Energy saving is a good business

I heard from many people that energy savings are very expensive and not everybody can afford them. I disagree with this statement. Investment in energy savings is a very profitable business but it requires the right approach.

Energy saving process has two major parts.

1.     Optimization of operating set points and operating strategies.

2.     Capital investment in energy saving equipment (PLCs, VFDs and etc.).

We can have a look at typical energy saving project with investment of $ 200,000. Annual savings are $ 100,000. Payback is 2 years.

Table 1

Modest investment in optimization of refrigeration plant will give us significant energy savings. We can get initial part of this savings without capital investment. Energy saving equipment will help us to get the second part of these savings.

Energy saving equipment itself can save us only $ 20,000. Usually, these savings come from VFDs. PLC itself will not save energy at all, but it will give us opportunity to implement better set points and operating strategies and energy can be saved through optimization.

Example. In a previous newsletter (April 2007), I showed you energy savings by using wet bulb approach. Assume that we installed new PLC with wet bulb approach feature but head pressure was set to fixed set point (120 psig). At this setting we will not get any energy savings. It means that PLC is not saving energy itself but it can help us to implement better set points (wet bulb approach) and energy will be saved through this implementation.

Many companies claim that they have modern refrigeration plants with energy saving equipment. However, this equipment is only tools in energy saving process. You can use these tools differently and you will get different energy savings.

We can compare traditional approach and cost effective approach to energy saving.

Usually, companies buy energy saving equipment (PLCs, VFDs and etc.) first and later they try to improve operating set points and operating strategies. Average payback of this approach is 2 - 5 years or ROI (return on investment) is 50 - 20 %. If you did not succeed in improvement of set points, your payback will be over 10 years and ROI will be less than 10 %. Limited improvement of set points is the main reason of unsuccessful investment in energy efficiency.

Cost effective investment can be done in several steps.

Step 1. Improve operating set points and operating strategies to the level where you need capital investment to continue this improvement. Initial optimization can give us $ 50,000(out of $ 80,000) of energy savings and requires just $ 10,000 of investment (these are real life numbers). Payback of this step is 2.4 months and ROI is 500 %. This return on investment is phenomenal. I do not know any other industry where you can get similar return on investment in energy efficiency.

Certainly, every new approach or technology should be tested. To test PLC or VFD you have to buy it first by paying 100 % of the price. You can not return this equipment back, if you are not satisfied with its performance. You can buy 10 - 20 % of set points optimization just to test this new approach. Very often this sub step can be done for free.

Step 2. At this step you should buy energy saving equipment with the shortest payback.

We decided to invest $ 20,000 in energy efficiency of refrigeration plant. Purchase of condenser fan VFD will give us 5 years payback. Purchase of oil pump for screw compressor will give us 1 year of payback and ROI is 100 %. Certainly, it is better to invest in oil pump first.

I believe that every company can invest, at least, in step 1. You will get unprecedented return on this investment.

Energy saving in industrial refrigeration is a very good business, if it is done right.   

Recently I found that not everybody agree with my newsletters. I am open to discussions. These discussions will help us all to better understand the energy savings in industrial refrigeration. Please, send me your comments (positive or negative), questions or concerns.