February 2018
Have you ever considered that compressed air is a utility to your business, just like water, electricity and gas are? With energy costs continuing to rise and three quarters of the lifetime costs of a typical compressor being attributed to energy, buying compressed air as a utility may be one option that can assist you in reducing your energy costs. In this blog post we explain how and look at the top 4 reasons to consider buying compressed air as a utility.
Compressed air is often considered the fourth utility however, unlike gas, electricity and water, the majority of end users will actually own the compressed air system which generates the compressed air they require. In many cases this is absolutely the right decision. However did you realise there is another option, where you can simply just buy the compressed air you need? And, there are a number of advantages to opting to buying compressed air as a utility.
1: No capital investment required
Quite simply when you buy compressed air as a utility no investment into capital equipment is required. You just pay for the compressed air you use in the same way you pay for the electricity, water and gas you use. The compressed air utility provider is responsible for planning, installing and operating the compressed air system in agreement with your requirements. The result: you save 100% of the investment cost of a compressed air station!
2: Cost transparency
We all know how much the big 3 utilities cost us to use. However, relatively few compressed air users know how much the volume of compressed air they produce actually costs them as a unit of energy, which would require factoring in the costs of; capital investment, maintenance and servicing, replacement of consumables and electricity.
Instead of a composite calculation, where compressed air it purchased as a utility, the end user will have a fixed price per cubic metre of compressed air. And, in the same way many users purchase their other utilities, this would be a contractually agreed price over a set period of time. When you are buying compressed air as a utility this is normally based on a mutually agreed base volume of compressed air consumption which has been calculated based on the individual end users compressed air requirements. In addition, the contract would usually include an agreed rate that would be applied if consumption exceeds the agreed amount.
Cost transparency is therefore improved when you choose to purchase only the required volume of compressed air you require. In addition there is a tax advantage to buying compressed as a utility. By buying compressed air at a contractually established price per cubic metre, fixed costs are converted into variable operating costs, which can immediately be claimed for tax purposes.
3: No maintenance and service costs
When you choose to simply buy the compressed air you use, it is the utility provider that is responsible for the operation and maintenance of the compressed air supply system. This eliminates the traditional maintenance and service costs associated with an owner-operated compressed air system for the end user. It is therefore also in the interest of the utility provider to use the most technologically advanced compressed air equipment, including an advanced master compressed air controller, which is responsible for constantly monitoring the compressed air system.
Sophisticated Industrie 4.0-ready compressor controllers will also connect back to the utility provider’s service centre, delivering real time data on any alerts as well as maintenance and service requirements. Effectively this ensures optimal efficiency and compressed air availability whilst at the same time boosting production reliability.
4: Energy Efficient Operation
Last but by no means least, realising optimum energy efficiency may well be a resultant cost benefit to the end user of buying compressed air as a utility.
As many of you will no doubt be aware, energy is the largest cost associated with running a compressor accounting for around 75% of its lifetime costs. Combine that with steep and rising energy costs, means looking for opportunities to optimise compressed air energy efficiency and thereby reducing the associated energy costs, has never been so important.
When a company moves to buying compressed air as a utility it is normal for the provider to install a completely new compressed air system to ensure full utilisation of all potential energy savings. And, it is highly likely that this will include the most advanced technology, such as high efficiency compressors and intelligent, PC-based compressed air management systems. Together with efficient and smart 3D pressure control, these innovations enable maximum system pressure to be reduced, which in turn dramatically cuts energy consumption.
It’s not unusual to realise savings of up to 30 percent as a result. Even better still, as the provider will be delivering the compressed air at a fixed rate, it’s in their interest to ensure the system operates as efficiently and cost effectively as possible, so the energy savings will be long term and not just a one off! These savings will of course vary depending on each specific situation, however it is good to know these savings will be ongoing.
When is the right time to consider buying compressed air as a utility?
If you’re looking for rapid energy efficiency improvements or your existing compressed air system is reaching the end its life-cycle, then switching to buying compressed air as a utility may be a very attractive option. However, as always it will depend on your specific situation. So, if you think buying compressed air as a utility might be a good fit for your business then the first step would be to discuss your options with a compressed air specialist that offers both solutions. They will be able to assess your specific requirements and provide you with information on what options would work best for your situation and requirements.
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Would you like to learn more about the Sigma Air Utility contracting model? Phone 1800 640 611 or fill in the form below and we will contact you.