ENERGY MANAGEMENT AND AUDITING

36
Bureau of Energy Efficiency
2. BASICS OF ENERGY AND ITS VARIOUS FORMS
Syllabus
Basics of Energy and its various forms: Electricity basics - DC & AC currents,
Electricity tariff, Load management and Maximum demand control, Power factor.
Thermal basics -Fuels, Thermal energy contents of fuel, Temperature & Pressure, Heat
capacity, Sensible and Latent heat, Evaporation, Condensation, Steam, Moist air and
Humidity & Heat transfer, Units and conversion.
2.1 Definition
Energy is the ability to do work and work is the transfer of energy from one form to another. In
practical terms, energy is what we use to manipulate the world around us, whether by exciting
our muscles, by using electricity, or by using mechanical devices such as automobiles. Energy
comes in different forms - heat (thermal), light (radiant), mechanical, electrical, chemical, and
nuclear energy.
2.2 Various Forms of Energy
There are two types of energy - stored (potential) energy and working (kinetic) energy. For
example, the food we eat contains chemical energy, and our body stores this energy until we
release it when we work or play.
2.2.1 Potential Energy
Potential energy is stored energy and the energy of position (gravitational). It exists in various
forms.
Chemical Energy
Chemical energy is the energy stored in the bonds of atoms and molecules. Biomass, petrole-
um, natural gas, propane and coal are examples of stored chemical energy.
Nuclear Energy
Nuclear energy is the energy stored in the nucleus of an atom - the energy that holds the nucle-
us together. The nucleus of a uranium atom is an example of nuclear energy.
Stored Mechanical Energy
Stored mechanical energy is energy stored in objects by the application of a force. Compressed
springs and stretched rubber bands are examples of stored mechanical energy.

2. Basics of Energy and its Various Forms
37
Gravitational Energy
Gravitational energy is the energy of place or position. Water in a reservoir behind a hydropow-
er dam is an example of gravitational energy. When the water is released to spin the turbines, it
becomes motion energy.
2.2.2 Kinetic Energy
Kinetic energy is energy in motion- the motion of waves, electrons, atoms, molecules and sub-
stances. It exists in various forms.
Radiant Energy
Radiant energy is electromagnetic energy that travels in transverse waves. Radiant energy
includes visible light, x-rays, gamma rays and radio waves. Solar energy is an example of radi-
ant energy.
Thermal Energy
Thermal energy (or heat) is the internal energy in substances- the vibration and movement of
atoms and molecules within substances. Geothermal energy is an example of thermal energy.
Motion
The movement of objects or substances from one place to another is motion. Wind and
hydropower are examples of motion.
Sound
Sound is the movement of energy through substances in longitudinal (compression/rarefaction)
waves.
Electrical Energy
Electrical energy is the movement of electrons. Lightning and electricity are examples of elec-
trical energy.
2.2.3 Energy Conversion
Energy is defined as "the ability to do work." In this sense, examples of work include moving
something, lifting something, warming something, or lighting something. The following is an
example of the transformation of different types of energy into heat and power.
It is difficult to imagine spending an entire day without using energy. We use energy to light our
cities and homes, to power machinery in factories, cook our food, play music, and operate our
TV.
More the number of
conversion stages, lesser
the overall energy
efficiency
Oil burns to generate heat -->
Heat boils water -->
Water turns to steam -->
Steam pressure turns a turbine -->
Turbine turns an electric generator -->
Generator produces electricity -->
Electricity powers light bulbs -->
Light bulbs give off light and heat

38
2.2.4 Grades of Energy
High-Grade Energy
Electrical and chemical energy are high-grade energy, because the energy is concentrated in a
small space. Even a small amount of electrical and chemical energy can do a great amount of
work. The molecules or particles that store these forms of energy are highly ordered and com-
pact and thus considered as high grade energy. High-grade energy like electricity is better used
for high grade applications like melting of metals rather than simply heating of water.
Low-Grade Energy
Heat is low-grade energy. Heat can still be used to do work (example of a heater boiling water),
but it rapidly dissipates. The molecules, in which this kind of energy is stored (air and water
molecules), are more randomly distributed than the molecules of carbon in a coal. This disor-
dered state of the molecules and the dissipated energy are classified as low-grade energy.
2.3 Electrical Energy Basics
Electric current is divided into two types: Directional Current (DC) and Alternating Current
(AC).
Directional (Direct) Current
A non-varying, unidirectional electric current (Example: Current produced by batteries)
Characteristics:
• Direction of the flow of positive and negative charges does not change with time
• Direction of current (direction of flow for positive charges) is constant with time
• Potential difference (voltage) between two points of the circuit does not change polarity
with time
Alternating Current
A current which reverses in regularly recurring intervals of time and which has alternately pos-
itive and negative values, and occurring a specified number of times per second. (Example:
Household electricity produced by generators, Electricity supplied by utilities.)
Characteristics:
· Direction of the current reverses periodically with time
· Voltage (tension) between two points of the circuit changes polarity with time.
· In 50 cycle AC, current reverses direction 100 times a second (two times during onecycle)
Ampere (A)
Current is the rate of flow of charge. The ampere is the basic unit of electric current. It is that
current which produces a specified force between two parallel wires, which are 1 metre apart
in a vacuum.
Voltage (V)
The volt is the International System of Units (SI) measure of electric potential or electromo-

39
kVAr (Reactive Power)
kVAr is the reactive power. Reactive power is the portion of apparent power that does no work.
This type of power must be supplied to all types of magnetic equipment, such as motors, trans-
formers etc. Larger the magnetizing requirement, larger the kVAr.
Kilowatt (kW) (Active Power)
kW is the active power or the work-producing part of apparent power.
tive force. A potential of one volt appears across a resistance of one ohm when a current of one
ampere flows through that resistance.
1000 V = 1 kiloVolts (kV)
Resistance
Voltage
Resistance =
_______
Current
The unit of resistance is ohm (Ω)
Ohm' Law
Ohm's law states that the current through a conductor is directly proportional to the potential
difference across it, provided the temperature and other external conditions remain constant.
Frequency
The supply frequency tells us the cycles at which alternating current changes. The unit of fre-
quency is hertz (Hz :cycles per second).
Kilovolt Ampere (kVA)
It is the product of kilovolts and amperes. This measures the electrical load on a circuit or sys-
tem. It is also called the apparent power.
1000
Amperes
x
Voltage
(kVA)
power
Apparent
,
circuit
electrical
phase
single
a
For =
1000
)
(
,
sin
factor
Power
x
Amperes
x
Voltage
kW
Power
phase
gle
For =
1000
732
.
1
)
(
,
factor
Power
x
Amperes
x
Voltage
x
kW
Power
phase
Three
For =
1000
Amperes
x
Voltage
x
3
(kVA)
power
Apparent
,
circuit
electrical
phase
three
a
For =

40
Power Factor
Power Factor (PF) is the ratio between the active power (kW) and apparent power (kVA).
When current lags the voltage like in inductive loads, it is called lagging power factor and when
current leads the voltage like in capacitive loads, it is called leading power factor.
Inductive loads such as induction motors, transformers, discharge lamp, etc. absorb com-
paratively more lagging reactive power (kVAr) and hence, their power factor is poor. Lower the
power factor; electrical network is loaded with more current. It would be advisable to have
highest power factor (close to 1) so that network carries only active power which does real
work. PF improvement is done by installing capacitors near the load centers, which improve
power factor from the point of installation back to the generating station.
Kilowatt-hour (kWh)
Kilowatt-hour is the energy consumed by 1000 Watts in one hour. If 1kW (1000 watts) of a elec-
trical equipment is operated for 1 hour, it would consume 1 kWh of energy (1 unit of electrici-
ty).
For a company, it is the amount of electrical units in kWh recorded in the plant over a month
for billing purpose. The company is charged / billed based on kWh consumption.
Electricity Tariff
Calculation of electric bill for a company
Electrical utility or power supplying companies charge industrial customers not only based on
the amount of energy used (kWh) but also on the peak demand (kVA) for each month.
Contract Demand
Contract demand is the amount of electric power that a customer demands from utility in a spec-
ified interval. Unit used is kVA or kW. It is the amount of electric power that the consumer
agreed upon with the utility. This would mean that utility has to plan for the specified capacity.
Maximum demand
Maximum demand is the highest average kVA recorded during any one-demand interval with-
in the month. The demand interval is normally 30 minutes, but may vary from utility to utility
from 15 minutes to 60 minutes. The demand is measured using a tri-vector meter / digital ener-
gy meter.

41
Prediction of Load
While considering the methods of load prediction, some of the terms used in connection with
power supply must be appreciated.
Connected Load - is the nameplate rating (in kW or kVA) of the apparatus installed on a con-
sumer's premises.
Demand Factor - is the ratio of maximum demand to the connected load.
Load Factor - The ratio of average load to maximum load.
The load factor can also be defined as the ratio of the energy consumed during a given period
to the energy, which would have been used if the maximum load had been maintained through-
out that period. For example, load factor for a day (24 hours) will be given by:
PF Measurement
A power analyzer can measure PF directly, or alternately kWh, kVAh or kVArh readings are
recorded from the billing meter installed at the incoming point of supply. The relation kWh /
kVAh gives the power factor.
Time of Day (TOD) Tariff
Many electrical utilities
like to have flat
demand curve to
achieve high plant effi-
ciency. They encourage
user to draw more
power during off-peak
hours (say during night
time) and less power
during peak hours. As
per their plan, they
offer TOD Tariff,
which may be incen-
tives or disincentives.
Energy meter will
record peak and non-
peak consumption sep-
arately by timer con-
trol. TOD tariff gives
opportunity for the user to reduce their billing, as off peak hour tariff charged are quite low in
comparison to peak hour tariff.
Load
Maximum
Load
Average
Factor
Load =
Hours
x
recorded
load
Maximum
hours
during
consumed
Energy
Factor
Load
24
24
=

