Cooperative funding strategies can make it possible for mill leaders to identify and support energy reduction opportunities and bring energy innovation into mills.
Saving energy means saving money. The problem: saving energy costs money, too.
As a very energy-intensive industry, pulp and paper manufacturers may find it particularly challenging to identify and fund energy reduction projects. Fortunately, local, state, and federal governments also reap the economic benefits of energy reduction—and many states have funding programs that incentivize projects at both the home and industry level.
FOCUS ON ENERGY
One such program is Focus on Energy, Wisconsin utilities’ statewide energy efficiency and renewable resource program, which is funded by the state’s investor-owned energy utilities and participating municipal and electric cooperative utilities. Focus on Energy works with eligible Wisconsin residents and businesses to install cost-effective energy efficiency and renewable energy projects. Wisconsin is the top state for forest products production, so Focus on Energy has plenty of experience funding projects in pulp and paper manufacturing facilities.
“Given the capital intensive nature of our mills, much of our capital spending is allocated to simply maintaining our facilities,” says Steve Brooks, director, corporate energy for Verso, which has mills in Stevens Point and Wisconsin Rapids. “Focus on Energy provided the needed mechanisms to finance energy projects that not only provide environmental benefits through reductions in fuel and energy consumption, but importantly, help improve financial performance.”
For states, the benefits of such a program are many. Capital expenditure in manufacturing creates jobs, supports local economies, and offers environmental benefits by focusing on cleaner energy and lower emissions. In Wisconsin, the Focus on Energy program reduces the need to purchase coal and natural gas from other states, and lessens the need for additional power infrastructure. The energy and dollars saved through Focus on Energy have delivered more than US$1 billion worth of net economic benefits to Wisconsin since 2011, according to the program. Energy savings from completed projects, coupled with positive impacts across the state’s economy, produced a US$4.07 return for every dollar invested during 2015 and 2016.
Yet companies that want to take advantage of programs like Focus on Energy still may need assistance with identifying energy projects and in finding initial funding. CleanTech Partners, headquartered in Middleton, WI, is the implementer for Focus on Energy’s Emerging Technologies program, and a sub-contractor to Leidos, an implementer for Focus on Energy’s Large Energy Users Program. According to Masood Akhtar, president and founder of CleanTech Partners, the key was recognizing that a “one-size-fits-all” strategy doesn’t work. “The pulp, paper, and packaging industry isn’t just energy-intensive—it’s also resource limited,” he says. “Another challenge is that often, mills don’t have the staff and/or required innovation-focused subject matter experts on hand. And frequently, no matter what potential benefits are finally identified, mills just don’t have the capital available to throw into big energy projects.”
To meet these challenges, Focus on Energy’s Energy Advisors work with mills to “fill in the gaps” of expertise and funding. “We use various tools, such as technical assistance, subject matter expertise, grants, interest-free loans, and Strategic Energy Management,” Akhtar says. “When appropriate, we form Corporate Energy Committees, which include representatives from industry and Focus on Energy, and meet quarterly or semi-annually to discuss the mill’s short- and long-term needs.”
The specialized knowledge that partners bring can be a huge benefit for mills. “You can have an internally-developed energy reduction program, but at some point you need some outside perspective,” says Jack Williamson, general manager, Green Bay Packaging. “The Focus on Energy team can do that. They don’t just come in, recommend one project, and you never see them again. If you use the program as it’s intended, those folks become contacts and resources. They’re the outside support to keep you driving.”
Fig. 1: Since 2010, Focus on Energy has provided incentives valued at about US$16 million to the pulp and paper industry.
Fig. 2: Lifecycle energy savings for Focus on Energy-supported projects in the pulp and paper sector, 2010-2017.
According to John Nicol, program director, Energy Efficiency Services at Leidos, Inc., the cooperative system works for the pulp and paper industry. Since 2010, Focus on Energy has provided engineering time and project incentives valued at a total of about US$16 million to the pulp and paper industry; the pulp and paper industry accounts for about 20 percent of the program’s energy savings in the business sector (Fig. 1). The total lifetime financial savings for the Focus on Energy-supported projects in Wisconsin’s pulp and paper sector is more than US$415 million (Fig. 2).
“Focus on Energy has been a committed partner with Expera in supporting technological innovation that reduces both environmental impacts and dependence on non-renewable resources,” says Steve Myers, vice president, operations for Expera Specialty Solutions. “The benefits of the energy efficiency projects implemented by Expera are much greater than reduced energy consumption. Focus on Energy delivers the necessary support manufacturers need to remain competitive in the global marketplace.”
