Energy Conservation and Management

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EXPERIMENT NO :- 1 Date : AIM: - TO STUDY ABOUT ENERGY SCENARIO AND CONSERVATION ENERGY SCENARIO: Introduction Energy is one of the major inputs for the economic development of any country. In the case of  the developing countries, the energy sector assumes a critical importance in view of the everincreasing energy needs requiring huge investments to meet them. Energy can be classified into several types based on the following criteria: •

Primary and Secondary energy Commercial and Non commercial energy Renewable and Non-Renewable energy

Primary and Secondary Energy Primary energy sources are those that are either found or stored in nature. Common primary energy sources are coal, oil, natural gas, and biomass (such as wood). Other primary energy sources available include nuclear energy from radioactive substances, thermal energy stored in earth’s interior, and potential energy due to earth’s gravity. The major primary and secondary energy sources are shown in Figure 1.1 Primary energy sources are mostly converted in industrial utilities into secondary energy sources; for example coal, oil or gas converted into steam And electricity.

Source Extraction Coal

Open or Deep Mines

Processing Preparation

Primary Primary energy

Secondary Energy Steam


Thermal Purification




Natural gas



Gas Well


Power Station


Natural gas gas

Thermal Petroleum Petroleum

Oil Oil Well

Cracking and and Refining

LPG LPG Petrol


Diesel/fuel oils Petrochemical




Primary energy can also be used directly. Some energy sources have non-energy uses, for example coal or natural gas can be used as a feedstock in fertiliser plants.

Commercial Energy and Non Commercial Energy 

Commercial Energy

The energy sources that are available in the market for a definite price are known as commercial energy. By far the most important forms of commercial commercial energy are electricity, coal and and refined petroleum products. Commercial energy forms the basis of industrial, agricultural, transport and commercial development in the modern world. In the industrialized countries, commercialized fuels are predominant source not only for economic production, but also for many household tasks of general population. Examples: Electricity, lignite, coal, oil, natural gas etc. 

Non-Commercial Energy

The energy sources that are not available in the commercial market for a price are classified as non-commercial energy. Non-commercial energy sources include fuels such as firewood, cattle dung and agricultural wastes, which are traditionally gathered, and not bought at a price used especially in rural households. These are also called traditional fuels. Non-commercial energy is often ignored in energy accounting. Example: Firewood, agro waste in rural areas; solar energy for water heating, electricity generation, for drying grain, fish and fruits; animal power for transport, threshing, lifting water for irrigation, crushing sugarcane; wind energy for lifting water and electricity generation. 

Renewable and Non-Renewable Energy

Renewable energy is energy obtained from sources that are essentially inexhaustible. Examples of renewable resources include wind power, solar power, geothermal energy, tidal power and hydroelectric power (See Figure 1.2). The most important feature of renewable energy is that it can be harnessed without the release of harmful pollutants. Non-renewable energy is the conventional fossil fuels such as coal, oil and gas, which are likely to deplete with time.



Figure 1.2 Renewable and Non-Renewable Energy




Global Primary Energy Reserves * Coal The proven global coal reserve was estimated to be 9,84,453 million tonnes by end of 2003. The USA had the largest share of the global reserve (25.4%) followed by Russia (15.9%), China (11.6%). India was 4th in the list with 8.6%.

Oil The global proven oil reserve was estimated to be 1147 billion barrels by the end of 2003. Saudi Arabia had the largest share of the reserve with almost 23%. (One barrel of oil is approximately 160 litres) 

Gas The global proven gas reserve was estimated to be 176 trillion cubic metres by the end of 2003. The Russian Federation had the largest share of the reserve with almost 27%. 

(*Source: BP Statistical Review of World Energy, June 2004)

World oil and gas reserves are estimated at just 45 years an d 65 years respectively. Coal is likely to last a little over 200 2 00 years Global Primary Energy Consumption The global primary energy consumption at the end of 2003 was equivalent to 9741 million tonnes of oil equivalent (Mtoe). The Figure 1.3 shows in what proportions the sources mentioned above contributed to this global figure.

World primary energy energy consumption consum ption

BP Statistical Review of World Energy 2004

© BP

Figure 1.3 Global Primary Energy Consumption




The primary energy consumption for few of the developed and developing countries are shown in Table 1.1. It may be seen that India’s absolute primary energy consumption is only 1/29th of  the world, 1/7th of USA, 1/1.6th time of Japan but 1.1, 1.3, 1.5 times that of Canada, France and U.K respectively. Table 1.1: Primary Energy Consumption by Fuel , 2009 In Million tonnes oil equivalent Oil Natural Coal Nuclear Hydro Gas Energy electric Country USA 914.3 566.8 573.9 181.9 60.9 Canada 96.4 78.7 31.0 16.8 68.6 France 94.2 39.4 12.4 99.8 14.8 Russian Federation 124.7 365.2 111.3 34.0 35.6 United Kingdom 76.8 85.7 39.1 20.1 1.3 China 275.2 29.5 799.7 9.8 64.0 India 113.3 27.1 185.3 4.1 15.6 Japan 248.7 68.9 112.2 52.2 22.8 Malaysia 23.9 25.6 3.2 1.7 Pakistan 17.0 19.0 2.7 0.4 5.6 Singapore 34.1 4.8 TOTAL WORLD 3636.6 2331.9 2578.4 598.8 595.4

Total 2297.8 291.4 260.6 670.8 223.2 1178.3 345.3 504.8 54.4 44.8 38.9 9741.1

Energy Distribution Between Developed And Developing Countries Although 80 percent of the world’s population lies in the developing countries (a fourfold population increase in the past 25 years), their energy consumption amounts to only 40 percent of the world total energy consumption. The high standards of living in the developed countries are attributable to high-energy consumption levels. levels. Also, the rapid population growth in the developing countries has kept the per capita energy consumption low compared with that of  highly industrialized developed countries. Figure 1.4: Energy Distribution Between Developed The world average energy consumption and Developing Countries per person is equivalent to 2.2 tonnes of  coal. In industrialized countries, people use four to five times more than the world average, and nine times more than the average for the developing countries. An American uses 32 times more commercial energy than an Indian.




Indian Energy Scenario: Coal dominates the energy mix in India, contributing to 55% of the total primary energy production. Over the years, there has been a marked increase in the share of natural gas in primary energy production from 10% in 1994 to 13% in 1999. There has been a decline in the share of oil in primary energy production from 20% to 17% during the same period.

Energy Supply Coal Supply India has huge coal reserves, at least 84,396 million tonnes of proven recoverable reserves (at the end of 2003). This amounts to almost 8.6% of the world reserves and it may last for about 230 years at the current Reserve to Production (R/P) ratio. In contrast, the world’s proven coal reserves are expected to last only for 192 years at the current R/P ratio. Reserves/Production (R/P) ratio- If the reserves remaining at the end of the year are divided by the production in that year, the result is the length of time that the remaining reserves would last if production were to continue at that level. India is the fourth largest producer of coal and lignite in the world. Coal production is concentrated in these states (Andhra Pradesh, Uttar Pradesh, Bihar, Madhya Pradesh, Maharashtra, Orissa, Jharkhand, West Bengal).

Oil Supply Oil accounts for about 36 % of India's The ever rising import bill total energy consumption. India today is Year Quantity (MMT) Value (Rs Crore) one of the top ten oil-guzzling nations in 1996-97 33.90 18,337 the world and will soon overtake Korea as 1997-98 34.49 15,872 the third largest consumer of oil in Asia 1998-99 39.81 19,907 after China and Japan. The country’s 1999-00 57.80 40,028 annual crude oil production is peaked at 2000-01 74.10 65,932 about 32 million tonne as against the 2001-02 84.90 8,116 current peak demand of about 110 million 2002-03 90 85,042 tonne. In the current scenario, India’s oil 2003-04 95 93,159 consumption by end of 2007 is expected *2004-05 100 1,30,000 to reach 136 million tonne(MT), of which * Estimated domestic production will be only 34 MT. Source: Ministry of Petroleum and Natural Gas India will have to pay an oil bill of  roughly $50 billion, assuming a weighted average price of $50 per barrel of crude. In 2003-04, against total export of $64 billion, oil imports accounted for $21 billion. India imports 70% of  its crude needs mainly from gulf nations. The majority of India's roughly 5.4 billion barrels in oil reserves are located in the Bombay High, upper Assam, Cambay, Krishna-Godavari. In terms of sector wise petroleum product consumption, transport accounts for 42% followed by domestic and industry with 24% and 24% respectively. India spent more than Rs.1,10,000 crore on oil imports at the end of 2004. 5



Natural Gas Supply

Natural gas accounts for about 8.9 per cent of energy consumption in the country. The current demand for natural gas is about 96 million cubic metres per day (mcmd) as against availability of 67 mcmd. By 2007, the demand is expected to be around 200 mcmd. Natural gas reserves are estimated at 660 billion cubic meters. 

Electrical Energy Supply

The all India installed capacity of electric power generating stations under utilities was 1,12,581 MW as on 31 st May 2004, consisting of 28,860 MW- hydro, 77,931 MW - thermal and 2,720 MW- nuclear and 1,869 MW- wind (Ministry of Power). The gross generation of power in the year 2002-2003 stood at 531 billion units (kWh). 

Nuclear Power Supply

Nuclear Power contributes to about 2.4 per cent of electricity electricity generated in India. India has ten nuclear power reactors reactors at five nuclear power stations producing electricity. More nuclear reactors have also been approved for construction. 

Hydro Power Supply

India is endowed with a vast and viable hydro potential for power generation of which only 15% has been harnessed so far. The share of hydropower in the country’s total generated units has steadily decreased and it presently stands at 25% as on 31st May 2004. It is assessed that exploitable potential at 60% load factor is 84,000 MW. 

Final Energy Consumption

Final energy consumption is the actual energy demand at the user end. This is the difference between primary energy consumption and the losses that takes place in transport, transmission & distribution and refinement. The actual final energy consumption (past and projected) is given in Table 1.2. Table 1.2 DEMAND FOR COMMERCIAL ENERGY FOR FINAL CONSUMPTION (BAU SCENARIO)

Source Units 1994-95 2001-02 2006-07 2011-12 Electricity Billion Units 289.36 480.08 712.67 1067.88 Coal Million Tonnes 76.67 109.01 134.99 173.47 Lignite Million Tonnes 4.85 11.69 16.02 19.70 Natural Gas Million Cubic Meters 9880 15730 18291 20853 Oil Products Million Tonnes 63.55 99.89 139.95 196.47 Source: Planning Commission  BAU:_Business As Usual




Sector wise Energy Consumption in India

The major commercial energy consuming sectors in the country are classified as shown in the Figure 1.5. As seen from the figure, industry remains the biggest consumer of  commercial energy and its share in the overall consumption is 49%.

Energy Needs of Growing Economy:

Figure 1.5 Sector Wise Energy Consumption (2007-2008)

Economic growth is desirable for developing countries, and energy is essential for economic growth. However, the relationship between economic growth and increased energy demand is not always a straightforward linear one. For example, under present conditions, 6% increase in India's Gross Domestic Product (GDP) would impose an increased demand of 9 % on its energy sector. In this context, the ratio of energy demand to GDP is a useful indicator. A high ratio reflects energy dependence and a strong influence of energy on GDP growth. The developed countries, by focusing on energy efficiency and lower energy-intensive routes, maintain their energy to GDP ratios at values of less than 1. The Th e ratios for developing countries are much higher. 


Energy Needs

The plan outlay vis-à-vis share of energy is given in Figure 1.6. As seen from the Figure, 18.0% of the total five-year plan outlay is spent on the energy sector. PLANWISE OUTLAY

Figure 1.6 Expenditure Towards Energy Sector

Per Capita Energy Consumption

The per capita energy consumption (see Figure 1.7) is too low for India as compared to developed countries. It is just 4% of USA and 20% of the world average. The per capita consumption is likely to grow in India with growth in economy thus increasing the energy demand. 7



Primary energy consumption per capita

BP Statistical Review of World Energy 2004

© BP

Energy Intensity Energy intensity is energy consumption per unit of GDP. Energy intensity indicates the development stage of the country. India’s energy intensity is 3.7 times of Japan, 1.55 times of  USA, 1.47 times of Asia and 1.5 times of World average.

Long Term Energy Scenario For India: 


Coal is the predominant energy source for power production in India, generating approximately 70% of total domestic electricity. Energy demand in India is expected to increase over the next 10-15 years; although new oil and gas plants are planned, coal is expected to remain the dominant fuel for power generation. Despite significant increases in total installed installed capacity during the last decade, the gap between electricity supply and demand continues to increase. The resulting shortfall has had a negative impact on industrial output and economic growth. However, to meet expected future demand, indigenous coal production will have to be greatly expanded. Production currently stands at around 290 Million tonnes per year, but coal demand is expected to more than double by 2010. Indian coal is typically of poor quality and as such requires to be beneficiated to improve the quality; Coal imports will also need to increase dramatically to satisfy industrial and power generation requirements. 8




India's demand for petroleum products is likely to rise from 97.7 million tonnes in 2001-02 to around 139.95 million tonnes in 2006-07, according to projections of the Tenth Five-Year Plan.

The plan document puts compound annual growth rate (CAGR) at 3.6 % during the plan period. Domestic crude oil production is likely to rise marginally from 32.03 million tonnes in 2001-02 to 33.97 million tonnes by the end of the 10th plan period (2006-07). India’s self sufficiency in oil has consistently declined from 60% in the 50s to 30% currently. Same is expected to go down to 8% by 2020. As shown in the figure 1.8, around 92% of  India’s total oil demand by 2020 has to be met by imports.

Figure 1.8 India’s Oil

Natural Gas India's natural gas production is likely to rise from 86.56 million cmpd in 2002-03 to 103.08 million cmpd in 2006-07. It is mainly based on the strength of a more than doubling of  production by private operators to 38.25 mm cmpd. 

Electricity India currently has a peak demand shortage of around 14% and an energy deficit deficit of8.4%. Keeping this in view and to maintain a GDP (gross (gross domestic product) growth of 8% to 10%, the Government of India has very prudently prudentl y set a target of 215,804 MW power Table 1.3 India’s Perspective Plan For Power For Zero Deficit Deficit Power By 2011/12 (Source Tenth And Eleventh Five-Year Plan Projections)

Installed capacity as on March 2001

Thermal (Coal) (MW

Gas / LNG /  Diesel (MW)


Gas: 10,153 Diesel: 864


Nuclear (MW)

Hydro (MW)









31,425 (14.6%)

12,100 (5.6%)

57,789 (26.8%)


Additional capacity Total capacity March 2012

114,490 (53.0%)




Energy Conservation and its Importance

Coal and other fossil fuels, which have taken three million years to form, are likely to deplete soon. In the last two hundred years, we have consumed 60% of all resources. For sustainable development, we need to adopt energy efficiency measures.

Today, 85% of primary energy comes from non-renewable, and fossil sources (coal, oil, etc.). These reserves are continually diminishing with increasing consumption and will not exist for future generations (see Figure 1.13).

What is Energy Conservation? Energy Conservation and Energy Efficiency are separate, but related concepts. Energy conservation is achieved when growth of energy consumption is reduced, measured in physical terms. Energy Conservation can, therefore, be the result of several processes or developments, such as productivity increase or technological progress. On the other hand Energy efficiency is achieved when energy intensity in a specific product, process or area of production or consumption is reduced without affecting output, consumption or comfort levels. Promotion of  energy efficiency will contribute to energy conservation and is therefore an integral part of  energy conservation promotional policies.




