PART 1:FUNDAMENTALS OF ENERGY MANAGEMENT

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Outline

Introduction Energy Efficiency Energy Units and Calculations Engineering Economic Analysis Energy Auditing Energy Intensity & Benchmarking Electricity & Energy Prices

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Energy Management

The phrase energy management can be defined as: The thoughtful and effective use of energy to maximize profits (minimize costs) and enhance competitiveness.

This rather broad definition covers many operations from product and equipment design through product shipment.

Energy management can take the form of implementing new energy efficiency technologies, new materials, new processes and methodologies.

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Energy Management

The primary objective of energy management is to maximize profits or minimize costs, but it can also help in: Improving productivity and increasing product or service quality. Raising awareness of the importance of energy conservation. Improving environmental quality. Developing and maintaining effective monitoring, reporting, and

management strategies for wise energy usage. Finding new and better ways to increase returns from energy

investments.

Efficiency5

Efficiency is one of the most frequently used terms in energy calculations, and it indicates how well an energy conversion or transfer process is accomplished.

𝐸𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑐𝑦 ሺ𝜂ሻ= 𝑈𝑠𝑒𝑓𝑢𝑙 𝐸𝑛𝑒𝑟𝑔𝑦 𝑂𝑢𝑡𝑝𝑢𝑡𝑇𝑜𝑡𝑎𝑙 𝐸𝑛𝑒𝑟𝑔𝑦 𝐼𝑛𝑝𝑢𝑡

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Efficiency

Source: greencarcongress.comSource: greencarcongress.com

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Typical Efficiency of Common Devices

Device Efficiency (%)Electric Motor 90

Home Oil Furnace 65Steam Boiler (power plant) 88

Power Plant (thermal) 36Automobile Engine 25

Light Bulb-Fluorescent 20 Light Bulb -Incandescent 5

Source: Thermodynamics, a practical approach, McGrawHill

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Units of Energy & Power

Joule [J] is the basic unit of energy: 1 J = 1 N.m = 0.2388 cal

Power is the rate of energy and is measured by Watt [W]: 1 J/s = 1 W

Another common unit of energy is the [kWh] 1 kWh = 3.6 ×106 J

kWh = (3600 s)(kW) = 3600 s (kJ/s) = 3600 kJ

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If a house loses energy at a rate of 650 W, how much energy will be needed to keep it at warm at 20C for 8 hours.

If this is done using a resistance heater that has an efficiency of 90%, how much electrical energy will be consumed?

Example

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Other Units of Energy & Power

1 J = 0.2388 cal 1 kWh = 3412 BTU 1 kW = 3412 BTU/h 1 ton refrigeration = 12,000 BTU/h = 3.5 kW 1 hp = 746 W 1 hp.hr = 2.68 ×106 J = 0.74 kWh

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Unit Prefixes

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Energy Conversion Unit Table

1 kWh 3.6 MJ1 m3 natural gas 37 MJ

1 kg #2 fuel oil (Diesel) 42 MJ1 litre gasoline 35 MJ

1 m3 #2 fuel oil (Diesel) 39 GJ1 m3 propane (LPG) 25.5 MJ1 kg propane (LPG) 45.6 MJ

1 Ton Oil Equivalent (TOE) 41.9 GJ1 Barrel Oil Equivalent (BOE) 6.1 GJ

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Example

A steam boiler for a facility can operate on LPG or diesel. LPG costs $1.25 per kg, and results in efficiency of 75%, while diesel costs $1.0 per liter and results in efficiency of 78%.Which fuel should be used from an economic point of view?

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Engineering Economic Analysis

It is the Use of a combination of quantitative and

qualitative techniques to analyze economic

differences among engineering design alternatives

in selecting the preferred design.

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Capital Investment Characteristics

When companies spend money, the outlay of cash can be broadly categorized into one of two classifications; expenses or capital investments.

Expenses are generally those cash expenditures that are routine, ongoing, and necessary for the ordinary operation of the business.

Capital investments, on the other hand, are generally more strategic and have long term effects.

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Capital Investment Characteristics

Three characteristics of capital investments are of concern when performing life cycle cost analysis.

First, capital investments usually require a relatively large initial cost.

“Relatively large” may mean several hundred dollars to a small company or many millions of dollars to a large company.

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Capital Investment Characteristics

The second important characteristic of a capital investment is that the benefits (revenues or savings) resulting from the initial cost occur in the future, normally over a period of years.

The period between the initial cost and the last future cash flow is the life cycle or life of the investment.

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Capital Investment Characteristics

The last important characteristic of capital investments is that they are relatively irreversible.

