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The Lean and Energy Toolkit

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Chapter 2: Overview of Energy Use and Lean

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This chapter provides background information on energy use and describes how Lean implementation efforts can increase energy efficiency.

Energy Sources and End Uses

Key TermIn the manufacturing sector, the predominant energy sources are natural gas and electricity (a secondary source, typically generated off-site by a utility using one or more primary energy sources or fuels). Manufacturers also use other energy sources, such as fuel oil, for producing heat and power on-site. Some facilities have on-site co-generation, where they combust a fuel (e.g., natural gas or wood scraps) to produce heat and electricity. Figure 3 lists major energy sources used by the industry and manufacturing sectors in the U.S. economy.

Sources of Energy Used for U.S. Industry and Manufacturing, 2005 (Figure 3)

Sources of Energy Used for U.S. Industry and Manufacturing, 2005 (Figure 3)

Source: U.S. Energy Information Administration, Annual Energy Review 2005, Washington, DC, July 2006. www.eia.doe.gov. Exit EPA Disclaimer

Key TermAggregate, facility-level information on energy use (typically derived from monthly utility bills) only tells part of the story. Understanding the energy end uses—what work we use the energy to do—reveals more useful information to identify opportunities for improving efficiency and reducing costs. Box 5 lists several of the common end uses for energy in manufacturing. In an office setting, end-uses primarily include heating, ventilating, and air conditioning (HVAC), lighting, and operation of appliances and computers.

Energy End Uses: What Do We Use Energy to Do? (Box 5)

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Key PointWhile identifying energy end uses is often straightforward, determining the amount of energy used by each end use can be challenging—but end use information is essential to targeting waste and improvement opportunities. In the context of Lean, it may even be useful to understand energy end use information at the process and equipment levels. Chapter 3 discusses some strategies and techniques for better understanding energy uses and costs at your facility.

Looking at energy end uses across the manufacturing sector in the U.S. economy provides an indication of where efficiency improvement opportunities may exist. Tapping into sector-specific resources can help companies identify additional areas of efficiency opportunity within their sector (see Appendix B for information on sector-focused energy reduction resources).

Process heating accounts for 53 percent of direct energy end use at manufacturing facilities, while machine drives and motors account for another 22.1 percent, according to a recent study by NAM (see Table 1). Chapter 4 describes specific strategies for reducing the energy used by these and other types of processes.

Key PointConsider targeting your facility’s energy efficiency efforts on two key end uses that are likely to account for a significant portion of your facility’s energy use. As shown in Table 1, the following end uses typically have energy savings opportunities:

    1. Process heat
    2. Machine drives and motors

For facilities without these types of energy end uses, HVAC systems and lighting may be good end uses to target.

Table 1:  Manufacturing Sector Inputs for Heat, Power, and Electricity Generation by End Use
Industrial Sector End Use Category Trillion British thermal unit (Btu) Percentage of Total Direct End Use
Indirect End Use (Boiler Fuel) 3,635
Direct End Use 7,655 100%
All Process Uses 6,323 82.6%
Process Heating 4,055 53.0%
Machine Drive 1,691 22.1%
Electrochemical Process 298 3.9%
Process Cooling and Refrigeration 210 2.7%
Other Process Uses 69 0.9%
All Non-Process Uses 1,314 17.2%
Facility Heating, Ventilation and Air Conditioning 692 9.0%
Facility Lighting 211 2.8%
Conventional Electricity Generation 243 3.2%
Other Facility Support 96 1.3%
Onsite Transportation 69 0.9%
Other Non-Process Uses 3 0.0%
End Use Not Reported 157  
Total 11,447  
Source: Prepared by the Leonardo Academy from U.S. Department of Energy data, 1998 Data from Annual Energy View 2003, published September 2004.

