Energy Audit Study Material V1.0

Coal Power Plants
XSOS: Energy & Environment

Coal Power Plants

XSOS: Energy & Environment Source: National Library of New Zealand's website
Green Power Plants

Green Power Plants

Energy Audit and Analysis
Version 2.0
Disclaimer:
1. This material is for academic study only. Not for commercial purpose.

Energy
“Energy is the ability to do work”

It is inconceivable to imagine life without energy

The Sequence
Energy
Transition
Renewable
Energy
Energy • Design of
Efficiency Solar Energy
Energy Systems
Conservation • Energy Audit
Environmental & Analysis
Impact of • Energy
Energy Conservation
Activities Project

Fundamental 1 Energy From Environment
Environment Environment Resource
Hydrogen
Biomass, Solar Waste

Wind
Coal Energy Natural Energy

Gas
Nuclear Natural
Gas
Oil

Various Sources of Energy

Renewables

Sources of Energy

Sources of Energy

Sources of Energy

Energy Transformation
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.

Energy Supply Chain
Environmental impact Cost of Energy increases as losses add up

Fundamental 2 Energy Pyramid

Fundamental 3 Energy Quad
Energy Resource Need

Security • Energy source should match the need
• Energy Source should be
abundant
Minimum Waste / Sustainability

Affordability
• Minimum waste should be created in the • Energy should be affordable
process

Energy and Environment
Understanding the Impact of How to improve the situation

energy activities on Environment

Case Study Discussion
Case 1: Integrated Water and Energy Solutions for

Irrigation in Rural India
Chrome HTML
Document

Energy Activity and Environmental Damage

Energy Activity and Environmental Damage- Geographical Scale of Impact
Global • Global Climate Change

• Stratospheric Ozone Depletion
• Reduction of Biodiversity
• Water and Land use and Degradation
Regional • Ocean contamination (oil Spills)

• Mobilization of Toxic Contaminants
• Acid Deposition
• Radioactivity and radioactive wastes
• Urban Air Pollution

• Indoor Air Pollution
Local • Localised surface and ground water pollution

• Solid and hazardous waste
• Occupational Health and Safety
• Large Scale Accidents
• Noise Pollution

Global Impact The Green House Effect

Global Impact What causes green House gas emissions ?

Global Impact What causes green House gas emissions ?
Source: https://www.nrdc.org/stories/greenhouse-effect-101

Global Impact Green house gases – Origin, Sink & Effects
Type of Greenhouse Gas Origin Sink Contribution To Greenhouse Effect

Carbon dioxide (CO2) Burning of fossil fuels Plants undergoing photosynthesis Absorption of infrared radiation
Indirectly affects the concentration of
Deforestation Oceans
ozone in the stratosphere.
Methane (CH4) Burning of Biomass Microorganisms uptake Absorption of infrared radiation
Reactions associated with hydroxyl
Rice paddies ozone and water vapor in the
groups
stratosphere
Fermentation by
Production of carbon dioxide
enteric bacteria
Nitrous oxide (N2O) Burning of Biomass Removal by soils Absorption of infrared radiation
Combustion of fossil Indirectly affects the concentration of
Photolysis in the stratosphere
fuels ozone in the stratosphere
Fertilizers
Ozone (O3) Chemical reactions that All catalytic chemical reactions that Absorption of infrared and ultraviolet
involve oxygen involve nitrous oxide, hypochlorite, and radiation
hydroxyl species
Chlorofluorocarbon (CFC) Industrial production Photolysis and reaction with oxygen Absorption of infrared radiation
ozone in the stratosphere
Carbon Monoxide (CO) Plant emissions Soil uptake Affects stratospheric O3 and OH cycles
Manmade release
Reactions with OH produces CO2
(transport & industrial)
Sulphur Dioxide (SO2) Volcanoes Dry and wet deposition Forms aerosols, which scatter solar
Coal and Biomass radiation
Reactions with OH
burning
Source: https://www.bioexplorer.net/greenhouse-gases.html/

Global Impact Green house gases impact: Global warming
• The increase in the amounts of greenhouse gases in the atmosphere reduces the out-flux of infrared radiation, resulting in a
warmer temperature.
• Changes in the Earth’s temperature will trigger other phenomena like changes in wind patterns and variation of cloud covers.

Global Impact Green house gases impact: Global warming – Rise in Sea Levels
• The increase in temperature results in the thermal expansion of seawater and melting of the ice and glaciers in some regions
like Greenland and Antarctica, thereby adding water to the total water in the ocean.
• Several studies are predicting that if global warming continues, the Earth’s sea level will become ten times higher (from 0.09
meters to 0.88 meters) in the next 90 years.
Global Impact Green house gases impact: Global warming – Effects on Biological Cycles
• One of the most affected is the hydrological cycle. Because the atmosphere becomes relatively warmer than it was, the
amount of evaporation is also expected to increase. In other words, this means that higher amount of precipitation will be
experienced.
• On the other hand, global warming also contributes to the loss of coastal areas and other habitats, thereby reducing
organism population and diversity.
Global Impact Green house gases impact: Global warming – Economic and Agricultural Impacts
• Because of higher carbon dioxide in the atmosphere, photosynthesis can readily occur, making plants grow at a faster rate.
However, too much heat can also affect soil and water conditions, thereby causing them to wilt and eventually die. When this
happens, agricultural production, as well as economic growth will be affected

Global Impact Stratospheric Ozone Depletion
Source: https://newbreweress.weebly.com/stratospheric-ozone.html

Global Impact Stratospheric Ozone Depletion

Global Impact Ozone Depletion Impact
Source: https://newbreweress.weebly.com/stratospheric-ozone.html

Global Impact Biodiversity Loss

Global Impact Energy Sources with Potential impact on Biodiversity

Energy Activity and Environmental Damage- Geographical Scale of Impact
Global • Global Climate Change

• Stratospheric Ozone Depletion
• Reduction of Biodiversity
• Water and Land use and Degradation
Regional • Ocean contamination (oil Spills)

• Mobilization of Toxic Contaminants
• Acid Deposition
• Radioactivity and radioactive wastes
• Urban Air Pollution

• Indoor Air Pollution
Local • Localised surface and ground water pollution

• Solid and hazardous waste
• Occupational Health and Safety
• Large Scale Accidents
• Noise Pollution

Case Study Discussion
Case 2: Water, Biomass and Energy Nexus: Electricity

Generation from Sugarcane Biomass in Guatemala

Energy and Environment
Understanding the Impact of How to improve the situation

energy activities on Environment

XSOS: Energy Audit Handbook
Handbook for Energy Audit
Version 1.0
Disclaimer:
1. This material is for academic study only. Not for commercial purpose.

Energy Audit Process
Phase 1 Phase 2
Preparation & Pre-analysis Site Visit & Reporting

Step 1
Introductory Meeting to agree approach
Step 2
Confirm Scope and collect preliminary data
Step 3
Identify key personnel and schedule site visit
Step 4
Develop energy use baseline and audit plan
Step 5
Develop Audit Checklist
Phase 1
Preparation & Pre-analysis

Step 10
Audit Report
Step 9
Financial Analysis of Energy
opportunities and threats
Step 8
Data Analysis and Identifying energy
Step 7
Undertake analysis of current
energy practices and usage onsite
Step 6 Phase 2
Conduct Site
audit and
Site Visit & Reporting
record findings

Step 1 Introductory Meeting to agree approach
✓ Meet the stakeholders in the organization to understand the context for the energy
audit.
✓ Any key insight / information regarding the energy usage that the client is looking for.
✓ Discuss and analyze the organization's current energy use and energy management system.
Agree to the approach
✓ List down the key personnel and engage with them understand the issues.
✓ Request specific energy information from the organization.
✓ Level of analysis (Preliminary / Detailed)
✓ Boundaries of the audit
When planning the audit agenda, it is important to note the operational patterns of the areas to be audited. The best
time to audit a significant energy-using piece of equipment is during both operational periods and non- operational
periods, so that the audit team can identify baseload reduction opportunities.

