Business: Industrial

Getting Ideas for Energy Management Opportunities
2.1.10 Full cost accounting

The foundry accountant could be the energy champion’s best friend. All
that has to be done is to explain to the accountant the concepts behind energy
bills (see Section 2.2.1, “Managing electricity,” page 36, and
Section 2.2.2, “Managing fuels,” page 40) and show the energy implications
of production non-quality on the total operational costs. Both fixed and variable
costs may be affected.

The accountant’s initial knowledge of energy matters
may be limited to bill paying – a situation all too common in foundries
with little or no energy-metering capabilities and an equal lack of interest
in energy improvement.
However, his or her professional interest may be aroused when shown Appendix
5.2 on energy benchmarks for Canadian foundries of basic metal cast types.
Most if not all of these measures are controllable costs. To develop a set
of key energy indicators like those in the Appendix, essential metering, monitoring
and operational controls are required. Seeing the potential of the
measurements and the magnitude of costs, the accountant would certainly support
the energy improvement drive and help in preparing cost justifications for
acquisition of the meters and the controls it would require. The rest is
the work of the energy champion.

Here are some of the indicators that every
foundry likely has, as the minimum:

• Cost of electricity – total;
  • Consumption charge (time of day/week rates
    and charges);
  • Demand charge; and
  • Power factor penalty (if any);
• Cost of natural gas; and
• Cost of water (includes sewer charges).

The energy intensity, the cost of energy
per tonne of good castings, electricity per work hour, and similar global measurements
can be developed from
these data. It is not always possible to say what the energy costs are for
heating
and lighting
of offices versus the production foundry or how much energy an old sand
system uses. The basic information is not enough for an effective control:
one needs
to know how, where, when and why the energy is spent and how much it
costs. For instance, it may be a revelation when it is determined how much
energy is wasted in a foundry during non-production periods
and on weekends! That can be achieved with the help of sub-metering of
key equipment/operations. Other indicators may thus be developed:

• Energy (gas,
  oil or electricity) and cost of energy per tonne of melted metal;
• Average load
  factor;
• Average power factor;
• Furnace thermal conversion efficiency;
• Furnace demand as percentage of the
  foundry’s total demand; and
• Compressor electrical costs, etc.

All such measurements can be used for setting
standards against which new energy consumption (cost) targets can be determined.
More on this
is in Section 3.4, “Developing energy management programs further” (page
99) and Section 3.5, “Implementing, monitoring performance
and continually improving” (page 101). Accounting for energy
costs should investigate the impact of production practices on overall
costs and help in determining optimal
solutions. Examples are daytime versus nighttime melting and poor
practices in keeping molten metal in the furnace longer or at a higher
tap temperature than
necessary. In scrap, energy cost will be equal to or slightly higher
than in good castings. The subsequent processing of the scrap, however,
effectively doubles the energy content per kilogram and causes other
costs, briefly mentioned
in
Section 2.1.8, "Managing
energy as raw material" (page 30). In full accounting for these
"hidden" costs, the true extent of internal waste due
to scrap will
become obvious and will overshadow the nominal “spout metal units cost
of scrap.” Subsequently,
management support and capital funds approvals should be much easier
to obtain for:

• Process and equipment changes; and
• Energy loss reduction programs and energy
  recovery systems.

Other EMOs
Housekeeping

• Consider developing meaningful energy performance indicators specific
  to your foundry’s needs;
• Conduct seminars or awareness sessions for
  all operators to explain:
  • The energy costs and the means of their control;
  • The effect of good housekeeping
    on driving energy costs down; and
  • The importance of proper operational practices;
• Review the indicators regularly
  at operations management meetings;
• Keep employees informed – communicate
  the results;
• Use the energy cost results
  in developing and reviewing business plans, alternate energy plans and
  capital projects; and
• Use the energy cost indicators
  as a management tool to improve performance.

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