Auditing Compressed Air Costs

by R. Scot Foss, Plant Air Technology

The first step in controlling compressed air costs is finding out what you have and how much it costs.  Here is a review of the procedures for auditing a system.

Every plant is a candidate for a compressed air system audit – even facilities that seem to have overcome their problems.  Often, these facilities have managed only to overpower problems without applying controls. 

The basis for audit calculation is cost/hour/100 cfm of compressed air.  This unit is calculated by equation 1.  Because supply can create demand, and operating equipment does not necessarily have any correlation to demand, the unit of measure should be production demand.  (The relationship between supply and demand and other system control factors was discussed in a pervious article, “Economics of Compressed Air”). 

Eight primary cost components must be investigated:

1. Electricity or alternative energy,
    

2. Water or air cooling,
    

3. Contaminant control equipment (dryers, filters, etc.),
    

4. Preventative maintenance,
    

5. Breakdown maintenance,
    
6. Operators,
    
7. Depreciation,
    
8. Miscellaneous (interest on inventory, insurance, supervision, general administration, etc.)

Finding the costs may be difficult because these items usually are not identified as compressed air expenses.  Although the accounting department may not identify these items as compressed air, they are still real components of the cost of compressed air.  Each component is essential to investigating and tuning the system.

Electricity Costs:

Electricity is the largest component of the cost of compressed air.  It represents 45 to 70 percent of the total unit cost, depending on the electricity rate structure.  In the United States, the cost ranges from $0.025 to $0.16/kwh.  The electricity cost for compressed air can range from $0.50/hour/100 cfm to $3.82/hr/100 cfm.  Therefore, cost savings that can cut demand or unload horsepower are important.

Four areas of configuration improvement significantly reduce electricity cost:

1. Minimizing waste,
    
2. Controlling demand,
    
3. Controlling Compressors, and
    
4. Utilization of storage.

The efficiency of the system (the ability to shut off compressors) is far more important than the efficiency of the compressors.

In measuring electricity, the kilowatt is the only appropriate unit of measure for most applications.   The electrical component of compressed air is calculated using Equation 2.

The variables of power consumption, motor efficiency, and power factor are not on a straight line with compressor capacity.  Optimum efficiency is near, but not necessarily at, flat out operation of the compressor.  All other conditions of part load affect the variables negatively to some degree.  Because it is often difficult to get performance data from suppliers, and values vary with the load, it is best to measure and record electric power consumption.  Once electric power consumption

has been determined, you can calculate the electric component of compressed air with Equation 3.

Cooling Costs:

If your facility has air-cooled compressors, the cooling fans may be mounted on the compressor motor shaft or driven by a separate motor.  In both cases the horsepower rating and attendant costs must be determined.  A cooling fan, however, is not a variable-speed device.  It operates flat out regardless of the load condition of the compressors.

Even when unloaded, the compressor generates heat that must be removed.  If it is unloaded at the same time that another unit is supplying the system, the air or water-cooling media must be added to the operating cost of the system

For example, a 100 hp compressor capable of 470 cfm is operating in a system with another similar compressor that is running flat out. 

The electrical cost is $0.06/kWh.  Cooling cost for the compressor running flat out is $0.0336/hr/100 cfm.  When the second unit is running at 50% of capacity, its cooing cost is the same as for full output.  The cost for the second compressor’s cooling increases to $0.0687/hr/100 cfm.  When the combined cooing cost for operating both compressors in these modes is divided by system output (470 + 235 cfm), the system cost becomes $0.045/hr/100 cfm.

If your facility has a water-cooled machine or system, the cost of water in gal/hr/100 cfm must be obtained.  Many plants know the cost of 1,000 gal of water for city, well, and tower water.  Usually these costs range from $0.55 to $1.80/1,000 gal.  To calculate the water flow across the compressor when data at various inlet temperatures are not available.  Use Equation 4; cooling water cost can be calculated with Equation 5.

For a closed loop or tower with glycol, the factor of 500 in Equation 4, which is used for a once-through system, must be reduced to account for the lower heat-transfer rate.

Factors that contribute to the cost of cooling water include makeup water, sewage cost, pumping cost, fan cost, maintenance, electricity for the system, and depreciation.

Furthermore, if the cooling water is allowed to run for a compressor producing no flow, its cost must be calculated into the cost/hour/100 cfm.  As average cost would be $0.30/hr/100 cfm although costs can run as high as $0.70/hr100 cfm on once-through systems.

Air Treatment Costs:

Cleanup equipment such as dryers and filters are a necessary part of most plant or process air systems.  Unfortunately, the selection and installation of this equipment tends to be experiential.  Clearly defined problems and well-conceived configuration technology seem to become the victim of the common philosophy; “if it’s worth doing, its worth overdoing”.  Without the audit function of measuring results and costs, perhaps this approach can be justified.

Many types of dryers are available including refrigerated, direct expansion, heatless and heat reactivated, thermal mass, and deliquescent.  Most dryers in current use are the refrigerated non-cycling or the heatless regenerative types.  The effectiveness of these units is a function of inlet temperature, velocity, ambient conditions, part load condition of the system, and drainage design.

For auditing purposes, both types of dryers have the same characteristics: without energy management controls that consider heat load, both operate flat out regardless of input.  As the volume of compressed air being processed goes down, drying cost/hour/100 cfm and maintenance costs rise.

