1. FUNDAMENTALS OF ENERGY MANAGEMENT

2. 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. 2

3. 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. 3

4. Energy Efficiency Energy Input Useful Energy Output Energy Dissipated to the Surroundings 4

5. Example  An electric motor consumes 100 watts (a joule per second (J/s)) of power to obtain 90 watts of mechanical power. Determine its efficiency ? = 90 W x 100 = 90 % 100 W 5

6. Efficiency of Some Common Devices DeviceEfficiency (%) Electric Motor90 Home Oil Furnace65 Home Coal Furnace55 Steam Boiler (power plant)89 Power Plant (thermal)36 Automobile Engine25 Light Bulb-Fluorescent20 Light Bulb -Incandescent5 6

7. Vehicle Efficiency – Gasoline Engine 25% Of the gasoline is used to propel a car, the rest is “lost” as heat 7

8. Efficiency in Power Generation 8

9. Energy Conversion Unit Table 1 kWh3.6 MJ 1 m 3 natural gas37 MJ 1 kg #2 fuel oil42 MJ 1 litre gasoline35 MJ 1 m 3 #2 fuel oil39 GJ 1 m 3 propane (LPG)25.5 MJ 1 kg propane (LPG)45.65 MJ 1 MJ1000 kJ 1 GJ10 6 kJ 1 MW10 6 Watts 9

10. 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? 10

11. Energy Use Index (EUI)  Basic measure of a facility’s energy performance.  A statement of the number of MJ of energy used annually per square meters of conditioned space.  To compute the EUI:  Identify all the forms of energy used in the facility.  Tabulate the total energy in MJ used in the facility.  Determine the total number of square meters of conditioned space. 11

12. Energy Use Index (EUI)  The Energy Use Index is the ratio of the total MJ used per year to the total number of square meters of conditioned space.  A typical office building in the US has an EUI of around 900 MJ/square meters/year.  Food sales and food service facilities in the US have the highest average EUI’s of over 2000 MJ/square meters/year. Health care facilities are next at about 1750 MJ/square meters/year. 12

13. Energy Use Index (EUI) Example:  An office building has 10,000 square meters of conditioned floor space and uses 2.0 million kWh and 6800 GJ of natural gas in one year.  Convert the electric and gas use into MJ by finding the appropriate conversion factor. 13

14. Energy Use Index (EUI)  One kWh electric energy is equal to 3.6 MJ, thus 2.0 million kWh is equal to ………….  One GJ of natural gas is 1000 MJ, so 6800 GJ of natural gas is equal to …………  The EUI is then MJ divided by square meters, and is equal to MJ/square meter/year …………. 14

15. Energy Cost Index (ECI)  The Energy Use Index (EUI) has some fairly obvious limitations:  Problem with mix of fuel and electricity.  Looks only at site energy- not source energy.  With site energy, 1 kWh is valued at 3.6 MJ, but back at the thermal power plant, it took around 11-12 MJ of primary energy to produce the 3.6 MJ value of that 1 kWh. 15

16. Energy Cost Index (ECI)  The Energy Cost Index is sometimes used as a simpler and more meaningful measure of energy efficiency.  The Energy Use Index is somewhat misleading since all MJ are not really equal.  Electric energy is much higher quality energy than oil or gas, and it costs about three times as much per end use MJ.  The Energy Cost Index adds up all costs of energy and divides result by total square meters of conditioned space. 16

17. Energy Cost Index (ECI):Example  For the 10,000 square meters office building looked at earlier, the cost of electricity is $ 153,200 per year, and the cost of gas is $ 52,500 per year.  The ECI is then $................. divided by 10,000 square meters, for an ECI of ……………………/square meter/year.  The ECI is easy to calculate, and is very useful.  It is another simple benchmark that can be used. 17

18. 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. 18

19. 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.  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. 19

20. 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. 20

21. Introduction to Energy Auditing  Saving money on energy bills is attractive to businesses, industries, and individuals alike.  Customers whose energy bills use up a large part of their income, and especially those customers whose energy bills represent a substantial fraction of their company’s operating costs, have a strong motivation to initiate and continue an ongoing energy cost-control program. 21

22. Introduction to Energy Auditing No-cost or very low cost operational changes can often save a customer or an industry 10-20% on utility bills. Capital cost programs with payback times of two years or less can often save an additional 20-30%. In many cases these energy cost control programs will also result in both reduced energy consumption and reduced emissions of environmental pollutants. 22

23. Introduction to Energy Auditing  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 dollars on energy bills. 23

24. Goals of Energy Auditing  The goals of the audit are: To clearly identify the types and costs of energy use, To understand how that energy is being used—and possibly wasted, To identify and analyze alternatives such as improved operational techniques and/or new equipment that could substantially reduce energy costs, and To perform an economic analysis on those alternatives and determine which ones are cost-effective for the business or industry involved. 24

25. Energy Audit Phases  The three phases of an energy audit: Preparing for the audit visit Performing the facility survey Implementing the audit recommendations 25

26. Energy Audit Phases  In the first phase, data from the energy bills is analyzed in detail to determine what energy is being used and how the use varies with time.  Preliminary information on the facility is compiled, the necessary auditing tools are gathered, and an audit team is assembled.  Phase two starts after a safety briefing when the team performs a walkthrough inspection, looking carefully at each of the physical systems within the facility and recording the information for later use. 26

27. Energy Audit Phases  After the plant survey, the audit team must develop an energy balance to account for the energy use in the facility.  Once all energy uses have been identified and quantified, the team can begin analyzing alternatives.  The final step of phase two is the audit report which recommends changes in equipment, processes or operations to produce energy cost savings. 27

28. Energy Audit Phases  Phase Three—the implementation phase—begins when the energy manager and the facility management agree on specific energy savings goals and initiate some or all of the actions recommended to achieve those goals.  Setting up a monitoring system will allow management to assess the degree to which the chosen goals have been accomplished and to show which measures have been successful and which have failed. 28

29. Electricity Rate Structures  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. 29

30. 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. 30

31. 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. 31

32. 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. 32

33. 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. 33

34. 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. 34

35. Innovative Rate Structures  Utilities have designed a variety of rate types to influence the customer to use more or less energy or use energy at times that are helpful to the utility.  One of these rate structures is the time-of-use rate (TOU).  The primary purpose of this rate structure is to send the proper pricing signals to the consumer regarding the cost of energy during specific times of the day.  Generally, a utility’s daytime load is higher than its nighttime load, resulting in higher daytime production costs.  Proper TOU price signals will encourage customers to defer energy use until costs are lower. 35

36. Example 1  An office building is billed for electricity according to the following structure:  Customer cost = $50 per month  Energy cost = $0.06 per kWh  Demand cost = $6.5 per kW per month  Fuel adjustment = $0.025 per kWh  This month, the building used 150,000 kWh, and the metered demand was 525 kW, calculate its electricity bill for this month. 36

37. Example 2  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. 37