Energy efficiency is often viewed as a resource option like coal, oil or natural gas. It provides additional economic value by preserving the resource base and reducing pollution. For example, replacing traditional light bulbs with Compact Fluorescent Lamps (CFLs) means you will use only 1/4th of the energy to light a room. Pollution levels also reduce by the same amount (refer Figure 1.14). Nature sets some basic limits on how efficiently energy can be used, but in most cases our products and manufacturing processes are still a long way from operating at this theoretical limit. Very simply, energy efficiency means using less energy to perform the same function. Although, energy efficiency has been in practice ever since the first oil crisis in 1973, it has today assumed even more importance because of being the most cost-effective and reliable means of mitigating the global climatic change. Recognition of that potential has led to high expectations for the control of future CO2 emissions through even more energy efficiency improvements than have occurred in the past. The industrial sector accounts for some 41 per cent of global primary energy demand and approximately the same share of CO2 emissions. The benefits of Energy conservation for various players are given in Figure 1.15.





Heat Loss :

The typical home owner would like the inside of their house to be around 72º on the inside in the winter. This is called the Winter Inside Design Temperature. However, because it is cold outside, heat travels through the building envelope, the walls, windows and ceilings to the outside. This heat is lost by conduction. Also, cold winter air leaks into the house and warm air leaks out. This is called infiltration. There is a continuous movement of heat from the inside to the outside, which is measured in units called BTUs (British Thermal Units). The speed of the movement of heat is called the Heat Loss and is measured in BTUH, which means BTUs per Hour. If it is 72º inside the house and 52º outside then the 20º temperature differential will cause a certain num ber of BTUs to leave the house each hour, let’s say that that number is 9,768 BTUH. The heat loss of this house at 52º is 9,768 BTUH. This means that your heating system needs to produce 9,768 BTUs each hour to keep the house at 72º, when it is 52º outside. If it is even colder outside, then the house will lose more heat each hour, the heat loss will be higher. When selecting a heating system, at what outside temperature do you need to know the heat loss? Well, this of course depends on where you live, how cold your winters are. The temperature to use as an outside temperature is called the Winter Outside Design Temperature. This is the temperature, say 10º for instance, at which only 2 ½% of the time is colder than 10º. The heat loss of the house when calculated with an outside temperature of the Winter Outside Design Temperature is called the Design Heat Loss. Because the heat loss at any temperature other than the design temperature is not really a relevant number, we usually just say Heat Loss, rather than Design Heat Loss. So, to recap, the Heat Loss of the house is the number of BTUs lost each hour when the house is at the Inside Design temperature inside and the outside is at the Winter Outside Design Temperature.




Fig: 1

The factors affecting heat loss: 1. Temperature difference : Reducing the inside temperature and moving to a warmer climate are two ways to reduce heat loss 2. Area of the building envelope: Smaller houses have lower heat losses than larger on es. 3. Thermal Resistance: Adding insulation to the walls and ceiling (increasing R-value) slows the movement of heat, thus reducing heat loss. 4. Tightness: Better window frames, sealing cracks particularly around doors reduces infiltration as does better fireplaces

Heat Gain:

Heat loss is made up of the heat lost by conduction through the building envelope and infiltration. Heat Gain occurs in the summer time. Heat Gain is i s made up of  1. 2. 3. 4. 5. 6.

Heat gained by conduction (through walls, windows, ceilings etc) Heat gained by infiltration (warm outside air coming in, c ool inside air leaking out) Moisture gained by infiltration (moist outside air coming in, dryer air leaving) Radiation from the sun, either direct or indirect, through windows, glass doors and skylights. Heat and moisture given off by people. Heat given off by appliances. 13



Fig:2 So you can see that heat h eat gain is a little more complex. Notice that items 1 and 2 are directly directl y related to the temperature of the outside air, just like their cou nterparts in winter heat loss calculations, but items 3, 4, 5 and 6 occur no matter what the outside temperature is. To make things a little more complex, heat gain calculations take moisture into account as part of  the Design Heat Gain. Fortunately, a computer compute r program like HVAC-Calc handles this complexity for you.

Sensible Gain and Latent Gain

The heat gain associated with the temperature of the air is called the Sensible Heat Gain. The heat gain associated with the water in the air that leaks in due to infiltration and the water that evaporates from people’s skin as well as the moisture in their breath is called the Latent Heat Gain. If you add up the Sensible Gain and the Latent Gain you get the Total Heat Gain. There is a Total Heat Gain at every outside design condition however the one of interest is the Total Design Heat Gain at the outside Summer Design Conditions. The Summer Design Conditions consist of more than just the outside temperature. They consist of  the Summer Design Temperature (only 2½ % of time warmer than this) and Summer Moisture Content (measured in grains of water per pound of air, typical Houston 113, New York 98), Daily Temperature Range (High, Medium or Low). The daily range is a measurement of how the temperature varies during the day. A high daily range means temperatures start cool in the morning, hot in midday and cool down at night. A high daily range will result in a lower heat gain than a low daily range where wh ere it starts out hot and stays hot all day. da y. 14



With a computer program such as HVAC-Calc, the Summer Design Conditions and Winter Design Conditions for hundreds of cities are built in to the program. You select them once and then forget it. There is also an additional unit of measurement that is used to describe the cooling capacity of air conditioners and that is the "Ton". One Ton is 12,000 BTU per hour (BTUH). It comes from the number of BTU’s absorbed by a ton of ice melting in 24 hours. If you have a heat gain of 30,000 BTUH then you would need to remove 30,000 BTUH in order to keep the house at the indoor design temperature of say 75. You could remove the 30,000 BTUs each hour by setting up some fans to blow the inside air over a mountain of ice, being sure to completely melt 2 ½ tons each day. Or you can install a 2 ½ ton air conditioner. Due to the difficulty of obtaining ice these days and the problems associated with drinking two and a half tons of ice water each day, most people will choose the 2 ½ ton air conditioner. 

Cooling and Heating Load Calculations: Calculations:

The calculation of the cooling and heating loads on a building or zone is the most important step in determining the size and type of cooling and heating equipment required to maintain comfortable indoor air conditions. Building heat and moisture transfer mechanisms are complex and as unpredictable as the weather and human behavior, both of which strongly influence load calculation results. Some of the factors that influence results are: Conduction/convection of heat through walls, roofs, floors, doors and windows. Radiation through windows and heating effects on wall and roof surface temperatures. Thermal properties of buildings (Insulation, glass transmittance, surface absorbtivity. Building thermal mass and corresponding delay of indoor temperature change. Construction quality in preventing air, heat, and moisture leakage. Heat added/lost with ventilation air needed to mai ntain air quality (code compliance). Heat generated by lights, people, appliances, and equipment. Heat added/lost by air, water, and refrigeration distribution systems. Heat generated by air and water distribution equipment. Moisture added/lost with ventilation air to maintain air quality and code compliance. Moisture movement through building envelope. Moisture generated by occupants and equipment. Activity level, occupancy patterns, and make- up (male, female, child) of people. Acceptable comfort and air quality levels of occupants. Weather conditions (temperature, moisture, wind speed, latitude, elevation, solar radiation, etc.) 15



These many factors combine to force engineers to develop procedures that minimize the load calculation complexity without compromising accuracy. A combination of measured data and detailed simulations have generated techniques that can be done with a pocket calculator and a one-page form or more complex numerical simulations that take hours to complete using modern computers. However, many assumptions and simplifications must be made for all methods.












For reference purposes, record customer’s name, address and phone number in the spaces provided. 2. Record inside and outside design temperatures in the spaces provided and calculate the temperature differences Use local code or practices or ACCA Manual J* as a guide. 3. Measure total area of windows and doors and record for each construction in Tables A and B. Total area at the bottom of Table A should equal total area at the bottom of Table B. Multiply each area by its appropriate factor. 4. Find gross wall area by multiplying total length of exposed walls by ceiling height. Use more than one line, if needed, for different types of wall construction. Record on gross wall line in sq. ft. column of Construction Data. 5. Subtract total Windows and Doors area from Gross Wall area. Reco rd under Net Walls. 6. Record exposed ceiling area. 7. Record exposed floor area. If floor is concrete slab or floor of heated crawl space, record linear feet of exposed perimeter. 8. Select proper heat transfer multipliers from Table C (additional U factors for heating can be obtained from ACCA Manual J, Table 2, by using the 100° temperature difference column in the manual and dividing by 100. This represents the U factor. Cooling factors can be obtained directly from Tables 4 and 5 of Manual J. Record factors in their proper columns. co lumns. 9. Multiply area by their factors and enter in the BTUH loss and BTUH gain columns. c olumns. 10. Record number of people (usually based on 2 people per bedroom) and multiply by 300. Enter total in BTUH gain column. 11. Total the BTUH loss and gain columns and record as sensible total. Heat loss total represents loss per degree temperature difference. Heat gain total represents entire sensible load not including latent load (moisture removal). 12. Multiply heat loss by design temperature difference that you selected as your Design Condition for heating. Multiply heat gain by 1.3 latent heat factors. Record on Sub-Total line. 13. If a large percentage of ductwork is not in the conditional space, multiply the BTUH Loss and Gain Sub-Totals by the duct loss/gain factors. This becomes your total BTUH HEAT LOSS AND HEAT GAIN for equipment selection.




The CLTD/CLF Method

Many engineers use some form of the Cooling Load Temperature Difference/Cooling. Load Factor (CLTD/CLF) method. The combined effects of convection, conduction, radiation, and thermal lag for opaque surfaces are combined into a modification of the conduction equation:



An array of CLTD tables are used to account for thermal mass, insulation levels, latitude, time of  day, direction, temperature swing, and other variables. CLF factors are used to account for the fact that building thermal mass creates a time lag between heat generation from internal sources (lighting, people, appliances, etc.) and the corresponding cooling load. CLF factors are presented in a set of tables that account for number of hours the heat has been on, thermal mass, type of floor covering and window shading, number of walls, and the presence of ventilation hoods. A CLF represents the fraction of the heat gain that is conv erted to cooling load.




Solar gains through glass are computed in a similar manner with introduction of Solar Cooling Load (SCL) factors with the units of heat rate per unit area that are tabularized by facing direction (N, E, S, W, Horz.) and latitude. The fraction of solar gain that is transmitted is accounted for with a shading coefficient (SC) to correct for transmittance and shading devices.



All of these factors are summed and added to some estimate of the latent (dehumidification) load to arrive at the cooling load. Recent publications have devoted little attention to the heating loads in larger buildings, since they are often small even in colder climates due to the internal heat generation of equipment. The most recent version of the ASHRAE Handbook of Fundamentals (2001) contains a one-half page discussion of heating load which provides only minimal guidance. More detailed discussions are provided for residential buildings in the Handbook and the parallel Manual J Load Calculation published by the Air Conditioning Contractors of America (ACCA). However, increased attention to heating load calculations are warranted due to the growing awareness of the need of adequate ventilation air at all times to maintain indoor air quality (IAQ). The recommended ventilation rates in high occupancy buildings often exceed the heat losses from all other components combined.




Factors Affecting Thermal Performance

Environmental concerns and the rising cost of fuel mean that there is an increased focus on the minimisation of energy use during the natural occupational life of a building. The thermal performance of the building envelope can make a significant contribution to reducing the overall building energy usage. Reducing operational carbon emissions from buildings is imperative in the drive to combat global warming. The European Union Energy Performance of Buildings Directive (EPBD, 2002/91/EC), published in 2002, aims to promote building energy efficiency across the whole EU, and requires energy performance to be calculated to a national standard. In response, the 2006 revisions to Part L of the Building Regulations (Conservation of Fuel and Power) in England and Wales is projected to save over 1 million tonnes of carbon emissions by 2010 and incorporates a new National Calculation Methodology for non-domestic buildings. Enhanced thermal performance of the building envelope, both in terms of improved insulation and air-tight construction, plays a key role in minimising energy use for heating and cooling and hence in reducing carbon emissions.  CO2 emissions targets can be met by a combination of means, such as:

Efficient insulation and better detailing of the building env elope. Air-tight construction of the building envelope. Energy efficient appliances and fittings (e.g. boilers and lighting). Automatic controls and building management systems. Use of zero-emission technologies such as solar water heating and photovoltaics. Over the years, well-proven cladding systems have been developed using pre-finished steel for the outer and/or inner skin of the building envelope. Highly insulated, air-tight cladding systems, with well designed junctions and interfaces can make a significant contribution to reducing the overall carbon emissions of a building over its lifetime.


―Reasonable improvement‖ for the conservation of fuel and power shall be made whenever   building work is being carried out, where it is ―cost effective‖ according to criteria contained in ADL2B. Any extension or significant refurbishment to a building, must meet defined criteria, documented within ADL2B, including improvements to the existing building. 21



Established pre-finished steel over cladding and other refurbishment solutions are available to meet these requirements. Heat can escape through the building envelope by direct heat transfer through the walls, roof, floors and windows, both through the insulation itself and through direct paths of lower thermal resistance called thermal bridges.


The air-tightness of a building envelope has a direct effect upon the energy performance of the building High levels of air infiltration through joints, interfaces, doors, windows and service penetrations will add to heating and air conditioning loads and consequently to CO2 emissions and energy bills. High air leakage levels will account for a substantial proportion of energy losses for the occupier. Conversely, good air-tightness in a building reduces capital spend on heating and cooling systems, also reducing running costs. Air leakage typically accounts for 25-50% of the heat loss from a building. 

Solar gain:

Under the 2006 revision of part L2, it is mandatory to consider the effects of solar gain, in order to minimise the need for air conditioning. It requires approximately 3 to 4 times as much energy to cool a building, as it does to heat it. It is therefore essential that potential causes of overheating are minimised by: Reduced incidence of direct sunlight (through roof lights and windows). Provision of well designed solar shading. Use of natural or assisted ventilation to reduce reliance on air conditioning.

The effects of solar gain need to be balanced against the benefits of natural day da y lighting. Modelling packages can be used to predict the natural lighting levels throughout the day/year within a building for varying areas and orientation or roof lights and windows. Large areas of roof lights can lead to excessive solar gain causing the building to overheat. ov erheat. Roof light areas greater than 15% will almost certainly lead to a certain amount of overheating. For low energy design, the lowest sensible lighting level should be specified. Most roof lights will need to be triple skin to achieve the limiting U value standard of 2.2 W/m2K as specified in the latest building regulations.




For large single storey buildings, 10% roof light area can be considered as a good practical starting point when considering a daylight requirement. 

Thermal bridging:

A thermal bridge is a localised area of lower thermal resistance in the building envelope resulting in higher heat flow and lower internal surface temperatures. Repeating thermal bridges, such as fasteners, must be included in the U-value calculation, whereas non-repeating thermal bridges such as flashings must be accounted for separately. One type of thermal bridge occurs when any non-insulative material penetrates the insulated layer and becomes a heat conduction co nduction path. Examples of this include fixings, brick ties, lintels, composite cladding junctions, brackets in built-up cladding, window and door frames, cantilevers for balconies, and roof beam supporting overhangs. Thermal bridging also occurs as a result of  building geometry. For example, corners can also be thermal bridges, providing a heat flow path from both adjoining walls, as are panel joints and other design features. As well as increasing heat loss from the building envelope, thermal bridging can cause localised condensation as surface temperatures may be reduced below the dew point (condensation temperature) of the air in the space. This is a particular danger in buildings where the Relative Humidity (RH) may be high, such as canteens, laundries, swimming pools and some factories. The relatively high thermal conductivity of steel (approximately 52 W/mK) means that careful detailing is required to ensure that thermal bridging does not occur in certain applications. 


In the UK, the U-value concept is used to quantify heat loss through plane elements of the building envelope. This U-value is defined as the overall thermal transmittance of a particular construction element (a wall or a roof for example), including the effect of surface resistance. It depends upon the thickness and thermal conductivity of its component layers and, in the case of air cavities, the emissivity of the surfaces. U-values are measured in W/m2K, and the lower the value the better the thermal performance. Uvalues of simple constructions can be calculated readily but for constructions with integral thermal bridges such as light gauge steel framing, the method becomes more complex. BS EN ISO 6946 contains approved calculation methods. There are also software tools validated by the Building Research Establishment (BRE) available to perform U-value calculations using accepted approximation methods.





