Superior Energy Performance Program Demonstrates 1.7-Year Payback

Aimee McKane
Peter Therkelson
March 2014

For years, industrial facilities have saved energy by investing in more-efficient equipment or operational methods as old equipment ages and new strategies emerge. However, studies show that to achieve deep, persistent energy savings, companies must implement a facility-wide process that continuously monitors those changes and allows for improvements that ensure optimal performance.

With that in mind, the U.S. Department of Energy (DOE) and the U.S. Council for Energy-Efficient Manufacturing (U.S. CEEM) developed and are implementing the Superior Energy Performance™ (SEP) Program. The program is designed to increase the energy efficiency of industrial facilities through implementation of an energy management system (EnMS) based on the ISO 50001 energy management system standard and by obtaining third-party verification of the resulting energy performance improvements. The SEP program was opened to widespread participation in December 2013 and has more than 40 facilities participating in a national demonstration program. Seventeen of those facilities have already received SEP certification, and with the recent announcement of the program many more are expected to benefit.

To spur that participation, Lawrence Berkeley National Laboratory (Berkeley Lab) researchers Peter Therkelsen and Aimee McKane collaborated with Ridah Sabouni and Tracy Evans of Energetics Incorporated and DOE's Paul Scheihing to assess the costs and benefits of industrial facilities being certified to the SEP program, and to examine the business value of SEP and ISO 50001. Their paper, "Assessing the Costs and Benefits of the Superior Energy Performance Program," shows that implementation of ISO 50001 coupled with SEP energy performance targets results in quantifiable and significant energy (0.174 trillion Btu [TBtu] per year, on average) and energy cost savings ($503,000 per year, on average) for the facilities examined. They found that the payback period for SEP participation, taking into account energy cost savings attributable to SEP and all SEP associated costs (including internal facility staff time), to be equal to an average of 1.7 years.

Pairing ISO 50001 with SEP

McKane, Deputy Group Leader at Berkeley Lab, first proposed the development of an international energy management system standard in 2007. She was instrumental in establishing U.S. leadership for the development of the standard and continues to be involved as the Chair of the U.S. Technical Advisory Committee to ISO TC 242, the committee responsible for developing the ISO 50001 portfolio of standards.

"ISO 50001 and SEP provide an approach to energy performance improvement that provides significant energy saving and cost benefits," says McKane. "At the same time, it prepares organizations to bring their energy efficiency programs to the next level, one of continual improvement based on effective use of available data."

Benefits of ISO 50001 and SEP

The ISO 50001 standard provides a structure for engaging every level of an organization in management of their energy use and consumption, through a range of actions from robust operational control to the application of new technologies. An EnMS integrates energy management into a business culture of continual improvement, so that it is less reliant on the efforts of individual champions. These energy management business processes also result in greater and more sophisticated use of available data, which improves decisions about which projects to implement and leads to more persistent energy savings from implemented projects. The SEP program combines the energy management business processes of ISO 50001 with transparent, third-party verification of energy performance improvement. This external verification of results is proving valuable to the industrial facilities that have completed their certifications. The program is accredited by the American National Standards Institute (ANSI) and the ASQ National Accreditation Board (ANAB).

Facilities that participate in the SEP program are provided with DOE's Energy Performance Indicator (EnPI) software to help staff calculate energy performance improvement results. The DOE provides support by guiding facilities to external technical assistance and third-party certification audits. This study focused on nine facilities that were certified during the demonstration phase of SEP, and who agreed to share detailed data on their energy uses, consumption, and costs.

Quantifying the Costs and Benefits

The research team sent out a questionnaire, conducted interviews, and analyzed energy data that the facilities had collected to determine the costs and benefits of implementing ISO 50001 and being certified in the SEP program. These costs and benefits were utilized to calculate the marginal payback of participating in the SEP program.

Results showed that after implementing an ISO 50001-conformant EnMS, all of the facilities achieved greater energy savings from operational improvements than from capital projects. Nearly three-quarters of energy and cost savings were from operational improvements—in fact, three facilities achieved SEP certification through these improvements alone.

A representative of Cooper Tire, in Texarkana, Arkansas, explained one of the key benefits. "SEP has helped justify expenditures to management. The measurement and verification requirement helps to identify real cost savings, allowing us to reinvest those savings into additional energy projects."

Not surprisingly, the longer that a facility had the EnMS in place, the more energy they saved. As the EnMS and training became more ingrained in daily operations, savings rose. This study also showed that even though SEP program achievement targets are focused on energy savings (not energy cost savings), facilities can realize significant energy cost savings. Overall, savings beyond the business-as-usual operating costs began two quarters after beginning implementation of an EnMS.

