September/October 2000
Issue Focus: How to Choose Contracting Services
This page presents all the articles in the September/October 2000 issue of Energy Matters, the BestPractices quarterly of the U.S. Department of Energy's Industrial Technologies Program.
In This Issue
- Guest Column: Get it Done by Sharing the Benefits of Energy Projects
- Select the Best Motor Repair Services
- Performance Optimization Tips: The Vital Few
Guest Column: Get it Done by Sharing the Benefits of Energy Projects
By Jay Raggio
Imagine your facility sits directly on top of an underground deposit of valuable minerals. You would like to tap into the value the minerals represent, but you don't know anything about mining and recovery. What if you offered to "share the wealth" with an experienced mining company if it will take on the necessary steps to recover the minerals?
This scenario may actually exist at many commercial and industrial facilities. Not that they literally sit on top of valuable mineral deposits, but they often do have substantial recurring expenses for the various forms of energy that they consume. These energy expenses can be "mined" for technically and economically feasible opportunities to reduce energy costs or be more profitable while using the same or less energy.
Explore the Opportunities
The values that may be gleaned from the current energy expenses and process and production metrics can be explored by a qualified energy services company, or ESCO. They will work closely with facility operators, turning over every rock to look for meaningful opportunities. ESCOs will accept compensation for performing such work through an arrangement to share the resulting financial gains with the facility owner.
Opportunities may take many forms, including:
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Changing energy price conditions by negotiating more favorable rates with current suppliers. For example, a time of use (TOU) rate may save on energy costs, depending on the facility load profile.
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Changing energy price conditions by selecting alternate, lower cost energy service providers (ESPs) rather than the traditional utility being the electric energy supplier.
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Changing price conditions by modifying the energy service conditions with current suppliers-for example, taking electrical service at primary voltage instead of secondary voltage. Service at primary voltage often has a lower unit price ($/kWh) than secondary voltage service.
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Mitigating adverse price conditions through the use of financial instruments and hedging strategies. Figure 1 provides an example of hedging. As the price of a key raw material increases, energy prices, through a negotiated contract with an ESP, decrease allowing the overall costs of production to remain relatively stable.
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Mitigating high energy cost conditions by shutting down nonessential equipment during high energy cost periods (load shedding), changing the time when energy intensive operations are carried out (load shifting), or even self-generating during high energy cost periods.
- Using less energy overall by implementing retrofit energy efficiency measures.
- Using less energy per unit of production by modifying process practices and/or technologies.
There are no givens that an ESCO will always uncover opportunities worth pursuing. Thus, it is important that all parties understand and accept the risks as well as the potential rewards of embarking on a program to investigate energy cost savings opportunities. Further, every effort should be made to manage the risks in any arrangement to share future savings or benefits.
Define Criteria for Sharing Benefits
A facility operator must consider several important areas in any arrangement to share future benefits. From the beginning, define the criteria for success. For example, what minimum dollar value of savings must be achieved to make it worthwhile? If investments are likely, what return on investment must be achieved? What maximum payback period will be considered? What limitations will there be on disruption of the facility's occupants or its operations? By starting from a solid set of ground rules, you enable the ESCO to focus on finding the biggest "bang-for-the-buck" opportunities.
Have a clear and mutual understanding and quantification of where you are starting from-that is, identify the current energy costs and production per unit of energy. Collect and make available to the ESCO historical records of energy use, costs, and production statistics. The variables in past energy costs must be analyzed and assigned to quantifiable metrics such as cooling degree days, building occupancy profiles or production throughput. The ESCO will develop a computer-based energy consumption model for a facility and/or a process, and will test and verify its prediction capabilities using the historical data.
You must also establish, at the outset, a clear and mutual understanding and acceptance of how financial gains attributable to the ESCO's performance will be measured and quantified. What data will be monitored and collected, and how will that data be used? Can a computer model provide sufficiently valid results on which to base the sharing of benefits?
Be Assured of Performance
Most leading ESCOs have a level of confidence in their experience and capabilities to guarantee that their recommendations will deliver a minimum level of financial gain. The facility owner should insist on receiving guarantees for performance.
Last, the facility owner and ESCO must agree on steps to be taken in the event of disputes over the achieved financial gains. A prudent approach might be to mutually agree that an impartial third party would determine the achieved gains, or at least audit the ESCO's determination of achieved gains. The ESCO should employ an underwriting organization to back up its guarantees, and the ESCO's contract should include provisions for arbitrating difficult disputes.
