Vein of Gold
Ready to do a little prospecting? Get out your latest electric bill.
For most metalcasters, electricity is one of the largest ongoing costs. Artfully crafted, the typical electric bill is summarized to the point that it is just a notice of what you need to pay the electric company. Arcane terminology, and little detail, most likely relegate your “validation” of the bill to a comparison of a bill from the same time last year to see if they were about the same.
Most people just pay the bill and view it as a necessary evil that they can do nothing about.
But buried in that arcane terminology on your bill is a hidden motherload; a vein of gold that can be mined every month. It’s right before the few eyes that ever get to see the bill. You just need to know where to look.
Virtually every medium and large business gets treated to some “special” additions to their electric bill that homeowners typically do not get. One such addition goes by a variety of names, such as Demand, Peak Demand, Capacity Charge, etc. Whatever it’s called by your electric utility company, it’s usually easy to find. Just look for a line item that amounts to almost half the cost of your total bill (and maybe even more).
Precisely because it is one of your largest expenses, it could be very worthwhile to give that monthly aggravation a little extra attention. After all, finding a way to avoid all or part of that cost would go straight to the bottom line to improve profit.
Imagine turning all your furnaces on at the same time. Big demand is registered. Any other equipment being turned on at the same time, like compressors, machine shop, etc. adds to the total demand. In most states, the total power required during the highest demand in any 15-minute period during the month establishes your peak demand for billing purposes for your next bill.
The Mother Lode
Dig a little and you’ll find a wide and deep vein of gold in that demand charge. Reduce it and reap the savings. While you can spend a lot of time and resources to refine how, when and where you use electricity, there may be a faster and easier way to get relief. How would your electric bill look with a demand charge reduced by 50% (or more) every month?
One of the reasons this author is so excited about onsite electric generation is it can dramatically reduce—or outright eliminate—demand charges from your electric utility. Open the mine as soon as the generation equipment is installed.
Virtually NO changes are required to your business operations.
You can also gain other benefits from onsite electric generation, such as emergency backup power, overall lower electric rates, etc. How much you would benefit depends on factors such as your current per kWh rate, demand charge per KW, your per therm cost of natural gas, etc. In my analysis of several such projects for metalcasters, I’ve found systems that benefit a wide range of metalcasting operations, especially mid-size manufacturers. You don’t have to be very large to benefit.
Onsite generation projects often have an excellent simple return on investment (ROI), if you want to own the equipment required. However, many foundries may prefer an option that requires no capital investment. In this case, the vendor offers a Power Purchase Agreement (PPA).
With a PPA, the vendor provides all the hardware, installation, maintenance—and even the cost of the natural gas to run the onsite electric generators. In exchange, the foundry agrees to purchase any electricity they use from the installed electric generators, at a fixed rate for a contracted period, that is less than what the foundry is paying per kWh to their local electric company.
Onsite electric generation can be accomplished very quickly. Start operating your own gold mine for new revenue every month.
For more information on this column, contact the author at email@example.com .