Energy A customer viewpoint

Energy A customer viewpoint

Graham WhitehurstDirector, Michelin NI

Ballymena Celebrating 40 years of Truck Tyre Production in NI

Michelin BallymenaMichelin Ballymena

• 1.4 Million Truck Tyres per year– More than is sold in the whole UK & Ireland

• 1100 people– Working 357 days/yr, 24/7, 12 hour shifts

• Tyre process is very energy intensive– Consumes approx 200 GWh / annum

Major Energy User in NIMajor Energy User in NI

£2000k

£3000k

£4000k

£5000k

£6000k

£7000k

£8000k

£9000k

£10000k

2004 2005 2006 2007 2008 2009

£9 Million Energy Bill in 2009 !

Electricity

Gas

Ballymena had the highest Energy Costs in the Michelin

Group in 2008

Ballymena had the highest Energy Costs in the Michelin

Group in 2008

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

N.Ireland Italy Germany Spain GB France Romania

Michelin European Country Utility Costs Comparison

€/M

Wh

Energy has become the 2nd largest cost after

payroll (Excluding Raw Materials)

Energy has become the 2nd largest cost after

payroll (Excluding Raw Materials)

Overheads

Maintenance

DepreciationPay

Energy Costs

Michelin Energy Strategy

Michelin Energy Strategy

1. Utility SupplyA.Choice of UtilityB.Purchasing Strategy

C.Long-term, including renewables

2. Efficiency of Energy Use

A. Utility Choice : Gas or Fuel Oil ?

A. Utility Choice : Gas or Fuel Oil ?

‘Dual Fuel’ Boilers since 2005

Natural Gas or HFO ?

-25% £ Savings / yr

-29% less CO2 / yr

• Historically, Fixed Price ContractHistorically, Fixed Price Contract

• Low Risk, Budgets fixed,Low Risk, Budgets fixed,

• You know what you have to payYou know what you have to pay

• but are you paying too much ?but are you paying too much ?

• Now Flexible ContractNow Flexible Contract

• Market Pricing reviewed dailyMarket Pricing reviewed daily

• Purchase Decisions made daily/wklyPurchase Decisions made daily/wkly

2. Utility Purchasing Strategy: Gas

2. Utility Purchasing Strategy: Gas

• Pre-SEM, little or no effective competition

• Large customer presents it’s own problems - ‘maybe too big to take on’

• Welcome the potential for new players to the market, but timing critical, and SEM must deliver

B. Purchasing Strategy: ElectricityB. Purchasing Strategy: Electricity

Project Progress

Wind –Turbines

9% Electricity from 2 Wind-Turbines

• 3rd Party Supplier selected• Legal Contracts in place• 30 Year Lease, 15 Year initial PPA• Joint Planning Phase now to be engaged• Community & Council Lobbying• Project started in 2006 • Installation envisaged 2010 earliest

Dundee Factory, Scotland

C. Long-term Strategy: Wind-Turbines

C. Long-term Strategy: Wind-Turbines

C. Long-Term Strategy: CHPC. Long-Term Strategy: CHP

Project Progress

Onsite CHPPotential to supply 60% electricity

• Site offers a high Thermal Load, suited to onsite CHP Applications• 3 Preliminary Opportunity Studies now received for 3rd Party Funded Projects• External Consultant engaged to review the Offers and assist in Supplier decision • Installation could be as early as 2010

2. Efficiency of Energy Use2. Efficiency of Energy Use

To improve our energy efficiency we adopt three approaches:-

• Capital Investment Projects

• Best Practice maintenance

• Education of the workforce

£2 Million Energy savings since 2002

£1.2 Million Capital Investment– 17 Electrical projects– 9 Thermal projects– 4 Water projects

Efficiency – Capital Investment Efficiency – Capital Investment

•Identification of capital projects-> Action projects which reduce the ‘fixed’

energy load-> Generally work on at least a 2 year payback-> Prepare projects to have ‘on the shelf’ in

case additional finance becomes available

•Study support from external consultancy,

via Carbon Trust

Energy Projects – Breakthrough Ideas

Helpline 0800 58 57 94 www.thecarbontrust.co.uk/ energy

Energy Projects completedEnergy Projects completed

• Variable Speed Drives

• Insulation replacement

• Lighting optimisation

• Vent steam recovery

• Compressor control optimisation

• Steam Trap Checking

• Steam Leaks Repair

• Tableaux Controls Set-Up

• Air Leaks Management **

Efficiency - Best Practise MaintenanceEfficiency - Best Practise Maintenance

Background Historical Leakage rate > 40% (2 compressors)

High Compressor running Costs

No common approach across Site

Worsening Trend on Factory Air Consumption

40

45

50

55

60

65

Jan Mar May July Sept Dec

Efficiency – Air Leaks ManagementEfficiency – Air Leaks Management

‘’Right Tools for the Job’’– Ultrasonic leak detectors – Training of users– Tagging of leaks– Balanced scorecard monitor

Over 3000 leaks recorded & repaired to date

Leakage Rate July ‘08 reduced to 26%– Generated £37K annual savings

Efficiency – Air Leaks Management

Energy Awareness Campaigns• Monthly Factory Intranet Updates• Factory TV Energy Information• Information Boards @ Factory Gate• Team Meeting Energy Communications• Energy Checklists for Shutdowns developed• Energy improvement Ideas from the Workforce

Future Initiatives• Energy Spoke in each production team• Energy Promotional Week• Carbon Trust supported Interactive Staff Training

Workshops

Efficiency – Education of WorkforceEfficiency – Education of Workforce

METERING• Electricity• Air• Steam• Water

ENERGY TRACKING & ACCOUNTABILITY• Energy Monitor of Key Utilities by Workshop• Driven by a Factory Energy Improvement

Team

Efficiency – Education of WorkforceEfficiency – Education of Workforce

Efficiency Results: 10% improvement since 2005

3.90

4.10

4.30

4.50

GJ/Tonne

2005 2006 2007 2008

Site Energy Consumption

Impact of Energy Strategy - Costs

Impact of Energy Strategy - Costs

£5000k

£6000k

£7000k

£8000k

£9000k

£10000k

2005 2006 2007 2008 2009

Energy Bill

£5000k

£6000k

£7000k

£8000k

£9000k

£10000k

£11000k

£12000k

2005 2006 2007 2008 2009

Energy Bill No Focus Bill

Impact of Energy Strategy - Costs

Impact of Energy Strategy - Costs

-25%

£5000k

£6000k

£7000k

£8000k

£9000k

£10000k

£11000k

£12000k

2004 2005 2006 2007 2008 2009

Energy Bill No Focus Bill 2011

Impact of Energy Strategy - Costs

Impact of Energy Strategy - Costs

Wind-Turbines & CHP Installed

-12%

How can Government help ?How can Government help ?• The SEM needs to deliver on End-Customer Savings,

arising from an Effective Market. Mechanisms need to be in place to encourage both Generators & Suppliers to enter the Market to allow effective Competition, and drive down Costs.

• Recent PSO Reduction from the Energy Regulator

was very encouraging, and has had a major impact on the 2009 Energy Bill. Lobbying by CBI must continue on behalf of all Users.

• Further support needed on Government Assisted Investment Schemes, particularly for Companies seen to be actively reducing Energy Consumption and moving to renewable energy

Energy: Michelin ConclusionEnergy: Michelin Conclusion

• External Factors influencing Energy Costs, are outside the control of Industrial Sites.

• However, the use of Energy within a

Site and the development of strategies to diversify energy supply and purchasing can and should be MANAGED.

Thank you for your attention

Any questions?