14.4.2 Strategy approach to energy management
Volvo Group has had Environmental Care as one of its core values since 1972. To challenge themselves, Volvo Group reached an agreement with World Wildlife Foundation (WWF) to enter their Climate Savers program, primarily focusing on the fuel consumption of the products. This agreement was later expanded to include further aspects such as production factory energy efficiency. Based on this, Volvo CE updated its Environmental Care focus to take a broader energy management approach using Lean energy thinking.
The priority prior to this was to reduce CO 2 emissions from the factories. The new strategy was turned around to first focus on energy conservation. This was followed by improved energy efficiency and then finally renewable energy as seen in Fig. 14.7. Figure 14.7. Energy pyramid. • Energy conservation refers to not using energy in the first place by, for example, turning off equipment which is not used, turning on equipment later at the start of production and turning it off earlier and generally using existing equipment in a smarter way to eliminate or reduce the amount of energy used. • Energy efficiency is the second step which relates to investing in more energy-efficient equipment. For example, new electrical motors (such as replacing IE2 motors with IE5) but also investing in energy recovery and fundamentally when investing to invest in right size equipment (equipment found in factories are often over dimensioned due to unclear initial requirements and exaggerated safety limits). • Renewable energy is the final step in the energy pyramid. This was initially just called CO 2 neutral but changed to renewable not to include nuclear energy and hence participating in creating a global demand for renewable energy. Adding this as a last step is actually misleading as several factories have been purchasing renewable electricity for many years already and there are ongoing activities to improve the level of renewable energy (50% of energy used in 2016 was renewable). To put it as a last step however signals the new strategy, which compared to the old one where CO 2 reduction was the priority, is different. It also highlights the need to start to focus first on energy conservation and then on energy efficiency rather than just purchasing solar panels and then wasting the majority of the electricity produced by these solar panels.
Following the strategy outlined by the energy pyramid has several reasons and multiple benefits: • Build culture and behavior: strong focus on energy conservation means involving everyone in the factory and hence starting to build the right behavior and culture around energy. The people working in the factory never see or have to pay the energy bills and hence the awareness is by default lower compared to a home-owner. In the factory, employees behave differently from when at home, for example, it would be considered normal to turn off the lights at home when you leave to go to work, the same is not obvious at work for many different reasons (awareness, not sure to be the last to leave, not knowing where the switch is, and so on). To build culture and behavior takes time and it is therefore important to start as soon as possible and to make sure to involve all employees and levels of management in the factory. • Low cost: to focus on energy conservation does not cost much money as no significant investments are involved. The main cost is man-hours used to set up the approach and to train and involve everyone. This means that no capital expenditure or investment budget is needed to start which lowers the barrier and inertia to get started. • Self-funded: not only is energy conservation low cost but it also enables the strategy to be self-funded. Through energy conservation the energy bills will be reduced and hence costs are reduced. These savings can then be utilized to invest in the following step, energy efficiency, which will reduce cost even more. This may in turn be utilized to improve the level of renewable energy which in some cases can be costly (e.g., replace factory heating system or paint shop oven heating source). • Reduce size of future investments: is one benefit of energy conservation which is easily overlooked. By working with a system without making capital investments and just trying to do low cost waste elimination improvements one gets to know the system better and, for example, reduced flow rates will perhaps in a future investment enable the use of smaller and less expensive pumps and motors.
It is important to remember that energy conservation is a never-ending journey. In that way the visualization in the energy pyramid can be misleading. In order to keep a culture and behavior in place there needs to be some expectation from the organization and its leadership. If focus is lost, for example if significantly increasing production volumes happens, then there is a significant risk that performance and results will slide back.
Based on the revised strategy an energy management journey was started. Data analysis showed that Volvo CE is a low energy intensity company which was no surprise. Energy intensity being defined as annual energy cost divided with turnover was found to be 0.54%. The low level of energy intensity also helps to explain why energy use was not on the agenda of management. The data analysis further looked into the energy use by energy type as seen in Fig. 14.8 where it can be seen that electricity is by far the most used energy type. When electricity use was broken down per factory the Pareto in Fig. 14.9 could be made. Figure 14.8. Energy use by type. Figure 14.9. Electricity use per factory.
The outcome of the data analysis was that electricity was the prioritized energy type to address initially. To reduce the scope of the work it was also decided to initially only include the seven largest factories since that still captures 75% of the electricity use. The result of the data analysis is an example of prioritization and focus to get a stronger drive and achieve tangible results quicker. Based on a study per factory it was estimated that more than 30% of the electricity used was actually wasted during nonproduction hours. Based on the strategy to start with energy conservation is was decided to start the energy management journey by focusing on electricity idle losses in the seven largest factories.
Prior to 2013, the only energy performance index which was followed on a global level in operations was energy use per produced machine (kWh/unit). This is a very limited measurement when driving a structured improvement work as it will mostly show if it was a warm or cold winter season and if production volume increased or decreased. So, the next challenge was to define the key performance index for idle electricity losses and to ensure that when comparing the seven factories with each other we would be comparing apples to apples. Idle electricity use was defined as ten consecutive hours in the weekend between 19.00 (7 pm) on Saturday evening and 05.00 (5 am) on Sunday morning. A second measurement was defined as production time electricity which was taken as 10 consecutive hours on the following working day (normally following Monday unless vacation/holiday). If the idle electricity was divided with production electricity then a third measurement could be established which was called relative idle electricity as seen in Eq. (14.1). The relative idle electricity allowed comparison between the different factories despite difference in product, size, working hours, and so on. A KPI definition document was created to outline the exact details. Equation 14.1. Relative idle electricity calculation.
Data were collected from all the factories and the relative idle electricity was calculated. This revealed that the best factory was at 17% and the worst at 42%. Based on this, a target was set for all factories to achieve less than 15% before the end of 2015. Benchmark studies showed that a good level of idle electricity for similar companies would be less than 10% which gives a potential for a more challenging target in the future. An issue which was highlighted in some factories was that they did not have an electricity measurement system installed, in those cases the data supplied by the electricity supplier was used.
