EMC’s energy initiatives include the only non-profit group energy procurement initiative for industry in the province and the largest manufacturing buying group for energy, on behalf of Ontario manufacturers. We are also providing manufacturers with key resources to better manage their energy consumption, achieve bottom line impacts and reduce their carbon footprint.
Mention the words 'energy management' and the reactions will be as numerous and varied as there are solutions and providers wanting to sign you up to a contract. Sorting through reputable resources (and some less than so) and understanding what to do and who to trust is just as important as signing the cheque.
Every year, just prior to our break for Christmas, I have the privilege of reporting the results of EMC's energy initiatives with members. Once again, this year was a success for members, however energy never ceases to be a hot topic for manufacturers. How do you spell relief? It's a topic that often needs a really big bottle of Tylenol with a Rolaids chaser.
I heard a number of times this year, having a trusted resource has been a big help for members.
This past year, I also had the privilege to speak on energy with manufacturers from virtually all Ontario consortium regions and several from Alberta. 2013 was an interesting year for many EMC members. Energy prices are still fairly low - a continuation of the record low prices for both electricity and natural gas we saw last year - with recent months seeing the curve start to turn upward.
However 2013 could have been a very different year… and not in a good way.
Just over three years ago this month we heard from industry sources, there was only a "three-year supply of natural gas estimated to remain in North America." Essentially without the discovery of shale gas and how to extract it effectively through improvements to hydraulic fracturing (fracking) technology, we would virtually be totally dependent on imports of Liquefied Natural Gas for this commodity.
Shale gas is natural gas that is found in rock formations 2-3 kilometers below the surface (see the attached illustration). While there are environmental and other considerations with fracking, world prices for NG are much higher than we pay in Canada and exposed to those prices, we would be facing a significant increase in energy prices for everyone in Canada.
(Source: National Geographic Society)
The removal of coal from the power generation equation in Ontario (intended to significantly reduce carbon footprint) had the potential to push prices even higher. With this gas solution, prices have somewhat stabilized and the resulting shift from coal to natural gas is having a good financial benefit for the market. Not only are we getting rid of a significant source of pollutants in coal burning, but the lower-than-coal natural gas prices are providing a cheaper alternative for generating peak-demand electricity, at the moment.
Maintaining a secure source of peak energy generation has allowed our markets to ease somewhat. Renewable energy is still adding to industry's overall energy costs through the global adjustment, however improvements in wind generation's ability to respond to peak needs has reaped some improved benefits there too.
In spite of the relatively low prices, an encouraging sign? The number of manufacturers strategically attacking energy is on the rise.
Manufacturers are realizing they need to be forward thinking in their approach to energy consumption, effective in achieving energy efficiencies and reducing their carbon footprint, and becoming more strategic in how they buy the energy they actually consume.
Reliance on cheap energy as a business case is akin to relying on the Canadian dollar when the exchange rate was at 76 cents… it's an artificial buffer to the world market. EMC's continuing message is for manufacturers to consider energy as a key value stream in everything they do.
This year, EMC and Natural Resources Canada (NRCan) and their Office of Energy Efficiency have partnered to better communicate these efforts to Canadian manufacturers. I have the pleasure of representing our members as part of the CIPEC Taskforce (Canadian Industry Program for Energy Conservation) and EMC is excited to be working with NRCan on the upcoming Energy Summit 2014, a 2-day event May 14/15 in Niagara Falls, providing industry with the latest resources, tools and information essential to maximize growth, improve profits, while reducing their environmental impact… all related to energy.
In November, EMC jointly hosted the first ISO 50001 workshop with NRCan's CIPEC program in Canada. Over 60 representatives from a cross-section of industry in Ontario and Quebec were on hand for a very successful event.
A good friend to EMC - Phil Dick from OMAF/RA - has developed and launched a "Leaner and Cleaner is Greener, an Operator's Primer" Manual, focusing on the 8-5-3 method. This is a tremendous resource for manufacturers of all sectors, and we encourage you to read it and connect with Phil at OMAF/RA for more information. EMC will be working with Phil and his team in bringing these productivity opportunities to food, beverage and bio producing members in 2014 through the Growing Forward 2 (GF2) initiative. More news to be released in January.
A Penny Saved…
For more than six years, EMC and our subject-matter-expert team with ECNG Energy LP have been providing members with exemplary service and support, helping industry consumers to better manage their energy costs, engage custom-tailored procurement strategies and access the volume benefits of a large, networked group of member manufacturers.
EMC's Energy Buying Group has continued its outstanding achievements in 2013. As the only non-profit group initiative of its kind and the largest manufacturing buying group for energy on behalf of Ontario manufacturers, members are accessing resources, services and achieving bottom line impact not available elsewhere.
In addition to welcoming new members to the group this year, we have provided all participating members with customized energy strategies, one-on-one coaching and mentoring and recently launched a new online benchmarking and reporting tool. We completed many competitive tenders this year and while some challenging summer months returned higher market prices than we were willing to accept, after staying vigilant through several rounds of tenders our group was able to achieve sharper pricing and beat each of the member price targets.
We are proud to support our members and we don't penalize or charge any additional fees for balancing or verification etc. These 'add a penny' charges often levied by for-profit providers can add significant costs for manufacturers who are successful in reducing their energy consumption or experience variances (planned or otherwise) in production.
Our group model for providing a better flexibility and cost certainty, reporting and built-in bill verification, a lower cost of operation and a world-class team of experts has again proven to be the standard for energy procurement.
Looking Ahead to 2014…
When we open our utility bills every month, the first thing we always do is look at is the total at the bottom. Almost always (insert groan here) we experience the anger, frustration, sometimes confusion and often a migraine, over how all this can make sense.
Next year we will see the upward trend in pricing continue. The Ontario government recently announced energy prices will rise an estimated 33% over the next 3 years, in their regulated programs. As markets move to export natural gas, along with some upward movement in the larger industrial rates, we will need to continue to help manufacturers deploy strategies which better manage these complex commodities.
While we can't avoid paying the bills, there are many things we can do to reduce the total cost on these bills. Procurement, consumption, efficiency, and energy management - all factors affecting your total cost of energy and looking at just one will not achieve the desired effect. Compound this with the legislated "taxes" which now comprise more than the cost of energy itself and it can seem like a bridge too far.
As recently as this past week, I heard a few members say they didn't believe they could do anything about it. For them energy represents a small percentage of their overall production cost and not worth the effort. We believe every manufacturer has an opportunity to reduce their cost and consumption and I am pleased to report, the mindset towards energy complacency is shifting.
In 2014 we will continue to work with NRCan and other partners on providing members with access to efficiency resources. NRCan has committed funding to help manufacturers engage programs too. We will be promoting ISO 50001 implementation and through events like Energy Summit 2014 will provide the opportunity for industry to learn and benchmark from each other.
Every month we are providing members with a market outlook / update, posted by Margaret Harrison with our facilitating partner ECNG Energy. This is in addition to Margaret, myself and Gillian Pollock meeting with members directly through briefings and Strategic Interest Group (SIG) events throughout the year. We are slated to welcome several new Energy group members in the coming months and will continue to offer the resources to further refine their approach to energy, with more options, events and improved access to information, service, support and the team of subject-matter experts in the coming year.
We encourage all manufacturers to review their energy costs and the opportunity for savings and 'doing more with a smaller carbon footprint'. Please be sure access the expertise we have assembled to help you navigate this challenging and 'frack-tured' subject.
On behalf of EMC and the Energy Team, thank-you to all our members. We look forward to serving you in 2014, and we wish you a Merry Christmas and a Safe, Prosperous and Happy New Year!