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Understand the Costs of Energy Use

Key PointUnderstanding the costs of energy use can raise awareness of the potential value of identifying and eliminating energy waste during a Lean event. The costs of energy use are not always “visible” to production managers because they are rolled up into facility overhead costs, rather than assigned to production areas. Explicitly tracking costs associated with individual processes or equipment can encourage energy conservation. If, however, cost savings from energy efficiency improvements revert to overhead, or result in lower future budgets, production managers may not have an incentive to reduce energy use. It may therefore be necessary to create incentives for reducing energy use by sharing energy savings.

One of the primary data sources for energy cost data is your facility’s utility bill. Utility bills often include the following types of data:

New ToolBecause of variation in energy use and costs, it can be helpful to use spreadsheets or other systems to monitor your facility’s energy performance and costs over time. An example Electrical Power Bill Analysis Worksheet is below. Similar worksheets may be used to track monthly costs for natural gas and other fuels.

Table 2: Electrical Power Bill Analysis Worksheet
Date Consumption Consumption Cost Peak Demand Demand Cost Total Cost
(months) (kWh) ($) (kW) ($) ($)
Jan 198,800 $12,975 948 $8,759 21,734
Feb 331,200 $20,374 912 $8,427 28,801
Mar 245,000 $13,951 710 $6,560 20,511
Apr 305,600 $18,902 948 $8,759 27,661
May 368,000 $22,621 1,222 $11,290 33,911
Jun 318,400 $19,651 888 $8,205 27,856
Jul 289,200 $18,855 890 $8,223 27,078
Aug 335,600 $21,720 964 $8,907 30,627
Sep 367,600 $23,638 952 $8,796 32,434
Oct 387,200 $25,384 1,144 $10,570 35,954
Nov 350,000 $22,583 824 $7,613 30,196
Dec 374,400 $24,701 1,105 $10,210 34,911
Totals 3,871,000 $245,355 11,507 $106,319 351,674
Source: Muller, Michael R. Dr.  Self-Assessment Workbook for Small Manufacturers Version 2.0, http://iac.rutgers.edu/database/technicaldocs/IAC_Manuals/selfassessment.pdf, Exit EPA Disclaimer October 2003.

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Energy Efficiency Benefits of Lean Implementation

Key PointSignificant energy savings typically ride the coattails of Lean activities—even without explicit consideration of energy use. These coattails can be understood by thinking about energy in the context of Lean’s deadly wastes.

Energy Use Reductions on the Coattails of Lean

The focus of Lean is on identifying and eliminating non-value added activity, or waste, from processes. Lean typically targets seven so-called “deadly wastes”:

  1. Overproduction
  2. Inventory
  3. Transportation
  4. Motion
  5. Defects
  6. Over processing
  7. Waiting

Key PointEnvironmental and energy wastes are not explicitly included in the seven deadly wastes of the Toyota Production System. This does not mean that the wastes are unrelated to the environment, however. In fact, your company may have already seen large energy use reductions from implementing Lean, because energy and environmental wastes are embedded in, or related to, the seven deadly wastes. Table 3 lists energy impacts associated with wastes targeted by Lean methods.

Table 3: Energy Use Hidden in Lean Wastes
Waste Type Energy Use
Overproduction
  • More energy consumed in operating equipment to make unnecessary products
Inventory
  • More energy used to heat, cool, and light inventory storage and warehousing space
Transportation and Motion
  • More energy used for transport
  • More space required for work in process (WIP) movement, increasing lighting, heating, and cooling demand and energy consumption
Defects
  • Energy consumed in making defective products
  • More space required for rework and repair, increasing energy use for heating, cooling, and lighting
Over processing
  • More energy consumed in operating equipment related to unnecessary processing
  • Use of right-sized equipment often results in significant reductions in energy use per unit of production
Waiting         
  • Wasted energy from heating, cooling, and lighting during production downtime

Key PointDespite these relationships between Lean deadly wastes and energy use, Lean efforts often overlook opportunities to save energy. Your company can enhance its Lean performance by ensuring that energy- efficiency opportunities are explicitly identified during Lean activities.
 

To Consider
 

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