Dr Nigel Davies, manufacturing and technical director at Muntons, and speaker at the Future Factory: Energy Conference 2013, has seen the benefits of an effective energy strategy first hand.
The company achieved 13th place in this year’s Sunday Times Green List and were the highest placed Food and Drink Company.
Since it launched its energy efficiency strategy 13 years ago, malt products producer Muntons has managed to steadily balance sustainable measures and decreased costs.
Following the introduction of the climate change levy in 2000 and the subsequent introduction of the company’s energy strategy, Muntons has reduced the company’s energy consumption by 12%. Taking into account energy cost inflation Dr Davies says this has equated to a saving of several million pounds.
“When we started off, we created a ten year energy plan and put pay backs next to all of those items and anything that required a payback below three years we tackled first,” says Dr Davies. “We then moved on to a number of cumulative small targets such as changing to higher efficiency motors, looking at leaks, and other similar projects.”
Dr Davies says the company then moved on to energy monitoring and targeting and the company identified leaks and erroneous readings which had not been detected by conventional testing. “It cost £100,000 to install but it certainly paid for itself well within a year, probably six months.”
From the information uncovered by the monitoring, Muntons undertook to revamp the process by which it heats its kilns which are involved in the final stage of the malt creation process.
“We switched from a hot water radiator to a type of heater called a Varicon. That was just over a million pound investment. The idea was that it would save 8% of gas but actually because it was such an efficient bit of kit, we didn’t have to pay the European green taxation on it so we saved the carbon credits. We were then able to also increase production because we could run the kiln much quicker. When you put all that together, it was a zero year payback project.”
Dr Davies says the company benefited from a time when carbon credits were valued at about 12 euros a tonne. Now the credits are priced at below four euros a tonne, which makes similar projects less attractive. But even aside from that, the increased productivity due the reduced cycle time was something the team at Muntons had not anticipated and which has proved to be a huge benefit to the company.
“Often you think you have factored in all the costs when you are doing the capital appraisal but that was one we hadn’t anticipated would have such a big impact because until you’ve got it in and running it is difficult to call.”
Davies believes that going forward companies involved in European carbon schemes are going to experience about a 20% increase in emission targets that will drive the price of carbon up.
“There has been talk for many years that carbon needs to be about 40 euros a tonne but it will take a while to get there,” says Dr Davies. “However, if it does, there will be a lot of projects that will be justified on selling the carbon credits.”
But what is the cost of going green?
“I get a bit fed up with people saying that ‘green initiatives always cost’,” says Davies. “I’ve heard that far too many times and I always counter that for us green always pays. We have never yet done a green project which hasn’t paid for itself. If you are careful in the way you invest then you’ll find that the green projects, no matter if it is waste or energy saving.”
The company has another project, which has been recently approved, to install an anaerobic digester which will provide twenty-five per cent of our electricity on site. The project is expected to cost £5m but will turn the cost of taking sludge off-site (£750,000 per annum) into a £1.2m income in just over four years time.
Muntons has targets set for reduction in gas and electricity usage under the climate change agreement and is looking to to reduce its dependency on traditional grid electricity in an effort to reduce costs in the long-term and safeguard its supply.
“We’re looking to source wind power for one of our plants where one wind turbine would provide the entire electricity for our North Yorkshire plant. We were looking to put it on the land but there was local objection to that. So we’re now instead looking at buying the electricity which is generated a few miles away. That will be supplied by a company called Wind Energy Direct.”
But when it comes to cost, says Davies, it is not just about reducing energy use but also improving purchasing strategies. Admitting that Muntons is not a company particularly expert in the intricacies of trading, he says the company works in this area with Schneider Electric, who are also speaking at the Energy Conference 2013.
“We decide at budgeting time the appetite for risk that we have got and the total value of our electricity and gas portfolio. This is something that companies tend not to do. They often think they can be more clever on the spot market.
“Instead of doing this we have set risk limits so that if the price hits the higher buffer level, it triggers a fixing of all the purchasing that we need. This means that once we have budgeted, we will never go above the maximum level that we budgeted for. That is a pretty good way of purchasing and a safer way of budgeting.”