Energy efficiency improvement in a metal processing company HOW TO REDUCE ENERGY COSTS. Guide for Entrepreneurs

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Marilyn Kelley
6 years ago
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1 Energy efficiency improvement in a metal processing company HOW TO REDUCE ENERGY COSTS Guide for Entrepreneurs

2 Can modernization of machinery and technologies in a company from the metal processing sector be cost-effective? Polish entrepreneurs are well aware of growing energy costs. Social attitudes to environmental degradation are also increasing the will to promote and introduce energy efficiency. During the first edition of the PolSEFF programme Polish entrepreneurs implemented Investment projects in the years They have shown that modernization of metal processing equipment can bring significant energy savings. Most investments have been implemented by companies producing various products and semi-finished products from metal. In most cases the main objective of the investment was to increase the production capacity and modernize technologies in order to increase production efficiency and the quality of the final product. As it turns out a small project optimization in terms of energy efficiency allowed the project to not only reach its original targets but also achieve significant savings due to decreased energy consumption of 70% annually. This brochure was created to present the standard types of investments in the metal processing sector that gave the company minimal energy savings of at least 20% and helped in the implementation of development strategies. The examples shown are based on projects implemented by PolSEFF. What are the key elements in metal processing projects that bring the highest benefits? The infographics below present examples of modernisation investment projects implemented by SMEs from the metal processing sector. Replacement of a milling machine Main activity of a company: Production of custom machines, metal processing services. Modernisation of short production runs machines, replacement of a milling machine Savings: 14,000 PLN annually Additional information: Replacing an old vertical milling machine to a new HAAS VF-8/50 with modern numerical controls and a utility bank. Thanks to this investment the company increased its production capacity by 85%. Now it can execute more orders consuming less energy. NPV of the investment summed up to 2.7m PLN and IRR was 85%. Investment cost: 540,000 PLN Energy cost savings: 43%

3 Modernisation of a production line Main activity of a company: Ventilation system production Additional information: Replacing 9 metal processing machines with a digitally controlled Mitsubishi Laser CNC ML3015eX. The old machines are: nibblers, 2 lathes, 2 guillotines, drill, hydraulic press and a turret cutter. These machines did various actions in classic metal processing technology. The investment helped in reducing all the previous production steps to one performed by the new machine. The company increased its energy efficiency, reduced its production time and increased the product quality due to a simplified and modern procedures. NPV of the investment summed up to 8m PLN and IRR was 80%. Investment cost: 1,610,000 PLN Energy cost savings: 37% Installation of a laser CNC metal processing machine Savings: 38,500 PLN annually

Modernisation of a production line for processing large metal elements Main activity of a company: Production of industrial metal elements (e.g. cylinders) Additional information: Buying and installing a digitally controlled lathe Geminis GTS for processing of large metal elements.

4 Modernisation of a production line for processing large metal elements Main activity of a company: Production of industrial metal elements (e.g. cylinders) Additional information: Buying and installing a digitally controlled lathe Geminis GTS for processing of large metal elements. The previous production line was equipped with two lathes. Due to heavy use the machines wore out and had to be replaced. One of the machines became redundant due to the reorganization process and the other one is still being used to a limited extent. Upon investment completion the old machine is responsible for the rough processing of metal and the new machine finishes the production process. Thanks to the modernization of the production line the company improved the quality of its products and lowered the energy costs by 54%. Due to the investment the company will annually save 61,000 PLN Investment cost: 256,000 PLN Energy cost savings: 49% Modernisation of a production line for processing large metal elements, replacement of a lathe Savings: 61,000 PLN annually

5 When is modernization of technologies in the metal processing sector most profitable? PolSEFF projects in the metal processing sector have shown that almost any modernization investment can lead to significant savings. Many investments in this sector were expensive, what made the payback period of one year hard to achieve. Nevertheless very positive indicators of Internal Rate of Return (IRR) as well as the Net Present Value (NPV) justified the implementation of the project. Highest savings were reached on projects involving replacement of traditional metal processing technologies to advanced machines with numerical controls that combine several steps of production into one process. Financing modernization investments in the metal processing sector Benefits of using the PolSEFF 2 programme to finance modernisation investments. Being an entrepreneur, who implements a modernisation investment in his company within the Programme is entitled to receive the following benefits: Annual energy savings of at least 20% A grant of 10% or 15% of the loan amount used to finance the eligible elements of the project. 15% is granted under investments that require full energy audits of buildings. Free support of PolSEFF 2 engineer-experts who assist in completing the required application forms and conduct the required technical and financial evaluation of the project. The experts also provide energy audits and verify that the investments qualify for financing. Investments in modernization of machines, equipment and production lines made by SMEs from the metal processing sector are financed by the second edition of the PolSEFF programme. The investor can use one of the following options. LEME investments simplified procedure When an investor is planning to replace a forklift for example he can use the simplified procedure and choose the machine from the LEME list. The list is available on the website of the PolSEFF 2 programme and it is regularly updated with new products and categories. Suppliers are welcome to register new products on the LEME list. Instructions on how to register new products can be found on the PolSEFF 2 website in the section For Suppliers. The investor is entitled to a grant of 10% of the loan amount used to finance the eligible elements of all LEME projects. Assisted investments standard procedure The standard procedure is recommended for projects implemented by companies from the metal processing sector. It covers all the investments that cannot be completed through LEME. More information about the standard procedure can be found on the PolSEFF 2 website.

6 PolSEFF 2 the program for financing energy efficient investments in small and medium enterprises. PolSEFF 2 is the second edition of the successful Polish Sustainable Energy Financing Facility programme developed by the European Bank for Reconstruction and Development. It is implemented as a part of the NF Programme, which is operated by the National Fund for Environmental Protection and Water Management with support of the European Union. PolSEFF 2 is a EUR 200 million credit line made available to participating banks. The banks then offer loans to SMEs for financing energy efficiency investments. More information about the PolSEFF 2 programme is available at Contact: PolSEFF 2 OFFICE ul. Orzycka 27, 3rd Floor Warsaw, Poland Tel Fax helpline@polseff.org WE SUPPORT AND FINANCE THE IMPROVEMENT OF ENERGY EFFICIENCY IN YOUR COMPANY

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