“Lean” is a word often used in modern manufacturing. What does lean do for us? Can we experience something similar to lean manufacturing with energy? As Amory Lovins put it, “We have nothing to lose but our waste.” In this first of a series of white papers we will discuss lean energy, how it works, and what it means to your industrial business.

1. WHITE PAPER SERIES – VOLUME I

2. LEAN ENERGY
A Framework for Achieving Continuous Increase in
Industrial Energy Productivity
This is one of a series of white papers on Lean Energy. Download the other papers in the
series from http://www.z-fed.com/zf-energy-whitepapers
ZF Energy Development LLC is an energy management firm specializing in providing a
low cost energy supply for industrial users.
Copyright © 2013 ZF Energy Development LLC. All rights reserved.
This document and translations of it may be copied and furnished to others, and
derivative works that comment on or otherwise explain it or assist in its implementation
may be prepared, copied, published, and distributed, in whole or in part, without
restriction of any kind, provided that the above copyright notice and this section are
included on all such copies and derivative works. However, this document itself may not
be modified in any way, including by removing the copyright notice or references to ZF
Energy Development LLC or Z-FED, without the permission of the copyright owners. This
document and the information contained herein is provided on an "AS IS" basis and ZFED DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED
TO ANY WARRANTY THAT THE USE OF THE INFORMATION HEREIN WILL NOT INFRINGE
ANY OWNERSHIP RIGHTS OR ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
Published 2013 by ZF Energy Development, LLC.
Any comments relating to material contained in this document may be submitted to ZFED, 57 West Avenue, Wayne PA 19087, or by email to info@z-fed.com.
Page 2 of 12
© 2013 ZF Energy Development LLC. All Rights Reserved.

3. INTRODUCTION ...............................................................................................................4
THE LEAN ENERGY IDEA .....................................................................................................5
THE LEAN ENERGY EVOLUTION ............................................................................................7
Lean Principles ............................................................................................................................. 7
JIT Conversion ............................................................................................................................ 10
BIBLIOGRAPHY .............................................................................................................. 12
© 2013 ZF Energy Development LLC. All Rights Reserved.
Page 3 of 12

4. ZF ENERGY DEVELOPMENT WHITE PAPER
INTRODUCTION
‘Lean’ is a word often used in modern manufacturing. It’s used mainly as a contrast
word. Whereas prior methods were ‘fat’, i.e., there was a lot of material volume in
production processes,
‘lean’ trades volume for
speed. By moving material
faster, there is less of it in
the system. Since, ‘lean’
has come to mean doing
more with less in general.
120
100
80
60
40
What does ‘lean’ do for us?
Most of the modern
product flow is the result
of this thinking, and perworker productivity is now
Figure 1, Economic Output per Labor Hour 1948-2011; 2005=100, Source:
five times what it was in
(Bureau of Labor Statistics, 2013)
1950. One may dispute the
details, but the facts are this: lean manufacturing made the world we are in today. In
fact, it has been so successful that it is not inconceivable that there will be a time when
only 0.5% or less of the population will make everything we use.
20
0
50
19
53
19
19
56
59
19
6
19
2
65
19
68
19
71
19
74
19
19
77
80
19
8
19
3
86
19
89
19
92
19
95
19
19
98
01
20
0
20
4
07
20
10
20
Can we experience something similar with energy? Is there an analogous concept - lean
energy – that would give us a similar revolution where everything we use requires only a
67% thermal and mechanical loss
10% transmission loss
4% lighting
10% fans
Energy
input into
power plant
30% oven inefficiency
100#
33#
29.7#
28.5#
25.6#
18#
Energy applied to
value added process
Figure 2, In most cases 18% or less of the total energy input for an industrial process
actually creates value
Page 4 of 12
© 2013 ZF Energy Development LLC. All Rights Reserved.

5. Lean Energy
tiny amount of energy? How does lean energy bring economic benefits to American
industry? Given the doom-laden predictions for man-made climate change, is there a
possibility that lean energy might save the world?
As Amory Lovins put it, “We have nothing to lose but our waste”. In this first of a series
of white papers we will discuss Lean Energy, how it works, and what it means to your
industrial business.
THE LEAN ENERGY IDEA
Natural Gas
Supply Chain
A widget manufacturer requires that their
widgets are baked in an oven for five minutes
as an intermediate manufacturing step. The
baking oven has three energy inputs: a
natural gas burner, a conveyor motor, and a
blower. The conveyor motor and blower use a
combined 20 Amperes at 480 Volts, or 9.6
kW. The burner is a 0.5 mmBTU/h system, or
146.5 kW.
Electrical Supply Chain
Lean energy is simple, but not easy. The underlying idea follows the thinking of a justin-time (JIT) material supply: needed energy is made available just at the time and place
when it is needed to create value. Not
earlier, not later. To understand what this
means, let’s take a look at an example.
Fuel Supply
Combustion
∞ Thermal Energy
∞ Other Energy
Grid
Consumption
by motors
Consumption
by burner
In a conventional model, the widget
Time
Conversion Cycle Time
manufacturer buys gas and electricity from a
Figure 3, Energy Supply Chain for the curing oven of widget
commodity supplier, plus a distributor that
manufacturer
delivers the commodity to the factory. From
there, pipes and wires are run to the oven. The electricity is purchased on the retail
market, and the source of that
Motor
Moving Conveyor electricity is a mix, depending on
Electrical
whatever generation fuel mix is
Generation
Motor
online at any given moment of time.
Fuel Supply
Moving Air
Gas
Combustion
Hot Air
© 2013 ZF Energy Development LLC. All Rights Reserved.
They key difference between natural
gas and electricity is that electricity
is a value added product. In other
Page 5 of 12