42
Three phase AC power measurement
Most of the motive drives such as pumps, compressors, machines etc. operate with 3 phase AC
Induction motor. Power consumption can be determined by using the relation.
Power = √3 x V x I x CosΦ
Portable power analysers /instruments are available for measuring all electrical parameters.
Example:
A 3-phase AC induction motor (20 kW capacity) is used for pumping operation. Electrical
parameter such as current, volt and power factor were measured with power analyzer. Find
energy consumption of motor in one hour? (line volts. = 440 V, line current = 25 amps and PF
= 0.90).
Energy consumption = √ 3 x 0.440 (kV) x 25(A) x 0.90(PF) x 1(hour) = 17.15 kWh
Motor loading calculation
The nameplate details of motor, kW or HP indicate the output parameters of the motor at full
load. The voltage, amps and PF refer to the rated input parameters at full load.
Example:
A three phase,10 kW motor has the name plate details as 415 V, 18.2 amps and 0.9 PF. Actual
input measurement shows 415 V, 12 amps and 0.7 PF which was measured with power analyz-
er during motor running.
Rated output at full load = 10 kW
Rated input at full load = 1.732 x 0.415 x 18.2 x 0.9 = 11.8 kW
The rated efficiency of motor at full load = (10 x 100) / 11.8 = 85%
Measured (Actual) input power = 1.732x 0.415 x 12x 0.7 = 6.0 kW
Which applications use single-phase power in an industry?
Single-phase power is mostly used for lighting, fractional HP motors and electric heater appli-
cations.
Example :
A 400 Watt mercury vapor lamp was switched on for 10 hours per day. The supply volt is 230
V. Find the power consumption per day? (Volt = 230 V, Current = 2 amps, PF = 0.8)
Electricity consumption (kWh) = V x I x Cos x No of Hours
= 0.230 x 2 x 0.8 x 10 = 3.7 kWh or Units
%
2
.
51
100
8
.
11
0
.
6
100
% =
=
= x
x
kW
Rated
kW
Measured
loading
Motor

1
1. ENERGY SCENARIO
Syllabus
Energy Scenario: Commercial and Non-Commercial Energy, Primary Energy Resources,
Commercial Energy Production, Final Energy Consumption, Energy Needs of Growing
Economy, Long Term Energy Scenario, Energy Pricing, Energy Sector Reforms, Energy
and Environment: Air Pollution, Climate Change, Energy Security, Energy Conservation
and its Importance, Energy Strategy for the Future, Energy Conservation Act-2001 and its
Features.
1.1 Introduction
Energy is one of the major inputs for the economic development of any country. In the case of
the developing countries, the energy sector assumes a critical importance in view of the ever-
increasing energy needs requiring huge investments to meet them.
Energy can be classified into several types based on the following criteria:
• Primary and Secondary energy
• Commercial and Non commercial energy
• Renewable and Non-Renewable energy
1.2 Primary and Secondary Energy
Primary energy sources are
those that are either found or
stored in nature. Common pri-
mary energy sources are coal,
oil, natural gas, and biomass
(such as wood). Other primary
energy sources available
include nuclear energy from
radioactive substances, thermal
energy stored in earth's interi-
or, and potential energy due to
earth's gravity. The major pri-
mary and secondary energy
sources are shown in Figure 1.1
Primary energy sources are
mostly converted in industrial
utilities into secondary energy
sources; for example coal, oil
or gas converted into steam
Figure 1.1 Major Primary and Secondary Sources

1. Energy Scenario
2
and electricity. Primary energy can also be used directly. Some energy sources have non-ener-
gy uses, for example coal or natural gas can be used as a feedstock in fertiliser plants.
1.3 Commercial Energy and Non Commercial Energy
Commercial Energy
The energy sources that are available in the market for a definite price are known as commer-
cial energy. By far the most important forms of commercial energy are electricity, coal and
refined petroleum products. Commercial energy forms the basis of industrial, agricultural,
transport and commercial development in the modern world. In the industrialized countries,
commercialized fuels are predominant source not only for economic production, but also for
many household tasks of general population.
Examples: Electricity, lignite, coal, oil, natural gas etc.
Non-Commercial Energy
The energy sources that are not available in the commercial market for a price are classified as
non-commercial energy. Non-commercial energy sources include fuels such as firewood, cattle
dung and agricultural wastes, which are traditionally gathered, and not bought at a price used
especially in rural households. These are also called traditional fuels. Non-commercial energy
is often ignored in energy accounting.
Example: Firewood, agro waste in rural areas; solar energy for water heating, electricity
generation, for drying grain, fish and fruits; animal power for transport, threshing, lifting water
for irrigation, crushing sugarcane; wind energy for lifting water and electricity generation.
1.4 Renewable and Non-Renewable Energy
Renewable energy is energy obtained from sources that are essentially inexhaustible. Examples
of renewable resources include wind power, solar power, geothermal energy, tidal power and
hydroelectric power (See Figure 1.2). The most important feature of renewable energy is that it
can be harnessed without the release of harmful pollutants.
Non-renewable energy is the conventional fossil fuels such as coal, oil and gas, which are
likely to deplete with time.
Figure 1.2 Renewable and Non-Renewable Energy

Introduction to Energy Management 1
Chapter 1
Introduction to
Energy Management
1.0 ENERGY MANAGEMENT
The phrase energy management means different things to different
people. To us, energy management is:
The judicious and effective use of energy to maximize profits
(minimize costs) and enhance competitive positions
This rather broad definition covers many operations from product and
equipment design through product shipment. Waste minimization and
disposal also presents many energy management opportunities.
A whole systems viewpoint to energy management is required to
ensure that many important activities will be examined and optimized.
Presently, many businesses and industries are adopting a Total Quality
Management (TQM) strategy for improving their operations. Any TQM
approach should include an energy management component to reduce
energy costs.
The primary objective of energy management is to maximize profits
or minimize costs. Some desirable subobjectives of energy management
programs include:
1. Inproving energy efficiency and reducing energy use, thereby reduc-
ing costs
2. Cultivating good communications on energy matters
3. Developing and maintaining effective monitoring, reporting, and
management strategies for wise energy usage
Copyright © 2003 by The Fairmont Press, Inc.

2 Guide to Energy Management
4. Finding new and better ways to increase returns from energy invest-
ments through research and development
5. Developing interest in and dedication to the energy management
program from all employees
6. Reducing the impacts of curtailments, brownouts, or any interruption
in energy supplies
Although this list is not exhaustive, these six are sufficient for our
purposes. However, the sixth objective requires a little more explanation.
Curtailments occur when a major supplier of an energy source is
forced to reduce shipments or allocations (sometimes drastically) because
of severe weather conditions and/or distribution problems. For example,
natural gas is often sold to industry relatively inexpensively, but on an
interruptible basis. That is, residential customers and others on
noninterruptible schedules have priority, and those on interruptible
schedules receive what is left. This residual supply is normally sufficient
to meet industry needs, but periodically gas deliveries must be curtailed.
Even though curtailments do not occur frequently, the cost associ-
ated with them is so high—sometimes a complete shutdown is neces-
sary—that management needs to be alert in order to minimize the nega-
tive effects. There are several ways of doing this, but the method most
often employed is the storage and use of a secondary or standby fuel.
Number 2 fuel oil is often stored on site and used in boilers capable of
burning either natural gas (primary fuel) or fuel oil (secondary fuel). Then
when curtailments are imposed, fuel oil can be used. Naturally, the cost of
equipping boilers with dual fire capability is high, as is the cost of storing
the fuel oil. However, these costs are minuscule compared to the cost of
forced shutdown. Other methods of planning for curtailments include
production scheduling to build up inventories, planned plant shutdowns,
or vacations during curtailment-likely periods, and contingency plans
whereby certain equipment, departments, etc., can be shut down so criti-
cal areas can keep operating. All these activities must be included in an
energy management program.
Although energy conservation is certainly an important part of en-
ergy management, it is not the only consideration. Curtailment-contin-
gency planning is certainly not conservation, and neither are load shed-
ding or power factor improvement, both of which will be discussed later
on in this chapter. To concentrate solely on conservation would preclude
some of the most important activities—often those with the largest sav-
ings opportunity.

1.1 THE NEED FOR ENERGY MANAGEMENT
1.1.1 Economics
The American free enterprise system operates on the necessity of
profits, or budget allocations in the case of nonprofit organizations. Thus,
any new activity can be justified only if it is cost effective; that is, the net
result must show a profit improvement or cost reduction greater than the
cost of the activity. Energy management has proven time and time again
that it is cost effective.
An energy cost savings of 5-15 percent is usually obtained quickly
with little to no required capital expenditure when an aggressive energy
management program is launched. An eventual savings of 30 percent is
common, and savings of 50, 60, and even 70 percent have been obtained.
These savings all result from retrofit activities. New buildings designed to
be energy efficient often operate on 20 percent of the energy (with a
corresponding 80 percent savings) normally required by existing build-
ings. In fact, for most manufacturing and other commercial organizations
energy management is one of the most promising profit improvement-cost reduc-
tion programs available today.
1.1.2 National Good
Energy management programs are vitally needed today. One impor-
tant reason is that energy management helps the nation face some of its
biggest problems. The following statistics will help make this point.*
• Growth in U.S. energy use:
It took 50 years (1900-1950) for total annual U.S. energy consumption
to go from 4 million barrels of oil equivalent (MBOE) per day to 16
MBOE. It took only 20 years (1950-1970) to go from 16 to 32 MBOE.
This rapid growth in energy use slowed in the early 1970’s, but took a
spurt in the late 1970’s, reaching almost 40 MBOE in 1979. Energy use
slowed again in the early 1980’s and dropped to 35 MBOE in 1983.
Economic growth in the mid 1980’s returned the use to 40 MBOE in
1988. Energy use remained fairly steady at just over 40 MBOE in the
late 1980’s, but started growing in the 1990’s. By the end of 1996,
energy use was up to almost 45 MBOE, and in 2000, 49.4 MBOE per
day.
• Comparison with other countries:
With only 5 percent of the world’s population, the United States
*These statistics come from numerous sources, mostly government publications from the
Energy Information Administration or from the U.S. Statistical Abstract.

