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Module-I
Lecture 1
• Introduction to the syllabus lesson plan, reference books, course outcomes
• Energy scenario World and India
• Regulatory authorities in India
• Need of energy management
• Definition of energy management
Energy Management
Open Elective
Offered by Dept. of Electrical & Electronics Engineering, VSSUT, Burla
For CoVID the
number of e-
lectures are
limited to 30
keeping the
Syllabus same.
 b/d barrel per day

Source: BP Statistical Review of World Energy 2020

 Status of energy scenario India and World
Source: BP Statistical Review of World Energy 2020
Table 3.
Consumption Growth rate p.a. Share
Exajoules 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2019 2008-18 2019
India 21.52 22.55 23.88 25.11 26.08 27.86 28.77 30.07 31.33 33.30 34.06 2.3% 5.2% 5.8%
World 482.82 506.02 518.31 524.98 534.91 539.25 543.17 550.60 560.42 576.23 583.90 1.3% 1.6% 100.0%
Primary energy: Consumption per capita Growth rate p.a.
GJ per capita 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2019 2008-18
India 17.7 18.3 19.1 19.8 20.4 21.5 22.0 22.7 23.4 24.6 24.9 1.2% 4.0%
World 70.2 72.7 73.6 73.7 74.2 73.9 73.6 73.8 74.2 75.5 75.7 0.2% 0.4%
Renewables: Renewable power generation 2019 Growth rate
TWh 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Wind Solar Others Total
India 28.0 33.9 41.9 49.5 55.9 63.0 65.1 79.8 99.2 122.8 134.9 5.0% 27.3% -3.2% 9.8%
World 1270.2 582.8 615.0 2468.0 1429.6 724.1 651.8 2805.5 12.6% 24.3% 6.0% 13.7%
Electricity generation Growth rate p.a. Share
TWh 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2019 2008-18 2019
India 879.7 937.5 1034.0 1091.8 1146.1 1262.2 1317.3 1401.7 1473.8 1551.4 1558.7 0.5% 6.5% 5.8%
World 20264.4 21569.9 22256.6 22804.7 23433.5 24029.8 24266.3 24922.9 25643.0 26652.7 27004.7 1.3% 2.7% 100.0%
p.a.= per annum, EJ=Exajoules=1018 joule, GJ=Gigajoules=277.8 kWh, TWh=Terawatt-hours= one trillion (1012) Watt
Table 5. Comparison of 2018-19 with each type fuel use
Fig 1. Grid connected RE in India up to March
2019
Source: Behera S, Pati BB. Grid-Connected
Distributed Wind-Photovoltaic Energy
Management: A Review. In Wind Solar Hybrid
Renewable Energy System 2019 Oct 9.
IntechOpen. (Book Chapter)
Fig.2 Consumption of electricity sectorwise in India
Source: http://www.mospi.gov.in/
Energy Statistics 2020 - MoSPI
There is scope of saving energy in bulk in largest
consuming industrial sector
 Besides these there are new role players :
• R & D, intellectual property protection, and
international cooperation, promotion, and
coordination in renewable energy sources such
as wind power, small hydro, biogas, and solar
power: Ministry of New and Renewable Energy
(MNRE)
• For reliable & resilient power systems, fostering
efficient electricity markets, promoting economy
and sustainability. For load despatch functions of
5 Regional Load Despatch Centres and a National
Load Despatch Centre (NLDC): Power System
Operation Corporation Limited (POSOCO)
• The Government of India set up Bureau of Energy
Efficiency (BEE) on 1st March 2002 under the
provisions of the Energy Conservation Act, 2001.
The mission of the Bureau of Energy Efficiency is
to assist in developing policies and strategies with
a thrust on self-regulation and market principles,
Fig.3 Overview of Indian Power Sector within the overall framework of the Energy
Conservation Act, 2001 with the primary objective
of reducing energy intensity of the Indian
economy: Bureau of Energy Efficiency (BEE)

Source: Overview of Indian Power Sector and Regulations - ESMAP

www.esmap.org
 Fig.4 Power saving label

• Energy Efficiency in Electrical Equipment and Fig.5 Energy Efficiency benefits

designs indicated by star rating, the more stars,
the better efficiency and less input- given by
BEE.
• Energy auditor certification by BEE
Check the label before buying electrical
equipment such as refrigerator, air conditioner
etc. It is beneficial in long run to save your
money on electricity bill.
Source: Guide book, BEE
Electricity Pricing in India
ABT (Availability Based Tariff)

Energy Security
Need of energy management
With the passage of time, the cost
of energy has shot up to a great
extent. This change has resulted
in making energy management a
priority for all the facility
managers and commercial
building owners.
Nowadays, a number of cutting-
edge technologies are being
exploited in the field including
the latest automated management
systems. These technologies
when used in conjunction with
certain principles of energy
management exhibit potentials to
create a successful energy
program which is quite efficient.

Fig.7 The gist of energy management

WHAT IS ENERGY?
Definition: Energy is the capacity of a physical
system to perform work. Energy exists in several
forms such as heat, kinetic or mechanical energy,
light, potential energy, electrical or other forms.
 According to the law of conservation of energy, the
total energy of a system remains constant, though
energy may transform into another form.
Definition of energy management
Energy Management is defined as “The strategy of
adjusting and optimizing energy, using systems and
procedures so as to reduce energy requirements per
unit of output while holding constant or reducing total
costs of producing the output from these systems”.
Energy management is a technical and management
function which is to monitor, record, analyse critically
examine, alter and control energy flows through Fig.8 The pillars of energy management
systems so that energy is utilized with maximum
efficiency. Who is an energy manager?
An energy manager is responsible for the day to day
management activities of fuels and deliveries, boiler houses,
distribution systems, building services, plant, process
equipment, pollution exhausts, effluents and waste.
Lecture 2
Principles of energy management
Source: https://www.mitsde.com
Identification and tracking of Energy Pattern
The first step of any program is identifying and tracking the energy pattern of that program. If we do not have the
knowledge of when and where the energy is used, then there is no way to estimate the relative importance of any
Energy Management Project.
Controlled energy system’s use
To obtain more amount of energy saving, it is not important to install more and more efficient components like
electronic ballasts or T-8 lamps, etc. Instead, what is more important is that we must keep a check on the system’s use
and ensure that the resources are aptly used.
Properly maintained and managed facilities
A program with effectively maintained and managed facilities is the only program that offers effectual Energy
Management. The quantity of technological equipment has nothing to do with the success of energy management
program.
Good Maintenance practices
To attain the highest rates of return on Energy Conservation, it is important to keep in mind the maintenance practices
in the program. We know that Great Maintenance and Successful Energy Management go hand in hand, so simply by
performing maintenance, we can achieve success in any energy management programs.
Preventive and Reactive Maintenance
Despite the funding limitations, we know that waiting for any crisis to take place is a waste of time, i.e., reactive
maintenance is imprudence. On the contrary, preventive maintenance is critical for the program’s success. It can be
ignored when systems are new, heat exchange systems are clean, seals are tight and calibrations are precise.
Distinction between Maintenance and Energy Management
One should know the clear distinction between Maintenance and Energy Management. Cleaning and fixing of
equipment for better use come under good maintenance while installation of more efficient equipment comes
under good energy management. Both of these serve different purposes. It is very important to remember their
difference whenever a budget is being prepared for any program.
Automated Energy Management Systems
Even the most overrated technologies of automated energy management systems cannot recompense
for a poor heating, ventilation and air conditioning (HVAC) system design. No automation can bring more performance out of any
system components if heating and cooling of loads is incorrectly calculated or if the set of equipment is inappropriate.

Fig. 8 Cycle of energy management

 Electrical Energy Management System (EEMS) widely refers to a computer system which is designed
specifically for the automated control and monitoring of electric power and utility system. The scope may
span from a load dispatch centre to a group of power networks. Most of these energy management systems
also provide decision making facilities for operator in the operation and control in real time. The data
obtained from such actions are used to train operators in a control centre and for performing engineering
studies for futuristic actions like planning, optimization and maintenance scheduling, etc. on a frequent basis
and to produce trend analysis and annual consumption forecasts.
Energy Management System (EMS) is a collection of computerized tools used to monitor, control, and
optimize the performance of generation and transmission systems. This intelligent energy management
software control system is designed to reduce energy consumption, improve the utilization of the system,
increase reliability, and predict electrical system performance as well as optimize energy usage to reduce cost.
Energy Management System applications use real-time data such as frequency, actual generation, tie-line load
flows, and plant units’ controller status to provide system changes. Energy Management System had its origin
in the need for electric utility companies to operate their generators as economically as possible. To operate
the system as economically as possible required that the characteristics of all generating units be available in
one location so that the most efficient units could be dispatched properly along with the less efficient. In
addition, there was a requirement that the on/off scheduling of generating units be done in an efficient manner
as well. Energy management systems can also provide metering, sub metering, and monitoring functions that
allow facility and building managers to gather data and insight that allows them to make more informed
decisions about energy activities across their sites.
EMS in Power Systems:
Electrical energy management systems (EMS) are an important function for the reliable and efficient operation of power
systems. EMS is related to the real time monitoring, operation and control of a power system. The information from the
power system is read through Remote Terminal Units (RTUs), an integral part of Supervisory Control and Data Acquisition
(SCADA) to an EMS or Energy Control Centre (ECC). EMS consists of both hardware and software. Hardware part of EMS
consists of RTU, Intelligent Electronic Device (IED), Protection, Computer networking, .etc. Software part of EMS consists
of Application programs for network analysis of power systems. In EMS, application programs are run in a real time as well
as extended real time environment to keep the power system in a secure operating state. Now-days, EMS is an integral part of
any power system. It is used as a part of Substation Automation System (SAS), Demand Side Management (DSM),
Protection, and Distribution Management Systems (DMS) for renewable energy and so-on. In the next few years, EMS-DMA
will change the role of power systems, monitoring and control.
An energy management system (EMS) is a system of computer-aided tools used by operators of electric utility grids to
monitor, control, and optimize the performance of the generation and/or transmission system. The monitor and control
functions are known as SCADA, followed by several on-line application functions. Energy Management Software (EMS) is a
general term referring to a variety of energy-related software applications which may provide utility bill tracking, real-time
metering and lighting control systems, building simulation and modeling, carbon and sustainability reporting , demand
response, and/or energy audits. Managing energy can require a system of systems approach.
1.2 Objectives:
There are primary and secondary objectives of energy management system. The primary objectives are related to
the security and stability of the system, while the secondary objectives relate to the
Primary Objectives: Security and Stability of the system
Secondary Objectives: Economic Operation and Control
Tertiary Objectives: Optimization, Operational Planning and Maintenance Scheduling
1.2.1 Primary Objectives:
1. Maintaining the power system in a secure and stable operating state by continuously monitoring the power flowing in the
lines and voltage magnitudes at the buses.
2. Maintaining the frequency within allowable limits.
3. Maintaining the tie-line power close to the scheduled values.
1.2.2 Secondary Objectives:
1. Economic Operation of the power systems through real time dispatch and Control.
2. Optimal control of the power system using both preventive and corrective control actions.
3. Real time Economic Dispatch through real power and reactive power control
1.2.3 Tertiary Objectives:
1. Optimization of the power system for normal and abnormal operating scenarios.
2. Optimal control of the power system by appropriate using both preventive and corrective control actions
3. Maintenance scheduling of generation and transmission systems.
The three objectives are executed at different levels by the operator in a control centre.
While the first objective is automatic or closed loop control without the intervention of the operator, the secondary and
tertiary are performed with the aid of the operator.
In energy management systems, voltage magnitudes and power flows over the lines are continuously monitored
through SCADA, to check for violations. The violations in voltage are addressed by preventive control actions, while
the power flow violations are addressed by means of corrective actions. The tie line power flows at scheduled values
will be maintained by adjusting the MW outputs of the AGC generators so as to accommodate fluctuating load
demands.
The energy management software application will also calculate the required parameters to optimize the operation of
the generation units under energy management action. EMS is a computer-based Operation and Control System. It is
used in mentoring and controlling the system in real time. It receives large amount of information from power Systems
through SCADA. It selectively uses Information from SCADA for computation and analysis. It Send back ‘important
control signals’ to the System through SCADA.
EMS has different names, namely 1) ECC: Energy Control Centre, 2) Load Dispatch Centre, 3) DSM: Demand side
Management, 4) DMS: Distribution Management System, etc.. The main functions of these are to operate the power
systems in real time.
Working of EMS:
The important working of an EMS is given below
1. Real time monitoring and control over the
whole distribution network.
2. Enhanced customer service through a complete
outage management package including trouble
call taking, fault localization and restoration as
well as outage statistics and customer notification.
3. Efficient work order handling via the built-in
work management tools.
4. Better crew and resource management
including support for crew scheduling and
tracking, dispatching and assignments as well as
follow-up and reports.
5. Optimal network utilization using the State
Estimator functionality for optimal feeder
reconfiguration and loss minimization in balanced
networks
6. Better support for all reporting with retrieval of
historical data archived in a data warehouse
Fig. 9 Energy management system in Power System
Source: NPTEL Lecture on EMS
 The working of an EMS is divided into two categories, namely ‘real-time’ or ‘On-Line’ and ‘off-line’ corresponding to
the problem being addressed and the application it is handling.
a. Real time or online applications
b. Extended real time of Off line applications
Real time or online applications:
These programs are usually those program which require real- time attention like control and protection functions. For
example the following applications can be classified under this category
Control functions:
i) Load Frequency Control (LFC)
ii) Automatic Generation Control (AGC)
iii) Reactive Power Control (RPC)
iv) Voltage Control (VC)
v) Reactive Power and Voltage Control (QVC)
Protection Functions:
i) Protective relaying
ii) Primary protection
iii) Secondary protection or backup protection

The protective functions are the first which are activated in a real time operation as a protective measure. These are
followed by essential control functions like LFC, AGC, RPC, VC, RPC, QVC, etc..
EMS and SCADA are two important entities in the real time monitoring, operation control of power systems.
Figure describes the three main classifications about
the operation, namely
i) On-line closed loop control
ii) On-line open loop control
iii) Off line study or simulation model

On-line closed loop controls are those which are

performed without the presence of the operator like
LFC, AGC, etc.
On-line closed loop controls are those which are
performed with the presence of the operator for
decision making like Operation and Dispatch.
Examples are
i) Real power dispatch or active power dispatch
(APD)
ii) Reactive Power Dispatch (RPD)
iii) Active and Reactive Power Dispatch

These may or may not involve economics of

operation. The main concern is the matching of
power generation to the load requirement, which is
termed as essential load balance criterion. This
ensures that the load requirement is met, which is
also termed as the ‘generation load following’. Fig. 10 Energy management for online and offline tasks
The following are the important functions which are carried out based on the
real time functions
Measurements: Measurements of important parameters from the remote
terminal unit (RTU) like three phase voltage, current, power factor, power
flows, etc.
Monitoring: Real time monitoring of the above parameters at frequent
intervals of time. These values are continuously monitored to check for any
significant deviations from normal values
Control Actions: Important control functions or actions like ‘preventive’,
‘corrective’, ‘emergency’ , ‘restorative’, etc.
Network Topology Processing: Building a network model based on real time
measurements.
State Estimator: Determining the best estimate from real time measurements.
Power Flow: Load flow analysis or Determining voltages and phase angles.
Security Assessment: Determining the ‘secure’ or ‘insecure’ state of a system.
Contingency Analysis: Impact of a set of contingencies to identify harmful
ones.
Load flow analysis, Determining voltages and phase angles.
Optimal Power Flow: Optimization of a specified objective function with
constraints.
Short Circuit Analysis: Determination of fault currents for various faults on
the network.
Fig. 11 Energy Management Systems
functions in more detail
Operating States of a Power System:
Normal operating state
Abnormal operating state
Restorative state
Normal or secure state
In the normal operating state, the system is said to be secure and all constraints like voltages at nodes, real and reactive power
generation, real and reactive power flows are satisfied. The aim of the power system is to keep the operating state of the power
system to lie in the normal state. Even though this is a stable operating state, any slight disturbance will take it to the abnormal
state.
Abnormal or insecure state:
In the event of a disturbance, like generator outage or line outage, the operating conditions change and the variables like nodes
voltages and powers (real and reactive); real and reactive power flows violate the operating limits or constraints.
The abnormal state or insecure state is further classified in to the following states;
a. alert
b. emergency
c. in-extermis ( or islanding)
Restorative state:
The power system disturbance, based on its nature, can lead the power systems to a blackout or brownout state. In the blackout
state, the entire load is separated from the generators, through either the tripping of the generators or the transmission lines. No
load is supplied. In the brownout state, partial load is supplied through the transmission network. The blackout state is more severe
than the brownout state and requires several stages for restoring in back to the normal operating state.
After the disturbance has occurred, the operator in an EMS tries to bring back the power system to normal operating state through
measures known as restorative strategies. In this process the generators and lines which have tripped will be bought back to service
through a sequence of steps known as restorative measures
(a) Connectivity of operating states (b) Constraints in Operating States

Fig.12 Various operating States of a power system

The working of fig (a) can be described as following.
a. Normal: All constraints (EQ and INEQ) are satisfied, but enough power generation reserve is available.
In case of any generator outage, the reserve from other generators can supply the load without any interruption.
b. Alert: All constraints (EQ and INEQ) are satisfied, but reserve power generation is zero. As a result, in the event of a
loss of generator, the remaining generators cannot supply the load, load shedding as to be resorted to. The operator in an
EMS monitors this situation continuously so as to take effective decision for preventing the power system from going
into emergency or islanding mode. The power system can be bought back to the normal state through preventive control
actions.
c. Emergency: In this state, the equality constraint if violated, while the inequality constraint is satisfied. Corrective
control is used to bring the system back to normal operating state directly or through alter state.
d. In-extermis or islanding: In this state the power system enters in to an islanded mode of operation, where both EQ
and INEQ states are violated. Once the system comes to this state it cannot go back to the emergency mode. In this state
the large power system is separated into small areas or islands, where the loads are supplied from local generations. All
the tie lines connecting the areas are open and they work in an independent mode of operation. System reliability is
more important in this stage than economic operation.
e. Restorative Mode: In this mode, the power system has to be restored through several steps by switching generators
and transmission lines. This is a difficult task and requires strategies for bringing on the generator and synchronizing it
to the grid. Improper sequence will cause tripping.
Energy Management Objectives Clarified
The basic objective of any Energy Management
System is to answer five simple questions:
• How much energy is consumed?
• How is the energy consumed?
• Where is the energy consumed?
• When is the energy consumed?
• What is the quality of the energy consumed?
In order to address these queries Energy Audits are conducted.
Lecture 3

Fig.13 Methodology based on the Pareto-analysis.