Need for energy conservation: There is actuate shortage of energy in the world now a days, the demand of energy is increased rapidly as listed below. Year 1) 2) 3) 4) 5) 6) 7)

1960 1965 1970 1975 1980 1985 1990

energy consumed 13.27 * 10^12 16.34*10^12 21.69*10^12 23.39*10^12 29.63*10^12 35.09*10^12 41.65*10^12

In view of limited resources and ever increasing demand of energy ,it is essential to find out the major areas for use of energy so that the capability of energy in various fields can be analyzed and inefficient energy consumption can be minimized

Method of energy conservation The prospect of depleting fossil fuel supplies and progressive degradation of the environment has turned world attention to various aspect of energy use, in the process of upgrading the living standards man has been consuming more and more energy to satisfy his material wants, coupled with the degradation of forests, lands, ever increasing consumption of commercial energy sources has been contributing to the pollution of air, water and soil, Energy being a major requirement of modern society , its development and management carries a lot of significance in the economic development of any country. There is a close relationship between the level of energy consumption in country and its economic development, energy is required for domestic use, agriculture, industry, commerce, transport, and in almost every sphere of life, Since two oil shocks during last two decades, awareness of efficient use of energy has increased specially in the developed countries, ,due to lake of political will, paucity of capital and failure to adopt newer energy efficient technologies have hindered the progress towards better energy efficiency, moreover the environment has received much less attention than it deserves.




Energy conservation can be define as the reduction of energy use per unit of product, changing from a secure fuel to a more readily available fuel, through conserervation measure in industry would be different from those in the domestic sector, the final aim is to conserve depleting natural resources. The inter ministerial working group of energy set up by the government of India estimated that energy saving potential of 25% is presently exiting in industrial sector. This was mainly by introducing short and medium term measures. If long term measure such as co-generation, boiler replacement, process modification, and advanced control are included the potential would be much higher.

Efficiency improvement in thermal power plant 1) Saving in auxiliaries:- the average all India auxiliaries power consumption in thermal plants during 1990-91 was around 10%, with concerned effort , it may be possible to reduce it by 1%, saving potential on account of 1% reduction in auxiliary power consumption will be 13000 million units and additional revenue on account of above will be Rs. 1027 crore considering average ave rage rate Rs 1 per KWh. This Th is one example is sufficient to insist the importance of energy conservation. 2) Saving potential in coil and oil:- the present average specific coal consumption on all India basis of thermal power stations 0.72kg/kWh, with improvement in thermal efficiency ,it may not be difficult to bring down the specific coal consumption level to 0.70kg/kWh in the country .saving in coal consumption with reduction of 0.02kg/kWh in specific coal consumption during VIII plan was 24 million tones and saving of the order of Rs 1200crores taking coal price as Rs 500 per tone 3) Plant load factor improvement:- the present PLF of the thermal power plant is around 54%, with the implementation of renovation and modernization programmed and other necessary measure, it is possible to increase PLF by 3%.Additional generation due to increase in PLF from 54% to 57% will be 13000 million units, 4) Modern method of thermal power plant generation:- a few modern method like co generation FBD and new boiler design and control system and non conventional energy uses, are presently under consideration and applications in Indian power industry. This is a trend to use natural gas or crude oil instead of low grade coal for power generation as pollution hazard from this sources are less than the use of coal these substitution fuels are used mostly In gas turbine plants whole coal based thermal efficiency is considerably low than conventional thermal plants.

Energy audit

The main purpose of energy audit is to establish quickly and reliably the basic relative costs of the various forms of energy purchased, their main uses and to identify the principle locations where losses, wastages or inefficiency occurs. 25



There are five basic steps involved in energy e nergy audit as described below

Step 1 Evolve comprehensive energy management policy. The first step in energy conservation is to take a decision that it must be done, what target can be set and in what time frame, these are to be achieved. The fig shows the energy management chart.

Step 2 conducting a detailed energy audit. The next step is to identify all forms of energy being used and to carry out an audit for each type of energy used. An energy audit identifies the cost of energy ene rgy and where and how it is used. It will identify The amount or energy expended in a process with the help of mass and energy balance for each process. Then energy flow diagram is prepared showing the quantity, form, source and quality (temperature) of the energy required for various processes. Next step is to make a critical analysis for energy used and energy wasted. This is followed by identification of potential areas for energy conservation. A typical energy audit of a factory would be as shown in fog. Experience with energy audits in different plants indicate the more common causes leading to inefficient energy use as listed below in table.

Primary losses

Secondary losses

Leaks through lining (fuel, steam , water)

Exhaust gases (from stack of furness, boiler)

Faulty Traps (wrong types, over sizing, poor maintenance)

Condensate and flash steam (steam heated system)

Faulty combustion (excess air, poor fuel, air pressure, insufficient burner)

Blow down (from boiler and process vessels)

Overheating (absence of control)

Hot effluents (waste liquoirs)

Overcooling (faulty controll)

Cooling water (to cooling tower)

Excessive ventilation Low power factor, excessive lighting




Detailed formats for conducting energy audits in typical areas including energy cost evaluation, boiler house energy consumption, checklist for heat generation, distribution and consumption are provided at the end. Similar format can be developed for all other activities using energy. energ y.

Step 3. The efficiency of energy utilization varies with the specific industrial operations, the materials produced and nature of manufacturing operation. Therefore, an effective energy conservation program has to be undertaken. Initial measures to conserve energy(fuel and electricity) in each plant are just to follow the operating practices listed in previous table which can result in as much 10 to 15% saving with no capital investment. Higher saving upto 30 to 40% can be achieved with capital investment on major energy saving schemes. Energy consumption even can be halved if the problem is tackled in a scientific and methodical manner.




A positive plan of action should be undertaken after analysis then detail design work is to be carried out to draw up the specification for practical modification of the existing processes.

Step 4 I mplementation mplementation of energy conservation program. Implementation of energy conservation measures will yield saving but pilot scale projects should be undertaken to establish their technical feasibility.

Step 5 Reviews of achievements. Proper measurement and control systems are to be incorporated to monitor the performance of the equipments used for energy conservation. Monthly review of all important parameters responsible for energy conservation should be conducted be conducted to ensure that the program is progressing in the right direction. The management of energy system used in each industry like energy saving in buildings, energy saving in boilers, energy optimization by scheduling the loading and grid load distribution are some example where energy management is required for energy conservation. Many publications are available to study in details the management techniques used for each industry and each process in industry. To discuss all these in one text is not possible and that is not the purpose of this text except to bring out the methodology used for energy conservation. Keeping in view the resource constraints, new generation capacity has limited scope. The trust areas of energy conservation energy management and optimal utilization of existing installed capacities/facilities have vast potential for energy saving/improvement and involve comparatively less capital investment .these areas must be given greater attention and high priority to mitigate the anticipated power shortages during IX th and subsequent plan periods. During VII the plan, renovation and modernization program of thermal power stations was accorded a high priority and benefits achieved form it wear very encouraging. The plant load factor during VIIth plan increased form 50% to56.5% and an additional generation of about 10000 million units was reportedly achieved form old thermal sets which underwent substantial renovation and modernization . the implementation of concrete time bound action plans in the key areas discussed above can also yield encouraging result if high priority is accorded to them and concrete and determined effort made in the implementation of these programs.

Energy Management Control Systems

An energy management control system (EMCS) is a centralized computer control system that is intended to operate a facility’s equipment efficiently. Energy management systems can be applied as part of many of the energy energ y saving measures of the Energy Conservation Manual. These systems are still evolving rapidly, and they are controversial. This Note will keep you out of  trouble by explaining the important issues. The most important issue is whether or not to install a 28



system. Some applications are appropriate for computer control systems, and many are not. A range of simpler alternatives are available. You will learn the advantages of building automation systems, including monitoring, report generation, and remote control of equipment. You will also learn the pitfalls, including system cost, skilled staffing requirements, software limitations, vendor support, rapid obsolescence, and lack of standardization. These systems are also known by a variety of other names, including ―energy management systems‖ (EMS), ―smart building controls,‖ ―building automation system‖ (BAS), etc. A system typically has a central computer, distributed microprocessor controllers (called ―local panels‖, ―slave panels‖, ―terminal equipment controllers‖, and other names), and a digital communication system. The communication system may carry signals directly between the computer and the controlled equipment, or there may be tiers of communications. The Note illustrates these variations.

Application requirements

As opposed to a batch data processing environment, real-time sensor based applications require some special user interfaces to




Interfaces must be defined between the user device (control point) and the digital and analog hardware input/output addresses on the computer. Decisions must be made regarding alarm scanning frequency, program scheduling for alarm and normal functions, priority assignments, and system resource allocation. Programs must be scheduled according to application requirements, such as controlled device cycling in energy management applications. A multiprogramming executive interface to the system supervisor must provide all time-dependent inputs with assigned priority levels and specify which programs are to occupy which partitions, in order to optimize memory usage. Files of different sizes on bulk memory (disk or diskette) must be allocated for the 

The digital computer performs the t he following functions:

Monitors power consumption from one or more power meters, comparing it with time-dependent target and maximum consumptions. When specified targets are exceeded, selected devices are turned off for periods specified by the user. Turns devices on and off according to the time of day, and periodically cycles devices during their on period, as during the first shift. Monitors large numbers of alarm-condition points and overrides control of one or more devices according to whether the alarm points are on or off. Alarm conditions may arise if values of  temperature, pressure, or flow in air conditioning equipment exceed limits, or if the environmental temperature or humidity exceeds limits, or if the security of an area is violated. Controls inlet air dampers based on outside air enthalpy; adjusts device of times according to outdoor temperature and interfaces to control panels in facility control rooms. Analog Dialogue 43-01, January (2009) 1

Technology for energy conservation

To expanding the technologies for energy conservation, developing new techniques for nextgeneration products that are even more energy-efficient. We work closely with our customers to clearly define the performance and energy parameters they require. Through close cooperation, can optimize the solutions to help make energy-efficient energy-efficient designs that are easy to develop, speed time to market and are more attractive to end consumers. The products designed designed to improve energy conservation, while helping to meet our performance goals for applications such as:

Industrial motor control ®

• Enabled by our high-performance DSCs and ColdFire and Power Architecture™ embedded controllers 30



Domestic large appliances • Enabled by our high-performance DSCs, MCUs & Sensors Building automation • Enabled by our high performance ColdFire Ethernet embedded controllers, wireless ZigBee/802.15.4 compliant solutions, low-power MCUs and sensors Digital power supplies • Enabled by our high-performance DSCs, MCUs and sensors Remote power management and metering • Enabled by our high- performance  performance Flexis™ series of HCS08 and ColdFire V1 MCUs and ZigBee compatible solutions Audio and video consumer products • Enabled by our SMARTMOS™ analog power management chip sets, i.MX processors and sensors Factory automation • Enabled by our ColdFire, Power Architecture and wireless IEEE(R) 802.15.4 compliant solutions Automotive braking energy regeneration Automotive hybrid engine control Automotive alternator and starter technology Petrol and diesel engine control. • All enabled by our high-performance microprocessors (MPUs) and MCUs built on Power Architecture technology 

Introducing advanced technology:

Improving the energy conservation of motor-driven systems can be achieved by replacing less efficient motors or by introducing advanced-technology variable speed drives. Existing, less efficient drives often use a universal motor or single-phase AC induction motor with simple control. This can be quite inexpensive; however the low precision speed and torque control can not facilitate today’s advanced control algorithms that can help improve performance and energy conservation. In addition, universal motors typically operate at a low 60-70 percent conservation range, whereas brushless DC or 3-phase AC motors, with more advanced electronic control, can achieve an operating conservation of 85-95 percent. Introducing variable speed drives across the industrial segment can also achieve significant improvements in operating efficiencies and energy consumption. A conventional pumping system, for example, has an conservation level of a mere 31 percent because considerable energy is wasted through the mechanical valve. Replacing the valve with a variable-speed drive can dramatically improve liquid flow control as pump speeds are adjusted. The operating conservation of a pumping system with variable-speed drive can help you reach up to 72 percent co 31



Co generation

Cogeneration (also combined heat and power, CHP) is the use of a heat engine or a power station to simultaneously generate both electricity and useful heat. All power plants emit a certain amount of heat during electricity generation. This can be released into the natural environment through cooling towers, flue gas, or by other means. By contrast CHP captures some or all of the by-product heat for heating purposes, either very close to the plant, or especially in Scandinavia and eastern Europe as hot water for district heating with temperatures ranging from approximately 80 to 130 °C. This is also called Combined Heat and Power District Heating or CHPDH. Small CHP plants are an ex ample of decentralized of decentralized energy. In the United States, Con Edison distributes 30 billion pounds of 350 °F/180 °C steam each year through its seven cogeneration plants to 100,000 buildings in Manhattan the biggest steam district in the United States. The peak delivery is 10 million pounds per hour (corresponding to approx. 2.5 GW) This steam distribution system is the reason for the steaming manholes often seen in "gritty" New York movies. Other major cogeneration companies in the U.S. include Recycled Development[4] and leading advocates include Tom Casten and Amory Lovins.


By-product heat at moderate temperatures (212-356°F/100-180°C) can also be used in absorption chillers for cooling. A plant producing electricity, heat and cold is sometimes called trigeneration or more generally: polygeneration plant. plant.[5] Cogeneration is a thermodynamically efficient use offuel. offuel. In separate production of electricity some energy must be rejected as waste heat, but in cogeneration this thermal energy is put to good use

Introduction Masnedø CHP power station in Denmark. This station burns straw as fuel. The adjacent greenhouses are heated by district heating from the plant. Thermal power plants (including those that use fissile elements or burn coal, petroleum, or natural gas), gas), and heat engines in general, do not convert all of their thermal energy into electricity. In most heat engines, a bit more than half is lost as excess heat (see: Second law of  thermodynamics and Carnot's theorem). theorem). By capturing the excess heat, CHP uses heat that would be wasted in a conventional power plant, potentially reaching an efficiency of up to 89%, compared with 55%[6] 55%[6] for the best conventional plants. This means that less fuel needs to be consumed to produce the same amount of useful energy. Some tri-cycle plants have used a combined cycle in which several thermodynamic cycles produced electricity, and then a heating system was used as a condenser of the power plant's bottoming cycle. For example, the RU-25 MHD generator inMoscow inMoscow heated a boiler for a conventional steam powerplant, whose condensate was then used for space heat. A more modern system might use a gas turbine powered by natural gas, whose exhaust powers a steam plant, whose condensate provides heat. Tri-cycle plants can have thermal efficiencies above 80%. The viability of CHP (sometimes termed utilisation factor), especially in smaller CHP installations, depends upon a good baseload of operation, both in terms of an on-site (or near site) electrical demand and heat demand. In practice, an exact match between the heat and electricity needs rarely exists. A CHP plant can either meet the need for heat (heat driven operation) or be run 32



as a power plant with some use of its waste heat. The latter being least advantageous in terms of its utilization factor and thus overall efficiency. The viability can be greatly increased where opportunities for trigeneration exist. In such cases the heat from the CHP plant is also used as a primary energy source to deliver cooling by means of an absorption. CHP is most efficient when the heat can be used on site or very close to it. Overall efficiency is reduced when the heat must be transported over longer distances. This requires heavily insulated pipes, which are expensive and inefficient; whereas electricity can be transmitted along a comparatively simple wire, and over much longer longe r distances for the same energy loss. A car engine becomes a CHP plant in winter, when the reject heat is useful for warming the interior of the vehicle. This example illustrates the point that deployment of CHP depends on heat uses in the vicinity of the heat engine. Cogeneration plants are commonly found in district heating systems of cities, hospitals, prisons, oil refineries, paper mills, wastewater treatment plants, thermal recovery wells and industrial plants with large heating needs. Thermally enhanced oil recovery (TEOR) plants often produce a substantial amount of excess electricity. After generating electricity, these plants pump leftover steam into heavy oil wells so that the oil will flow more easily, increasing production. TEOR cogeneration plants in Kern County, California produce so much electricity that it cannot all be used locally and is transmitted to Los Angeles [citation needed]. needed]. CHP is one of the most cost efficient methods of reducing carbon emissions of heating in cold climates.

