SA slicing food manufacturing’s energy costs

Food manufacturers’ energy costs can make up at least 15 percent of their total operational costs. Seeing a chance to make improvements across the state's $14 billion food manufacturing industry, FoodSA, South Australia's peak industry body, has released the Energy Efficient Equipment Toolkit.

It's a set of recommendations, guidelines and case studies for food manufacturing businesses to increase their efficiency and productivity by upgrading equipment or improving their existing facilities. While it was made with South Australia in mind, these recommendations can apply to almost any food manufacturer in Australia.

Why are energy costs on the rise?
A lot of businesses are curious as to why energy costs are rising in Australia. It's a combination of factors that boil down to increasing demand and aging infrastructure.

  • Wholesale costs contribute 40 percent of energy cost. These are all costs associated with generating electricity – as costs of resources go up, so does the wholesale cost.
  • Network charges contribute to 40 percent of energy cost. These are all costs associated with the energy network – mainly upgrading existing infrastructure and building new components to deal with the country's rising peak demand.
  • Retail costs make up 12 percent of the total cost. This is the supplier's profit margin, and therefore rises inline with the other costs.
  • Renewable energy schemes count to eight percent of the cost – these are the costs associated with hitting Australia's Renewable Energy Target. This can be turned in to a benefit for the business – more on that later.

The FoodSA Energy Efficient Equipment Toolkit Introduction has a further breakdown of energy costs and their impact on food manufacturers.

Benefits of energy efficiency
While it might seem like the sole benefit of becoming more energy efficient is saving on energy costs, there are a number of flow-on benefits, if managed properly.

  • Reduced costs on material consumption, such as water or refrigerants, as new or upgraded equipment becomes less wasteful.
  • Reduced maintenance costs and downtime.
  • Improved productivity.
  • Enhanced branding and profile of the company with marketing and public relations opportunities.

Where to start
When there are so many components along a business' production line, it can be hard to know where to start.

FoodSA recommends the following procedure:
1. Assess your business and where savings can be made. Food manufacturers are diverse, so energy requirements along their production lines will all be different. The table below covers many of the major energy spends and some common weighting for a range of businesses. Identify which part of production uses the most energy and focus on that to begin with. These are the seven facets of food manufacturing the FoodSA Energy Efficient Equipment Toolkit examines in detail.

2. Look in to opportunities to optimise your existing equipment.
3. Follow that up by researching possible benefits to retrofitting and replacing existing equipment. These are bigger investments with longer payback times, but they could result in greater savings down the road.
4. Collect information on your project. This will let you put a figure to any upgrades, as well as projected payback times and long-term benefits.

Page 7 of FoodSA's Energy Efficient Equipment Toolkit's Business Case has a more advanced formula to calculate project energy savings. Essentially, calculate energy consumption of your current equipment by multiplying the equipment power rating by its efficiency and the amount of hours it runs per year. Do the same for possible new equipment, which might have both better power rating and, if more productive than the old unit, less hours operating per year. Subtract the new unit's running cost from the old, and you have savings per year, which you can then use to predict payback times and long-term savings.

Refrigeration toolkit (click link for full details):
There are several simple optimisations for refrigeration that can greatly increase energy efficiency. These are cheap, fast and provide real, immediate savings.

  • Use the maximum safe temperature setting: You can decrease power use by using the highest acceptable temperature setting for your product. Rather than freezing everything to kingdom come, settle on a safe temperature. Each 1°C increase in temperature reduces power usage by two to four percent
  • Seal doors well: Energy consumption can increase by 10 percent due to faulty seals and a further 10 percent due to doors left open by staff. Avoid this by installing tight seals and implementing automatic door closers or training staff.

Further suggestions include upgrades (big and small) – such as new blast freezers or replacing fans, refrigerants or insulation with more efficient alternatives, as well as changes in procedure – such as overcooling products during the night in off-peak power times and using less energy to cool them during the day.

Cooking and Heating toolkit (click link for full details):
The variety of cooking and heating systems varies moreso than refrigeration, so this can be a more complicated case. Here are some examples of upgrades that will lead to a more energy efficient business, and more savings down the line:

  • For pasteurising products, consider switching from a steam boiler, which are about 50-90 percent efficient due to overheating water, to a hot water boiler. These are more efficient – around 90-95 percent efficient – and less susceptible to heat loss. By installing a hot water boiler close to the pasteuriser, you can also save up to 20-30 percent on boiler power usage as there's less heat lost on the journey. Water boilers also have lower maintenance costs in the long run, providing flow on benefits.
  • For mixing liquid products, a pneumatic or puled air mixer is an extremely efficient tool. Energy savings can be up to 95 percent over typical mixers. Rather than having separate components to a mixer, externally or internally, such as mud mixers or eductors, the pneumatic mixer releases compressed air or gas in pulses which circulates 100 percent of the product. There are no moving parts that cause downtime or expensive maintenance, and it results in a homogenous product with a uniform temperature.

