Australian manufacturers are looking to low or no-cost measures to reduce energy footprints, as an uncertain economic environment and rising energy prices start to bite.
According to Craig Morgan, principal of sustainability consultancy Northmore Gordon, anything longer than a two-year payback these days is a real challenge.
The exception, he says, is solar, which many firms across manufacturing, food and beverage, industrial and agricultural processing are seriously looking at.
“Solar is almost in the category of lighting,” Morgan says.
“The big industrials are looking at it because it is low risk, low maintenance and the prices are coming down.”
For most companies, the cost of finance for solar is lower than the cost of grid energy per kilowatt – this gives them around a five-year payback.
Water utilities are also interested, he says.
“Everyone will be starting to take solar seriously over the next few years.”
Morgan’s company, which is currently writing a guide for the NSW Office of Environment and Heritage on optimising compressed air systems, surveyed its clients across the manufacturing sector and found there was a distinct difference in pain points between multinationals and Australian operators.
“If they are part of a global multinational, the corporate targets for energy, water and greenhouse gas emissions reductions [generally] exceed government requirements,” he says.
“They are moving ahead of policy … irrespective of leaders like Trump, Putin and Turnbull, and also irrespective of Paris. They are setting their own aggressive targets.”
This poses three main problems for their Australian branches – lack of a structured plan for meeting the corporate target; no data or poor quality data; and lack of resources internally to implement required changes within the timeframe required.
His consultancy aims to address these, including providing a visual platform for data, creating alert and alarm systems to flag energy or water use that is exceeding the required targets, and virtual energy manager services.
Morgan says domestic manufacturers generally have “less developed” targets, and are experiencing enormous price pressures.
That bottom-line pressure means looking for easy wins, as generally firms are more focused on growing their output and market share to balance the books, rather than cutting costs.
There are some easy wins he says companies can achieve, however, including upgrading lighting.
“The Energy Efficiency Certificate schemes in NSW and Victoria have driven a massive uptake in LEDs. Everyone has done it or is looking at,” Morgan says.
There are also easy wins around utilities, boilers, refrigeration and air compression. Processes can also be made more energy-efficient by installing controls.
The company is currently writing a guide for the NSW Office of Environment and Heritage on optimising compressed air systems.
Key points for reducing energy use and costs include ensuring it is controlled correctly, reducing relevant set points and reducing any leaks. Steps can be taken to ensure the associated water drains are operating correctly and effectively, and an overall analysis carried out of how compressed air is used to then eliminate any inappropriate uses.
“Compressed air is not cheap,” Morgan says.
It’s about “doing what you do with less air” to reduce demand.
Gas prices becoming an issue
One area Morgan says Australian industry needs to be addressing to achieve substantial greenhouse gas emissions reductions is the use of fossil fuel gas for steam, hot water and other plant.
The consultancy is working with some clients that are looking at biogas as a replacement.
“There is a huge opportunity for biogas, especially in regional areas,” Morgan says.
The soaring cost of gas is also potentially an incentive.
Chief executive of Think Brick, Elizabeth McIntyre, told The Fifth Estate that in her industry manufacturers have seen prices go from around $2.50 a gigajoule to between $20-$21 a gigajoule under the most recent round of locked-in contracts. This has become the brick industry’s major challenge, she says, as gas is used for the firing process.
Morgan says many water utilities are gaining value from biogas generation in conjunction with their waste water treatment plants.
“Melbourne Water’s Western water treatment plant is almost an exporter of biogas.”
There are also food and beverage plants that could have an opportunity to use their own waste streams for biogas generation, Morgan says.
In regional areas where there are concentrated waste streams from industries such as meat processing, there is both a biogas opportunity and a way to reduce loads on local waste water treatment plants.
Council sector another key area
The consultancy also works on projects for schools, hospitals, aquatic centres and local government assets.
In the council sector, Morgan says many have “aggressive targets” for emissions reduction.
Unlike the commercial property sector, where large portfolio owners find rating systems like NABERS are a driver of value for them, for other sectors it’s mainly about reducing costs.
“Everyone struggles with money,” Morgan says.
Councils, however, “don’t struggle as much, because they take a long-term view of payback”.
Unlike a manufacturer, councils also have some security of knowing they are likely to be around long-term.
Morgan says even though there are now quite sophisticated energy efficiency finance offers around, it is not enough to convince many manufacturers to partake.
“Manufacturing has a limited amount of internal resources, time and capital. [In general] they want growth more than cost-saving.”
Part of the uncertainty is not just around energy costs, wages or other headline issues.
The reality of making things is that products change and consumer tastes change, Morgan says.
Water utilities looking to cut costs
Another sector where there is a good level of efficiency activity is the water utilities sector.
There are two main areas they look to reduce energy use – pumping and low pressure air blowing used to aerate the water.
Tactics to improve energy efficiency include the use of bubble diffusion technology and improved control systems, Morgan says. Ensuring variable speed drives are installed on all pumps and reducing the level of unnecessary recycled flows in the facility are also quick wins.
For any sector, setting appropriate targets and key performance indicators is central.
Morgan says there is a new approach being taken to KPIs for energy, water and emissions that takes into account influencing factors like product mix, production volumes and weather conditions.
This results in equations that correlate more closely to what is actually happening at any given time.
The consultancy is a partner company of Wattly, a software developer and energy efficiency certificate creator and aggregator. Morgan says the companies have experienced dramatic growth over the past four years.
Currently they share 20 employees between them, and last year opened an office in Singapore in addition to existing offices in Sydney and Melbourne.
Singapore ahead on many areas of sustainability
Morgan says there are some areas where Singapore is ahead of Australia in terms of sustainability.
They include measuring building performance, which is mandatory across all asset classes. Morgan says the driver of the “highly sophisticated” approach to performance in the built environment is “very obviously about energy demand”.
The requirements for some aspects are quite rigorous, for example the statutory requirements around chiller performance.
There is also an evolved approach to water efficiency, with recycled water regarded as one of the “four taps” of the city-nation’s water supply. This is another area where Australia lags behind, Morgan says.
“They are very advanced in water reclamation [in Singapore]. There are no waste water plants there – they call them “water reclamation plants”.