Types of plants Topping cycle plants primarily produce electricity from a steam turbine. The exhausted steam is then condensed, and the low temperature heat released from this condensation is utilized for e.g. district heating or water desalination. Bottoming cycle plants produce high temperature heat for industrial processes, then a waste heat recovery boiler feeds an electrical plant. Bottoming cycle plants are only used when the industrial process requires very high temperatures, such as furnaces for glass and metal manufacturing, so they are less common. Large cogeneration systems provide heating water and power for an industrial site or an entire town. Common CHP plant types are: Gas turbine CHP plants using the waste heat in the flue gas of gas turbines. The gaseous fuel used is typically natural gas Gas engine CHP plants (in the US "gaseous fuelled") use a reciprocating gas engine which is generally more competitive than a gas turbine up to about 5 MW. The gaseous fuel used is normally natural gas. These plants are generally manufactured as fully packaged units that can be installed within a plantroom or external plant compound with simple connections to the site's gas supply and electrical distribution and heating systems. Typical large example see [8] Biofuel engine CHP plants use an adapted reciprocating gas engine or diesel engine, depending upon which biofuel is being used, and are otherwise very similar in design to a Gas engine CHP plant. The advantage of using a biofuel is one of reduced hydrocarbon fuel consumption and thus 33



reduced carbon emissions. These plants are generally manufactured as fully packaged units that can be installed within a plantroom or external plant compound with simple connections to the site's electrical distribution and heating systems. Another variant is the wood gasifier CHP plant whereby a wood pellet or wood chip biofuel is gasified in a zero oxygen high temperature environment; the resulting gas is then used to power the gas engine. Typical smaller size biogas plant see [9] Combined cycle power plants adapted for CHP Steam turbine CHP plants that use the heating system as the steam condenser for the steam turbine. Molten-carbonate fuel cells and solid oxide fuel cells have a hot exhaust, very suitable for heating. Nuclear Power plants can be fitted with steam drains after the high, mid, and/or low pressure turbines to provide heat to a heat system. With a heat system temperature of 95°C it is possible to extract about 10 MW heat for every MW electricity lost. With a temperature of 130°C the gain is slightly smaller, about 7 MW for every MWe lost.[10] lost .[10] Smaller cogeneration units may use a reciprocating engine or Stirling engine. The heat is removed from the exhaust and the radiator. These systems are popular in small sizes because small gas and diesel engines are less expensive than small gas- or o r oil-fired steam-electric plants. Some cogeneration plants waste (see incineration). incineration). 



by biomass,[11] biomass,[11] or


and municipal

Heat recovery steam generator

A Heat Recovery Steam Generator (HRSG) is a steam boiler that uses hot exhaust gases from the gas turbines or reciprocating engines in a CHP plant to heat up water and generatesteam. generatesteam. This steam in turn drives a steam turbine and/or is used in industrial processes that require heat. HRSGs used in the CHP industry are distinguished from conventional steam generators by the following main features: The HRSG is designed based upon the specific features of the gas turbine or reciprocating engine that it will be coupled to. Since the exhaust gas temperature is relatively low, heat transmission is accomplished mainly through convection. The exhaust gas velocity is limited by the need to keep head losses down. Thus, the transmission coefficient is low, which calls for a large heating surface area. Since the temperature difference between the hot gases and the fluid to be heated (steam or water) is low, and with the heat transmission coefficient being low as well, the evaporator and economizer are designed with plate fin heat exchangers




Topping cycle

A schematic diagram of a topping cycle c ycle is shown in Figure The topping cycle consists of a high pressure steam boiler and turbine generator with the high pressure turbine exhausting steam steam to one or more low pressure steam steam turbine generators. High pressure topping turbines are usually installed as an addition to an existing lower pressure steam electric plant 35



The bottoming cycle consists of a low pressure steam boiler and turbine generator with the low pressure turbine exhausting steam to one or more high pressure steam turbine generators. Low pressure bottoming turbines are usually installed as an addition to an existing high pressure steam electric plant.





Innovative Energy Management techniques to reduce electricity cost. In the current business scenario, with increasing competition and narrowing margins, innovativeenergy management techniques can substantially reduceelectricity  cost and translate into significant increase in profit margin particularly for the energy

intensive industries. Today electricity costs are the most controllable variable and are easier to reduce as compared to other factors such as material, labour, interest and depreciation. To achieve achiev e savings in electricity bills b ills is at the core of strategic business decisions, especially for energy-intensive entities where competitive advantage is often influenced by energy costs. Studies indicate that by implementing innovative energy management system Indian industries can reduce electricity cost varying from 10 to 60 per

cent if they employ right strategies and technologies. can be broadly classified into demand side and supply side   Energy management  management. While the former deals with making specific changes in energy consumption patterns to save electricity without affecting the existing output levels, the latter involves cost-effective and reliable supply of power. The choice of innovative innovative measures for  energy management in the industries that work best for an enterprise to reduce

its electricity bills and optimize its profit margin are highly highl y specific to the particular firm or production unit. In service and manufacturing sector, heating, ventilating and air conditioning, electric motors provide huge opportunities to the enterprises to rationalise demand. Most of the measures in this segment comprise re-engineering or retro-fitting to reduce thermal load. The various innovative energy management techniquesto reduce electricity consumption include, using variable frequency drives (VFD) for pumps, replacing old motors with energy efficient motors, replacing insulations to prevent radiation loss from heat carrying surfaces, optimising the chiller-running hours etc. Lighting is another area that has wide scope to save electricity substantially. The typical 37



energy management measures in this context, involve use of Compact Fluorescent Lamps, energy efficient electronic ballasts etc. through replacement or retrofits. The pay back  period is generally short, ranging from 18 months to 24 months, thus making the process economically attractive.

On the supply side of energy management , self generation in key energy-intensive industries in India ranges from 50 to 100 per cent of the total power consumption. Then there are also small commercial entities that deploy back-up power units to compensate for grid power shortages. Large industrial users typically benefit from lower unit costs arising from economies of scale in self-generation. For small entities the advantages lie in business continuity from back-up power. Such local generation solutions not only ensure reliable power supply but also avoid system losses transmission and distribution network and eventually reduce electricity cost .

Not all the above measures under energy management programs to reduceelectricity costs require huge investments but needs development of an investment plan to achieve

energy efficiency where ever necessary. Measures such as installation of VFDs, optimising voltage and frequencies of own generation and fine-tuning of existing pumps and motors involve very low levels of investment that are capable of generating high levels of energy and financial savings. These measures are especially advantageous for the large numbers of  small









expensive energy

management technologies.

Overall, the objective of the energy management program is to identify and study the potential areas and to carry out analysis with measured data in order to evaluate the energy cost savings potential and the investment required to implement the innovative techniques of energy management. In India, many early adopters of Energy Monitoring and

Management Systems (EM&MS) in both manufacturing and service sectors through the providers of energy management services, services, have seen results in the form of considerable reduction in electricity costs that seem to suggest that the payback period for availing such services is actually in weeks and months and not in years. 38



How To Reduce Your Energy Bil Reduce Energy Usage In these tough times the end of the month when you receive all your bills is probably the day you dread the most. I know I hate coming home on a Friday afternoon at the end of the month only to be confronted with enormous electricity bills. In times like these you should really start thinking about what you can do to reduce your energy usage so you can have cheaper electricity bills. In this article we are going to share some great tips on what you can do to reduce your energy usage and achieve your goal of cheaper electricity. The first thing you need to think about if you want to reduce your electricity bill is to get your family/room-mates on board. You don’t want to be known as the crazy person running around switching off light builds and recycling things out of  the trash if no one else in the family is willing to make the sacrifice with you. The best bet with room-mates is to reiterate the fact that a reducing energy usage will reduce the electricity bill, which will give them more disposable income to spend on whatever they want, it may be hard to make the electricity bill of an apartment cheaper than it already is, but it is possible to reduce your electricity bill, even in an apartment!. With your family the situation is a bit tougher especially with small children explaining electricity usage to children is not the easiest of tasks. After explaining on how to reduce energy usage maybe set some goals. When your family achieves these goals you could set a reward for the whole family. Suggest tips on how to reduce electricity usage, but also interact with your family and see what ideas they come up with to cheapen your electricity bill.

Electric Bill

Cheaper Electricity Bills We all remember the obvious things that we can do to reduce electricity, but you need to think  about the small things that you can do to ensure that you you have a cheaper electricity bill. Does your refrigerator really need to be on the coldest setting setting that you have it on? Reducing the temperature 39



on your refrigerator could have an immediate impact on making your electricity bill cheaper. Little things like this are what can cut your electricity bill by an insane amount. Before you can start making immediate savings you would need to make your house more energy efficient. You need to get rid of all your your incandescent light bulbs, and incandescent lamp and replace them with more energy efficient light bulbs. It may seem like like a pain in the short term to be spending money to reduce your electricity bill, but in the long term the energy efficient light bulbs, not only last longer but they also use less electricity so that every month you will see a savings on your electricity bill. You can also buy energy saver gadgets that gauge which appliances are either using too much electricity or those those that you do not need to keep on all the time. These gadgets help you control and reduce your electricity usage.

Energy Efficient appliances A lot of you may be thinking that you can’t reduce your electricity usage because you have so many appliances that use electricity. We are living in a world of iPhones, iPods, iTouchs, coffee makers, microwaves, laptops, flat screen TV’s, and computers but the thing is the electricity usage is not directly rated to the number of electrical appliances present in your house but the it is related to the way that you use them.

Here are a few tips on what you can do to reduce the electricity usuage on some common appliances that consume a lot of electricity: Only use the washing machine when you have a full wash ready to go Try to turn off your boiler/geyser when it is not being used Air conditioning is what causes an increase in tropical places like Florida and California; try to keep it at the minimum that you need to keep cool. You do do not need to turn your house into an igloo Make sure to turn off your computer monitor when not in use, it uses a lot of power and takes  just a second To switch off  Lower the setting on your fridge An appliance on standby mode is not the same an appliance that is switched off.

Produce Your Own Electricity My last recommendation is for lowering your electricity bill is to take the benefit of reading some reports and guides, one that I have found really well written and explaining everything is called Earth4Energy, it has some great solutions on what you can do to generate electricity at home and get some free or cheap electricity for you home appliances. It has helped me reduce my electricity bill by half. You need to try to reduce your requirements for electricity by using renewable energy using natural resources like wind, solar, thermal, these sources are cheaper than standard electricity and provide long term return, not just for your wallet but also for the environment. For more information check out Earth4Engery.




Tips on How to Lower and Reduce your Electricity Costs by Half 

Tips on how to save electric costs by half  During this hard time when many people are feeling the financial limitations, it prudent to cut costs on our electricity consumption and costs, below are tips to reduce electricity costs

Tip1: Never leave electrical consuming gadgets on, ensure that all electrical appliances including TV, Computers, radios, stereo, iron boxes, amplifiers are turned off, this will reduce electricity costs, all appliances should be turned off at the surge surge protector. Turning appliances off at the strip control ensures that devices like modem which normal consumes electricity are none consuming, this will greatly reduce your electrical costs

Tip2: Use energy saving bulbs for lightening your houses, energy saving bulbs are more economical than ordinary bulbs and are known to provide high quality light with less energy, energy saving bulbs will reduce your lightening consumption c onsumption by half hence lower electricity costs Tip3: Ensure that all the lamp shade you are using are clean, having lamp shades with white interior provide maximum light, this will greatly reduce your electricity co sts and bills Tip4: Your security lights that are outside the house should have a detectors, it is advisable to install timer switches like the local authority does for their public lights, this will reduce electricity costs by ensuring that electricity are only on when wh en needed and at the right time Tip5: Always close the refrigerator door, as open it causes the refrigerator to consume more electricity to provide cooling effect. Closing your refrigerator ensures that cool air are not let out does reduce the amount of electricity consume hence will lead to reduction in our electricity costs Tip6: When boiling water, use your electric kettle, do not use cooker as they will take too long to boil hence increasing your electricity costs Tip7: Use your microwaves oven to warm food as they are faster and simple to use, they heat up faster compare to cookers. Microwaves electrical consumption is greatly lower than the cookers; this allows you to save half your electricity costs. Microwaves are more efficient and cook faster than normal oven




Tip8: Do not waste your freezer space, ensure that it is always full; this allows for maximum utilization of energy consumed by the freezer hence hen ce will greatly serve you better Tip9: unfreeze food in the on the open air or refrigerator rather than on the Microwaves, this might take more time but you will save electricity costs by half, unfreezing food in the Microwaves consume a lot of energy Tip10: Lastly to save your electricity costs by 50% do all the above tips one by one and remember never to put hot food in your fridge, doing this will increase your electricity costs great, since hot food will requires much energy to cool off.

Setting up an energy management scheme . This checklist provides guidance for those wishing to control the amount of energy consumed by their company or organisation. Organisations are under increasing pressure to reduce costs and protect the environment. Energy can be costly and harm the environment. All organisations use it, and many see it as a `fixed cost' that cannot be reduced. However, there are ways in which the amount of energy used can be reduced, leading to savings, and a successful energy management scheme can produce benefits both for the organisation and the environment.

Definition An energy management scheme provides a systematic and continuous method of assessing, improving and evaluating an organisation's energy usage.

Advantages of an energy management scheme An effective energy management scheme: * saves money * conveys an `environmentally friendly' attitude * often makes for greater employee workplace comfort.

Disadvantages of an energy management scheme There are no real disadvantages to introducing an energy management scheme, but remember that it takes time and can require initial expenditure ex penditure to accrue long-term savings or environmental benefits.

Action checklist 1. Designate an Energy Management Committee




The members of the Energy Management Committee should be drawn from all levels of the organisation. Members from the finance and purchasing departments should be included, together with the transport manager where applicable. The Committee will manage the assessment, improvement and evaluation of energy usage. Appoint a coordinator (someone with project management experience who commands respect and can get things done) to oversee the scheme. If  expertise or resources available are limited consider calling in an en ergy management consultant.

2. Define the scope and coverage of the scheme Depending on the size of the organization it is advisable to concentrate on one building or site initially; the experiences from this can then be used to improve energy efficiency throughout the rest of the organization. It may also be decided to look at only one type of energy usage, for example, heating or use of company vehicles.

3. Gather information Ask the committee's finance department representative to produce a report of all the energy bills over the last couple of years. Check the tariffs being paid. Do they look sensible, or too high? Look for variations in consumption over the year. Ask an alternative provider if they can quote using your own consumption data. Consider a single supplier for both gas and electricity which may provide further savings. Contact the local Energy Efficiency Office to ascertain whether any grants are available for your organization. The Office should also be able to provide figures giving best practice energy usage which can be compared with those of your organization. If possible, try to compare your organization’s energy usage figures with those of another organization. 4. Undertake an energy audit This involves an examination of the organisation to highlight energy wastage. Checklists should be produced covering different areas. Areas to cover and points to look for include:

* Transport - Are vehicles properly serviced, maintained and tuned? - Do employees share vehicles when the y are travelling to the same place on o n business? - Do some drivers appear to use too much fuel? Do they need advice on fuel economy? - Is the most cost-effective form of transport used? - Can diesel or lpg be used instead of petrol?

