Assumption: It’s impossible to accurately estimate and prove savings from energy initiatives.
Fact: New solutions allow you to accurately project and verify energy cost savings.
Food and beverage companies are often presented with a wide range of potential energy saving solutions. Many of these initiatives are compelling, but fail to move forward because of a major roadblock: difficulty proving the credibility of savings estimates and explaining how savings will be verified after implementation. When an energy or operations manager brings a proposal to his or her boss, the number one question is: How confident can we be in these savings?
Given the variety of factors impacting energy costs, such as time-of-use, weather, occupancy, and rate fluctuations, answering this seemingly simple question can actually be quite difficult – but not impossible.
Low-cost energy management solutions are available today that use real-time energy monitoring to assess how and when buildings use energy, down to the second. This technology analyzes historic and current energy usage patterns and accounts for weather, time-of-use impacts, and rate differences to predict what usage and costs would have been under the status quo. As a result, they can easily model the real-life cost impacts of an energy initiative and verify results down the road – without having to take a solution provider’s word for it.
Assumption: Energy projects are expensive and capital intensive.
Fact: Food processors can access low- and no-cost savings with automated demand management and energy intelligence software.
Many food processing and storage facilities have attempted to lower their electricity bills with equipment upgrades and retrofits such as LED lighting, HVAC controls, or motor and pump upgrades. While these can make a big impact on overall energy consumption, they often involve high upfront costs or long payback periods.
The truth is that equipment upgrades only address a portion of a facility’s energy savings potential, overlooking operational inefficiencies such as firing up machinery all at once, leaks in refrigeration or compressed air systems, or energy-expensive shift schedules. These types of operational issues are typically hard to find, but inexpensive to fix. Rather than replacing costly building systems and equipment, food companies can access low- and no-cost savings by investing in monitoring and demand management solutions that detect, notify, and respond to savings opportunities.
Fortunately, advanced energy technologies are now available that combine learning software and energy storage to automate and verify savings for food production facilities, while providing real-time visibility into energy use and costs.
Companies like ShoEi Foods USA and Safeway have implemented advanced energy storage in order to:
- Save money by automatically trimming energy peaks with no change to operations
- Receive valuable alerts to shift energy use away from moments when costs are highest
- Accurately estimate electricity bills before they arrive
- Visualize how and when they use energy in real-time to identify hidden waste
- Assess the potential and actual impacts of energy initiatives
As the leading provider of advanced energy storage to food processors, Stem lowers monthly energy bills with no change to business operations or guest experience. Stem does more than just store and deploy – it learns your facility’s patterns to maximize savings and deliver real-time, actionable insights. Getting started is easy, with simple activation and no upfront costs.
“We told Stem what we wanted to achieve and they made it happen: Stem’s software collected the data that was needed to make a plan precise enough to hit our goal. Now we save about $6,000 per month as a result,” Dwight Davis, Facility & Plant Manager at ShoEi Foods USA, Inc.
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