Step 2 Confirm Scope and collect preliminary data
✓ Confirm scope
• Compliance Requirements (if any)

• Single site / Multi site or organization wide.
• If the audit needs to be specific to a significant energy-using piece of equipment,
department, process, transport fleet or building e.g. transport / refrigeration.
• Time and duration of the audit.
✓ Collect Data
• Electricity bills (for min 1 year, ideally 3 years)

• Other fuel bills and metering data
• Access to online billing data.
• Energy monitoring software and data sets, as well as copies of building layout drawings,
piping and instrumentation diagram/drawings (P&IDs), site plans, asset or equipment lists,
process diagrams, and activity metrics data such as production output or occupancy
weather data may also be requested.

Step 3 Identify key personnel and schedule site visit
✓ The success of the audit clearly depends on the availability of key documents, the subsequent review
of these documents and the data gathered. However, the availability of knowledgeable and
experienced members of the client organisation, who may provide significant detail about
operational routines, recent and planned changes, technical improvements, or specific areas of
concern is also critical.
✓ The auditor should identify all key personnel, gain an understanding of their roles and
responsibilities, and establish their availability to cooperate with the audit process. A senior director
should also be identified at this point, to sign off on the audit as part of a management review.
✓ ‘Buy in’ will be required from various departments to ensure that sufficient time and resources are
made available to enable the auditor to analyse the main areas of energy consumption, and to
determine departments’ operational practices and behaviours. Organisational commitment should
extend wider than just utilities personnel and should include members of the operations,
maintenance teams and any sub-contractors working on site. Typically, production personnel play a
key role in determining how much energy is used and they should be included in any discussions.

Step 4 Develop energy use baseline and audit plan
4.1 Undertake preliminary analysis
- Based on data requested and provided by client, preliminary analysis helps in more effective
site work.
- Potential areas for further investigation.
- Such areas might include periods with spikes in energy use or any particular regulatory
considerations. These will help identify the measurements that need to be taken.
4.2 Review best available technologies/practices
Residential Institution Commercial Industry

4.3 Consider measurement planning and portable measuring instruments
Electrical Temperature Combustion Steam HVAC Buildings Compressed Data LPHW

Systems Measurement Systems Systems Systems Air Loggers and CHW
• Multimeter • Surface Pyrometer • Combustion • Ultrasonic Leak • Manometer • Light Meter • Ultrasonic Leak • 4-20Ma Logger • Ultrasonic
Analyser Flowmeters
• Voltmeter • Portable Electronic • Detectors • Psychrometric • Measuring Tape • Detectors • 0-10V Logger
• Ammeter • Thermometer • Steam Trap Tester • Anemometer • Thermal • Digital Logger
• Power Meter • Thermocouple Image • Vibration Logger
Probe
Camera • Light Sensor
• Infrared
Thermometer
• Infrared Camera
* Modern systems come with data logging with multiple days of data storage and web connectivity with cloud-based
access.

4.4 Analyse current and Past performance
4.4.1 Analysis of energy bills

• .
The auditor’s initial review of energy bills should determine if any unnecessary charges have been incurred.
For example:
• Charges associated with excessive or insufficient maximum import capacity (OD – Over Demand) for electricity.
• Other electricity penalty charges suchas low power factor charges.
• Incorrect tariff selection due to changes in tariff structure or changes to the process in recent times.
• Energy usage take-or-pay contracts with ESCO providers.
• Volume agreements with suppliers of solid fuels
The billing information and energy consumption information from the sub-meters available on site should be analysed to determine if
there are any trends in consumption patterns. The submeters will provide time interval data and such data can be instrumental in
conducting a high-level analysis of organizational consumption and trends.

4.4 Sample Analysis of energy bills
Monthly electricity load profile over a period of two Monthly profile indicating seasonal driver for gas consumption. This driver should be further
years indicating significant peak in electrical consumption in February 2016. The energy • . analysed to determine if the driver is weather related or activity related and determine if the
audit should establish what caused this increase. This could possibly be a metering relationships statistically significant.
error or an accidental change to a process parameter.
kWh
kWh
160,000
160,000
140,000
140,000
120,000
120,000
100,000
100,000
80,000
80,000
60,000
60,000
40,000
40,000
20,000
20,000
JAN 15
APR 15
JUN 15
AUG 15
NOV 15
DEC 15
JAN 16
APR 16
JUN 16
AUG 16
NOV 16
DEC 16
FEB 15
MAR15
MAY 15
JUL 15
SEP 15
OCT 15
FEB 16
MAR16
MAY 16
JUL 16
SEP 16
OCT 16
JAN 15
APR 15
JUN 15
AUG 15
NOV 15
DEC 15
JAN 16
APR 16
JUN 16
AUG 16
NOV 16
DEC 16
FEB 15
MAR15
MAY 15
JUL 15
SEP 15
OCT 15
FEB 16
MAR16
MAY 16
JUL 16
SEP 16
OCT 16

4.4 Sample Analysis of energy bills
Quarter-hour profile indicating electrical load profile over a seven-day period, including weekend profile. This should be analysed to determine baseloads, out-of- hour
consumption and any anomalies in the data that may lead to identification of energy savings opportunities.
MONDAY WEDNESDAY THURSDAY
FRIDAY SATUDAY SUNDAY

4.5 Benchmarking
Sample of building benchmarking data Building Type

Electricity Typical Fossil-thermal Typical
Source
Benchmark (kWh/m2) Benchmark (kWh/m2)
General Office 95 120
Supermarket/
400 105
Other Large Food Store
Hotel 105 330
25m Swimming Pool 237 1336
University Campus 80 240
Significant energy user benchmark indices

Significant Energy User Typical Performance Benchmark Items to Consider Prior to Benchmarking
Boilers Boiler Efficiency Boiler Type, Fuel Source
Compressors Specific Energy Consumption Drier Technology, Size of Plant
Chillers Coefficient of Performance Refrigeration Temperature, Refrigerant
Lighting Lux Levels, Kwh/m2 Energy Service, Lighting Technology
Transport Litres/100km, Mpg Vehicle Type, Journey such as Intercity

4.5 Audit Plan
Timeline and schedule of each event
High priority events

AUDIT PLAN
It defines the audit procedure and
execution.
Tasks assigned and responsibilities of each team member
Outline and format of the audit report

Step 5 Develop Audit Checklist
Electrical energy consumption Audit

Checklist Steam Boiler Audit Checklist
❑ Load Chart
❑ Gas input Steam
❑ Electrical Layout
output
❑ Maintenance Schedule and Records
❑ Feed water volume Condensate
❑ Breakdown Chart
return rate Steam pressure
❑ Tools –Multimeter , Power analyser etc.
❑ Total Dissolved Solids (TDS)levels
❑ Safety Gadgets
❑ Boiler feedwater temperature
❑ List of measurements to be taken
❑ Boiler house air temperature
❑ List of Systems / Subsystems to be
❑ Boiler feed water tank level
assessed
❑ Economiser inlet and outlet temperature
❑ O2or Co2levels to combustionrate
❑ Flue gas temperature
❑ Smoke number
❑ Maintenance records
❑ Operator logs
❑ Combustion Analysis Results