* Lighting 43



- Are the most efficient light bulbs being used? - Could more use be made of daylight by moving workstations nearer windows? windo ws? - Are lights switched off when rooms are not in use? - Are windows cleaned regularly?

* Heating - Is the heating system serviced regularly? - Are thermostats functioning correctly and are they set to the correct temperature? - Is the heating switched off or turned down when the building is empty? - Are windows double glazed?

* Air conditioning - Is there really a need for it? - Is the system kept clean and regularly maintained? - Is it working against the heating system?

* Insulation - Are the wall and roof insulation materials of the correct t ype and thickness?

* Ventilation - Do employees open doors or windows to cool the place down rather than turning down thermostats? - Are there excessive draughts from badly fitting doors and windows? * Equipment / machinery - Is machinery running efficiently? - Could any heat / energy produced by processes be re-used? - Is the right size of machine used for each job? - Are computers and machines turned off when not in use? 44



Every member of the Committee should be involved in the preparation and carrying out of the survey. It can be split by department or site, or each member can look at one particular aspect of  energy use.

5. Analyse the results and make improvements i mprovements / modifications The results of the survey should highlight areas where action can be taken immediately (for example turning down thermostats) and areas where investment may be needed to produce longterm gains (for example a more efficient boiler system). Ensure that the purchasing department takes energy efficiency into account when making acquisitions by asking suppliers about the energy consumption of any machinery or equipment to be purchased. Ask the department to look  for more energy-efficient machines that could replace the present ones cost-effectively, and new innovations such as systems that switch off lights automatically unless deliberately reactivated.

6. Communicate and train staff  Communicate the benefits of reduced costs through improved energy management to all employees. Provide training on ways in which workers can reduce energy usage, for example, by not opening windows to cool down an office but turning the heating down. The checklists used to undertake the energy audit will help with this. Ask suppliers to provide training on the best ways to maintain and service specialist equipment. Reward staff who suggest successful ways in which energy usage can be reduced.

7. Evaluate the changes and look for further improvements Check the energy bills after the scheme has been implemented and record any reductions. Communicate successes to all employees. Hold regular meetings of the En ergy Management Committee to look for further ways in which energy ene rgy usage can be reduced.

Dos and don'ts for an energy management scheme Do * Make maintenance and servicing a regular process. * Let all staff know of the importance of reducing energy usage. * Ensure purchasing staff look at energy efficiency efficienc y before making an acquisition.

Don't * Forget to record the amount spent on energy before the scheme is implemented. * Hide the results of the scheme--inform all staff of its success. * Stop after one audit and set of responses--continually look for improvements. 45



Related checklists * Taking action on the environment * Setting up a suggestion scheme

Thought starters * Are lights switched off when a room is left empty? * Are all the radiators functioning correctly? * Does your company car use too much petrol? * Turning the heating down one degree saves fuel.

Checklists are available in the following formats: * Individual checklists. * A complete set of 175 on CD-ROM or in hard copy. cop y. * Checklists with permission to photocopy.

Planning for an Effective Energy Management Program The headline in the local newspaper caught my eye - "Lower energy use leaves experts pleased but puzzled." The article stated that "Although the data are preliminary, experts are baffled that the country appears to have broken the decades-old link between economic growth and energy consumption." For those of us who have been involved in energy management for many years, this article contained no news. We have seen, in the last few years, companies becoming more efficient in their use of energy, which shows in the data. Companies that have exacted all possible savings from downsizing are looking for new ways to become more competitive. Better management of  energy is a viable way to cut costs, so more companies are establishing energy management programs. With the new technologies and alternative energy sources now available, this country could possibly reduce its energy consumption by 50%-if there were no barriers to implementation. But of course, there are barriers, mostly economic. Therefore, we might conclude that managing energy is not just a technical challenge, but one of how to best implement those technical changes within economic limits, with a minimum of disruption. Unlike other management fads, such as value analysis and quality circles, that have come and gone, energy management will have a long-lasting place in business. 46



There are several reasons for this: There is direct economic return Most manufacturing companies are looking for a competitive edge Energy technology is changing rapidly; state-of-the-art techniques have half lives of 10 years at the most Energy management includes energy security Facilities managers who choose-or are drafted-to manage energy will do well to recognize this continuing need and exert the extra effort to become skilled in this emerging and dynamic profession.

Energy Manager Management support is very important to the success of an energy management program. Even more important is the selection of an energy manager who can secure this support. The energy manager should have a vision of what managing energy can do for the business. Every successful program has a mover and shaker who makes things happen. The energy program is built around this person. Some energy managers take on too much of the burden, trying to be energy engineers as well as energy managers. Although individuals working alone can accomplish much, for the long haul, programs that involve everyone at a facility are much more productive and permanent. Developing a working organizational structure may be the most important thing an energy manager manage r does. The Energy Policy Act of 1992 (EPACT) changed the role and qualifications of the energy manager. For instance, EPACT requires certification of federal energy managers, deregulation of  the electric utility industry, and performance contracting, which adds business acumen to the job qualifications for energy managers. following requirements for an energy manager: Set up an energy management plan Establish energy records Identify outside assistance Assess future energy needs Identify financing sources Make energy recommendations Implement recommendations Provide liaison for the energy committee Plan communication strategies Evaluate program effectiveness




Energy management programs can, and do, originate within a single division of a large corporation. The division, by example and savings, causes people at the corporate level to imitate the program. Other times corporate personnel initiate programs. These corporate people have facilities responsibility and have implemented good corporate facilities programs. They see the importance and potential of an energy management program and take a leadership role in implementing one. In every case observed by the author, good programs have been initiated by one individual who has recognized the potential, put forth extra effort, taken the risk of pushing new concepts, and seemed to have a higher calling to save energy.

Corporate Programs When a program is initiated at the corporate level, there are some advantages: More resources are available to implement the program, such as budget, staff, and facilities Top management support can be used to get management support at lower levels The existence of expertise throughout the corporation is better known and can be made available to division energy managers Expensive test equipment can be purchased and maintained at corporate level for use by other entities as needed A unified reporting system can be put in place Creative financing may be the most needed and the most important assistance to be provided from corporate level Corporate personnel can best determine the affects of energy and environmental legislation Corporate personnel can best evaluate electrical utility rates and structures, as well as the effects of unbundling of electric utilities However, corporate-level energy managers must be aware that some divisions may have already done a good job of saving energy. Division personnel may worry about corporate-level staff taking credit for their work. Also, all divisions don't progress at the same speed. Work with those who are most interested first, then give them credit to top management. Others divisions will then request assistance.

Energy Team The energy team is the core of the program. The main criterion for membership should be interest. Administration groups, such as accounting or purchasing, facilities and maintenance, and each major department should be represented. Team members should be appointed for a specific time period, such as one year. Annual membership rotation can allow new people with new ideas to participate, provides a mechanism for tactfully removing non-performers, and involves greater numbers of people in the program in a meaningful way.




Team members should be selected to supplement skills the energy manager lacks; it is unrealistic to think one energy manager can have all the skills. The team, however, must: Have enough technical knowledge to understand the technology used by the organization, or be trained in that technology Have a knowledge of potential new energy-saving technologies 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 The strengths of each team member should be evaluated using the skill list above and their assignments made accordingly.

Employees Employees are perhaps the greatest untapped resource in an energy management program. A structured method of soliciting their ideas for more efficient use of energy can prove to be the most productive effort of the energy management program. A good energy manager will spend 20% of the year 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 procedure in place for them to have any input, their ideas go unsolicited. An understanding of the psychology of motivation is necessary before an employee involvement program can be successfully conducted. Motivation may be defined as the amount of physical and mental energy that a worker is willing to invest in a job. Three key motivation factors are listed: Motivation is already within people. The task of the supervisor is not to provide motivation, but to know how to release it. The amount of energy and enthusiasm people are willing to invest in their work varies with the individual. Not all are overachievers, but not all are lazy either. The amount of personal satisfaction derived from a task determines the amount of energy an employee will invest in the job. Achieving personal satisfaction has been the subject of  much research by industrial psychologists, and they have emerged with some revealing facts. For example, they have learned that most actions taken by people are done to satisfy a physical need, such as the need for food, or an emotional need, such as the need for acceptance, recognition, or achievement. Research has also shown that many efforts to motivate employees deal almost exclusively with trying to satisfy physical needs, such as raises, bonuses, or fringe benefits. These methods are effective only for the short term, so we must look beyond these to other needs that may be sources of o f releasing motivation, 49



A study done by Heresy and Blanchard in 1977 asked workers to rank job-related factors listed below. The results: 1. Full appreciation for work done 2. Feeling "in" on things 3. Understanding of personal problems 4. Job security 5. Good wages 6. Interesting work  7. Promoting within the company and growth 8. Management loyalty to workers 9. Good working conditions 10. Tactful discipline of workers This priority list will no doubt need to be changed over time and customized for individual companies, but the rankings of what supervisors thought employees wanted were almost diametrically opposed. They ranked good wages first. Knowing that job enrichment is a key to motivation, the energy manager can involve employees in a program by providing some simple and inexpensive recognition. suggestions will improve significantly with training. Educational training should be considered for management, the energy team, and employees.

Management Training Subtle ways must be developed to get them up to speed. Getting time on a regular meeting to provide updates on the program is one way. After the momentum of the program gets going, it may be advantageous to have a half- or one-day presentation for management. A periodical, concise report can be a tool to educate management. Short articles that are pertinent to the educational goals, taken from magazines and newspapers, can be attached to reports and sent selectively. Having management be a part of a training program for either the energy team or employees, or both, can be an educational experience, since we learn best when we have to make a presentation.

Energy Team Training Since the energy team is the core Educational Planning A major part of the energy manager's job is to provide energy education for the organization. After two decades of effort, ignorance concerning energy remains a big problem.




Raising the energy education level throughout the organization can have big dividends. An energy program will operate much more effectively if management understands the complexities of  energy, and particularly the potential for an economic benefit. The coordinators will be more effective when they are able to prioritize energy conservation measures and are aware of the latest technology. Finally, the quality and quantity of employee group of the energy management program, proper and thorough training for them should have the highest priority. Training is available from many sources and in many man y forms. Self study-requires a good library of energy-related materials for coordinators In-house training-may be done by a qualified member of the team or an outside consultant Short courses offered by associations such as the Association of Energy Engineers, by individual consultants, by corporations, and by colleges and universities Comprehensive courses of one to four weeks duration offered by universities, such the one at the University of Wisconsin, and the one being run cooperatively by Virginia Tech and North Carolina State. For large decentralized organizations with ten or more regional energy managers, an annual twoor three-day seminar can be the base for the educational program. Such a program should be planned carefully. The following suggestions should be inco rporated into such a program: Select quality speakers from inside and outside the organization. Invite a top-level executive from the organization to give opening remarks. It may be wise to offer to write the remarks, or at least to provide some material for inclusion. Involve the participants in workshop activities so they can provide input to the program. Also, provide some practical tips on energy savings that they might go back and implement immediately. One or two good ideas can pay for their time in the th e seminar. Make the seminar first class with professional speakers, a banquet with an entertaining after-dinner speaker, and a manual that includes a schedule of events, sketches of speakers, list of attendees, and information on each topic presented. Vendors may contribute door prizes. You may wish to develop a logo for the program, and include it on small favors such as cups, carrying cases, etc.

Employee Training A systematic approach for involving employees should start with some basic training in energy. This will help them develop better ideas. Employees value training, so morale may also improve. Simply teaching the difference between electrical demand and kilowatt-hours of energy, and that compressed air is very expensive is a good beginning. Short training sessions on energy can be made part of other training for employees. A more comprehensive training program should include: Energy conservation in the home Fundamentals of electrical energy 51



Fundamentals of energy systems How energy surveys are conducted and what to look for

Audit Planning With the maturing of performance contracting, energy managers have two choices for the energy audit process. They can go through the contracting process to select and define the work of a performance contractor, or they can set up their own team and conduct audits. A corporate energy manager may order performance contracting at one facility and energy auditing at another. Performance contracting requires no investment other than that involved in the contracting process (which can be very time consuming). Just the energy manager and financial personnel are involved. However, there are disadvantages: Technical resources are generally limited to the contracting co ntracting organization Performance contracting is still maturing, and many firms underestimate the work required The contractor may not have all the skills needed The contractor may not have an interest in low-cost or no-cost projects The audit team approach also has risks. Financing identified projects becomes a separate issue for the energy manager, and a well-organized energy management structure is needed to take full advantage of the work of the audit team. Audit teams, however, can be selected to match equipment to be audited and can be made up of inhouse personnel, outside specialists, or best, a combination of both. They can identify all low-cost and no-cost energy conservation projects, as well as projects requiring large capital investments. The audit often serves as an excellent training tool because other personnel become part of the process. Sometimes a training component can be added to the audit process.

Ownership The key to a successful energy management program can be described using one word-ownership. Program ownership must extend to everyone within the organization. Employees who operate a machine "own" that machine. Any attempt to modify their "baby" without their participation will not succeed. Members of the energy team are not going to be interested in seeing one person-the energy manager-get all the fame and glory for their efforts. Managers who invest in energy projects want to share in the recognition for their risk taking. A corporate energy team that goes into a division for an energy audit must help put a person from the division in the energy management position and then make sure the audit belongs to the division. Ownership is the most important key, but below are some others.




Tips for Success In observing successful energy management programs, the following tips for success have been compiled: Have a plan that deals with organization, surveys, training, and strategic planning that has scheduled events. Advantages include avoiding disruptions by non-productive ideas, and setting up scheduled events that keep the program active. Give away-or at least share-ideas for saving energy. The surest way to kill a project is to be possessive. If others have a vested interest they will help make it work. Be aggressive. The energy team-after some training-will be the most energy knowledgeable group within the company. Too many management decisions are made with a meager knowledge of the effects on energy management. Use proven technology. Many programs get bogged down trying to make a new technology work and lose sight of the easy projects with good payback. Don't buy serial number one. Price breaks and promises of support will not overcome the problems of beta testing a solution. Go with the winners. Not every department within a company will be enthused about the energy program. Make enthusiasts look good through the reporting system to top management and others will follow. A final major tip-ask the machine operators what should be done to reduce energy use. Then make sure they get proper recognition for ideas.

Energy Saving Tips Replace Light Bulbs Unplug Electronics Save Water Adjust Your Thermostat Buy Energy Efficient Appliances. Adjust Your Water Heater. Keep Cool With Ceiling Fans Be Smart About Lighting Power Down Your Computer.




Wash Clothes in Cold Water Load Up Your Dishwasher Maintain Your Clothes Dryer Find and Seal Leaks

Good Investment Recommendations Programmable Thermostat. Seal Your Ducts Seal Your Home Insulate, Insulate, Insulate Upgrade Your Heating System. Maintain Your Cooling System Windows

Electrical end use in industries Chile consumed 22,362 gigawatt-hours (GWh) of electricity in 1992 (see Figure 1). Fifty-nine percent of this is consumed by the industrial sector. The commercial, public and residential sectors together consume 30 percent of the country's electricity. Residential consumption is estimated to be twice that of commercial. Transmission and distribution losses are also significant at 14 percent.





Motors and lighting are the two largest end-uses in Chile.25 Motors consume an estimated 61 percent of Chile's electricity while lighting takes up 18 percent.


