Brief Introduction To Energy Management

TOPICS COVERED   Ø Energy management   §  What is energy management? §  What are the objectives of energy management? §  Why is energy management important? §  Principles of energy management   Ø Energy Audit   §  What is energy audit? §  Why is the need for energy audit? §  Types of energy audit   Ø Energy Management Program   §  Organizational Structure o   Energy Manager o   Energy Team o   Employees §  Energy Policy §  Planning   Ø Conclusion                       What is Energy Management?   The fundamental goal of energy management is to produce goods and provide services with the least cost and least environmental effect. The term energy management means many things to many people. One definition of energy management is:   "The judicious and effective use of energy to maximize profits (minimize costs) and enhance competitive positions" (Cape Hart, Turner and Kennedy, Guide to Energy Management Fairmont press inc. 1997)   Another comprehensive definition is   The strategy of adjusting and optimizing energy, using systems and procedures so as to reduce energy requirements per unit of output while holding constant or reducing total costs of producing the output from these systems.   Energy management includes planning and operation of energy-related production and consumption units. Energy management is the proactive, organized and systematic coordination of procurement, conversion, distribution and use of energy to meet the requirements, taking into account environmental and economic objectives. What are its objectives of energy management? The objective of Energy Management is to achieve and maintain optimum energy procurement and utilisation, throughout the organization and:   •  To minimise energy costs / waste without affecting production & quality • To minimise environmental effects, resource conservation, climate     protection   Why is energy management important?   Energy management is the key to saving energy in your organization. Much of the importance of energy saving stems from the global need to save energy - this global need affects energy prices, emissions targets, and legislation, all of which lead to several compelling reasons why you should save energy at your organization specifically. Energy management helps improve environmental quality. It reduces the load on power plants as fewer kilowatt hours of electricity are needed. Energy management is the means to controlling and reducing your organization's energy consumption and controlling and reducing your organization's energy consumption is important because it enables you to: Reduce costs – this is becoming increasingly important as energy costs rise. Reduce carbon emissions and the environmental damage that they cause - as well as the cost-related implications of carbon taxes and the like, your organization may be keen to reduce its carbon footprint to promote a green, sustainable image. Not least because promoting such an image is often good for the bottom line. Reduce risk – the more energy you consume, the greater the risk that energy price increases or supply shortages could seriously affect your profitability, or even make it impossible for your business/organization to continue. With energy management you can reduce this risk by reducing your demand for energy and by controlling it so as to make it more predictable. On top of these reasons, it's quite likely that you have some rather aggressive energy-consumption-reduction targets that you're supposed to be meeting at some worrying point in the near future... Your understanding of effective energy management will hopefully be the secret weapon that will enable you to meet those aggressive targets...       The global need to save energy If it wasn't for the global need to save energy, the term "energy management" might never have even been coined... Globally we need to save energy in order to: Reduce the damage that we're doing to our planet, Earth. As a human race we would probably find things rather difficult without the Earth, so it makes good sense to try to make it last. Reduce our dependence on the fossil fuels that are becoming increasingly limited in supply.   Principles of energy management Four main principles underlie in the basis of a well-organized program for energy management:   The first of these is to control the costs of the energy function or service provided, but not the MWh of energy . In addition to energy costs, it is useful to measure the depreciation, maintenance, labour, 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. For example - if we can lower the temperature level of a thermal process, along with reducing heat loss will eventually be possible using other sources of heat, and from there to other parts energy conversion elements. In turn, they may require less maintenance and repair. Thus, by managing the quality of the heat achieves a multiplier effect.   The 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. 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 oversizing 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 (so called Pareto's Principle).   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. Submetering 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 behavioural 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.   What is Energy Audit?   Energy Audit is the key to a systematic approach for decision-making in the area of energy management. It attempts to balance the total energy inputs with its use, and serves to identify all the energy streams in a facility. It quantifies energy usage according to its discrete functions. Industrial energy audit is an effective tool in defining and pursuing comprehensive energy management programme. The energy audit is one of the first tasks to be performed in the accomplishment of an effective energy cost control program. An energy audit consists of a detailed examination of how a facility uses energy, what the facility pays for that energy, and finally, a recommended program for changes in operating practices or energy-consuming equipment that will cost-effectively save money on energy bills. As per the Energy Conservation Act, 2001, Energy Audit is defined as "the verification, monitoring and analysis of use of energy including submission of technical report containing recommendations for improving energy efficiency with cost benefit analysis and an action plan to reduce energy consumption".         What is the need for energy audit?   