Can a new compressed air system pay for itself?

Published:  10 March, 2010

Can a new compressed air system pay for itself?

It may be time to invest in a new compressed air system but in the current economic climate is this a viable option? Would it be cheaper to make do with your existing system for a bit longer - or is running an ageing compressor more expensive in the long run? Whether you are a private or a public sector business there are finance options available which may assist you in upgrading your compressed air system where energy savings can be proven. David Burton, General Manager at Boge Compressors Ltd discusses the current options available.

"Its official – the UK is out of the recession! Well, at least from a technical perspective. Figures out at the time of writing suggest that the economy grew by 0.1% in the final quarter of 2009. Of course, the impact on the day to day trading situation will not hugely change for many businesses for some time and most experts agree that the road to recovery will be slow with some suggesting a double dip recession a possibility.

Like all sectors, the compressed air industry, has been affected by the economic climate of the past 18 months. Significantly is has affected why and how end user's are choosing to invest in new equipment. Tighter budgets or lack there of have meant that the focus on energy efficiency has heightened.

Customers are having to take compressed air energy efficiency more seriously – it"s not just about being environmentally friendly and reducing your carbon footprint – it creates real financial benefits and savings – something that no Factory Manager or Financial Controller can ignore.

Where a customer is considering upgrading their equipment, more and more are now requesting an audit to initially identify if and where savings are possible. The audit results can then clearly highlight what the estimated quantitative savings would be by optimising the compressed air system. Of course, even with savings and payback periods identified the initial capital equipment investment still has to be financed.

 Finance Options

In a number of cases the estimated savings and payback periods provided from an audit can create a strong enough case for the customer to justify financing the new equipment themselves. However, where that is not an option loans such as The Carbon Trust’s 'energy-efficiency’ loan are becoming more popular.

The Carbon Trust has long since offered loan solutions for those users replacing in-efficient equipment with new energy saving technologies - a route which has without a doubt increased in popularity in recent times.

For the private sector SMEs the Carbon Trust has the unsecured interest free energy efficiency loan scheme. This loan is suitable where the company has been trading for at least 12 months and wants to finance an energy saving project such as replacing an ageing compressor with a new energy efficient one where carbon savings can be proven.

In July 2009 the ‘energy-efficiency’ loan from the Carbon Trust became even more accessible - particularly for smaller companies who were looking to fund new energy efficient equipment - with the introduction of lower borrowing and carbon thresholds. As a result it is now possible to apply for at little as £3,000. The loan also remains a viable option for the medium sized company with loans available up to £500,000.

Since April 2009 the Carbon Trust has also began offering interest free loans to the public sector to fund energy saving technologies with over £50 million earmarked for this project. These loans are offered on a first come first served basis.

To be eligible the project must have a payback period of no more than 5 years and the value of the loan must not exceed £100 per tonne of carbon saved over the lifetime of the equipment.

It may be tempting in the current economic situation to put off upgrading your compressed air system until the good times return. However, it is worth bearing in mind that an inefficient compressed air system or one that is no longer in sync with any changes that may have occurred to the compressed air demand will be costing you more to operate in electricity costs. And, with finance options available that can pay from themselves in energy savings generated by upgrading, there is certainly a strong case to review your existing compressed air system.”

CASE STUDY

Carleton Furniture Group - one of the UK’ s leading manufacturers of contract furniture – is one company that recently took advantage of this loan scheme to finance the upgrading of their compressed air system. Following a comprehensive audit, we were able to demonstrate to Carleton Furniture Group the amount of compressed air being generated over an average period of time next to the actual amount required. The results suggested that by replacing the existing compressors with energy efficient versions they would save over £18,000 per annum.

Carleton Furniture Group chose to proceed with our recommendations and funded the new compressed air system with an energy-efficiency loan from The Carbon Trust, which the Carleton Furniture Group said made funding the project viable in the current economic climate.

In order to verify the savings after installation we conducted a post audit. The results proved to be even better than predicted demonstrating that Carleton Furniture Group was set to save over £22,000 per annum with their upgraded compressed air system.

A key benefit of these loans is that they are designed to pay for themselves and as you can see, in the case of Carleton Furniture Group, the loan more than paid for itself though the energy savings realised.

For further information please visit: www.boge.co.uk

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