Rising energy costs and sustainability goals are driving automotive manufacturers to take measures to improve energy efficiency not just in manufacturing processes but also in their entire supply chain. See how companies like Tata Motors and M&M are reaping the benefits of energy management.
Without energy, there is no manufacturing. This is also true to automotive manufacturing activities, which are highly energy intensive. Energy usage have significant influence on cost of manufacturing, at the same time total greenhouse gas (GHG) emission is directly proportional to the energy usage. Thus, energy management is very important in automotive sector.
“Energy management is a continuous process that develops overtime. By taking right approach to energy management, it is possible to make considerable savings in carbon emission and manufacturing costs. Successful energy management is only a combination of an effective strategy and right practical interventions. Success can be ensured by making energy management an integral part of running the organisation,” feels Arvind Bodhankar, Head - HSE & Sustainability, Tata Motors Ltd (TML).
Energy usage is considered as ‘cost of doing business’ and companies are aware of the waste and the associated costs. In automobile plants, fuel is used for steam applications, curing ovens of painting lines, heat treatment and casting operations. Majority of the energy is consumed in the form of electricity, which is used throughout the facility for compressed air, metal forming, lighting, air conditioning, painting, material handling, welding, robotic arms, machining etc.
“Energy costs are rising rapidly. In order to remain competitive resources must be used efficiently. Monitoring, measuring and managing energy use is the key to better production efficiency and sustainability. Energy recovery is also fast becoming a central component of energy efficiency across the automotive sector. The innovation that is generating a lot of savings in highly energy intensive sectors such as automotive is the capture, storage and reuse of excess energy,” opines Dr Shrikar Dole, Founder & CEO, SDG Foundation.
Sustainability drives energy efficiency
Rapid industrialisation and advanced technological changes have put Indian economy on fast growth. But such developments pose, unprecedented challenges to human society in term of climatic and environmental degradation. Therefore, the industry and the government will have to take steps to deal with environmental threats and explore ways to address these issues, thus creating a sustainable environmental future for all.
Dr Dole says, “Using energy management as solution for streamlining manufacturing processes, enhancing productivity, as well as the need for environmental sustainability has become a norm thereby adding to cost reduction. Legal requirements and standards are becoming more and more focused on protecting the environment (for example, ISO 50001).”
This is driving auto makers to focus on energy management to achieve their sustainability goals. Dr Sunita Purushottam, Head of Consulting, Treeni Sustainability Solutions, explains, “Energy management is one of the most important factor for the companies as it results in the reduction of operating cost, reduces carbon footprint and other air emissions due to reduced fuel consumption in the manufacturing process. Energy and carbon emissions are considered as KPIs for automotive industry.”
Automotive manufacturing has three major areas of focus for improving energy efficiency - manufacturing process, products and supply chain. “The energy conservation strategy of automotive firm needs to cover these three areas to have holistic approach for reduction in energy consumption,” points out Dr Purushottam.
Effective energy management strategy enables organisations to establish the systems and processes necessary to improve energy performance, including energy efficiency, use and consumption.
According to Vijay Kalra, Chief of Manufacturing – Automotive Division, Mahindra & Mahindra Ltd (M&M), some of the key driving factors to have effective energy management strategy are:
• To be cost competitive: Automotive industry is facing more and more competitive environment wherein cost of product is one of the decisive factor for customers. Thus, it is imperative for each automobile industry to be cost competitive. Energy cost is one of the major contributors in overall manufacturing cost. Hence, reduction in energy consumption supports in improving the bottom line performance and optimise manufacturing cost.
• To be energy secured: Energy is prime source for any automobile manufacturing, and hence ensuring energy availability around the clock is very essential. Considering the current deficit in demand and available energy, energy management plays very important role to sustain energy secured status.
• To reduce carbon emission: Entire world is facing burning issue of climate change and global warming and, therefore, reducing energy consumption through effective energy management is important to optimise the carbon emission (emitted due to use of energy).
• To improve brand image: Energy and carbon emission reduction are the key parameters of business responsibility report (BRR) and sustainability reporting which are being reported by most corporates in public domain. Reduction in energy and carbon emission weighs high for stakeholder engagement.
M&M’s continuous improvement programme
Auto makers are devising energy policy which states their commitment to achieve energy performance improvement and provides framework for setting objective & targets. Take the example of Mahindra & Mahindra which follows Plan-Do-Check-Act (PDCA) continual improvement framework and has incorporated energy management into everyday organisational practices.
