Rising fuel prices - operational efficiency more important than ever – case study available
Published July 7th, 2022
Manufacturing and energy industries have faced several challenges during past two years, from component shortages to delivery problems. In 2022, increased fuel prices, which are at an all-time high, can be added to that list. One of the industries that is affected by increased fuel prices, is heat and power industry. Unpredicted machine break-down causes unpredicted switch from environmentally friendly fuels to fossil fuels to continue the heat production.
Kari Muhli, who has an extensive experience in energy industry and energy utilities risk management, gives an example on the effect of price changes: ”Since June 2021, the fuel prices have increased dramatically compared to current situation. As an example, if a 50 MW heat production plant faces a 3-day outage, leading to a switch from wood chips to light fuel oil, the total cost of the breakdown today could be in the region of 500 000 €. Last June, total cost of a 3-day breakdown with same basic assumptions would have been around 300 000 €. Due to vastly increased (fossil) fuel prices and other important factors, such as cost of CO2 emission rights, the current expenses could therefore be roughly two hundred thousand euros more than one year ago. This is a huge financial risk that highlights the importance of different proactive measures, like increased fuel stocks, quick availability of critical spare parts and use of predictive monitoring technologies”.
Antti Leskinen CEO, APL Systems: “We have had discussion with a CEO from heat industry, who pointed out that the payback times for operational reliability / condition monitoring investments have shortened in today’s world. Reasons for this are for example increased costs and prices, longer delivery times and more uncertain availability (machines and spare parts, external services). “
“We work together with combined heat and power production where one of the key elements is safe and sound fuel supply. Typically, there has been a challenge to have and acquire predictive data and visibility of fuel supply. For example, we are following vibrating conveyor functioning with predictive advance alarms on malfunctions. Malfunctions can typically be detected days or months before serious risks can occur for heat and power production. This means avoiding serious risks, especially in those facilities where there are no double fuel supply lines or non-duplicated production devices”.
Kari Muhli, Kari is an experienced professional with a long-time extensive experience especially in energy and wood industries, renewables, circular economy, enterprise and operational risk management, investment projects, business planning and business support. He works as an independent management consultant / external advisor with his clients for example in business development, operational excellence, risk management and investment projects.
Antti Leskinen CEO, APL Systems, Antti has long experience in renewables industry as well as he is partner and co-founder of APL Systems, company providing operational excellence services for industry and energy.