With proper attention to the risks involved, meaningful financial gains can be mined from existing energy expenses. Get it done by establishing a win-win relationship with a qualified energy services company.
Select the Best Motor Repair Services
By Lynda Butek
There is never a good time for a motor to fail. But they do fail, and when one does, you will want to solve the problem as quickly and effectively as possible.
For best results, take steps to prequalify the motor service centers you plan to use before your motors fail.
Just as motor users differ in terms of the motors they use and the importance of those motors to their operation, service centers differ in terms of their approach, expertise, and capabilities. What constitutes the "best" shop will vary from end user to end user, and in some cases, from motor to motor.
Instead of discussing "good" versus "bad" repair shops here, we'll discuss how you, the motor user, can select the best motor service center for your work.
Do Your Homework
The first step in choosing the right motor service center is to do your homework. That starts in your own facility.
First, determine what kinds of motors you have in your operation. Do an inventory and note:
- What size are the motors?
- What are the voltages?
- Are they explosion proof?
- Are they pump motors?
- What other special characteristics do they have, if any?
- Can they be easily replaced?
You should also know if you have a spare for any motor that is critical to your operation and that is not readily available from a local source. Find out if the service center has a spare. Consider how a day or a week of downtime caused by a failed motor would affect your operation and your bottom line.
Visit Several Service Centers
Once you have determined your needs, the next step is to visit several service centers in your area. Most repair facilities welcome customer visits so they can show off their shop.
On your visit, look at the center's equipment. Find out:
- Do they have the necessary handling equipment for your motors?
- Will their ovens and dip tanks accommodate your motors?
- Do they have the proper voltage to test your motors? Most motors should be run at full voltage as the final test of a good repair.
- How much experience do they have in repairing the types of motors you use?
Keep in mind that not every shop can handle every aspect of every motor repair. If that is the case, ask how they prequalify the shop or shops they will use to do the work they don't handle themselves.
Compare Customer Service
In addition to the technical expertise and services, you will want to choose a shop with exceptional customer service. Find out what extra steps the service center is willing to take for your convenience and to ensure high-quality work.
For example, pick-up and delivery or installation may be important to you. Some firms offer these services, some don't. You should discuss these services up front before a motor failure occurs.
Also, find out if the service center has a quality assurance program in place. Ask what types of before-and-after testing and reports they will supply. Ask to see the system they use to keep track of your motor while it is being repaired.
Look at the shop's inventory of new motors. Do they stock the types of motors you use? Do they stock premium efficiency motors for replacement? If not, do they have a ready source for this equipment to minimize your downtime?
Make sure the shop gives you repair/replace options every time you send in a motor for service.
If your facility runs around the clock, 365 days a year, you may well need the same kind of service from your motor service center. How do they handle off-hours service? Can they handle your needs even on holidays?
Finally, get a list of references, and call those references to see what their experiences have been with the service center.
Be on the Same Wavelength
Another benefit of visiting the service center is the opportunity to meet face-to-face with the people who will do your work. By meeting them, you can assess how comfortable you will feel working with them. You should be confident they understand your motor repair needs and that they will treat your motor problems with real concern. If not, keep looking.
Invest in Good Work
Once you are satisfied that a service center can do your work, remember that doing a good repair job takes time. Cutting corners can result in a poor repair. If you want the service center to do a good repair job, you must be willing to let them do that job.
Taking the time to assess your motor needs and determining the best shop to fill those needs will help you get the most from your repair dollar. This will be time and money well spent.
Performance Optimization Tips: The Vital Few
By Don Casada
In the January/February 2000 issue of Energy Matters, Mac Smith discussed a 7-Step Systems Analysis process for implementing a reliability centered maintenance program1. The first of his seven steps was to focus on "bad actor" systems, noting that 80% of the maintenance and production problems come from 20% of the systems.
The general rule of 80/20 was given the name "Pareto principle" in the 1950s by J.M. Juran, an eminent industrial engineer, in recognition of work done by Italian economist Vilfredo Pareto on the distribution of wealth2. Juran coined a phrase—"the vital few and trivial many"—that succinctly describes the concept, and he noted that it has application in many fields.
