![]() |
Best Practice Guide |
|
Food and Beverage Growers and Processors |
||
![]() |
IntroductionEnergy, Agriculture and Food Processing
In a world of competing pressures, it used to be understandable for food growers and processors to overlook energy. For some, energy is only a small percentage of total operating costs, dwarfed by more expensive inputs like labor and materials. Others view energy as a "fixed" cost - machines and lights need to stay on, after all. Still others might recognize the importance of energy efficiency and energy conservation, but don't think they have the time or resources to spare to do anything about it. The tide is changing. Rising electricity and natural gas prices are front-page news, and will continue to increase as global resources dwindle. Price spikes, though temporary in nature, place immediate strain on already tight profit margins. Supply shortfalls, natural disasters, and other reliability problems that cause service disruptions can strike unexpectedly and, at times, with great cost, stopping production lines and potentially fouling equipment and product. Material costs are also rising in response to energy prices and shortages, as evidenced recently by Hurricane Katrina. And, as energy becomes part of everyday conversation, people are connecting it to environmental concerns like climate change and pollution control, realizing that everyone and every business needs to do their share. In response, businesses across California are adopting no-cost and low-cost Best Practices as well as smart investments in energy efficiency and energy conservation. People soon discover that this is a win-win proposition. Utility bills drop, which helps payback the cost of energy projects. Savings on energy bills increase bottom-line performance, making more money available for other business activities, thus increasing total energy productivity. Energy left unchecked, on the other hand, is money wasted and profits lost. The benefits of managing energy extend well beyond direct cost savings, typically resulting in multiple indirect benefits. Buildings are more comfortable and property value increases. Production can increase with fewer work stoppages and less health and safety risks. Equipment life is extended. Opportunities may even arise to improve product quality, such as with better cooling and refrigeration. To investors and lenders, successful energy management helps demonstrate sound overall management practices, boosting confidence in executive leadership.
There has never been a better time to invest in energy efficiency projects that improve total energy productivity. Publicly funded incentive programs are enjoying historically high funding levels, and offer a broad set of tools: tax credits, purchase rebates, design assistance for new construction, engineering consultations, equipment testing and energy audits, and tool-lending libraries, to name just a few. The State of California has committed an unprecedented $2 billion towards energy efficiency over the next three years. On the national level, the federal government passed the Energy Policy Act (EPAct) of 2005, which provides clean generation, transmission, and energy efficiency incentives estimated at $14.5 billion over the next ten years.
Businesses interested in renewable energy as well as energy efficiency can take advantage of additional funding sources. California's Solar Initiative provides $2.8 billion over the next 11 years to encourage installation of photovoltaic panels. The EPAct provides incentives for solar, wind, geothermal, biomass and landfill gas. Farms, ranches and small rural businesses are eligible for additional funding for energy efficiency and renewable energy projects through the U.S. Department of Agriculture. Remember, though, that it is most cost-effective to improve energy efficiency before installing onsite generation. Besides funding, many resources exist to assist food and beverage processors with planning and implementing energy efficiency projects. Off-the-shelf, well-tested technologies are widely available to improve the energy performance of almost any equipment or building system. Several associations, organizations, and institutions sponsor research and pilot projects that help industry peers innovate new ways to save energy and share best practices, such as the partnership between the California League of Food Processors (CLFP) and the California Energy Commission and the multi-state State Technologies Advancement Collaboration. Practical education and training resources abound, with many excellent services provided free-of-charge by the local utility. This best practice guide is meant to aid food and beverage growers and processors who want to learn more about the benefits of energy management. It describes steps taken to reduce energy by a number of different agricultural and food and beverage processing businesses. It also provides basic information about tools and technologies that can be adopted to help save energy. Some sections discuss energy management specific to agricultural production, primarily information on pumps and motors used for irrigation. The rest of the guide discusses industrial building and equipment systems, and applies more generally to both growers and processors. Throughout, links direct readers to more in depth and technical resources for further information.
Any discussion of agricultural energy in California must consider the role of water pumping and irrigation. More than 85 percent of farms are irrigated, requiring energy-intensive pumps and motors and a complex system of water projects administered by water agencies and irrigation districts. Water resources must also be shared with burgeoning urban areas, which affects agricultural pumping practices. In total, more than 10 million megawatt-hours (MWh) of electricity are consumed each year for agricultural water pumping, including energy used by irrigation districts for surface and groundwater pumping, on-the-farm groundwater and booster pumping, and conveyance of water to irrigation districts. This is roughly equivalent to the annual electric needs of 1.6 million California homes. Although dominated by water pumping, farms and ranches also use energy for a number of other purposes, including:
Most farms and ranches have ample opportunity to improve energy efficiency and reduce energy costs. A study by the American Council for an Energy-Efficient Economy, for example, suggests that potential annual energy savings in California could total 5.4 trillion Btus or about $94 million dollars.
