UNIT I

ENERGY MANAGEMENT

PRINCIPLES OF ENERGY MANAGEMENT:-

Energy management includes planning and operation of energy- related
production and consumption units. If energy productivity is an important opportunity for the
nation as a whole, it is a necessity for the individual company. It represents a real chance for
creative management to reduce that component of product cost that has risen the most since
1973. Those who have taken advantage of these opportunities have done so because of the
clear intent and commitment of the top executive. Once that commitment is understood,
managers at all levels of the organization can and do respond seriously to the opportunities at
hand. Without that leadership, the best designed energy management programs produce few
results. In addition, we would like to suggest four basic principles which, if adopted, may
expand the effectiveness of existing energy management programs or provide the starting
point of new efforts.
The first of these is to control the costs of the energy function or service provided,
but not the Btu of energy. As most operating people have noticed, energy is just a means of
providing some service or benefit. With the possible exception of feedstocks for
petrochemical production, energy is not consumed directly. It is always converted into some
useful function. The existing data are not as complete as one would like, but they do indicate
some surprises. In 1978, for instance, the aggregate industrial expenditure for energy was
$55 billion. Thirty-five percent of that was spent for machine drive from electric motors,
29% for feedstocks, 27% for process heat, 7% for electrolytic functions, and 2% for space
conditioning and light. As shown in Table 1.1, this is in blunt contrast to measuring these
functions in Btu. Machine drive, for example, instead of 35% of the dollars, required only
12% of the Btu. In most organizations it will pay to be even more specific about the function
provided. For instance, evaporation, distillation, drying, and reheat are all typical of the uses
to which process heat is put. In some cases it has also been useful to break down the heat in
terms of temperature so that the opportunities for matching the heat source to the work
requirement can be utilized. In addition to energy costs, it is useful to measure the
depreciation, maintenance, labor, and other operating costs involved in providing the
conversion equipment necessary to deliver required services. These costs add as much as
50% to the fuel cost.
It is the total cost of these functions that must be managed and controlled, not the Btu
of energy. The large difference in cost of the various Btu of energy can make the commonly
used Btu measure extremely misleading. In November 1979, the cost of 1 Btu of electricity
was nine times that of 1 Btu of steam coal. Table 1.2 shows how these values and ratios
compare in 2005. One of the most desirable and least reliable skills for an energy manager is
to predict the future cost of energy. To the extent that energy costs escalate in price beyond
the rate of general inflation, investment paybacks will be shortened, but of course the reverse
is also true. A quick glance at Table 1.2 shows the inconsistency in overall energy price
changes over this period in time. Even the popular conception that energy prices always go
up was not true for this period, when normalized to constant dollars. This volatility in energy
pricing may account for some business decisions that appear overly conservative in
establishing rate of return or payback period hurdles. Availabilities also differ and the cost of
maintaining fuel flexibility can affect the cost of the product. And as shown before, the
average annual price increase of natural gas has been almost three times that of electricity.
Therefore, an energy management system that controls Btu per unit of product may
completely miss the effect of the changing economics and availabilities of energy
alternatives and the major differences in usability of each fuel. Controlling the total cost of
energy functions is much more closely attuned to one of the principal interests of the
executives of an organization controlling costs.
 A second principle of energy management is to control energy functions as a
product cost, not as a part of manufacturing or general overhead. It is surprising how
many companies still lump all energy costs into one general or manufacturing overhead
account without identifying those products with the highest energy function cost. In most
cases, energy functions must become part of the standard cost system so that each function
can be assessed as to its specific impact on the product cost. The minimum theoretical
energy expenditure to produce a given product can usually be determined en route to
establishing a standard energy cost for that product. The seconds of 25-hp motor drive, the
minutes necessary in a 2200°F furnace to heat a steel part for fabrication, or the minutes of
5-V electricity needed to make an electrolytic separation, for example, can be determined as
theoretical minimums and compared with the actual figures. As in all production cost
functions, the minimum standard is often difficult to meet, but it can serve as an indicator
of the size of the opportunity. In comparing actual values with minimum values, four
possible approaches can be taken to reduce the variance, usually in this order:
1. An hourly or daily control system can be installed to keep the function cost at the desired
level.
2. Fuel requirements can be switched to a cheaper and more available form.
3. A change can be made to the process methodology to reduce the need for the function.
4. New equipment can be installed to reduce the cost of the function.
The starting point for reducing costs should be in achieving the minimum cost possible with
the present equipment and processes. Installing management control systems can indicate
what the lowest possible energy use is in a well-controlled situation. It is only at that point
when a change in process or equipment configuration should be considered. An equipment
change prior to actually minimizing the expenditure under the present system may lead to
over sizing new equipment or replacing equipment for unnecessary functions.
The third principle is to control and meter only the main energy functions the roughly 20%
that make up 80% of the costs. As Peter Drucker pointed out some time ago, a few functions
usually account for a majority of the costs. It is important to focus controls on those that
represent the meaningful costs and aggregate the remaining items in a general category.
Many manufacturing plants in the United States have only one meter, that leading from the
gas main or electric main into the plant from the outside source. Regardless of the
reasonableness of the standard cost established, the inability to measure actual consumption
against that standard will render such a system useless. Sub metering the main functions can
provide the information not only to measure but to control costs in a short time interval. The
cost of metering and sub metering is usually incidental to the potential for realizing
significant cost improvements in the main energy functions of a production system.
The fourth principle is to put the major effort of an energy management program into
installing controls and achieving results. It is common to find general knowledge about
how large amounts of energy could be saved in a plant. The missing ingredient is the
discipline necessary to achieve these potential savings. Each step in saving energy needs to
be monitored frequently enough by the manager or first-line supervisor to see noticeable
changes. Logging of important fuel usage or behavioral observations are almost always
necessary before any particular savings results can be realized. Therefore, it is critical that
an energy director or committee have the authority from the chief executive to install
controls, not just advise line management. Those energy managers who have achieved the
largest cost reductions actually install systems and controls; they do not just provide good
advice. As suggested earlier, the overall potential for increasing energy productivity and
reducing the cost of energy services is substantial. The 20% or so improvement in
industrial energy productivity since 1972 is just the beginning. Although no one knows
exactly how much we can improve productivity in practice, the American Physical Society
indicated in their 1974 energy conservation study that it is theoretically possible to achieve
an eightfold improvement of the 1972 energy/production ratio. Most certainly, we are a
long way from an economic saturation of the opportunities. The common argument that not
much can be done after a 15 or 20% improvement has been realized ought to be dismissed
as baseless. Energy productivity provides an expanding opportunity, not a last resort. The
chapters in this book provide the information that is necessary to make the most of that
opportunity in each organization.
ORGANIZING ENERGY MANAGEMENT PROGRAM:-
All the components of a comprehensive energy management program are depicted
in Figure 2-1. These components are the organizational structure, a policy, and plans for
audits, education, reporting, and strategy. It is hoped that by understanding the
fundamentals of managing energy, the energy manager can then adapt a good working
program to the existing organizational structure. Each component is discussed in detail
below.
The organizational chart for energy management shown in Figure 2-1 is generic. It
must be adapted to fit into an existing structure for each organization. For example, the
presidential block may be the general manager, and VP blocks may be division managers,
but the fundamental principles are the same. The main feature of the chart is the location of
the energy manager. This position should be high enough in the organizational structure to
have access to key players in management, and to have knowledge of current events within
the company. For example, the timing for presenting energy projects can be critical.
Funding availability and other management priorities should be known and understood.
The organizational level of the energy manager is also indicative of the support
management is willing to give to the position.