‘Plan’ involves conducting the energy review and establishing the baseline, energy performance indicators (EnPIs), objectives, targets and action plans necessary to deliver results. ‘Do’ means implementing the energy management action plans including various energy efficiency improvement projects. While doing so, the company ensures competency enhancement, adequate training and creating awareness among all internal stakeholder. M&M has also incorporated energy efficiency in procurement and design. ‘Check’ means monitoring and measuring energy consumption and determining energy performance against the energy policy & objectives and reporting the results. ‘Act’ involves taking actions to continually improve energy performance and the energy management systems.
Following PDCA framework, M&M has implemented projects like energy efficient compressors and AC systems, building management systems, adoption of heat pumps including hybrid heat pumps, waste heat recovery from paint shop and heat treatment ovens, HVLS fan, green building implementations, harnessing renewable energy (2.2 MW solar and 4.2 MW wind energy) etc. “Reduction in carbon footprint is one of the main KMI and KPI for most corporates across the globe including Mahindra,” states Kalra.
According to him, “The company is committed towards technology driven energy saving initiatives and lays emphasis in inculcating innovation driven culture within organisation. "Mahindra & Mahindra is the first company to declare its carbon price in India at $10 per tonne of CO2 emitted by operations. This ensures commitments towards the investment of energy efficiency projects,” says Kalra.
Environmental stewardship: The Tata Motors’ approach
Tata Motors, another major Indian auto maker, uses Tata Code of Conduct as the guiding principles for its overall approach towards the environment and environmental stewardship. “We pursue to conserve natural resources through reduce-recycle-recover and refurbishment. We are committed to improving the environment, particularly with regard to the emission of greenhouse gases, consumption of water and energy, and the management of waste and hazardous materials. We continuously strive to offset the effect of climate change in our activities,” says Bodhankar.
Tata Motors’ approach to energy and resulting emission is at two levels - operation and product. With respect to energy usage at operation level, the company, in line with its energy policy, has committed to reduce dependency on fossil fuel and its energy strategy focuses on adopting renewable source of energy through a grid, in-house renewable energy generation and collaborating with power utilities for renewable energy for meeting its energy demand.
“With respect to energy efficiency of our products, we continuously strive to comply with all the environmental laws and manufacture environmentally sustainable products,” observes Bodhankar.
During the financial year 2016-17, Tata Motor’s energy conservation (EnCon) initiatives have resulted in saving of 58686 GJ of energy and 8292.75 tCO2e emission reduction through various means of fuel use optimisation and electrical energy-saving measures. He says, “Our extensive materiality assessment helped us identify key issues, while continuous internal performance management and monitoring mechanism helps us to strategise our actions on identified material issues for integrated sustainable development and adhere to our ethical principles.”
In line with TML’s material issues and continuous self-assessment of its performance, the company has established short-term and long-term goals for environmental and social material topics. “Energy is one such material topic to us and we have short-term goals for managing this material topic. We plan for 5% reduction over previous year (target year 2017-18). Also, we aspires to meet 100% of energy demand from renewable energy,” informs Bodhankar.
Renewable energy helps conservation
Apart from energy optimisation, another major intervention in the automotive industry is the shift towards renewable energy for manufacturing processes. For example, Tata Motors, one of the signatories of RE100 (a global collaborative initiative of influencing business committed to 100% renewable electricity), has increased its renewable energy contribution to 16.34% in 2016-17 from 8.44% in 2015-16.
“Apart from the usual energy conservation initiatives, Tata Motors plans to source more renewable energy. The cumulative renewable energy installed capacity of the company, as of 2016-17, is 3.85 MW of solar power and 21.95 MW of wind power plant at Pune. We are planning to expand this in the coming years along with exploring options of PPA with other RE (renewable energy) distributors so that we are on track to achieve our aspiration of switching to 100% RE,” explains Bodhankar.
In order to lower the cost of renewable power, auto companies are focusing on the most cost-effective markets and signing long-term third-party PPAs with energy providers to provide business certainty. A PPA allows a company to invest with no upfront capital investment and establishes a fixed price per Kw hour over a long-term period. Tamil Nadu, where 40% of supply is provided by wind energy, PPAs are common among auto manufacturers.
Another option is to set up captive solar and wind generation to support a factory. Take the example of Maruti Suzuki, India’s leading car maker, which was able to offset 1,014 tonne of CO2 by setting up 1 MW solar power plant at Manesar facility.
Making supply chain energy efficient
Most automobile plants outsource a large number of their operations and buy parts from vendors. “The in-house operations, which generally are painting, final assembly, machining, few auxiliary operations etc, constitute a fraction of the total energy needed to manufacture the vehicle. Rest of the energy consumption occurs at ancillary units outside the automobile manufacturing facility,” says Dr Dole.
