I'm in the process of setting up an EMS for the small company I work for. One of our targets is reduction in energy use; the boss has suggested a target of a 20% reduction over 2 years. However, he wants the energy use to be calculated as a percentage of turnover so it would be possible, if turnover increased, to achieve our "reduction" when in fact energy use stays the same or increases. What do people think? Is this an acceptable way to calculate our targets?

However, he wants the energy use to be calculated as a percentage of turnover so it would be possible, if turnover increased, to achieve our "reduction" when in fact energy use stays the same or increases. What do people think? Is this an acceptable way to calculate our targets?

Do you mean "turnover" as in employee turnover?

Without knowing what you do or your type of process, it's difficult to comment.

You need to understand the behavior of your cost in your type of business. Generally, there is a fixed cost plus another portion which is a variable. The fixed cost per unit volume will be reduced as your turnover or volume increases (based on current set-up) but not the variable. If you have enough data, you should be able to estimate the ratio of fix/variable cost at different outputs and use them as benchmarks to determine savings.

Do you mean "turnover" as in employee turnover?

No, I mean "turnover" as in financial turnover.

Without knowing what you do or your type of process, it's difficult to comment.

You need to understand the behavior of your cost in your type of business. Generally, there is a fixed cost plus another portion which is a variable. The fixed cost per unit volume will be reduced as your turnover or volume increases (based on current set-up) but not the variable. If you have enough data, you should be able to estimate the ratio of fix/variable cost at different outputs and use them as benchmarks to determine savings.

I agree. Your energy use also has fixed/variable components. Keeping the plant lit versus running the machines (if that is applicable) would illustrate that. It also has seasonal components (heat, air conditioning) that may not coincide with any seasonality of sales. To clearly understand your savings you need to see what fixed energy savings apply to fixed energy use and what variable energy savings apply to variable energy use. It may not be as clear when combining them.

However, these are high resolution issues, does your target need that much resolution? Are you complicating it for the sake of meeting it? Or would a lower of net energy saving be more suitable?

Energy consumption is huge in our industry. We actually have permits that say we cannot produce more than X tons per a 24 hour period. Therefore, we do measure energy consumption by ton. (the more tons we produce, the more effecient we are, and the lower the KWH/Ton is.

Energy consumption is huge in our industry. We actually have permits that say we cannot produce more than X tons per a 24 hour period. Therefore, we do measure energy consumption by ton. (the more tons we produce, the more efficient we are, and the lower the KWH/Ton is.

Just curious - would you say the variable cost of energy in your process dwarfs the fixed energy costs - as to make them statistically insignificant and not worth the bother of tracking? Or, do you track those costs, too?

If you are using the term "turnover" the same as per capita generated, yeah, sure...pretty common. All you're doing is putting in a variable to help keep things balanced.

If you are using the term "turnover" the same as per capita generated, yeah, sure...pretty common. All you're doing is putting in a variable to help keep things balanced.

Sorry if I'm using unfamiliar terminology - it may be one of those UK/US differences like CV/Resume, pavement/sidewalk etc.

Sorry if I'm using unfamiliar terminology - it may be one of those UK/US differences like CV/Resume, pavement/sidewalk etc.

If you'll check out my Profile you'll see that UK phrases may not be that unfamiliar...We have 1 or 2 Brits in the company:lol:

Bob, we know fixed and variable, and can report either or both.

Sorry if I'm using unfamiliar terminology - it may be one of those UK/US differences like CV/Resume, pavement/sidewalk etc.

Wikipedia helped clear that one up....

Hi

There are various performance indicators which can be used for setting targets for energy consumption:

a) absolute energy reduction - irrespective of the change in the quantum of activity
b) Ratio indicator - e.g. energy consumed per unit production; energy consumed per unit value addition; energy consumed per turnover
c) Indexed - e.g. energy consumed indexed to the increase/decrease of production (in terms of number of products or sales volume etc.) compared to a baseline year

Our experience is that the indicator is useful when:

a) the energy consumed is measured and reported in primary energy units (e.g. GJ). You may be using energy in the form of electricity (KWh), gas (Kg or cu.m) , steam (therms), compressed gas (cu.m), diesel (KL) etc. All these forms of energy need to be converted to primary energy units for a better monitoring of the KPI
b) specific energy consumption (i.e. energy used per unit production) is measured and monitored

Indices based on "currency" value have their problems as they are affected by the prices of energy as well as the parity of the currency you use with other currencies. Our experience with such an indicator has been dismal.

From the external stakeholder point of view the absolute energy used by a company will be of interest; but it is difficult to reduce absolute consumptions when there is growth.

Considering all the above I would suggest a ratio indicator like energy cosumed per unit production as the most appropriate indicator for you. You may like to seggregate the energy used for production from that used for accommodation and utilities for a better understanding of the actual energy used for production. On similar lines you may take up projects for energy consumption reduction for accommodation; here the indicator may be energy used per unit area/volume of office space or energy used per employee etc.

Once you select the indicator, the 20 % reduction target that you set needs to be monitored using this indicator; then the whole exercise will be meaningful.

with kind regards,

Ramakrishnan

The process of dividing a data set by a variable to negate the effect of the variable on the data is called normalization. It is quite common in my experience in an EMS to normalize data that is monitored or is the subject of a CI initiative.

I have found five common normalizing factors are used:

1. Number of widgets produced
2 - Dollar value of production
3 - Labour hours
4 - Machine hours and/or
5 - A bulk parameter (such as tons of resin or tons of steel used).

The normalization factor that makes sence for your operation/data may take some trial and error to find. Some of my clients carry more than one normalization factor for a couple of months to see which one makes the most sence / gives the best insight into the data set.

John,
The target needs to be made according to known consumption and whether your company is already performing to a high energy use efficiency.
Benchmark figures may be available for your industry sector and employee total from the likes of Envirowise and/or Carbon Trust publications found on-line.
These benchmarks will be measured in terms of Kwh/product or per employee and will take account of fluctuating output.

Alternatively there may be some local resource efficiency assistance (FOC!) in the form of sites visits, sponsored by local councils or regional development agencies.

An unconsidered 20% reduction in absolute use may end in tears if an employees performance is based upon that target and the use of turnover is not a suitable benchmark to use with so many variables it contains.

Nick