Energy Manager
One very important part of an energy management program is to have top management
support. More important, however, is the selection of the energy manager, who can among
other things secure this support. The person selected for this position should be one with a

vision of what managing energy can do for the company. Every successful program has had
this one thing in common one person who is a shaker and mover that makes things happen.
The program is then built around this person.
Energy Team
The coordinators shown in Figure 2-1 represent the energy management team within one
given organizational structure, such as one company within a corporation. This group is the
core of the program. The main criteria for membership should be an indication of interest.
There should be a representative from the administrative group such as accounting or
purchasing, someone from facilities and/or maintenance, and a representative from each
major department. This energy team of coordinators should be appointed for a specific time
period, such as one year. Rotation can then bring new people with new ideas, can provide a
mechanism for tactfully removing nonperformers, and involve greater numbers of people in
the program in a meaningful way.
Employees
Employees are shown as a part of the organizational structure, and are perhaps the greatest
untapped resource in an energy management program. A structured method of soliciting
their ideas for more efficient use of energy will prove to be the most productive effort of
the energy management program. A good energy manager will devote 20% of total time
working with employees. Too many times employee involvement is limited to poste
Employees in manufacturing plants generally know more about
the equipment than anyone else in the facility because they operate it. They know how to
make it run more efficiently, but because there is no mechanism in place for them to have
an input, their ideas go unsolicited.
ENERGY POLICY
A well written energy policy that has been authorized by management is as good as
the proverbial license to steal. It provides the energy manager with the authority to be
involved in business planning, new facility location and planning, the selection of
production equipment, purchase of measuring equipment, energy reporting, and training
things that are sometimes difficult to do. If you already have an energy policy, chances are
that it is too long and cumbersome. To be effective, the policy should be short two pages at
most. Many people confuse the policy with a procedures manual. It should be bare bones,
but contain the following items as a minimum:
i) Objectives this can contain the standard motherhood and flag statements about energy,
but the most important is that the organization will incorporate energy efficiency into
facilities and new equipment, with emphasis on life cycle cost analysis rather than lowest
initial cost.
ii) Accountability this should establish the organizational structure and the authority for the
energy manager, coordinators, and any committees or task groups.
iii) Reporting without authority from top management, it is often diffi cult for the energy
manager to require others within the organization to comply with reporting requirements
necessary to properly manage energy.
i) The policy is the place to establish this. It also provides a legitimate reason for requesting
funds for instrumentation to measure energy usage.
ii) Training If training requirements are established in the policy, it is again easier to include
this in budgets. It should include training at all levels within the organization.
PLANNING:-
Planning is one of the most important parts of the energy management program, and for most
technical people is the least desirable. It has two major functions in the program. First, a good
plan can be a shield from disruptions. Second, by scheduling events throughout the year,
continuous emphasis can be applied to the energy management program, and will play a major
role in keeping the program active.

