Original Date: 09/14/1998
Revision Date: 01/18/2007

In 1985, Raytheon Missile Systems Company (RMSC) initiated the Strategic Energy Management Plan (SEMP) which greatly reduced energy usage, minimized capital equipment investments, produced a savings of $15.6 million (as of 1996), and avoided 369 million pounds of air pollutants that would have been generated at the power plant. These significant savings were achieved through a series of energy reduction strategies including occupancy sensors, fuel switching technology, plate and frame heat exchangers, thermal energy storage systems, variable frequency drive technology, lighting retrofitting, peak shedding, and management planning.

RMSC’s largest savings ($2.8 million) occurred in 1996 after partnering with an Energy Services Company (ESCo) that utilized Energy Saving Performance Contracting (ESPC) methodology. Initially, ESCo conducted an audit at RMSC to analyze energy usage and how best to apply current technologies to maximize the savings. After completing the audit, ESCo proposed a five-year contract to RMSC that would reduce cost by no less than $400,000 annually without the need for large capital investment dollars. This proposal also stipulated repair/replacement of low efficiency apparatus throughout the plant, full compliance with applicable regulations, and extensive training for employees on how to maintain peak performance. The savings were guaranteed by ESCo, and a check would be written to RMSC regardless of how much money was realized though the implemented energy saving strategies. In return for ESCo assuming all the risks and substantial costs of capital improvements, RMSC agreed to significantly share the reward of cost savings with ESCo over the length of the contract. Once the contact is fulfilled, RMSC will reap all the rewards and costs savings (currently $2.6 million annually) through the lifespan of the equipment. This win-win strategy allows RMSC to accelerate its energy savings and equipment programs, while proactively promoting good stewardship of its capital investments and environmental resources.

One of RMSC’s most successful energy saving programs of SEMP is the thermal energy storage tanks. The concept is simple. Cold water is generated during off peak hours when electrical usage is low and the cool ambient condition of the night exists. Large volumes of chilled water are then stored for daytime usage. To be successful, a large water storage tank is needed to house the chilled water until it can be rapidly heated during the workday. The original proposal called for a $2 million capital investment with an eight-year payback period. However, the Air Force considered this payback period to be too long. RMSC engineers did further research, and discovered an existing 1.7- million gallon storage process tank which they felt could be converted to store the chilled water. After re- engineering the project, the engineers realized that the tank could be used as is, and cut the project’s investment cost down to $1 million. The Air Force approved this proposal, and gave RMSC permission to proceed. The cost savings realized from this single project alone will exceed $265,000 annually. Had this project been implemented when first proposed in the early 1990s, the company would have realized a savings of more than $2 million by this time.

Energy savings strategies such as those of SEMP are sound business decisions that make good sense from cost and environmental standpoints. SEMP promotes sound, proven, and demonstrable technologies that guarantee a tremendous return on investment. The cost of capital equipment dollars are greatly reduced or eliminated. RMSC’s decision to partner with ESCo resulted in guaranteed savings to the company that would have otherwise been paid to the utility company. SEMP saves dollars, reduces negative environmental impact, provides a guaranteed return on investment, and promotes proactive capital equipment investments.

For more information see the Point of Contact for this survey.