consumes about 25 percent of its energy and produces about 25 per-
cent of the world’s gross national product (GNP). However, some
nations such as Japan, West Germany, and Sweden produce the same
or greater GNP per capita with significantly less energy than the
United States.
• U.S. energy production:
Domestic crude oil production peaked in 1970 at just over 10 million
barrels per day (MBD), and has fallen slowly since then to just over 5.8
MBD in 2000. Domestic gas production peaked in 1973 at just over 24
trillion cubic feet (TCF) per year. Gas production remained fairly
steady between 1988 and 1992 at about 21-22 TCF per year. Deregula-
tion has improved our domestic production in the short run, but in
the long run we continue to face decreasing domestic output. Since
1992, production rose in 1998, and reached a level of 24.5 TCF per
year. However, in 2000 it fell to 19 TCF per year.
• Cost of imported oil:
Annual average prices per barrel for imported crude oil rapidly esca-
lated from $3.00 in the early 1970’s to $12 in 1973-1974 and to $37 in
1981. Since 1981 prices have fallen from this peak, and dropped to
about $12 in 1986. From 1986 to 1996, prices ranged from about $12 to
$22 a barrel, with a short spike in prices during the 1989-90 Gulf War.
Prices dropped to $10 in 1998, and have since risen back to about $26.
• Reliance on imported oil:
The United States has been a net importer of oil since 1947. In 1970 the
bill for this importation was only $3 billion; by 1978 it was $42 billion;
by 1979, $60 billion; and by 1981, $80 billion, even though the volume
imported was less than in 1979. This imported oil bill has severely
damaged our trade balance and weakened the dollar in international
markets. In 1985 the bill for oil imports fell to a low of $37 billion. It
climbed to almost $64 billion in 1990. In 1996 it was just over $61
billion, but with lower prices after 1996, it was just over $50 billion in
1998. But, with higher prices in 2000, it was $119 billion.
In addition to these discouraging statistics, there are a host of major
environmental problems, as well as economic and industrial competitive-
ness problems, that came to the forefront of public concern in the late
1980’s. Reducing energy use can help minimize these problems by:
• Reducing acid rain. Lake acidification and deforestation have been
the greatest effects of acid rain from the combustion of fossil fuels
containing significant amounts of sulfur, such as coal and some oil.

The Clean Air Act Amendments of 1990 will restrict the future emis-
sion of sulfur dioxide to the level emitted in 1980.
• Limiting global climate change. Carbon dioxide, the main contributor
to potential global climate change, is produced by the combustion of
fossil fuel, primarily to provide transportation and energy services. In
1992, many countries of the world adopted limitations on carbon
dioxide emissions.
• Limiting ozone depletion. In the U.S., about half of the CFC’s—which
have been associated with ozone depletion—are used in providing
energy services through refrigeration and air conditioning, and in
manufacturing insulation. Recent international agreements will sub-
stantially phase out the use of CFC’s in industrialized countries by the
year 1996.
• Improving national security. Oil imports directly affect the energy
security and balance of payments of our country. These oil imports
must be reduced for a secure future, both politically and economi-
cally.
• Improving U.S. competitiveness. The U.S. spends about 9 percent of
its gross national product for energy—a higher percentage than many
of its foreign competitors. This higher energy cost amounts to a surtax
on U.S. goods and services.
• Helping other countries. The fall of the Berlin Wall in 1989 and the
emergence of market economies in many Eastern European countries
is leading to major changes in world energy supplies and demands.
These changes significantly affect our nation, and provide us an eco-
nomic impetus to help these countries greatly improve their own
energy efficiencies and reduce their energy bills.
There are no easy answers. Each of the possibilities discussed below
has its own problems.
• Many look to coal as the answer. Yet coal burning produces sulfur
dioxide and carbon dioxide, which produce acid rain and potential
global climate change.
• Synfuels require strip mining, incur large costs, and place large de-
mands for water in arid areas. On-site coal gasification plants associ-
ated with gas-fired, combined-cycle power plants are presently being
demonstrated by several electric utilities. However, it remains to be

seen if these units can be built and operated in a cost-effective and
environmentally acceptable manner.
• Solar-generated electricity, whether generated through photovoltaics
or thermal processes, is still more expensive than conventional
sources and has large land requirements. Technological improve-
ments are occurring in both these areas, and costs are decreasing.
Sometime in the near future, these approaches may become cost-
effective.
• Biomass energy is also expensive, and any sort of monoculture would
require large amounts of land. Some fear total devastation of forests.
At best, biomass can provide only a few percentage points of our total
needs without large problems.
• Wind energy has technological “noise” and aesthetic problems that
probably can be overcome, but it too is very expensive. In addition, it
is only feasible in limited geographic regions.
• Alcohol production from agricultural products raises perplexing
questions about using food products for energy when large parts of
the world are starving. Newer processes for producing ethanol from
wood waste are just being tested, and may offer some significant
improvements in this limitation.
• Fission has the well-known problems of waste disposal, safety, and a
short time span with existing technology. Without breeder reactors
we will soon run out of fuel, but breeder reactors dramatically in-
crease the production of plutonium—a raw material for nuclear
bombs.
• Fusion seems to be everyone’s hope for the future, but many claim
that we do not know the area well enough yet to predict its problems.
When available commercially, fusion may very well have its own
style of environmental-economical problems.
The preceding discussion paints a rather bleak picture. Our nation
and our world are facing severe energy problems and there appears to be
no simple answers.
Time and again energy management has shown that it can substan-
tially reduce energy costs and energy consumption. This saved energy can

be used elsewhere, so one energy source not mentioned in the preceding
list is energy management. In fact, energy available from energy manage-
ment activities has almost always proven to be the most economical
source of “new” energy. Furthermore, energy management activities are
more gentle to the environment than large-scale energy production, and
they certainly lead to less consumption of scarce and valuable resources.
Thus, although energy management cannot solve all the nation’s prob-
lems, perhaps it can ease the strain on our environment and give us time to
develop new energy sources.
The value of energy management is clear. There is an increased need
for engineers who are adequately trained in the field of energy manage-
ment, and a large number of energy management jobs are available. This
text will help you prepare for a career which will be both exciting and
challenging.
1.2 ENERGY BASICS FOR ENERGY MANAGERS
An energy manager must be familiar with energy terminology and
units of measure. Different energy types are measured in different units.
Knowing how to convert from one measurement system to another is
essential for making valid comparisons. The energy manager must also be
informed about the national energy picture. The historical use patterns as
well as the current trends are important to an understanding of options
available to many facilities.
1.2.1 Energy Terminology, Units and Conversions
Knowing the terminology of energy use and the units of measure is
essential to developing a strong energy management background. Energy
represents the ability to do work, and the standard engineering measure
for energy used in this book is the British thermal unit, or Btu. One Btu is
the amount of energy needed to raise the temperature of one pound of
water one degree Fahrenheit. In more concrete terms, one Btu is the
energy released by burning one kitchen match head, according to the U.S.
Energy Information Agency. The energy content of most common fuels is
well known, and can be found in many reference handbooks. For ex-
ample, a gallon of gasoline contains about 125,000 Btu and a barrel of oil
contains about 5,100,000 Btu. A short listing of the average energy con-
tained in a number of the most common fuels, as well as some energy unit
conversions is shown below in Table 1-1.
Electrical energy is also measured by its ability to do work. The

traditional unit of measure of electrical energy is the kilowatt-hour; in
terms of Btu’s, one kilowatt-hour (kWh) is equivalent to 3412 Btu. How-
ever, when electrical energy is generated from steam turbines with boilers
fired by fossil fuels such as coal, oil or gas, the large thermal losses in the
process mean that it takes about 10,000 Btu of primary fuel to produce one
kWh of electrical energy. Further losses occur when this electrical energy
is then transmitted to its point of ultimate use. Thus, although the electri-
cal energy at its point of end-use always contains 3412 Btu per kWh, it
takes considerably more than 3412 Btus of fuel to produce a kWh of
electrical energy.
1. 2. 2 Energy Supply and Use Statistics
Any energy manager should have a basic knowledge of the sources
of energy and the uses of energy in the United States. Both our national
energy policy and much of our economic policy are dictated by these
supply and use statistics. Figure 1-1 shows the share of total U.S. energy
supply provided by each major source. Figure 1-2 represents the percent-
age of total energy consumption by each major end-use sector.
Table 1-1
Energy Units and Energy Content of Fuels
1 kWh 3412 Btu
1 ft3 natural gas 1000 Btu
1 Ccf natural gas 100 ft3 natural gas
1 Mcf natural gas 1000 ft3 natural gas
1 therm natural gas 100,000 Btu
1 barrel crude oil 5,100,000 Btu
1 ton coal 25,000,000 Btu
1 gallon gasoline 125,000 Btu
1 gallon #2 fuel oil 140,000 Btu
1 gallon LP gas 95,000 Btu
1 cord of wood 30,000,000 Btu
1 MBtu 1000 Btu
1 MMBtu 106 Btu
1 Quad 1015 Btu
1 MW 106 watts

1.2.3 Energy Use in Commercial Businesses
One question frequently asked by facility energy managers is “How
does energy use at my facility compare to other facilities in general, and to
other facilities that are engaged in the same type of operation?” Figure 1-3
shows general energy usage in commercial facilities, and Figure 1-4 shows
their electricity use. While individual facilities may differ significantly
from these averages, it is still helpful to know what activities are likely to
consume the most energy. This provides some basis for a comparison to
other facilities—both energy wasting and energy efficient. In terms of
priority of action for an energy management program, the largest areas of
energy consumption should be examined first. The greatest savings will
almost always occur from examining and improving the areas of greatest
use.
Figure 1-1
U.S. Energy Supply 1998
(100% = 90.94 Quads)
Source - U.S. Department
of Energy EIA
Figure 1-2
U.S. Energy Consumption
1998 (100% = 90.94 Quads)
Source - U.S. Department of
Energy EIA
Gas
23%
Coal
23%
Oil
39%
Nuclear, Hydro,
Other Renewables
15%
Residen-
tial
19%
Industrial
36%
Trans-
portation
27%
Com-
mercial
16%

