As a result, our primary manufacturing facility in Ontario, New York, ranks as one of the most successful facilities certified under the U.S. Department of Energy's (DOE's) Superior Energy Performance (SEP) program. Under SEP, HARBEC achieved a 16.5 percent improvement in energy performance, which was verified by an independent third party. We have also met our goal of being carbon neutral.
We are aggressive in how we save energy. As part of our involvement in DOE's Better Buildings, Better Plants Challenge we have publicly committed to reducing our energy intensity by 25 percent by 2021 and openly sharing our results and progress.
Since the company's launch in 1977, we have looked for cost effective ways to manage and save energy. One of the greatest challenges in making energy saving upgrades and technologies a reality is finding the capital to get them off the ground. Fortunately, we have found successful economic opportunities (and financial institutions willing to take a risk) to help us be more lean and competitive in our energy use.
Financing: Unconventional but efficient
Historically, the biggest barrier to financing energy efficiency projects has been the short payback requirements companies insist these projects meet. Essentially, companies ask that energy efficiency and renewable energy projects pay for themselves within a one to three year period. While this approach can be sensible for many types of business investments, Harbec believes it is counterproductive in the case of energy efficiency and renewable energy investments.
For these kinds of investments, Harbec uses a financing method that looks at energy project payback periods differently. Rather than adhering to strict return on investment (ROI) or payback rules, we evaluate potential projects on the basis of financial impacts over the entire course of the projects' expected lives. For Harbec, we will invest in any project that generates a positive return over its life span, provided we can secure external financing.
In these cases, the longer-than-normal payback periods are justified because the dollars used are coming from the utility budget, essentially the excess power costs. If these required utility expenditures are simply spent on an alternative way to provide the power to run the facility and also purchase an asset (energy saving upgrades/technologies), both the company and the bank win, regardless of the length of time.
Dollars that were typically given to energy providers and utilities in the past are instead invested in new assets that provide the power needed to manufacture our products. Even though these types of projects will often take longer to pay for themselves, the economic upside is that they will continue to contribute cost savings for many additional years. As a result of this approach, we have implemented a variety of successful energy efficiency and renewable energy projects, including two on-site wind turbines that wouldn't have been approved and financed using conventional approaches.
We are sharing more details on Harbec's financing method on the Better Buildings Challenge website.
Wind generates energy savings
The two different wind turbines we've installed over the past two decades, 250 kilowatts (kW) and 850 kW, at our Ontario plant are good examples of how we have financed energy efficiency. In 1998, when we developed our first major wind energy project, most banks were reluctant to provide financing due to the project's anticipated payback period of as much as 10 years. After being turned down by more than 30 banks, we found four local institutions that shared the risk and made the loan. The turbine was finally installed in 2002.
After eight years on a moderate wind site with no subsidies, it paid for itself two years ahead of schedule. With the loan now paid off, Harbec is reaping no-cost electricity for the remainder of the project's life, which could span another 15 years. Additionally, Harbec has reduced its exposure to unexpected electricity price spikes for years to come. With those kinds of clear financial benefits, we decided to look for other, similar opportunities.
In 2012, with the help of subsidies and grants, we installed our second wind turbine which produces five to six times more energy per year. We expect this one to pay for itself in less than six years.
Harvesting rain for water and energy savings
Aside from our unconventional financing, we've also looked for new ways to lower our energy costs while lowering operating costs. When a change in our fire insurance required us to install a sprinkler system for fire control, we didn't have many options, since our facility didn't have adequate town water service to operate the sprinklers. Our only options were to install a 200,000 gallon water tank or to build a pond with a pump house.
After carefully researching options, we discovered that our roof and parking lot provided us with 1.2 million gallons of water potential a year. Once we diverted that water, we calculated that we could put in a 900,000 gallon reservoir in the available space. We diverted all the water from our roof and parking lot and now manage a water system that supports the sprinkler systems and will help us meet our new goal of being water neutral in our manufacturing operations by 2015.
We are committed to finding new ways to manage and save energy - it's in our company DNA. That's why our partnership with programs such as SEP and the Better Plants Challenge are key to saving energy. As a partner in the Challenge we can share our successes like the above financing strategies, and learn from other partners and their own achievements.
We also believe that the market is moving toward product impact accountability with new economic opportunities for manufacturers who provide components, assemblies and products that demonstrate environmental impact reductions. Pursuing this new type of business model also has the potential to reduce your cost of doing business if you do it correctly. The alternative will be to buy your way out (think: carbon credits and taxes). We believe the former will make us all the more competitive.
Bob Bechtold is the founder of Harbec, whose mission is to provide tightly toleranced prototypes, tooling, machined components and quality injection molded parts in a sustainable manner with a social conscience. Harbec proudly fosters an atmosphere of encouragement and respect for the health and prosperity of their customers, employees, and the global community.
Editor's note: The author is a PlasticsToday contributor. The opinions expressed are those of the writer.