Columnists: Johan Wollin, Volvo
Published on: 13 Sep 2019
Don’t idle away: How Volvo turns energy waste into value
In 2012, Volvo Group and Volvo CE decided to intensify their energy management work and joined the Climate Savers agreement hosted by WWF. The agreement included product related activities as well as a manufacturing focus. The plants were challenged to implement energy savings equivalent to a 2% year over year reduction. To drive this energy management work, a three-step strategy was implemented consisting of: 1) Energy Conservation, 2) Energy Efficiency and 3) Renewable Energy.
Energy conservation for Volvo CE means to reduce and if possible, eliminate energy waste. Energy conservation was initially translated into reducing idle electricity use. Our plants normally do not run during the weekends, but they still use electricity. In 2012 the average idle level was 28%. A target was set for the plants to achieve 15%, which was achieved in 2016. The benefit of idle electricity reduction is that it does not cost much to put in place, as it is mostly about turning off equipment.
By focusing on idle electricity, we gradually started to change the culture and behaviour around energy rather than only addressing it through technical solutions and investments. The target of 15% will become 12% in 2021, dropping again to 10% in 2023 as plants are continuously challenged to improve. We believe that world class idle electricity use for our type of production is around 7%.
Energy efficiency is mostly about using right sized and more energy efficient equipment as well as energy recovery. Since 2013, Volvo CE has implemented more than 50 GWh’s of energy savings measures.
The final step is to shift towards renewable energy. We actively buy renewable electricity everywhere where it is possible (which is more or less everywhere except some parts of Asia). The reason we focus on the renewable target as the last step is to clearly communicate to the plants that there is no point putting up solar panels on our roofs if we then waste the electricity that these panels produce.
Energy management leads to organisation-wide benefits
In the beginning, the energy management work was motivated by cost reduction and doing something good for the environment. It was only in 2014 that we started to include non-energy benefits in communications with management and employees. Even if you know that there are non-energy benefits it can sometimes be difficult to quantify them. When replacing florescent light tubes with LED it is quite easy to include the longer lifetime and reduction in maintenance and disposal cost in the business case; however, non-energy benefits in more elaborate measures or projects can be difficult to quantify.
For example, when working with idle electricity, we ensure that production equipment that is turned off during the weekend can actually be turned back on when production starts Monday morning. We end up working with our production team and equipment, and as a result of our efforts realize that we reduce unplanned down time. Trying to quantify this benefit in monetary terms is not straight-forward; however, there is empirical research which shows that non-energy benefits can be estimated to be 2.5 times the energy saving . This multiplier can be used to simplify the set-up of the business cases to step-up investments in energy management.
Productivity improvements is an under-valued non-energy benefit. When we do energy treasure hunt workshops and quick energy kaizen’s we see that a majority of the improvement ideas will actually also improve productivity. If we can improve productivity, then we can turn off the equipment earlier and start to save energy. This productivity gain can of course be very beneficial but difficult to include and take advantage of during the preparation of the business case, as it is perhaps only at a later stage that we will see the full benefit.
Another non-energy benefit that is often missed is that working with continuous improvement as a way of thinking in the energy area translates into training the whole organization in continuous improvements. This learning can then be expanded to work with continuously improving safety, quality, delivery etc. for the benefit of the customers, the company and the employees.
Since 2013, Volvo CE estimates that energy management work has saved €10M of which half is direct energy savings and half is non-energy savings. That is most likely a very conservative estimate of the non-energy savings.
Moving forward, Volvo CE will continue with its energy management work in pursuit of the WWF challenge to implement energy savings equivalent of 2% of the energy use. This will mean that we need to implement a minimum of 24 GWh’s of savings between January 2019 and December 2023. We will continue our efforts to educate management and employees internally about non-energy benefits and refine our efforts to include them in business cases.
 Hall, N. P. & Roth, J. (2003) 'Non-energy benefits from commercial and industrial energy efficiency programs: Energy efficiency may not be the best story', Proceedings of the 2003 International Energy Program Evaluation Conference, pp.689-702
About Volve CE
Volvo Construction Equipment (Volvo CE) is a global construction equipment manufacturer operating 14 plants world-wide. The main products are excavators, wheel loaders and haulers. With annual sales of around 84 BSEK and a total work force of 14,000 employees it is one of the largest manufacturers in the construction equipment industry.