The commercial sector uses about 15 percent of all the primary
energy consumed in the United States, at a cost of over 70 billion dollars
each year [1]. On an end-use basis, natural gas and oil constitute about 50
percent of the commercial energy use, mainly for space heating. Over 47
percent of the energy use is in the form of electricity for lighting, air
conditioning, ventilation, and some space heating. Although electricity
provides slightly less than half of the end-use energy used by a commer-
cial facility, it represents well over half of the cost of the energy needed to
Figure 1-4
Commercial Electric Use 1995 (end-use basis)
Source - U.S. Department of Energy EIA
Figure 1-3
Commercial Energy Use 1995 (end-use basis)
Office
Equip-
ment
6%
Lights
46%
Lights
23%
Miscella-
neous
9%
Office
Equipment
13%
Space
Cooling
19%
Refrigera-
tion
7%
Space
Heating
4%
Hot Water
2%
Space
Cooling
10%
Hot Water
15%
Miscella-
neous
14%
Space
Heating
32%

operate the facility. Lighting is the predominant use of electricity in com-
mercial buildings, and accounts for over one-third of the cost of electricity.
Commercial activity is very diverse, and this leads to greatly varying
energy intensities depending on the nature of the commercial facility.
Recording energy use in a building or a facility of any kind and providing
a history of this use is necessary for the successful implementation of an
energy management program. A time record of energy use allows analy-
sis and comparison so that results of energy productivity programs can be
determined and evaluated.
1.2.4 Energy Use in Industry
The industrial sector—consisting of manufacturing, mining, agricul-
ture and construction activities—consumes over one-third of the nation’s
primary energy use, at an annual cost of $100 billion [2]. Industrial energy
use is shown in Figure 1-5 and industrial electricity use is shown in Figure
1-6.
Manufacturing companies, which use mechanical or chemical pro-
cesses to transform materials or substances into new products, account for
about 85 percent of the total industrial sector use. The “big three” in
energy use are petroleum, chemicals and primary metals; these industries
together consume over one-half of all industrial energy. The “big five,”
which add the pulp and paper industry, as well as the stone, clay and
glass group, together account for 70 percent of all industrial sector energy
consumption.
According to the U.S. Energy Information Administration, energy
efficiency in the manufacturing sector improved by 25 percent over the
Figure 1-5
Industrial Energy Use (end-use basis)
Heat
36%
Steam
31%
Cogeneration
13%
Mach. Drive/Electric 19%

period 1980 to 1985 [3]. During that time, manufacturing energy use de-
clined 19 percent, and output increased 8 percent. These changes resulted
in an overall improvement in energy efficiency of 25 percent. However,
the “big five” did not match this overall improvement; although their en-
ergy use declined 21 percent, their output decreased by 5 percent—result-
ing in only a 17 percent improvement in energy efficiency during 1980-
1985. This five year record of improvement in energy efficiency of the
manufacturing sector came to an end, with total energy use in the sector
growing by 10 percent from 1986 to 1988. Manufacturing energy use
stayed constant for 1989 and 1990, and was still the same in 1998.
Restoring the record of energy efficiency improvements will require
both re-establishing emphasis on energy management and making capital
investments in new plant processes and facilities improvements. Reduc-
ing our energy costs per unit of manufactured product is one way that our
country can become more competitive in the global industrial market. It is
interesting to note that Japan—one of our major industrial competitors—
has a law that every industrial plant must have a full-time energy man-
ager [4].
1.3 DESIGNING AN ENERGY MANAGEMENT PROGRAM
1.3.1 Management Commitment
The most important single ingredient for successful implementation
and operation of an energy management program is commitment to the
program by top management. Without this commitment, the program
Figure 1-6
Industrial Electricity Use (end-use basis)
Source - Federal Energy Management Agency
Pumps 24%
Non-motor Use 22%
Compressors 12%
Machine Tools 6%
Other Motors 12%
DC Drives 8%
Fans & Blowers 14%
HVAC 2%

The categories of programs implemented by 3M include: conservation,
maintenance procedures, utility operation optimization, efficient new de-
signs, retrofits through energy surveys, and process changes.
Energy efficiency goals at 3M are set and then the results are mea-
sured against a set standard in order to determine the success of the
programs. The technologies that have resulted in the most dramatic im-
provement in energy efficiency include: heat recovery systems, high effi-
ciency motors, variable speed drives, computerized facility management
systems, steam trays maintenance, combustion improvements, variable
air volume systems, thermal insulation, cogeneration, waste steam utiliza-
tion, and process improvements. Integrated manufacturing techniques,
better equipment utilization and shifting to non-hazardous solvents have
also resulted in major process improvements.
The energy management program at 3M has worked very well, but
management is not yet satisfied. They have set a goal of further improving
energy efficiency at a rate of 3 percent per year for the next five years, from
1996 to 2000. They expect to substantially reduce their emissions of waste
gases and liquids, to increase the energy recovered from wastes, and to
constantly increase the profitability of their operations. 3M continues to
stress the extreme importance that efficient use of energy can have on
their industrial productivity.
1.6 ENERGY ACCOUNTING
Energy accounting is a system used to keep track of energy con-
sumption and costs. “Successful corporate-level energy managers usually
rank energy accounting systems right behind commitment from top cor-
porate officials when they list the fundamentals of an ongoing energy
conservation program. If commitment from the top is motherhood, care-
ful accounting is apple pie.”*
A basic energy accounting system has three parts: energy use moni-
toring, an energy use record, and a performance measure. The perfor-
mance measure may range from a simple index of Btu/ft2 or Btu/unit of
production to a complex standard cost system complete with variance
reports. In all cases, energy accounting requires metering. Monitoring the
energy flow through a cost center, no matter how large or small, requires
the ability to measure incoming and outgoing energy. The lack of neces-
sary meters is probably the largest single deterrent to the widespread
utilization of energy accounting systems.
*”Accounting of Energy Seen Corporate Must,” Energy User News, Aug. 27, 1979, p. 1.

1.6.1 Levels of Energy Accounting
As in financial accounting, the level of sophistication or detail of
energy accounting systems varies considerably from company to com-
pany. A very close correlation can be developed between the levels of
sophistication of financial accounting systems and those of energy ac-
counting systems. This is outlined in Figure 1-11.
Most companies with successful energy management programs
have passed level 1 and are working toward the necessary submetering
and reporting systems for level 2. In most cases, the subsequent data are
compared to previous years or to a particular base year. However, few
companies have developed systems that will calculate variations and find
causes for those variations (level 3). Two notable exceptions are General
Motors and Carborundum. To our knowledge, few companies have yet
completely developed the data and procedures necessary for level 4, a
standard Btu accounting system. Some examples of detailed energy ac-
counting can be found in [6].
Financial Energy
————————————————————————————————
1. General accounting 1. Effective metering, development of
reports, calculation of energy
efficiency indices
2. Cost accounting 2. Calculation of energy flows and
efficiency of utilization for various
cost centers; requires substantial
metering
3. Standard cost 3. Effective cost center metering of
accounting historical energy and comparison to historical
standards data; complete with variance reports
and calculation of reasons for
variation
4. Standard cost 4. Same as 3 except that standards for
accounting engineered energy consumption are determined
standards through accurate engineering models
Figure 1-11
Comparison between financial and energy accounting.

1. 6. 2 Performance Measures
1.6.2.1 Energy Utilization Index
A very basic measure of a facility’s energy performance is called the
Energy Utilization Index (EUI). This is a statement of the number of Btu’s
of energy used annually per square foot of conditioned space. To compute
the EUI, all of the energy used in the facility must be identified, the total
Btu content tabulated, and the total number of square feet of conditioned
space determined. The EUI is then found as the ratio of the total Btu
consumed to the total number of square feet of conditioned space.
————————————————————————————————
Example 1.1—Consider a building with 100,000 square feet of floor space.
It uses 1. 76 million kWh and 6.5 million cubic feet of natural gas in one
year. Find the Energy Utilization Index (EUI) for this facility.
Solution: Each kWh contains 3412 Btu and each cubic foot of gas contains
about 1000 Btu. Therefore the total annual energy use is:
Total energy use = (1.76 × 106 kWh) × (3412 Btu/kWh)
+ (6.5 × 106 ft3) × (1000 Btu/ft3)
= 6.0 × 109 + 6.5 × 109
= 1. 25 × 1010 Btu/yr
Dividing the total energy use by 105 ft2 gives the EUI:
EUI = (1.25 × 1010 Btu/yr)/(105 ft2)
= 125,000 Btu/ft2/yr
————————————————————————————————
The average building EUI is 80,900 Btu/ft2/yr; the average office building
EUI is 101,200 Btu/ft2/yr. Figure 1-12 shows the range of energy inten-
siveness in 1000 Btu/ft2/yr for the twelve different types of commercial
facilities listed [7].
1.6.2.2 Energy Cost Index
Another useful performance index is the Energy Cost Index or ECI.
This is a statement of the dollar cost of energy used annually per square
foot of conditioned space. To compute the ECI, all of the energy used in
the facility must be identified, the total cost of that energy tabulated, and

the total number of square feet of conditioned space determined. The ECI
is then found as the ratio of the total annual energy cost for a facility to the
total number of square feet of conditioned floor space of the facility.
————————————————————————————————
Example 1.2 Consider the building in Example 1.1. The annual cost for
electric energy is $115,000 and the annual cost for natural gas is $32,500.
Find the Energy Cost Index (ECI) for this facility.
Solution: The ECI is the total annual energy cost divided by the total
number of conditioned square feet of floor space.
Total energy cost = $115,000 + $32,500 = $147,500/yr
Dividing this total energy cost by 100,000 square feet of space gives:
ECI = ($147,500/yr)/(100,000 ft2) = $1.48/ft2/yr
————————————————————————————————
Figure 1-12
Building energy utilization index.
(In Thousand Btu per Square Foot per Year)
250
200
150
100
50
0
A
L
L
B
L
D
G
S
A
S
S
E
M
B
L
Y
E
D
U
C
A
T
I
O
N
F
O
O
D
S
A
L
E
S
F
O
O
D
S
E
R
V
H
L
T
H
C
A
R
E
L
O
D
G
I
N
G
R
E
T
A
I
L
O
F
F
I
C
E
P
U
B
S
A
F
E
T
Y
W
A
R
E
H
O
U
S
E
O
T
H
E
R