Says Butch Johnson, owner, Flambeau River Papers LLC: “Without Focus on Energy, our mill would not be as energy efficient as we are today; we wouldn’t be as green as we are today; and if you get right down to it, because of what FOE has been able to save our mill, in a very tough business—we might not be here today.”
When Smart Papers put its mill in Park Falls, WI, up for sale in 2006, Focus on Energy offered potential purchasers up to US$350,000 in financing for energy-saving projects. Flambeau River Papers purchased the mill, and used this line of credit to finance five projects that included raw water tank heat recovery, PM 3 flash steam recovery, identification and repair of compressed air leaks and failed stream traps, and wastewater treatment blower control.
The success of the first wave of projects led Flambeau River to identify and undertake a second wave of projects in 2014 (again with Focus on Energy). When all of the projects are completed, the mill expected to annually save a total of 2,017,000 kWh and 812,267 therms—enough to power 850 homes for one year and save the mill US$523,155 in annual energy costs.
INNOVATION AND METRICS
Improving energy efficiency has always been part of Verso’s strategy for reducing its costs and its environmental footprint, says Brooks. Innovation is part of that. “Last year we significantly changed the energy footprint of our pulp mill through a reconfiguration that resulted in the shutdown of obsolete equipment, providing both maintenance and energy cost savings. This year, we are moving forward with a list of energy projects that will save thousands of pounds of steam every hour,” he says.
“Another thing Focus on Energy did was to show our mill a bigger picture of what is going on not just nationally, but globally,” Johnson says. “We joined a Department of Energy program where we set our goal to reduce energy use by 25 percent over a 10-year period, and we did that. It absolutely helps to have specific benchmarks; 25 percent is a big number—but as you keep looking, you see the potential.”
Williamson agrees that metrics are important. “We are constantly working on improving our systems to define and track desired project outcomes,” he says. “Every energy reduction project we’ve done has met or exceeded its capital justification. We continue to build on an energy-focused operations and capital approach to running our business. Safety, environmental compliance, product quality—those initiatives are key to our business on a day-to-day perspective. We need day-to-day metrics that help every level of our organization make good energy decisions.”
Flambeau River’s latest project is in the wastewater treatment plant. “We’re going to reduce our electrical costs by being able to reduce the motors we’re using for the fine bubble diffusers; we think that’s going to be a sizeable number,” says Johnson.
“After all, if you’re not looking at new technologies, who knows how long your mill will be able to operate?”
Reducing Energy Use:
Advice From the Top
Paper360° asked executives who have led their mills through successful energy reduction projects to share their insights. Our respondents are:
• Steve Brooks, director of corporate energy, Verso Corporation
• William (Butch) Johnson, owner, Flambeau River Papers
• Jack Williamson, general manager, Green Bay Packaging
P360: What factors have been most critical to the success of your energy reduction projects?
Brooks: Achieving success is a team sport—remove any of the players and the effort fails. In the case of energy reduction, success occurs at the intersection of corporate leadership committed to invest in efficiency projects, a technical partner that identifies energy best practices that can be economically implemented in the mill, and a mill team that will take ownership of projects and drive them to completion.
Johnson: First, simply being able to identify the potential energy savings—to pick out the low-hanging fruit. One of the first things that Focus on Energy worked on with us was putting together an energy conservation team, which really helped.
Next, as we completed our projects, we communicated results. Our customers were very happy with what we were doing on the environmental side, and our employees took pride in being able to cut costs and be good for the environment.
Williamson: Necessity! In today’s market where margins are getting tighter, you can’t operate without an energy directive. With that, you need leadership that can push change. If your team thinks you need to do things the same way you’ve always done them, it’s hard to improve. You have to have a change leadership.
P360: What do you know now that you wish you’d known before beginning?
Brooks: We would likely have gotten an earlier start on this year’s energy projects had we known the flexibility of financing options available through Focus on Energy. Their team did a great job of helping to identify the best financial strategy to implement each project.
Johnson: There is always a fight over where the capital expenditures are going to be. But when we put the accountant’s touch to the energy projects we identified, many of them showed payback in a very short period of time—some less than a year. I wish we had jumped on some of them even earlier.
Williamson: If you’re not able to measure the impact of your projects, it’s going to be harder to see your success. So better energy metrics, and a better overall energy management concept before you start doing projects, is also helpful. You need your team committed to energy initiatives that they can help develop and champion.