Business Idea: Industrial Energy Conservation Solutions

INDUSTRIAL ENERGY CONSERVATION SOLUTIONS

BYAadil Naveed 2013(Fall)-MBA E-004

TODR. ASIF NAWAZ

PROJECT PROFILE

PROJECT PROFILEProduct /Services Energy Solutions (Personal Services)

Potential customers Energy Consuming Industries

Deliverables Energy Conservation Potentials

Strategic Partners ABB, WEG, SIEMENS etc.

Contingencies Not frequent

Business Type Small Business (Sole proprietorship)

Planning Requirement Daily basis

Competitive Strategy Cost effectiveness and Quality

Business Emergence Corridor Principle

Field Experience 3 Years in IMEIP US-AID

Team Span 3 to 5 Members

PROJECT SCOPE

PROJECT SCOPE

Industrial Energy Conservation is the need of the hour

With increasing energy prices and shortfall we need to conserve and generate more

The deliverable include the identification of areas where energy savings are possible

Replacements of old, less efficient motors and other instruments would be suggested

Saving potentials would be calculated and discussed with the customers

HOW THE IDEA EMERGED ?

Idea GerminationI was doing Energy auditing since last two years

during which the idea emergedI often thought that there is an empty market niche

which can be exploited Preparation

I started gathering information which would be required to start a new business

I gathered knowledge from where ever possible and help was taken from seniors

HOW THE IDEA EMERGED ?

IncubationDuring the last few months I saw an increasing

potential for this sort of business Illumination

I prepared the feasibilities of the idea and the finances associated with it and it came out to be a good business venture

VerificationNow I am planning to execute the business plan

which would verify its validity

WHAT CREATES THE MARKET NICHE ?


Energy Crisis in the countryIncreasing Environmental ProblemsDeclining Fossil FuelsIncreasing Energy PricesEnergy Efficient MotorsEnergy Policies EstablishmentVFD Technology Emergence


ISO 50001 implementationUS-AID Energy initiativeNew Process DesignsEvolution in Lighting TechnologyIncreasing use of Renewable EnergyGlobal Warming

Energy Crisis in the country

The energy demand is increasing in the country with every passing day

Due to the lack of planning by the previous governments Pakistan is facing a serious energy crisis

Currently Pakistan is facing a shortfall of 4,000 to 5,000 MW

So the need of the hour is that apart from increasing the energy generation we must also focus on conserving it

The energy prices in the countries have increased by 100% since 2000

ARRIVAL OF NEW TECHNOLOGY

Energy Efficient MotorsNew energy efficient motors (IE1, IE2, IE3 and IE4) are in the markets with IE4 having the highest efficiency of almost 96%

Evolution in Lighting TechnologyThe new LVD lights consume 50% less energy and provide 37 % more luminosity compared to a normal light in operation

EFFICIENCY GRAPH

LVD vs. Older Technology

ARRIVAL OF NEW TECHNOLOGY

VFD Technology EmergenceEmploying a VFD and reducing the RPM of a motor can easily result into about 20% energy saving

Previously dampers have been employed which does not reduce the energy consumption but in fact dampens the energy delivered10 reduction in RPM means 22% reduction in energy consumption and 20% reduction in RPM means 44% reduction

US-AID INITIATIVE

US-AID was providing 50% subsidy on the purchase of new motors and VFDs in their IMEIP project

Old inefficient motors were replaced by New high efficiency motors and new VFDs were installed to increase the energy savings

The 3rd phase and the biggest of this project is due within a year or so

Almost 70 industries all over the Pakistan benefitted from this project and 90% of them were highly satisfied with the energy savings

MARKET ANALYSIS

5 C

CustomersEnergy Consuming Industries

CompanyIECoS Pvt. Ltd.

CompetitorsFew Individuals

CollaborationABB and WEG Pakistan

ContextEnergy Conservation is the need of the hour with the

increasing energy prices and shortfall.

