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Optimization as investment decision supportin a Swedish medium-sized iron foundry: a move beyond traditional energy auditing
Linköping University, Department of Management and Engineering, Energy Systems. Linköping University, The Institute of Technology.
Linköping University, Department of Management and Engineering, Energy Systems. Linköping University, The Institute of Technology.
Linköping University, Department of Management and Engineering, Energy Systems. Linköping University, The Institute of Technology.
2009 (English)In: Applied Energy, ISSN 0306-2619, E-ISSN 1872-9118, Vol. 86, no 4, 433-440 p.Article in journal (Refereed) Published
Abstract [en]

Due to increased globalisation, industries are facing greater competition that is pressing companies into decreasing their expenses in order to increase their profits. As regards Swedish industry, it has been faced with substantial increases in energy prices in recent years. Barriers to energy efficiency such as imperfect information inhibit investments in energy efficiency measures, energy audits being one means of reducing barriers and overcoming imperfect information. However, an evaluation of such energy audits in Sweden reveals that it is chiefly low-cost measures that are undertaken as a result of an audit. Moreover, these audits often tend to focus on support processes such as ventilation, lighting, air compressors etc., while measures impacting production processes are often not as extensively covered, which underlines the need for further support in addition to energy audits. Decision support is practised in a variety of different disciplines such as optimization and simulation and the aim of this paper is to explore whether investment decision support practices may be used successfully towards small and medium-sized manufacturers in Sweden when complex production-related investment decisions are taken. The optimization results from the different cases, involving a foundry’s investment in a new melting unit, indicate that with no electricity price fluctuations over the day, the investment seems sound as it lowers the overall energy costs. However, with fluctuating electricity prices, there are no large differences in energy costs between the option of retaining the existing five melting furnaces at the foundry and investing in a twin furnace and removing the holding furnaces – which was the initial investment plan for the foundry in the study. It would not have been possible to achieve this outcome without the use of investment decision support such as MIND. One of the main conclusions in this paper is that investment decision support, when strategic investment decisions are to be taken, may be a means of emphasising energy efficiency for energy-intensive SMEs beyond the level of traditional energy auditing.

Place, publisher, year, edition, pages
Elsevier, 2009. Vol. 86, no 4, 433-440 p.
Keyword [en]
Energy efficiency, Foundry industry, Investment decision support, Optimization
National Category
Engineering and Technology
Identifiers
URN: urn:nbn:se:liu:diva-12514DOI: 10.1016/j.apenergy.2008.08.012ISI: 000263490400005OAI: oai:DiVA.org:liu-12514DiVA: diva2:330
Note

Original publication: Patrik Thollander, Nawzad Mardan and Magnus Karlsson, Optimization as investment decision supportin a Swedish medium-sized iron foundry: a move beyond traditional energy auditing, 2009, Applied Energy, (86), 4, 433-440. http://dx.doi.org/10.1016/j.apenergy.2008.08.012. Copyright: Elsevier B.V., http://www.elsevier.com/

Available from: 2008-09-30 Created: 2008-09-10 Last updated: 2017-12-12Bibliographically approved
In thesis
1. Towards Increased Energy Efficiency in Swedish Industry: Barriers, Driving Forces & Policies
Open this publication in new window or tab >>Towards Increased Energy Efficiency in Swedish Industry: Barriers, Driving Forces & Policies
2008 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

Industrial energy efficiency is one of the most important means of reducing the threat of increased global warming. A higheruse of electricity than their European competitors, together with increased energy costs due to increasing energy prices in Swedish industry have negative impacts on results and competitiveness. Of great importance are thus different means which promote energy efficiency such as industrial energy policy instruments. However, cost-effective energy efficiency measuresare not always undertaken. In order to formulate and adopt accurate industrial energy end-use polices, it is thus of importanceto identify the barriers that inhibit the implementation of cost-effective energy efficiency measures. It is also of importance to identify the factors which promote the implementation. The aim of this thesis is to analyze industrial energy systems andmore specifically study factors that promote or inhibit energy end-use efficiency in Swedish industrial companies.

Results from this thesis show that the implementation of technical energy efficiency measures is a major means for both energy-intensive and non-energy-intensive Swedish companies to overcome the threat of rising energy prices, for example for electricity. While energy efficiency measures in the non-energy-intensive industry are related mainly to support processes, measures in the studied energy-intensive Swedish foundry industry are related to both support and production processes.

In the various case studies of barriers and driving forces, the most significant barriers to energy efficiency - with largevariations for some of the barriers among the studied cases - were found to be: technical risk such as risk of productiondisruptions; lack of time or other priorities; lack of access to capital; cost of production disruption/hassle/inconvenience; other priorities for capital investments; technology considered inappropriate at the site; difficulty/cost of obtaininginformation about the energy use of purchased equipment; and lack of budget funding. The largest driving forces, apart fromcost reductions resulting from lowered energy use, were found to be the existence of a long-term energy strategy and peoplewith real ambition. These driving forces did not, unlike the results of barriers to energy efficiency, vary widely across thestudied sectors.

