A Report from PepsiCo's Road to Zero
This morning, PepsiCo announced the latest phase of the company's ongoing efforts to transform a 27-year-old Frito-Lay manufacturing facility in Casa Grande, Arizona into a "Near Net Zero" consumer of energy and water. I had the chance to tour the facility recently with Al Halvorsen, the company's Director of Environmental Sustainability.
Spoiler alert: I'm a manufacturing and warehousing geek, having spent 20 years touring hundreds of factories and distribution centers in the past. I can get just as excited by an inspection machine that sorts out sub-standard potato chips -- really, it kicks out the individual chip while all the others head toward the bag -- as I can about the latest advances in solar technology. And while there are a number of innovative technologies being used, PepsiCo's real story is two-fold:
- Taking a systems thinking approach to bundling improvements in such a way that the sum is much greater than its parts.
- Focusing on sustainability as a team sport.
Performance with Purpose from the Top Down
Frito-Lay's Casa Grande plant is about an hour drive south of Phoenix. As you approach the plant, the first thing you notice is the parking lot. Most of the cars are shaded by single axis photovoltaic solar panels that rotate to follow the sun while additional arrays stand like energy sentinels at the entrance to the property.
As we settle into the conference room to discuss the tour, Halvorsen points out the light tubes passively lighting the room. They seemed to light up the room as if it were flooded with fluorescents, but much warmer. Only afterwards did I wonder how to turn them off.
According to Halvorsen, the challenge PepsiCo is trying to meet with projects such as those highlighted at the Casa Grande plant is to figure out what the company can do after they've picked much of the low-hanging fruit. Or, to put it another way, how many times can a company do another lighting retrofit and get a significant reduction in energy use?
PepsiCo has aggressive sustainability goals. In their 2010 Corporate Citizenship Report, the $60 billion company identifies 47 goals and commitments, 15 of which are specifically related to environmental sustainability. These include a 20 percent reduction in water use, efforts that strive to eliminate solid waste to landfill at their production facilities, and improvements in electricity use efficiency by 20 percent.
Achieving PepsiCo's Performance with Purpose goals starts at the top with a commitment by PepsiCo's CEO, Indra K. Nooyi. According to Halvorsen, her support was critical for the company to invest in some of the technologies at the Casa Grande plant that wouldn't normally meet the company's standard return on investment (ROI) requirements.
Powering the Snacks of the Future
In April 2010, PepsiCo's Rob Schasel wrote in GreenBiz that the company was shifting away from Renewable Energy Certificates "in order to focus on direct investments that will accelerate our use of alternative energy sources to power operations at the facility level throughout the PepsiCo network."
The results of some of those investments are on display in Casa Grande where two-thirds of all power used by the facility is renewably sourced.
Power generation is a bit of a smorgasbord of solar strategies so the company can test a number of options. Five separate and distinct photovoltaic solar systems are installed throughout the property, which produce approximately 10,000,000 kwhs of electrical power annually -- enough to power 860 homes.
Halvorsen took me out to the back 40, where the solar panels lived. 18,000 solar panels are installed on 36 acres of the facility's agriculture property and there's room to expand. Two thirds of the panels were installed through a power purchase partnership with the local utility (Arizona Public Service) and a third-party solar developer (Solar Power Partners) while the 6,000 panel field is owned and operated by Frito-Lay.
There are also 10 Stirling engines installed on site. These giant solar-electric dishes look more like they should be searching for intelligent life on another planet, but instead concentrate sunlight on the "engine" suspended in front of it.
A Stirling engine has a closed cylinder that houses a gas, such as helium, and a piston. Applied heat expands the gas to move the piston that, in turn, pumps other mechanisms, such as a crank, to create energy. Stirling engines were invented in the 19th century as an alternative to steam engines.
Starting this fall, PepsiCo will use the power generated by the Stirling engines to charge two electric delivery trucks. PepsiCo will then get to claim the trucks as zero-emission vehicles. This is all part of their commitment to reduce fuel used by 50 percent by 2020 (based upon a 2008 baseline).
Electricity isn't the only renewably sourced energy used to operate the plant. A newly installed biomass boiler uses wood and agricultural waste from a nearby municipality as its combustion energy source.
The boiler produces all of the steam needs for the manufacturing plant and has reduced natural gas use by more than 80 percent. Halvorsen and I watch a conveyor inch along tree trimmings and wood waste to feed the boiler. It seems as slow as Congress but at least the hot air here has a beneficial use.
A Commitment to Water Stewardship
PepsiCo has made a commitment to ensuring a positive water impact as well. The company's goal is to make more and better water available to the environment and the communities where the company and its suppliers operate. While much of this initiative will focus on local water sheds around the world, the Casa Grande site is doing its part by recycling up to three-quarters of all of the water used in the production of potato chips and other snacks.
The water recovered from manufacturing operations is processed in a facility that combines Membrane Bio Reactor and Low-Pressure Reverse Osmosis technology to recycle from 50 percent to 75 percent of all the process water used in the facility to meet EPA primary and secondary drinking water standards.
By the end of the year, engineers at the Frito-Lay plant will have installed additional water treatment systems to ensure they recycle three-fourths of the process water used by the facility. Where the company used to draw 400,000 gallons a day from the local water utility, they now draw only 100,000 gallons.
After our tour, I sat down with Halvorsen and members of his team to find out what they learned from their experiences at Casa Grande. Here are three lessons:
1. Integrated design is critical for meeting multiple goals. The team told me that capital improvement projects shouldn't just be evaluated on their individual merits. Projects should be evaluated in terms of how the improvement will work as part of a holistic design or master plan.
The key to this evaluation for PepsiCo was the establishment by their executive management of their key goals for energy, water, and waste reduction. For example, early on the team considered implementing a co-generation system but the options they looked at would have required using more water. While it may have contributed positively to the company's energy goals, it would have made it more difficult to meet their water targets.
By evaluating the impacts in conjunction with all of their other potential projects, engineers were also able to find beneficial synergies. For example, once water is captured from the factory, it is processed through a centrifuge where solids, such as potato peelings and corn kernels, are separated and given to local farmers for use as animal feed.
2. Success requires external as well as internal networking. In terms of working with outside organizations, Manufacturing Plant Director Jason Gray told me that in addition to upgrading a factory, they had to learn to partner with government agencies and other groups. "We learned every part of government," Gray observed. "The energy and water projects required permitting, siting, and regulatory meetings not traditionally associated with plant improvements. In addition to making chips, we realized we're also running a utility."
3. Sustainability is a team sport. The efforts by the Casa Grande team are just one part of the overall PepsiCo learning process. Each year the company hosts a sustainability summit to share best practices and honor site champions. During the summit, they hold "Change the Physics" sessions where plant personnel are asked to step out of their daily routine to look at future technologies and find the next new thing. Engineers get invited to travel for site audits and post-commissioning trips to not only make sure things are still working as intended but also to share knowledge from other factories.
PepsiCo continues to raise the bar with their leadership. The company has set high public targets for reducing its environmental impact. But these targets can only be met through significant capital investment, experimentation, and most importantly, a team-based approach to sustainability.
All of these are features of what we've been talking about with our VERGE initiative. Lucky for me, my trip to Casa Grande was as close to visiting a VERGE theme park as you're probably going to find today. And for now, there are no long lines to see all of the amazing technologies.