When evaluating refrigerated dryers, remember that

most are equipped with hermetic and semi-hermetic compressor/motor combinations.  Motor efficiency and power factor are much lower than that of the average industrial motor. 

With regenerative drying, it takes purge air, electrical heat energy, or combination of the two an average of 12 to 14% of the input energy to operate.

The constituents of drying cost are electricity (if any), purge air (if any), water or air cooling (if any), breakdown maintenance (including labor), desiccant change (including labor), and depreciation.

Calculations for drying costs are illustrated in Example A, “Air Treatment Cost Summary”.

The ability to match cleanup equipment to the system’s load largely influences unit cost efficiency.  At $0.06/kWh, refrigerated drying can cost between $0.07 and $0.13/hr/100 cfm.  Regenerative drying at the same electricity rate can cost between $0.22 and $0.36/hr/100 cfm.  Considering these cost variables, a wise business decision comes from defining the problem and systems technology.

Filtration should be selected on the basis of wet load differential, capacity to hold dirt, and applicability to the system.  Every unit of pressure demand generated by either wet load clean or the amount of dirt allowed to accumulate adds energy cost to the system.

Filter elements should be changed when the cost of energy to maintain the system’s pressure exceeds the value of the replacement element.  Initial selection should account for these issues.  The constituents of cost for filtering are maintenance (including drainage and element changes) and depreciation.  Power costs will show up in electricity, but should not be overlooked for audit purposes.

Maintenance Costs:

Three distinct categories of maintenance should be audited:

1.       Preventative maintenance,

2.       Breakdown maintenance, and

3.       Outside service.

You should know the difference between the cost of outside labor and full-burdened inside labor.

There can be a substantial difference between minimum preventive maintenance and quality preventive maintenance programs and their influence on breakdown maintenance (and the consequences thereof).  Many facilities have found that records of these expenses are lost in the accounting system.  Appropriate data coding can make auditing as well as future decisions much easier regarding the air system, its cost efficiency, its unit efficiencies, and equipment retirement issues.  Maintenance cost calculations are outlined in Example B, “Maintenance Cost Summary”.

Operator Costs:

Whether operators are employed depends upon the size and manageability of the system, union agreements, the presence of compressor controls to manage the system efficiently, and scheduled data collection for monitoring maintenance and performance.  A number of companies surveyed used an average of 5% of an operator’s annual cost of $40,000 for monitoring.  The operator cost factor can greatly influence the need and selection of automation management and data collection equipment.

Depreciation and Installation Costs:

Although depreciation is not normally assigned specifically to the system operating data for accounting purposes, it is a real cost for auditing purposes.  There are as many methods for depreciation scheduling as accounting conventions.  Investigate the method used by your company.

The cost of depreciation of a 1,000 cfm capacity system operating at 750 cfm, with a capital cost of $72,000 and an installation cost of $15,000, operating 5,850 hr/yr is $0.396/hr/100 cu ft using the 5 year straight line method.

Although many people would minimize the depreciation cost factor, auditing should show whether you are receiving full value for the capital investment.  Whether the compressors are part loaded, fully loaded, off, or standing by, depreciation expense must be factored simply because they are there.  The condition of loading in the system will give you an idea of the value being received.

Miscellaneous Costs:

Many costs can be used in the miscellaneous cost category or, in most cases, be factored into other categories.  These costs include interest on inventory (value x prime interest rate x 1.7); inventory aging to destruction (7 to 9 % of inventory annually); insurance expense; supervision expense; purchasing expense (a % of purchase value); and administration (a % of total cost).

The type of cost accounting system used determines how these costs are handled; however, these items are all real costs that cannot be ignored.  Other costs may have been overlooked.  However, we are only setting up guidelines for a convention that will realistically assist the user to analyze efficiency and cost value effectiveness.

All of these factors can be called burden or be applied to the individual categories.  Once the annual costs have been computed, divide them by the hours of operation and then divide that figure by the system’s flow divided by 100 to get the cost in dollars/hour/100 cfm.

Summary:

When you consider the multitude of variables and the infinite configurations possible, it is no surprise to learn that costs for 100 cfm of compressed air can vary from $1.10 to over $5.00/hr.

Overall costs are outlined in Example C, “Total System Cost Summary”.  This example provides numerous opportunities to improve efficiency and reduce cost.  A combination of demand and supply management controls, with a more articulated trim configuration such as one 100 hp and two or three 50 hp units, could reduce unit costs by 20 to 25% and annual costs by 30 to 45%.

There are many ways to reduce demand and unit cost while improving production quality.  Where should you begin?  The firs step is a configuration audit with value analysis.  The most efficient equipment in a poorly configured system will produce mediocre results.

If improvement in production quality, reduction in downtime, and improved costs are important to you, get compressed air out of the area of unassigned cost.  It is doubtful that any other system in a modern facility can offer as many variables of cost or opportunities for expense reduction.

R. Scot Foss is president of Plant Air Technology, Charlotte, N.C., a company specializing in system auditing and designing. This series of articles is based on his book, “Compressed Air System Solution Series”.  A portion of the proceeds from sales of the book is donated to children’s charities.  The book can be ordered through Southern Corporation.