Schneider Electric - Case Study - LEW cuts energy expenditure by 7%, - 2015

Make the most of your energy SM LEW cuts energy expenditure by 7%, with Schneider Electric's support  Manufacturing

LEW Castings is a well-respected manufacturer and metal casting company from the market town of Rochdale in Greater Manchester. Employing 21 people, the thriving small business manufactures both ferrous and non-ferrous sandcastings and diecastings, using a wide range of materials and a diverse range of processes. With ten furnaces running nine hours a day and six holding molten aluminium overnight, energy consumption has a huge impact on the profitability of the company. Energy fees represent a huge sum on the balance sheet for businesses large and small, especially those that use machinery or need to heat large premises. For LEW, energy consumption represented five per cent of the company’s annual turnover. As long-time energy customers of Schneider Electric, LEW knew and appreciated its smart power systems and progressive partnership approach in achieving energy efficiency. LEW also knew any reduction to the energy costs would be a big boost to the bottom line.   “Energy consumption is of course a significant business expense,” said Alan Scarfe, director, LEW Castings. “Reducing cost was our primary goal and as a small business we struggled to secure the kind of cost efficiencies that larger buyers can. We wanted to reduce costs but risk, energy expertise and buying power was holding us back.”   PROJECT AT A GLANCE  Project Type Manufacturing Location Rochdale IN BRIEF•   Goal -  With ten furnaces running nine hours  a day and six holding molten aluminium overnight, energy consumption has a huge impact on the profitability of the company.  Energy fees represent a huge sum on the balance sheet for businesses large and small, especially those that use machinery or need to heat large premises. For LEW, energy consumption represented five per cent of the company’s annual turnover.  •   Solution -   LEW transferred to Schneider  Electric’s Energy Risk Management programme in October, 2013. Rather than continue with the traditional, fixed price contract, LEW saw the benefit of working with Schneider Electric on a flexible contract, based on wholesale energy prices. •   Results -   After transferring to the Risk  Management Portfolio in late 2013, we have taken advantage of lower wholesale energy costs throughout 2014. This has resulted in a 7.6% saving on our electricity spend in the first eleven months of the year,” Scarfe said.   LEW cuts energy expenditure by 7%,  with Schneider Electric's support  Manufacturing

LEW transferred to Schneider Electric’s Energy Risk Management programme in October, 2013. Rather than continue with the traditional, fixed price contract, LEW saw the benefit of working with Schneider Electric on a flexible contract, based on wholesale energy prices. LEW joined Schneider Electric’s Risk Managed Portfoilo, joining a number of customers that have a similar energy spend. However directly tying their energy consumption price to ever-changing natural gas prices and fluctuating electricity demand patterns involved a shift in the risk the company was taking on. Schneider Electric’s expert advisors were critical to achieving LEW’s goal of reducing electricity spend over time whilst balancing the risk that this new approach exposed them to. “Many business customers want the peace of mind that comes with knowing energy costs will be exactly what they expected and what they budgeted for, and are happy to pay a premium for this guarantee. However, contracts that track to wholesale prices can offer significant rewards when it comes to cost saving. The key for all businesses is balance.  Knowing exactly how much risk they are happy to be exposed to when traded off against the potential benefits, is essential,” commented  Lynn Molloy, Client Manager, Energy and Sustainability Service at Schneider Electric.   In the Risk Management programme, advisors helped LEW determine its risk profile, setting their ‘Risk Limit’ and putting the business in the right category for it’s spend and appetite for risk. Manufacturing “Many business customers want the peace of mind that comes with knowing energy costs will be exactly what they expected and what they budgeted for."  Lynn Molloy, Client Manager, Energy and Sustainability Service, Schneider Electric.  

Manufacturing Partnering with Schneider Electric for advice and management of our flexible contract made sense. Already in year one we couldn’t be happier with the results,” Scarfe said. The Schneider Electric Risk Management programme provides smaller organisations with the energy purchasing opportunities typically commanded by much larger businesses. Unlike the traditional fixed-price contract, LEW were able to take advantage of the kind of contract previously unattainable to customers not spending £1 million plus per annum. Utilising Schneider Electric’s award-winning Value at Risk model, LEW enrolled in a flexible 3-year contract. The agreement protects the company during times of market price inflation, yet also allows it the benefit of a rate reduction when market prices fall. LEW are protected by a Risk Limit, which was established on the day Schneider Electric began to manage the contract. The Risk Limit is the wholesale commodity price on day one, plus 15 per cent.  Whatever happens to the market, even if the market spikes on day one and never recovers, this limit cannot be breached. It acts as a ceiling and a worst-case scenario cost of the commodity they are purchasing. Under this agreement Schneider Electric automatically hedges, buys or fixes the customer’s position before the limit is breached.    “In reality the customer is never likely to reach their worst case cost. The Risk Limit is set to give protection against any significant prices rises,” commented Molloy.      “After transferring to the Risk Management Portfolio in late 2013, we have taken advantage of lower wholesale energy costs throughout 2014. This has resulted in a 7.6% saving on our electricity spend in the first eleven months of the year,” Scarfe said. By signing a three-year contract LEW has been able to see the benefit of predictable and sustained savings on energy expenditure as well as stable risk assessment.  “By joining the Risk Management programme, we have benefited from Schneider Electric’s expert advice as well as reduced costs. I appreciate how the team has taken control of our energy requirements, freeing up our time and resources to focus on growing our business,” Scarfe added. “By joining the Risk Management programme, we have benefited from Schneider Electric’s expert advice as well as reduced costs." Alan Scarfe, Director, LEW Castings. 

UK contact details -  0870 608 8 608 Fax  0870 608 8 606  Ireland contact details -  01 601 2200 Fax  01 601 2201 As the global specialist in energy management with operations in more  than 100 countries, Schneider Electric offers integrated solutions across  multiple market segments, including leadership positions in energy  and infrastructure, industrial processes, building automation, and data  centres/networks, as well as a broad presence in residential applications.  Schneider Electric is dedicated to making individuals’ and organisations’ energy safe, reliable, efficient, productive and green from Power Plant to Plug TM . We are changing our brand names and becoming one Schneider Electric.  You’ll get the same great quality products, but from one name you can remember and trust. This provides you and your customers with the reassurance associated with Schneider Electric. Some of our market leading brands have already become Schneider Electric including Merlin Gerin, Telemecanique, Square D, GET, Mita, Sarel, Himel, Thorsman,  Tower and TAC. Working as one Schneider Electric makes it clearer that our ranges are highly compatible for integrated solutions.   Schneider Electric Ltd Schneider Electric Limited is a company registered in England and Wales. Registered number: 1407228. Registered office: Stafford Park 5, Telford, Shropshire TF3 3BL. © 2013 Schneider Electric. All Rights Reserved. Schneider Electric, Active Energy Management,  Compact, EcoStruxure, ION Enterprise, iRIO, Make the most of your energy, Masterpact,  Micrologic, Power Plant To Plug, Modbus, and PowerLogic are owned by Schneider Electric  Industries SAS, or its affiliated companies in the United States and other countries.  As standards, specifications and designs change from time to time, please ask for confirmation  of the information given in this publication. SE8903  JAN 2015 United Kingdom Stafford Park 5, TelfordShropshire TF3 3BLTel: 0870 608 8 608Fax: 0870 608 8 606www.schneider-electric.com/uk Ireland Head office, Block aMaynooth Business CampusMaynooth, Co. KildareTel: (01) 601 2200Fax: (01) 601 2201www.schneider-electric.com/ie member of