How to make your assets earn money for you

What would you do if you were a food or beverage manufacturer or processor and you were told you could save your company thousands of dollars in energy bills every year? Most companies would sign up straight away. But what if part of the condition was that at some point in time throughout the year, certain pieces of plant or machinery were switched off. Pretty risky, right? Not so according to Andrew Sutherland from Enel X, a company that specialises in helping businesses – including those in the food and beverage sector – optimise their energy needs.

Sutherland, who is a consultant for Enel X, works with businesses to strategically reduce their energy demand, based on a signal of electricity grid need or shortage, and to monetise this activity. He said that persuading a company to switch off equipment is probably the hardest sell. But, what if there was no risk involved at all? That, said Sutherland, is the key.

“The trickiest part is going into a business and convincing them we can automate a process that will save them energy and money – even earn them money – by turning off a machine and that it will have no impact on their operations,” said Sutherland. “They have to get their head around the idea that we are going to turn off certain parts of their process at a certain point in time. It is only a handful of hours every year.

“I was explaining the concept recently to an abattoir owner and he said, ‘I have 800 staff. I can’t be turning off equipment’. I explained to him that it wasn’t about switching off all of the equipment. It’s about certain assets being turned off at the right point in time.”

Flexibility
Enel X is a subsidiary of Italy-based Enel Group, which is one of the 100 largest companies in the world with revenue in excess of $126bn in 2018. The company sees a gap in the market where companies can not only save money on their energy consumption, but can contribute to the national grid and even
earn money.

Sutherland said that the company comes to the market with a different point of view to a lot of others in the same space. Enel X helps organisations to reduce costs without the need for investment in new infrastructure, by making equipment more efficient. It has expertise and history working with businesses to identify elements of their existing infrastructure and assets or processes that can help deliver a cost reduction if they are used in a slightly different way.

“We work with businesses to identify what they have, what they could have, and then roll those assets and processes into flexibility or demand response programs that help them lower costs. Importantly, the equipment used fully serves its operational purposes, and further benefit is extracted based on what the equipment can provide to the grid,” he said.

For example, Sutherland talks of a business in Victoria that specialises in cold storage. It houses food and beverage products. What Enel X did was help the company manage its assets in a way that it could curtail the energy load of the refrigeration units at a strategic point in time. This not only saved power, but helped that customer earn revenue from the market to help support the grid and the broader community.

“We installed a meter, which is a technical solution that we set up onsite. It recorded when there were disturbances in the grid as a whole,” said Sutherland. “When that occurred, we sent a signal for only the assets they nominated to make a response that provided value to the grid and therefore earned the customer revenue. For this particular customer, he estimated that year-on-year over three years he saved about 10 per cent on his power bill.”

Companies are surprised how much money they can save, according to Sutherland. Demand response, or power flexibility, has been in Australia for many years, however to many it is a new concept. The market is constantly evolving and transforming, with new opportunities for businesses to take part in the market from a demand point of view.

“We are at the forefront of the changes in the rules. We are an advocate for many changes as well,” said Sutherland. “Our history as a global organisation means we know how valuable power flexibility is. As an organisation worldwide, we have enough power flexibility in our portfolio that can manage the state of Victoria on any normal day. Our expertise is with flexibility and demand response. We are the world’s largest operator in this space and we are also the largest aggregator of load to our market operator in  Australia.”

While it makes business sense to use the service – after all what business doesn’t want to save money – Sutherland also points out that not only is the solution practical, it might also soon prove to be a necessity in some parts of the country.

“In the past four months there has been a series of issues that have had an effect on the grid,” he said. “We’ve had outages with generators in Victoria where two generators were out of action for the majority of 2019, which caused a lot of concern about the reliability of the grid. There have been outages between Victoria and Tasmania with the Bass link. In the past couple of weeks there were a few events between Victoria and South Australia, which has needed assets like ours. Using our service, businesses that offered their flexibility are be paid for making a contribution to the support of our grid. That helps our whole community.”

Sutherland believes that, at the moment, the national power grid finds itself at a critical juncture where there is not enough wind and solar power available to cover any shortfalls in power supply, while battery storage is still too expensive. He also believes Australia hasn’t hit a critical mass to help the transition. The country has hit a point where the grid now needs flexible assets and flexibility that will help advance the transition.

“The drivers in the community are for decarbonisation and climate change,” he said. “People in that frame of mind support the use of flexibility because it advances the situation we want. When we don’t have enough wind or solar, we need flexibility at that point in time to keep the grid stable and to ensure that we are not stifling more investment.”

Sutherland can’t reiterate enough that it’s not about turning off the equipment all the time, it has got to be strategic and it has got to be low impact if at all.

Enel X has proprietary software that helps the customer maximise the outcomes to the market. There is software around the trading and dispatch notices but ultimately it is an automated process that combines hardware at the site and software on Enel X’s end.

“We use a combination of hardware and software,” he said. “We need to install certain meters that will sense all the disturbances in the grid and then give a signal to the site.”

He also points out that there is an underutilised power supply available that a lot of big multinationals in the food and beverage industry have and, again, they could earn money from them – standby generators.

“There are a lot of businesses out there who have realised that the reliability of the grid is not as good as it once was so they have made investments in standby generators,” he said. “These investments are substantial for an asset that sits there largely dormant waiting for the power to go out. What we do is we turn those assets into an active market participant. That asset helps to support the grid in terms of need and in price.

“A back-up generator has an invaluable role. For example, in South Australia when they had the outages in 2016, a lot of the businesses did have generators but they were not adequately maintained and many were not available at the time that the customer actually needed it. By taking part in the power flexibility programmes, they are actively used. It is not a dormant asset.”

Sutherland cites an example of a bakery he has been working with. If it loses power they have a huge amount of waste that will happen; the company will have idle staff, and can only get a certain amount of product out the door if they run on their generator.

“It is an asset that is there, but it is underutilised and it is not properly configured for the site,” said Sutherland. “We are working with that business via a grant and funding with the SA government, to help them get to a situation where the sustainability of their operations is maximised. If there is an outage, they will be able to get all the product through the process and out the door. They therefore minimise waste, which is great for the environment – all the conversion of the resources, all the labour is not idle. Generators play a critical role because the grid, in its simplest form, is no longer reliable as it once was.”

Sutherland expects that their offering might take a little bit of time for some companies to comprehend. However, once they get the details sorted out, it is win-win situation.

“We do not expose the customer to any form of market risk,” said Sutherland. “We incentivise them, and the government incentivises them, and we need their flexibility. We are going to do it in a controlled way so that all of your operations are not affected in any way.”