✓ Measuring equipment required, installed and to be carried at the time of audit

✓ Requiredmeasurementandproposedobservationtables
✓ Systems and subsystems to be assessed during audit
✓ Historical data and reports
Layer Definition Lighting Example
The desired outcome that

5.1 Energy Venn diagram sample application Energy Service
necessitates the use of
Luminance level for office tasks
energy
The Energy Venn diagram is an effective way of
visualising the factors contributing to energy use, and The means by which the
Process Natural/artificial lighting
may be useful when drawing up achecklist. energy service is
achieved
MANAGEMENT Equipment The constituent parts of the process Fixtures, shading devices, reflectors
OPERATIONS
& MAINTENANCE
The control applied on Automation systems including
CONTROL Control daylight sensors, occupancy sensors,
the above
equipment dimming capability, switches
EQUIPMENT
PROCESS
The ongoing operation and Optimal change-out of light tubes,
Operation and Maintenance
maintenance applied to the alignment to evolving occupancy
equipment patterns
ENERGY SERVICE The ongoing management Awareness campaigns, EPIs

Management
of the equipment (Energy Performance
Indicators)

5.1.1 Sample audit checklist for compressed air system
Developing a checklist for compressed air system
The approach used to devise a checklist for a

compressed air system using the Energy Venn HOUSEKEEPING
diagram is illustrated
OPERATION
& MAINTENANCE Repair Leaks
• What do I want to do with the compressed air? CONTROL SYSTEMS Variable Inlet Volume
• What requires the compressed air?
• What is the fundamental piece of work that I want
VSD Control
compressed air to do? PLANT DESIGN
• Is there another way of delivering the output that
requires using less or no energy? Compressor Type
• Can I use a less energy intensive alternative? PROCESS
• What is the minimum specification required? TECHNOLOGY Multiple-Stage Compressor
Energy Efficient Motor
ENERGY
Reduce Pressure

As shown above, if using the Energy Venn diagram certain questions are developed in relation to eachlayer.
These are listed below:
Energy service, how the energy is being used: Plant design: Operation and maintenance:
• Is the compressed air at only 7-10% efficiency • Does the installed set of compressors adequately • Are leaks repaired in a timely way?
necessary for the specific job or could the function meet the load?
be fulfilled by another more efficient method, for • Is the pressure drop in the piping excessive? If that Housekeeping
is the case, it may indicate that the demand has :
example, an electric actuator?
expanded beyond what the network was originally • Are lines and equipment switched off when
• If it is not feasible to use a more efficient method,
designed to handle. they should be, e.g. at night or during breaks?
is it possible to reduce pressure, which would
• Is there an opportunity for heat recovery? • Are redundant pipe runs isolated?
decrease energy use and losses from leakage and
so on? This could, for instance, include the Control systems:
inappropriate use of air - for cooling (when a fan
would be more suitable), or for cleaning (when • Are the installed controls adequate?
other methods could be used). • Have the controls and energy performance for The checklist should be formatted as a series of
Process technology: operation in unloaded mode been evaluated questions or points, and should include space for
against a variable-speed drive (VSD) solution? inserting data gathered and additional information
• Is the correct type of compressor employed for the • Would a variable inlet volume compressor meet such as machine details, hours of operation etc.
pressure and volume needed? the load more efficiently?

Step 1
Introductory Meeting to agree approach
Step 2
Confirm Scope and collect preliminary data
Step 3
Identify key personnel and schedule site visit
Step 4
Develop energy use baseline and audit plan
Step 5
Develop Audit Checklist
Phase 1
Preparation & Pre-analysis

Energy Audit Process
Phase 1 Phase 2
Preparation & Pre-analysis Site Visit & Reporting
Stakeholders + Energy Audit Team Stakeholders + Energy Audit Team
Energy Audit Team + Energy Audit Team +

Key personnel Key personnel
Audit Site
Step 10
Audit Report
Step 9
Financial Analysis of Energy
Step 8
Data Analysis and Identifying energy
Step 7
Undertake analysis of current
energy practices and usage onsite
Step 6 Phase 2
Conduct Site
audit and
Site Visit & Reporting
record findings

Step 6 Conduct Site audit and record findings
6.1 Device site visit agenda
• This should include the site visit opening meeting, a list of areas/ utilities to be visited,
• Meetings with operations and maintenance teams and production personnel, and
• A closing meeting with all teams.
Depending on the scale of the audit, the agenda may span several days. Other aspects that may be considered include
whether it is necessary to see the plant in operation and/or during downtime or at night-time; any possible monitoring or
measurement that may be needed; availability of people with operational knowledge and any other site activities.
6.2 Consider health and safety
• It is essential to observe all site safety rules and permit- to-work requirements while
conducting on-site audit activities.
• The auditteam should be aware of any risks associated with the site activities and
actively mitigate them; for example, personal protective equipment must be worn or
permission to enter the site may be refused.

6.3 Carry out site visit
• The site visit comprises a detailed walk-around of the area(s) to be audited, with a significant emphasis on the
largest energy-consuming assets. Typically, this involves reviewing energy and utility systems with the
respective area supervisors and discussing the current operations, maintenance and control regimes of each
energy-using piece of equipment.
• The discussions should cover various improvement categories, as shown in Table below. Use a camera to
record, for example, settings or condition of insulation, if allowed.
Category Examples
Behavioural: Housekeeping Turning off equipment when not required, operating equipment for the minimum desired time for the minimum required set-
points.
Technical: Maintenance Replacing filters as part of preventative maintenance programmes, re-instating insulation, leak remediation programmes.
Reviewing control systems and optimising the control strategies for optimal energy performance. For example, on a dryer system,
Technical: Controls control on extract humidity rather than supply temperature; on ventilation systems, control on extract CO2levels rather than supply
temperatures.
Infrastructural or equipment changes requiring capital investment. Typically, audits focus more on capital
investments/improvements rather than no-cost or low-cost improvements (covered in the above three categories).
Capital

6.3 Carry out site visit
• The audit checklist, developed as part of the planning stage, will be useful at this point.
• Note taking and record-keeping during the site survey are also crucial. This includes indicating personnel
spoken to, the systems that have been examined, the parameters observed, and assessing operational
performance using metered data.
• Establishing positive relationships with key client personnel is important to enable the auditor to elicit useful
information and possibly identify opportunities for energy efficiency improvements.
6.3.1 Assess energy management
• The assessment of the client organization's overall approach to energy management should be carried out with senior
management in order to determine what they could do to embed energy management principles further within the
organization structure.
• Specifically, the assessment should be used to determine current practice, and the progress and achievements made to date.