Fig. 14. Basic steps of the Pareto analysis.

Source: SCHOENMAKERS I, ZEILER W. Pareto

analysis: a first step towards nZEB Hospitals.
Pareto analysis
Step 1 and 2: Identify problems and identify the root causes of each problem
The first step of the Pareto analysis identified the problems (energy consuming parameters). The root causes of the
problems were analysed using a Root Cause Analysis (RCA), a well-known method used in the second step of the Pareto
analysis.
Figure illustrates a Pareto diagram applied on the energy reduction problem. On the x-axis the problems which causes the
energy consumption and on the y-axis the energy consumption. The 80% value line illustrates 80% of the energy
consumption, which is assumed to be caused by 20% of the problems. If primary problems are identified, the problems can
be solved by defined corrective actions.
The dotted line indicates the 80/20 rule: 80% of the energy consumption can be solved with 20% of the influencing
parameters.

Fig. 15 Pareto diagram

Step 3, 4 and 5: Rank, score, group problems
The energy influencing parameters were grouped into five prospective (use influences, setpoints, building, system
operation and external influences). The prospective including the parameters were scored and rated using a
probability-impact analysis. A high probability and large impact means a high energy reduction potential.
For example for a Hospital, for heating, ventilating and air-conditioning (HVAC) the outcome of this analysis were
KPIs (user presence and occupancy, room temperature and air changes per hour (ACH)), which represented the
focus of the research on corrective actions.
Step 6 Corrective actions
The corrective actions are part of step 6 of the Pareto analysis. An action plan described improvement actions on
the KPIs (user presence and occupancy, temperature and ACH) that were determined and formulated. Corrective
actions resulted in a useful solution of energy reduction. Alignment of the actual system operation to the users’
energy demand, potentially leads to energy reduction.
Definition of Energy Audit
As per Indian Energy Conservation Act 2001,
Energy Audit is defined as:
“the verification, monitoring and analysis of use of energy including submission of technical report containing
recommendations for improving energy efficiency with cost benefit analysis and an action plan to reduce energy
consumption “

Or
An energy audit is a review of current energy costs so that a company can achieve savings.

Or
An energy audit is an inspection, survey and analysis of energy flows for energy conservation in a building, process or
system to reduce the amount of energy input into the system without negatively affecting the output(s).
The aim of energy audit is to obtain a simple but comprehensive photograph of the overall energy flow situation within a
premises.
Principle
When the object of study is an occupied building then reducing energy consumption while maintaining or improving
human comfort, health and safety are of primary concern. Beyond simply identifying the sources of energy use, an energy
audit seeks to prioritize the energy uses according to the greatest to least cost effective opportunities for energy savings.
Why the Need for Energy Audit
• The three top operating expenses are energy (both electrical and thermal), labour and materials.
• Energy would emerge as a top ranker for cost reduction.
• primary objective of Energy Audit is to determine ways to reduce energy consumption per unit of product
• output or to lower operating costs.
• Energy Audit provides a “ bench-mark” (Reference point) for managing energy in the organization.

AREAS OF ENERGY AUDIT

• thermal-technical protection of buildings,
• heating systems
• hot water preparation,
• ventilation systems and air-conditioning (buildings and technology)
• electric appliances (administrative and technological incl. electrical connection, transformation, distribution network, el.
switchboards, el. compensation)
• gas or other energy resources consuming appliances (furnaces, cleaning devices,..)
• Indoor/outdoor lighting,
• measurement and regulation.
ENERGY AUDIT METHODOLOGY

• Pre-audit presentation.

• Collection of data / information.

• Measurements and monitoring with instruments.

• Computation and in-depth analysis.

• Post-audit presentation to discuss the Energy Conservation

• Opportunities identified by the audit team.

Lecture 4

FLOW CHART FOR THE CONSTRUCTION OF AN ENERGY AUDIT

The energy audit may be neatly subdivided into the input side, the output side, and throughput. The input side
constitutes an analysis of fuel and electricity bills for a representative recent annual period. The output side
details the ultimate energy rejection to the external environment, mainly via heat transmission through the
building fabric and ventilating air. The data is obtained from a site energy survey. Analyses of the throughputs
may require micro audits, or energy balances over individual items of plant and equipment, such as furnaces,
boilers, refrigeration systems, steam autoclaves. compressors, etc., to ascertain operating efficiencies and to
identify where sundry gains occur. The systematic approach to an energy audit contains the following
sequential steps:
1. Submit preliminary questionnaire.
2. Process responses from questionnaire.
3. Obtain fuel and electricity bills for a recent representative annual period.
4. Analyse fuel and electricity bills.
5. Conduct boiler house survey and efficiency measurements.
6. investigate energy distribution systems.
7. Perform internal site survey.
8. Construct input side of the audit.
9. Obtain local climatic data.
10. Perform external site survey.
11. Quantify sundry gains.
12. Construct output side of the audit.
13. Construct the energy audit balance sheet.
14. Investigate any residual and iterate to balance the audit.
15. Analyse throughputs.

Questions which an Energy Auditor

should ask- Primary Questionnaire
• What function does this system serve?
• How does this system serve its function?
• What is the energy consumption of this system?
• What are the indications that this system is working properly ?
• If this system is not working, how can it be restored to good working conditions/
• How can the energy cost of this system be reduced?
SECONDARY QUESTIONNAIRE-THE CLIENT INTERVIEW
Having obtain an input/output audit from the annual fuel bills and the external site survey, energy
throughputs should be investigated to ascertain direct rejects of energy to the external other than those losses
via fabric heat transmission and ventilation (e.g., process fluid effluents, flue gases from internal furnaces,
etc.). The aim is to quantify the uses of electricity and process fuels which do not result in sundry gains. The
energy contributing to sundry gains should also be disaggregated to facilitate economic appraisals of 'internal'
energy conservation retrofit measures. The purpose of the secondary questionnaire is to extract information
concerning the internal activities, plant and processes.

Energy management practices

The interview should commence with a presentation of the initial energy audit recommendations and
discussions.
INTERNAL ENERGY AUDIT CHECKLIST
During the internal site survey, the energy auditor should start at the boiler house and track energy flows to the final point of use
and rejection to the external environment. An energy flow chart or a Sankey diagram should be constructed during the quest.
The energy management checklist should cover:
• Fuels-coal, oil, gas
• Electricity
• Energy release—furnaces
• Energy conversion—boilers, autoclaves and liquid heaters
• Heat distribution systems Heating systems
• Energy storage systems
• Plant and equipment
• Lighting
• Thermal insulation
• Ventilation
• Air conditioning systems
• Domestic hot water systems
• Compressed air services
• Refrigeration Plant and chilled water distribution systems
• Steam plant
• Waste heat and materials reclamation a Controls
DETAILED ENERGY AUDIT
A TYPICAL INDUSTRIAL FORMAT
Energy Audit Team
Executive Summary –Scope & Purpose
Energy Audit Options & Recommendations
1.0 Introduction about the plant
1.1 General Plant details and descriptions
1.2 Component of production cost (Raw materials, energy, chemicals,
manpower, overhead, others)
1.3 Major Energy use and Areas
2.0 Production Process Description
2.1 Brief description of manufacturing process
2.2 Process flow diagram and Major Unit operations
2.3 Major Raw material Inputs, Quantity and Costs
3.0 Energy and Utility System Description
3.1 List of Utilities
3.2 Brief Description of each utility
3.2.1 Electricity
3.2.2 Steam
3.2.3 Water
3.2.4 Compressed air
3.2.5 Chilled water
3.2.6 Cooling water
4.0 Detailed Process flow diagram and Energy& Material balance
4.1 Flow chart showing flow rate, temperature, pressures of all input-
Output streams
4.2 Water balance for entire industry
5.0 Energy efficiency in utility and process systems
5.1 Specific Energy consumption
5.2 Boiler efficiency assessment
5.3 Thermic Fluid Heater performance assessments
5.4 Furnace efficiency Analysis
5.5 Cooling water system performance assessment
5.6 DG set performance assessment
5.7 Refrigeration system performance
5.8 Compressed air system performance
5.9 Electric motor load analysis
5.10 Lighting system
6.0 Energy Conservation Options & Recommendations
6.1 List of options in terms of no cost, low cost, medium cost and high cost, annual energy
savings and payback
6.2 Implementation plan for energy saving measures/Projects
ANNEXURE
Al. List of instruments
A2. List of Vendors and Other Technical details
Types of Energy Audits Lecture 5
1. Preliminary Energy Audit
2. Targeted Energy Audit
3. Detailed Energy Audit
Preliminary Energy Audit
Preliminary energy audit uses existing or easily obtained data.
• Establishes the energy consumption in the organization
• Estimates the scope for saving
• Identifies the most likely areas for attention
• Identifies immediate(no cost or low cost) improvements
• Sets a ‘reference point’
• Identifies areas for more detailed study/measurement
Targeted Energy Audits
Targeted energy audits are mostly based upon the outcome of the preliminary audit results. They provide data and detailed
analysis on specified target projects. As an example, an organization may target its lighting system or boiler system or
compressed air system with a view to bring about energy savings. Targeted audits therefore involve detailed surveys of
the target subjects/areas with analysis of the energy flows and costs associated with those targets.
Detailed Energy Audit
Detailed Energy Audit evaluates all systems and equipment which consume energy and the audit comprises a detailed study on
energy savings and costs.
Detailed Energy Audit is carried out in 3 phases
• The Pre-audit Phase
• The Audit Phase
• The Post-Audit Phase
Types of energy audit
The term energy audit is commonly used to describe a broad spectrum of energy studies ranging from a quick walk-
through of a facility to identify major problem areas to a comprehensive analysis of the implications of alternative
energy efficiency measures sufficient to satisfy the financial criteria of sophisticated investors. Numerous audit
procedures have been developed for non-residential (tertiary) buildings. Audit is required to identify the most efficient
and cost-effective Energy Conservation Opportunities (ECOs) or Measures (ECMs). Energy conservation opportunities
(or measures) can consist in more efficient use or of partial or global replacement of the existing installation.
When looking to the existing audit methodologies developed in IEA-ECBCS Annex 11, by American Society of
Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) and by Krarti (2000), it appears that the main
issues of an audit process are:
• The analysis of building and utility data, including study of the installed equipment and analysis of energy bills;
• The survey of the real operating conditions;
• The understanding of the building behaviour and of the interactions with weather, occupancy and operating
schedules;
• The selection and the evaluation of energy conservation measures;
• The estimation of energy saving potential;
• The identification of customer concerns and needs.
Common types/levels of energy audits are distinguished below, although the actual tasks performed and level of effort
may vary with the consultant providing services under these broad headings. The only way to ensure that a proposed
audit will meet your specific needs is to spell out those requirements in a detailed scope of work. Taking the time to
prepare a formal solicitation will also assure the building owner of receiving competitive and comparable proposals.
Generally, four levels of analysis can be outlined (ASHRAE):

