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Economic analysis of alternatives for optimizing energy use in manufacturing companies

Author

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  • Méndez-Piñero, Mayra Ivelisse
  • Colón-Vázquez, Melitza

Abstract

The manufacturing companies are one of the main consumers of energy. The increment in global warming and the instability in the petroleum oil market have motivated companies to find alternatives to reduce energy use. In the academic literature several researchers have demonstrated that optimization models can be successfully used to reduce energy use. This research presents the use of an optimization model to identify feasible economic alternatives to reduce energy use. The economic analysis methods used were the payback and the internal rate of return. The optimization model developed in this research was applied and validated using an electronic manufacturing company case study. The results demonstrate that the main variables affecting the economic feasibility of the alternatives are the economic analysis method and the initial implementation costs. Several scenarios were analyzed and the best results show that the manufacturing company could save up to $78,000 in three years if the recommendations based on the optimization model results are implemented.

Suggested Citation

  • Méndez-Piñero, Mayra Ivelisse & Colón-Vázquez, Melitza, 2013. "Economic analysis of alternatives for optimizing energy use in manufacturing companies," Energy Economics, Elsevier, vol. 40(C), pages 146-154.
    • Handle: RePEc:eee:eneeco:v:40:y:2013:i:c:p:146-154
    DOI: 10.1016/j.eneco.2013.06.001
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    More about this item

    Keywords

    Economic analysis; Energy optimization; Mathematical modeling;
    All these keywords.

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • L69 - Industrial Organization - - Industry Studies: Manufacturing - - - Other
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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