Frequently, after the initial investment has been made, terminating or significantly altering the nature of a capital investment has substantial (usually negative) cost consequences.

This is one of the reasons that capital investment decisions are usually evaluated at higher levels of the organizational hierarchy than operating expense decisions.

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Capital Investment Cost Categories

In almost every case, the costs which occur over the life of a capital investment can be classified into one of the following categories: Initial Cost, Annual Expenses and Revenues, Periodic Replacement and Maintenance, or Salvage Value.

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Capital Investment Cost Categories

As a simplifying assumption, the cash flows which occur during a year are generally summed and regarded as a single end-of-year cash flow.

Initial costs include all costs associated with preparing the investment for service. This includes purchase cost as well as installation and preparation costs.

Initial costs are usually nonrecurring during the life of an investment.

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Capital Investment Cost Categories

Annual expenses and revenues are the recurring costs and benefits generated throughout the life of the investment.

Periodic replacement and maintenance costs are similar to annual expenses and revenues except that they do not (or are not expected to) occur annually.

The salvage (or residual) value of an investment is the revenue (or expense) attributed to disposing of the investment at the end of its useful life.

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Payback Period

The payback period of an investment is generally taken to mean the number of years required to recover the initial investment through net project returns.

The payback period is a popular measure of investment worth and appears in many forms in economic analysis literature.

Unfortunately, all too frequently, payback period is used inappropriately and leads to decisions which focus exclusively on short term results and ignore time value of money concepts.

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Payback Period

The fact that this approach ignores time value of money concepts is apparent by the fact that no time value of money factors are included in the determination of m.

This implicitly assumes that the applicable interest rate to convert future amounts to present amounts is zero.

This implies that people are indifferent between $100 today and $100 one year from today, which is an implication that is highly inconsistent with observable behavior.

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Example

A 10 kW electric motor with 84% efficiency is replaced with 96% high efficiency motor which costs SR 5000. Assuming that the motor is operating for 4000 hours per year at full load, calculate the payback period if the electricity cost is SR 0.3/kWh.

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Energy Auditing

An Energy Audit is a systematic, detailed, and periodic process that serves the purpose of identifying: how energy is consumed in a given facility Energy Conservation Opportunities

The energy audit is the first and essential step towards the establishment of a professional energy management program.

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Audit Objectives

Improving energy efficiency.

Conserving non-renewable energy resources.

Reducing environmental impact and carbon footprints.

Lowering energy costs.

Improving the quality of processes, services, and products.

Improving the comfort and safety of people.

Role in Energy Management Programs 27

Energy Auditing

Audit Report with Recommended

Actions

Implementation of Audit

Recommendations

Monitoring and Control

Review for continuous

improvement

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Audit Scope

Energy Balance

Electricity Measurements

Electromechanical Drives Lighting System

Compressed Air System

Cooling System Boilers & Steam System

Renewable Energy &

Environmental Impact

Economic Feasibility

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Audit Methodology

Review with management

Preparation of audit report

Analysis of Energy conservation measures

Actual consumption and efficiency measurement

Document review and analysis

Walkthrough visit

Meeting with key personnel

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1- Meeting with key personnel

The meeting agenda focuses on: audit objectives and scope of work company rules and regulations roles and responsibilities of the audit team description of scheduled project activities

In addition, the discussion during this meeting seeks to establish: operating characteristics energy system specifications operating and maintenance procedures unusual operating constraints

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2- Walkthrough

After the initial meeting, a walkthrough visit of the facility is arranged to gather and record observations of the various operations first hand, focusing on the major energy consuming systems identified during the interview.

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3- Document review

These documents should include: All available architectural and engineering plans Company operation and maintenance procedures and

logs Energy (electricity & fuel) bills for the previous 12-24

months Detailed analysis of these documents is necessary

to identify and understand trends and areas of interest to investigate during facility measurements.

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4- Facility Measurements

After a thorough review of the construction and operating documentation, the major energy consuming processes in the facility are further investigated.

Where appropriate, field measurements are collected to substantiate operating parameters, including efficiency, load factors,…etc.

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5- Analysis of ECM

The collected data during the audit is processed and analyzed to develop a list of major Energy Conservation Measures (ECMs) for each of the major energy consuming systems.

After the ECMs list is developed, the feasibility study is conducted to calculate the implementation cost, energy savings and a simple payback period for each of the ECMs.

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6- Preparation of the Audit Report

The results and recommendations are summarized in a final audit report.

The report includes: Description of the facilities and their operation Discussion of all major energy consuming systems Description of all recommended ECMs with their specific

energy impact, implementation costs, benefits and payback period.