The Energy Information Administration reported a value of the
ECI for the average building as $1.19/ft2/yr from 1995 data. The ECI
for an average office building was $1.51/ft2/yr.
1.6.2.2 One-Shot Productivity Measures
The purpose of a one-shot productivity measure is illustrated in
Figure 1-13. Here the energy utilization index is plotted over time, and
trends can be noted.
Significant deviations from the same period during the previous
year should be noted and explanations sought. This measure is often
used to justify energy management activities or at least to show their
effect. For example, in Figure 1-13 an energy management (EM) pro-
gram was started at the beginning of year 2. Its effect can be noted by
comparing peak summer consumption in year 2 to that of year 1. The
decrease in peaks indicates that this has been a good program (or a
mild summer, or both).
Table 1-3 shows some often-used indices. Some advantages and
disadvantages of each index are listed, but specific applications will re-
quire careful study to determine the best index.
Table 1-4 proposes some newer concepts. Advantages and disad-
vantages are shown, but since most of these concepts have not been
utilized in a large number of companies, there are probably other ad-
vantages and disadvantages not yet identified. Also, there are an infi-
nite number of possible indices, and only three are shown here.
1.6.3 An Example Energy Accounting System
General Motors Corporation has a strong energy accounting sys-
tem which uses an energy responsibility method. According to General
Motors, a good energy accounting system is implemented in three
phases: (1) design and installation of accurate metering, (2) develop-
ment of an energy budget, and (3) publication of regular performance
reports including variances. Each phase is an important element of the
complete system.
1.6.3.1 The GM system
Phase 1—Metering. For execution of a successful energy accounting pro-
gram, energy flow must be measured by cost center. The designing of
cost center boundaries requires care; the cost centers must not be too
large or too small. However, the primary design criterion is how much

Introduction
to
Energy
Management
29
Figure 1-13
One-shot energy productivity measurement.

30
Guide
to
Energy
Management
Table 1-3. Commonly Used Indices
——————————————————————————————————————————————————
Productivity indicator Advantages Disadvantages
——————————————————————————————————————————————————
1. Btu/unit of production 1. Concise, neat 1. Difficult to define and meas-
2. Often accurate when process ure “units”
energy needs are high 2. Often not accurate (high
3. Good for interplant and company HVAC* and lighting makes energy
comparison when appropriate nonlinear to production)
2. Btu/degree day 1. Concise, neat, best used when HVAC* 1. Often not accurate (disregards
is a majority of energy bill process needs)
2. Often accurate when process 2. Thermally heavy buildings
needs are low or constant such as mfg plants usually
3. Very consistent between plants, compan- do not respond to degree days
ies, etc. (all mfg can measure degree days)
3. Btu/ft2 1. Concise, neat 1. No measure of production
2. Accurate when process needs are low or or weather
constant and weather is consistent 2. Energy not usually linearly
3. Very consistent (all mfg can measure proportional to floor space
square feet) (piecewise linear?)
4. Expansions can be incorporated directly
4. Combination, e.g., Btu/ 1. Measures several variables 1. Harder to comprehend
unit-degree day-ft2 or 2. Somewhat consistent, more
Btu/unit-degree day accurate than above measures
3. More tailor-made for specific needs
——————————————————————————————————————————————————
*Heating, ventilating, and air conditioning.

Introduction
to
Energy
Management
31
Table 1-4
Proposed Indices
——————————————————————————————————————————————————
Productivity indicator Advantages Disadvantages
——————————————————————————————————————————————————
1. Btu/sales dollar 1. Easy to compute 1. Impact of inflation
2. ____________$ energy______________ 1. Really what’s desired 1. Very complex, e.g., lots
($ sales) or ($ profit) or ($ value added) 2. Inflation cancels or shows of variables affect profit
changing relative energy costs including accounting
3. Shows energy management procedures
results, not just conservation 2. Not good for general
(e.g., fuel switching, demand employee distribution
leveling, contingency planning)
3. Btu/DL hour (or machine hour 1. Almost a measure of production 1. More complex, e.g., can’t
or shift) where DL = direct labor (same advantage as in Table 1-3) treat a DL hour like a
2. Data easily obtained when unit of production
already available 2. Energy often not propor-
3. Comparable between plants tional to labor or
or industries machine input, e.g., high
4. Good for high process energy needs HVAC and lighting
——————————————————————————————————————————————————

energy is involved. For example, a bank of large electric induction heat-
treating furnaces might need separate metering even if the area in-
volved is relatively small, but a large assembly area with only a few
energy-consuming devices may require only one meter. Flexibility is
important since a cost center that is too small today may not be too
small tomorrow as energy costs change.
The choice of meters is also important. Meters should be accurate,
rugged, and cost effective. They should have a good turndown ratio; a
turndown ratio is defined as the ability to measure accurately over the
entire range of energy flow involved.
Having the meters is not enough. A system must be designed to
gather and record the data in a useful form. Meters can be read manu-
ally, they can record information on charts for permanent records, and/
or they can be interfaced with microcomputers for real-time reporting
and control. Many energy accounting systems fail because the data col-
lection system is not adequately designed or utilized.
Phase 2—Energy Budget. The unique and perhaps vital aspect of General
Motors’ approach is the development of an energy budget. The GM
energy responsibility accounting system is somewhere between levels 3
and 4 of Figure 1-11. If a budget is determined through engineering
models, then it is a standard cost system and it is at level 4. There are
two ways to develop the energy budget: statistical manipulation of his-
torical data or utilization of engineering models.
The Statistical Model. Using historical data, the statistical model shows
how much energy was utilized and how it compared to the standard
year(s), but it does not show how efficiently the energy was used. For
example, consider the data shown in Table 1-5.
The statistical model assumes that the base years are characteristic
of all future years. Consequently, if 1996 produced 600 units with the
same square footage and degree days as 1995, 1000 units of energy
would be required. If 970 units of energy were used, the difference (30
units) would be due to conservation.
We could use multiple linear regression to develop the parameters
for our model, given as follows:
energy forecast= a(production level) + b(ft2) + c(degree days) (1-1)

We can rewrite this in the following form:
X4 = aX1 + bX2 + cX3
where X1= production (units)
X2 = floor space (ft2)
X3 = weather data (degree days)
X4 = energy forecast (Btu)
Degree days are explained in detail in Chapter Two, section 2.1.1.2.
Their use provides a simple way to account for the severity of the weather,
and thus the amount of energy needed for heating and cooling a facility.
Of course, the actual factors included in the model will vary between
companies and need to be examined carefully.
Multiple linear regression estimates the parameters in the universal
regression model in Equation 1-1 from a set of sample data. Using the base
years, the procedure estimates values for parameters a, b, and c in Equa-
tion 1-1 in order to minimize the squared error where
squared error = ∑ X4
i
± X4
2
base (1-2)
years
Table 1-5
Energy Data for Statistical Modela
————————————————————————————————
1995 1996 1997
————————————————————————————————
Total energy (units) 1,000 1,100 1,050
Production (units) 600 650 650
Square feet 150,000 150,000 170,000
Degree days (heating) 6,750 6,800 6,800
————————————————————————————————
aTaken, in part, from R.P. Greene, (see the Bibliography).

with X4 = energy forecast by model
X4
i
= actual energy usage
The development and execution of this statistical model is beyond
the scope of this book. However, regardless of the analytical method used,
a statistical model does not determine the amount of energy that ought to
be used. It only forecasts consumption based on previous years’ data.
The engineering model. The engineering model attempts to remedy
the deficiency in the statistical model by developing complete energy
balance calculations to determine the amount of energy theoretically re-
quired. By using the first law of thermodynamics, energy and mass bal-
ances can be completed for any process. The result is the energy required
for production. Similarly, HVAC and lighting energy needs could be
developed using heat loss equations and other simple calculations. Ad-
vantages of the engineering model include improved accuracy and flex-
ibility in reacting to changes in building structures, production schedules,
etc. Also, computer programs exist that will calculate the needs for HVAC
and lighting.
Phase 3—Performance Reports. The next step is the publication of energy
performance reports that compare actual energy consumption with that
predicted by the models. The manager of each cost center should be
evaluated on his or her performance as shown in these reports. The
publication of these reports is the final step in the effort to transfer energy
costs from an overhead category to a direct cost or at least to a direct
overhead item. One example report is shown in Figure 1-14.
Sometimes more detail on variance is needed. For example, if con-
sumption were shown in dollars, the variation could be shown in dollars
and broken into price and consumption variation. Price variation is calcu-
lated as the difference between the budget and the actual unit price times
the present actual consumption. The remaining variation would be due to
a change in consumption and would be equal to the change in consump-
tion times the budget price. This is illustrated in Example 1.3. Other
categories of variation could include fuel switching, pollution control, and
new equipment.

Figure 1-14
Energy performance report (106Btu)
Actual Budget Variance % variance
Department A
Electricity 2000 1500 +500 +33.3%
Natural gas 3000 3300 –300 –9.1%
Steam 3500 3750 –250 –6.7%
Total 8500 8550 –50 –0.6%
Department B
Electricity 1500 1600 –100 –6.2%
Natural gas 2000 2400 –400 –16.7%
Fuel oil 1100 1300 – 200 –15.4%
Coal 3500 3900 – 400 –10.2%
Total 8100 9200 – 1100 – 11.9%
Department C
•
•
•

36
Guide
to
Energy
Management
——————————————————————————————————————————————————
Example 1.3
The table shown in Figure 1-15 portrays a common problem in energy management reporting. The energy
management program in this heat treating department was quite successful. When you examine the totals, you see
that the total consumption (at old prices) was reduced by $5631. The total energy cost, however, went up by $500,
which was due to a substantial price variation of $6131. Consequently, total energy costs increased to $34,000.
[A] [B] [C] [D] [E] [F] [G]
E – F or (Bb – Ab)C
Actual Budget Unit price Unit price A - Ba (D - C)Ab consumption
$ $ (budget) (actual) variance price variance variance
Department 106 Btu 106 Btu $/106 Btu $/106 Btu
(source) ———————————————————————————————————————————————
Heat treating $9,000 $8,500 $4.00 $4.50 +$500 +$1000 –$500
(electricity) 2,000 2,125 — — — — —
(natural gas) 15,000 16,000 2.50 3.12 –1000 +2980 –3980
4,808 6,400 — — — — —
(steam) 10,000 9,000 3.50 4.46 +1000 +2151 –1151
2,242 2,571 — — — — —
(total) $34,000 $33,500 — — +$500 +$6131 –$5631
————————————
aMeasured in $
bMeasured in 106 Btu
Figure 1-15
Energy cost in dollars by department with variance analysis.