6.3.1 Assess energy management

Level Energy Policy Organising Motivation Information Systems Marketing Investment
Energy policy, action Energy management fully Formal and informal channels Comprehensive system Marketing the value of Positive discrimination in
plan and regular review integrated into management of communication regularly sets targets, monitors energy efficiency and the favour of ‘green’ schemes,
4 have commitment of top structure. Clear delegation exploited by energy manager consumption, identifies performance of energy with detailed investment
management. of responsibility for energy and energy staff at all levels. faults, quantifies savings and management both within the appraisal of all new-build and
consumption. provides budget tracking. organisation and outside it. refurbishment opportunities.
Formal energy policy, but no Energy manager accountable Energy committee used as M&T reports for individual Programme of staff awareness Same payback criteria
active commitment from top to energy committee main channel together with premises based on sub- and regular publicity employed as for all other
3 management. representing all users, chaired direct contact with major metering, but savings not campaigns. investment.
by a member of the managing users. reported effectively to users.
board.
Unadopted energy policy set Energy manager in Contact with major Monitoring and targeting Some ad hoc staff awareness Investment using short-term
by energy manager or senior post, reporting to ad users through ad hoc reports based on supply meter training. payback criteria only.
departmental manager. hoc committee, but line committee chaired by senior data. Energy unit has ad hoc
2 management and authority departmental manager. involvement in budget setting
are unclear.
An unwritten set of guidelines Energy management is the Informal contacts between Cost reporting based on Informal contacts used to Only low-cost measures taken.
part-time responsibility engineer and a few users. invoice data. Engineer promote energy efficiency.
1 of someone with limited compiles reports for
authority or influence. internal use within technical
department.
No explicit policy No energy management No contact with users. No information system. No promotion of energy No investment in increasing
or any formal delegation No accounting for energy efficiency. energy efficiency in premises.
of responsibility for energy consumption.
0 consumption

Appendix Sample site visit agenda
An agenda is a useful way to help the client organisation with planning around the audit process. It also helps to ensure delivery of an
organised and focused audit. The example below shows the level of detail that should be provided to ensure that the client has a clear
understanding of what the audit team’s visit will entail.
Sample energy audit site visit timetable:
Time Activity
8:30 Auditor arrives and is introduced to relevant client organisation representatives.
9:00 Site visit opening meeting: The main site contact person, as well as other relevant personnel who will have some involvement in the audit, should attend part or all of this meeting.
• Short presentation on the audit process, agreeing anychanges to the audit procedures andtimetabling.
• Review energy management processes and overall energy consumption.
• Review client energy initiatives to date and potential areasfor focus.
11:00 Tour site and inspect main process: All relevant personnel who will have some involvement in the audit should take part in this site tour.
• Observe main activities on the site focusing on energy useand including processes and utilities.
• Discuss energy use with personnel who are responsible for process operations on the site.
15:00 Audit team examines on-site energy monitoring system.
16:00 Closing meeting: The main site contact person and relevant personnel should attend.
• Present status update to the client.

• Plan monitoring of any required measurement or logging activities.
• Any additional data requests, based on site tour/other observations.
• Plan schedule for subsequent days or non-operational periods (e.g. night-time or weekends).

Step 7 Undertake analysis of current energy practices and usage onsite
7.1 Technical Assessment
A number of technical areas must be considered when carrying out an energy audit. Dependingon the organisation being
audited, certain areas will require a technical assessment in order to identify opportunities for energy efficiency
improvements.
Areas that may require examination include, but are not limited to, the following:
• Buildings
• Lighting
• Heating, controls and boilers
• Heating ventilation and air conditioning (HVAC)
• Pumps
• Transport fleet, telematics
• Refrigeration
• Industrial processes
• Wastewater treatment plants
• Compressed air
• Renewable energy.

7.1.1 Buildings
7.1.2 Lighting
7.1.3 Heating and Boilers
7.1.4 Heating, ventilation and air conditioning (HVAC)

7.1.5 Pumps
7.1.6 Transport
7.1.7 Refrigeration and cooling
7.1.8 Industrial processes

7.1.9 Wastewater Treatment Plants
7.1.10 Compressed Air
7.1.11 Renewable Energy

7.1.1 Buildings
Buildings account for a significant amount of energyconsumption. They offer a large opportunity for improved energy performance
depending on their age, condition and designintent.
What to check Typical opportunities Potential pitfalls
• Broken or poorly maintained windows and doors • Improving building air tightness to reduce • Loss of production due to the disruptive nature
• Poorly utilised space heating requirement of some deep retrofits
• Poor roof lights • Identifying over heating/cooling of areas • Failure to provide maintenance and operations
• Holes, leaks, draughts or dampness in the building • Reducing building activity when unoccupied for personnel with adequate training for deploying a
fabric long periods sophisticated building management system.
• Windows open during cold weather • Reducing early building activation in the
• Inadequate insulation morning prior to occupancy
• The complaints log for the building • Reducing heating system activity during
• Thermal bridging or hot spots (use athermal imaging unoccupied periods
camera during a cold night) • Improving temperature set-point protocols
• Building equipment such as heating system, ventilation • Assessing the occupancy patterns of the building
system, lighting system and ITsystems for additional • Increasing the utilisation of the building
opportunities for energy efficiency improvements (increasing density)
• The building performance against benchmarks, and • Adapting ventilation rates and adopting
understand why the building performanceis different to the technologies used for ventilation
benchmark • Better utilisation of the building
• Use of auxiliary electric heater management system.
• Staff comfort

7.1.1 Buildings
7.1.2 Lighting

7.1.5 Pumps
7.1.6 Transport



7.1.2 Lighting
Lighting is one of the most visible energy consumers in any building or facility, and developments in technology and effective controls may
offer significant opportunities for energy efficiency improvements.
With regard to the control of lighting, the most important area to address is behaviour change, as no level of automation can outstrip the
efficiency that can be achieved by manual switching when applied correctly.
What to check
• Lighting on in unoccupiedspaces
• Excessive light levels for the tasksrequired in the space
• Inaccessible light switches
• Lighting types that do not facilitate switching off in infrequently used spaces (lighting with a long strike time)
• Large areas controlled by one switch, orlighting wired directly to a meter control box (MCB) without aswitch
• Motion sensors with no manual overrideswitch
• Daylight linked controls and autodimming, Occupancy sensors
Lighting fixtures located in suboptimallocations (over enclosed machines or over a cabinet where only the top of themachine is illuminated)
• External lighting on fixed time switch,manual control or photocell located ina shaded area
• Unsuitable, dirty or discoloured diffusers andshades Obscured or dirty roof lights (daylightharvesting)
• Reluctance of the occupants or managementto turn off unnecessarylighting
• Artificial lighting in areas with sufficientdaylight (or blinds closed during theday). Night-time lighting levels and switch offprocedures
• Lux levels appropriate for the activity in an areaas outlined below

7.1.2 Lighting Typical opportunities
Recommended
Area
Illuminance (lux)
• Checking lighting levels asstairwells, corridors and circulation areas are often over lit; there
may be an opportunity to disconnect somefittings
Open plan office, mainly screen based 300 • Replacing high-intensity lighting with more energy- efficient alternatives, e.g. replacing T8
with T5 or light-emitting diode (LED)
Open plan office, mainly paper based 500 • Relocating photocell to area of direct light
• Installing additional switching so as to facilitate turning off some lights when notrequired
Meeting rooms and conference rooms 300 • Running an awareness campaign toinform all employees of the importance of turning off
lighting when the area isunoccupied
Break rooms and canteens 200 • Installing lighting maps for switching banks
• Installing automatic controls (timers, personal infrared sensors (PIRs), occupancy sensors
Plant rooms 200 and photocells), especially in infrequently usedspaces
• Cleaning skylights and windows
Corridors 100
• Introducing a practice of opening blinds tomaximise the use of daylight
• Cleaning reflectors and diffusers to maximise the efficiency of light fittings
• Removing any unnecessary lighting and relocating fittings in poorlocations (over
Workshops 300
cabinets or redundant machines or too close to walls).

Step 8 Develop graphic interpretation of energy opportunities and threats
Potential pitfalls
• Installing PIRs with short duration, creating annoyance and hence resistance
from occupants
• Overly complex switching circuits
• Over-reliance on automated lighting controls.