REPORTING:-
There is no generic form to that can be used for reporting. There are too many variables
such as organization size, product, project requirements, and procedures already in existence.
The ultimate reporting system is one used by a chemical company making a textile product.
The Btu/lb of product is calculated on a computer system that gives an instantaneous reading.
This is not only a reporting system, but one that detects maintenance problems. Very few
companies are set up to do this, but many do have some type of energy index for monthly
reporting. The energy Coordinator shall keep the Energy Office advised of all efforts to
increase energy efficiency in their areas. A summary of energy cost savings shall be submitted
each quarter to the Energy Office. The Energy Manager shall be responsible for consolidating
these reports for top management.
CONTROLLING:-
Controlling is one of the managerial functions like planning, organizing, staffing and directing.
It is an important function because it helps to check the errors and to take the corrective action
so that deviation from standards are minimized and stated goals of the organization are
achieved in a desired manner.
According to modern concepts, control is a foreseeing action whereas earlier concept of
control was used only when errors were detected. Control in management means setting
standards, measuring actual performance and taking corrective action.

MONITORING:-
Monitoring information on energy use, in order to establish a basis for energy management and
explain deviations from an established pattern. Its primary goal is to Maintain said pattern, by
providing all the necessary data on energy consumption, as well as certain driving factors, as
identified during preliminary investigation (production, weather, etc.). Energy monitoring and
targeting is primarily a management technique that uses energy information 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 consumption, 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 utilities such as fuel, steam, refrigeration, compressed air, water,
effluent, and electricity are managed 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 measure of operation. Once this information is
available on a regular basis, targets can be set, variances 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%.
The essential elements of M&T system are:
 Recording -Measuring and recording energy consumption
 Analyzing -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, this may have
occurred.
One very important part of an energy management program is to have top management
support. More important, however, is the selection of the energy manager, who can among
other things secure this support. The person selected for this position should be one with a
vision of what managing energy can do for the company. Every successful program has had
this one thing in common one person who is a shaker and mover that makes things happen.
The program is then built around this person. There is a great tendency for the energy
manager to become an energy engineer, or a prima donna, and attempt to conduct the whole
effort alone. Much has been accomplished in the past with such individuals working alone,
but for the long haul, managing the program by involving everyone at the facility is much
more productive and permanent. Developing a working organizational structure may be
the most important thing an energy manager can do.
The role and qualifications of the energy manager have changed substantially in the
past few years, caused mostly by EPACT-1992 requiring certification of federal energy
managers, deregulation of the electric utility industry bringing both opportunity and
uncertainty, and by performance contracting requiring more business skills than engineering.
the
following requirements for an energy management:
i) Set up an Energy Management Plan
ii) Establish energy records
iii) Identify outside assistance
iv) Assess future energy needs
v) Identify financing sources
vi) Make energy recommendations
vii) Implement recommendations
viii) Provide liaison for the energy committee
ix) Plan communication strategies
x) Evaluate program effectiveness
Energy management programs can, and have, originated within one division of a large
corporation. The division, by example and savings, motivates people at corporate level to pick
up on the program and make energy management corporate wide. Many also originate at
corporate level with people who have facilities responsibility, and have implemented a good
corporate facilities program. They then see the importance and potential of an energy
management program, and take a leadership role in implementing one. In every case observed
by the author, good programs have been instigated by one individual who has recognized
the potential, is willing to put forth the effort in addition to regular duties will take the
risk of pushing new concepts, and is motivated by a seemingly higher calling to save
energy. If initiated at corporate level, there are some advantages and some precautions.

