Location: Headquartered in Applecross, WA
DR Program: EnerNOC Demand Response Western Australia
DR Strategy: Curtailment
Primary DR Strategy: Operational shut-down (4 hours maximum)
Annual DR Payments: Approximately $500,000
The Big Picture
Doral Pty Ltd is a mining and mineral processing company with mining operations in the mineral sands of Burekup, outside Bunbury, and processing facilities in Picton and East Rockingham. The mineral sands of this region are known the world over for their valuable composition that includes the heavy materials ilmenite and zircon.
Doral’s mining operation is a 24-hour-per-day process of extracting the minerals— approximately 110,000 tonnes of ilmenite and 15,000 tonnes of zircon per year—and separating them from the surrounding clay and sand. Once dried, the minerals are sorted through a combination of magnetic and electrostatic techniques at Doral’s Picton processing site.
At Doral’s processing facility in East Rockingham, three powerful electric arc furnaces heat alumina and zirconia to their fusion points. Two alumina furnaces and one zirconia furnace—each consuming approximately 2.5 megawatts (MW)— produce fused alumina, silica fume, and fused zirconia.
Doral’s products are shipped all over the world, primarily to Asia and Europe.
Doral’s business is extremely energy intensive; in addition to the around-the-clock mining operation, the business involves fabrication, construction, and heavy freight transport. Energy use can comprise as much as 20% of Doral’s yearly operating costs, which is why Chief Financial Officer Neil Raine is always on the lookout for ways to offset the company’s high energy spend without altering the business’ infrastructure.
A Business Case for the Discerning CFO
With such a significant percentage of operating costs directly tied to energy usage, CFO Neil Raine set about calculating ways to effectively reduce Doral’s annual energy cost without making major changes to its facilities or negatively impacting business operations. He had been courted by many different companies and energy suppliers offering a wide range of energy management solutions, but when EnerNOC approached Raine in 2009 about participating in demand response, he knew he had found a winning partnership.
With EnerNOC demand response the value proposition was simple: reduce electricity usage and get paid for it. During specific temporary periods, called dispatches, Doral reduces electricity usage across its three facilities—the mining operation in Burekup and the two processing facilities in Picton and East Rockingham. In return, EnerNOC pays Doral $500,000 annually. It sounded good, but just to be certain, Raine did what any good CFO would do and weighed the benefits of annual payments against the cost of a temporary shutdown.
Raine first looked at what was involved in a demand response dispatch. Firstly, four hours in advance of a dispatch, coordinators at each Doral site are notified by email or text message. Doral then notifies site workers of the exact time that the shutdown associated with the demand response dispatch will take place. For the actual shutdown, the two alumina furnaces are turned off, along with the alumina crushing and sizing plant, for a maximum of four hours. The same goes for the zirconia operation.
Raine estimated that even if all of these machines were down for a total of 24 hours per year, Doral would still make money from EnerNOC’s annual payments.
Actual downtime in previous years had not even come close to this estimate. In 2010, there had been just 12 hours of downtime, and zero hours the year before. EnerNOC paid whether dispatches occurred or not. The concept was so simple that Raine had no trouble getting buy-in from Doral’s CEO. “It was an easy sell,” he said. “Once I calculated that the cost of shutting down was far exceeded by the benefits of annual payments, it became a relatively straightforward business decision,” he added. “We’re getting significant payments for a relatively small impact on our business.”
Since energy is one of Doral’s largest operating expenses, the financial incentives are clearly the biggest benefits Doral receives for participating in EnerNOC’s demand response program. But while lots of programs offer energy savings opportunities, it is EnerNOC’s ability to make demand response work for Doral’s business that set it apart. Companies that partner with EnerNOC for demand response, also get access to EnerNOC's energy intelligence software (EIS), which allows personnel to see exactly where Doral’s energy costs are coming from. “Historically, we’ve run a little bit blind,” said Brad Snow, General Manager of Doral Fused Materials, who oversees the East Rockingham operations. “We’d just shut down and hope that we’d get below our minimum demand reduction, but now we can log into EnerNOC and have a look at what our actual reading is.”
EnerNOC energy intelligence software is a comprehensive solution for energy management that brings a range of benefits to Doral.
Advanced notification and frequent communication with EnerNOC before, during, and after a dispatch ensure that the process runs smoothly.
When Doral is called upon to reduce its energy consumption, facility managers give everyone involved plenty of time to implement Doral’s energy reduction plan deliberately and safely. Workers at the sites transition to cleanup and maintenance activities during the machines’ downtime. When the demand response dispatch is over, EnerNOC notifies the sites and operations resume. Payments arrive quarterly. It’s that simple.
Working closely with Doral personnel, EnerNOC put together an energy management plan that minimized the dispatches’ impact on the business. EnerNOC’s tailored energy reduction plan for Doral enabled certain machines to continue running during a dispatch while others shut down. While a dispatch calls for the shutdown of the furnaces and sizing plants at East Rockingham, the essential equipment such as water pumps and lighting continue to run seamlessly. Because the dispatches never exceed four hours, operators know exactly how much downtime they can expect. General Manager Brad Snow added: “With our agreement, we’re never in total darkness, so operators can still do routine work. It’s a good opportunity for everyone to catch up in some way.” How do workers feel about these occasional shutdowns? “They know there’s a benefit and that we’re getting paid for it,” he added.
On the mining side at Burekup, the majority of equipment shuts down, but the site continues to haul material and, like the processing facilities, mine workers also take advantage of the downtime by attending to maintenance and clean-up around the site. The business does not altogether come to a halt; instead, for the four-hour downtime periods, Doral staff are able to get other tasks done within the facilities, and continue with parallel operations on those machines not affected.
EnerNOC places a premium on maintaining strong communication and relationships with its sites through regular contact with customers like Doral, even outside of shutdown periods. “We’ll just get on the phone and talk to them,” said Neil Raine. “They’ll come and see us whenever we need them to, or they’ll just come to say hello. They have local presence in our city, so we can get them in to talk to us if we need.” The result is a great working relationship that Raine describes as a shared gain for both companies. “We’ve set up a win-win model, and we’re very satisfied.”
A Comprehensive Approach to Sustainability
Doral is committed to minimizing its impact on the environment wherever possible. By reducing energy consumption during a dispatch, Doral is contributing the overall stability of WA’s power grid. Reducing consumption at key periods means that the grid can keep up with demand for electricity in WA without having supplementary power plants built in the region.
Since incorporating demand response into its energy management plan, Doral has had total annual downtime of less than 12 hours. This was only half of what Raine had accounted for in his original analysis, and therefore worked out to be an excellent value for the company. “Given that we still came out on top when we calculated 24 hours of shutdown – and we did not come close to that – we’ve gotten a very good deal,” Raine added.