7.1.1 Buildings
7.1.2 Lighting

7.1.5 Pumps
7.1.6 Transport


7.1.3 Heating and boilers

Steam thermal oil and hot water boilers are energy conversion devices that convert the energy in fuels into a usable means of space and process
heating for buildings and various processes.
What to check
• It is essential to obtain a clear understanding of the
energy service requirement in terms of both the • Insulation conditions of the boiler, distribution systems’ pipes, valves, flanges and fittings
temperature requirements of the thermal oil or hot • Condition of any control dampers, three port valves
• Boiler loads, to determine if there are multiple boilers operating on low loads resulting in dry cycling
water systems and the pressure requirements of
• Hot water flowing through standby boilers
steam systems.
• Level of controls including, zoning, optimum stop start, weather compensation
• Boilers operating out of hours
• The ‘as found’ and ‘as left’ combustion efficiency of the boiler following the most recent maintenance report
• The combustion efficiency of multiple units (compare units and determine the cause of different efficiencies)
• The system’s thermal efficiency (calculate)
• Electric heating in offices, e.g. portable heaters
• On steam boilers, feed water volume, the boiler total dissolved solids (TDS) levels, condensate return rates,
condensate return temperatures, and steam plumes from condensate receivers.

7.1.3 Heating and boilers
Typical opportunities
Potential pitfalls
• Insulating high temperature pipes, valves and flanges and minimising the temperature setting on the hot water
boiler • Installed condensing boilers not operating
• Installing weather-compensating temperature controls in condensing modes
• Installing flue gas isolation damper on standby boiler • Turning off hot water systems for a period,
• Reviewing the sequence control of the boilers and associated waste heat recovery devices on the thermal which may result in corrosion and
system, e.g. heat recovery from process, combined heat and power (CHP), solar collector, etc. subsequent leakage in the distribution
• Installing two-way valves on the hot water distribution system and controlling the distribution pump using a system
variable-speed drive (VSD) • Long heat-up time for spaces when heating
• Isolating circulating pumps when not required systems are operated intermittently.
• Ensuring that the condensing boiler operates on condensing mode
• Checking the correct minimum blowdown rate and ensuring that the TDS levels are maintained in
• accordance with the boiler manufacturer’s guidance
• Considering installing de-stratification fans in spaces with high ceilings, thus reducing the space temperature
• Addressing failed steam traps
• Insulating uninsulated feed water tank
• Replacing steam with high temperature hot water

7.1.1 Buildings
7.1.2 Lighting

7.1.5 Pumps
7.1.6 Transport


Systems encompass heat generators such as boilers, chillers and distribution systems, including piped and ducted.
What to check Typical opportunities
• The temperature in the conditioned space (is it excessively high or low?) • Matching variable speed control on fans, refrigerant compressors and circulation
• Heating or cooling operating outside of required periods pumps to demand
• Presence of draughts • Using ‘free-cooling’ during low ambient conditions
• Heating and cooling running simultaneously in areas, potentially serviced by different • Reviewing HVAC operational controls
systems • Adapting ventilation rate to occupancy through CO2 controls
• Overly tight control of temperature or relative humidity • Heat recovery using run-around coils or air-to-air heat exchanger
• Use of supplementary heating, e.g. portable heaters • Improving temperature and time controls
• Damaged or blocked filters or fouled coils • Enthalpy control
• Restricted airflows, e.g. at grilles • Rebalancing or recommissioning
• Passing valves • Lowering air changes
• Use of fresh air or recirculation in accordance • Replacing steam heating with low pressure hot water system (LPHW).
• with intent of controls (this will depend on internal and external conditions and
whether humidity
• is controlled)
• Fans and dampers working correctly
• Water supply and return temperatures for heating and cooling applications.

Potential pitfalls
• HVAC systems typically have to satisfy needs for a

large number of occupants and these needs may
vary significantly
• Difficulty of making changes where conditions are
regulated.

7.1.1 Buildings
7.1.2 Lighting

7.1.5 Pumps
7.1.6 Transport


7.1.5 Pumps
Pumps are one of the largest consumers of electricity and have widespread application in buildings, industrial processes and water and wastewater treatment.
• The peak flow and head requirement and duration • In many cases, installing a new pump would be justifiable – to reflect the actual
• The most common flow and head requirement and the duration it occurs operating conditions as opposed to the original design conditions
• Design specification, commissioning sheets and maintenance records. There is often • Matching of pump operation point for maximum efficiency to most common load
a mismatch in these, thus leading to opportunities for improvement. • If the system has a VSD, determining the optimum speed
• Current requirements compared with what the pump was originally designed to • If the system has no VSD, considering installing a VSD
handle • If there are duty/standby installations, considering upgrade of one pump only and
• Feasibility of using an alternative pump running this one for most of the time, with the older pump as standby to improve
• If a VSD is fitted, whether a speed adjustment could deliver better kWh per m3 the feasibility of the project.
• Are any valves throttled? • Using two-port control and variable-speed pumps in place of three-port control
• Is the liquid velocity within the typical range? • Changing piping to reduce velocities and pressure drops due to sharp bends, etc.
• Any parallel pumps with different commissioned values and/or running performance • Isolating redundant pipe runs
• Standby pump running as assist pump • Reducing overall flow and pressure in a system and using a small booster pump to
supply loads with high pressure drop and small flow.
• Evidence of operational problems – cavitation, noise, overheating of fluid, leaking
check valves, liquid hammer, suboptimal (e.g. emergency storm) pump running due
to lack of repair to normal pump
• Are any motors overheating, and/or unclean?

7.1.5 Pumps
Potential pitfalls
• Throttled valves do not always point to the need for

speed control, particularly if there is a high static
head. Therefore, the system should be considered
as a whole before making any recommendations on
this
• Any capacity tests should be carefully coordinated
with operating personnel, so as to avoid service-
related issues
• Complicated networks may require a full hydraulic
model in order to determine optimal operating
conditions.

7.1.1 Buildings
7.1.2 Lighting

7.1.5 Pumps
7.1.6 Transport


7.1.6 Transport
Transport energy saving opportunities typically break down into vehicle-related (i.e. purchase of more efficient vehicles or maintenance of current vehicles), driver
behaviour and organisationplanning and management.
What to check
• Using reduced rolling resistance tyrescan lower fuel consumption by 3%
• Age and suitability of vehicles for tasks
• Using correct tyrepressures – if pressure is 25% too low, rolling resistance increases
• Level of data available on fuel use, if available, carry out comparison of litres/ 100km
by 10% and fuel consumption by 2%
based on class of vehicle
• Driver training, potentially in tandem with monitoring of fuel usage – gives reduced
• Route planning, is there potential to improve or to drive at night when road
idling time with savings of 5-10%
congestion is lower?
• Reducing drag with measures such as covering open loads – using aerodynamic aids
• Maintenance regimes, tyrepressure and type of tyres
on larger vehicles can save 3-15%
• Aerodynamics, is there potential for improved aerodynamics for longer-trip vehicles?
• Choosing correct vehicle for task, taking into account load, traffic, environment and
• Driver practices, is there potential for reduced idling time and driver practices? route
• Maintenance, state of insulation, seals and age of refrigerated units • Regularly removing unnecessary loads
• Fuel leakage. • Using GPS, telematics and fleet management systems
• Matching truck size to load delivery requirements
• Considering life cycle energy use cost as part of new vehicle purchase decision
• Carrying out maintenance/upgrading of refrigerated units
• Considering electric cars for the organisation’sfleet

7.1.6 Transport
Potential pitfalls
• Potential improvements that are related to

driver practices may need to be handled
carefully during the energy audit
• Good data for evaluation may be difficult to
obtain unless fleet management and/or reliable
odometer and fuel figures are available.

