Profitability

/Profitability

Energy management stands behind better stock performance

Companies with strong energy management demonstrate higher performance at the stock market. Do not take my word for it, here is a snapshot of stock performance of a well-known leader in energy management 3M USA (US:MMM, black) compared to Dow Jones US Chemicals Index (XX:DJUSCH, blue) over last 5 years as presented at Market Watch. [...]

Simple payback can cost you profits and what is the better way ratio

Simple payback period is routinely used as an ultimate ratio when it comes to selecting between energy projects. This practice may cost your company money in missed opportunities. Simple payback period (SPP) is the simplest way to assess profitability of an investment project. Simply divide first year cost by first year savings and you get [...]

Options to reduce Global Adjustment for Class A: natural gas generator, batteries and mathematics, curtailing

What’s the best way to fight global adjustment cost? Omitting numerous details, three options are available: behind the meter generation, batteries and curtailing. Below is a quick comparison of pros, cons and risks of these solutions. Natural gas generators – switch to own source of power during peak hours Vendor promise Install a behind the meter [...]

Fighting Global Adjustment with batteries and mathematics

At a recent energy conference and tradeshow, #ESX2108, among other interesting presentations, one caught my attention - a serious approach offered by Peak Power Inc to reducing Global Adjustment charges by switching demand during peak hours to huge batteries. They consider peak chasing a mathematical game, and rightly so. Peak Power uses big data and machine learning to [...]

By | 2018-07-27T10:13:50-05:00 July 27th, 2018|Categories: Energy management, Profitability|Tags: , , |1 Comment

How to help CFO approve your energy project and keep healthy margins?

Corporations routinely require energy projects to meet a 2 year simple payback threshold, which is another way of requesting a 50% return. Same corporations rarely enjoy returns in excess of 10% in their core business. Are CFOs mean to energy projects, plain stupid, or what? - Unlikely. Slow thinkers do not make it to corner offices. [...]

What is kWh worth at your plant?

A trivial question, which does not have a simple answer without the context. Consider a plant that in the last month used 1,000,000 kWh to produce 10,000 units and paid $15,000 for electricity. Does kWh cost $0.15? Is energy cost per unit $1.5? Yes, No and Maybe. Cost or value of a kWh depends on [...]

How can an energy manager travel in time and space to impress CFO?

Which energy manager does CFO know by first name? Hands-on? Watchful? Strategic? A Hands-On energy manager walks the floor daily to personally check consumption of every machine. He is in one place at a time. A Watchful energy manager installs meters to check real-time energy performance. He monitors several machines at the same time. A [...]

How to separate honest energy efficiency vendors from snake oil salesmen?

If you are a plant manager I bet that scores of energy efficiency vendors call and email you daily. All of them want to sell their hardware and most promise extreme profitability. Will you choose a project based on salesman promise alone? If you want to quickly navigate the sea of energy efficiency offers without [...]

Due credit often misses good energy managers, but not the smart ones

Proper analysis brings energy heroes front and center. Can this be you? The graph shows results of statistical analysis of electricity consumption at a frozen food warehouse performed in accordance with recommendation of International Performance Measurement and Verification Protocol (IPMVP). Blue dotted line represents a cumulative sum of differences between actual and predicted consumption. Difference [...]

Procurement cannot buy electricity, natural gas and water

Procurement department can buy materials, machines and office supplies, but cannot buy electricity, natural gas and water. Just can't. Does not have sufficient decision-making authority. Neither does CFO. Nor even President. Utilities are bought by a person who flips the switch or turns the valve, not by procurement or CFO or President. Procurement contract [...]