California's more than 3,000 food and beverage processors are the third largest industrial users of energy, behind petroleum refining and manufacturing of computer and electronic products. Approximately 60 percent of this energy is from natural gas, 20 percent is from electricity, and 20 percent is from other fuel sources including coal and renewables. The cost of energy for processors ranges from three to 45 percent of the total cost of production. Although actual energy use varies widely between market sectors, and between individual companies, the following tables provide a general sketch of cumulative energy use and end-use applications. Estimated Annual Water and Energy Use of Major Food Processing Sectors in California (Technology Roadmap: Energy Efficiency in California's Food Processing Industry, California Energy Commission, October 2004).
(1) CLFP, 2003
(1) CLFP, 2003
The impact of high electricity prices can hit food growers and processors particularly hard. Peak production occurs during harvest, which for most crops coincides with peak electricity demand in the summer months. Food growers and processors cannot postpone operations, and must pay peak charges. Equally important are concerns over energy reliability. Any electrical supply disruption can cost food and beverage processors much more than lost production if produce and food stuffs cannot be safely maintained or if equipment is damaged by a sudden loss of power. A survey of food processors in California conducted by the University of California, Davis California Institute of Food and Agricultural Research (CIFAR) found that the average number of power outages per facility per year was 5.2 and the average cost per outage was more than $70,000. The CIFAR study also found that almost three-quarters of those surveyed felt that managing energy consumption would be more important over the next five years. The top reasons for this were cited as a need to reduce costs to remain competitive (67 percent), increasing plant energy usage (62 percent), and rising electricity and natural gas prices (52 percent each). Natural gas demand in California grows steadily each year, too, faster than the national average. California imports nearly 85 percent of its natural gas, and must compete with every national market for supplies. Since California uses about half of its natural gas for electric power generation, any increase in the price of natural gas will result in electricity price spikes or supply shortfalls. Meanwhile, across the country, more wells are producing less natural gas; supplies worldwide are predicted to be in decline. Nearly half of all natural gas consumed by food and beverage processors powers onsite boilers and, to a lesser extent, cogeneration of hot water, steam and electricity. Both boiler and cogeneration systems produce steam for use in a number of applications such as process heat, sterilization, and building heating. In total, steam accounts for nearly 60 percent of all energy used for production and assembly.
Food and beverage processors can reduce energy costs by investing in energy efficiency and energy conservation. The Congressional Office of Technology Assessment, for example, determined that energy-intensive industries such as food and beverage processing can reduce energy use by 16 to 37 percent using existing technologies. Many businesses choose to implement no-cost or low-cost measures first, since this gives managers the opportunity to evaluate the benefits of energy management. Costs savings can then finance additional, future measures that may be more capital intensive. Remember, though, that best practices often do not require equipment replacement or capital expenses for new technologies - checking and repairing leaks in compressed air systems, for example, yields big savings without necessitating installation of new equipment. Try to plan for continuous plant optimization, and schedule energy projects to work within budgetary and operational limitations. Cost savings are also possible through rate management. This entails analysis of actual energy use, peak periods, and equipment loads compared with different rate schedules offered by local utilities and other energy service providers. Plant operations and schedules are then adjusted to take full advantage of cheaper time-of-use rates through load shifting or load shaving strategies. Although the CIFAR survey was conducted previous to the 2001 energy crisis, the study found that 64 percent of food processors already discuss rate schedules with their utility or marketer, and that 38 percent are enrolled in interruptible rates. Another 37 percent take advantage of lower off-peak rates. By reducing peak energy use, food and beverage processors can reduce their own costs while helping to ensure reliable energy supplies for their entire community.
All data from the U.S. Energy Information Administration, Manufacturers Energy Consumption Survey (MECS). Grey-shaded rows are from MECS 1998. All others are from MECS 2002. (a) Time-of-use and interruptible rates, for example. (b) Needed to manage energy use for programs such as real-time pricing. (c) Boilers, burners, insulation, and piping, for example. (d) Compressors, sizing, and leak reducion, for example. (e) Adjustable speed drives, motors, and pumps, for example. (f) Facility heating, ventilating, and air conditioning (HVAC) excludes steam and hot water. (g) A 'Full-Time Energy Manager' is a person whose major function is to direct or plan energy strategies relating to energy use and energy-efficient technology within the establishment. |