7.1.1 Buildings
7.1.2 Lighting

7.1.5 Pumps
7.1.6 Transport



The amount of energy used in a refrigeration system is largely determined by the overall temperature difference that must be overcome, i.e. the difference between
condensing and evaporating temperature, and the size of the load that must be cooled.
What to check
• Potential to use‘free cooling’for some or all of the time – perhaps with ambienttemperatures
• Is the capacity of the plant appropriate forthe current load?
• Does the plant operate at part load fora large portion of the time?
• Potential to use an alternative mix of plant at part load – for example, fixed-speed screw for baseload and piston compressor for load trimming
• Plant condensing temperature and cooling medium temperature (typically water or outdoor air).Check
• if the temperature difference is appropriate for the plant. Check the design conditions temperature difference – typically about 10°C for anevaporative condenser and
15°C for an air-cooled condenser. A 1°C increase in condensing temperature typically increases running costs by between 2% and 4%
• Plant evaporating temperature and cooled medium temperature (often water-glycol or indoorair). Check if the temperature difference is appropriate for the plant. Check the
design conditions temperature difference. Typically, this is about 6-12°C for air coolers and 3-8°C for liquid coolers, but it is also quite application specific. A 1°C decrease in
evaporating temperature typically increases running costs by between 2% and 4%
• Temperature set-points. Are the set-points ideal for the intended application under all conditions?
• Evidence of maintenance issues with the plant and/ or difficulties in achieving temperatures
• Use of plant that will need to be replaced or become difficult to maintain, depending on refrigerant phase-out regulations
• Insulation levels and condition including moisture ingress


What to check
• Short-cycling of plant
• High pressure drops in liquid circuits. Can indicate high flows and pump load which ultimately increases cooling load
• Air leakage into cold spaces due to poor housekeeping or maintenance
• Fouling (or icing where relevant) of evaporators, condensers or heat exchangers.
• Using free cooling where the process temperature required is higher than the ambient temperature
• Reducing condensing temperature when ambient conditions are lower, e.g. at night or during the winter
• Minimising auxiliary loads such as circulation pumps, depending on load requirements
• Running more condenser fans to reduce condensing temperature even under warm conditions when the load is lower
• Better load matching of available plant
• Maximising cooled space or medium temperatures and evaporating temperatures
• Reducing air leakage through use of a fast-acting door, air curtains, strip curtains, dedicated personnel doors
• Optimising defrost cycles
• Optimising time controls for plantoperation
• Splitting plant to serve loads at differenttemperatures
• Replacing equipment with more efficient plant – this leads to an opportunityfor energy efficient design
• Using a heat pump to provide cooling and then heating process water simultaneously.

Potential pitfalls
• Minimum condenser temperature may be limited by needs for defrosting or oil cooling
• Auxiliary loads such as pumps and fans may need to keep running to allow detection of load change by temperature sensors
• Diverse loads and temperature requirements on a central system may mean that energy efficiency is compromised, as the lowestrequired temperature must be attained. This may be an
opportunity for a dedicated smaller system to handle smaller loads at lower temperatures
• Minimum condenser temperature may be limited by requirements for defrosting or oil cooling.
https://www.linquip.com/blog/difference-between-
refrigeration-and-air-conditioning-comparison/

7.1.1 Buildings
7.1.2 Lighting

7.1.5 Pumps
7.1.6 Transport



This section describes a common approach that can be applied to various industrial processes. Before starting work on an industrial process, the auditor should
develop a flow diagram of the process. Once this has been completed, and assuming that the auditor has a sufficient understanding of the process, it should be
possible to establish the steps in the process that are the main users of various types of energy.
What to check
• Options to reduce the energy service need (load)

• Opportunities to use a more efficient form of energy generation, e.g. gas burner in place of oil burners
• Heat pump to recover energy from cooling loads
• Options to reduce the level of energy use, e.g. lower process temperature in steel plant, lower pressure steam in dryer plant etc.
• Potential for alternative, more efficient technologies
• Options to improve the understanding of the consumption drivers or energy-relevant variables
• Whether plant capacity is properly aligned or sized to throughput
• Potential to make gains with improved production planning, e.g. run at full capacity and then stop for a period rather thanrunning continuously at part load
• High rework or reject rates indicating a requirement for control improvements
• Level of operator knowledge of systems with regard to the influence of their actions on energy use
• Consistency in the product mix, recipe control etc.
• Maintenance issues or challenges in achieving required quality that may result in higher energy demand
• Parasitic loads, e.g. air leakage in ovens, furnaces or extract systems, excessive moisture in raw materials, inappropriateuse of auxiliary services.

• Improving quality controland overall equipment effectiveness (OEE) leading to improved energy efficiency
• Improving operational control through better
• understanding of parameters critical forenergy use in the process
• Addressing bottlenecks in theprocess helping the rest of the process to improve efficiency
• Changing process to remove energy-usingsteps, e.g. using low temperature cure adhesive thus removing the need to use a curing oven
• Improving insulation for heatingand cooling processes
• Optimising production runs or batch sizes for energy use.
Potential pitfalls
• Complex processes require specialist understanding

• Proprietary technologies may mean that early engagement with vendors is needed in order to deliver savings.
.

7.1.1 Buildings
7.1.2 Lighting

7.1.5 Pumps
7.1.6 Transport


7.1.9 Wastewater treatment plants

Many large sites have wastewater treatment plants (WWTPs). Designs of these plants vary due to the range of effluent types and local effluent outflow
requirements. Measures tend to focus on aeration, which typically accounts for between 40% and 50% of the WWTP energy use.
• Design plant load and current plant load patterns • Installing fine bubble diffusion technology
• Proper control of dissolved oxygen (DO) level • Effectively distributing air to meet load, e.g. concentrating at start of process where
• Ingress of excessive hydraulic load, e.g. storm drain water there is a higher demand
• Load optimisation, e.g. use of less cleaning water or separation of unwanted waste • Improving process control including DO control
streams where appropriate • Controlling variable-speed blowers and aerators by DO
• Level of technology efficiency, e.g. fine bubble diffusers (blowers) in place of surface • Using buffer storage tanks to smooth uneven flow from process
aeration • Using high-efficiency motors, blowers and pumps
• Appropriateness of plant size • Sizing pumps to achieve efficiency at typical common flow rates, as opposed to
• Desired level of plant turn-down ratio for various typical load levels design maximum
• Correct division of flow in the air distribution system • When using centrifugal systems, allowing sludge to thicken in order to reduce
• Difficulties in achieving plant outflow requirements dewatering costs
• Significant variability in plant flow and load. Are DO sensors and other controls • Generation of biogas todisplace oil or natural gas in the fuel supplymix.
properly maintained and cleaned regularly so that they can be read correctly?
• Maintenance regime and state of repair of plant and fittings, including sludge removal
etc.
• Opportunities for biogas generation and use.

7.1.9 Wastewater treatment plants
Potential pitfalls
• Composition of inflow effluent may vary greatly, making optimization difficult

• Lack of standby plant may make modification difficult
• Ineffective process control to achieve required emissions (potentially due to gaps in operator knowledge) may
need to be addressed in order to affect energy savings.
https://www.smart2zero.com/news/wastewater-power-plant-
electrical-energy-sewage-treatment-plant

7.1.1 Buildings
7.1.2 Lighting

7.1.5 Pumps
7.1.6 Transport



Compressed air is one of the largest energy users in industry. Due to its ease of use, it is often used inappropriately.
• Repairing compressed air leaks

• Age of compressors and number of stages in each
• If excessive compressed air pressure required for one critical application, using a volumetric
• Audible air leakage during site survey
expander (‘donkey’) compressor
• Leak tags on the system for prolonged periods of time
• Ducting fresh air to the compressor air inlet from outside, ambient air temperature is typically
• System optimisation: Is it operating at the minimum acceptable pressure? between 5°C and 10°C colder than compressor room air
• Pressure drops: does pressure drop across the air treatment plant? • Recovering the waste heat from the air compressor to use for space heating or potentially pre-
• Compressor air inlet temperature and is it installed in hot boiler room or plant room? heating combustion air for a boiler
• Means of work and alternatives (liquid agitation using air, compressed air for product • Installing a variable-speed air compressor instead of a fixed-speed air compressor for partial load
transport etc.) operations
• Compressor sequence control • For new applications, installing waste heat recovery from the oil cooling system in an LPHW
• Status of part-load operations for multiple compressor sites system
• Proper air isolation on equipment lines when not in use. • Isolating compressed air distribution systems during out of production hours (zone control
solenoid valves)
• Isolating dead legs
• Doing a pump-up test at night time or when air using equipment is not in use
• Replacing users that require high-volume, low- pressure air with air blowers.
• Installing moisture-sensing drain traps instead of manual air receiver blowdown valves.