4 P

Product/ServicesEnergy Services

PromotionWebsite, Pamphlets and Brochure

PlaceIndustries all over the Pakistan

PricingIndustries would be charged Rs. 20 per KW

STRENGTHS ANALYSIS During the last 2 to 3 years I have been auditing the

industries which are ready for investment in the energy sector

These are my ready potential customers and I have all the contact details available with me

I have the N.P.O. auditor certificate which will be helping me in training the junior engineers and in gaining the contracts

The vendor companies (ABB, WEG, SIEMENS etc) are my natural alliances and will be doing the marketing for me

The technologies are calling for the change and it is easy to convince the clients regarding the saving potentials

MARKETING ANALYSIS As the 3rd phase of US-AID IMEIP project is due within six

months and the industries are interested in seeking the potential replacement

We would be providing them with saving potentials before the start of the 3rd phase so they can place their orders accordingly

There are almost 58 potential customers which are in contact with me and are willing to invest in energy sector

Industries which missed the chance of getting registered in the previous two phases are lurking for the 3rd phase and would be easy to convince

MARKETING

An attractive website would be made and emails regarding services would be forwarded to the industries

Energy Conservation Pamphlets would be made and mailed

Motors, VFDs and Lighting vendors would be contacted for support

Engineers in their spare time would be visiting the industries and giving presentations to high officials

SWOT Analysis

SWOT Analysis

STRENGTHSVendor’s Interest3rd IMEIP US-AID PhaseNegligible Competition3 years of field experience

WEAKNESSESNo data for help availableLow competition, Low MotivationLack of Awareness

SWOT Analysis

OpportunitiesSolar Panels for IndustriesWaste Heat ExchangersMachine Spare parts Services

ThreatsGIZ, NEC starts similar servicesCustomers low motivationNo energy left to conserve

GROWTH STAGES

GROWTH STAGES

PRE-START UP GROWTHThe instruments required would be purchase from

Makkays Pvt. Ltd.The Engineers would be hired (1-3 years experienced)

and trained for EAMarketing would be done by the website and

Pamphlets START –UP GROWTH

During the initial phase maximum audits would be done and reports would be then compiled

Energy audit results would be verified with the customers

GROWTH STAGES

EARLY GROWTH Rapid response is expected so new teams can be

hired on contract and project basis Competitors may arrive, cost effectiveness would

be the weapon to use LATER GROWTH

Industrial instrument installation services Erection support would be provided to industries Solar system installation is also a possibility

POTENTIAL CUSTOMERS

POTENTIAL CUSTOMERSSr. No. Facility Name Address Disco District

1Sapphire Finishing Mills Limited

Sapphire Finishing Mills Ltd. 3.5 Km, Raiwind Manga Road, Raiwind

LESCO Kasur

2Crescent Steel And Allied Products Ltd.

A/25 S.I.T.E Nooriabad. District Jam Shoro Sindh, Pakistan

HESCO Jamshoro

3 Al Noor Sugar Mills

Shah Pur Jaharian Taulaka, Doulat Pur District Benazirabad Sindh Pakistan Sukhar

SEPCO Benazirabad

4Thatta Cement Company Limited

Makli Ghulam Ullah Road District Thatta, Sindh

HESCO Thatta

5 Pak-Arab FertilizerDisposal Workshop Pak Arab Fartilizer Kwl Road Khad Factory

MEPCO Multan

6 Nestle Pakistan LimitedNestle Pakistan Limited, Sheikhupura Road, Sheikhupura.

LESCO Sheikhupura

7Dalda Foods Private Limited

F 33 Site Hub River Road Karachi

KESC Karachi

8 Unilever Pakistan Limited.

Unilever Pakistan Limited,Tea Factory,Chak # 88-A 10 R,Khanewal MEPCO Khanewal

9 Thal Limited (Jute Division)

Dg Khan Road Muzafargarh MEPCO Muzaffargarh

10 Hazara Phosphate Fertilizer Pvt.Ltd

Hazara Phosphate (Pvt) Ltd Hattar Road, Haripur. PESCO Haripur

11 Ici Soda Ash KhewraIci Soda Ash Plant Khewra IESCO Jhelum

12 Maple Leaf Cement Factory Ltd.

Maple Leaf Cement Factory Ltd. Iskandarabad, Mianwali.

FESCO Mianwali

13 Anjum Textile Mills (Private) Limited

42 Km Sheikhupura Road Faisalabad FESCO Faisalabad

14 Bilal Fibres Mills38-Km Sheikhupura Road Faisalabad FESCO Faisalabad

15 Al-Abbas Cement Industries Limited

Nooriabad Industrial Area, Kalo Koher District Jamshoroo Sindh

HESCO Jamshoro

ENRGY AUDITING TEAM

ENERGY AUDITING TEAM

Team Lead

Environmental Analyst

Electrical Engineer

Mechanical Engineer

Chemical Engineer

WBS OF PROJECT

Every team member is expected to work individuallyAll the data collection would be done with the help

of the industrial representativeData collected would be shared with the customer

before analysisThe final analysis and report compilation would be

done by the Team LeadFinal audit results would then be submitted to the

esteemed customer in hard form

ENRGY AUDITING TEAM

Electrical EngineerMotor SizingMotor DrivesLightningHVAC

Mechanical Engineer Machinery Maintenance Compressors Thermography

ENRGY AUDITING TEAM

Chemical Engineer Carbon Emission Waste Heat Supply &Waste Water

Environmental Engineer Health and balance of Environment Energy Management Standards Carbon Footprints