Introduction
to
Energy
Management
37
However, had energy consumption not been reduced, the total energy cost would have been:
2125(4.50) + 6400(3.12) + 2571(4.46) = $40,997.
The total cost avoidance therefore was:
$40,997 – $34,000 = $6997
which is the drop in consumption times the actual price or
(2125 – 2000) 4.5 + (6400 – 4808) 3.12 + (2571 – 2242) 4.46 = $6997
This problem of increased energy costs despite energy management savings can arise in a number of ways.
Increased production, plant expansion, or increased energy costs can all cause this result.
——————————————————————————————————————————————————

8. ENERGY MONITORING AND TARGETING
159
Syllabus
Energy Monitoring and Targeting: Defining monitoring & targeting, Elements of mon-
itoring & targeting, Data and information-analysis, Techniques -energy consumption,
Production, Cumulative sum of differences (CUSUM).
8.1 Definition
Energy monitoring and targeting is primarily a management technique that uses energy infor-
mation as a basis to eliminate waste, reduce and control current level of energy use and improve
the existing operating procedures. It builds on the principle "you can't manage what you
don't measure". It essentially combines the principles of energy use and statistics.
While, monitoring is essentially aimed at establishing the existing pattern of energy con-
sumption, targeting is the identification of energy consumption level which is desirable as a
management goal to work towards energy conservation.
Monitoring and Targeting is a management technique in which all plant and building utili-
ties such as fuel, steam, refrigeration, compressed air, water, effluent, and electricity are man-
aged as controllable resources in the same way that raw materials, finished product inventory,
building occupancy, personnel and capital are managed. It involves a systematic, disciplined
division of the facility into Energy Cost Centers. The utilities used in each centre are closely
monitored, and the energy used is compared with production volume or any other suitable mea-
sure of operation. Once this information is available on a regular basis, targets can be set, vari-
ances can be spotted and interpreted, and remedial actions can be taken and implemented.
The Monitoring and Targeting programs have been so effective that they show typical
reductions in annual energy costs in various industrial sectors between 5 and 20%.
8.2 Elements of Monitoring & Targeting System
The essential elements of M&T system are:
• Recording -Measuring and recording energy consumption
• Analysing -Correlating energy consumption to a measured output, such as production
quantity
• Comparing -Comparing energy consumption to an appropriate standard or benchmark
• Setting Targets -Setting targets to reduce or control energy consumption
• Monitoring -Comparing energy consumption to the set target on a regular basis
• Reporting -Reporting the results including any variances from the targets which have
been set
• Controlling -Implementing management measures to correct any variances, which may
have occurred.
Particularly M&T system will involve the following:
• Checking the accuracy of energy invoices
• Allocating energy costs to specific departments (Energy Accounting Centres)

• Determining energy performance/efficiency
• Recording energy use, so that projects intended to improve energy efficiency can be
checked
• Highlighting performance problems in equipment or systems
8.3 A Rationale for Monitoring, Targeting and Reporting
The energy used by any business varies with production processes, volumes and input.
Determining the relationship of energy use to key performance indicators will allow you to
determine:
• Whether your current energy is better or worse than before
• Trends in energy consumption that reflects seasonal, weekly, and other operational para-
meters
• How much your future energy use is likely to vary if you change aspects of your busi-
ness
• Specific areas of wasted energy
• Comparison with other business with similar characteristics - This "benchmarking"
process will provide valuable indications of effectiveness of your operations as well as
energy use
• How much your business has reacted to changes in the past
• How to develop performance targets for an energy management program
Information related to energy use may be obtained from following sources:
• Plant level information can be derived from financial accounting systems-utilities cost
centre
• Plant department level information can be found in comparative energy consumption
data for a group of similar facilities, service entrance meter readings etc.
• System level (for example, boiler plant) performance data can be determined from sub-
metering data
• Equipment level information can be obtained from nameplate data, run-time and sched-
ule information, sub-metered data on specific energy consuming equipment.
The important point to be made here is that all of these data are useful and can be processed to
yield information about facility performance.
8.4 Data and Information Analysis
Electricity bills and other fuel bills should be collected periodically and analysed as below. A
typical format for monitoring plant level information is given below in the Table 8.1.
8. Energy Monitoring and Targeting
160

161
TABLE 8.1 ANNUAL ENERGY COST SHEET
Thermal Energy Bill Electricity Bill Total
Energy Bill
Month Fuel 1 Fuel 2 Fuel 3 Total Day Night Maximum Total Rs.Lakh
Rs. Lakh kWh kWh Demand Rs. Lakh
1
2
3
4
5
6
7
8
9
10
11
12
Sub-Total
%
Pie Chart on Energy Consumption
All the fuels purchased by the plant should be converted into common units such as kCal. The
following Table 8.2 below is for that purpose.
Figure 8.1 % Share of Fuels Based on Energy Bill
After obtaining the respective annual energy cost, a pie chart (see Figure 8.1) can be drawn as
shown below:

After conversion to a common unit, a pie chart can be drawn showing the percentage dis-
tribution of energy consumption as shown in Figure 8.2.
8.5 Relating Energy Consumption and Production.
Graphing the Data
A critical feature of M&T is to understand what drives energy consumption. Is it production,
hours of operation or weather? Knowing this, we can then start to analyse the data to see how
good our energy management is.
After collection of energy consumption, energy cost and production data, the next stage of
the monitoring process is to study and analyse the data to understand what is happening in the
plant. It is strongly recommended that the data be presented graphically. A better appreciation
of variations is almost always obtained from a visual presentation, rather than from a table of
numbers. Graphs generally provide an effective means of developing the energy-production
relationships, which explain what is going on in the plant.
Use of Bar Chart
The energy data is then entered into a spreadsheet. It is hard to envisage what is happening from
plain data, so we need to present the data using bar chart. The starting point is to collect and
collate 24/12 months of energy bills. The most common bar chart application used in energy
162
TABLE 8.2 FUEL CONVERSION DATA
Energy source Supply unit Conversion Factor to Kcal
Electricity kWh 860
HSD kg 10,500
Furnace Oil kg 10,200
LPG kg 12,000
Figure 8.2 %Share of Fuels Based on Consumption in kCals

163
management is one showing the energy per month for this year and last year (see Figure 8.3) -
however, it does not tell us the full story about what is happening. We will also need produc-
tion data for the same 24/12-month period.
Having more than twelve months of production and energy data, we can plot a moving
annual total. For this chart, each point represents the sum of the previous twelve months of
data. In this way, each point covers a full range of the seasons, holidays, etc. The Figure 8.4
shows a moving annual total for energy and production data.
This technique also smoothens out errors in the timing of meter readings. If we just plot
energy we are only seeing part of the story - so we plot both energy and production on the same
chart - most likely using two y-axes. Looking at these charts, both energy and productions seem
to be "tracking" each other - this suggests there is no major cause for concern. But we will need
to watch for a deviation of the energy line to pick up early warning of waste or to confirm
Figure 8.3 Energy Consumption :Current Year(2000) Vs. Previous year(1999)
Figure 8.4 Moving Annual Total - Energy and Production
Production
Energy

164
whether energy efficiency measures are making an impact.
For any company, we also know that energy should directly relate to production. Knowing
this, we can calculate Specific Energy Consumption (SEC), which is energy consumption per
unit of production. So we now plot a chart of SEC (see Figure 8.5).
At this point it is worth noting that the quality of your M&T system will only be as good as the
quality of your data - both energy and production. The chart shows some variation - an all time
low in December 99 followed by a rising trend in SEC.
We also know that the level of production may have an effect on the specific consumption.
If we add the production data to the SEC chart, it helps to explain some of the features. For
example, the very low SEC occurred when there was a record level of production. This indi-
cates that there might be fixed energy consumption - i.e. consumption that occurs regardless of
production levels. Refer Figure 8.6.
Figure 8.5: Monthly Specific Energy Consumption
Figure 8.6 SEC With Production
S
E
C
P
R
O
D
U
C
T
I
O
N
SEC

165
The next step is to gain more understanding of the relationship of energy and production, and
to provide us with some basis for performance measurement. To do this we plot energy against
production - In Microsoft Excel Worksheet, this is an XY chart option. We then add a trend line
to the data set on the chart. (In practice what we have done is carried out a single variable
regression analysis!). The Figure 8.7 shown is based on the data for 1999.
We can use it to derive a "standard" for the up-coming year's consumption. This chart shows a
low degree of scatter indicative of a good fit. We need not worry if our data fit is not good. If
data fit is poor, but we know there should be a relationship, it indicates a poor level of control
and hence a potential for energy savings.
In producing the production/energy relationship chart we have also obtained a relationship
relating production and energy consumption.
Energy consumed for the period = C + M x Production for same period
Where M is the energy consumption directly related to production (variable) and C is the
"fixed" energy consumption (i.e. energy consumed for lighting, heating/cooling and general
ancillary services that are not affected by production levels). Using this, we can calculate the
expected or "standard" energy consumption for any level of production within the range of the
data set.
We now have the basis for implementing a factory level M&T system. We can predict stan-
dard consumption, and also set targets - for example, standard less 5%. A more sophisticated
approach might be applying different reductions to the fixed and variable energy consumption.
Although, the above approach is at factory level, the same can be extended to individual
processes as well with sub metering.
At a simplistic level we could use the chart above and plot each new month's point to see
where it lies. Above the line is the regime of poor energy efficiency, and below the line is the
regime of an improved one.
Figure 8.7: Energy vs Production