Over the last decade, electricity use by the Chilean industrial sector increased by more than 30 percent.28 Overall industrial energy intensity has increased by 5 percent during the same time period. The National Energy Commission (CNE) attributes higher energy intensity to increased mechanization, fuel switching and changes in the productivity of industry. The CNE considers this increase in energy intensity to be an indication that there is an urgent need for significant improvement in the industrial sector's energy efficiency. The CNE concludes that a targeted industrial efficiency policy would reduce the alarming increase in energy intensity in industry.29

Industrial Sector Efficiency Potential: Two Case Studies The following are two case studies of energy efficiency potential in Chile's copper and textile industries. Corporación del Cobre (Codelco) The Corporación del Cobre (Codelco) is Chile's publicly-owned copper company and the country's industrial giant. In 1990 it had sales of US$3.2 billion, investment projects of US$330 million and 37,000 employees. Just one Codelco mine spends US$50 million on energy each year. Over the next 4 years, Codelco plans five new infrastructure projects worth nearly US$2 billion. Codelco faces a number of challenges ch allenges that are relevant to energy efficiency: 55



The increasing depth of its mines requires more energy consumption. Codelco is responding by increasing the use of controls and mechanization to reduce energy costs. More stringent regulations under Chile's new environmental law will cost Codelco an estimated US$2 billion.31 Codelco is seeking the lowest cost way to reduce its air and water emissions. Increasing competition in the national and international copp er market is forcing the company to maintain and increase the quality of its copper while staying competitive. Codelco views modernization of its operations as a way to simultaneously increase product qu ality and capital productivity.

Divisions within Codelco have begun to respond to these pressures by improving the energy efficiency of the mining and production processes. As a first step, Codelco evaluated the energy efficiency potential in motors and transformers in its Chuquicamata mine, the world's largest open pit copper mine. The study found that motors consume 95 percent of the mine's electricity. One phase of the copper mining process, the concentrator, consumes almost half of the mine's electricity. Installation of energy-efficient motors would reduce the mine's annual electricity consumption by 55 GWh, saving US$3 million per year in electricity costs.32 Large industries in Chile, including Codelco, are becoming interested in the concept of energy services companies. IIEC and the University of Chile have a contract with Codelco to introduce energy efficiency criteria to the company's management. The project will also investigate the feasibility of a division-wide policy of life-cycle costing for all energy-using equipment. The Textile Industry There are approximately 4,500 companies in Chile's textile industry, representing 18 percent of  Chile's 25,000 companies. Like most Chilean industries, textile manufacturers use out-dated and inefficient technology. The fabrication of fiber, thread and material is the most energy-intensive process in the textile industry, accounting for an average 15 percent of total production costs. A study of the potential for energy savings in the textile industry suggests that minimal energy efficiency investments could realize significant energy savings and a return on investment within one year.33 Principal opportunities for energy savings exist in the generation of steam vapor. Insulation of valves and tubes, reduction of the evaporation from cleaning machines and the introduction of controls would greatly enhance the efficienc y of the manufacturing process. The Commercial and Residential Sectors Chile's construction industry experienced a boom in the early 1990s driven by residential high-rise and commercial buildings. The boom slowed in 1994 as construction of residential buildings declined, although new commercial buildings continue to spring up around Santiago.34 The industry expects the building sector to continue to enjoy strong growth.




Construction activity varies from region to region. Small- and medium-sized cities outside the Santiago area are growing rapidly. The city of Temuco, for example, is one of the fastest growing cities in all of Latin America. Together, the commercial, residential and public sectors account for 30 percent of electricity consumption in Chile.

FIGURE 3: ESTIMATED END USE ELECTRICITY CONSUMPTION IN THE RESIDENTIAL AND COMMERCIAL SECTORS Lighting is an important end-use in both residential and commercial buildings, representing 30 percent and 50 percent of total consumption respectively. Refrigeration is also a significant residential end-use.36 Potential for Energy Efficiency in the Commercial and Residential S ectors Residential and commercial customers pay as much as US$0.11 per kWh for electricity. In a country with a climate like that of northern California, these rates make investments in energy efficiency very compelling. Chile's climate varies widely from the north to the south. However, Santiago's climate is similar to that of San Francisco. The south is generally 5 to 10 degrees colder than Santiago and the north is 5 to 10 degrees warmer. Studies suggest that two-thirds of energy losses in the building sector are through poor building design and inefficient appliances. Investment in insulation in Santiago's buildings would pay for itself after one winter season. In the colder climate of Punta Arenas in the far south, such an investment would take only two weeks to pay back.37 57



The barriers to energy efficiency in Chile are similar to those in other developing countries, namely: Consumers lack knowledge about the life-cycle cost of standard versus efficient technologies and are not familiar with energy-efficient energ y-efficient products. There are no building or energy energ y performance standards in Chile. Many energy-efficient products, such as electronic ballasts and superior lighting controls, are not widely available in Chile. Building contractors and architectural and engineering firms are not familiar with the basic techniques and materials which could improve the energy efficiency of the building envelope and mechanical systems. Energy-efficient technologies are not yet integrated into building design. However, the construction industry has begun to include heating, ventilating and air conditioning (HVAC) systems in urban residential and commercial buildings. This building innovation has created significant opportunities for building energy management systems. Until only a few years ago, new thermostat systems in Chile were quite primitive. The growing sophistication of the architecture and construction industries and the presence of large multinational companies like Honeywell and Johnson Controls have expanded the market for energy management systems and the variety of products available. Significant advertising and marketing efforts by companies like Philips have also increased the installation of some energy-efficient technologies, such as compact fluorescent lamps, in apartment and office buildings. The widespread use of energy-efficient products would significantly reduce the life-cycle cost of  operating buildings in Chile and increase the comfort comfo rt of building occupants. Status of Building Codes and Ordinances Building codes that govern energy performance do not exist in Chile. However, the success of  Chile's municipal housing design project may compel the Ministry of Housing to develop an energy performance code. In the meantime, a team of Chilean building design experts and policy makers is convening a panel with counterparts from Brazil, Argentina, Peru and Urugu ay to form a regional building code. Current building ordinances categorize buildings based on their purpose (single family, high-rise apartments, row houses, etc.) and on the "quality" of materials used in construction. It is not clear how the Housing Ministry arrived at these categorizations but it is certain that energy efficiency was not a factor. For example, houses designed with aluminum windows are considered higher quality than a house with wood windows, even though wood windows are usually more energy58



efficient than aluminum. Chile's municipal energy efficiency programs and current efforts to develop regional building codes may force a reevaluation of these ordinances. There have so far been very few energy efficiency projects in the commercial and residential sectors. The most successful project to date improved the level of insulation in new houses and buildings. The following is a description of that project. Home and Building Insulation in La Florida

Most houses and buildings in Chile are not insulated. To help change this situation, the University of Chile joined with insulation manufacturers and an architect to encourage the installation of  insulation in new homes and buildings. The project was situated in La Florida, a municipality near Santiago. As part of the project, the municipality of La Florida reduced building permit fees for architects and builders who specified thermal insulation for new buildings. The municipality prorated the reduction in fees based on the thermal efficiency factor of the design (G Factor). Between 1991 and 1993, the project resulted in the insulation of 1,491 buildings, mostly private homes, with a total area of 100,000 square meters (1,000,000 square feet).38 The project's success has motivated at least three other regions in Chile to adapt the model for implementation in their own municipalities. The Public and Municipal Sector




Chile's municipalities have led the country in imp lementation of several energy efficiency projects, including the above-mentioned insulation project and the following highly successful streetlighting retrofit project. Energy-Efficient Streetlighting Chile's municipal streetlighting project was developed by the National Energy Commission (CNE) to raise awareness of energy and electricity costs among municipalities. The pilot project took place in the northern city of Antofagasta. The municipality replaced over 7,000 streetlights in the city with energy efficient streetlights at a cost of US$675,000. The CNE forecast monthly savings of US$25,000 from reduced electricity consumption but this forecast did not consider reduced maintenance costs. The new lights required no maintenance for two years. Instead of taking 27 months to pay back the initial investment, the Antofagasta project took only 17 months. In addition, the project had the following economic and environmental benefits: Net monthly savings of US$25,000 in electricity costs. Reduced maintenance costs. Development and use of an innovative financing mechanism. Annual reduction of 1,500 tons of CO2 from thermal electricity generation.


As of January 1994, 150 municipalities around the country were implementing similar street lighting projects. At the national level, these projects could yield several additional benefits:




Distribution utilities have become involved in street lighting retrofits by providing financing to municipalities. The municipalities repay the distribution companies on their monthly electricity bill from energy savings. Half the municipalities implementing street lighting projects around Chile have arranged for financing through their local utility while the other half have opted for leasing arrangements with private companies. Between 1991 and 1994, the increased demand for luminaries from the municipalities led to a reduction in price from US$130 to $100 per luminaries. Municipal awareness of energy consumption (and the opportunities to reduce what was once perceived as a fixed cost) is generating new energy efficiency projects at the municipal level. Country-wide replication of this project could save US$11 million in annual electricity costs (amortized over 6 years), equal to the cost of o f a 33.5 MW central generating facility. Non-Power Sectors Although it is not the focus of this study, market opportunities for energy efficiency exist beyond electricity. Chile is highly dependent on non-renewable resources and imports 90 percent of its petroleum, mostly for transportation. Transportation in Santiago Santiago's automobile fleet is growing rapidly, exacerbating the city's air pollution and congestion problems, despite the fact that public transportation provides 50 percent of daily trips in the city. Transportation and its related problems are a policy priority in the capital region and among other growing cities. Policy makers have already required all new vehicles to be equipped with catalytic converters. Non-catalytic automobiles are restricted from circulation in the Santiago metropolitan area on certain days of the week during winter and spring. Policy makers are also beginning to restrict the number of buses that can operate in Santiago's downtown. Private bus owners must now bid on downtown bus routes in order to operate along them. Policy makers, transportation professionals and citizens of the city agree that more political and technical measures must be implemented in order to avert further deterioration of Santiago's transport system. There are several factors that contribute to a potential market for economicallyviable alternative transportation technologies: Political commitment to address transportation problems in Chile; Availability of natural gas by 1997; Strong technical transportation planning and engineering capability; Political and consumer concerns about the impact of air pollution on city residents; Existence of an air quality monitoring system; 61



Dependence on imported oil (90 percent) exacerbated by sharply increasing fuel consumption; and Growing consensus that increased investment in urban road infrastructure will not address Chile's transport problems. In the long term, possible opportunities for investment in alternative transport technologies are: Natural gas vehicle conversion for taxis and buses (Buenos Aires has already converted their fleet of taxis); Electric vehicles, which have captured the interest of at least one distribution utility; and Advanced traffic signalization and controls systems. US firms with proven transport innovations that combat congestion and air contamination face an open market and welcome political support in Santiago and other large Chilean cities. IIEC's Latin American office in Santiago is the best initial contact for transport firms interested in the Chilean market over the medium- to long-term.

Solar cookers and hot water heaters The northern region of Chile offers favorable conditions for the use of solar energy, including solar hot water heating for homes and hospitals and generation of electricity for industry. Chilean consumers use several times more fuelwood than other developing countries, primarily for water heating and cooking. Installation of solar cookers and hot water heaters could significantly reduce the environmental and economic costs of fuelwood consumption. According to the National Energy Commission, the cost of installed hot water heaters is roughly US$500 per square meter and that of solar cookers is US$100 per square meter.

Wood Stoves Santiago requires new wood stoves to comply with Oregon State and US Environmental Protection Agency regulations. As a result, all wood stoves sold in Santiago are high-efficiency models. There is currently only one manufacturer of high-efficiency wood stoves supplying this market. The stoves are expensive and sold in a niche market catering to higher income residents of  the city. There is room for foreign suppliers in this market.

Energy Conservation in Metal Finishing Operations In Minnesota, fabricated metal operations are the second largest consumer of industrial electrical energy and metal finishing was the sixth largest segment identified for fabrication electrical consumption. Metal fabrication was also the third largest industrial consumer of natural gas with metal finishing constituting the largest portion of this consumption accounting for about one third of it. According to M nTAP’s Energy Conservation Market Analysis, the plating, polishing, and finishing sub-sector accounts for approximately 32% of the total gas use of fabricated metal 62



operations in Minnesota. The analysis also identified that this sub-sector offers the most potential natural gas savings. The electrical use of the plating, polishing, and finishing sub-sector has the potential for nearly 18% estimated savings. There are many opportunities available to reduce gas and electrical consumption in in your metal finishing facility. The Energy Center in Wisconsin published information on energy use in the metal finishing industry and related conservation opportunities in two volumes: Metal Finishers Guide to Reducing Energy Costs [PDF 192KB]. This guide provides step-by-step instructions on how to improve the efficiency and reduce the costs of metal finishing. It offers an Action Step Checklist to help you organize and track the actions you take in your facility. Metal Finishers Technical Supplement [PDF 377KB]. This reference provides technical information to support the energy-saving techniques, or actions, described in the Energy Center of  Wisconsin’s Metal Finisher’s Guide to Reducing Energy Costs.

The chart to the right shows the percentage electrical end-use by metal finishing processes as identified in an American Electroplaters and Surface Finishers (AESF) study. "Secondary Processes" includes process heating, compressed air, waste treatment, and polishing. "Building and Other" includes lighting, air conditioning, and other uses.




On the electrical side, process power (rectifiers) and ventilation are the largest portions of energy consumption, followed by lighting, pumps, and motors. The following are opportunities to increase energy efficiency through energy improvements. Power supply improvements High energy use in rectifiers is typically due to heat loss. Check all joints in the rectifier for hot spots caused by resistance and heat generation and clean those joints. Other resistance losses may be caused by corrosion within the rectifier, the use of undersized conductors, or excessive distance between the rectifier and the tank. Choose a rectifier that is water-cooled or convection-cooled instead of fan-cooled. Fan-cooled rectifiers use additional energy to operate the fan and have a higher potential for corrosion from the air input. Convection-cooled rectifiers remove heat without a fan. Although the initial cost of water-cooled rectifiers is greater, they provide the greatest efficiency. Energy is not wasted on operating a fan and the heated water can be reused in your facility. There are opportunities to minimize losses in your electrical power supply systems. If electrical conductors are undersized or their connections have air or corrosion gaps in them, some of the electricity is converted to heat and lost. In AC to DC power rectifiers, if the conversion process is not proceeding correctly they produce less DC electricity and more heat. The following new design and maintenance practices minimize these losses: Have a thermal imaging inspection performed to identify high-temperature electrical conductors and electrical connections. Repair poor connections and upgrade undersized conductors. Have measurements taken to determine the actual electrical transformation efficiency of your existing rectifiers. After identifying current replacement options, efficiency, and cost, evaluate the financial return for replacing rectifiers with more efficient models. Conduct routine maintenance to insure existing rectifiers operate efficiently and operating temperatures are minimized.

Ventilation improvements Ventilation is a high user of energy in metal finishing facilities. There are costs associated with operating fans, supplying energy to make-up air, and treating exhaust air. Ventilation is important in avoiding corrosive fumes that deteriorate the facility and equipment. Opportunities are available to improve your ventilation system. Energy may be conserved through recovering exhaust. High volumes of air are exhausted; if recovered and transferred to the makeup, it can reduce the energy needed to condition make-up air.




