Is Compressed Air a Utility or a Production Input?

By: Michael Camber

Compressed air is often referred to as the fourth or even the fifth utility. Compressed air professionals have promoted this idea for decades. Compressed air certainly has some attributes of other utilities, but there are some notable differences.

For example, industrial facility design firms typically address plumbing, lighting, and HVAC but many don’t include compressed air, instead leaving it to the plant operator or process equipment providers to specify and buy compressed air equipment. We’ve also noted that most education tracks associated with facilities management events routinely cover gas boilers, lighting, HVAC, and water conservation. They even touch on motors and drives, but rarely do we see compressed air systems included on these curricula. Add to this that many building energy audit professionals take a pass when it comes to a compressed air system assessment. Perhaps they don’t dare delve into compressed air, for fear of compromising production.

It may be splitting hairs, but there’s a good business case for not thinking of compressed air as a utility. First, unlike electricity, gas and water, compressed air is generated on site. Second and more to the point, compressed air consumption is more closely tied to production than water, lighting, HVAC, and overall electrical usage. Unlike water, electric and HVAC, there is little to no human usage of compressed air, so all associated costs should be allocated as a production expense rather than overhead.

If it’s treated like other inputs to production, it should be costed per unit. But it almost never is. Relatively few plants know their costs of running compressors, and fewer track it closely and allocate it to overall production—let alone specific product lines.

Now here are somethings you may not know: (1) Generating compressed air may be your single biggest consumer of electricity, and (2) on average, 50% is wasted through leaks, inappropriate uses and artificial demand. So this often un-costed input often has only a 50% yield. Nothing to be proud of if you’re a production manager.

Still thinking of it as a utility? OK, then consider this. The waste in a compressed air system isn’t like leaving the lights on in the office at the end of the day. It is like buying and installing a thousand lights in a room (with no people) and leaving them on 24/7/365. Nothing to be proud of if you’re a plant or facilities manager, either.

We believe that changing how compressed air is accounted for may help drive efforts to improve efficiencies faster than simply treating it as general overhead like other utilities often are. It’s partly an agency issue and the problem has two sides—that is, most often the people who produce the resource are not accountable for the efficient use of the resource.

If you are tracking compressed air costs closely and/or assigning per unit costs, we’d like to hear about it. Did it have any impact on your compressed air system operation and costs? Let us know in the comments section.

 

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