Potential pitfalls
• Completing compressed air leak detection programmesbut not

fixing the leaks
• Reducing the compressed air pressure without completing a
whole system evaluation
• Accepting that leaks are part of all compressed air systems and
that air leaks are acceptable.

7.1.1 Buildings
7.1.2 Lighting

7.1.5 Pumps
7.1.6 Transport


Renewable energy may be included in the scope of the energy audit. If

included, it may assume more or less importance depending on the
focus of the audit and the objectives of the client organization
management team. For example,
• if the organisation’s goal is carbon reduction, then renewable
energy technologies will form a central element of the assessment
of opportunities.
• However, if the organisation’s goal is energy reduction, then low-
cost or no-cost opportunities could be more important for the
audit focus.
The energy efficiency first principle should always be applied to

ensure that the energy requirement is minimised, before considering
new sources of energy. Applying this principle will likely reduce the
size of the renewable system required and, in turn, should probably
reduce the investment cost.

Once an organisationdecides that they wish to pursue a renewable

energy option for heating or electricity supply, the challenge is to
determine the appropriate renewable measure(s) for their business. In
determining this, the auditor should be able to help the organization
• Identify what is financially viable and what is most appropriate for the
business
• Decide on the financing mechanism, whether to develop their own
project or use an ESCO model to fund the upgrade, and
• Agree where to implement the renewable energy measure.
While one renewable measure may work well for one business, there is
no guarantee that it will work well for another; careful evaluation and
consideration are required before choosing any option. Any evaluation
should also consider the measure that fits best with the organisation’s
brand, image and environmental or corporate social responsibility
objectives.

Step 8 Data Analysis and Identifying energy opportunities and threats
8.1 Identifying energy opportunities and threats
• Balancing the Energy In and Out of the system

• Compile readily available data, measured data from installed measuring devices,
and measured data by external energy-audit equipment
• Data collected must be realistic and have minimum assumptions.
• Present the data in suitable Graphical form
8.1.1 Benchmarking and Comparative Analysis
✓ comparative analysis is prepared for current and past energy consumption

✓ Benchmarking is used to design policies
✓ High-performing systems or buildings are rewarded and poor performers
✓ are targeted for immediate actions.

8.1.1 Benchmarking and Comparative Analysis
Methods to perform Benchamrking
1. Comparing the company’s historical performance with the present one.

2. Comparison is made between two similar processes or buildings.
3. Comparing with a peer company producing the same products.
4. Calculating specific energy consumption.
5. Comparing for best in industry, based on energy consumption as well as quality of product.
6. Benchmarking is carried out for a common unit of production.

8.2 Graphical representation of data
Time-affected change in energy consumption,

e.g., air-conditioning load increases during summer or furnace load increases
during charging hours, etc.
Sudden changes or spikes The charts provide direct information about the ways and the main areas
of energy use on hourly, daily, monthly, and seasonal basis.
in energy-use indicates
abnormality and locations
of energy savings.
Comparison of energy indexes can be made between similar plants or
buildings within the same premises.
When more than one type of fuel is used, costs can be compared between
them.

8.2 Graphical representation of data

8.3 Identifying energy opportunities and threats
Based on technical analysis, operational feasibility, environmental impact etc. energy opportunities
and energy conservation methods are to be listed down.
Non Exhaustive list of the buckets that can be considered are:
• Fuel Substitution
• Energy usage by Processes
• Energy Distribution
• Energy Generation
Subsequent to identifying the energy saving opportunities, a financial analysis of the same is required
for the management for project approval, budgeting and funds arrangement.

Step 9 Financial Analysis of Energy opportunities and threats
Financial analysis of opportunities for energy efficiency improvements is an important criteria in the audit process. The depth
of financial analysis depends on the type of opportunity, the quantum of the investment and the level of risk associated with
the said opportunity.
9.1 Selection of financial analysis method
9.1.1 Low Investment case
In cases where implementation cost is low and the savings are relatively small, a detailed life cycle cost analysis is not
warranted. A simple evaluation based on simple payback methodology may be adequate for decision-making purposes.
Suggested tool: Simple Pay back method
9.1.2 High Investment case
For larger investments, if only one solution is being put forward for evaluation and the payback is very short, there may
be little added benefit in conducting a life cycle costing exercise.
However, when operating costs are substantial, life cycle costing techniques can be useful in getting a more balanced
view of the overall cost over the lifetime of the asset. This might convince decision makers of longer term benefits and
assist in securing financial appraisal.

Financial analysis of opportunities for energy efficiency improvements is an important criteria in the audit process. The depth
of financial analysis depends on the type of opportunity, the quantum of the investment and the level of risk associated with
the said opportunity.
9.1 Selection of financial analysis method
9.1.1 Low Investment case
In cases where implementation cost is low and the savings are relatively small, a detailed life cycle cost analysis is not
warranted. A simple evaluation based on simple payback methodology may be adequate for decision-making purposes.
Suggested tool: Simple Pay back method
9.1.2 High Investment case
For larger investments, if only one solution is being put forward for evaluation and the payback is very short, there may
be little added benefit in conducting a life cycle costing exercise.
However, when operating costs are substantial, life cycle costing techniques can be useful in getting a more balanced
view of the overall cost over the lifetime of the asset. This might convince decision makers of longer term benefits and
assist in securing financial appraisal.

9.2 Calculations Approach and Validations.
It should be possible for a third party to check that the energy savings calculations are reasonable.
This requires sufficient information on assumptions and methods used to be recorded. If, for example, design software is
used, information on the inputs should be recorded. The basis for the savings estimated should be real and transparent.
The calculations should be sufficiently robust to enable decision-making at a level appropriate to the scope of the audit. For
example, an investment-grade audit, which focusses heavily on the return on investment and financial concerns involved
with the potential energy efficiency improvements, requires more rigorous input data and calculations than a brief scoping
audit that is intended to identify opportunities for further investigation.
In other cases, if a clear magnitude of savings can be established with a ‘rule of thumb’ calculation, this could be used if a
detailed calculation would not appreciably change the answer to a degree where a different outcome is likely. For example,
changing the payback for a project from 3 years to 3.18 years by using a more detailed analysis would probably not warrant
the extra effort. It is not generally expected that the output of an energy audit will be the basis for a design (unless that is
specifically agreed in the scope). Rather, the audit results, on their own, may be sufficient to enable decision-making for
measures to be ranked for consideration and to be implemented. The level of calculations to be carried out and the
robustness of approach to be adopted should be chosen with this in mind, and agreed at the time of commencement of the
audit.

