Energy Management Gaining Strategic Prominence for Indian Automobile Manufacturers

Automotive companies are taking the necessary steps to improve their resource consumption and meet their renewable energy goals. Indian automotive companies are continuously targeting energy optimization. Further, many large players, such as Kirloskar Oil Engine Ltd. and TVS Motors, are engaging in large scale Purchasing Power Agreements for wind energy to meet their renewable energy goals.

Energy management does not require new infrastructure

Energy management initiatives do not always need investment in new infrastructure. German automotive manufacturer, Volkswagen, reduced their energy consumption from 2012 to 2013 by 15% solely by reducing set points for their chillers /compressors and optimizing the on/off time of production equipment in their 115,000 square meters Pune Plant. The air ventilation, lights and hot water boiler are now automated to be switched OFF during Lunch/Tea breaks and non production hours. Likewise, the compressed air generator’s pressure set point reduced to 6.5 kg/cm2 from 6.7 kg/cm2 during production time and during non-production time it is set to 6.0 kg/cm2. The chilled water temperature set point was changed from 11 degrees C to 10 degrees C. All these optimizations yielded an energy savings of 757 MWh/ annually without an upfront investment.

Kirloskar Oil Engines Ltd. also undertook simple strategic interventions for energy management. Most of these interventions were implemented to enable energy optimization in their Kolhapur (Kagal), Pune, Nasik and Rajkot Plants. Sunil Doshi, Corporate Energy Manager, Kirloskar Oil Engine Ltd. explains “in the engineering industry, energy consumption is mainly dependent on production volumes. Chances of energy wastage is highest if the plant is underutilized relative to its designed capacities.” In Kagal, they reduced the speeds of blowers for pre-treatment line & ovens. In their other plants, Kirloskar switched off hydraulic power packs and installed auto timer circuits to control office lighting. Even for basic plant utilities functions, idling equipment for compressed air, lighting and water pumps are examples of key losses. “There is a lot of awareness shaped and continuously demonstrated for avoiding wastage of energy” Doshi states.

Another source strength behind sustainability interventions is collaboration and open-sourcing solutions on sustainability issues . Volkswagen developed the website “Massnahment@web” where employees can enter and share measures and innovative ideas across all Volkswagen plants in the world in order to facilitate collaboration. Volkswagen is using the website to streamline the uptake of projects across all their plants. Kirloskar appointed a Production Planning Control head as part of their ENCON team, who linked on-going optimization of energy usage to production plans.

The biggest challenge in retrofitting in the automotive sector is keeping up with changing production volumes while still reducing resource and energy consumption. One reason is that the production volume of different products needs to align with the market demand, thereby resulting in changes which resource management and saving programs cannot always offset or accommodate. “Due to the colossal and sudden variation in market requirements, production varies significantly,” explains Sunil Doshi. “This may result in varying & increasing resource consumption. It considerably impacts the overall results we can achieve through resource saving programs.”

Contracting exclusively for green power

Apart from energy optimisation, another major intervention is the automotive industry’s shift towards using renewable energy for manufacturing processes. Most companies will not pay a premium for renewable energy. Initiatives must be price competitive to locally available forms of power, meaning that in most cases renewable energy acquisition must be delivered at cost par or better.

In order to lower the cost of renewable wind power TVS Motors and other 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. A PPA cannot be done in all Indian markets. In a state like Tamil Nadu where 40% of supply is provided by wind energy, PPAs are common among corporations like TVS Motors and state incentives provide the long-term security needed to attract investors.

TVS Motors Company along with other group companies conducted a Power Purchasing Agreement (PPA) investing a total of Rs 76.5 Cr towards installing 59.75 MW windmills. Of the 59.75 MW windmills, 7.2 MW wind turbines will be commissioned and dedicated for exclusive use by TVS Motors at their Hosur plant. The agreement was executed with Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO). Since wind power is seasonal, to ensure uninterrupted power supply, TVS Motors also struck an agreement with TANGEDCO for the demand of 18,000 KVA at 110 KV supplies from non-renewable sources. Since the implementation of this scheme in April 2013, wind energy contributed to roughly 27% of overall power consumption.

Kirloskar Oil Engines installed seven windmills with a capacity of 5.6 MW in Pachpatta (Near to Nasik) to provide power to both their Pune and Kagal plants. They generate roughly 112 lakhs units per year which is provides a contribution of 40% of overall power consumption of Kolhapur & Pune plants.

Role for decentralized renewable energy in supporting ancillary processes

Another option is to set up captive solar and wind generation to support a factory. For decentralised renewable generation, ensuring a pure-form and reliable source of power from renewable sources such as wind and solar is perceived to be costly and high risk to support core manufacturing processes. However, there is a role for decentralized renewable energy in supporting ancillary energy demand i.e. associated processes which are not on the ‘critical production path’.

An interesting example is the use of decentralized solar heating for pre-treatment processes. One example is TVS Motor’s retrofit of their production cycle by implementing a solar powered air heater to pre-treat their paint for scooter and moped style parts. The use of solar energy technology in this case was feasible since it did not affect a mission critical component of production. As TVS Motor Production Engineering Member Vivekaanandan P explains “the innovation can be horizontally applied for similar applications, anywhere where hot air is required. Solar energy can be used to heat the air and other companies can adopt this renewable energy for the same and similar application”. The project has an expected payback of 5 years (2019).

Companies have limited capital available to invest in sustainability projects due to capital mostly being allocated to revenue generating assets. Despite this, the experience of the automobile industry reveals that energy management and green power initiatives are attracting strategic prominence for automobile manufacturers.

Volkswagen, TVS Motors, and Kirloskar Oil Engine Ltd are Parivaratan Awards nominees for 2014