Level 0 – Benchmarking: This first analysis consists in a preliminary Whole Building Energy Use (WBEU) analysis
based on the analysis of the historic utility use and costs and the comparison of the performances of the buildings to
those of similar buildings. This benchmarking of the studied installation allows determining if further analysis is
required;
Level I – Walk-through audit: Preliminary analysis made to assess building energy efficiency to identify not only
simple and low-cost improvements but also a list of energy conservation measures (ECMs, or energy conservation
opportunities, ECOs) to orient the future detailed audit. This inspection is based on visual verifications, study of
installed equipment and operating data and detailed analysis of recorded energy consumption collected during the
benchmarking phase;
Level II – Detailed/General energy audit: Based on the results of the pre-audit, this type of energy audit consists in
energy use survey in order to provide a comprehensive analysis of the studied installation, a more detailed analysis of
the facility, a breakdown of the energy use and a first quantitative evaluation of the ECOs/ECMs selected to correct the
defects or improve the existing installation. This level of analysis can involve advanced on-site measurements and
sophisticated computer based simulation tools to evaluate precisely the selected energy retrofits;
Level III – Investment-Grade audit: Detailed Analysis of Capital-Intensive Modifications focusing on potential
costly ECOs requiring rigorous engineering study.
Benchmarking
The impossibility of describing all possible situations that might be encountered during an audit means
that it is necessary to find a way of describing what constitutes good, average and bad energy
performance across a range of situations. The aim of benchmarking is to answer this question.
Benchmarking mainly consists in comparing the measured consumption with reference consumption of
other similar buildings or generated by simulation tools to identify excessive or unacceptable running
costs. As mentioned before, benchmarking is also necessary to identify buildings presenting interesting
energy saving potential. An important issue in benchmarking is the use of performance indexes to
characterize the building.
Benchmarking for Energy Performance
• Internal Benchmarking
- Historical and trend analysis
• External Benchmarking
- Across similar industries
Scale of operation, vintage of technology, raw material specification and quality and
product specification and quality
These indexes can be:
• Comfort indexes, comparing the actual comfort conditions to the comfort requirements;
• Energy indexes, consisting in energy demands divided by heated/conditioned area, allowing
comparison with reference values of the indexes coming from regulation or similar buildings;
• Energy demands, directly compared to “reference” energy demands generated by means of simulation
tools.
Bench Marking Energy Performance
• Quantification of fixed and variable energy consumption trends vis-à-vis production levels
• Comparison of the industry energy performance w.r.t. various production levels (capacity utilization)
• Identification of best practices (based on the external benchmarking data)
• Scope and margin available for energy consumption and cost reduction
• Basis for monitoring and target setting exercises
Benchmarking parameters
Production or Equipment Related
•Gross production related
e.g. kWh/MT clinker or cement produced (Cement plant)
e.g. kWh/MT, kCal/kg, paper produced (Paper plant)
•Equipment / utility related
e.g. kWh/ton of refrigeration (on Air conditioning plant)
e.g. kWh /litre in a diesel power generation plant.
Walk-through or Preliminary Energy Audit (PEA)
The preliminary audit (alternatively called a simple audit, screening audit or walk-through audit) is the
simplest and quickest type of audit. It involves minimal interviews with site-operating personnel, a brief
review of facility utility bills and other operating data, and a walk-through of the facility to become familiar
with the building operation and to identify any glaring areas of energy waste or inefficiency.
Typically, only major problem areas will be covered during this type of audit. Corrective measures are
briefly described, and quick estimates of implementation cost, potential operating cost savings, and simple
payback periods are provided. A list of energy conservation measures (ECMs, or energy conservation
opportunities, ECOs) requiring further consideration is also provided. This level of detail, while not
sufficient for reaching a final decision on implementing proposed measure, is adequate to prioritize energy-
efficiency projects and to determine the need for a more detailed audit.
Considerable savings are possible through small improvements in the “house keeping” practices, and the
cumulative effect of many such small efficiency improvements could be quite significant. These can be
identified by a short survey, observation and measurements. Many energy conscious industries have already
achieved considerable progress in this area.
Approach to Preliminary Energy Audit (PEA)
This essentially involves preliminary data collection and analyses. The PEA is based on collection of available data,
analysis, observation and inference based on experience and judgment is carried out within a short time.
The PEA is the first step in implementing an energy conservation programme, and consists of essentially collecting
and analyzing data without the use of sophisticated instruments. The ability and experience on the part of Energy
Auditor will influence the degree of its success.
Normally the results of the audit would depend on:-
• Experience of the auditor
• Availability and completeness of data
• Physical size of the facility
• Depth of analysis of available data
• Complexity of operations within the facility
• Awareness of energy matters within the facility
Broadly, the audit is carried out in six steps:-
1. Organize resources
• Manpower/time frame
• Instrumentation
2. Identify data requirements
• Data forms
3. Collect data
a. Conduct informal interviews
• Senior management
• Energy manager/Coordinator
• Plant engineer
• Operations and production management and personnel
• Administrative personnel
• Financial manager
b. Conduct plant walkthrough/visual inspection
• Material/energy flow through plant
• Major functional departments
• Any installed instruments, including utility meters
• Energy report procedures
• Production and operational reporting procedures
• Conservation opportunities
4. Analyze data
a. Develop data base
• Historical data for all energy suppliers
• Time frame basis
• Other related data
• Process flow sheets
• Energy-consuming equipment inventory
b. Evaluate-data The PEA is essentially, as the name implies a preliminary data
• Energy use-consumption, cost and schedules collection and its analysis process. Readily available data on
• Energy consumption indices the plant’s energy systems and energy –using processes or
• Plant operations equipment are obtained and studied. The operation and
• Energy savings potential condition of equipment are observed by going around the plant.
• Plant energy management program These provides basis to develop recommendations for
• Preliminary Energy Audit immediate short term measures and to provide quick and rough
5. Develop action plan estimates of savings that are possible and achievable. A
• Conservation opportunities for immediate implementation preliminary study usually
• Projects for further study Identifies and assesses obvious areas for energy savings such
• Refinement of corporate energy as stream leaks, compressed air leaks, poor or missing
• Resources for detailed energy audit insulation, condensate recovery, idling equipment,
• Systems for test deterioration and deficiencies in combustion and heat transfer
• Instrumentation: portable and fixed equipment etc. and serves to identify specific areas for the
• Manpower requirements detailed plant energy study.
• Time frame
6. Implementation
• Implementation identified low cost/no cost projects
• Perform detailed audit
Detailed Energy Audit (DEA)
This would be a comprehensive energy study using portable energy monitoring instruments. The essential part of
this audit is carrying out various measurements and analyses covering individually every significant energy consuming
plant item/processes, to determine their efficiencies and loss of energy at that point, and potential energy savings.
The Detailed plant energy study is a comprehensive analyses and evaluation of all aspects of energy generation,
distribution and utilization within plant. The analyses is based on consistent and detailed accounting of all energy inputs
into a system and all energy outputs from a system which results in the development of energy and mass balance. At the
plant level, the analyses require time series data on a daily, monthly, or yearly basis, on the quantities of all forms of
primary energy flowing into the plant, e.g. coal, fuel, oil, electricity, etc. And production figures of major products, by-
products and waste products, at the department or sectional level. Information is required on the quantity of energy
forms consumed, and the production figures of intermediate products. At the equipment level, in addition to the
quantities of energy forms and material products, process parameters such as temperature, pressure, flow rate, etc. are
also required.
Data generation and collection is an essential and critical element of a detailed energy audit study. Difficulties in getting
data required generally arise due to unavailability of historical records. The acquisition of actual operating data through
existing or new permanently installed instruments or portable test instruments cannot be overemphasized in this
context.
Measurements are critical in any serious effort to conserve energy. Apart from helping to quantify energy consumption,
measurements also provide a means to monitor equipment performance and check equipment condition. Examples of
measurements and instrument types are:
1. Flow/Velocity: Orifice plate, Picot tube, Ventura tube, Turbine meter, Vortex shedding flow meter
2. Temperature: Thermometers - Bimetallic, Resistance etc., Thermocouple, Radiation pyrometer.
3. Pressure: Bourdon gauge Diaphragm gauge, Manometers
4. Stack Gas Analysis: Orsat apparatus, Oxygen analyzers, Carbon dioxide analyzers, Carbon monoxide analyzers.
5. Heat flow: Thermography equipment
6. Electrical: Multimeter, Ammeter, Wattmeter, Power Factor meter, Light meter
7. Stream Trap Testing: Stethoscope, Ultrasonic Detector
The duration of DEA, studies depend on plant size and complexity. Whereas preliminary energy study can be carried out
in a few days, the detailed study would require anywhere from few weeks to months to years of effort.
Long term approach
These are still short term solutions. The opportunities for improving the efficiency of energy use in the long term,
however, lie in applying techniques and technologies of conservation to new plants. Proper attention to the efficient use of
energy at the design stage is vitally important.
General audit
The general audit (alternatively called a mini-audit, site energy audit or detailed energy audit or complete site energy
audit) expands on the preliminary audit described above by collecting more detailed information about facility operation
and by performing a more detailed evaluation of energy conservation measures. Utility bills are collected for a 12 to 36
month period to allow the auditor to evaluate the facility's energy demand rate structures and energy usage profiles. If
interval meter data is available, the detailed energy profiles that such data makes possible will typically be analyzed for
signs of energy waste. Additional metering of specific energy-consuming systems is often performed to supplement utility
data. In-depth interviews with facility operating personnel are conducted to provide a better understanding of major
energy consuming systems and to gain insight into short and longer term energy consumption patterns. This type of audit
will be able to identify all energy-conservation measures appropriate for the facility, given its operating parameters. A
detailed financial analysis is performed for each measure based on detailed implementation cost estimates; site-specific
operating cost savings, and the customer's investment criteria. Sufficient detail is provided to justify project
implementation.
Investment-grade audit
In most corporate settings, upgrades to a facility's energy infrastructure must compete for capital funding with non-
energy-related investments. Both energy and non-energy investments are rated on a single set of financial criteria that
generally stress the expected return on investment (ROI). The projected operating savings from the implementation of
energy projects must be developed such that they provide a high level of confidence. In fact, investors often demand
guaranteed savings. The investment-grade audit expands on the detailed audit described above and relies on a complete
engineering study in order to detail technical and economical issues necessary to justify the investment related to the
transformations.
Specific audit techniques
Infrared thermography audit
The advent of high resolution thermography has enabled inspectors to identify potential issues within the building
envelope by taking a thermal image of the various surfaces of a building. For purposes of an energy audit, the
thermographer will analyze the patterns within the surface temperatures to identify heat transfer through convection,
radiation, or conduction. It is important to note that the thermography ONLY identifies SURFACE temperatures, and
analysis must be applied to determine the reasons for the patterns within the surface temperatures. Thermal analysis of
a home generally costs between 300 and 600 dollars.
For those who cannot afford a thermal inspection, it is possible to get a general feel for the heat loss with a non contact
infrared thermometer and several sheets of reflective insulation. The method involves measuring the temperatures on
the inside surfaces of several exterior walls to establish baseline temperatures. After this, reflective barrier insulation is
taped securely to the walls in 8-foot (2.4 m) by 1.5-foot (0.46 m) strips and the temperatures are measured in the center
of the insulated areas at 1 hour intervals for 12 hours (The reflective barrier is pulled away from the wall to measure the
temperature in the center of the area which it has covered.). The best manner in which to do this is when the
temperature differential (Delta T) between the inside and outside of the structure is at least 40 degrees. A well insulated
wall will commonly change
approximately 1 degree per hour if the difference between external and internal temperatures is an average of 40
degrees. A poorly insulated wall can drop as much as 10 degrees in an hour.
Pollution audits
With increases in carbon dioxide emissions or other greenhouse gases, pollution audits are now a prominent factor in
most energy audits. Implementing energy efficient technologies help prevent utility generated pollution.
Online pollution and emission calculators can help approximate the emissions of other prominent air pollutants in
addition to carbon dioxide.
Pollution audits generally take electricity and heating fuel consumption numbers over a two year period and provide
approximations for carbon dioxide, VOCs, nitrous oxides, carbon monoxide, sulfur dioxide, mercury, cadmium, lead,
mercury compounds, cadmium compounds and lead compounds.
 Lecture 6
Identification of Energy Conservation Factors & Areas
Steps for conserving energy can be taken if we know the correct factors and areas to be
studied and also details of fuels used.
These can be:
• Energy generation
• Energy distribution
• Energy usage by processes
• Fuel substitution
Measuring Energy Performance
Production Factor = Current year’s production/Reference year’s production
• Reference Year Equivalent Energy Use
• The reference year’s equivalent energy use (or reference year equivalent) is the energy that would
have been used to produce the current year’s production output.
• The reference year equivalent is obtained by multiplying the reference year energy use by the
production factor (obtained above)
• Reference year equivalent = Reference year energy use x Production factor
• Plant Energy Performance is the improvement or deterioration from the reference year.
It is a measure of plant’s energy progress.
• Plant energy performance = (Reference year equivalent – Current year’s energy) x 100/Reference year
equivalent
 Technical and Economic feasibility- Factors

Technology availability, space, skilled manpower, reliability, service, Impact of measure on safety, quality,
production or process. Maintenance requirements and spares availability.

Sample Worksheet for Economic Feasibility

Name of Energy Efficiency Measure

Net Savings /Year (Rs./year)

= (Annual savings-annual operating costs)
Payback period in months
= (Investment/net savings/year) x 12
 Lecture 7

Energy monitoring & targeting Importance

An effective monitoring & implementing system with adequate technical ability for analyzing energy saving
options is key to ENERGY MANAGEMENT.
Energy monitoring and targeting is primarily a management technique that uses energy information as a basis to

eliminate waste, reduce and control current level of energy use and improve the existing operating procedures .
These techniques covers all plant and building utilities such as fuel, steam, refrigeration, compressed air, water,
effluent, and electricity are managed as controllable resources in the same way that raw materials, finished
product inventory, building occupancy, personnel and capital are managed.----It Becomes the “Energy Cost
Centers.”
Elements of Monitoring & Targeting System
• Recording - Measuring and recording energy consumption
• Analyzing - Correlating energy consumption to a measured output, such as production quantity
• Comparing -Comparing energy consumption to an appropriate standard benchmark
• Setting Targets -Setting targets to reduce or control energy consumption
• Monitoring - Comparing energy consumption to the set target on a regular basis
• Reporting -Reporting the results including any variances from the targets which have been set
• Controlling - Implementing management measures to correct any variances, which may have been
occurred.
Particularly M&T system will involve the following:

• Checking the accuracy of energy invoices

• Allocating energy costs to specific departments (Energy Accounting Centres)
•Determining energy performance/efficiency
•Recording energy use, so that projects intended to improve energy efficiency can be checked
•Highlighting performance problems in equipment or systems
Data and Information Analysis
• Plant level information can be derived from financial accounting systems-utilities cost centre
• Plant department level information can be found in comparative energy consumption data for a group of similar
facilities, service entrance meter readings etc.
• System level (for example, boiler plant) performance data can be determined from sub metering data
• Equipment level information can be obtained from nameplate data, run-time and schedule information, sub-metered
data on specific energy consuming equipment
• After collection of energy consumption, energy cost and production data, the next stage of the monitoring process is to
study and analyze the data and represent it for day to day controls—so represent it graphically by pie chart, bar chart
Relating Energy Consumption and Production
Specific Energy Consumption(SEC) is energy consumption per unit of production
CUSUM -Cumulative Sum
•Cumulative Sum (CUSUM) represents the difference between the base line and the actual consumption points over the
base line period of time.
•This useful technique not only provides a trend line, it also calculates savings/losses to date and shows when the
performance changes.
Fig.16 CUSUM plot
The Sankey Diagram and its Use The Sankey diagram is very useful tool to represent an entire input
and output energy flow in any energy equipment or system such as boiler, fired heaters, furnaces after
carrying out energy balance calculation. This diagram represents visually various outputs and losses so
that energy managers can focus on finding improvements in a prioritized manner.

Example: The Figure

shows a Sankey diagram
for a reheating furnace.
From the Figure, it is
clear that exhaust flue gas
losses are a key area for
priority attention.
Sundry gains:
These are energy losses
during combustion,
conversion, distribution
and utilization which
offset energy demands of
secondary utilization.

Fig.17 Sankey Diagram

The Ten Steps for Detailed Audit
Units and conversion factors.
General
1 short ton (ton) = 2000 lb
1 metric ton (tonne) = 1000 kg 1 ton = 0.907185 tonne
1 barrel = 42 U.S. gallons = 159.0 liters 1 barrel of crude oil ~ 0.136 tonne
1 square mile = 640 acres = 2.590 km2 1 hectare = 10-2 km2 = 2.471 acres
Energy units
1 calorie (thermochemical) = 4.184 J 1 calorie (15 °C) = 4.1858 J
1 calorie (IT) = 4.1868 J
1 calorie (mean) = 4.1900 J, 1 Btu = 251.9958 calories
1 Btu (thermochemical) = 1054.35 J, 1 Btu (59 °F) = 1054.80 J
1 Btu (IT) = 1055.06 J
1 Btu (mean) = 1055.87 J
1 kilowatt-hour (kWh) = 3.6 x 106 J
1 kilowatt-hour (kWh) = 3412 Btu (IT), 1 therm = 100,000 Btu
1 electron-volt = 1.6022 x 10-19 J
Large-scale units
1 quad = 109 MBtu = 1015 Btu
1 exajoule (EJ) = 1018 J
1 terawatt-year (TWyr) = 8.76 x 1012 kWh
Units of power
1 watt (W) = 1 J/sec
1 horsepower = 746 W
106 bbl of crude oil/day ~ 2.12 quad/yr
ENERGY INDEX
Energy index is a useful parameter to monitor and compare energy consumption of specific products
manufactured by the industry. Energy index is the figure obtained by dividing energy consumption by
production output, and the index may be calculated weekly, monthly or annually. Although the total energy
indices are sufficient for monitoring purposes, a record of the individual energy indices should be maintained.
In the event of an increase or decrease (due to perhaps a conservation measure) in energy index, the particular
source can be investigated immediately.
COST INDEX
The cost index is another parameter which can be used to monitor and assess energy consumption by a
company. The cost index is defined as the cost of energy divided by the production output. An individual cost
index can be determined for each energy form and for the total energy consumption by the company.
Example:
Consider a company using three energy forms – oil, gas and electricity. The annual energy consumption is
shown below in various energy units. Each of these energy types may be represented as a percentage of the
total energy used and tabulated as an energy balance.

Calorific value of oil: 18.3X10 Btu/lb;

Density of fuel: 9.7 lb/gal;
1 Btu (thermochemical) = 1054.35 J, 1 Btu (59 °F) = 1054.80 J
1 J=2.77X10-4 Wh

Percentage Energy Balance:

Example:
If the company in previous Example produces 100X103 tons of a particular product, calculate the energy
indices.
Oil energy index: 0.520X109 Wh/100X109 = 5.20X10-3 Wh/ton of product
Gas energy index: 0.146X109 Wh/100X109 = 1.46X10-3 Wh/ton of product
Electricity energy index: 0.995X109 Wh/100X109 = 9.95X10-3 Wh/ton of product
Total energy index: 1.661X109 Wh/100X109 = 16.61X10-3 Wh/ton of product

Example:
Table below shows energy costs for a company using coke, gas and electricity. This company produces 15X103 tons
per year. Calculate cost indices.

