Unlock the cash from your compressors

HEADNOTE

Need a more efficient compressor? These days, you don't have to dig deep into your capital reserves. Paddy Baker reports on how suppliers are making both their equipment and its upkeep more affordable

If

the laws of physics were different, few manufacturers would run their own air compressors - they would simply have the air brought into the site from outside, like other utilities. It's only the fact that compressed air can't be transported economically over long distances that means factories have to generate it on site. Traditionally, having compressors on site meant owning them, but that doesn't have to be the case. And with the service, maintenance and support packages that are increasingly available, all that factory managers need concern themselves with is the monthly charge - a fixed quantity, generally speaking - and, of course, the electricity bill.

Compressor manufacturer Atlas Copco's offering in this area is called Total Air. This is a flexible range of funding packages that can cover compressor acquisition, planned maintenance and the supply of replacement parts. The company cites three main benefits of this type of approach (which often also apply to other companies' offerings):

* Costs are guaranteed for the period of the contract, and there are no hidden extras - easing financial planning

* Servicing in line with the manufacturer's recommendations is included in the price

* Depending on the nature of the contract, the equipment does not have to appear as an asset on the company's balance sheet.

"Total Air brings the very latest compressor technology backed by regular maintenance and genuine Atlas Copco parts within the range of most budgets," says John Forman of Atlas Copco compressors. "It gives companies who do not view capital purchase of equipment as a way forward the ability to capitalise on business growth or development which otherwise might be denied them because of limited funds or the need to invest elsewhere. It is equally appealing to new businesses or companies keen to take advantage of the latest energy-saving technology without having to build up capital reserves."

What happens at the end of the contract will depend on the exact nature of the agreement. Atlas Copco's Total Air package offers three different options. Under contract rental, equipment reverts to the lessor at the end of the contract period; with hire purchase, it passes to the user on payment of a final fee (agreed at start-up); and under the finance lease option, equipment can often be sold to a third party, with the bulk of the proceeds being retained as a rental rebate.

Compressor distributor Motivair has over 100 customers for its monthly hire package known as BudgetAir. Managing director Carry Jordan says these customers vary in size from large foundries and diecasting operations down to small jobshops. These customers pay a monthly fee, based on their air requirement and the number of hours per year that the compressor runs for. This covers them for all warranty work, servicing and breakdown repairs. "The customer can just fit and forget," he says. "And as we can monitor their equipment remotely, we can diagnose a problem, send an engineer in - it could be overnight if they're operating 24 hours a day - and have it fixed before the customer is even aware there's been a problem."

Another advantage, he says, is the convenience of dealing with a single provider, rather than dealing with the compressor supplier and a finance house, as is often the case with conventional purchasing arrangements.

Entire installation

One Motivair customer is Precision Disc Castings (PDC) of Poole, Dorset, whose four Atlas Copco compressors - the 200-person site's entire compressor installation - have been supplied under a BudgetAir lease purchase agreement. The contract, which commenced in August 2002, runs for five years.

Was switching to BudgetAir an easy decision to make? "We had to do a fair amount of justification, obviously, but it became very clear, very quickly," says Paul Sillence, maintenance superintendent. The six compressors the company had previously were maintained in house, but at a staggering cost. he explains: "For the same amount that we were spending on maintaining the old compressors, we could install new compressors, rip out the old ones and have a maintenance contract - at zero additional cost."

So not only does PDC have compressors that are more energy efficient and quieter than the ones they replaced, its maintenance technicians are able to spend more time on other tasks, as Motivair looks after both routine maintenance and inspections (the company is automatically alerted by the compressors when these are due) and repairs (on a call-out basis). "On this site, compressed air is Motivair's responsibility," comments Sillence.

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To have an overstretched maintenance department is commonplace these days. Vernon Edwards of CompAir says: "There's a realisation within industry that some utilities are never going to be given the priority they need. People know there are savings to be gained from more efficient operation, but their engineers are tied up looking after the process side of the business, and just don't have time to work on the utilities. Others just don't want the responsibility any more."