Was he ever right! A quick search for Internet references to "Pareto" found the principle related to the following concerns (to cite just a few):
- Time management
- Evangelism
- Military logistics
- Medical expenses
- Local area network traffic
- Bacteriological use of genomic data
- Computer code debugging
The general idea is that a relatively small fraction of a particular population (the "vital few") is responsible for a large fraction of the results—whether positive or negative, while the larger population segment (the "trivial many") is responsible for a small fraction. There is nothing magical about the numbers 80 and 20, by the way—they just illustrate the commonly observed disproportionality of cause and effect.
As a common practical application, consider maintenance of an automobile's engine and power train. While there may be 15 or 20 periodic maintenance items recommended by the manufacturer, engine lifetime is most significantly affected by proper maintenance of two fluids—engine oil and engine coolant. Careful attention to these two items may exceed the benefits of all the other items combined.
Industrial Energy Opportunities
Does Juran's principle of the "vital few and trivial many" apply in industrial energy consumption? Absolutely.
There are many manifestations of this principle in DOE's United States Industrial Motor Systems Market Opportunities Assessment, published in 19983. One stark example involved motor size. While almost 60% of the motor population was found to be in the range of 1 to 5 horsepower (hp), this segment consumed less than 5% of the energy. On the other hand, the less than 6% of the population greater than 50 hp was responsible for 72% of the energy consumption. Table 1 shows population and energy consumption as a function of size group from the study; Figure 1 shows the cumulative population and energy distributions.
Source: United States Industrial Motor Systems Market Opportunities Assessment, December 1998.
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Interesting information, but are there practical applications? Again, absolutely.
Assume we are tasked with identifying energy-saving opportunities in the motor-driven systems at an industrial facility. Let's say the motor population of 10,000 is similar in population and use distribution to that found in the DOE study. And let's also assume that we don't have a nice database listing of motors by size and application (a common situation). Should our first step be to inventory the entire facility and develop such a database, including information such as nameplate horsepower, full load current, and efficiency?
To answer that, let's make a couple more assumptions: It takes 20 minutes to locate and tabulate the information for the average motor; and the work is to be done by a technician at $25/hr. Given those assumptions, the cost of inventorying all 10,000 motors would be more than $83,000. Gulp!
But $71,000 of that cost would be associated with motors that are 20 hp or less. If we only look at the 570 motors that are larger than 50 hp, the inventory cost would be less than $5,000.
So instead of launching into development of a full-blown inventory, a more common-sense approach might be to simply accompany operators in each section of the plant during normal rounds. Operators will not only identify the big stuff so that the technician can do the inventory, but can give a quick guess as to what fraction of the time the motor is operated, a critical element in subsequent review.
Other filters or screens can be used to help further reduce the number of a plant's "vital few" pieces of equipment. For example, in many plants, focusing on centrifugal loads such as pumps, fans, and compressors will pay the greatest dividends. The DOE study found that more than 60% of all potential energy savings were in such systems.
The Pumping System Assessment Tool (PSAT) software program developed by DOE can be downloaded free of charge. Included with the PSAT download is a prescreening document that, although focused on pumps, includes some simple, primary screening guidance, which applies generically and directs the user toward the "vital few" machines. The program can be downloaded from the BestPractices Web site. Alternatively, a CD that includes both PSAT and MotorMaster+ motor selection and management tool can be requested from the OIT Clearinghouse at (800) 862-2086.
Not a Cure-All, But Still Good for What Ails Ye
The "vital few and trivial many" principle is not universal, and its application won't solve all our problems. But it is a great first step, not only in reliability centered maintenance efforts, but in prescreening for potential energy reductions. And it is no coincidence that the big stuff that runs a lot is high on the list for potential energy reduction review and is likely to be a high reliability priority.
Don't make your energy program a game of Trivial Pursuit—make it a search for The Few, The Proud, The Machines (the big ones, that is).
E-mail Don Casada at doncasada@diagsol.com.
1 RCM—Gateway to a World Class Maintenance Program, Anthony M. (Mac) Smith.
2 Juran later regretted so naming the principle, since it is universal in nature; he noted that Pareto's observation was simply application to one particular field of many.
3 The publication is available for download at www.eere.energy.gov/industry/bestpractices/pdfs/mtrmkt.pdf.
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