The report also incorporates a summary of all the activities and efforts performed throughout the project with specific conclusions.

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7- Review with Management

A formal presentation of the final recommendations is given to the management to supply them with sufficient review and discussion of the benefits and costs to make informed decisions on the prioritized implementation of the appropriate ECMs.

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Implementation of Recommendations

Communication of energy efficiency measures and targets

Training of key personnel on energy efficiency measures

Installation and implementation of recommended equipment/actions

Procurement of recommended equipment/services

Allocation of budget according to estimated costs

Development of detailed specifications of equipment/services

Development of prioritized implementation action plan with time-frames

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Monitoring & Control

Recommendations for continuous improvement

Feedback on energy conservation measures against expected targets

Periodical analysis and interpretation of data against benchmarks

Collection of energy consumption data

Procurement and installation of measurement and monitoring devices

Development of energy measurement and monitoring plan

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Principles of Energy Monitoring

The results of the monitoring should feed back to the beginning of the audit cycle and thus potentially initiate more analysis, implementation, and monitoring.

Energy monitoring involves the development of an energy performance model (EPM) that quantifies a relationship between consumption and the applicable independent variables, and the comparison of performance predicted by the model to actual performance.

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Establishing the Energy Performance Model

Energy use data alone are of very limited usefulness in understanding the nature of the energy system, identifying opportunities for efficiency improvement, and controlling energy use in the future.

Refining data to information that facilitates these functions involves analysis, following steps illustrated here.

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Establishing the Energy Performance Model

Three basic methods exist for establishing a model: Previous year’s data:

Simply using last year as a predictor of this year’s consumption. Typically only useful when there are no significant factors of influence.

Regression and the factors of influence Analysis:A statistical approach based upon historical consumption

Simulation model:Using complex numerical computer models to simulate the energy consumption.

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Establishing the Energy Performance Model

The most common method for a basic system is regression analysis.

In many instances linear regression of energy consumption against a single independent variable (degree-days or production) generates a valid energy performance model.

In some cases, multivariant linear regression, for example against degree-days and production in a plant for which there is significant dependence on weather, is a better representation of the energy relationship.

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Independent Variables: Production Level

Energy use in manufacturing and industrial facilities depends strongly on production level or a measure of the facility’s output, in units, tons, or some other appropriate unit.

Also, energy use in these operations often exhibits a strong dependence upon weather.

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Establishing the Energy Performance Model

Month Production (Ton) Electrical Consumption (kWh)

January 36 21355February 33 20252

March 26 19349April 15 13476May 22 17456June 31 21350July 42 26862

August 48 30972September 53 33769

October 46 29645November 39 24315December 40 23908

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Establishing the Energy Performance Model

10 15 20 25 30 35 40 45 50 55 600

5000

10000

15000

20000

25000

30000

35000

40000

f(x) = 518.067586543745 x + 4951.82251663717R² = 0.951149264761259

Production (Ton)

Elec

tric

ity

Cons

umpti

on (k

Wh)

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Establishing the Energy Performance Model

The graph produces an energy performance model equation as shown. That is,

The two parameters in the equation have a physical meaning: The slope of the line, 518.07 represents the incremental

energy consumption per heating degree day The intercept, 4951.8, represents the non-heating or weather-

independent load.

Electricity (kWh) = 518.07 x Production (Ton) + 4951.8

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Energy Intensity Vs Energy Efficiency

Energy Intensity is measured by the quantity of energy required per unit output or activity, so that using less energy to produce a product reduces the intensity.

Energy Efficiency improves when a given level of service is provided with reduced amounts of energy inputs or services are enhanced for a given amount of energy input.

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Energy Intensity Vs Energy Efficiency

Energy efficiency refers to the activity or product that can be produced with a given amount of energy; for example, the number of tons of steel that can be melted with a megawatt hour of electricity.

At the level of a specific technology, the difference between efficiency and energy intensity is insignificant - one is simply the inverse of the other.

For example, energy intensity is the number of megawatt.hours (or GJ, or MBTU) used to produce one ton of steel.

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Energy Intensity Benchmarks

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Electricity Rate Structures - General

The rate tariff structure generally consist of: customer charge energy charge demand charge

Each type of charge may consist of several individual charges and may be varied by the time or season of use.

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Customer Charge

This is generally a flat fee per customer. It is used to cover the costs incurred in the connection

between customer and utility. Customer costs vary with the number of customers, not

with the amount of use by the customer. These costs include the operating and capital costs

associated with metering (original cost and on-going meter-reading costs), billing, and maintenance of service connections.