6. ZF ENERGY DEVELOPMENT WHITE PAPER
words, someone else has already combusted or converted some other form of raw
energy into electricity. For the oven, natural gas is not the value-added product, it is the
heat that does the baking, and that is derived – converted – by combusting the gas.
The first law of thermodynamics asserts that energy can only be converted, or
transferred, not created or destroyed, so therefore the naming of ‘generators’ is a
physics misnomer. The oven burner converts gas to heat, and the generators on the grid
convert fuel to electricity. The overall system input for the widget manufacturer is a
variety of fuels.
Total
The problem with this
Thermal Total Gas Electrical Electricity
Losses
(kW)
Losses
(kW)
Total kW
system is that it is wasteful. Input
183.1
27.3
210.4
20%
36.6
The conversion efficiencies Burner Conversion Loss
Generation Combustion Loss
60%
16.4
along both the thermal and Transmission Loss
8%
1.3
Delivered
146.5
9.6
156.1
electrical value chains are
Total System Losses
26%
such that the total 156 kW
oven input requires at best 210 kW of input. In addition, the applied energy (exergy) is
less than 156 kW. The conveyor and blower motors are conversion devices just the
same, with their own losses: conveyor friction, motor losses, oven thermal losses, etc.,
actually bring the direct applied energy to much less than 156 kW.
In summary, lean energy is about eliminating waste and lowering cost. To understand
how to apply this, we will focus on two things: How can we structure it such that Input ≈
Delivered. Put another way:
Consumed Energy – Applied Energy ⟶
0
And how can we maximize energy productivity, i.e.,
Pe =
The remainder of this White Paper series will be dedicated to taking various
perspectives on these two underlying relationships.
Page 6 of 12
© 2013 ZF Energy Development LLC. All Rights Reserved.

7. Lean Energy
THE LEAN ENERGY EVOLUTION
Lean energy is a discipline that seeks to (1) reduce energy cost and, (2) drive energy
waste toward an achievable minimum (or, maximize exergy (Gundersen, 2011)). The
idea emerges from lean management in general, or the principles of just-in-time supply
that came from the Toyota Production System (Womack, Jones, & Roos, 1990). All of
these ideas have the same underlying kernel idea: the most efficient possible use of
capital in industrial processes. The Toyota Production System itself was borne in part
from the teachings of W. Edwards Deming.
Lean energy centers on conversion cycle time, which is the time between acquired and
applied energy (sometimes called exergy). The less time between these two events, the
lower energy losses, the less capital invested in energy operations.
Like lean management in general, this simple idea has a plethora of sometimes nonobvious implications.
Lean Principles
The lean manufacturing movement arose from a lack of capital, particularly the money
needed to finance large inventories. Taiichi Ohno and Shigeo Shingo determined in the
1960s that make-to-inventory was a drag on profits. In order to add value at minimal
expense, they devised a system that
Energy Kaizen
accelerated the material flow through a
Conversion Cycle Reduction
factory to such speed that substantial
Standard Demand
inventory could not accrue. It sounds odd,
Standard
Standard
Load
Load
Flow
Interval
but that is the net effect of a JIT, make-toEconomic Dispatch
order system. The secret to its spectacular
efficiency is in the cycle time reduction of
Figure 4, Lean Energy Framework
every step that adds value to material.
Therefore, speed and inventory are inversely proportional to each other: as speed
increases, inventory decreases. Reduce cycle time to 0, and costs and capital required
for inventory management disappear.
Albert Einstein showed us that mass and energy are the same thing, separated by a
constant. Does the energy analogy hold? If we decrease manufacturing cycles times,
does energy consumption decrease?
Imagine a manufacturing process that consumes energy in making a product. Energy is
drawn from its source, typically the ground, and conveyed to a generation plant. There
the energy is converted, and the electrical energy output is transmitted via the grid to a
© 2013 ZF Energy Development LLC. All Rights Reserved.
Page 7 of 12

8. ZF ENERGY DEVELOPMENT WHITE PAPER
point of consumption. Other conversion output, such as heat and sound, are lost
forever.
Let’s consider total energy consumed from a fuel supply. Over time, this amount simply
accumulates, and we can represent this abstractly as a cumulative line, as shown in
Figure .
This graph represents the
manufacturing process input.
The output of that process
we’ll call ‘Applied Energy’,
culminating in a product that is
sold or creates value. It
contains all the cumulative
energy input consumed by the
manufacturing process.
Figure 5
So we can show the Cumulative Applied Energy as offset from the Cumulative
Consumed Energy by some amount of time (Figure ).
The energy consumed at time t’ is converted into revenue at time t”. We’ll call that the
Conversion Cycle Time. This includes the conveyance of fuels to conversion to the point
of use.
Figure 6
Page 8 of 12
© 2013 ZF Energy Development LLC. All Rights Reserved.