Some advantages are:

More resources are available to implement the program, such as budget, staff, and facilities.
 If top management support is secured at corporate level, getting management support at
division level is easier.
Total personnel expertise throughout the corporation is better known and can be identified
and made known to division energy managers.
Expensive test equipment can be purchased and maintained at corporate level for use by
divisions as needed.
A unified reporting system can be put in place.
Creative financing may be the most needed and the most important assistance to be
provided from corporate level.
 Impacts of energy and environmental legislation can best be determined at corporate level.
Electrical utility rates and structures, as well as effects of unbundling of electric utilities,
can be evaluated at corporate level.
Some precautions are:
i) Many people at division level may have already done a good job of saving energy, and
are cautious about corporate level staff coming in and taking credit for their work.
ii) All divisi Work with those who are most interested
first, then through the reporting system to top management give them credit. Others will
then request assistance.
PRELIMINARY QUESTIONNAIRE FOR ENERGY AUDIT:-

General Information
1 Name of the Building :
Contact Person :
Address (with tel. no. and email) :
Age of the building :
2 Total built up area ( ft2 or m2) :
Total Air conditioned Area (ft2 or m2)
3 Annual consumption of energy sources
Electricity purchased (kWh) :
Electricity generated (kWh) :
Electricity purchased cost (Rs) :
High Speed Diesel (HSD) or LDO or Fuel oil quantity
(liter) :

Electrical System details:

1 Sanctioned load (kW / kVA) :
2 No. of transformers :
Rating of transformers :
Whether transformer test certificates are :
available
3 No. of capacitors :
Rating of capacitors :
Whether Auto Power Correction Relay is :
installed
4 No. of DG sets :
 Rating of DG sets :
5 Electricity tariff
Energy charges (per kWh) :
Demand charges (per kVA)

Lighting System details:

1 Whether dedicated feeders exist for lighting :
2 Whether meters are installed to measure :
lighting consumption

3 Total Lighting load (kW)

4 Type and wattage of lamps predominantly used :
Wattage and number of Fluorescent tube lights :
Wattage and number of bulbs
Wattage and number of CFLs
5 Type of Lighting fixtures used
6 Type of control (occupancy sensor,
continuous dimming etc.)
7Type of ballasts (copper or electronic) used :

HVAC System details:

Central Plant
1 Type of chillers and their nos. :
2 Rating of chillers (TR) :
COP of Chiller
Capacity (kW ) and No. of chilled water
3 pumps :
Capacity (kW) and No. of condenser water
4 pumps :
5 Capacity (TR) and No. of cooling towers :
Whether two speed motors are installed in
6 cooling Towers :
Whether Variable Frequency Drives (VFD) are
7 installed in cooling towers :
8 No. of Air handling units (AHUs) :
Whether two speed motors are installed in :
9 AHUs
10 Whether VFD are installed in AHUs :
11 No. of Fan coil units (FCUs) :
Whether three speed motors are installed in :
12 FCUs

Unitary system
1 Packaged ACs :
Capacity (TR and kW) and numbers
 Running hrs/day
2 Split ACs :
Capacity (TR and kW) and Numbers
Running hrs/day
3 Window ACs :
Capacity (TR and kW) and Numbers
Running hours/day
Whether thermostats are installed in the zones :
4 where air conditioning is provided

Ventilation system
1 Ceiling Fans :
Capacity (Wattage) and numbers
Running hrs/day
2 Air Coolers :
Capacity (Wattage) and Numbers
Running hrs/day

Heating System details:

STEAM AND HOT WATER SYSTEM
1 Whether steam boilers are used :
Number :
Rating :
Fuel used :
2 Whether hot water boilers/Geysers are used :
Number :
Rating :
Fuel used :
3 Whether automatic controls are installed :
4 Whether hot water is used for building heating :
5 Average daily consumption of hot water :
6 Whether solar hot water system is used :
Water Pumping System details:
1 No. of raw water pumps and their rating (kW) :
2 No. of softening pumps and their rating (kW) :
3 Whether VFD installed :
4 Whether Sewage Treatment Plant (STP) is :
installed
Equipments
1 Computer/Laptops :
Numbers Wattage
2 Any other:
Capacity (Wattage) and Numbers

Energy conservation measures already adopted:

1 List of energy conservation measures already :
implemented
2 List of energy conservation measures planned :
but not implemented
3 Whether building automation system (BAS) is :
installed
4 Any other relevant information :