Demand Management, Distributed Energy Resources, Energy Efficiency, Energy Storage, Industrial, Distributed Generation, Solar, Sourcing Renewables, Wind - August 22, 2016 - By Amy Poszywak
Views from the top: How GM is transforming manufacturing with renewables, energy storage
Exclusive to Smart Energy Decisions
Big news stories about corporate energy management and renewable energy purchasing often begin and end with California tech names like Apple, Google and Microsoft. But those names aren't the only iconic American businesses taking creative approaches to their energy strategy.
From perhaps an unlikely industry headquartered in an unlikely city, . The Detroit-based automaker, which also boasts years of Energy Star awards for its successes in reducing its energy use, recently announced that it has already surpassed its 2020 goal of hitting 125 MW of renewables. On July 25, the U.S. EPA's Green Power Partnership program ranked GM the eighth largest user of onsite-generated green power in the U.S., and its relationship with renewables goes back further than you may think.
Smart Energy Decisions recently spoke with Mari Kay Scott, GM's executive director of global environmental compliance and sustainability to learn more about GM's approach to energy management and renewable energy and how the company views its energy use in relation to its broader environmental goals. Below is an edited transcript of that conversation, which also highlights GM's unique reuse program for the batteries that power its electric vehicle, the Chevrolet Volt.
Smart Energy Decisions: We know that GM has been pursuing renewable energy for some time, starting with landfill gas sites. In the last few years, solar and wind costs have really come down and we know GM has been pursuing those sources as well. How would you describe the evolution of how GM has approached renewable energy?
Mari Kay Scott: In the beginning, we were looking at like 'this is kind of cool, we want to be a part of it, how can we do this and how can it save us money?' And we did some smaller projects, most of them were on-property projects and that's why we have some landfill gas right next to our plants. You'd see the gas getting flared off, and someone said 'how can we capture some of that gas and use it in our boilers?' So we started there, and our Lake Orion plant was next to a landfill, and a plant, and Ohio was like six miles away so we built a pipeline and started working with the landfill and figured out how to adjust our boilers and use that landfill gas and it was much cheaper than the natural gas that was mined. So it's very available and pretty easily used. We added a couple other projects after that first one.
Then we got into solar. We did some solar panel installations, one of the first ones was in Ranco Cucamonga, Calif., a huge solar array on top of a warehouse, and then we did one in Spain and one in Germany on a rooftop, so some really large rooftop solar arrays, working with incentives that we could get from states or countries. Then from there, we saw that it was very successful and people were very proud of it, and we got some great publicity from it, so we started looking at all the rates in all the countries, and where do we have incentives, and where else could we do solar, and that's when some of the government incentives started going to the utilities, and the utilities had numbers they had to meet. So we started saying, how can we work with the utilities, and be a host site, maybe it won't be our solar array but maybe a host site for a utility that has to make x-percent of their supply renewable. So that evolved into there being investors willing to do this stuff with wind energy or larger solar offsite, almost like we were doing with utilities but in a nonregulated area, we could do it with an investor.
So I think it was kind of a natural evolution as we continued to want to be involved and to have good rates. Then we saw that it took some volatility out of our utility bills, and in some cases now it's getting to be on par or cheaper, so instead of just having the advantage of a fixed rate, it's almost going back to our initial line of thinking on doing landfill gas, which was, 'hey, it's cheaper and it's right next door, let's go get it.'" We're now kind of evolving back to some of that with the solar projects, especially, really the wind, it's the same price or cheaper, and then you continue to get that good, green feeling and good corporate citizenship feeling. That's how we evolved into the wind field, with power purchase agreements.
What's next on the horizon with renewables? We saw GM's recent announcement that it has entered into agreements that put it ahead of its 2020 renewable energy goals, has there been any discussion of what the next set of goals looks like?
We're still working on that. Hopefully, we're going to be able to soon tell people about our next goal, but right now we're vetting it through a lot of different people in the company to see if we can't get it all approved. But we certainly want to continue with clean energy, we want to continue to expand and we're hoping that could be one of our aspirational goal areas as we try to come up with some big goals for the company. Stay tuned on that one.
Corporate energy efficiency has evolved a great deal over the years, and is something GM has been focused on for a long time. How would you characterize how your focus on energy efficiency has evolved over the years and what has been your biggest lesson learned?