Coke cost index = 108.0 X103/15 X103 (tons) = 7.2/ton Gas cost index = 3.6 X103/15 X103 (tons) = 0.2/ton
Electricity cost index = 22.5 X103/15 X103 (tons) = 1.5/ton Total cost index = 134.1 X103/15 X103 (tons) = 8.9/ton
Energy Conservation Schemes
Development of an energy conservation programme can provide savings by reduced energy use. However, it is
economical to implement an energy conservation program only when savings can offset implementation
cost over a period of time. Potential areas of conserving energy and a logical analysis of the methods or
techniques of conservation would provide a systematic and disciplined approach to the entire conservation
strategy as a sequel to the energy audit. Some established conservation trends are replacement, retrofit, process
innovation, fuel conservation and co-generation.
It is generally considered that investment for energy conservation should be judged by exactly the same criteria as
for any other form of capital investment. Energy conservation measures may be classified on an economic basis
and fall into the following three categories:
(a) Short term: These measures usually involve changes in operating practices resulting in little or no capital
expenditure.
(b) Medium term: Low-cost modifications and improvements to existing equipment where the pay-back period
is less than two years and often under one year.
(c) Long term: Modifications involving high capital costs and which frequently involve the implementation of
new techniques and new technologies.
While the first two categories together can achieve savings of the order of 5-10%, capital expenditure using
existing and new technology may achieve a further 10-15%. It is impossible to give a comprehensive list of all
items in each category but selected examples are given for each section.
Short-term energy conservation schemes
Items in this group can be considered as a tightening of operational control and improved housekeeping.
(a) Furnace efficiencies: Greater emphasis should be placed on minimum excess combustion air. Oxygen levels of
flue gases should be continually monitored and compared with target values. Oil burners must be cleaned and
maintained regularly.
(b) Heat exchangers: In the case of heat where useful heat is transferred from product streams to feed streams,
careful monitoring of performance should be carried out to determine optimum cleaning cycles. Frequency of
cleaning will generally increase as a result, with consequent improved heat recovery.
(c) Good housekeeping: Doors and windows should be kept closed as much as possible during the heating season.
Wear natural light is sufficient, do not use artificial light. Avoid excessive ventilation during the heating season.
Encourage staff to wear clothing appropriate to the temperature of the working areas.
(d) Use of steam: Major steam leaks should be repaired as soon as possible after they occur: often a firm
specializing in ‘on stream’ maintenance can be used. One crude distillation columns where live steam is used for
stripping purposes, the amount required should be optimized and carefully controlled.
(e) Electrical power: In industries where all the electrical power is ‘imported’ conservation measures can reduce
the annual electricity costs by 10–15 percent. Steam driven turbines may prove more economical as prime movers.
Natural air cooling may be sufficient and therefore induced–draught fans may be taken out of commission.
Pumping costs can sometimes be saved by utilizing gravity to move products from one tank to another. Where
possible, use off-peak electricity.
Medium-term energy conservation schemes
Significant savings in energy consumption are often available for quite modest outlays of Capital based on a pay-
back period of less than two years,
(a) Insulation: Improving insulation to prevent cold air leaking into the building and also, improving insulation
thickness was determined at a time when fuel oil was Rs 6 per tonne and, consequently, at present fuel oil prices,
optimum thicknesses have increased appreciably. In addition, in older plants lagging may have deteriorated to
varying degrees. For an outlay of Rs 25000, savings of Rs 60000 per annum were achieved.
In all oil refinery the lagging on the process steam system was up rated to new optimum thicknesses and the
Rs20000 invested in the project was recouped within a year
(b) Heating Systems: Improving the time and temperature control of the heating systems in buildings should result
in substantial energy savings.
(c) Replacing air compressors
(d) Instrumentation: To measure and control the energy conservation parameters, adequate instrumentation must be
provided or operators will soon lose interest in maintaining efficiencies if they are working with inadequate an
unreliable instruments.
(e) Process modifications: Many of these schemes will depend on the nature of the industry concerned, however,
one general scheme will be considered. Steam condensate, if uncontaminated, may be used as boiler feed water.
Improved condensate return systems can increase the amount recovered. The effect will be to increase the heat
recovered in the condensate and at the same time reduce raw water and treatment costs.
In one instance 10000 Kg/h of condensate was recovered for an investment of Rs 10000; the pay-back time was less
than six months.
(f) Burners: The control and amount of atomizing stream is important and often in furnaces and boilers the
amount of atomizing steam is far in excess of design.
In a hospital two fuel oil-fired boilers were examined and in some instances it was found that 1 kg steam/kg fuel
oil was being utilized. The oil burners were replaced and the atomizing steam requirements are now 0.1 kg
steam/kg fuel oil. The pay-back for an outlay of Rs12000 was ten months.
(g) Electrical Power Savings: Considerable savings may be made by adjusting the electrical power factor
correction.
Capacitors were installed in one particular company at a cost of Rs 10000. The power factor was increased from
0.84 to 0.97 reducing the maximum demand level by over 14 percent. The pay-back time was nine months.
To increase plant capacity two feed pumps may be run in parallel to achieve the required feed rate. When
replacement, for mechanical reasons, becomes necessary it is more economical to replace the pump by a single
pump having a higher capacity.
Long-term energy conservation schemes
To obtain further economics in energy consumption required the spending of significant amounts of capital,
although, in many cases, the return on capital for the long-term investment may not be as good as that of the
medium term. Full financial evaluation is needed, using the appraisal techniques discussed in Unit-V, to ensure the
investment is economically viable.
(a) Heater modifications: The installation of heating tubes and air pre-heaters to extract more heat from furnace
flue gases.
(b) Improved Insulation: Additional lagging of heated storage tanks. This type of project often comes within the
medium-term group.
(c) Heat recovery: improved heat recovery in the processing areas by additional heat exchange schemes.
Many of the energy projects that have been outlined may be adopted by a wide variety of companies. However,
some are more specific in their application and it is necessary to consider the contribution of energy costs to
companies and energy usage by different industries.
Maximizing System Efficiencies
- Some Measures
• Replace pumps, fans, air compressors, refrigeration compressors, boilers, furnaces, heaters and other energy conservation
equipment, wherever significant energy efficiency margins exist
• Eliminate steam leakages by trap improvements
• Maximize condensate recovery
• Adopt combustion controls for maximizing combustion efficiency

Matching Energy Usage to Requirement

The mismatch between equipment capacity and user requirement often leads to inefficiencies due to part load operations,
wastages etc. It is thus essential that proper energy matching studies are carried out & actions implemented.
Examples :
Eliminate throttling.
Eliminate damper operations.
Fan resizing for better efficiency.
Moderation of chilled water temperature for process chilling needs.
Optimising Energy Input Requirement
In order to ensure that the energy given to the system is being put to optimal use, site specific measures and checks
should be carried out regularly.
EXAMPLES:
• Shuffling of compressors to match needs.
• Periodic review of insulation thickness
• Identify potential for heat exchanger networking and process integration.

Fuel and Energy Substitution –

key steps towards conservation
• Fuel substitution
• Replacement of coal by coconut shells, rice husk etc
• Replacement of LDO (Light Diesel Oil) by LSHS (Low Sulphur Heavy Stock )
• Energy substitution
• Replacement of electric heaters by steam heaters
• Replacement of steam based hot water by solar systems
The ABCs of Energy Conservation Schemes can be used as a checklist to identify the areas of deficiency
and adopt the right approach for energy savings.
Lecture 8
Example Case Study
Energy Audit at Mother Dairy
(Milk Plant)
BASE LINE DATA
Summary of Savings Identified & Realized
(Year 2003 & 2004)

*LDO: Light Diesel Oil

PNG: Pressurized Natural Gas
Major recommendations implemented:
1. Boiler fuel switched over to PNG from LDO
2. Steam supplied to ICP from this boiler
3. Improvement of Power Factor from 0.9 to 0.996
4. New air compressor installed lowering SEC
5. Installation of Auto Blow Down system for Boiler
Summary of Savings Identified
(Year 2005)
BOILERS
Observations:
1. Condensate recovery is not being done.
2. Feed water temperature presently is 50C.
Recommendations:
1. Recover condensate to raise feed water temperature to upto 85C
2. Install de-aerator head on feed water tank and recover condensate.
3. Install steam operated condensate recovery pump
Air Compressors
Observations:
1. Air leakage are about 26%.
Recommendations:
1. Plugging of air leakages
Illumination
Observations:
1. HPMV lamps are used for street lighting.
2. 36Watt Tube lights with copper chokes are used.
Recommendations:
1. Replace HPMV lamps by HPSV lamps
2. Replace 36 Watt Tube lights with T-5 28 Watt with electronic choke in
a phased manner.

The gaps may exist in design & actual operations for large complexes due to integration of :
✓ Steam thermal systems.
✓ Electrical systems
✓ Process systems (Motive/ Thermal loads) due to variation in efficiencies/ actual requirements
✓ Continuous monitoring and analysis of integrated systems is essential for improvements.
✓ Energy Audits will identify such gaps.
✓ Implementation of recommendations will result into considerable energy savings.
Implementation Phase.
The implementation phase is the most critical aspect of the entire program, since this is the central goal
of any energy management effort. What is desired here is that the firm now carry out those measures
which have been identified by the energy manager.
Obviously, one requirement of the implementation phase is that the firm be prepared to make the investments
necessary to begin saving energy. It is generally useful to categorize the energy management opportunities identified
into three groups:
• Operations and maintenance ("housekeeping") options
• Retrofit and modification options
• New design or major construction options
These can be seen to call for an increasing scale of capital investment, ranging from zero to minimal for
housekeeping changes, to extensive for options requiring new construction.
One effective approach for the energy manager to employ with investmentwary top management is to suggest that
all the operations and maintenance EMOs be made first. (These generally require no capital investment; the limited
resources required can be squeezed out of operating funds in one way or
another.)
The next step is to get management to agree to flagging the savings resulting from the first implementation steps.
These savings can then be considered to be "set aside" to implement subsequent steps in the plan.
In many cases, this approach will not be necessary. When the possibilities for saving money and energy are fully
understood, the necessary changes will be made. However, the criteria for determining which investments are
suitable vary widely.
For many industries with limited access to investment capital, a payback period of one year or less will be sought.
Larger firms with access to capital may settle for two to three years. Certain government agencies may find three to
ten years acceptable. The energy manager needs to establish what criteria are acceptable to his or her management
early in the process. Several other steps are important in the implementation phase. These can be summarized as
follows:
• Establish energy effectiveness goals for various departments, divisions, or individuals
• Institute reporting procedures
• Promote continuing awareness and involvement of personnel
• Provide for periodic review and evaluation of the overall energy management program
Module-II
Lecture 9

Energy Efficiency Analysis

Energy management is by definition the most cost-effective, efficient use of energy. Thus, efficiency is an important
concept for the energy manager. Efficiency may be considered from the point of view of the first or second laws of
thermodynamics. The first law is limited to considerations relating to the conversion of energy from one form to another.
Efficiency measures in this category will be referred to as "first law efficiencies." When evaluating the
overall utilization of fuels or energy forms, "second law considerations" apply. Second law efficiencies will be expressed
in terms of a quantity known as available work and will be discussed subsequently. In its most basic form, first law
efficiency may be thought of as the ratio of useful work delivered to energy input to a particular task. As we shall
see, however, there are many tasks for which this basic definition is inadequate or inappropriate. Therefore, at least two
other broad categories of energy efficiency have evolved. Herein they are referred to as "Coefficients of Performance"
(COPs) or Energy Use Performance Factors (EUPFs).

Source: Reference Book: Smith CB, Parmenter KE. Energy, management, principles: Applications, benefits,
savings. Pergamon Press, Elsevier; 2013.
MEASURES OF EFFICIENCY
Example: What is the first law efficiency of a single phase 0.75 kW (1 Hp) electric motor rated at 240 V, 4.88 A
full load current, and having a power factor of 0.8?

This calculation indicates an operating efficiency of 80 percent. This is true for the stated conditions; e.g., for full load and
when the power factor is 80 percent. For operation at other power factors, or for less than full load, the efficiency is less.

Power Factor and Efficiency of Selected Electric Motors (in percent)

Efficiency is usually load dependent. "Load," as used here, can mean a variety of things:
temperature, pressure, force, work, etc.
Example: An electric resistance heater rated at 240 V and 4.167 A delivers 3414 Btu/hr of heat. What is its efficiency?

This calculation implies that all of the input energy — i.e., electricity — is delivered to the load in the form of heat.
Obviously, we have neglected the losses which arise in the process of converting fuel into electricity, and any losses related
to delivering heat to the load (such as radiation losses, vent or stack losses, etc.).
This leads to a second point: Efficiency is only defined within certain specified system boundaries.
Example: An electric incandescent lamp is rated at 100 W and 120 volt. This means that the input power is 100 W.
The light output is 1,500 lumens. The conversion factor from lumens to watts is 1.496 x 10-3
watts/lumen. This gives an efficiency for the incandescent lamp of:

This is not too useful as a measure of efficiency, since the relationship of the input energy to the light delivered is not
clear. A measure in common use is the ratio of the light output in lumens to the input power in watts, called the
efficacy:

Efficacy is an example of an energy use performance factor; i.e., a factor which measures how energy is used to meet
a particular performance goal.
Next consider a window air conditioner which uses 1,000 W of input power to provide 10,200 Btu/hr of cooling. A quick
calculation suffices to show that the amount of work equivalent to this cooling (3 kWh) is greater than the input of energy
(1.0 kWh). Thus, "efficiency" is not a useful measure of an air conditioner which operates as a heat pump, pumping heat
out of a room and thereby cooling it.
Instead, the approach taken with air conditioners and heat pumps is to define a "coefficient of performance," (COP).
Coefficient of performance (COP)

Coefficients of performance are always greater than unity. So much for first law efficiency. As can be seen from the
above examples, efficiency (as commonly used) refers only to the ratio of work or heat output compared to
energy input. This measure reflects the quantities of energy
involved, but says nothing about their quality.
The quality of an energy form, called available work or simply availability, is a measure of its ability to perform useful
work. For example, a gallon of oil has approximately 148 MJ (140,000 Btu) of heating value. This is roughly the same
energy content as 1,000 gallons of lukewarm water heated to 9°C (17°F) above ambient temperature. Although the quantity of
energy is the same in both cases, the ability of the oil to perform useful work is much greater than the ability of the lukewarm
water. The quality (availability) of the oil is much greater.
In a qualitative sense, it may be said that the quality (availability) of electricity and fuels such as oil, coal, and gas is quite
high. Likewise, high pressure, high temperature steam has high availability. Conversely, hot water, low temperature process
heat, or low pressure steam have low availability.
 The available work of a system can be shown to be given approximately by:

where:
E =internal energy (including potential energy, kinetic energy, etc.)
V = volume,
S = entropy
µi0 = chemical potential per mole of i th component
ni = number of moles of i th component
Po = pressure of the atmosphere,
To = temperature of the atmosphere, and
i =i th molecular component.
internal energy (including potential energy, kinetic volume, entropy chemical potential per mole of i th component number of
moles of i th component pressure of the atmosphere, temperature of the atmosphere, and i th molecular component. energy,
etc.)
For a given energy, volume, and system composition, it can be seen that B decreases as the system entropy increases. If
applied to a hydrocarbon fuel, B is the minimum useful work required to form the fuel in a given state from the water and
carbon dioxide in the atmosphere. Since the minimum is also the useful work of a reversible process, B also represents the
maximum useful work which could be obtained by oxidation of the fuel and return of the products to the atmosphere.
Energy Effectiveness
A measure of thermodynamic effectiveness or efficiency of energy use for a process can be determined by the
ratio of the increase in available work attained by the products in the process, divided by the available useful
work of the fuel consumed. If the products leave the process at high temperature, as in a blast furnace, the
process should not be charged with available work in the products by virtue of the elevated temperature. If this
work is lost, the deficiency is not in the process but in the means by which the products are cooled.
The concept of available work provides a useful measure of efficiency. In addition, it suggests process steps or
areas where improvements in efficiency are possible. A word of caution is appropriate with regard to interpreting
the concept of the theoretical minimum energy required. Theoretically, a car driving from Denver to Los Angeles
should use no fuel and, as a matter of fact, should yield useful energy (due to the difference in elevation). Thus,
while the theoretical minimum is a useful concept with which to gauge the potential for fuel conservation, there
is no implication that the attainment of such a goal is practical or even possible. There is, however, a useful
measure of efficiency which can be derived from an availability analysis. This we shall call effectiveness, which
is the ratio of the theoretical minimum work needed for a given process and the actual useful work required.
The difference between the popular notions of efficiency and the concept of effectiveness is illustrated by steam
boiler operation:
An acceptable boiler is one which achieves efficiencies of about 90 percent. That is, only 10 percent of the input
energy is dissipated in the flue gas or by heat transfer losses. We are satisfied then with 90 percent efficiency and
consider we are doing the best by present technological standards. Yet, this overlooks consideration of whether we
have utilized the fuel to its maximum potential.
On the basis of thermodynamic availability, this "efficient" operating boiler has an effectiveness of only 40 to 45
percent, indicating some work was lost unnecessarily in making the steam. We can define a second law efficiency
("effectiveness") as follows:
effectiveness rather than the efficiency.
For the electric motor. We make the assumption that effectiveness is defined at the source of electricity and does
not include the generation of electricity. In this case,

This is the same result as before.