8.6 CUSUM
Cumulative Sum (CUSUM) represents the difference between the base line (expected or stan-
dard consumption) and the actual consumption points over the base line period of time.
This useful technique not only provides a trend line, it also calculates savings/losses to date and
shows when the performance changes.
A typical CUSUM graph follows a trend and shows the random fluctuation of energy con-
sumption and should oscillate around zero (standard or expected consumption). This trend will
continue until something happens to alter the pattern of consumption such as the effect of an
energy saving measure or, conversely, a worsening in energy efficiency (poor control, house-
keeping or maintenance).
CUSUM chart (see Figure 8.8) for a generic company is shown. The CUSUM chart shows what
is really happening to the energy performance. The formula derived from the 1999 data was
used to calculate the expected or standard energy consumption.
From the chart, it can be seen that starting from year 2000, performance is better than stan-
dard. Performance then declined (line going up) until April, and then it started to improve until
July. However, from July onwards, there is a marked, ongoing decline in performance - line
going up.
When looking at CUSUM chart, the changes in direction of the line indicate events that
have relevance to the energy consumption pattern. Clearly, site knowledge is needed to inter-
pret better what they are. For this sample company since we know that there were no planned
changes in the energy system, the change in performance can be attributed to poor control,
housekeeping or maintenance.
166
Figure 8.8 CUSUM Chart

167
The CUSUM Technique
Energy consumption and production data were collected for a plant over a period of 18 months.
During month 9, a heat recovery system was installed. Using the plant monthly data, estimate
the savings made with the heat recovery system. The plant data is given in Table 8.3:
Steps for CUSUM analysis
1. Plot the Energy - Production graph for the first 9 months
2. Draw the best fit straight line
3. Derive the equation of the line
The above steps are completed in Figure 8.9, the equation derived is E = 0.4 P + 180
8.7 Case Study
TABLE 8.3 MONTH WISE PRODUCTION WITH ENERGY CONSUMPTION
Month Eact - Monthly Energy Use P - Monthly Production
( toe * / month) ( tonnes / month)
1 340 380
2 340 440
3 380 460
4 380 520
5 300 320
6 400 520
7 280 240
8 424 620
9 420 600
10 400 560
11 360 440
12 320 360
13 340 420
14 372 480
15 380 540
16 280 280
17 280 260
18 380 500
* toe = tonnes of oil equivalent.

168
TABLE 8.4 CUSUM
Month Eact P Ecalc Eact – Ecalc CUSUM
(0.4 P + 180) (Cumulative Sum)
1 340 380 332 +8 +8
2 340 440 356 -16 -8
3 380 460 364 +16 +8
4 380 520 388 -8 0
5 300 320 308 -8 -8
6 400 520 388 +2 -6
7 280 240 276 +4 -2
8 424 620 428 -4 -6
9 420 600 420 0 -6
10 400 560 404 4 -10
11 360 440 356 +4 -6
12 320 360 324 -4 -10
13 340 420 348 -8 -18
14 372 480 372 0 -18
15 380 540 396 -16 -34
16 280 280 292 -12 -46
17 280 260 284 -4 -50
18 380 500 380 0 -50
Eact- Actual Energy consumption Ecalc - Calculated energy consumption
4. Calculate the expected energy consumption based on the equation
5. Calculate the difference between actual and calculated energy use
6. Compute CUSUM
These steps are shown in the Table 8.4.
7. Plot the CUSUM graph
8. Estimate the savings accumulated from use of the heat recovery system.
From the Figure 8.10, it can be seen that the CUSUM graph oscillates around the zero line for
several months and then drops sharply after month 11. This suggests that the heat recovery sys-
tem took almost two months to commission and reach proper operating conditions, after which
steady savings have been achieved. Based on the graph 8.10 (see Table 8.4), savings of 44 toe
(50-6) have been accumulated in the last 7 months. This represents savings of almost 2% of
energy consumption.
44
2352
100 1 8
#
. %
· =

#Eact for the last 7 months (from month 12 to month 18 in Table 8.4)
CUSUM chart for last 18 months is shown in Figure 8.10.
The CUSUM technique is a simple but remarkably powerful statistical method, which high-
lights small differences in energy efficiency performances. Regular use of the procedure allows
the Energy Manager to follow plant performance and spot any trends early.
169
Figure 8.9 Energy Production Graph
Figure 8.10 Example CUSUM Graph

170
QUESTIONS
1. What is the difference between monitoring and targeting?
2. Explain briefly the essential elements of a monitoring and targeting system.
3. What are the benefits of a monitoring and targeting system?
4. What do you understand by the term "benchmarking" and list few benefits?
5. Explain the difference between internal and external benchmarking.
6. Explain how a CUSUM chart is drawn with an example.
7. Narrate the type of energy monitoring and targeting systems in your industry.
REFERENCES
1. Energy conservation – The Indian experience, Department of Power & NPC Publication
2. Energy Audit Reports of National Productivity Council
3. Cleaner Production – Energy Efficiency Manual prepared for GERIAP, UNEP,
BANGKOK by National Productivity Council

54
Syllabus
Energy Management & Audit: Definition, Energy audit- need, Types of energy audit,
Energy management (audit) approach-understanding energy costs, Bench marking, Energy
performance, Matching energy use to requirement, Maximizing system efficiencies,
Optimizing the input energy requirements, Fuel and energy substitution, Energy audit
instruments
"The judicious and effective use of energy to maximize profits (minimize
costs) and enhance competitive positions"
(Cape Hart, Turner and Kennedy, Guide to Energy Management Fairmont press inc. 1997)
"The strategy of adjusting and optimizing energy, using systems and procedures so as to
reduce energy requirements per unit of output while holding constant or reducing total
costs of producing the output from these systems"
3.1 Definition & Objectives of Energy Management
The fundamental goal of energy management is to produce goods and provide services with the
least cost and least environmental effect.
The term energy management means many things to many people. One definition of ener-
gy management is:
Another comprehensive definition is
The objective of Energy Management is to achieve and maintain optimum energy procurement
and utilisation, throughout the organization and:
• To minimise energy costs / waste without affecting production & quality
• To minimise environmental effects.
3.2 Energy Audit: Types And Methodology
Energy Audit is the key to a systematic approach for decision-making in the area of energy man-
agement. It attempts to balance the total energy inputs with its use, and serves to identify all
the energy streams in a facility. It quantifies energy usage according to its discrete functions.
Industrial energy audit is an effective tool in defining and pursuing comprehensive energy man-
agement programme.
As per the Energy Conservation Act, 2001, Energy Audit is defined as "the verification, mon-
3. ENERGY MANAGEMENT AND AUDIT

3. Energy Management and Audit
55
itoring and analysis of use of energy including submission of technical report containing rec-
ommendations for improving energy efficiency with cost benefit analysis and an action plan to
reduce energy consumption".
3.2.1 Need for Energy Audit
In any industry, the three top operating expenses are often found to be energy (both electrical
and thermal), labour and materials. If one were to relate to the manageability of the cost or
potential cost savings in each of the above components, energy would invariably emerge as a
top ranker, and thus energy management function constitutes a strategic area for cost reduction.
Energy Audit will help to understand more about the ways energy and fuel are used in any
industry, and help in identifying the areas where waste can occur and where scope for improve-
ment exists.
The Energy Audit would give a positive orientation to the energy cost reduction, preventive
maintenance and quality control programmes which are vital for production and utility activi-
ties. Such an audit programme will help to keep focus on variations which occur in the energy
costs, availability and reliability of supply of energy, decide on appropriate energy mix, identi-
fy energy conservation technologies, retrofit for energy conservation equipment etc.
In general, Energy Audit is the translation of conservation ideas into realities, by lending
technically feasible solutions with economic and other organizational considerations within a
specified time frame.
The primary objective of Energy Audit is to determine ways to reduce energy consumption
per unit of product output or to lower operating costs. Energy Audit provides a " bench-mark"
(Reference point) for managing energy in the organization and also provides the basis for plan-
ning a more effective use of energy throughout the organization.
3.2.2 Type of Energy Audit
The type of Energy Audit to be performed depends on:
- Function and type of industry
- Depth to which final audit is needed, and
- Potential and magnitude of cost reduction desired
Thus Energy Audit can be classified into the following two types.
i) Preliminary Audit
ii) Detailed Audit
3.2.3 Preliminary Energy Audit Methodology
Preliminary energy audit is a relatively quick exercise to:
• Establish energy consumption in the organization
• Estimate the scope for saving
• Identify the most likely (and the easiest areas for attention
• Identify immediate (especially no-/low-cost) improvements/ savings
• Set a 'reference point'
• Identify areas for more detailed study/measurement
• Preliminary energy audit uses existing, or easily obtained data

56
3.2.4 Detailed Energy Audit Methodology
A comprehensive audit provides a detailed energy project implementation plan for a facility,
since it evaluates all major energy using systems.
This type of audit offers the most accurate estimate of energy savings and cost. It considers
the interactive effects of all projects, accounts for the energy use of all major equipment, and
includes detailed energy cost saving calculations and project cost.
In a comprehensive audit, one of the key elements is the energy balance. This is based on an
inventory of energy using systems, assumptions of current operating conditions and calculations
of energy use. This estimated use is then compared to utility bill charges.
Detailed energy auditing is carried out in three phases: Phase I, II and III.
Phase I - Pre Audit Phase
Phase II - Audit Phase
Phase III - Post Audit Phase
A Guide for Conducting Energy Audit at a Glance
Industry-to-industry, the methodology of Energy Audits needs to be flexible.
A comprehensive ten-step methodology for conduct of Energy Audit at field level is pre-
sented below. Energy Manager and Energy Auditor may follow these steps to start with and
add/change as per their needs and industry types.