The Energy Center in Wisconsin provides the following list to optimize your existing plant ventilation system: Create a list of all ventilated workstations. For each workstation determine the ventilation requirement according to regulations and your facility’s standards. For each ventilation point have the actual ventilation rate measured by a qualified ventilation service company. For each ventilation point determine required ventilation rate from the American National Standards Institute (ANSI) standards (see your local contractor or the technical supplement to this guide). Pursue these actions as appropriate: To reduce the amount of ventilation needed: cover idle tanks, improve hood and baffle designs, and identify mist suppressant options. Hire a firm that specializes in this if you do not have the expertise available. If you have identified excessive ventilation reduce exhaust airflows by improving ventilation hood and baffle design. If airflow reduction is more than 20% of rated ventilation fan capacity, reduce fan speed and rebalance the th e system. You can reduce fan speed spee d by changing pulley wheel wh eel sizes in belt-driven systems, installing a variable-speed drive on direct-drive fans, installing an adjustable speed cou pling on direct-drive systems, and replacing the existing motor with a lower-speed or multiple-speed motor. Replacing the entire fan/motor assembly is also an option. Remember that wh enever you reduce total ventilation airflow or adjust one or more ventilation hoods, you must rebalance the system. If ventilation requirements at a workstation vary, then vary the ventilation rate to match the need. You can shut down the ventilation when unnecessary or vary the ventilation rate to match changing needs. Use a VSD on the fan instead of a damper. However, you should also evaluate if an entirely new ventilation system would provide you with substantial energy savings and if it fits into your capital improvement plans. Installing a new system, such as a push-pull ventilation system, can reduce th e volume of air being moved, moved , saving both electrical and fuel energy.

Lighting improvements Lighting improvements can be simple, and have the potential to save on energy costs. Lighting fixtures should be cleaned and maintained. Lighting systems are often designed to provide more light than necessary to compensate for dirty reflectors. Increase energy efficiency in your lighting 65



systems by reducing over lighting and removing diffusers. Zone lighting systems by installing lumen maintenance systems and activity sensors so that lights are on only when an area is in use. Dimmer controls can save energy by allowing the th e adjustment of light intensity. The Energy Center in Wisconsin provides the following list to reduce lighting costs by using more efficiency lighting technologies and reducing unnecessary lighting: If your fluorescent lights do not have electronic ballasts and T-8 (1 inch diameter or smaller) bulbs, contact a lighting supplier or consultant to evaluate the economics of replacing your lighting system with a newer, more efficient system. Identify periods when lighting remains on when not needed for production or safety. Quantify the number of fixtures and number of hours of unnecessary lighting. Contact a lighting supplier or consultant to evaluate the economics of installing automatic switching controls, which can turn lighting off when an area is unoccupied. Identify any outdoor lighting that is on during the day and install a photosensor to control this lighting. If you have any mercury vapor high bay or outdoor lights, contact a lighting supplier or consultant to evaluate the economics of installing metal halide fixtures with the same light output.

Compressed air improvements Compressed air is one of the most expensive uses of energy in a manufacturing plant. About 8hp of electricity is used to generate 1hp of compressed air. Calculating the cost of compressed air can help you justify system improvements that increase energy efficiency. Visit MnTAP's Greening Your Business Compressed Air page for tips for increasing your compressed air system’s efficiency and decreasing costs.

Fuel End-Use in Metal Finishing Processes




The chart to the right shows the percentage fuel end-use by metal finishing processes as identified in an AESF study. "Other" includes ovens and dryers, vapor degreaser heating and stills, waste recovery evaporators, and other uses. On the gas side, the largest consumers of fuel are process tank heating, boiler operation, and space heating.

Low temperature chemistries Low temperature chemistries can create gas savings for metal finishers. Processing and cleaning parts using low temperature chemistries mean the tanks need less water heating, and therefore less natural gas consumption. Additional opportunities exist for metal finishers, including optimizing plating bath temperatures through added insulation. Process changes, such as using more efficient rinsing techniques, are often inexpensive compared to purchasing new equipment and may have greater potential for adoption.

Ventilation improvements through push-pull push-pu ll systems Incoming air in a push-pull ventilation system is generally near the exhaust rather than being added to the building, potentially hundreds of feet away. Incoming or push air divides the work of  moving air across a tank and creates an ―air curtain‖ across the tank. Typically, it takes less effort (smaller volumes and fans) to move air from both sides than it does from a single side. In addition, 67



since the make-up air is quickly exhausted and not added to the building as general ventilation, it does not need to be heated unless it has an adverse effect on the tank’s operation. Since less heat is needed, natural gas consumption can be reduced.

Ventilation control Improved ventilation is generally a large capital improvement project that can affect tank locations and parts movement; it fits best when a line is being re-built. However, lowering the ventilation rate during down times can reduce gas consumption. To optimize the use of natural gas in the ventilation system, identify periods when the facility is not processing parts and reduce the fan speed and ventilation rate. Additionally, using automatic covers, efficient building insulation, and radiant heating for spot area heating can create pollution prevention and energy savings.

Energy Conservation Resources A Tank Heat Loss Calculator was developed by MnTAP to estimate the effects of insulating tanks, substituting low-temperature chemistries, or estimating energy consumption. Contact Karl DeWahl to learn more or access the calculator. cal culator. EPA Report: Energy Trends in Selected Manufacturing Sectors: Metal Finishing [PDF 272KB]. This report assess the opportunities and challenges for environmentally preferable energy outcomes in the metal finishing industry. EPA & Concurrent Technologies Corporation: Evaluation of the KCH Services, Inc. Automatic Covered Tank System for Energy Conservation [PDF 1.85MB]. An EPA pilot, which ended in 2003, verified the performance of commercial-ready metal finishing technologies that are designed to improve industry performance and achieve cost-effective pollution prevention results. The automated covered tank system technology is designed for metal finishing energy conservation. DOE: Metal Coating Industrial Assessment of Burton Metal Finishing, Inc. [PDF 74KB]. The Industrial Assessment Center at West Virginia University performed an energy assessment at Burton Metal Finishing, Inc. at Columbus, Ohio. Seven of the 12 recommendations made by the assessment team were implemented, resulting in the reduction of energy consumption by 1,411 MMBtu per year, and an annual saving of $19,277.

Demand management answers growing electricity needs The goal of the electricity supply industry is fairly simple: reliable delivery of electricity to customers. Today, to deliver on that goal, the industry is facing a new imperative: manage an effective demand management program. Demand management is one of a number of ways in which suppliers of a resource can meet their customers’ needs by either shifting or reducing demand peaks. As the demand for electricity is predicted to grow, the process will enable Australia to meet this energy need. 68



Currently, a relatively large percentage (say 15%) of the assets required to deliver electricity to the consumer are used on a relatively small number of peak days (say 3, or less than 1%). Given controlled pricing for utilities, and other issues, there will be limits to the amounts that can be invested in their infrastructure. Thus, if the peak can be kept stable or managed down, that releases funds for wise investment elsewhere. It also has other positive impacts. Demand management is accepted by government, business and industry in Australia as an alternative to developing and building new electricity generation, transmission and distribution capacity. It is also recognised that electricity demand needs better management in the areas of peak load, greenhouse gases and appliance efficiency. A proven performer internationally for over a decade, demand management addresses the causes rather than the symptoms of excessive energy needs. Demand management uses a range of  strategies to modify the level and timing of energy dem and. Within the demand management toolkit are energy efficient appliances and buildings, distributed generation, standby generation, interruptible contracts, improved network efficiency and more accurate pricing. For customers, the benefits of this alternative to more generation and network expansion include lower energy bills, better energy services, the improved utilisation of resources and fewer environmental costs. One energy supplier that serves a rapidly growing franchise area is Integral Energy which has embraced demand management. ―Our demand management program is reducing capital costs, deferring network augmentation and reducing greenhouse gas emissions. There are also customer benefits as the program improves customer awareness and education,‖ said Maree Zammit, Manager of Strategic Development. An example of Integral Energy’s approach is the program in Castle Hill, a bustling commercial and residential suburb in north western Sydney.

The program is a first in Australia with Integral Energy working with the Sustainable Energy Development Authority (SEDA) to cut peak load in the area. ―The project involves negotiations with major commercial customers to reduce their demand through initiatives such as efficient air conditioning upgrades and lighting,‖ sa ys Ms Zammit.




―Underpinning the program is our recognition that effective demand management requires the involvement of all participants in the energy value chain.‖

Warren Centre Executive Director is Chairing several sessions and Integral Energy and Origin Energy will have senior representatives speaking at the forthcoming Australian Energy & Utility Summit on 21st & 22nd July at the Sydney Convention Centre. Richard Powis, CEO, Integral Energy and Julian Turecek, Regulatory Affairs at Origin Energy will be joining an excellent lineup of speakers from Government and industry who will be making presentations on energy market reform, investment requirements, regulatory changes and key issues in generation, production, transmission, distribution, and issues for major energy users.




EXPERIMENT NO :- 5 Date: AIM : TO STUDY STUDY OF ENERGY MANAGEMENT Definition and Meaning : Energy management refer to the managing the use of energy and in straight forward way it is just finding the way to save electrical energy. It means energy management is to find and implement new and latest technologies and methods to find the answer to the question How we can save electrical energy or other form of energy. I used electrical energy because it is the most commonly used energy form. Visit This link to check why we prefer electrical energy over other forms of  energy ?

There Are Two Main Points In Energy Management : Demand Management Energy Efficiency Improvement Demand Management refer to the saving of electricity by controlling or managing the demand of  electricity or electrical energy. Energy efficiency refer to the quality improvement of the apparatus used in various energy consumption application. Energy is essential for working of each and every machine and thus the energy management is essential for each and every field of work.

Energy Management : Significance Significance refer to the why and what effect is has on affected systems. Significance of energy management refer to the fact why we need energy management and how it will affect the energy system. As energy management is saving of electrical energy so it is of great significance specially in an environment where people are facing energy crisis. More the energy we will save more energy we will have to spend on our needs. So energy management is significant and is the need of  the hour.

Energy Management : Why We Need This T his ? According to law of conservation of energy Energy can neither be created nor be destroyed. It can only be converted from one form to another. In this situation when we can't produce energy and we have to spend high capital on conversion of energy from other forms to electrical energy then we must save electrical energy as much as possible so that we can get energy as we need, when we need and at what cost we want ? Energy management is the only way to solve our energy related 71



problems. If you want more electricity then save electricity from now. I will discuss methods to save electrical energy in upcoming posts.

The What, Why, and How of Energy Management This article explains what "energy management" is, wh y it's important, and how you can use it to save energy. We'll start with the "what", and then move on to the "why", and the "how": What are you looking for? Are you looking for something in particular? Or do d o you have a question qu estion that you need answering? What is energy management? "Energy management" is a term that has a number of meanings, but we're mainly concerned with the one that relates to saving energy in businesses, public-sector/government organizations, and homes: The energy-saving meaning When it comes to energy saving, energy management is the process of monitoring, controlling, and conserving energy in a building or organization. Typically this involves the following steps: Metering your energy consumption and collecting the data. Finding opportunities to save energy, and estimating how much energy each opportunity could save. You would typically analyze your meter data to find and quantify routine energy waste, and you might also investigate the energy savings that you could make by replacing equipment (e.g. lighting) or by upgrading your building's insulation. Taking action to target the opportunities to save energy (i.e. tackling the routine waste and replacing or upgrading the inefficient equipment). Typically you'd start with the best opportunities first. Tracking your progress by analyzing your meter data to see how well your energy-saving efforts have worked. To confuse matters, many people use "energy management" to refer specifically to those energysaving efforts that focus on making better use of existing buildings and equipment. Strictly speaking, this limits things to the behavioural aspects of energy saving (i.e. encouraging people to use less energy by raising energy awareness), although the use of cheap control equipment such as timer switches is often included in the definition as well. The above four-step process applies either way - it's entirely up to you whether you consider energy-saving measures that involve buying new equipment or upgrading building fabric.Other meanings Photo by Valerie Everett 72



It's not just about saving energy in buildings - the term "energy management" is also used in other fields: It's something that energy suppliers (or utility companies) do to ensure that their power stations and renewable energy sources generate enough energy to meet demand (the amount of energy that their customers need). It's used to refer to techniques for managing and controlling one's own levels of personal energy. We're far from qualified to say anything more about this! It also has relevance in aviation  –  it's a skill that aircraft pilots learn in some shape or form. We know nothing about aircraft energy management, but we can at least manage a picture of a man on a plane... Anyway, from now on we will pay no more attention to these other definitions - all further references to "energy management" will be to the energy-saving sort described above. Home energy management Whilst energy management has been popular in larger buildings for a long time, it has only recently started catching on in homes. Most homeowners aren't even aware of the term, and take more of a haphazard, flying-blind approach to reducing their energy consumption... But the monitoring- and results-driven approach used by professional energy managers is just as effective in the home as it is in larger buildings. So, if you're a homeowner looking to save energy, don't be put off by the fact that this article focuses more on non-residential buildings. Most of the principles that apply to businesses and other organizations are also applicable to homes. Certainly the four-step process introduced above and detailed below is entirely applicable to home energy management.

Why is it 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. 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 b ecoming increasingly limited in supply. Photo by Kevin Dooley Wind turbines can only do so much - we humans use a lot of energy! Controlling and reducing energy consumption at your organization 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 costrelated 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-consumptionene rgy-consumptionreduction 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 ag gressive targets. How best to manage your energy energ y consumption? We identified four steps to the energy-management process above. We'll cover each of them in turn:

1. Metering your energy consumption and collecting the data As a rule of thumb: the more data you can get, and the more detailed it is, the better. The old school approach to energy-data collection is to manually read meters once a week or once a month. This is quite a chore, and weekly or monthly data isn't nearly as good the data that comes easily and automatically from the modern approach...




The modern approach to energy-data collection is to fit interval-metering systems that automatically measure and record energy consumption at short, regular intervals such as every 15minutes or half hour. There's more about this on our page about interval data. Detailed interval energy consumption data makes it possible to see patterns of energy waste that it would be impossible to see otherwise. For example, there's simply no way that weekly or monthly meter readings can show you how much energy you're using at different times of the day, or on different days of the week. And seeing these patterns makes it much easier to find the routine waste in your building.

2. Finding and quantifying opportunities to save energy The detailed meter data that you are collecting will be invaluable for helping you to find and quantify energy-saving opportunities. We've written an article that explains more about how to analyze your meter data to find energy waste. The easiest and most cost-effective energy-saving opportunities typically require little or no capital investment. For example, an unbelievable number of buildings have advanced control systems that could, and should, be controlling HVAC well, but, unbeknown to the facilities-management staff, are faulty or misconfigured, and consequently committing such sins as heating or cooling an empty building every night and every weekend. (NB "HVAC" is just an industry acronym for Heating, Ventilation and Air Conditioning. It's a term that's more widely used in some countries than others.) And one of the simplest ways wa ys to save a significant amount of energy is to encourage staff to switch equipment off at the end of each working day. Looking at detailed interval energy data is the ideal way to find routine energy waste. You can check whether staff and timers are switching things off without having to patrol the building day and night, and, with a little detective work, you can usually figure out who or what is causing the energy wastage that you will inevitably find. Detailed energy data is the key to finding the easiest energy savings And, using your detailed interval data, it's usually pretty easy to make reasonable estimates of how much energy is being wasted at different times. For example, if you've identified that a lot of  energy is being wasted by equipment left on over the weekends, you can: Use your interval data to calculate how much energy (in kWh) is being used each weekend. Estimate the proportion of that energy that is being wasted (by equipment that should be switched off). 75



Using the figures from a and b, calculate an estimate of the total kWh that are wasted each weekend. Alternatively, if you have no idea of the proportion of energy that is being wasted by equipment left on unnecessarily, you could: Walk the building one evening to ensure that everything that should be switched off is switched off. Look back at the data for that evening to see how many kW were being used after you switched everything off. Subtract the target kW figure (ii) from the typical kW figure for weekends to estimate the potential savings in kW (power). Multiply the kW savings by the number of hours over the weekend to get the total potential kWh energy savings for a weekend. Also, most buildings have open to them a variety of equipment- or building-fabric-related energysaving opportunities, most of which require a more significant capital investment. You are probably aware of many of these, such as upgrading insulation or replacing lighting equipment, but good places to look for ideas include the Carbon Trust and Energy Star websites. Although your detailed meter data won't necessarily help you to find these equipment- or buildingfabric-related opportunities (e.g. it won't tell you that a more efficient type of lighting equipment exists), it will be useful for helping you to quantify the potential savings that each opportunity could bring. It's much more reliable to base your savings estimates on real metered data than on rules of thumb alone. And it's critically important to quantify the expected savings for any opportunity that you are considering investing a lot of time or money into  –  it's the only way you can figure out how to hone in on the biggest, easiest energy savings first.