For the resistance heater. Assume the heater delivers warm air at 43°C
(316°K) to a house when the outside air is 0°C (273°K). The available work

where:
Q = heat output of heater, 1,000 watts
T0 = heat sink temperature, 0°C
T1 = heat reservoir temperature, 43°C.
The maximum possible heat or work usefully transferred is, of course, 1,000 watts. The effectiveness is therefore:
This shows that the loss of available work results from using a premium high temperature energy form (electricity) to
produce low temperature heat. The effectiveness would be much greater (about e = 68%) if temp. T1closer to 600°C.
The effectiveness would be greater if this were a heat pump rather than a resistance heater. In this case, e would be
multiplied by the COP (typically 3.0).
Air conditioner. The air conditioner has a COP of 10.2. Its effectiveness is given by

where:
T0 = heat sink temperature (40°C)
T2 = cool reservoir temperature (20°C).
These temperatures correspond to typical hot summer day weather conditions.
For this case,

This indicates that air conditioners do not work effectively when the outside air
temperature is close to the temperature of the conditioned space.
Table. First-law and Second-law Efficiencies for Single Source-Single Output Devices
Table. Causes of Inefficiency

Some of the losses are thermodynamically unavoidable. Others are economically irretrievable. The challenge to
the energy manager is to first identify those which he or she can do something about, find out how to do it, and
then get the management to agree to do it.
 Lecture 10

Management of heating ventilating and air-conditioning (HVAC) – principles, opportunities, case studies

In a typical central HVAC system, the largest electricity users are the chiller and the air distribution fans, followed by the
cooling tower and the water pumps. The boiler is usually the only user of fuel (gas, oil, or coal), unless some form of electric
heating is used. In a decentralized or rooftop system, the breakdown is similar except for the lack of cooling tower pumps and
the substitution of direct heating for boilers.
Very large reductions can and have been made in the use of energy by HVAC equipment. Often these improvements are
made with existing equipment.
There have been examples of energy use being cut in half with no noticeable effect on the comfort of building occupants.
This is the essence of energy management — not doing without, but doing more with what is available.
GENERAL PRINCIPLES OF ENERGY MANAGEMENT IN HVAC SYSTEMS
1. Optimize Controls: Use controls to provide heating and cooling only when it is required.
2. Optimize Capacity: Review the system capacity and get rid of excess capacity. Note that other energy management
activities (reducing heat loads from lighting, for example) could impact on HVAC energy use.
3. Reduce the Load: Minimize heating and cooling loads by reducing infiltration, solar heat loads, etc.
4. Heat and Cool People, Not Buildings:* Do not condition unoccupied spaces; provide heating and cooling where people
work, rather than in aisles, etc.
5. Use Efficient Processes: Select the most efficient heating and cooling process for the building, its occupants, and for the
climate. Customize systems for intended uses (e.g., once-through systems may have been required for previous uses —
chemicals, contaminants, etc. — but new "office" or other use would allow recirculation).
6. Use Efficient Equipment: Select the most efficient equipment for the heating and cooling process selected.
7. Operate Equipment Efficiently: Make certain existing equipment is operating as efficiently as possible; correct
deficiencies.
8. Use Passive Concepts: Make the building and the climate do as much of the heating/ cooling work as possible.
9. Employ Heat Recovery: Heat can be recovered from equipment, building exhausts, and other sources.
10. Provide energy storage capability: Energy stored can permit off-peak use of equipment, load leveling, and more efficient
utilization of equipment.
*One exception is heating to provide freeze protection during the winter. Another is cooling for computer facilities. Also,
some delicate instruments/equipment, chemicals require temperature control.
GENERAL PRINCIPLES OF ENERGY MANAGEMENT
IN HVAC SYSTEMS (Explanation)
The first step in improving the efficiency of an HVAC system is to look at what can be done with straightforward
changes. Typically, most of the savings available from the use of advanced types of control systems such as
computers or minicomputers are also available through simple control changes such as the time clocks which cost
hundreds of times less. In most cases, more energy can be saved by derating fans and pumps rather than by
cycling them with sophisticated controls. Computers should only be applied to systems which are already
operating at the limit of their efficiency under standard controls, or to systems where the number of components
to be controlled is very large.
The second general step is to reduce system capacity to the lowest acceptable level. (This will vary, depending on
local codes and standards.) For example, ventilation should be just adequate to maintain health and comfort on a
day where maximum cooling is required. If there is excess capacity, as is typically designed into buildings, the
additional fan horsepower is wasted, and more heating and cooling than is necessary may be occurring. If
ventilation can be reduced by 20 percent (and static pressure dampers are not used) the energy used by fans can
be cut in half, as will be explained later.
The third step is to reduce the load. This seems obvious, but is frequently overlooked. Infiltration, solar heat
gains, equipment heat, conduction or radiation losses or gains, all can add to or detract from the building heat
source. Insulation, weather stripping, reflective window covers, shading, different color paints, venting
equipment waste heat, more efficient lighting, are some measures which can be employed.
The fourth step is to examine the basic heating and cooling requirements for the facility. The purpose of an
HVAC system is to heat or cool people, not building. Recognition of this simple fact can sometimes lead to
changes in operational patterns which make large savings possible.
The fifth step is to select the most efficient process for heating or cooling. In new construction, well-insulated
buildings combined with passive design features can greatly reduce heating energy. In certain climates,
evaporative cooling (either "wet" or "dry") will use less energy than refrigeration.
The sixth step is to use the most efficient equipment. There is, for example, a fairly wide range in electric
motor efficiency for a given size motor. Likewise, variable speed pumps or motor drives may permit energy
savings.
The seventh step is to operate equipment efficiently. It makes no sense to have high efficiency motors and
then operate them at part load if one could carry the full load. Energy saving economizer systems with
inoperative or improperly operating controls also will not perform as intended.
The eighth step, the use of passive design concepts. The approach is to plan the building design (or its
retrofit) in such a way as to optimize the use of energy flows to and from the environment.
The ninth step is to recover heat. This is particularly important (and economically attractive) in the colder
climates. In concept, one could also recover "cool," although generally the temperature differences are less
and the process is more difficult to justify economically.
Heating and cooling needs can be understood by considering how homeotherms (warm blooded mammals)
maintain their body temperatures. Metabolic processes are employed to maintain a relatively constant and high
(37°C, 98.6°F) body temperature. This high temperature is convenient because it facilitates the rejection of heat
from the organism to the atmosphere. Four processes are used: conduction, convection, radiation, and
evaporation. For humans, convection and radiation dominate when the surroundings are at temperatures less
than about 27°C (80°F). Above 27°C, evaporation begins to be of increasing importance, until at ambient
temperatures of 37°C, it dominates. Conduction is small since usually the feet (normally well-insulated) are the
only conducting surface. Convection is an important mechanism, and benefits from slight air currents resulting
either from natural convection, wind, or mechanical cooling. For radiation to be important, the body (influenced
by the clothing worn) must radiate energy to nearby surfaces which are at lower temperatures. The MRT is a
measure of these temperatures, and is typically in the range of 20 to 27°C. Recent research indicates that
humidity (over a broad range) has a second order effect on heat rejection and comfort.

Heat produced by humans is generated at the rate of:

Power, Watts Activity
70 Sleeping
120 Sitting quietly
150 Desk work
200-300 Light work
400-700 Sports, heavy labor
This heat load must be accounted for in the design of heating and cooling systems.
(Recall that 1 watt equals 1 joule/second.)
With light clothing and sedentary activities, American Society of Heating, Refrigerating and Air-
Conditioning Engineers, (ASHRAE) standard 55-66 recommends that dry bulb temperature (DBT) shall
be between 22.8 and 25°C (73- 77°F), when the MRT is approximately equal to the dry bulb temperature.
The relative humidity should be in the range of 20 to 60 percent, and air velocity should be in the range of
3.1 to 13.7 m/min (10-45 ft/min)
Figure shows the Psychrometric chart with approximate comfort zone, as well as an extended zone
which might be tolerable (slightly cool or slightly warm)

Psychrometric charts are complex graphs that

can be used to assess the physical and
thermodynamic properties of gas-vapour mixtures
at a constant pressure. They are often used to
assess the properties of moist air.

Fig. 18 Psychometric Chart

Ventilation requirements have also been recommended by ASHRAE, and standard 90-75 revises them. In no
case should the outdoor air quantity be less than 0.14 M3/min (5 ftVmin), although it should be recognized that
this can include a contribution from infiltration.
Careful control of ventilation is important for health and energy reasons.
Too little ventilation can be unpleasant because of odour retention, or can be unhealthy. (Current research
indicates that ventilation is important to control "indoor air pollution"; i.e., the build up of radon, carbon
monoxide, or other gases within buildings.) Too much ventilation greatly increases energy use, since incoming
air must be heated or cooled.
Based on the preceding discussion, some concepts for heating and cooling emerge. For efficient heating:
• Temperatures should be comfortable in occupied areas
• MRT should be high in occupied areas (i.e., don't put individuals in front of a large window)
• Eliminate cold air flows (drafts) if possible
• Keep humidity up to acceptable levels
• Isolate individuals from conduction losses
For efficient cooling:
• Temperatures should be comfortable in occupied areas
• MRT should be low in occupied areas
• Maintain sufficient air movement
• Don't let humidity get too high
* The mean radiant temperature (MRT) is defined as the uniform temperature of an imaginary enclosure in
which the radiant heat transfer from the human body is equal to the radiant heat transfer in the actual non-
uniform enclosure.
Example: It is desired to provide a source of hot water at 100°C for an HVAC application. Hot water is to be produced
by mixing steam with 3.79 kg/sec of water at 74°C. How much steam at 102°C is needed?
Assumptions:
a. Ignore gravity terms
b. Assume initially velocity in = velocity out; with more data this could be checked
c. No shaft work is involved
d. There will be losses from the water heater, but no data are given; ignore
them for the moment

Total energy input = (3.79) (0.308) + (0.18) (2.67) = 1.66MJ/sec

Suppose 10 percent heat losses are calculated. Then steam flow should be
increased to provide 10 percent (0.17 MJ/sec additional energy, e.g.):

Therefore consider using a steam flow of: 0.18 + 0.064 = 0.24 kg/sec.
ENERGY MANAGEMENT OPPORTUNITIES IN HVAC SYSTEMS
In any energy management program, it is desirable to implement those energy management opportunities
(EMOs) first which have little or no cost. Consequently, EMOs will be discussed in the following order
(the costs are approximate, because what seems to be a minor cost item in one building could be a major cost item
in another):
• Operational and maintenance strategies (including minor control changes) — low cost
• Retrofit or equipment modifications — moderate cost
• New equipment or new designs — major cost
Furthermore, the discussion will begin with the major equipment items and then will turn to a system-by-system review.
Chillers. Improved controls often offer opportunity for energy savings with chillers. A major area for investigation is operation at
low loads. Since air conditioning systems are designed on the basis of a maximum heat load, much of their operation is actually
at less than full load. Careful use of equipment during partial load conditions can lead to significant energy savings. Adjusting
controls to permit one unit (if there are several) to run at full load (rather than several at part load) or cycling one unit on and off
at full load, rather than running continuously at partial load, can save as much as 50 percent of the energy which would otherwise
be used.
Condensing is another opportunity for saving energy. Controls may be set to keep the condensing temperature at too high a value.
(A typical condensing temperature setting is about 40°C [104°F]). The limiting factor is the design of the expansion valve, which
requires a specified minimum pressure drop to deliver sufficient refrigerant. Lee outlines a method for evaluating acceptable
condensing temperatures. A 5°C reduction in condensing temperature can save 10 to 20 percent on chiller energy use. Cooler
condenser water has the added advantage of a reduced tendency to cause scaling. Evaporator temperatures should also be
examined. If they are set lower than necessary, extra energy will be used. If comfort levels have recently been increased, it may
mean that evaporator temperatures can be increased. A 2 to 5°C increase in the evaporator temperature could save on the order of
10 to 20 percent of the energy formerly used. Controls can also reduce chiller energy use by being modified for night cooldown,
weekend shutdown, or to take advantage of cooling with outside air when conditions are correct.
Compressors should be kept in good repair; valve malfunction, ring wear, or impeller wear lead to refrigerant
leakage or blow-by, and cause excessive energy use.
In cases where retrofit of systems is being considered, apply principles 5 and 6 (efficient processes and equipment).
Perhaps there is a source of "free" cold water. A paper mill in Oregon found it could run its well water at 13°C (55°F)
through the cooling coils in the plant before using it to generate steam. This reduced chiller energy use and the energy used for
boiler feed water heating. It may be feasible to cool directly with the cooling tower, if wet bulb temperatures are sufficiently low
enough (even for part of the year). If proper filtering is available, the cooling tower water could be connected directly to the chilled
water loop. Or, a heat exchanger between the two loops could be used to protect the coils from fouling. Another technique is to
turn off the chiller but use its refrigerant to transfer heat between the two loops. This "thermocycle" uses the same principle as heat
pipes, but only works on chillers with the proper configuration.
A low wet-bulb temperature during the night can also be utilized. It requires a chiller which handles low condensing temperatures
and a cold storage tank. This technique is encountered as part of "cool storage" systems developed to respond to time-of-day or
demand pricing for electricity.
In new designs or new equipment installations, proper sizing is of obvious importance. Another important consideration is the load
control feature. Since the chiller will operate at less than full load most of the time, it is important that it do so efficiently.
In addition to control of single units, it is sometimes desirable to use multiple compressor reciprocating chillers. This allows some
units to be shut down when the demand is for partial load. The remaining compressors operate fully
loaded, increasing efficiency.
Commonly, in commercial and industrial buildings, a convenient source of heat for a heat pump is the building exhaust air. This is
a constant source of warm air available throughout the heating season. A typical heat pump design could generate hot water for
space heating from this source at around 32 to 35°C (90 to 95°F). Heat pumps designed specifically to use building exhaust air can
reach 66°C(150°F).
Another application of the heat pump is a continuous loop of water traveling throughout the building with small
heat pumps located in each zone. Each small pump can both heat and cool, depending upon the needs of the
zone. This system can be used to transfer heat from the warm side of a building to the cool side. A supplemental
cooling tower and boiler are included in the loop to compensate for net heating or cooling loads.
A double bundle condenser can be used as a retrofit design for a centralized system. This creates the option of
pumping the heat either to the cooling tower or into the heating system hot duct. Some chillers can be retrofitted
to act as heat pumps. Centrifugal chillers will work much more effectively with a heat source warmer than
outside air (exhaust air, for example). The compression efficiency of the centrifugal chiller falls off as the
evaporator temperature drops.
Another commonly encountered problem is the use of a large central chiller to air condition a single office on
weekends or to provide special conditions for a computer facility or other special installation. In such cases, turn
off the central plant and install a small package unit sized to meet the need.