57
Ten Steps Methodology for Detailed Energy Audit

58

59
Phase I -Pre Audit Phase Activities
A structured methodology to carry out an energy audit is necessary for efficient working. An
initial study of the site should always be carried out, as the planning of the procedures neces-
sary for an audit is most important.
Initial Site Visit and Preparation Required for Detailed Auditing
An initial site visit may take one day and gives the Energy Auditor/Engineer an opportunity to
meet the personnel concerned, to familiarize him with the site and to assess the procedures nec-
essary to carry out the energy audit.
During the initial site visit the Energy Auditor/Engineer should carry out the following
actions: -
• Discuss with the site's senior management the aims of the energy audit.
• Discuss economic guidelines associated with the recommendations of the audit.
• Analyse the major energy consumption data with the relevant personnel.
• Obtain site drawings where available - building layout, steam distribution, compressed air
distribution, electricity distribution etc.
• Tour the site accompanied by engineering/production
The main aims of this visit are: -
• To finalise Energy Audit team
• To identify the main energy consuming areas/plant items to be surveyed during the audit.
• To identify any existing instrumentation/ additional metering required.
• To decide whether any meters will have to be installed prior to the audit eg. kWh, steam,
oil or gas meters.
• To identify the instrumentation required for carrying out the audit.
• To plan with time frame
• To collect macro data on plant energy resources, major energy consuming centers
• To create awareness through meetings/ programme
Phase II- Detailed Energy Audit Activities
Depending on the nature and complexity of the site, a comprehensive audit can take from sev-
eral weeks to several months to complete. Detailed studies to establish, and investigate, energy
and material balances for specific plant departments or items of process equipment are carried
out. Whenever possible, checks of plant operations are carried out over extended periods of
time, at nights and at weekends as well as during normal daytime working hours, to ensure that
nothing is overlooked.
The audit report will include a description of energy inputs and product outputs by major
department or by major processing function, and will evaluate the efficiency of each step of the
manufacturing process. Means of improving these efficiencies will be listed, and at least a pre-
liminary assessment of the cost of the improvements will be made to indicate the expected pay-
back on any capital investment needed. The audit report should conclude with specific recom-
mendations for detailed engineering studies and feasibility analyses, which must then be per-
formed to justify the implementation of those conservation measures that require investments.

60
The information to be collected during the detailed audit includes: -
1. Energy consumption by type of energy, by department, by major items of process equip
ment, by end-use
2. Material balance data (raw materials, intermediate and final products, recycled
materials, use of scrap or waste products, production of by-products for re-use in other
industries, etc.)
3. Energy cost and tariff data
4. Process and material flow diagrams
5. Generation and distribution of site services (eg.compressed air, steam).
6. Sources of energy supply (e.g. electricity from the grid or self-generation)
7. Potential for fuel substitution, process modifications, and the use of co-generation
systems (combined heat and power generation).
8. Energy Management procedures and energy awareness training programs within the
establishment.
Existing baseline information and reports are useful to get consumption pattern, production cost
and productivity levels in terms of product per raw material inputs. The audit team should col-
lect the following baseline data:
- Technology, processes used and equipment details
- Capacity utilisation
- Amount & type of input materials used
- Water consumption
- Fuel Consumption
- Electrical energy consumption
- Steam consumption
- Other inputs such as compressed air, cooling water etc
- Quantity & type of wastes generated
- Percentage rejection / reprocessing
- Efficiencies / yield
DATA COLLECTION HINTS
It is important to plan additional data gathering carefully. Here are some basic tips to avoid wasting time
and effort:
• measurement systems should be easy to use and provide the information to the accuracy that is
needed, not the accuracy that is technically possible
• measurement equipment can be inexpensive (flow rates using a bucket and stopwatch)
• the quality of the data must be such that the correct conclusions are drawn (what grade of prod
uct is on, is the production normal etc)
• define how frequent data collection should be to account for process variations.
• measurement exercises over abnormal workload periods (such as startup and shutdowns)
• design values can be taken where measurements are difficult (cooling water through heat exchang
er)
DO NOT ESTIMATE WHEN YOU CAN CALCULATE
DO NOT CALCULATE WHEN YOU CAN MEASURE

61
Draw process flow diagram and list process steps; identify waste streams and obvious
energy wastage
An overview of unit operations, important process steps, areas of material and energy use and
sources of waste generation should be gathered and should be represented in a flowchart as
shown in the figure below. Existing drawings, records and shop floor walk through will help in
making this flow chart. Simultaneously the team should identify the various inputs & output
streams at each process step.
Example: A flowchart of Penicillin-G manufacturing is given in the figure3.1 below. Note
that waste stream (Mycelium) and obvious energy wastes such as condensate drained and steam
leakages have been identified in this flow chart
The audit focus area depends on several issues like consumption of input resources, energy
efficiency potential, impact of process step on entire process or intensity of waste generation /
energy consumption. In the above process, the unit operations such as germinator, pre-fermen-
tor, fermentor, and extraction are the major conservation potential areas identified.
Figure 3.1

62
Identification of Energy Conservation Opportunities
Fuel substitution: Identifying the appropriate fuel for efficient energy conversion
Energy generation :Identifying Efficiency opportunities in energy conversion equipment/util-
ity such as captive power generation, steam generation in boilers, thermic fluid heating, optimal
loading of DG sets, minimum excess air combustion with boilers/thermic fluid heating, opti-
mising existing efficiencies, efficienct energy conversion equipment, biomass gasifiers,
Cogeneration, high efficiency DG sets, etc.
Energy distribution: Identifying Efficiency opportunities network such as transformers,
cables, switchgears and power factor improvement in electrical systems and chilled water, cool-
ing water, hot water, compressed air, Etc.
Energy usage by processes: This is where the major opportunity for improvement and many
of them are hidden. Process analysis is useful tool for process integration measures.
Technical and Economic feasibility
The technical feasibility should address the following issues
• Technology availability, space, skilled manpower, reliability, service etc
• The impact of energy efficiency measure on safety, quality, production or process.
• The maintenance requirements and spares availability
The Economic viability often becomes the key parameter for the management acceptance. The
economic analysis can be conducted by using a variety of methods. Example: Pay back method,
Internal Rate of Return method, Net Present Value method etc. For low investment short dura-
tion measures, which have attractive economic viability, simplest of the methods, payback is
usually sufficient. A sample worksheet for assessing economic feasibility is provided below:
Classification of Energy Conservation Measures
Based on energy audit and analyses of the plant, a number of potential energy saving projects
may be identified. These may be classified into three categories:

63
1. Low cost - high return;
2. Medium cost - medium return;
3. High cost - high return
Normally the low cost - high return projects receive priority. Other projects have to be analyzed,
engineered and budgeted for implementation in a phased manner. Projects relating to energy
cascading and process changes almost always involve high costs coupled with high returns, and
may require careful scrutiny before funds can be committed. These projects are generally com-
plex and may require long lead times before they can be implemented. Refer Table 3.1 for pro-
ject priority guidelines.
3.3 Energy Audit Reporting Format
After successfully carried out energy audit energy manager/energy auditor should report to the
top management for effective communication and implementation. A typical energy audit
reporting contents and format are given below. The following format is applicable for most of
the industries. However the format can be suitably modified for specific requirement applicable
for a particular type of industry.

64

65

66
The following Worksheets (refer Table 3.2 & Table 3.3) can be used as guidance for energy
audit assessment and reporting.
TABLE 3.2 SUMMARY OF ENERGY SAVING RECOMMENDATIONS
S.No. Energy Saving Annual Energy Annual Capital Simple
Recommendations (Fuel & Electricity) Savings Investment Payback
Savings (kWh/MT Rs.Lakhs (Rs.Lakhs) period
or kl/MT)
1
2
3
4
Total
TABLE 3.3 TYPES AND PRIORITY OF ENERGY SAVING MEASURES
Type of Energy Annual Annual
Saving Options Electricity Savings Priority
/Fuel savings
KWh/MT or kl/MT (Rs Lakhs)
A No Investment
(Immediate)
- Operational
Improvement
- Housekeeping
B Low Investment
(Short to Medium Term)
- Controls
- Equipment Modification
- Process change
C High Investment
(Long Term)
- Energy efficient Devices
- Product modification
- Technology Change

67

3.4 Understanding Energy Costs
Understanding energy cost is vital factor for awareness creation and saving calculation. In
many industries sufficient meters may not be available to measure all the energy used. In such
cases, invoices for fuels and electricity will be useful. The annual company balance sheet is the
other sources where fuel cost and power are given with production related information.
Energy invoices can be used for the following purposes:
• They provide a record of energy purchased in a given year, which gives a base-line for
future reference
• Energy invoices may indicate the potential for savings when related to production
requirements or to air conditioning requirements/space heating etc.
• When electricity is purchased on the basis of maximum demand tariff
• They can suggest where savings are most likely to be made.
• In later years invoices can be used to quantify the energy and cost savings made through
energy conservation measures
Fuel Costs
A wide variety of fuels are available for
thermal energy supply. Few are listed
below:
• Fuel oil
• Low Sulphur Heavy Stock (LSHS)
• Light Diesel Oil (LDO)
• Liquefied Petroleum Gas (LPG)
• COAL
• LIGNITE
• WOOD ETC.
Understanding fuel cost is fairly simple
and it is purchased in Tons or Kiloliters.
Availability, cost and quality are the main
three factors that should be considered
while purchasing. The following factors should be taken into account during procurement of
fuels for energy efficiency and economics.
• Price at source, transport charge, type of transport
• Quality of fuel (contaminations, moisture etc)
• Energy content (calorific value)
Power Costs
Electricity price in India not only varies from State to State, but also city to city and consumer
to consumer though it does the same work everywhere. Many factors are involved in deciding
final cost of purchased electricity such as:
• Maximum demand charges, kVA
(i.e. How fast the electricity is used? )
68
Figure 3.2 Annual Energy Bill

ENERGY MANAGEMENT AND AUDITING

ENERGY MANAGEMENT AND AUDITING

Recommended

Recommended

More Related Content

Similar to ENERGY MANAGEMENT AND AUDITING

Similar to ENERGY MANAGEMENT AND AUDITING (20)

Recently uploaded

Recently uploaded (20)

ENERGY MANAGEMENT AND AUDITING