In any industry, the three top operating expenses are often found to be energy (both electrical and thermal), labour and materials. If one were to relate to the manageability of the cost or potential cost savings in each of the above components, energy would invariably emerge as a top ranker, and thus energy management function constitutes a strategic area for cost reduction. Energy Audit will help to understand more about the ways energy and fuel are used in any industry, and help in identifying the areas where waste can occur and where scope for improvement exists. The Energy Audit would give a positive orientation to the energy cost reduction, preventive maintenance and quality control programmes which are vital for production and utility activities. Such an audit programme will help to keep focus on variations which occur in the energy costs, availability and reliability of supply of energy, decide on appropriate energy mix, identify energy conservation technologies, retrofit for energy conservation equipment etc. In general, Energy Audit is the translation of conservation ideas into realities, by lending technically feasible solutions with economic and other organizational considerations within a specified time frame. The primary objective of Energy Audit is to determine ways to reduce energy consumption per unit of product output or to lower operating costs. Energy Audit provides a "bench-mark" (Reference point) for managing energy in the organization and also provides the basis for planning a more effective use of energy throughout the organization.   Type of Energy Audit   The type of Energy Audit to be performed depends on: ·        Function and type of industry ·        Depth to which final audit is needed, and ·        Potential and magnitude of cost reduction desired Thus Energy Audit can be classified into the following two types      I.        Preliminary Audit    II.        Detailed Audit   Preliminary Energy Audit Methodology   Preliminary energy audit is a relatively quick exercise to: • Establish energy consumption in the organization • Estimate the scope for saving • Identify the most likely (and the easiest areas for attention • Identify immediate (especially no-/low-cost) improvements/ savings • Set a 'reference point' • Identify areas for more detailed study/measurement • Preliminary energy audit uses existing, or easily obtained data   Detailed Energy Audit Methodology   A comprehensive audit provides a detailed energy project implementation plan for a facility, since it evaluates all major energy using systems. This type of audit offers the most accurate estimate of energy savings and cost. It considers the interactive effects of all projects, accounts for the energy use of all major equipment, and includes detailed energy cost saving calculations and project cost. In a comprehensive audit, one of the key elements is the energy balance. This is based on an inventory of energy using systems, assumptions of current operating conditions and calculations of energy use. This estimated use is then compared to utility bill charges. Detailed energy auditing is carried out in three phases: Phase I, II and III. Phase I - Pre Audit Phase Phase II - Audit Phase Phase III - Post Audit Phase   ENERGY MANAGEMENT PROGRAM   All the components of a comprehensive energy management program are depicted in Figure below. 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.     ORGANIZATIONAL STRUCTURE   The organizational chart for energy management shown in Figure above 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 a 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.   Energy Team   The coordinators shown in Figure represent the energy management team within one given organizational structure, such as one company within a corporation. 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. Coordinators should be selected to supplement skills lacking in the energy manager since, it is unrealistic to think one energy manager can have all the qualifications outlined. So, total skills needed for the team, including the energy manager maybe defined as follows:   • Have enough technical knowledge within the group to either understand the technology used by the organization, or be trainable in that technology.   • Have a knowledge of potential new technology that may be applicable to the program.   • Have planning skills that will help establish the organizational structure, plan energy surveys, determine educational needs, and develop a strategic energy management plan.   • Understand the economic evaluation system used by the organization, particularly payback and life cycle cost analysis.   • Have good communication and motivational skills since energy management involves everyone within the organization.   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 posters that say “Save Energy.” 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. An understanding of the psychology of motivation is necessary before an employee involvement program can be successfully conducted.   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.   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. Almost everyone from top management to the custodial level will be happy to give an opinion on what can be done to save energy. Most suggestions are worthless. It is not always wise from a job security standpoint to say this to top management. However, if you inform people especially top management—that you will evaluate their suggestion, and assign a priority to it in your plan, not only will you not be disrupted, but may be considered effective because you do have a plan.                   CONCLUSION   Energy management has now matured to the point that it offers outstanding opportunities for those willing to invest time and effort to learn the fundamentals. It requires technical and management skills which broadens educational needs for both technical and management people desiring to enter this field. Because of the economic return of energy management, it is attractive to top management, so exposure of the energy manager at this level brings added opportunity for recognition and advancement. Managing energy will be a continuous need, so persons with this skill will have personal job security as we are caught up in the downsizing fad now permeating our society.     APPENDIX     BIBLIOGRAPHY AND REFERENCES:       §  Energy Management Handbook, Wayne C. Turner and Steve Doty §  Mashburn, William H., Managing Energy Resources in Times of   Dynamic Change, Fairmont Press, 1992 §  Hersey, Paul and Kenneth H. Blanchard, Management of Organizational Behaviour: Utilizing Human Resources, Harper and Row, 1970 §  Energy Efficiency and Energy Management Handbook, Bulgaria Energy Efficiency for Competitive Industry Financing Facility (BEECIFF) §  Guide to Energy Management, Cape Hart, Turner and Kennedy § §