Investment decision support such as optimization has shown to add more information for larger capital-intensive investmentsin energy-intensive industrial SMEs. The thesis also showed that energy audits are an effective means, in terms of publicmoney spent per kWh saved, of providing the industry with information on potential energy efficiency measures.

Based on the results presented in this thesis, a policy approach towards non-energy-intensive companies and industrial SMEsshould primarily include providing energy audits free of charge and involve the local authority energy consultants.

Abstract [sv]

Industriell energieffektivisering är ett av de viktigaste sätten att reducera hotet om en globaluppvärmning. En högre relativ elanvändning, i jämförelse med europeiska konkurrenter, tillsammans med stigande energikostnader beroende av stigande energipriser för den svenskaindustrin, riskerar leda till försämrad lönsamhet och försämrad konkurrenskraft. Det är såledesav stor vikt att främja energieffektivisering, exempelvis genom olika typer av styrmedel. Lönsamma energieffektiviseringsåtgärder genomförs emellertid inte alltid, till följd av olikahinder för energieffektivisering. För att kunna formulera precisa styrmedel är det därför avstor vikt att dessa hinder som förhindrar implementering av energieffektiviserande åtgärder,identifieras. Det är också av stor vikt att identifiera drivkrafterna. Syftet med denna avhandling är att analysera industriella energisystem och mera specifikt studera faktorer somfrämjar och förhindrar effektiv slutanvändning av energi i svensk industri.

Resultaten visar att hotet om stigande energikostnader, exempelvis beträffande elektricitet,både för icke energiintensiv och för energiintensiv svensk tillverkningsindustri, kan reduceraskraftigt om energieffektiv teknik implementeras. Medan åtgärder i icke energiintensiv industrifrämst är relaterade till stödprocesser så visar sig åtgärderna i den studerade svenska energiintensiva gjuteriindustrin vara relaterade till både stöd- och produktionsprocesser.

I fallstudierna beträffande hinder och drivkrafter visade sig de största hindren vara - med storavariationer mellan fallen - tekniska risker såsom risk för produktionsstörningar och avbrott; brist på tid/andra prioriteringar; brist på kapital; kostnader för produktionsstörningar; ickeenergirelaterade investeringar prioriteras högre; tekniken passar ej för företaget;svårigheter/kostnader att erhålla korrekt information beträffande energianvändningen av deninköpta utrustningen; och brist på budgetmedel. De största drivkrafterna var, utöver kostnadsminskningar till följd av minskad energianvändning, förekomsten av en långsiktigenergistrategi och en eldsjäl. Drivkrafterna varierade inte, till skillnad mot hindren, så mycketmellan de olika undersökta fallen.

Beslutsstöd såsom exempelvis optimering har visat sig kunna ge ökad information vid störremer kapitalintensiva investeringar i energiintensiva små- och medelstora företag. Vidare har energianalyser visat sig vara ett effektivt sätt, i termer av besparad kWh per statligt insattkrona, att ge industrin information beträffande möjliga energieffektiviserande åtgärder.

Resultat från avhandlingen indikerar att ett stöd gentemot icke energiintensiva och små och medelstora företag framförallt bör inkludera statligt finansierade energianalyser med denlokala energirådgivaren som en deltagande aktör.

Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2008. 83 p.
Series
Linköping Studies in Science and Technology. Dissertations, ISSN 0345-7524 ; 1214
Keyword
Industrial energy efficiency, barriers, driving forces, investment decision support, energy policies
National Category
Engineering and Technology
Identifiers
urn:nbn:se:liu:diva-14907 (URN)978-91-7393-793-1 (ISBN)
Public defence
2008-10-28, ACAS, hus A, Campus Valla, Linköpings universitet, Linköping, 10:15 (English)
Opponent
Supervisors
Available from: 2008-09-30 Created: 2008-09-30 Last updated: 2014-10-08Bibliographically approved
2. Combining simulation and optimization for improved decision support on energy efficiency in industry
Open this publication in new window or tab >>Combining simulation and optimization for improved decision support on energy efficiency in industry
2012 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

Industrial production systems in general are very complex and there is a need for decision support regarding management of the daily production as well as regarding investments to increase energy efficiency and to decrease environmental effects and overall costs. Simulation of industrial production as well as energy systems optimization may be used in such complex decision-making situations.

The simulation tool is most powerful when used for design and analysis of complex production processes. This tool can give very detailed information about how the system operates, for example, information about the  disturbances that occur in the system, such as lack of raw materials, blockages or stoppages on a production line. Furthermore, it can also be used to identify bottlenecks to indicate where work in process, material, and information are being delayed.

The energy systems optimization tool can provide the company management additional information for the type of investment studied. The tool is able to obtain more basic data for decision-making and thus also additional information for the production-related investment being studied. The use of the energy systems optimization tool as investment decision support when considering strategic investments for an industry with complex interactions between different production units seems greatly needed. If not adopted and used, the industry may face a risk of costly reinvestments.