FINANCIAL DETAILS

FINANCIAL DETAILS

Industrial Equipment

Energy Analyzer

Thermal Analyzer

Tachometer Vibrometer

Funds Allocated = Rs. 1000, 000/-

FINANCIAL DETAILS

Office Equipment

Furniture& AC etc. Laptops Stationary &

AdvertisingPrinter and

Scanner

Funds Allocated = Rs. 1200, 000/-

OFFICE RENT AND EXPENSESAn amount of Rs. 500, 000/- would be submitted

as advance for the rent placeMonthly Rent = Rs. 80, 000/-Office Expenses = Rs. 70, 000/- per month

(Photocopies + Print + Office Boy Pay + Tea etc.)Advertisement = Rs. 20, 000/- per month

Total Office Expenses = Rs. 170, 000/-

FINANCIAL DETAILS

FINANCIAL DETAILS

TEAM SALARIES

I myself would be working as the team lead and engineer who would be experienced up to 2 years would be hired and trained for their respective roles

Team Lead Rs. 100, 000/-Electrical Engineer Rs. 50, 000/-Mechanical Engineer Rs. 50, 000/-Chemical Engineer Rs. 50, 000/-Total Salaries Rs. 250, 000/-

FINANCIAL DETAILS TRAVELLING EXPENSES

Car would be taken on rent form the Lahore Rental Company (Mobile: 0321 90 999 09) from Johar Town branch Lahore The rates were taken from the company for the calculation purpose and they

are detailed below

Vehicle Charges Rs. 3, 600 per day + Distance dependent cost Car Rent (4 days per visit) Rs. 3, 600*4 = Rs. 14, 400/-

(For one visit) Distance dependent cost Rs. 17 per KM Total Visits per month 5 Average kilometers travelled 1000 KM

(Per Visit) Per month distance expenses 1000*5*17 = Rs. 85, 000/- Total Travelling Expenses 85, 000 + (14, 400*5) = Rs. 157, 000/-

(Per Month)

FINANCIAL DETAILS AUDIT FEE AND PROFIT

The audit fee would be charged at per watt basis. In other words we would be charging the audit fee according to the watts audited in the industry. Calculation would be done as:

Average sanction load (From 58 industries record) = 8580 KW Total monthly expenses = Rs. 577, 000/- At ~48.7 % profit income should be = Rs. 858, 000 Total KW audited per month (5 audits per month) = 8580*5 = 42900 KW So charges for the audit comes out to be Rs. 20 per KW This will ensure a profit of almost 48.7 % on the expenses which gives us a

profit of 858, 000- 577, 000 = Rs. 281, 000 per month given that the team perform 5 audits per month irrespective of the type of the industry.

INCOME STATEMENT

Initial Investment = Rs. 2700, 000/-Monthly Expenses = Rs. 577, 000/-Charges = Rs. 20 per KWTotal Monthly Earning = Rs. 858, 000/-Profit = 858, 000- 577, 000 = Rs. 281, 000/-Profit on Investment ~ 48.7 %Payback Period = 2700, 000/ 281, 000

= 9.6 months

EPILOGUE

EPILOGUEWith the reducing fossil fuels this business

plan is the need of the hourReduced energy usage will reduce the bills

and environmental pollution as wellEnergy Efficiency Program can be expanded to

other disciplines like building audits, home energy audits

This conserved energy can be used some where else

1 unit saved= 2 units produced

REFRENCEShttp://sharifinternational.net/energy-efficient-lamps/lvd-

lamps-comparison/http://www.aps-solutionsforbusiness.com/

ProjectCenter/Portals/54/MotorsFactSheet_WEB090908.pdf

http://www.plantservices.com/articles/2010/06vfdssaveenergy/?start=1

http://www.iso.org/iso/home/standards/management-standards/iso50001.htm

http://www.copper.org/environment/sustainable-energy/electric-motors/education/motor_text.html

THANK YOU FOR LISTENING