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Industry could save £2.5 billion at no cost – report

Posted on 19 November 2012

UK businesses could make up to £2.5 billion in energy cost savings
simply by implementing variable speed drives, according to a new survey.

The savings could be made within the next five years, according to
the report, from Siemens Financial Services, which highlights the
enormous benefits in the industrial sector from installing these drives.

What’s more, it says the investment could be made at no cost with savings helping to repay the initial capital outlay.

What are variable speed drives?

Variable speed drives (VSDs) can be fitted to many kinds of motors to make them run more efficiently.

They convert the incoming electrical supply, which has a fixed
frequency and voltage, into variable versions of both, to permit the
motor speed to be varied from zero to around 120% of its maximum rated
speed.

Because most motors operate at a fixed speed, even when their full power is not needed, between 30 and 80% of energy is wasted.

A clue as to how much this adds up to can be gained from the
statistic that, throughout Europe, electric motor-driven systems account
for around 70% of total industrial electricity consumption.

Replacing or fitting a VSD is a relatively minor cost, given that
over 95% of the lifetime costs of an industrial motor is the cost of the
electricity it consumes.

Around 50-70% of industrial processes would benefit from this technology. These include:

 constant torque loads, which include centrifuges conveyors,
extruders, grinders, mills, mixers, screw and reciprocating compressors,
crushers and surface winders, the power consumed is in direct
proportion to the useful work done, so halving the speed will result in
halving the power consumed; and
variable torque loads, such as fans as using heating, ventilation
and cooling systems, since the power consumed varies with the cube of
the motor speed, any speed reduction on the part of the motor will
result in large energy savings. A 20% reduction in motor speed can
result in a 50% power saving.

According to the Carbon Trust, a variable speed drive for a fan
powered with a 5.5kW electric motor costing around £1,500 to install,
excluding any controls, and operating for 80 hours per week, would
therefore save £1,179 a year, based on electricity at 13.4p/kWh.

The cost of purchasing the VSD would be recouped in just over a year.
In this case, it would be irrational not to replace the drive. But what
if the upfront cash is not available?

Financing techniques

Siemens says that despite the current tight credit conditions
companies can easily afford to invest in VSDs through the use of asset
finance such as leasing and renting.

These techniques offset the monthly cost of the new equipment against
the energy savings it delivers across the financing term, effectively
making it a zero net cost or even cash positive investment.

In the manufacturing sector this is often highly attractive, as
up-to-date equipment may not only lower energy costs, but also boost
productivity and extend manufacturing capability, generating more
revenue and margin.

The report says that such a deal has the advantage of tax efficient,
fixed payments for the agreement term, so the customer has the
reassurance that tailored payments can be offset against the expected
energy savings.

Darren Riva, Head of Energy Efficiency Financing for Siemens
Financial Services in the UK, comments: “The magnitude of the estimated
potential savings enabled by VSDs presents an extremely compelling
business case.

"Even when a project cannot completely offset the equipment upgrade
with energy-efficiency cost savings, the financing arrangement can
nevertheless subsidise the larger part of the upgrade cost.

"As up-to-date equipment may not only reduce energy costs but also
boost productivity and extend manufacturing capability," he said,
“manufacturers should leverage such alternative financing solutions to
capture the significant potential cost savings hidden in the industrial
processes.”

Other savings

This SFS report highlights just one of several energy-efficiency
initiatives that could lead to substantial cost savings in the
industrial sector. There are many more.

Riva adds that this means: "the true potential for energy and costs
savings in industry is very large indeed." Other technologies are:

Heating, ventilation and air conditioning
Supply voltage optimisation
Power management
Power optimisers for motors
Improved factory or process controls
Intelligent lighting controls and low-energy lighting
Building controls
Heat recovery
Monitoring and targeting systems
High efficiency motors.

The Carbon Trust can advise on arranging low cost finance for all these types of measures and more.

 

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