9. Lean Energy
Now, energy change is simply a transient state of matter, it doesn’t hang around.
Energy seeks diffusion and moves quickly. And, as it is converted, energy is rejected.
This means that less energy is applied than is consumed, as is described by the laws of
thermodynamics.
That means the energy Consumed at time t’ is immediately applied at t as well.
Therefore, the difference between the Consumed curve and the Applied curve at t’ is
the Conversion Loss.
One can see that, indeed, Conversion Cycle Time is proportional to Conversion Loss. If
we bring the blue and red lines closer together by reducing Conversion Cycle Time,
Conversion Losses decrease.
Figure 8
A student of the laws of thermodynamics might conclude that if the slope, or rate of
change, of cumulative consumption and application is the same, then no losses would
occur. Since losses are a fact, the two curves cannot have the same slope.
Converting a fuel supply at the very moment that the resulting energy can be applied to
a paid order can similarly reduce Conversion Cycle Time. If combustion is brought close
to the value added process, both heat and electrical output are used, therefore reducing
conversion losses (the inventory analogy). Therefore, JIT conversion – energy delivery
that occurs just in time at the value added process – is at the core idea of lean energy in
manufacturing.
© 2013 ZF Energy Development LLC. All Rights Reserved.
Page 9 of 12

10. ZF ENERGY DEVELOPMENT WHITE PAPER
JIT Conversion
We’ve demonstrated that JIT conversion promises reduced conversion losses. An
electric motor, of course, does exactly that. High HP Motors are more than 90%
efficient, and produces kinetic energy in fractions of a second. Getting that electricity to
the motor--not so much.
JIT conversion principles have to apply to the system as a whole: the entire process
between stable input fuel and value added. Conversion steps along the way produce
energy in more usable forms for purposes of conveyance, such as electricity, so the
efficiency of each step is critical. And each step along the way consumes capital, so the
total capital application governs the feasibility of the system.
We apply this principle in two ways – how efficient are the conversion devices in the
supply chain, and how productive is the process, i.e., what is the overall value-added
energy cost of the system?
Efficiency
Productivity
Conveyor Motor
What is the lowest consumption
method to move product through
the curing process?
Blower Motor
What is the lower consumption
method to apply heated air to
product surface
Thermal
What is the lowest consumption
method to heat air?
How can I lower the cost of
energy conversion?
The distinction between efficiency and productivity is important to an industrial
company or manufacturer.
The goal of lean energy is cost minimization. We could lower demand to the outer
envelope of technological state-of-art, but the choice of fuel, for example, may make a
significant cost difference at identical demand rates.
Furthermore, demand improvements typically require capital investments, and the
returns on such investments are compared against a current performance baseline. As
changes in supply logistics shape that performance baseline, investments in demand
reductions take on a different ROI.
Page 10 of 12
© 2013 ZF Energy Development LLC. All Rights Reserved.

11. Lean Energy
Therefore, energy efficiency
describes the measure of cycle
time reduction, while energy
productivity tells us about the
effort required to attain such
reduction. In practical terms,
the real world, we must
consider both.
ROI %
Energy Productivity
Investments
Energy Efficiency
Investments
0
Investment $
Figure 9, Relative Economic Elasticities of Productivity and Efficiency
Investments
© 2013 ZF Energy Development LLC. All Rights Reserved.
Page 11 of 12

12. ZF ENERGY DEVELOPMENT WHITE PAPER
Bibliography
Bureau of Labor Statistics. (2013, August 26). Multifactor Productivity Home Page.
Retrieved August 26, 2013 from US Department of Labor, Bureau of Labor Stastics:
http://www.bls.gov/mfp/
Gundersen, T. (2011). The Concept of Exergy and Energy Quality. Trondheim: Norwegian
University of Science and Technology.
Lovins, A. (2011). Reinventing Fire. White River Junction, Vermont, USA: Chelsea Green
Publishing.
McKinsey Global Institute. (2012). Manufacturing the future: The next era of global
growth and innovation . Seoul, San Francisco, London: McKinsey Operations Practice.
Womack, J., Jones, D., & Roos, D. (1990). The Machine That Changed The World. New
York, NY: Harper Perennial.
Page 12 of 12
© 2013 ZF Energy Development LLC. All Rights Reserved.