H+H UK Limited: reducing costs in energy-intensive manufacturing

The UK’s biggest aircrete block manufacturer is benefiting from Consultus Group energy management services including Energy Procurement, Supplier Contract Negotiation, Risk Management and Electricity Consortium.

Background

H+H UK manufactures aerated concrete (aircrete) products, a popular building material. With the main raw material pulverised fuel ash, a by-product of coalfired power generation, autoclave pressure chambers are used in production to provide elevated temperatures and pressures. “Our blocks are primarily used in housing construction,” says Ed Surman, Production Director. Operating two ites in East Yorkshire and one in Kent, he describes H+H as “one of three main manufacturers in the UK, and we probably have the highest capacity. Our product is a preferred choice for external and internal walls and foundations: it is strong, thermally efficient, lightweight, and easy to work with.”

Challenges

In terms of energy procurement and usage, H+H wanted to reduce risk and control costs in an energy-intensive process. “The process used to make aircrete is quite protracted, so the use of energy resources must be a major consideration for our factories,” Surman says. This process includes curing aircrete blocks in large autoclaves for several hours. “Mindful of the time it takes to complete this cycle, we needed to better manage both our gas and electricity supply and costs. Previously, we sourced our energy independently, at the day ahead price with suppliers. This meant significant market exposure. We tended to buy direct, but were limited in our choice of suppliers, so we decided to explore the market to see what other options were available.”

Solution

Energy Management services provided by Consultus cover all aspects of Procurement, including Supplier Contract Negotiation, Account Management, Risk Management & Risk Policy, and Electricity Consortium.

This approach, Surman says, included “the right purchasing and risk strategy to give H+H the ability to trade gas for two years out. Because of the complexity of supply market and contracts, being able to go out to tender for the next two years in such a complex market means you need a detailed understanding of that market. It is difficult to get someone with all that knowledge and experience in-house. Consultus understands that environment: it can go to the market, get a range of offers, assess them, tell us the differences, then make recommendations about where we should place our business.”

Providing new ways to purchase gas, the Consultus team ensured performance was reported using a metric familiar to H+H: measuring the new energy management and buying strategy against day ahead, the former purchasing approach. The solution was also designed to be adaptable. For example, when H+H decided to ‘fix out’ and remove exposure to the market, the strategy accommodated that. “We’re also part of an electricity purchasing consortium, which requires no input from us, and we’re very happy with how it’s working,” Surman adds.

Outcomes

“We’ve been working with Consultus for a number of years and have extended our relationship twice,” Surman says. “They provide the right balance of risk and benefit – and was the only provider that offered the certainty we wanted. Because they have such a clear understanding of energy markets and our energy requirements, we only need to meet twice a year. For us, the ease of management points to the credibility and credentials of their risk team and its knowledge of markets across Europe. We also get on extremely well with the team and have a strong relationship; it’s a good cultural fit.”

Surman adds, “We are exploring whether H+H International can use these services in other European locations. That’s n attractive proposition: Consultus could potentially offer H+H a complete package across more territories and utilities as markets open up.”

“Energy is a vital part of our manufacturing process: Consultus has the experience to deliver what we need.”

H+H UK Limited Production Director Ed Surman

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