Benefits of Participation

Implementation of the ISO 50001 standard and SEP program resulted in annual energy savings (0.174 TBtu, on average) and energy cost savings ($503,000, on average) for the nine facilities. These savings only include operational energy savings associated with EnMS implementation. Capital project implementation results in additional savings that are not considered in the calculation of SEP payback, since SEP implementation has no specific requirements for capital projects. Other productivity gains, though known to result from EnMS and energy performance improvement actions, are also not considered in the SEP payback calculation.

The facilities that participated in this study stated that the SEP program helped them to identify no-cost or low-cost operational programs and quantify the impact of those efforts on energy performance. All nine facilities showed greater energy savings during SEP participation than they did before the program. Facilities with annual energy consumption greater than 0.27 trillion Btu (approximately $1.9 million per year based upon national energy price averages) can expect to cover their implementation costs in less than two years.

Costs of Participation

All facility costs associated with SEP program implementation were collected from each facility studied. These costs include external technical assistance, EnMS metering and monitoring equipment, ISO 50001/SEP third-party certification audits, and internal facility staff time spent developing the EnMS and preparing for the third-party audit. This very conservative cost-accounting approach includes the full market value of facility staff time associated with developing the EnMS and meeting SEP requirements. It also assumes that there were no existing staff costs associated with energy-efficiency initiatives.

Including internal staff time, the average cost per facility was $319,000. The quantified internal facility staff time was the greatest component of these costs, representing 67 percent of costs. External technical assistance represented 18 percent of costs, metering equipment represented nine percent of costs and third-party audits represented six percent of costs. As both the facilities and DOE gain more experience with implementation, these costs are expected to decline.

The facilities reported that expert assistance was crucial, since the concepts of an integrated EnMS were new to staff, as was the software used to assist facilities in determining their level of energy performance improvement. Because the facilities in the study participated during the demonstration phase of the SEP program, DOE provided targeted technical assistance, the full cost of which was included in the overall cost of implementation per facility. Facilities also reported that costs associated with external technical assistance will be greatly reduced as ISO 50001 and the SEP program is implemented in other facilities within the same parent company.

The facilities all approached the metering and monitoring required for the SEP certification differently, demonstrating that this program element need not be complicated or expensive. Facilities are required to meter, monitor, and record energy consumption both for the whole facility and individually for "significant energy uses." Significant energy uses (SEUs) are those identified by the facility as having substantial energy consumption and offering considerable potential for energy performance improvement. Common examples included process dryers, boilers, and paint booths. One facility installed more metering than that required to receive the certification, but most simply used existing utility revenue meters combined with existing or new submeters. Four facilities installed no new metering equipment at all. Facilities view the additional costs for metering as money well spent, since they provide the data to both show the program's energy benefits and better identify areas that need further attention.

The facilities welcomed the third-party verification of their energy savings as an unbiased proof of the value of their programs, both internally and to external stakeholders, and saw the average $19,000 cost for auditing and certification (in a range between $16,000 and $20,000) as reasonable.

Implementing a robust EnMS to meet the requirements of SEP certification requires an industrial facility to invest staff resources and may also require outside support. However, once a facility has established an EnMS, maintaining the EnMS requires considerably less effort while the benefits of deeper and more sustained energy savings are ongoing. In addition, once the EnMS and methods for monitoring SEUs have been established, capital expenditures for metering equipment and operational costs of consultants are expected to be considerably less.

Building on the Program's Successes

The study's methodology, analysis, and results are being used to develop a framework for a planned Global Superior Energy Performance Partnership (GSEP) Energy Performance Database. However, because conducting the phone interviews and individually processing facility data is not scalable, future studies will need to devise a streamlined data collection approach. The U.S. Department of Energy is considering the integration of a cost/benefit methodology into EnPI, to standardize data collection and analysis and enable facilities to obtain results immediately.

As a measure of success, all of the facilities stated that they would pursue recertification, three years after their initial certification, and several indicated that they would seek SEP certification for other facilities within their parent company.

Paul Therkelsen and Aimee McKane (Lawrence Berkeley National Laboratory), Ridah Sabouni and Tracy Evans (Energetics Incorporated), and Paul Scheihing (United States Department of Energy). 2013. "Assessing the Costs and Benefits of the Superior Energy Performance Program." LBNL-6349E.

Mark Wilson