Associated Materials – Anson Chang – 2018

Goals

Associated Materials Incorporated (AMI) is a vertically integrated manufacturer and distributor of exterior residential building products, owning 11 manufacturing locations and over 120 supply centers in North America. This scale has resulted in both huge electricity requirements and costs, and in the past, AMI has had difficulty implementing energy-related projects. AMI enlisted Anson Chang to develop an energy cost saving strategy, research the potential in renewable energy integration and identify the best way to fund projects across production locations.

Solutions

Chang divided his time between three projects:

Renewable Energy Strategy: Chang modeled the financial undertaking of on-site solar, creating a list of priority locations based on 18 potential sites in 10 manufacturing plants. By joining the Business Renewable Center (BRC), AMI could receive free resources on strategy development, including around off-site procurement.

Electricity Cost Saving: Chang identified large savings around the Global Adjustment charge by installing battery storage systems in the Ontario plant. He also arranged three comprehensive industrial energy audits and assisted with two of them to explore the upgrade potential in lightings, HVACs and compressors.

Project Finance: Chang researched and modeled different ways to fund energy projects without capital investment. He identified Energy Service Agreement (ESA), an off-balance sheet approach, as the best suited for getting around financial barriers.  

Potential Impact

All of Chang’s recommended projects can be implemented with no upfront cost. For the ESA, AMI would pay the service providers from the savings generated by cutting on energy cost. The On-site solar at the Yuma plant in Arizona can serve as a pilot for clean energy projects, helping to generate $200,000 in savings and reduce 3.5 million kWh annually. By installing battery storage system at the Burlington plant in Ontario, AMI could avoid $900,000 Global Adjustment charge annually through smart dispatch. The energy efficiency projects identified through the three audits would amount to a potential saving 6.2 million kWh annually. These projects have a NPV of $3.2 million and reduce 2,000 metric tons of greenhouse gas emissions every year.