Energy efficiency really started out as just a great initiative for saving money. It had a great financial impact, and of course environmental benefits, and so we made it a part of our environmental metric, but a lot of people always continued to think of it as a cost savings strategy. But I think it's evolved from a few people pushing it in the plants to get people to conserve, to really being a big part of our business plan deployment, or BPD, where everybody in the plant is working along to save energy, and thinking of it more as a sustainable activity.
I think one of the biggest lessons learned is just that: make it an imperative in the plant, make it part of your level zero, which would be at the manufacturing manager level, or level one, at the plant manager level, along with safety, quality, cost, responsiveness. Environmental goals are just one of those, so that if everybody gets involved to make their metrics at the plant floor level, that rolls up to the plant manager's metrics and then, therefore, we can get better results. In other words, it went from people at the headquarters and maybe the plant powerhouse engineer, objective, to being on everybody's BPD board.
So we give the plant manager their objective, maybe it's 3% reduction in energy at the plant, and then they break that down to each shift, then to each department, then to each group. So that's really the evolution: from a few people working on it to every person on the plant floor working on it.
Looking at the future of energy efficiency, what is GM's biggest priority?
Well, we do have a goal for 2020. It's a 20% reduction from our 2010 baseline, so that's really important to us. Additionally, as go on down our glide path, we continue to get our low hanging fruit taken care of. As we're moving down to get closer and closer to 2020, it's getting more and more difficult to make the business case to make the changes to stay on track to hit our goal in 2020. So we're ahead right now, but we know that it continues to get more difficult.
So our biggest priority would be to continue to find either new technologies that help us to reduce or to find new ways to fund projects that would make them less costly, anything that would help us continue to meet our goals. Then, of course, we never sit still. When we meet a goal, we just figure out another one more difficult for the future.
We hear that a lot from companies, the question that arises after they go through and get the low hanging fruit, and even the middle-hanging fruit becomes how to drive efficiency beyond those things that you've already worked really hard to accomplish.
Right, actually, going into the big challenge for the future for energy use, that question follows on really nicely because once you've done a lot of the energy efficiency things, you really have to get into the technology.
So for instance, right now, we're doing a lot of upgrades to our paint shops. Some of the paint technology has changed, so we have something that we call a phosphate coating on our vehicles, so you kind of etch the metal and you prepare it and it's something you would do to the surface of the wall before you even got to a primer, so we prepare the metal and some of that technology in the past has needed a heated bath, and that takes a lot of energy. Well now, we've got a new thin-film process which can go on to the vehicle without heat, so you save a lot of money through being able to skip that process.
The other thing in the paint shop that we've done is called a three-wet process, which allows you to put primer, base coat and clear coat onto a vehicle before it goes through an oven to set. So instead of putting the vehicle into the oven between each process, you take three ovens and turn it into one oven. So that paint technology, and of course all the [original equipment manufacturers] are working on it, but it's a big transition in the plant, as you can imagine. It's difficult to take a process that you've had in place and change it to a new process. Sometimes you need to tear out the old paint shop and put in a new paint shop, and then more likely you put in a new paint shop, you transition over to the new paint shop while you're using paint shop, then you shut the old paint shop down and finally get to the point where you're getting a really energy efficient vehicle out, and it helps us with our quality as well. But those are the things, those new technologies, that helps us continue to make energy use reductions.
Automakers like GM have unique energy challenges compared to the rest of the commercial and industrial companies we cover. What are some of the larger challenges you are grappling with when it comes to efficiency?
Our biggest challenge is managing the energy hogs of our business. That would be the paint shop, which I mentioned already; the paint shop uses over half of the energy, up to, in some cases, 75% of the energy of a plant in an assembly plant. Then when you have components like we do in the U.S. and one other place in our international operations, we have foundries. In a foundry, you're melting metal, and making engine blocks or piston rods, so that is very, very energy intensive when you have huge blast furnaces. And in the paint shop, you're baking a whole vehicle, so imagine the size of the ovens, they're huge. They're hundreds of feet long, and in some cases go up to 400 degrees. That's our challenge, and it goes without saying that 2,000 people in four million square-foot building, what other places have four million square feet of manufacturing other than automotive? Not many.
GM's reuse project for the Chevrolet Volt battery has gotten a lot of attention this year; how did that project come about and what has GM learned from the process?
