An important aspect of energy management and conservations is tracking, recording and analyzing costs associated with energy consumption. Thus, a foundry accountant must be able to collect the concepts behind energy bills and should illustrate the energy implications of production non-quality on the total operational costs.
The preliminary knowledge of the accountant in energy matters may be limited to bill paying. However, to develop a set of key energy indicators, essential metering, monitoring and estimating operational controls are required. Only after understanding the potential of the measurements and the magnitude of costs, the accountant would be able to support the energy improvement drive and will help in preparing cost justifications for acquisition of the meters including following:
- Identify billing errors;
- Spot cost trends;
- Track cost fluctuations;
- Allow comparisons and account for variations against indices such as weather conditions and occupancy;
- Establish utilities budgets;
- Provide a basis for troubleshooting high usage/costs and
- Justify capital expenditures
Some of the most likely reflected indicators that every foundry has are:
- Cost of electricity – total;
- Consumption charge = time of day/week rates and charges;
- Demand charge; and
- Electric Bill Component involves Power factor penalty which is defined as penalty charged on the customers electrical bill in reference to the value of optimum power factor;
- Cost of natural gas (and other fuels); and
- Cost of water (includes sewer charges and other wastes).
Energy Intensity
It is defined as ratio of total energy costs to the total manufacturing costs. Also, in simple words, Energy Intensity can be defined as I = E/Q, where E denotes energy consumption and Q represents Output.
To calculate this figure, the basic information is not sufficient. One needs to understand how, where, when and why the energy is spent and how much it costs. To makes it simpler, energy consumption is considered to be divided in following categories:
- Total Consumption of Energy for all operations
- Total Consumption of Energy for non-fuel applications
- Total energy input for heat, power, and electricity
- Total energy consumption for heat, power, and electricity.
Other indicators for energy consumption are:
- Energy and cost of energy per tonne of melted metal;
- Average load factor;
- Average power factor;
- Furnace thermal conversion efficiency;
- Furnace demand as percentage of the foundry’s total demand; and
- Compressor electrical costs, etc.
Since outputs of manufacturing operations are physical units, they can be calculated appropriately. However, a foremost problem with using such physical measure of output is that they can’t be standardized within an industry. As a single manufacturing establishment or industry may produce a wide variety of end products, these products would be required to aggregate and then calculate the change in intensity.
Accounting for energy costs should explore the impact of production practices on overall costs and help in identifying optimal solutions. For e.g. daytime versus nighttime melting, poor practices carried out to keep molten metal in the furnace longer or at a higher tap temperature than required. In scrap, energy cost will be equivalent or slightly higher as compared to good castings. However, the processing of scrap effectively doubles the energy content per kilogram and causes other hidden costs. Considering full accounting for these "hidden" costs, the actual amount of internal waste due to scrap will be highlighted and will surpass the nominal spout metal units cost of scrap. Hence, Full cost accounting is similar to costing non-quality in the foundry’s energy usage.
Consequently, management should support and funds approvals must be made easier to obtain for:
- Process and machinery changes; and
- Energy loss reduction training programs and energy revival systems.