Case studies
Golden North, ice cream and frozen yoghurt producer, used the FoodSA guidelines to put together a case study of their possible energy savings. Their operations consumed up to 6,930 gigajoules of electricity and produced 1,760 tonnes of carbon dioxide. 75 percent of their energy spend went in to refrigeration, which was the main focus of their upgrades and replacements.

A team of independent consultants suggested the following changes to their operation:

  • The installation of one single screw compressor as a replacement for multiple, less efficient compressors.
  • The use of variable speed drives to allow a more efficient use of the compressor.
  • The installation of water heat exchangers for oil cooling, resulting in a significant improvement in the compressor efficiency.
  • The installation of variable speed fans to control the condenser's discharge pressure.
  • Golden North have secured a grant to fund half of the $895,000 investment. They stand to save:
  • Annual energy savings of 641,000 kWh.
  • An emissions reduction of 655 tonnes of carbon dioxide, equivalent to avoiding the carbon dioxide emissions of 136 cars annually.
  • Annual energy cost savings of $127,700.

Thomas Foods International is Australia's largest family owned meat processing company, with annual revenue over $1 billion. They reviewed a set of heat recovery efficiency upgrades for their Lobethal, South Australia processing facility. The facility, which processes 5,000 heads of lamb a day, could make large savings by fully utilising their heat reclamation system to produce all the pre-heated water (up to 70 degrees Celsius) needed. On top of that, a replacement of the shrink packaging system and upgrading boiler facilities would result in the following predicted outcomes, for an outlay of $1 million:

  • Annual gas savings of 224,000 litres of LPG.
  • Annual electricity savings of 177,800 kilowatts per hour.
  • Annual cost savings amounting to over $135,000.
  • Annual savings in water consumption of 3,700,000 litres, with an estimated cost of over $9,000.
  • Annual savings in water treatment and service costs of $28,000.
  • Annual savings in maintenance costs, estimated between $15,000 and $20,000.

Challenges of energy efficiency
It's easy to get excited about increasing your efficiency, but there are challenges and risks inherent in any investment. Manufacturers are likely busy managing cash flow, staff, capital, increasing their product's value and the day-to-day challenges of running a business.

To properly analyse your possible energy savings and improvements, you'll need to invest time and research to identify the best places to make efficient gains.

Some of these are fairly simple calculations – how much energy will a new piece of equipment use compared to your current equipment? What does that translate to in terms of cost?

But to make a truly detailed assessment, you also need to investigate other costs involved. Is the downtime cost of installing new gear worth it? What's the timeframe on return on investment?  Can this money be better spent on something else, such as a marketing campaign?

By looking in to each of these questions in detail, you can arrive at an informed decision: yes or no.

This should be on a case by case basis. Maybe your company can't afford to replace a refrigeration unit – but you can install a new variable speed drive on the unit that will decrease maintenance costs and not cause too much downtime.

Any investment in energy efficiency is a J-curve investment.  You make an investment now to save money in the future. That means there's a downturn – the initial investment – a catchup – as that investments begins to pay off – and the 'blue sky', where the investment pays off by saving (essentially making) money for you. Some investments will have shorter J-curves or payback periods, and it might make sense to start with these.

There are the flow-on benefits to take in to account as well. Your company's brand can easily be improved by instituting energy efficient procedures as well. By undertaking research on where your business can make improvements and demonstrating a willingness and ability to make them, you could have a solid case when applying for a federal or state level grant. This is one potential outcome that could take the sting out of the initial investment, as it did for Golden North.

Further energy opportunities – the big picture
Another area which other states could take a note from South Australia is in renewable energy. Some commentators think that the key to reducing energy bills across the spectrum is a wider uptake of renewables.

South Australia leads the nation in wind power, which depresses regional and peak energy costs, reducing energy prices by more than 40 percent during heatwaves. The average contribution for wind energy is around 25 percent of the state's needs, and up to 65 percent during certain periods.

Due to rebate programs and grants, South Australia also leads in the solar game, with around 16 percent of homes having rooftop solar power, and a multitude of businesses and government installations contributing as well.

The advantages of this become clear during heatwaves, with a majority of unintentional blackouts – which would bring manufacturing production a halt – being avoided due to peak demand being cut by renewable energy.

It's not something one manufacturer can do on their own, but on a wide scale, uptake of renewables certainly helps even the load over the wider power grid. As a result of renewables, South Australia's wholesale energy price reached the lowest it's been since the start of the national electricity market.


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