Add to that a skills base across industry as a whole that is generally low, and one can sympathise with compressor manufacturers who know that their advanced technology is often operated well below its potential. One example is variable speed drives (VSDs). These offer the opportunity to save energy, but they need to be correctly installed to carry the whole variable air demand either alone or in combination with a fixed speed machine. Edwards has seen instances where installing a VSD has actually increased energy consumption. The most common problem is standard compressors still coming on and off load, either because the wrong capacity VSD compressor has been installed or because the VSD compressor is too slow to respond to changes in demand - perhaps because an air receiver is not large enough, or because of the lack of a good control system to ensure the standard compressors remain fully loaded or switched off.

"Compressor manufacturers have little influence on the installation," says Edwards. "I've seen the latest, most efficient equipment installed, but it makes little difference to the electricity consumption as the technology has been poorly applied."

To address this, CompAir has created the AirWorx package. Under an AirWorx contract, a customer pays a monthly fee for its compressor installation - generally a new one. "We address the entire compressed air system ensuring that the equipment, installation and application are appropriate and that everything is working together to ensure that the entire installation is efficient," says Edwards. The goal is to unlock savings that would never be made if the customer had to justify the purchase of the new system under a traditional capital expenditure model.

"Our prime motivation isn't just to sell compressed air, but to sell an installation based on operational savings. So we deal with issues outside the compressor room, such as ensuring that controls are set up properly," continues Edwards. "We don't just look at consumption, but at the total cost of running compressed air plant -including the cost of compressor failures and spoiled product."

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This entails a thorough audit of the customer site to get a full understanding of its air requirements and - something that often gets overlooked - how the new equipment will work alongside the existing plant. "Because we get comprehensive data, we're in a good position to focus on the total system and offer a best-practice solution," says Edwards.

Five years is the usual contract term for smaller compressors, rising to ten years for larger models and more specialised machines such as oil -free or centrifugal compressors. To incur rising maintenance costs on older equipment and not take advantage of newer, more efficient models would not be good for the customer or for CompAir, he says, so it's best not to run contracts for too long.

AirWorx was launched at the end of 2002 in the UK, following successful implementations in France, Australia and New Zealand. However, says Edwards, pre-contract discussions can take up to a year: it can sometimes be difficult for customers to get away from the mindset of getting the ticket price down at all costs - a desire which tends to compromise traditional equipment proposals. "We find that by taking capital out of the equation altogether, we're better able to deliver what we promise."

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"There's a realisation within industry that some utilities are never going to be given the priority they need. People know there are savings to be gained from more efficient operation, but their engineers are tied up looking after the process side of the business, and just don't have time to work on the utilities"

Vernon Edwards, AirWorx (CompAir)

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The potential for improvement

An EU study published in 2001 (Compressed Air Systems in the European Union: Energy, emissions, savings potential and policy actions) found that across the whole of the European installed compressor base, energy savings of just under 33% could be achieved over a 15-year period. This is through a combination of measures both at the time of installation (such as improved system design, waste heat recovery and using variable speed drives) and during operation (mainly reducing leaks). On individual sites, the saving could be anything from 5% to 50%. "It depends on the country and the industry, but I've seen plenty of plants with savings potential in the 30-40% range," says Vernon Edwards of CompAir.

The report lists three organisational reasons why improved compressor energy efficiency is not more actively pursued:

* Electricity consumption figures for compressed air are often not separated out from overall consumption figures for a site, and the amounts may in any case not be large enough to merit the attention of senior management. In addition, electricity consumption is often seen as a general overhead; responsibility for reducing it does not fall to an individual manager.

* Top management may be unaware of the potential for savings that exists. When selecting new equipment, they may be swayed more by the purchase price than the operating costs.

* Responsibility for energy optimisation measures is likely to cut across many functions, such as production, maintenance, finance and purchasing. Getting high-level agreement on a relatively lowcost item like electricity consumption is likely to be difficult.