Del Williams 2015-04-20 17:50:42
Globally, renewable energy is near a tipping point. It is poised to move from subsidized, regulated alternative energy to clean, green renewable energy able to compete head-to-head with fossil fuels and nuclear based on price, with or without inconsistent subsidies or regulation. “Renewable energy provided an estimated 19% of global final energy consumption in 2012, and continued to grow in 2013,” states a Renewables 2014 Global Status Report, by REN21, an international nonprofit renewable energy policy network. According to the report, “China’s new renewable power capacity surpassed new fossil fuel and nuclear capacity for the first time,” and, “in the European Union, renewables represented the majority of new electric generating capacity for the sixth consecutive year.” While the global growth of the renewable energy sector is undeniable, much of that growth has been aided by energy support policies at the national, state, or local level. Unfortunately, when such aid is inconsistent, withdrawn, or the falling cost of fossil fuels makes renewable energy less competitive, renewable energy companies can face slack demand, which disrupts their business model. To truly sustain a global green rush in the renewable energy sector, what’s needed now is reliable manufacturing capability able to drive down cost and ramp up parts production to mass scale, along with consultative manufacturing partners that can help reduce overhead and improve design and manufacturability. Moving Beyond Subsidies “The biggest hurdle in the US has been price because renewable energy subsidies and supportive regulation come and go,” says Paul Eisenhuth, President of CEWA Technologies, a Wyomissing, PA-based developer of concentrating solar power dishes and solar tracking technology to produce sustainable thermal energy and electricity. “Green energy will really ramp up when it meets affordable mass scale price points without unreliable subsidies.” One challenge of renewable energy innovators, particularly startups, is that, while they aim to efficiently convert natural resources into energy, they often have limited resources and manufacturing expertise. “As a renewable energy startup, I don’t have the time, capital, or expertise to build sufficient manufacturing capability from scratch,” says Eisenhuth. “Not when high-fixed costs in facilities, equipment, and trained labor, or underutilized capacity, could sink the business.” Fortunately, renewable energy OEM’s latest competitive advantage, it turns out, is a one-stop, domestic outsourcing of precision metal fabrication, which is much more efficient than doing it all in-house or subcontracting to layers of vendors, each taking their slice of profit and adding weeks of lead time. Full-service metal fabrication under one roof can, in fact, help reduce overhead, improve design and manufacturability, and streamline the renewable energy OEM’s supply chain. Instead of manufacturing in-house or working with layers of vendors, from the start of product development Eisenhuth chose to work with Summit Steel and Manufacturing, a Reading, PA-based metal component fabrication provider. The company offers a full-range of services from 2D and 3D laser cutting, CNC turning/milling, Swiss machining, and centerless grinding/polishing to bending/forming, powder coating, robotic and manual welding, and assembly. “In talking with their engineers, we determined there’s a better, cheaper, faster way to build our highly polished aluminum dish, the heart of our unit,” says Eisenhuth. “We’d planned to press the dish using a hydroforming process from a single aluminum sheet, which has high startup costs.” “Instead, Summit developed a forming jig process to weld aluminum dish pieces together that costs one-tenth the hydroforming at low quantities, saves more at higher volumes, and is at least as fast,” says Eisenhuth. When CEWA Technologies needed a prototype part to keep their test development program running, with critical funding at stake, their full-service metal component fabrication provider rushed them the needed part. “Our whole testing program was at a standstill until a prototype piece was made for one of our supports,” says Eisenhuth. “I expected it to take two weeks, but they helped us design and draw it, and got it to me in three days. We successfully continued our test program and saved our funding.” Today, CEWA Technologies relies on their full-service metal component fabrication provider for 2D laser cutting, bending/forming, drilling, welding, powder coating, assembly, and shipping sub-assemblies direct to the customer. According to Eisenhuth, one of CEWA’s large solar concentrator dishes is capable of delivering 33.5 kW of thermal power, 14 kW of electricity, or a combination of the two. Both their large and small solar concentrator dishes are designed to meet the power, hot water, HVAC, and process heating needs of industrial, institutional, commercial, and agricultural customers. Eisenhuth says that partnering with their full-service metal component fabrication provider has enabled his company to produce solar concentrator dishes at a price competitive with fossil fuels without government subsidies. “We cut about six months off our development timeline working with Summit, going from prototype, to finished commercial product,” says Eisenhuth. “Working with them saved us at least $500,000 in development costs with an accelerated product development timeline and improved approaches to fabrication.” According to Eisenhuth, it makes sense for renewable energy OEMs, particularly startups, to outsource their parts manufacturing to a reliable full-service partner that can not only help improve their design and manufacturability, but also flexibly meet demand, bring down their unit price, and enable quick production rampup. Compared to waiting on multiple vendors in multiple locations shipping around product to be finished, Eisenhuth finds that relying on a one-stop, full-service vendor optimizes his manufacturing and supply logistics. “We’re saving about 15 to 20% in costs by eliminating unnecessary layers of subcontractor profit, shipping, packaging, accounting, and follow up,” he estimates. “We’re also saving at least four to six weeks of delivery time.” Eisenhuth says CEWA Technologies further saves by working with a large metal fabrication company like Summit Steel that can purchase raw materials at mill-direct pricing. Smaller machine shops typically buy in small quantities from metal service centers that include a middleman markup. Larger metal fabricators, on the other hand, have the buying power to purchase large quantities direct from the mill. These savings are then passed along to the OEM. For Eisenhuth, there is one additional competitive advantage to working with a one-stop shop: simplifying CEWA Technologies’ quality auditing. “Instead of having to track and audit several vendor subcontractors, I can monitor one full-service vendor,” he says. “That gives me one point of contact to quickly resolve any potential quality, production, or delivery issues, if necessary, without subcontractors pointing the finger of blame at someone else.” According to Eisenhuth, a business model will finally catapult the renewable industry past sporadic fits and starts: renewable energy innovators that focus on their core competence of system design and marketing, while partnering with reliable full-service parts manufacturers to lower unit cost and ramp up production. “When the renewable energy industry finally ramps up production to mass scale at a price competitive to fossil fuels regardless of subsidies or regulation, the global green rush truly begins,” he concludes. BE Del Williams is a technical writer for Business Energy.
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