How much money is at your ‘energy waste’ account?

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How much money is at your ‘energy waste’ account?

Situation

Doing nothing is an investment decision too. Investment with a guaranteed return of nothing.

Here is a common conversation at a manufacturing plant:

Me: … Implementation will cost you $5K and save $15K within 12 months.

Maintenance manager: So we save $10K?  Not much for our plant. Besides, I do not make investment decisions here.

Me: You just did. You have just approved a $15K investment into doing nothing. Besides, if $10K is nothing for your plant, would you cut me a cheque for $5K?

Well, last sentence is not so common.

Is maintenance manager at the core of energy waste?

Problem in this situation is NOT mentality of maintenance manager. The problem as I see it is in mentality of Plant Manager or CFO, who assume that at plant level energy is a fixed cost.

Since bills are similar month after month, it must be a fixed cost. – Wrong!

Energy management starts with management, not with energy.

Solution

A lot of solutions can be applied to this situation. Here is a simple one:

  1. Accept that 20% of energy cost is wasted and split energy cost into two accounts: ‘energy’ and ‘energy waste’.
  2. Allow redirection of funds at ‘energy waste’ from paying to utility to investment into improvement projects.
  3. Allow accumulation of funds at ‘energy waste account’ to finance bigger projects AND for annual ‘energy efficiency’ bonus.

I wrote about this earlier from a different angle – here.

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