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Energy Charge

This is a charge for the use of energy, and is measured in dollars per kilowatt-hour for.

The energy charge often includes a fuel adjustment factor that allows the utility to change the price allocated for fuel cost recovery on a monthly, quarterly, or annual basis.

This passes the burden of variable fuel costs (either increases or decreases) directly to the consumer.

Energy charges are direct charges for the actual use of energy.

Energy costs are not affected by the number of customers or overall system demand.

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Demand Charge

Electric utilities must be able to meet the peak demand—the period when the greatest number of customers are simultaneously using service.

The utility needs to generate enough power to cover its customers’ needs at all times.

Customers using service at off-peak hours are less expensive to serve than on-peak users.

Since electricity cannot be stored, and since a utility must provide instantaneous and continuous service, the size of a generation plant is determined by the aggregate amount of service taken by all its customers at any particular time.

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Demand Charge

Therefore, demand-related costs are dependent upon overall system requirements.

The demand charge is usually not applied to residential or small commercial customers, though it is not always limited to large users.

The customer’s demand is generally measured with a demand meter that registers the maximum demand or maximum average demand in any 15-, 30-, or 60-minute period in the billing month.

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Power Factor Charge

Another type of demand charge that may be included is a reactive power factor charge; a charge for kilovoltamp reactive demand (kVAR).

This is a method used to charge for the power lost due to a mismatch between the line and load impedance.

Where the power-factor charge is significant, corrective action can be taken, for example by adding capacitance to electric motors.

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Example

A company is billed for electricity according to the following structure: Customer charge = $151/bill/month Demand charge = $13.27/kW (June-October) Demand charge = $4.82/kW (November-May) Energy charge = $0.0468/kWh Power factor: If less than 80%, the charge is equal to the metered

demand multiplied by 80 and divided by the average power factor.

If the electric use during September for this company was as follows: 54,000 kWh, 250 kW measured demand, 75% power factor, calculate the electricity bill for this month.

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Electricity Rate Structure in KSA THE ELECTRICITY TARIFF AT PRESENT IN THE KINGDOMالتعرفة الحالية لبيع الطاقة الكهربائية في المملكة

التعرفة الشهرية ) ريال سعودي (قاطع العداد ) أمبير (شرائح االستهالك Meter Breaker ( Amps )Monthly Tariff ( SR )) ك. و. س / شهر (

Consumption Brackets6010الزراعيالصناعيالحكوميالتجاريالسكني( KWH / Month )ResidentialCommercialGovernmentalIndustrialAgricultural10015

1000 1 555125200212000 1001555125300223000 20011010101210400254000 30011010101210 Over 400 30أكثر من5000 400112121212106000 500112121212127000 60011515151212تعرفة إيصال الخدمة ) ريال سعودي (قاطع العداد ) أمبير (70012020201212 8000

9000 80012222221212Meter Breaker ( Amps )Connection Tariff ( SR )

10000 9001 2424241212601 380Over 10000 3 2626261212100800أكثر من

11 200400* تطبق التعرفة الصناعية على المستشفيات والمستوصفات األهلية وكذا المؤسسات والمعاهد والمدارس األهلية المرخص لها في مجال التعليم والتدريب.18 300800** تطبق التعرفة الزراعية على المساجد والجمعيات الخيرية عدا مشاريعها اإلستثمارية غير الزراعية والصناعية.

The Industrial Tariff has been Implemented for Private Hospitals and Dispensaries in Addition to40026 600 Private Institutions, Institutes and Schools that are Licensed in the Field of Education and Training.26 600 + 250 The Agricultural Tariff has been Implemented for Mosques and Charitable Societies but not Over 400 لكل كيلو فولت أمبير إضافيأكثر من

Applied on their Investment Projects. For every additional KVA

According to Council of Ministers Decision No. (170) of 12/7/1421 H (9/10/2000 G) (1);)1( حسب قرار مجلس الوزراء رقم )170( وتاريخ 1421/7/12هـ القاضي Stipulated to Straighten the First Article for Electricity Consumption Tariff. بتعديل البند األول الخاص بتعرفة االستهالك الكهربائي.

2- Meter Reading and Maintenance and Bill Preparation Tariff.

2- تعرفة قراءة وصيانة العداد وإعداد الفاتورة.

1- Elctricity Tariff from 1/8/1421 H (28/10/2000 G) up To Date.

1- تعرفة االستهالك بدءا̀ من 1421/8/1هـ حتى تاريخه.

3- Electricity Service Connection Tariff.

3 - تعرفة إيصال الخدمة الكهربائية.

Tariff ( Halala/KWH ) التعرفة ) هللة / ك. و. س (

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