Although these decision-making tools individually give good results, the possibility to use them in combination increases the reliability of the results, enhances the possibility to find optimal solutions, promises improved analyses, and a better basis for decisions in industry. The energy systems optimization tool can be used to find the optimal result and the simulation tool can be used to find out whether the solution from the optimization tool is possible to run at the site.

In this thesis, the discrete event simulation and energy systems optimization tools have been combined. Three Swedish industrial case studies are included: The new foundry at Volvo Powertrain in Skövde, Arla Foods dairy in Linköping and the SKF foundry in Katrineholm. Results from these cases show possibilities to decrease energy use and idling, to increase production, to combine existing and new production equipment and to decrease loss of  products.

For an existing industrial system, it is always preferable to start with the optimization tool reMIND rather than the simulation tool – since it takes less time to build the optimization model and obtain results than it does to build the corresponding simulation modeling. While, for a non-existent system, it is in general a good idea to use both the simulation and the optimization tool reMIND simultaneously, because there are many uncertain data that are difficult to estimate, by using only one of them. An iterative working process may follow where both tools are used.

There is a need for future work to further develop structured working processes and to improve the model to e.g. take production related support processes into account. To adapt the results in industries, improve the user friendliness of the tool and the understanding of the underlying modeling developments of the optimization tool reMIND will be necessary.

Abstract [sv]

Industriella system i allmänhet är mycket komplexa och det finns ett behov av beslutsstöd vid hantering av den dagliga produktionen, liksom beslut om investeringar för att öka energieffektiviteten och minska miljöpåverkan och kostnader. Simulering av industriell produktion och energisystemoptimering kan användas som beslutsstöd i sådana komplexa beslutssituationer.

Simuleringsverktyg är mest kraftfullt när det används för design och analys av komplexa produktionsprocesser. Verktyget kan ge mycket detaljerad information om hur systemet fungerar, till exempel information om de störningar som inträffar i systemet såsom brist på råvaror, blockeringar eller avbrott på en produktionslinje. Dessutom kan verktyget användas för att identifiera flaskhalsar för att indikera var arbete, material och information är försenade.

Energisystemoptimeringsverktyget kan ge företagsledningen ytterligare information om en eventuell studerad investering. Verktyget kan ge mer underlag för att fatta beslut och därmed ge mer information för den produktionsrelaterade investeringen som studeras. Behovet av användningen av energisystemoptimeringsverktyg som investeringsbeslutsstöd när man överväger strategiska investeringar för en industri med komplexa interaktioner mellan olika produktionsenheter bedöms vara stort. Om inte kan industrin istället möta en risk för kostsamma reinvesteringar.

Även om dessa verktyg kan vara beslutsstöd var för sig och ge bra resultat, så medföljer möjligheten att kombinera dessa verktyg att tillförlitligheten av resultaten ökar, såväl som möjligheten att hitta optimala lösningar, bättre analyser och ett bättre underlag för beslut inom industrin. Optimeringsverktyget kan användas för att hitta det optimala resultatet och simuleringsverktyg kan användas för att ta reda på om lösningen från optimeringsverktyget är möjlig att realisera i verklig drift.

I den här avhandlingen har diskret händelsestyrd simulering och energisystemoptimeringsverktyg kombinerats. Tre svenska industriella fallstudier är inkluderade: Volvo Powertrains nya gjuteri i Skövde, Arla Foods mejeri i Linköping och SKF-gjuteriet i Katrineholm. Resultat från dessa fall visar på möjligheterna att minska energianvändningen och tomgångsförlusterna, att öka produktionen, att kombinera ny och befintlig produktionsutrustning på ett effektivare sätt, och att minska kassation av produkter.

För ett befintligt industriellt system är det alltid mer effektivt att börja med optimeringsverktyget reMIND snarare än simuleringsverktyg - eftersom det tar mindre tid att bygga en optimeringsmodell och få resultat, än det gör för att bygga en motsvarande simuleringsmodell. För ett icke-existerande system är det i allmänhet ett effektivare tillvägagångssätt att använda både simulerings och optimeringsverktyg reMIND samtidigt, eftersom det finns många osäkra data som är svåra att uppskatta, med hjälp av endast ett av verktygen. En iterativ arbetsprocess kan följa där båda verktyg används.

Det finns ett behov av fortsatt arbete bl. a. av att utveckla strukturerade arbetssätt och att kunna integrera produktionsrelaterade stödprocesser i modelleringen. För att anpassa resultaten för industrin, och förbättra användarvänligheten av verktyget, utvecklingen av optimeringsverktyget reMIND kommer att behövas.

Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2012. 69 p.
Series
Linköping Studies in Science and Technology. Dissertations, ISSN 0345-7524 ; 1483
Keyword
Energy efficiency, Integration, Optimization, Simulation
National Category
Energy Systems
Identifiers
urn:nbn:se:liu:diva-84643 (URN)978-91-7519-757-9 (ISBN)
Public defence
2012-10-30, C3, hus C, Campus Valla, Linköpings universitet, Linköping, 10:15 (English)
Opponent
Supervisors
Available from: 2012-10-16 Created: 2012-10-16 Last updated: 2012-10-16Bibliographically approved

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