Realising this, auto makers are increasingly focusing on collaboration with their suppliers to find solutions for sustainability issues. “Emissions due to purchased goods and services are also a major contributor to our overall GHG emission and hence, we have initiated engagement with our supply chain to encourage energy efficiency, usage of renewable energy and monitoring their individual operations’ GHG emission. Through our supply chain engagement, we provide a platform for sharing best practices in terms of energy conservation, energy efficiency and in-house generation of renewable energy,” says Bodhankar of Tata Motors.
As a part of its PDCA frame work, M&M has a green supply chain policy and green procurement guidelines promoting energy efficient procurement. On the other hand, Maruti Suzuki has taken various initiatives to reduce per vehicle consumption of material and energy. For this, it also conducts energy audits on suppliers to identify opportunities to reduce energy consumption at suppliers’ end.
First measure, then reduce
When it comes to energy management, companies face challenges such as lack of data standardisation (leading to misinterpretation within the company), absence of all relevant energy data in a common platform for analysis, absence of common analytical dashboard (leading to lag in strategic decision making), etc.
Another challenge is calculation of the equivalent vehicle. Dr Sunita Purushottam explains, “For those automotive companies with a varied mix, this parameter is important for comparing energy efficiency across various processes. What you don’t measure you cannot manage. Granular level of energy metering is one of the solutions to determine the process wise energy consumption. This will help companies to understand where improvements are needed and can lead to identifying opportunities to save money. However, most companies feel that this is a waste of money and do not invest in understanding their consumption patterns across various processes.”
According to her, auto manufacturers should invest in measurement & monitoring technology and adopt ISO 50001 as both these are guaranteed to save the company upto 30-40% of their current energy bill.
Smart factory means savings
Earlier, companies had limited access to capital for sustainability projects as capital used to be mostly allocated to revenue generating assets. However, today energy management and green power initiatives are attracting strategic prominence for automotive manufacturers. “Auto manufacturers should focus more on improving bottom line for energy management and investment should be in a way that profit out of invested money should recover in shortest span,” suggests Kalra of M&M.
More intelligent use of energy is driving much of the technological innovation that the industry is seeing. The ‘smart factory’ which was once simply a dream is fast becoming a reality as a number of communications and sensing technologies converge.
“One of the key drivers behind the development of energy-efficiency control systems is Industry 4.0 that will have a disruptive impact on automotive manufacturing. At the core of Industry 4.0 is Big Data concept that will gather mass of information from a numerous sensors throughout the production process to deliver unparalleled insights that will reveal how energy can be more economically consumed,” says Dr Dole.
Successful energy management is only a combination of an effective strategy and right practical interventions. Success can be ensured by making energy management an integral part of running the organisation.
- Arvind Bodhankar,
Head - HSE & Sustainability, Tata Motors Ltd
Monitoring, measuring and managing energy use is the key to better production efficiency and sustainability. One of the key drivers behind the development of energy-efficiency control systems is Industry 4.0 that will have a disruptive impact on automotive manufacturing.
- Dr Shrikar Dole,
Founder & CEO, SDG Foundation
Practical tips for auto makers to improve energy efficiency:
Implement energy management system (EMS)
Encourage green company initiatives and GreenCo certification
Declare internal commitments on investment towards energy saving projects
Devise energy policy and ensure its implementation across all levels
Digitalise energy monitoring and management
Promote internal & external energy audits
Ensure eco-friendly supply chain
Adopt waste management strategy and work towards circular economy
The energy conservation strategy of automotive firm needs to cover three main areas - manufacturing process, products and supply chain - to have holistic approach for reduction in energy consumption.
- Dr Sunita Purushottam, Head of Consulting, Treeni Sustainability Solutions
Five operations key for energy efficiency
Dr Sunita Purushottam offers tips for energy reduction in five major operations in auto industry:
• Body in white (BIW): There should be reduction in scrap and improvisation of material utilisation
• Paints: Companies should look at advances in materials handling, design, and optimisation of the spray process, development of non-spray paint processes, and more energy-efficient cure and drying process
• Powertrain and chassis component: It helps in heat recovery from casting, vehicle designed for energy efficiency, reduce scrap, efficient casting of parts
• Final assembly: Equal focus need to be there at this stage for efficient material handling (which includes better logistic management, reduction of distance between tier 1/tier 2 suppliers and automotive company, efficient transportation, just in time sequence), usage of energy efficient tools, power supply (HVAC) and design & layout of system
• Plant infrastructure: It is a major factor that affects the energy management of any manufacturing set up. Having a right plant infrastructure in place and by implementing best energy management practices, performing energy assessments and benchmarking of energy use etc. an automobile company can efficiently manage and reduce energy consumption
Auto manufacturers should focus more on improving bottom line for energy management and investment should be in a way that profit out of invested money should recover in shortest span.
- Vijay Kalra,
Chief of Manufacturing – Automotive Division, Mahindra & Mahindra Ltd