Lean and Clean: How One Company Makes Factories Greener and More Competitive
In the United States, the bulk of our electricity still comes from burning stuff, which means that electricity production is the source of some 80 percent of all carbon emissions. Drill deeper, and you’ll learn that industrial production consumes about 30 percent of that electricity.
At a time when the United States is desperate to increase its manufacturing and create new jobs, it can be hard to reconcile the needs to increase industry and engender sustainability. After all, a key advantage held by factories in emerging economies, besides lower labor costs, is that they spend far less time and money worrying about emissions and other environmental challenges.
To compete sustainably, developed states need to innovate. And that’s where GOOD Company finalist Powerit Solutions comes in: They’ve created a product that gives energy-intensive businesses like foundries, food processors, and manufacturers of all kinds the ability to manage electricity through the smart grid to cut costs and become more efficient—all while laying the groundwork for the transition to clean energy.
“We’re using cloud-based technology … but implementing it typically in industrial cultures that are throwbacks to almost a different era,” says Bob Zak, the company’s North American president. “We have credibility with the facilities manager and the foundry guy. Being able to bridge two cultures, the high tech culture and the ‘get your hands dirty, let’s go make some steel’ culture, is really unique.”
The company sells a hardware product developed in Sweden called Spara—Swedish for “conserve”—that is chock full of smart chips that interface between the power companies and the various machines demanding electricity to do their work. At the heart of the system are the ideas of dynamic pricing and demand management.
Power companies charge many consumers a flat rate for electricity, but the price of power fluctuates day-to-day, minute-by-minute, even second-by-second. Utilities build a price buffer into their flat rate to make up for the volatility, but the new trend in the industry is dynamic pricing—charging customers based on the precise cost of the electricity they are buying, which increases at peak demand periods.
“If an end user can understand at any time that real-time price of electricity, [they can ask themselves] ‘do I buy at that price or do I try to change my behavior?’” Powerit Solutions CEO Kevin Klustner says. Spara helps companies do just that by managing power demand within the business, timing the activity of machines to ensure that demand stays below-peak and that electricity is bought at the lowest prices possible.
This process makes energy usage much more efficient, which Powerit executives say generally pays for the product in two years. But the technology doesn’t just produce savings for Powerit’s clients; it's also paving the way for cleaner energy infrastructure.
Managing power demand means less pressure on electrical utilities at peak hours, which is when they have to rely most on fossil fuel to produce energy. Cleaner technologies like solar, wind, and thermal power provide energy intermittently, which means they are harder to integrate into a grid where energy needs are constantly spiking. A smart grid, which communicates more effectively between energy users and producers, will allow for better natural resource management.
“The more predictability that we get on the demand side, the more we’re able to consume a larger percentage of clean energy as the total percentage of energy we consume,” Klustner says.
And in a rare synergy, sustainability goes hand-in-hand with global competition.
“When you’ve got foundries that are competing with international companies for their survival, and we can have a pretty good impact on their number two cost of doing business, that’s a pretty great feeling at the end of the day,” Zak says.
Powerit’s next steps are scaling up the analytics and data collection aspects of their business to give their customers more tools to optimize their electric performance. They also see opportunities to expand from their Swedish business unit throughout Europe, where comparably high energy prices make their product even more important.