When you have a lot of really great people within your organization like we do in global facilities as well as global environmental compliance and sustainability, you really great results. They're really smart people and as they were designing the Volt, and talking about the Volt battery, there were a lot of people saying 'you know, there's going to be a lot of energy left in those when they're no longer useful in the vehicle; what will we do with them?'
In the beginning, because we didn't know exactly how efficient or effective they were, or if we were going to have any problems, we said we were going to be taking them back from the vehicles once their life expired so that we could study them and see what's left in them. So some of our people got together with the guys that were doing product development, with the research and development department, and said that between product development and research and development, there were going to be some batteries coming back that would have, sometimes, 80% of their power left in them and asked what we could do.
People knew there would be a lot of need for that as we get further into renewable energy, because of their intermittency. So if we could design them to be reusable in the end, where we could just string them together into a pack, that might be really useful. So that's where it all started and we started making some good alliances with folks that were really smart about battery technology and the people that were doing the product development. We just kept meeting and talking, always having this vision that we could use them, and maybe even use them in a neighborhood someday where you'd have these little pods in the neighborhood that would help bridge a gap. So the first opportunity we had to try it in real life was there at the Milford proving grounds.
That's something you're planning on expanding to other areas as well, then?
I think so. I think we'll be continuing to use energy storage with our onsite solar and wind opportunities. I'm kind of pushing the team to say, hey, where's the next storage idea coming from and do we have enough people working on it and thinking about it, and I want to be in the forefront of that, because we do have the connection with the Chevy Volt as well as some of our other products that have battery technology in them, so why not use all the resources within our company that are developing these things for the vehicles to help us figure out a second use in that whole, circular economy type thought process.
One of the things we occasionally hear about from various companies who are actively pursuing renewable energy or distributed energy resources is that there sometimes can be issues with the utilities that they're working with. How would you characterize your relationship with the utilities that you work with at your U.S. facilities?
I think we have a really good relationship. As a matter of fact, we've always had meetings, right along with our team that procures energy, with [DTE Energy Corp.] and [CMS Energy subsidiary Consumers Energy] here in Michigan. We try to have relationships all over the world, and try to spread that, and encourage our other regional colleagues to have relationships for a number of reasons. First of all, stable power is really important to our production operations, so if there's ever a lightning strike or an animal that causes an outage, we want to be talking to them about their vegetation management projects, how often they look at the lines, what's their animal mitigation like, and we want them to understand the impact to our business if we lose power. So we have tried to have a positive relationship even before the renewables came around, so we knew them, and they knew us.
So when renewables came around, and we were getting into it, depending on if they were required to do some projects, we already knew the right people. So it was a good opportunity when they came to us and said they have some renewable energy incentives, and if you can do some projects that fit our criteria, we can help fund some of them. So we started out with a good relationship from the beginning.
Our last question is one we've been asking everyone who we've interviewed for this series, and it's about the evolution taking place in the role of energy managers at corporations, given increasing focus on carbon reduction goals and efficiency. What are your thoughts on how that has played out at GM?
At the plant level, in the past, they were often the only one out there looking for ideas. We've even had some of the utility companies provide energy engineers, and they would be out there looking for those ideas to help conserve energy, shutting things off and what-have-you. And as we've gotten it to part of our business plan deployment, and are trying to engage the whole plant team, in these goals and objectives, they change to more of a coach. A conservation coach or communicator to the team, making sure that they are managing the project or project delivery. We went through some tough times in 2008 and 2009 like a lot of people, but now we're doing much better as a company, so we have a little bit more money to do some of the projects that we couldn't do during those very lean years. So they may be working on managing project delivery. Then we're always looking at what might be the next project we want to do, so both from a sustainable as well as a conservation or efficiency perspective, they're helping us come up with ideas and then float them up to leadership to get funded and then implement them back at the plant. So, the smaller things, the turning off the lights and closing the doors, that's more the plant's scheme, then the more difficult projects and the sort of next level ideas, the energy manager is the one coming up with those ideas and working them through the company.
SED’s Take: Congratulations to GM for their accomplishments on both the supply and demand sides of their energy management programs. Two things strike me in Mari Kay's comments. First, her enthusiastic leadership has had a ripple effect throughout the organization; second, it’s clear that a deep commitment to energy efficiency and renewable energy sourcing has become part of GM’s culture. - John Failla
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