3. Targeting the opportunities to save energy Just finding the opportunities to save energy won't help you to save energy - you have to take action to target them... For those energy-saving opportunities that require you to motivate the people in your building, our article on energy awareness should be useful. It can be hard work, but, if you can get the people on your side, you can make some seriously big energy savings without investing anything other than time. As for those energy-saving opportunities that require you to upgrade equipment or insulation: assuming you've identified them, there's little more to be said. Just keep your fingers crossed that you make your anticipated savings, and be thankful that you don't work for the sort of organization that won't invest in anything with a payback period over 6 months. 76



Insulation - it usually works well, even when it looks like this...

4. Tracking your progress at saving energy Once you've taken action to save energy, it's important that you find out how effective your actions have been: Energy savings that come from behavioural changes (e.g. getting people to switch off their computers before going home) need ongoing attention to ensure that they remain effective and achieve their maximum potential. If you've invested money into new equipment, you'll probably want to prove that you've achieved the energy savings you predicted. If you've corrected faulty timers or control-equipment settings, you'll need to keep checking back  to ensure that everything's still working as it should be. Simple things like a power cut can easily cause timers to revert back to factory settings - if you're not keeping an eye on your energyconsumption patterns you can easily miss such problems. If you've been given energy-saving targets from above, you'll need to provide evidence that you're meeting them, or at least making progress towards that goal... And occasionally you might need to prove that progress isn't being made (e.g. if you're at your wits' end trying to convince the decision makers to invest some money into your energymanagement drive). Our article on energy-performance tracking explains how best to analyze your metered energy data to see how well you're making progress at saving energy. Like step 2, this step is one that our Energy Lens software has been specifically designed to help with. Managing your energy consumption effectively is an ongoing process... At the very least you should keep analyzing your energy data regularly to check that things aren't getting worse. It's pretty normal for unwatched buildings to become less efficient with time: it's to be expected that equipment will break down or lose efficiency, and that people will forget the good habits you worked hard to encourage in the past... So at a minimum you should take a quick look at your energy data once a week, or even just once a month, to ensure that nothing has gone horribly wrong... It's a real shame when easy-to-fix faults such as misconfigured timers remain unnoticed for months on end, leaving a huge energy bill that could have easily been avoided. But ideally your energy-management drive will be an ongoing effort to find new opportunities to target (step 2), to target them (step 3), and to track your progress at making ongoing energy




savings (step 4). Managing your energy consumption doesn't have to be a full-time job, but you'll achieve much better results if you make it part of your regular routine.

What is Payback Period : One of the oldest and most widely used method to evaluate a capital investment proposal is the Payback Period, as the name implies it refers to the time required to recover the initial investment or the initial cash outlay as it is called in financial terms. Simple Pay Back Period: Simple Payback Period (SPP) represents, as a first approximation; the time (number of years) required to recover the initial investment (First Cost), considering only the Net Annual Saving: The simple payback period is usually calculated as follows: Examples

Simple Payback period = First cost / Yearlybenefits Yearly benefits x Yearly costs cos ts Simple payback period for a continuous Deodorizer that costs Rs.60 lakhs to purchase and install, Rs.1.5 lakhs per year on an average to operate and maintain and is expected to save Rs. 20 lakhs by reducing steam consumption (as compared to batch deodorizers), may be calculated as follows: According to the payback criterion, the shorter the payback period, the more desirable the pro. Simple Payback period = 60/ 20 x 1.5 = 3 years 3 months

Advantages A widely used investment criterion, the payback period p eriod seems to offer the following advantages: •

It is simple, both in concept and application. Obviously a shorter payback generally indicates a more attractive investment. It does not use tedious calculations.

It favours projects, which generate substantial cash inflows in earlier years, and discriminates against projects, which bring substantial cash inflows in later years but not in earlier years.

Limitations •

It fails to consider the time value of money. Cash inflows, in the payback calculation, are simply added without suitable discounting. This violates the most basic principle principle of  financial analysis, which stipulates that cash flows occurring at different points of time can be added or subtracted only after suitable compounding/discounting.

It ignores cash flows beyond the payback period. This leads to discrimination against projects that generate substantial cash inflows in later years. 78



Internal Rate of Return : This method calculates the rate of return return that the investment is expected to yield. The internal rate of return (IRR) method expresses each investment alternative in terms of a rate of return (a compound interest rate). The expected rate of return is the interest rate for which total discounted benefits become just equal to total discounted costs (i.e net present benefits or net annu- al benefits are equal to zero, or for which the benefit / cost ratio equals one). The criterion for selection among alternatives is to choose the investment with the highest rate of return. The rate of return is usually calculated by a process of trial and error, whereby the net cash flow is computed for various discount rates until its value is reduced to zero.

The internal rate of return (IRR) of a project is the discount rate, which makes its net present value (NPV) equal to zero. It is the discount rate in the equation:

CFt value will be negative if it is expenditure and positive if it is savings. The internal rate of return is the value of "

" which satisfies the following equation:

The calculation of "k" involves a process of trial and error. We try different values of "k" till we find that the right-hand side of the above equation is equal to 100,000. Let us, to begin with, try k = 15 per cent. This makes the right-hand side equal to:





------------ + ------------- + --------------- + --------------- = 100, 802 (1.15)




This value is slightly higher than our target target value, 100,000. So we increase the value of k from 15 per cent to 16 per cent. (In general, a higher k lowers lowers and a smaller k increases the righthand side value). The right-hand side becomes:





------------ + ------------- + --------------- + --------------- = 98, 641 (1.16)







Since this value is now less than 100,000, we conclude that the value of k lies between 15 per cent and 16 per cent. For most of the purposes this indication suffices. suffices.

Advantages A popular discounted cash flow method, the internal rate of return criterion has several advantages: •

It takes into account the time value of money.

It considers the cash flow stream in its entirety.

It makes sense to businessmen who prefer to think in terms of rate of return and find an absolute quantity, like net present value, somewhat difficult to work with.

Limitations •

The internal rate of return figure cannot distinguish between lending and borrowing and hence a high internal rate of return need not necessarily be a desirable feature.

Example Calculate the internal rate of return for an economizer that will cost Rs.500,000, will last 10 years, and will result in fuel savings of Rs.150,000 each year. Find the i that will equate the following:

Rs.500,000 = 150,000 x PV (A = 10 years, i = ?)

To do this, calculate the net present value (NPV) for various i values, selected by visual inspection; NPV 25%


Rs.150,000 x 3.571 - Rs.500,000 = Rs.35,650

NPV 30%


Rs.150,000 x 3.092 - Rs. 500,000

= -Rs. 36,200

For i = 25 per cent, net present value is positive; i = 30 per cent, net present value is negative. negative. Thus, for some discount rate between 25 and 30 per cent, present value benefits are equated to present value costs. To find the rate more exactly, exactly, one can interpolate between the two rates as follows: i

= 0.25 + (0.30-0.25) x 35650 / (35650 + 36200) = 0.275, or 27.5 percent 80



Economics of Energy: Energy economics is the field that studies human utilization of energy resources and energy commodities and the consequences consequen ces of that utilization. In physical science terminology, ―energy‖ is the capacity for doing work, e.g., lifting, accelerating, or heating material. In economic terminology, ―energy‖ includes all energy commodities and energy resources, commodities or resources that embody significant amounts of physical energy and thus offer the ability to perform perform work. Energy commodities - e.g., gasoline, diesel fuel, fuel, natural gas, propane, coal, or electricity –  can be used to provide energy services for human activities, such as lighting, space heating, water heating, cooking, motive power, electronic activity. Energy resources - e.g., crude oil, natural gas, coal, biomass, hydro, uranium, wind, sunlight, or geothermal deposits – can be harvested to produce energy commodities.

Energy economics studies forces that lead economic agents  –  firms, individuals, governments to supply energy resources, to convert those resources into other useful energy forms, to transport them to the users, to use them, and to dispose of the residuals. It studies roles of alternative market and regulatory structures on these activities, economic distributional impacts, and environmental consequences. consequences. It studies studies economically economically efficient efficient provision provision and use of energy commodities and resources and factors that lead away from economic efficiency.

LIFE CYCLE COST DEFINITIONS: Life cycle cost is the total cost of ownership of machinery and equipment, including its cost of  acquisition, operation, maintenance, maintenance , conversion, and/or decommission (SAE 1999). LCC are summations of cost estimates from inception to disposal for both equipment and projects as determined by an analytical study and estimate of total costs experienced in annual time increments increments during the project project life with consideration consideration for the time value of money. money. The objective of LCC analysis is to choose the most cost effective approach from a series of alternatives (note alternatives is a plural plura l word) to achieve the lowest long-term cost of ownership. LCC is an economic model over the the project project life span. Usually the cost of operation, operat ion, maintenance, mainten ance, and an d disposal costs exceed all other first costs many times over (supporting costs are often 2-20 times greater than the initial procurement costs). The best balance among cost elements is achieved when the total LCC LCC is minimized minimized (Landers 1996). As with most engineering tools, tools, LCC provides best results when both engineering art and science are merged with good judgment to build a sound business case for action. Businesses must summarize LCC results in net present value (NPV) format considering depreciation, depreciation, taxes and the time value of money. money. Government organizations do not require require inclusion of depreciation or taxes for LCC decisions but they must consider the time value of  money.

INTRODUCTION Procurement costs are widely used as the primary (and sometimes only) criteria for equipment or system selection based on a simple payback period. LCC analysis is required to demonstrate that operational savings are sufficient to justify the investment costs (often the investment costs, for the lowest long term cost of ownership, are greater than for the simple payback period). Simple payback criteria are a relative measure for only one case. The more complicated LCC analysis works for comparing alternatives. The simple payback method is frequently used for small capital expenditures which are so clearly economical that the time and expense of a full LCC 81



analysis is not worthwhile. Thus many companies demand short short payback periods (1-1.5 years) to keep everything simple with a large financial hurdle for a short time payback which discourages capital projects unless they are big winners. The payback method uses the ($capital cost)/($benefit/year) ratio as a screen for a single project alternative (it is not particularly useful for sorting out multiple alternatives with variations in cost profiles and variations in capital). Remember the adage attributed to John Ruston: ―It’s unwise to pay too much, but it’s foolish to spend too little‖— this this is the the operating principle of LCC. For capital expenditures above $10,000-$25,000 it is wise to consider the use of LCC. Procurement costs are only the tip of  the iceberg but the damaging portion of the iceberg relates to the bulk of other costs associated with life cycle costing for equipment and systems. systems. Life cycle cost was strong in the 1960s when LCC was the subject of considerable interest and publications. Many original works on LCC LCC are out of print. Newer publications are emerging such as: 1) RMS Guidebook (SAE 1995) for a life c ycle cost summary, 2) Reliability and Maintainability Guideline for Manufacturing Machinery and Equipment (SAE 1999) for introducing details on how equipment survives and how it is restored to operating conditions as a method for decreasing life cycle costs by way of both a strategy and tactics for how reliability tools, used up-front, can reduce costs and 3) Life-Cycle Costing Manual for the Federal Energy Management Program NIST Handbook 135 (US Government 1995) for background and methodology for US Government calculations along with annual supplements for discount factors (US Government 2002). SAE advocates reducing life cycle costs for equipment in the automotive sector by showing show/why reliability and maintainability must be included in upfront decisions for strategic and tactical issues of achieving the lowest long term cost on ownership. LCC concepts are resurging with US Government efforts to minimize minimize energy costs. Remember this adage when considering LCC limitations: ―In the land of the blind, a one-eyed man is king!‖ LCC improves our blinded sight —  we don’t need the most wonderful sight in the  — we world, it just needs to be more acute than our fiercest competitor so that we have an improvement improvement in the cost cost of operating operating our plants. USA Department Department of Defense (DOD) tools and techniques are frequently used effectively in commercial areas and this is true of life-cycle costing. Numerous references to to LCC papers are listed listed in in cumulative cumulative indexes for a major major symposium (RAMS 2001). Major references for LCC in the DOD area are MIL-HDBK259 for LCC details, MIL-HDBK-276-1 and MIL-HDBK-276-2 as form guides for details and for importing data into specific software.

WHY USE LCC? LCC helps change provincial perspectives for business issues with emphasis on enhancing economic competitiveness by working for the lowest long term cost of ownership which is not an easy answer to obtain. Consider these typical problems and conflicts conflicts observed in in most most companies:

1. Project Engineering wants to minimize capital costs as the only criteria, 2. Maintenance Engineering wants to minimize repair hours as the only criteria, 3. Production wants to maximize uptime hours as the only criteria, 4. Reliability Engineering wants to avoid failures as the only on ly criteria, 5. Accounting wants to maximize project net present value as the only criteria, and 82



6. Shareholders want to increase stockholder wealth as the only criteria. Management is responsible for harmonizing these potential conflicts under the banner of  operating for the lowest long term cost of ownership. LCC can be used as a management decision tool for harmonizing the never ending conflicts by focusing on facts, money, and time. Why should engineers be concerned about cost details for LCC? LCC? It is important important to help engineers think like MBAs and act like engineers for profit making enterprises--It enterprises--It’s all about the money! Economic calculations calculations are well defined but the discount rate rate is important (US (US Government 2002). Accounting and finance organizations organizations set internal internal discount rates (which often change) to make economic decisions easy for engineers. Discount factors reflect a host of relationships and considerations which include very low risk investment returns such as Government T-bills, factors for projects such as estimated uncertainty errors, internal rates of returns, and so forth. In general, consider a typical discount value of 12% which is neither very low nor very high for calculations which will follow follow (the discount discount rate can also also be used for inflation/deflation factors):

1. What is the present value (PV) of US$1.00 today over time? [Think what will be the real value of the loan made to your no-good brother-in-law if it every gets repaid.] repaid.] 2. What is the future value (FV) of US$1.00 received over time? [Think what will be the value of your pension if you can live long enough to collect on it.] Cash flows into/out of a business. business. The discounting method method summarizes transactions transactions over the life of the the investment investment in terms of present or future dollars. Table 1 discount rates (used as multipliers or dividers) dividers) put financial transactions into the present value of money to answer the two questions posed above. Engineering always want a simple, single value, criteria for a project —  the answer for LCC is called  — the net present value (NPV). NPV is the present value of proceeds minus present value of outlays. Projects and processes with the greatest greatest NPV is usually the winner. Often for incremental changes on a project or within a plant, you lack enough details to arrive at a positive NPV. Thus many improvement projects must be selected on the least negative NPV values from many alternatives. So once again, we can have the single single number engineers always want —it’s NPV but in this case, it’s the least negative NPV. Most fixed fixed assets and other projects have a limited limited useful life. All equipment equipment has a finite life life based on both b oth deterioration deterioration and obsolescence. The most common depreciation methods is straight line depreciation based on acquisition cost less salvage. Straight line depreciation is based on consumption consumption of a fixed percentage of the equipment cost. cost. Often straight straight line depreciation is used for internal accounting reports of profit/loss and for calculating NPV. Income tax rates vary and may require inclusion of state state as well as federal taxes. For calculation calculation purposes, consider consider the tax rate is 38% based on the profit before tax numbers. numbers. Profit before before taxes may be positive positive or negative. When profit before before tax is negative, the company company receives a tax credit either a carry-back or carry-forward. carry-forward. When profit before tax is positive, positive, the company company pays taxes. For a project or process, tax numbers are used to calculate cash flows. After the tax is included, the cash flow is discounted to get present value, and the sum of all present values gives the NPV.


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