Case study. An electrical equipment manufacturer evaluated several alternatives to using a 100-ton air
conditioning system on Sunday's nonproduction hours to maintain temperature limits in a 40 m2 (400 ft2) test
room. The plant facility totals some 4,500 m2. The test room is used to temperature test electronic components
from 24 to 36 hours on a seven-day/week schedule. The test room generates its own heat by virtue of the number
of electronic components being tested. However, the maximum allowable temperature is 43°C (110°F) and the
plant air conditioning was being used to carry away excess heat.
The following calculation shows the economic savings resulting from replacing the central plant air conditioning
with a small package unit:
The heating requirement lasts for seven months per year. This leads to annual savings of $ 1,232, enough to justify a
thermostatically controlled ventilation fan or a package air conditioning unit, rather than the central system.
Note: this is an example of principle 2.
Fans. Energy management opportunities for fans can readily be identified
following the discussion of the principles of fan operation. To list some
possibilities:
• Controls: turn fans off when not in use or when not needed (on weekends, for
example)
• Optimize capacity: change motors; install variable speed or two-speed motor;if
this is not feasible, change pulleys to slow down the fan (the cubic law of fan
power)
• Select efficient fans and ducts: consider life cycle costs when sizing systems;
reduce pressure drops where feasible
• Make use of natural convection if possible
• Modify systems to function as variable air volume systems
• Reduce excessive ventilation
Case Study. A nuclear test reactor in Idaho used nearly 200,000 cfm of outside air
during the summer and 90,000 cfm during the winter for ventilation and cooling
of equipment. Despite its use for cooling, heating of outside air occurs during the
winter to temper the air before it is used for cooling.
To reduce heating energy use and fan power consumption, two supply fans
(HVS-1 and HVS-2) were to be retrofitted to a variable air volume configuration
as shown in figure. This permits substantially cooler air to be supplied to the
mechanical systems requiring cooling. Fig. 19. Typical variable air volume
supplementation-terminal reheat system.
The 128,000 cfm originally circulated through five mechanical areas would be reduced by 30 percent during cold weather and
the original 74,550 cfm of outside air would drop by 38,475 cfm (128,250 cfm x 30 percent). Primary design
considerations were dilution of stack discharge and control of relative building static pressures.
This project also included the following revised flow patterns: recirculate more operating area air, direct exhaust
from diesel generator room to heat exchanger pit, utilize bathroom exhaust for equipment cooling, etc.
In addition, modulating control systems for the economizers were proposed in HVS-1 to HVS-5 to allow control of discharge
air temperature without resorting to bringing in 100 percent outside air and heating it to the right temperature.
This also required close control to assure that the static pressure relationships were maintained. The total reduction in outside
air was 38,475 cfm as calculated above.
The total energy savings (steam plus electricity) was estimated to be 7,700 GJ/yr (7.3 GBtu/yr). The cost of the changes was
estimated at $126,000, for first year annual savings of $21,000. Discounted payback (including energy cost escalation) was 3.9
years.
Pumps. Pumps are important energy users in HVAC systems. Although they frequently receive less consideration than larger
equipment (such as chillers), they may operate continuously. When the capacity of the larger equipment is reduced, it may also
be possible to reduce pumping capacity. For example, with multiple chillers, there may be several chilled water pumps
operating in parallel, even when only one chiller is on. Control changes may permit the use of a single pump.
As explained in the section on pump theory, reducing the diameter of the pump impeller is equivalent to slowing it down. This
is an economical method for saving energy with certain types of pumps having excessive capacity.
Other approaches to reducing pumping power:
• Reduce pressure drop and head
• Use multiple pumps of different capacity, each operated at full load
• Use variable speed pumps
Cooling towers. The operating principles have been discussed previously. Providing adequate maintenance and
water treatment is essential. Fill material, fans, valves, and pumps should be in good working order without leaks.

Case study. An energy audit was made of several naval facilities in Hawaii.
During inspection and measurements on several reciprocating chillers, the nearby cooling tower was checked. It was
found that all of the fill material and the fan had been removed! Cooling was being provided by a water spray at the
top of the tower, with the water falling into the sump. This reduced the efficiency of the chiller considerably.
Other possibilities include lower condenser temperature.
HVAC systems Control strategies
• Night cool down with outside air
• Night temperature setback (heaters)
• Night shutdown with morning warmup
• Temperature control
• Minimize outside air during heating
• Reduce excessive ventilation
• Use outside air for cooling when feasible
• Reduce excessive humidification or dehumidification
• Reduce excessive heating or cooling capacity (following lighting reductions, etc.)

Among maintenance strategies, the upkeep, calibration, and repair of control systems should receive primary attention. An HVAC
system will be unable to function as designed unless the controls are properly maintained. Maintenance actions for individual
equipment items such as chillers, pumps, or fans have already been discussed. Care should also be taken that ducts are free from
leaks and insulated appropriately. The condition of static pressure dampers should be checked. If they operate improperly or
become jammed or frozen, air flow may be restricted. It may be found in older systems that this has been the case for some years.
If adequate air flow is provided in this condition, it may be possible to open the dampers fully or even to remove them, and then
change pulleys to slow the fan. Leaking dampers can result in a loss of heated or cooled air and should be repaired.
Lecture 11

Process energy
Process energy is defined as energy required to process materials in order to provide goods or services. Examples
readily come to mind: the heat required to cast or forge steel, the electricity which powers welders and machine tools, the
fuels which operate furnaces and ovens. Generally, process energy can be associated with industry, but this is too
restrictive a definition. For example, commercial launderies and restaurants use large amounts of energy, as does
agriculture, although none of these are commonly thought of as "industry." They do share, however, the common thread
that they process materials to provide a product or service. In view of the importance of process heat as a process energy
form, a major emphasis has been placed on fuels, combustion, steam generation and distribution, direct and indirect-fired
furnaces, and heat recovery. The next major area of process energy use is electricity, including electric heat, electric
motors and related equipment, and finally electrolytic processes.
Examples of Principles for Process Energy Management
Process Heating System
Process heating accounts for about 36% of the total energy used in
industrial manufacturing applications. Process heating systems include
combustion systems that run on fossil fuels and biomass; electric systems;
and heat recovery and exchange systems (see diagram). Process heating
systems can also include sensors, controls, material handling equipment,
emission controls, and safety equipment. About 90% of process heating
energy comes from the combustion of fossil fuels; electricity supplies
the rest. Advanced processes, improved designs, and thermal efficiency
gains are helping to reduce the environmental impacts of combustion-
related emissions. Potential for Savings Anywhere from 15% to 85% of
the energy supplied to industrial process heating equipment is actually
used for heating; the rest is often lost—for example, to exhaust streams
such as flue gases. However, today’s heat recovery technologies allow at
least part of this energy to be reused. Along with making sure that burners Fig.20. Key Components of a Process Heating System
and other combustion equipment are operating at peak efficiency,
Source:
reducing heat losses and finding good ways to recover and reuse waste
Save Energy Now in Your Process Heating
heat could be the most beneficial improvements you can make. Improving Systems - NREL
the operation of your plant’s process heating systems can yield significant www.nrel.gov
savings. Often, the best opportunities for savings are found among higher
temperature processes. But savings can be found in all temperature ranges Improving Process Heating Performance: A
throughout your plant. Sourcebook for Industry
PROCESS HEAT
Combustion.
Combustion is the starting point for all forms of process heat except nuclear or solar, neither of which is
currently of great importance. Indirect-fired operations, process heating is caused by radiant energy or is
transferred by the products of combustion. In indirectly heated operations, the heat of combustion is first
transferred to a working fluid (such as steam) which does the heating or which produces the electricity which
does the heating. Thus, combustion is the first area to examine when considering energy management options.
Fuels can be rated according to their heating value, which is a measure of the available work they possess.
however, due to practical limitations there are losses due to the thermodynamics of combustion. The only
current prospect for avoiding these losses is through the use of fuel cells which extract fuel energy without
combustion. Size, economic, and lifetime constraints limit fuel cell application for process energy at present.
The next loss of available work in the combustion process results from the decrease in temperature from the
flame temperature (on the order of 2,000°C) to the process temperature. In the case of a steam cycle, the process
temperature might be in the range of 200 to 500°C a drop in temperature from 2,000°C to about 550°C due to
material and corrosion limitations. This leads to a large decrease in available work before the energy is even
applied to a process.
Combustion of carbonaceous fuels requires oxygen. Oxygen is normally supplied from atmospheric air.
Complete combustion requires that the following conditions be satisfied:
• An adequate air (oxygen) supply
• Adequate fuel/air mixture
• Appropriate combustor temperature for fuel ignition
• Adequate combustor residence time for complete combustion. Too much air flow (excess air) leads to fuel
waste by increasing the energy lost up the stack, while not enough air will lead to incomplete combustion.
While a combined cycle probably will not be feasible in an existing plant, there are several other energy
management opportunities (EMOs) that can be considered:
• Monitor fuel quality and improve if required
• Provide correct amounts of excess air
• Establish and follow burner maintenance procedures
• Use waste heat to preheat combustion air
• Return condensate
• Preheat feedwater
• Add or improve automatic controls or monitoring equipment
• Consider mixing combustible wastes with fuel (solid waste with coal, waste lubricating oils with fuel oil, etc.)
For steam systems, consider:
• Steam leaks from lines and valves
• Defective steam traps
• Proper sizing and maintenance of distribution systems, including insulation
• Proper management of condensate return
• Proper maintenance of steam tracing systems.
Steam is used for heating purposes, for operating steam driven equipment, or for heating buildings. Some EMOs include:
• Supply steam at the lowest pressure possible
• Review steam uses to see if more efficient alternatives exist
• Apply the cascade principal to steam uses
Losses in hot water systems can be reduced by the following steps:
• Reduce thermostat settings
• Cover open tanks
• Insulate tanks and pipes
Pumping system losses can be reduced by lowering system pressures, reducing friction losses, and
stopping leaks. Major energy management opportunities can be summarized as:
• Reduce system pressure
• Reduce friction losses (increase pipe size, eliminate pressure reducing valves)
• Stop leaks
• Use storage tanks or accumulators so pumps can be shut down part time or operated off-peak
• Recycle or reuse water.
There are three basic approaches for managing the efficient use of process heat. These are:
• Reduce heat losses
• Use more efficient equipment and processes
• Recover heat
Heat Recovery.
Heat recovery is an important tool for the energy manager. The potential list of applications for this technique
is too long to include here, but representative examples will illustrate the possibilities.
• Recover heat from building exhaust air using run-around systems
• Recover heat from milk in dairy operations using heat pumps
• Recover heat from air compressor cooling water and preheat hot water with it
• Recover heat from steam condensate and use it to preheat feedwater
• Recover heat from chillers and use for hot water or space heating
PROCESS ELECTRICITY
Energy management opportunities can be grouped into four major categories:
• Upkeep and modification of equipment
• Selection of more efficient equipment
• Corrosion reduction
• Battery use and maintenance
 Lecture 12
Electrical Load And Lighting Management
1. Optimize Controls: Use silicon-controlled rectifier (SCR) motor drives; install selective switching for
lighting circuits.
2. Optimize Capacity: Provide required power on electric drives and heating systems.
3. Reduce the Load: Provide only necessary illumination levels.
4. More Efficient Processes: Use microwave or dielectric heating rather than resistance heating, for example.
5. More Efficient Equipment: Use higher efficiency motors, high efficiency lamps, heat pumps.
6. Employ Special Techniques to Reduce Losses: Decrease i2R losses, apply power factor corrections.
7. Energy Containment: Reduce losses from heaters, recover heat from motors, transformers, or equipment.
8. Cascade of Energy Uses: Cogenerate electricity used in the facility.
9. Energy Conversion: Convert pneumatic powered equipment to electric.
10. Energy storage: Use demand control techniques to shift loads off-peak.
Energy Management Principles for Electrical Loads
Consider optimal controls as the first area to explore in an electrical load energy management program. Timers or switches to
turn lights on only when and where needed are one example. Another might be to employ some of the new variable speed (SCR
or solid state) motor drives. Low cost microprocessors ("controls that think") are becoming available now which permit a much
broader range of control functions than was possible in the past.
The second general area is to optimize capacity. Excess capacity, especially in electric motors, leads to
inefficiencies of two types.
First, motors are less efficient at partial load.
Second, the power factor decreases at low loads, causing the electrical distribution system to incur greater losses.
The third step is to reduce loads wherever feasible. A good example of this is lighting. Modern office buildings
almost invariably have excessive illumination levels, unless they have already instituted corrective efforts. This
wastes energy two ways: first, in electricity to provide the light; and second, in air conditioning energy to remove
the extra heat in the summer.
The fourth step is to use more efficient processes. An example would be the use of microwave or dielectric heating
(where the heat is deposited directly in the heated material) as opposed to other heating processes.
The fifth step is to consider possibilities for more efficient equipment. High efficiency motors are available, as are
high efficiency lamps, heat pumps (rather than resistance heating), and many solid state devices which use less
energy.
The sixth step is to employ special techniques to reduce losses, such as power factor correction or resizing of
distribution systems to reduce / V losses.
The seventh step is to effectively contain energy and reduce losses. This can be accomplished by better insulation
of high temperature devices or buildings.
Another approach is to recover heat from motors, transformers, or equipment such as air compressors.
The eighth step involves exploring opportunities for "cascading" energy uses. One example is to see if electricity
can be cogenerated. This is often possible where large amounts of heat and electricity are used. Approaches using
both steam and gas turbines have been developed for industry.
The ninth step is to examine energy conversion opportunities. A variable speed motor might eliminate a
mechanical drive train, reducing losses. Or, air-driven equipment might be replaced with electric drives.
Finally tenth, energy storage is a possibility. Special large battery storage systems are being developed for
utilities which can be charged using off-peak power and discharged on-peak to reduce peaking power needs.
Demand control techniques, which permit deferral of certain loads until off-peak hours, can be thought of as
energy storage systems, since the energy not used is effectively "stored" for later use. (Think of it as water
which didn't have to go over the dam).
BASIC PRINCIPLES OF LIGHTING SYSTEMS
For a point source of light, the direct illumination at a point P is given by

where
I = Illumination, lm/m2 (lux)
LI = Luminous intensity, Cd
r = Radial distance, m
ɵ = Angle of incidence, degrees.
Note that the angle of incidence is with respect to a normal to the surface for
which the illumination is being calculated. This law only applies for direct
illumination and does not account for reflected light (as within a room).
Sample Calculation. Determine the illumination at point "P" for the lamp
shown in fig. 21.
Solution: For the vertical illumination, ɵ is as shown in the figure:
cos ɵ = 0.928.

Fig.21 Change of illumination with distance

ENERGY MANAGEMENT OPPORTUNITIES IN LIGHTING SYSTEMS

1. Delamp (reduce lighting levels if excessive).

2. Disconnect ballasts where lamps have been removed.
3. Relamp (use a lower wattage lamp).
4. Use more efficient lamps: replace incandescent with fluorescent; replace fluorescent with metal halide or sodium.
5. Use time clocks or photocell controls.
6. Use zone switching or install more switches.
7. Use task lighting.
8. Make effective use of day lighting where possible.
9. Use more efficient lenses to reduce losses.
10. Clean luminaires to increase illumination.
11. Improve color and reflectivity of walls, ceilings, and floors to reduce lighting energy needs.
12. Train personnel to turn lights off when not needed (employee energy awareness and motivation programs).
Delamping.
This EMO is appropriate in installations where excessive illumination occurs. Excessive illumination could be the
result of several causes:
• Overdesign
• Changed building purpose or occupancy
• Changed illumination requirements
• Changed illumination standards
Current illumination standards should be reviewed, since the older standards typically called for higher illumination levels.
in many areas such as unoccupied or storage areas, perhaps lighting levels can be reduced.
Disconnect ballasts.
Ballasts dissipate energy in much the same manner as a transformer. The energy is lost in the form of heat given off by the
windings and metal of the ballast. When the lamp is switched off, the ballast does not use any energy. However, it is
frequently the case that some lamps will be removed from a circuit during a delamping program, while others will remain
in the circuit.
In this situation, when the circuit is energized, the ballasts will still dissipate energy even if the lamps have been removed.
Further savings can be obtained by disconnecting the ballasts. This can be accomplished by cutting the connecting
wires and then insulating them. (Make sure the power to the circuit is disconnected before attempting to do this.)
Relamping.
The effect of substitution of alternative light sources for incandescent lamps reduces connected load and increases
lumen output. from an energy savings point of view, almost anything is better than incandescent. Sometimes a
new lamp can be fitted to the older lamp fixture and use the same ballast. If you decide on a lamp or lighting
system change, you should consider the advantages of group relamping, even if you do not replace with a higher
efficiency lamp. There are five advantages of group relamping:
• Reduced labor costs often mean a net savings:
Group-relamping saves on labor costs largely because most of the travel time and set-up time required to change
lamps individually is eliminated. When lamps are group-relamped after relatively few have failed, costs are
usually considerably reduced. The labor cost per lamp with spot replacement ranges from five to ten times the
group replacement cost.
• More light delivered: All lamps depreciate in lumens continually as they burn. The earlier they are replaced, the
higher the lumen output per watt. A 1000-watt, high-pressure sodium lamp will have lost 10 percent of its output
at the end of its life. Other types vary up to 35 percent of rated output lost at life's end.
• Fewer work interruptions: Group-relamping can be done at a convenient time — during vacation shutdown or
after working hours. The number of interruptions to report burnouts is greatly reduced.
• Better appearance of fluorescent lighting system:
Aging will produce black ends, color variations, and differences in brightness between adjacent“ old and new
light. With group-relamping, all lamps are the same age and appearance. Lamps are replaced before they go bad,
and the distraction of blinking, flashing, or swirling lamps is eliminated.
• Less maintenance of fluorescent auxiliary equipment: Abnormal operation
of lamps toward the end of the lamp life can damage starters and ballasts. These can add up to a more satisfactory
lighting system as well as monetary savings.
Low Wattage Lamps.
A significant reduction in lighting energy use can be achieved
simply by switching to low energy lamps.
Some typical savings are as follows:
• Fluorescent: The low energy type lamps use 10-20 percent less
energy on the average than normal fluorescent lamps with a small
reduction in output.
(Since some existing ballasts will not accept low wattage fluorescent
tubes, conduct a test before embarking on a large group-relamping
program.)