9.3 Financial Analysis Methods

9.3.1 Simple Payback
• Simple payback provides a good initial assessment of the viability

of a project and is widely understood
• The simple payback period is the length of time required to recover

the cost of an investment.
• The payback period is an important determinant of whether to

undertake the project; typically, longer payback periods are not
desirable.
• The payback period ignores the time value of money, unlike other
methods of capital budgeting, such as net present value, internal
rate of return, or discounted cash flow.
• Project investment cost: INR 200,000

Projected savings per year: INR 50,000
Simple Payback = 200,000 / 50,000 = 4 Years


9.3.2 Return on Investment
• Return on Investment (ROI) is a popular profitability metric used to

evaluate how well an investment has performed.
• ROI is expressed as a percentage and is calculated by dividing an

investment's net profit (or loss) by its initial cost or outlay.
• ROI can be used to make apples-to-apples comparisons and rank

investments in different projects or assets.
• ROI does not take into account the holding period or passage of
time, and so it can miss opportunity costs of investing elsewhere.
• Project investment cost: INR 200,000

Projected savings per year: INR 50,000
ROI = 50,000 / 200,000 = 25 %

BASICS Financial Analysis
Time Value of Money
The time value of money (TVM) is the idea that money

available at the present time is worth more than the
same amount in the future due to its potential earning
capacity.
This is because you can invest it and earn

interest. TVM can be used to compare investment
alternatives.


9.3.3 Life cycle Costing: Net present Value
Net present value (NPV) takes into account the time value of money. This refers to the view that money is worth more now
than in the future, due to factors such as the cost of capital, uncertainty, etc. The analysis converts future cash flow values to
current values which facilitates like-for-like comparison of projects.
NPV is the difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital
budgeting to analyze the profitability of a projected investment or project.


9.3.3 Life cycle Costing: Net present Value
If... It means... Then...

NPV > 0 the investment would add value to the firm the project may be accepted
NPV < 0 the investment would subtract value from the firm the project may be rejected
We should be indifferent in the decision whether to accept or

the investment would neither gain nor lose value for reject the project. This project adds no monetary value. Decision
NPV = 0
the firm should be based on other criteria, e.g., strategic positioning or
other factors not explicitly included in the calculation.
Discount rates vary depending on the organisation and on the types of projects undertaken by an organisation. Typically,
the rates are set by the finance department and take into account the type of capital available, the cost of this capital, and
the risk associated with a particular project. Therefore, they would normally be higher than the cost of borrowing.
Rates may vary from 4-8% for infrastructure-type projects in the public sector up to 15-30% or higher for private sector
projects. It can also be seen as the minimum rate of return that an organization wishes to receive on an investment.


9.3.4 Life cycle Costing: Internal Rate of Return (IRR)
IRR is used in capital budgeting to measure and compare the profitability of investments.
Internal rate of return (IRR) is a measure of the profitability of a project. It can be considered as the return that the investment
would need to deliver if it were invested elsewhere.
The IRR is the rate of return on a project that makes the NPV equal to zero. Therefore, for a project to be viable, the IRR must
always be greater than the discount rate. It can be calculated by trial and error (or by using a spreadsheet function).


9.3.5 Life cycle Costing: Modified Internal Rate of Return (MIRR)
The modified internal rate of return (MIRR) assumes that positive cash flows are reinvested at the firm's cost of capital and that
the initial outlays are financed at the firm's financing cost. By contrast, the traditional internal rate of return (IRR) assumes the
cash flows from a project are reinvested at the IRR itself. The MIRR, therefore, more accurately reflects the cost and
profitability of a project.
Formula and Calculation of MIRR

Given the variables, the formula for MIRR is expressed as:
where:
FVCF(c)=the future value of positive cash flows at the cost of capital for the company
PVCF(fc)=the present value of negative cash flows at the financing cost of the company
n=number of periods
Reference: https://www.investopedia.com/terms/m/mirr.asp


9.3.5 Life cycle Costing: Modified Internal Rate of Return (MIRR)
The MIRR is used to rank investments or projects of unequal size. The calculation is a solution to two major problems that
exist with the popular IRR calculation. The first main problem with IRR is that multiple solutions can be found for the same
project. The second problem is that the assumption that positive cash flows are reinvested at the IRR is considered
impractical in practice. With the MIRR, only a single solution exists for a given project, and the reinvestment rate of positive
cash flows is much more valid in practice.
The MIRR allows project managers to change the assumed rate of reinvested growth from stage to stage in a project. The
most common method is to input the average estimated cost of capital, but there is flexibility to add any specific
anticipated reinvestment rate.
Reference: https://www.investopedia.com/terms/m/mirr.asp

BASICS Financial Analysis
Key differences between NPV, IRR, MIRR

Step 10 Audit Report
• There is no standard format. Report should be clear and concise.

• Report depends on type of organization, size, depth of audit, etc.
• It needs to convey the depth and breadth of the appraisal carried out, and it should clearly
outline the opportunities for improvement.
10.1 Key points with respect to report:
1. Report must include a summary for all level of persons

2. It should have simple and direct language
3. Be consistent in terminologies and units
4. Sight one sample calculation in the annexure
5. Maximize use of graphical and colourful representations
6. Recommendations mentioned should be clear and direct
7. Make a list of assumptions prior to technical and financial analysis

Step 10 Audit Report
✓ Annual fuel and electricity saving

✓ Annual reduction in pollutants
✓ Operational reliability and feasibility of the proposed retrofit
✓ Capital cost of project, annual profit, possible funding support, etc.
10.2 Sample register of opportunities

Energy Audit Study Material V1.0

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Energy Audit Study Material V1.0

Uploaded by

Copyright:

Available Formats

Coal Power Plants

XSOS: Energy & Environment

XSOS: Energy & Environment

XSOS: Energy & Environment

XSOS: Energy & Environment

XSOS: Energy & Environment

“Energy is the ability to do work”

XSOS: Energy & Environment

XSOS: Energy & Environment

Environment Environment Resource

Biomass, Solar Waste

Coal Energy Natural Energy

XSOS: Energy & Environment

XSOS: Energy & Environment

XSOS: Energy & Environment

XSOS: Energy & Environment

XSOS: Energy & Environment

XSOS: Energy & Environment

XSOS: Energy & Environment

Environmental impact Cost of Energy increases as losses add up

XSOS: Energy & Environment

XSOS: Energy & Environment

Energy Resource Need

Minimum Waste / Sustainability

XSOS: Energy & Environment

Understanding the Impact of How to improve the situation

XSOS: Energy & Environment

Case 1: Integrated Water and Energy Solutions for

XSOS: Energy & Environment

XSOS: Energy & Environment

Global • Global Climate Change

• Water and Land use and Degradation

Regional • Ocean contamination (oil Spills)

• Urban Air Pollution

Local • Localised surface and ground water pollution

XSOS: Energy & Environment

XSOS: Energy & Environment

XSOS: Energy & Environment

XSOS: Energy & Environment

Type of Greenhouse Gas Origin Sink Contribution To Greenhouse Effect

XSOS: Energy & Environment

XSOS: Energy & Environment

XSOS: Energy & Environment

XSOS: Energy & Environment

XSOS: Energy & Environment

XSOS: Energy & Environment

XSOS: Energy & Environment

XSOS: Energy & Environment

Global • Global Climate Change

• Water and Land use and Degradation

Regional • Ocean contamination (oil Spills)

• Urban Air Pollution

Local • Localised surface and ground water pollution

XSOS: Energy & Environment

Case 2: Water, Biomass and Energy Nexus: Electricity

XSOS: Energy & Environment

Understanding the Impact of How to improve the situation

XSOS: Energy & Environment

XSOS: Energy Audit Handbook

XSOS: Energy Audit Handbook

XSOS: Energy Audit Handbook

XSOS: Energy Audit Handbook

Agree to the approach