Note: an additional 2-watt ballast savings will be realized per

lamp.
• Incandescent: Krypton gas lamps use 7.5 percent less energy
than normal incandescent lamps and yet deliver equal lumens.
These lamps generally cost the same as normal lamps, have the
same or greater lamp life, and deliver the same lumen output as
standard incandescent lamps.
Using The Most Efficient Light Source.
As described above, luminous flux is measured in lumens. It is generally well known that fluorescent lighting is
much more efficient than standard incandescent lighting in lumens/watt. It can also be seen from the table that of
the high intensity discharge (HID) lamps, the low and high pressure sodium lamps are considerably more
efficient than even fluorescent lamps. Not all lamps are appropriate to any particular area, however, and
lumens/watt is not the only factor to consider in assigning the most appropriate and efficient luminaire to a
particular area.
Sodium Lamps.
Although sodium lamps, for example, produce the most lumens/watt, they have certain drawbacks which
preclude their use in some spaces. Unlike fluorescent lamps, they produce an intense single-point light source
which is best utilized at least three meters (ten ft) above the work plane.
Also, their ballasts produce a low decibel steady hum and have a five- to 15- minute warmup period before
reaching full intensity. They are particularly well-suited for many areas, however, and have recently been
installed in office
buildings in many locations. They are especially appropriate and efficient in high-bay spaces such as all types of
fabrication shops, general shops, and workrooms.
They are also particularly well-suited to outdoor lighting. Other positive aspects to consider with all HID
luminaires are that lamps can typically last five to six years with daily use reducing relamping costs markedly.
Because of the high lumen output per individual lamp, considerably fewer fixtures are required for each space.
Improved Lighting Controls.
A system of on-off switches on individual or specific groups of light fixtures is called "selective switching." This
enables an individual to turn off specific light fixtures when no one is using that particular
area. This is an essential element in lighting energy conservation. Of course, the switches are useless unless
people use them. Therefore, they should be in convenient, easily accessible locations such as near the doorway
or entrance to the particular area they control. The particular fixtures which each switch controls should be
carefully designed to correspond to specific task areas which may not be used for periods of time within a larger
area.
Another important use of selective switching is in conjunction with natural light through windows and skylights.
An office, for example, with windows on one side should have separate switches for the light fixtures nearest the
windows.
These could then be left off during the day while only the fixtures further from the windows are used. Many
buildings constructed in the past decade were designed without individual switches for light fixtures. Typically,
groups of rooms were controlled together by a single circuit breaker. Often, for example, only one office will be
occupied while perhaps six others are lit but empty.
Obviously, a significant savings could be realized with individual switches. However, each case must be
examined separately to determine the cost effectiveness of installation costs.
Another way to insure that lighting is being used only when it is required is by using automatic switching. This
is typically either by photo control or clock timers. Timers can be preset to turn lights on and off at specific
times of the day on a 24-hour clock, and to turn lights off on the weekend.
Photo controls are light sensitive devices which turn fixtures on and off according to the intensity of existing
natural light. Photocells and timers are well-suited to outdoor and security lighting because they are typically
required only during specific times; in a parking lot, for example, where the final shift leaves at midnight,
timers are an efficient solution. Security lighting, however, which is required during all non-daylight hours is
most efficiently controlled by photocells. Seasonal changes in the time of sunset and sunrise require periodic
readjustments of clock timers which is unnecessary with photo controls. Security lighting (outdoor lighting,
parking lots, etc.) can be a major energy user. A single extra unneeded hour of security lighting because of
non-adjusted clock timers can cause the use of hundreds of unneeded kilowatt hours in a large facility.
Task Lighting.
A major determinant of luminaire efficiency is its location in relation to what needs to be seen. Artificial light
intensity decreases exponentially as the distance from the light source to the task increases. Optimum
efficiency, it would seem, is achieved by keeping the light source as close as reasonably possible to the work
plane. This is especially true with work requiring very high illumination levels such as technical drafting,
bookkeeping, or fine assembly work. Fortunately, these tasks require a relatively small working area and
specific task lighting is appropriate. A localized light source such as a flexible arm lamp can be used at the
work area to provide the required high illumination levels while surrounding areas, lit by ceiling fixtures, are
at lower levels. Another approach that can be used in some cases is to change the type of fixture, reflector, or
diffuser to more carefully control the focus of the light and, again, only put the light where it is required.
Because efficiency is increased, the number of fixtures or wattage of lamps may be significantly decreased.
This can be equally true in the case of outdoor lighting. For example, for security fences a fixture can be
selected that will emit a narrow beam appropriate to the fence area that is to be illuminated. This beam shape,
coupled with brighter, more efficient lamps, may reduce the number of fixtures required by as much as one-
half. Task-oriented illumination is non-modular, producing a variable lighting fixture pattern with fewer
luminaires. This characteristic can be employed to create an interesting environment, especially when
augmented with supplementary highlighting of interesting spaces (meeting places, sculptures, display areas). A
common notion that task-oriented lighting is inflexible for changing furniture arrangements can be refuted by
considering the following commercially available techniques:
• Flexible above ceiling distribution system
• Multiple lamp types
• Furniture with integrated lighting
• Interchangeable ceiling lighting patterns
Task-oriented lighting has a further advantage in that it creates an awareness
of light use by the user and provides an automatic stimulus to extinguish lighting
when the task is complete.
Make Effective Use Of Daylighting.
For centuries buildings were designed to permit the use of natural light. The convenience of artificial light has
slowly modified this practice, but today we see a trend back in the other direction. Daylighting can be
incorporated in office buildings easily in the perimeter areas. In the core areas, it will require special building
designs, but is feasible. In single-story buildings, skylights can be used. Daylighting is also practical in many
industrial areas.
Example.Maximizing the use of natural light led to substantial energy savings in a major industrial facility. A
new, large equipment fabrication shop (30 m wide, 80 m long, with a 12 m ceiling) was constructed. A
comparison was made between conventional lighting and conventional plus daylighting. Daylighting saved 38
percent of the lighting energy compared to the conventional approach by the following strategies:
• Large fiberglass skylights were installed in the roof. Two rows of these ran the length of the building.
• Natural light was also admitted by providing a 7.3 m high opening the entire length of the south wall of the
shop.
• Electric lighting was controlled by photocells located outside the building.
The shop was designed for illumination of 21.5 Dlux (20 fc), which was provided by 50 overhead metal halide
lamps, each rated at 426 W (lamps plus ballast). On the average, daylight provides adequate illumination for six
out of 16 working hours (38 percent) saving approximately (50) (426 W) (250 days/ year) (6 hr) (0.06$/kWh) =
l,917$/year.
Use More Efficient Lenses to Reduce Losses.
Lamps are typically shielded by shades, louvers, or lenses to distribute or to direct the light and to reduce glare.
These devices absorb some fraction of the light output; in extreme cases, more than 50 percent of the light can be
stopped by the lens. The light transmission of the lens when new varies with the type. For example, a clear plastic
lens will transmit 45 to 70 percent of the light; polarizer or diffuser type lenses transmit 40 to 60 percent; white
metal louvers, 35 to 45 percent; dark metal louvers, 25 to 40 percent. The performance of the lens degrades with
time due to aging and dirt buildup. Plastic lenses are susceptible to yellowing or darkening which eventually
reduces the light output substantially. If this situation is observed, it may be economical to replace the lenses,
which will increase the light output, and then reduce the number of lamps.
Clean Luminaires To Increase Illumination.
Dirt and dust collect on luminaries over a period of time, causing attenuation of light transmission. Several benefits
can be obtained, simply by cleaning light fixtures:
• More light delivered: removing dirt increases light output. This may increase productivity, and will bring
illumination back to design levels. If illumination is excessive, cleaning means fewer lamps will do the job and
some lamps can be eliminated.
• Better appearance: clean lighting systems improve the appearance of a work area or display area. This is
conducive to improved employee morale and better housekeeping. In summary, fixture lenses or diffusers should
be cleaned at 12-month intervals or even more frequently in high dust or dirt environments.
Improve Room Color And Reflectivity.
Since darker colors absorb light, the actual illumination levels in a room are affected by the color and
reflectivity of walls, ceilings, and floors. This can be tested by the simple technique of taking alight source
into rooms of different colors and measuring the illumination levels at similar distances from the source.
Illumination can often be improved in industrial facilities by cleaning the walls or repainting them with
lighter colors.
An Energy Awareness Program.
Many of the devices and energy management techniques recommended in this section are automatic,
utilizing switches, photocells, or other controls. However, another equally important aspect of controlling
energy usage is the human element. This begins with a basic awareness on the part of each individual of
the uses of energy. Within
• A carefully planned energy awareness program should be considered for any business with a large
lighting load and many employees. It should stress the importance of energy conscientiousness in day-
to-day activities. Conspicuous posters and signs on light switches and machine and appliance controls
have proven to be effective.
• Pamphlets on energy conservation and the importance of lighting should be distributed and available.
• Short seminars for managers and supervisors who could pass information to their respective employees
should be given.
• Suggestions and recommendations from employees themselves should be studied and implemented.
The point can also be made that energy is equivalent to money and jobs.
• Finally, a major point of any awareness program should be to dispell the notion that energy use by
lighting systems is insignificant.
 Heat And Light.
Lighting systems deposit heat in buildings. In most cases, all of the heat goes into the building. The exception
is where special cooling is provided to remove some of the heat. The heat from lights will be partially
deposited in conditioned spaces, and partially deposited in unconditioned spaces (such as an attic or a ceiling
plenum), depending on the design of the system. In cases where lights are on walls or ceilings and all of the
heat can be assumed to go into the conditioned space, the heat gain is

where
EL = heat added by lights, joules
QL = operating lighting load, watts
t = time lamps are in operation, seconds.
This additional heat is a benefit during the heating season and a detriment during the cooling season. Credit may be
taken for reducing the heating load. The additional cooling load may be calculated approximately by

Where Ec = Cooling load caused by lights, joules EL = Heat added by lights, joules COP = Average coefficient of
performance of air conditioning system. Under typical conditions the COP is approximately 2.0. This signifies that
every watt of lighting in air conditioned space adds a requirement for 0.5 watt of cooling.
Energy Management Opportunities with Electric Motors Lecture 13
1. Operational Improvements
• Supply rated voltage, properly balanced between phases.
• Improve controls; turn motors off when not in use.
• Schedule regular maintenance of motors.
• Provide regular lubrication.
• Provide adequate cooling.
• Reduce peak demand by rescheduling motor operation.
2. Retrofit Improvements
• Improve power factor.
• Improve cooling.
• Employ heat recovery from large motors.
• Replace old inefficient motors with efficient ones.
• Properly size motors to run at full load.
3. New Installations or Designs
• Purchase more efficient motors; evaluate on a life cycle basis.
• Consider using variable speed motors if loads vary.
• Use higher voltages for motor drives.
• Use three-phase rather than single-phase motors.
It is clear that there is not much one can do with an existing motor, so long as it is operated efficiently. The
inherent i2R losses in the stator and rotor cannot be reduced without rewinding the motor or purchasing a new one.
However, by understanding how these losses occur the user can optimize the use of motors. Since running at no
load wastes energy and results in a low power factor, it should be avoided. Running motors as close to the fully
loaded condition as possible will improve efficiency and power factor.
Installing capacitors
The following parameters need to be considered in installing capacitors:
• Location (either at the load or at the supply)
• Safety (provisions must be made for safely discharging stored energy)
• Overvoltage
• Economics
Several other points should be made concerning the use of capacitors. Low power factor can result in overloaded
transformers, as well as unnecessary losses in motors and in wiring. Low power factor also causes poor voltage
regulation, and excessive voltage drops. There are two approaches for connecting capacitors: at the load, or at the
switch board or distribution panel. The first is convenient because the capacitors are switched on and off with the
load. Also, reactive current losses are lower in this manner. The second method has the advantage that larger (and
therefore cheaper unit cost) capacitors can be used, but the savings in the branch circuits are not obtained. This
approach primarily leads to savings in the primary feeders and main transformer, but not on the load side of the
distribution. More expensive switches may be required than when the capacitors are switched with the individual
load.
PEAK DEMAND CONTROL
The utility must provide sufficient capacity to meet its customer's loads at all times, and still provide both
spinning and cold reserve capacity in the case of equipment failure. Because of the high capital cost of new
generating capacity, as well as the cost of transformers, substations, and distribution systems, most utilities
charge for the maximum demand (in kW) made by their customers, regardless of the duration of this demand.
Therefore it is in the interest of the customer and the utility to keep the peak demand to as low a value as
practical. While this does not directly save energy, it definitely saves money. There are several techniques which
can be used to reduce peak demand:
• Off-peak schedules
• Energy storage
• Demand limiting controls
• Computer demand control systems
Off-peak scheduling applies to loads such as golf course irrigation, where pumps can be scheduled to operate at
night or at other times of low demand. Ina multishift factory operation, it may be possible to schedule certain
energy intensive operations for off-peak hours, to reduce peak demand. Energy storage can also be considered to
reduce on-peak demand. Air compressors can be operated off-peak and can store compressed air; chillers can chill
water off peak and store it. Buildings can be precooled at night (using the thermal mass of the building to store
energy) to reduce daytime peak energy. Demand limiting controls (electronic controls or microprocessors) can be
designed to provide an indication of the demand and can open relays, preventing a pre-established limit from being
exceeded. Computer demand controls can go a step further, projecting what the demand will be (Forecast) over the
next demand interval, and if it appears that the demand limit will be exceeded, automatically drop certain nonessential
loads from the line. Once the demand decreases, these loads are restored automatically. If necessary they can be
restored temporarily on a rotating basis, providing partial service. This approach is frequently used with air handlers,
which may be shut off for periods of a few minutes to an hour without a noticeable effect on ventilation(depending on
the type of occupancy.)
ELECTRIC HEAT
Due to its relatively higher cost, electricity is not used extensively for process heat. However, there are
some types of applications where electricity offers advantages for heating. Electric heat can take several forms:
• Resistance heating- residential electric water heater
• Induction heating- heating current is induced in the workpiece from a supply of 1 -10 kHz. An example is the
heating of transformers, cores, and motor windings. In an induction furnace, a coil surrounds the workpiece, which
must be a conductor. The eddy currents exhibit a "screening" effect; i.e., the current density at the surface of the
workpiece is a maximum and decreases exponentially with depth. A "penetration" depth can be defined, wherein the
current has decreased to about 37 percent of the surface value. Approximately 90 percent of the heating occurs within
the penetration depth.
• Dielectric heating-heating of nonconducting materials by an electric field (high frequency current below 200 MHz)
• Electric arc heating- The electric arc furnace has three electrodes connected to the secondary of a three-phase
transformer. The principle is the same as in electric arc welding. When an arc is struck, the nearby gas is raised
to such a high temperature (in excess of 5,000°C) that it becomes highly ionized. In this state it is a sufficiently
good conductor to be maintained at a high temperature by the resistive heating produced by the current. The high
temperature of the plasma permits very efficient heat transfer.
• Microwave heating- heating by high frequency electromagnetic radiation. Typically, the frequency bands are 897 and2,450
MHz, corresponding to wave lengths of about 0.33 m and 0.12 m.
• Infrared heating- by i2R losses in heating lamps or devices, and thus is a special case of resistance heating. The difference,
however, is that infrared energy can be generated in a narrow band width. Eg. paper making, drying paints and enamels,
photographic film, and chemicals and drugs
• Heat pumps- The heat pump is basically a refrigerator operating in reverse. The evaporator receives heat from a low
temperature heat source (the air, waste heat, etc.). This causes evaporation of the working fluid; the vapor is then compressed by
the compressor. In the condenser it gives up the heat collected at the evaporator as well as the heat of compression. As this heat
is delivered, the vapor condenses, and the hot condensate passes through the expansion valve. Eg. HVAC are primarily air-to-air
heat pump, commercial applications employ liquid-to-liquid heat transfer.
Energy Management Opportunities with Electric Heat
Reduce Heat Losses Insulate furnace walls, ducts, piping. Put covers over open tanks or vats. Reduce time doors
are open. Avoid cooling time for heated products. Shut down heating system when not in use, or at least lower
temperatures (reduce standby losses).
More Efficient Equipment or Processes Use alternative processes (microwave, dielectric). Employ recuperators,
regenerators, or preheaters. Use direct-fired rather than indirect-fired systems. Use less energy-intensive materials in
processes. Use heat pumps for low temperature process heat. Reduce moisture content mechanically in materials used in
drying processes. Use lower temperature processes (cold rinses, etc.).
Recover Heat There are multiple sources: stacks, processes, building exhaust streams, cooling towers, compressors, etc.
Recovered heat can be used for space heating, water heating, process preheating, cogeneration, etc. Many types of heat
recovery systems are commercially available (heat wheels, run around systems, heat pipes, heat exchangers, heat pumps,
etc.).To reduce heat losses, it is important to recognize that heat is lost through three mechanisms: conduction, convection,
and radiation.
Energy Management Opportunities in Electrolysis
The greatest users of energy in this field (aside from the large indirect use caused by corrosion) is in primary
metals production, particularly aluminium and magnesium.
Corrosion Protection
• Use protective films, paints, epoxy. Provide cathodic protection (sacrificial anodes)
• Cathodic protection with an applied voltage
• Electroplating and anodizing
• Use chemical water treatment (corrosion inhibitors)
• Avoid contact of dissimilar metals (dielectric unions)
Storage Batteries
• Provide adequate maintenance (replace electrolyte, clean terminals, etc.)
• Use efficient charging techniques, charge at proper rates
• Avoid overheating, provide adequate ventilation
Electrolytic Processes
• Insulate plating tanks
• Provide proper maintenance of electrodes and rectifiers
• Recover waste heat
• Use of more efficient rectifiers (silicon versus mercury arc)
• Use more efficient controls
• Develop improved electrode design and materials to increase efficiency
Solution:
Example. Consider a 7.5 kW (10 hp) motor on an air
handler in a hospital. This 480 V, 3 ph,1800 RPM
motor is known to operate 2,000 hours per year.
Measurements indicate the following: Input power =
8.7 kW at full load Power factor = 0.88 Determine the
benefit of adding capacitors to improve the power
factor to 0.98. What is the motor efficiency? What is
the payback if capacitors cost $40/kVAR installed and
electricity costs $0.06/kWh? Transformer and
distribution system resistance is 10 ohms.
ELECTRICAL LOAD ANALYSIS
Daily load curve can be constructed by reading the meter every 15 minutes, every half-hour, or every hour.
Automatic demand recording meters(used in time-of-day pricing systems) normally provide a tabulation of these
types of data; a copy (in the form of a computer printout) can be obtained from the utility service representative.
The information contained in such graphs can then be analyzed to determine the following electrical load characteristics:
• Time of occurrence of peak demand
• Energy use during lunch break
• Ratio of maximum to least demand
• Ratio of summer to winter demand
• Percentage of total energy use occurring during off shift hours
• Percentage of total energy use occurring on weekends
These data can be used to assess the following situations:
• Are major loads left on during the lunch break?
• Is lighting or other equipment left on during weekends or off-shift hours?
• Can the peak demand be reduced? In an ideal situation, the load curve would be in the shape of a rectangle. It would be zero
during off-shift hours, rise instantly to a maximum value when the working day starts, remain at a constant value until the end of
the working day, and then decrease to zero again. If the off-shift energy use is 40 percent of the total or greater an energy audit
should be used to establish the components of this load and to evaluate whether this energy use is indeed necessary.
 Load Analysis Parameters and Nomenclature

Fig.22 Steel mill daily load curves.

 Lecture 14

Energy Management Principles Involving Computers

1. Control: A major application, ranging from small microprocessors controlling a single fan to a large, central
computer controlling fuel usage in a steel mill. (Replacement of simple time clocks and "thermostats" when
a large number are required and when schedule changes are needed frequently.)
2. Process optimization: Selection among several variables to optimize energy use in processes or buildings.
(Complex relationship among the independent and dependent variables.)
3. Audits/analysis: Prediction, simulation, analysis, evaluation; the computer is a tool which the energy
manager uses to carry out these tasks.
4. Consider simple (and cheaper) alternatives first: Be sure that economic analysis with computers is based on
only what a computer can provide best (i.e., discount energy savings that could be better achieved by other
means; e.g., slowing down fans, using a few simple timers, etc.).
5. Be sure to have "fail safe" computer control: (i.e., if the computer stops, emergency equipment will work
and critical loads are maintained).
The ENECON (Energy Conservation) program or a similar program should be run for any recommended energy
management option which has been identified as a result of energy audits.
Simulation.
Computers are useful for simulating energy flows through processes or buildings. For example, programs are
available to make the following types of simulations for buildings:
• Calculation of hour-by-hour thermal and electrical loads for buildings and simulation of the operation of the air distribution
system in meeting these loads
• Simulation of the operation of various pieces of equipment as they respond to loads imposed by a building's air-side system (as
opposed to coolant-side system) to determine monthly and annual energy usage for the various systems being evaluated
• Calculation of monthly energy costs and other annual operating costs with initial investment and associated owning cost factors
to find the total owning and operating costs of each candidate system on a year-by-year basis for any period up to 30 years
• Calculation of design point heating/cooling loads on a zone-by-zone basis using 24-hours of weather and solar data per month.
Process Analysis Or Forecasts. By modeling or simulating energy using processes, computers can be employed to assist in
making decisions which help save energy. For example:
• A microprocessor based flowmeter was developed by a company manufacturing process instruments and controls. This
instrument determines the integrated energy content of a natural gas stream in which different types of gases with different energy
contents and different specific weights are comingled.
• By using a computer to simulate the fuel consumption for various steps in a manufacturing plant, total energy use and cost
could be estimated. This model could then be exercised for various mixes of fuels and energy forms(depending on price and
availability) to select the lowest cost way to operate the plant for a given output.
Software Tools:
Load profiles and consumption data for domestic electricity, heat (hot water, space heating, cooking) and cooling
patterns (trigeneration, micro-CHP or m-CCHP) can also be simulated with types of residential load simulator (i.e.
based upon user occupancy and weather patterns).
• The software emulation platforms are mainly for developed urban residential (BEopt, Simergy, Gridlab-D,
EnergyPlus, AUDIT, BEACON, DOE-2, EZDOE, eQUEST®, MARKETMANAGER).
• TrnSys in for thermodynamic and thermoelectric modelling.
• CASAnova 3.3, educational software for heating and cooling energy demand as well as the temperature
behaviour in a house or building.
• CONTAM from ASHRAE has been used to study the indoor air quality impacts of heating, ventilation, and air-
conditioning systems in single-family residential buildings, ventilation in large mechanically ventilated office
buildings, radon entry and transport in large residential, office, and school buildings, and the design and
analysis of smoke management systems.
• RAPSim - Microgrid Simulator is an easy to use GUI enables electric source and grid simulation. Quick
introduction how to use the Renewables Alternative Power System Simulation (RAPSim)
• The SRLS is a tool developed under the auspices of NSERC-Canada that facilitates the study of energy
management systems in Smart Grids based on Matlab-Simulink-GUIDE toolboxes, providing a complete set of
user-friendly graphical interfaces to properly model and study appliance loads.
• The Hybrid Sunshine Solar Energy Simulator (SES) simulates electricity consumption by your appliances,
electricity generation by Solar or Wind Systems and electricity stored by Batteries.
• Hybrid Renewable and Distributed Generation Design Software (HOMOR) from www.homerenergy.com
• Some More: PSS, ETAP, R-Software, PSIM, PSCAD, MATLAB/ Simulink, GRID PACK , OpenDSS,
AnyLogic PLE
Source: https://www.researchgate.net/ and Thumann (Book)
Computer-Aided Design And Manufacturing.
The use of computers for aiding design and manufacturing of products will greatly increase in the future.
Systems are or soon will be available which will:
• Model a part using interactive graphic input
• Perform a detailed stress analysis on the part
• Optimize the design to minimize weight or minimize machining time
• Produce a tape suitable for use on a numerical controlled tool machine
• Automatically machine the part to the proper specifications
A subset of these computer-aided design activities is in the design of facilities, where drawings are contained in computer
storage media and modified drawing scan be quickly redrawn using large bed plotters. The advantage of this is that a
single design change may require changing a number of drawings and all these changes can be made automatically by the
computer using the proper drawing indices. Speed up of drawing, illustration, and plotted output will be enhanced by the
use of high-speed laser printing and plotting. Copy machine companies are already connecting duplicating machines
directly to computers to print "a page at a time" at rates of current high speed copy machines. These activities save
energy and human resources by producing products more efficiently.
CONTROL
Microprocessors And Minicomputers. The revolution of microelectronics is beginning to have an important impact
on energy management practices. The same technologies which dramatically reduced the cost of pocket calculators
is finding application in improved controls for appliances, vehicles, homes, and industrial processes.
Microprocessor controls are being utilized in microwave ovens, for example, and may soon be found in solar
systems, combustion systems, and HVAC systems for the home. In new vehicle types, microprocessors control
fuel flow to achieve higher fuel efficiency when the vehicle is not accelerating.
Energy Management And Control Systems (EMCS).
Figure illustrates the general concept of an EMCS. The equipment used for EMCS ranges incomplexity from a
small microprocessor (for a single building system) to a minicomputer which can handle larger buildings, to a tree
distributed processing system employing a central minicomputer coupled to a number of remotely located
microprocessors.
Fig.23 Energy Management And Control Systems (EMCS)
Why Computer aided Energy Management?
Source: Rajan GG. Optimizing energy efficiencies in industry.
2003.
COGENERATION Lecture 15
Definition : Cogeneration is the simultaneous generation in one process both thermal energy and electrical
and/or mechanical energy; Useful heat is heat produced in a cogeneration process to satisfy an economically
justifiable demand for heating or cooling; The heat produced by cogeneration can be delivered through various
mediums, including warm water (e.g., for space heating and hot water systems), steam or hot air (e.g., for
commercial and industrial uses). It is also possible to do Trigeneration, the production of electricity, heat and
cooling. Trigeneration is an attractive option in situations where all three needs exist, such as in production
processes with cooling requirements.
COGENMASTER. It is a computer program to model the technical aspects of alternative cogeneration systems
and options, evaluate economic feasibility, and prepare detailed cash flow statements.
Cogeneration technologies
Combined cycle gas turbine with hearth recovery
Steam backpressure turbine
Steam condensing extraction turbine
Gas turbine with heat recovery
Internal combustion engine
Micro turbines
Sterling engines
Steam engines
Fuel cells
Other classifications:
Topping cycle thermal cycles where power is produced prior to the delivery of heat to the industrial plant. One
example is the case of heat recovered from a diesel-engine generator to produce steam and hot water.
Bottoming cycle power production from the recovery of heat that would “normally” be rejected to a heat sink.
Examples include the generation of power using the heat from various exothermic chemical processes and the
heat rejected from kilns used in various industries.
Cogeneration units:
Micro-cogeneration means below 50 kWe;
Small-scale cogeneration means below 1 MWe.
Power to heat ratio (P/H): the ratio between electricity from cogeneration and useful heat when operating in
full cogeneration mode
Where can CHP be Economically Attractive?
Data Centers
Colleges & Universities
Ethanol/ Biofuel Process Plants
Food Processing Plants
Hospitals
Hotels
Ice Arenas
Chemicals, Pulp & Paper,
Fabricated Metals, Plastics
Nursing Homes
Office Buildings
Large Multi-Family Apartments
Refrigerated Warehouses
Restaurants
Supermarkets Theatres Greenhouses
Wastewater Treatment Facilities
Combined Cycle: this is a combination of the two cycles described above. Power is produced in a topping
cycle—typically a gas-turbine generator. Then, heat exhausted from the turbine is used to produce steam;
which is subsequently expanded in a steam turbine to generate more electric or shaft power. Steam can also
be extracted from the cycle to be used as process heat.

Fig.24 Combined cycle plant

Why is There an Opportunity?
• Rising Concerns Over
• Blackouts/Brownouts
• Power Supply Constraints
• Marked Increases in Electricity & Fuel Prices
• Selected Power Outage Costs
Benefits of CHP
High Efficiency, On--Site Generation Means:
• Improved Reliability.(Avoiding business disruptions)
• 50% less CO2 emissions.(Monetizing Environmental benefits)
• Up to 80% energy efficient.(Reducing Fuel use)
• Removes requirement for back-up diesels (Conserve Natural Resources)
• Can uplift Green Star ratings by 1-2 stars.
• Usually cost-effective.
• Support Grid Infrastructure
• Fewer T&D Constraints
• Defer Costly Grid Upgrades
• Price Stability
• Facilitates Deployment of New Clean Energy Technologies
The Cogeneration Design Process
The following evaluation steps are suggested to carry out cogeneration system design.
1. Develop the profile of the various process steam (heat) demands at the appropriate steam pressures for the
applications being studied. Also, collect data with regard to condensate returned from the process and its
temperature. Data must include daily fluctuations due to normal variations in process needs, as well as seasonal
weather effects; including the influence of not-working periods such as weekends, vacation periods, and
holidays.
2. A profile for electric power must be developed in the same manner as the process heat demand profile. These
profiles typically include hour-by-hour heat and power demands for “typical” days (or weeks) for each season or
month of the year.
3. Fuel availability and present-day cost as well as projected future costs. The study should also factor process
by-product fuels into the development of the energy supply system.
4. Purchased power availability and its present and expected future cost.
5. Plant discharge stream data in the same degree of detail as the process heat demand data.
6. Number and rating of major (demand and generation) equipment items. This evaluation usually establish
whether spare capacity and/or supplementary firing should be installed.
7. Plant, process and CHP system economic lives.
Once this initial data bank has been established, the various alternatives that can satisfy plant heat and power
demands can be identified. Subsequently, detailed technical analyses are conducted. Thus, energy balances are
made, investment cost estimated, and the economic merit of each alternative evaluated. Some approaches for
evaluation are discussed next.

Source: Turner WC, Doty S. Energy management handbook. The Fairmont Press, Inc.; 2007.
Economic Feasibility Evaluation Methods
Cogeneration feasibility evaluation is an iterative process—further evaluations generally require more data.
There are a number of evaluation methods using various approaches and different levels of technical detail.
Most of them consider seasonal loads and equipment performance characteristics. Some of the most
representative methods are discussed as follows.
1 General Approaches For Design and Evaluation
Hay (1988) presents a structured approach for system design and evaluation. It is a sequence of evaluation
iterations, each greater than the previous and each producing information whether the costs of the next step is
warranted. His suggested design process is based on the following steps.
Step 1: Site Walkthrough and Technical Screening
Step 2: Preliminary Economic Screening
Step 3: Detailed Engineering Design.
Similarly, Butler (1984) considers three steps to perform studies, engineering and construction of cogeneration
projects. These are discussed as follow.
Step 1. Preliminary studies and conceptual engineering.
This is achieved by performing a technical feasibility and economic cost-benefit study to rank and
recommend alternatives. The determination of technical feasibility includes a realistic assessment with
respect to environmental impact, regulatory compliance, and interface with a utility. Then, an economic
analysis-based on the simple payback period-serves as a basis for more refined evaluations.
Step 2. Engineering and Construction Planning.
Once an alternative has been selected and approved by the owner, preliminary engineering is started to
develop the general design criteria. These include specific site information such as process heat and power
requirements, fuel availability and pricing, system type definition, modes of operation, system interface,
review of alternatives under more detailed load and equipment data, confirm selected alternative and finally
size the plant equipment and systems to match the application.
Step 3. Design Documentation. This includes the preparation of project flow charts, piping and instrument
diagrams, general arrangement drawings, equipment layouts, process interface layouts, building, structural
and foundation drawings, electrical diagrams, and specifying an energy management system, if required.
Several methodologies and manuals have been developed to carry out Step 1, i.e. screening analysis and
preliminary feasibility studies. Some of them are briefly discussed in the next sections. Steps 2 and 3 usually
require ad-hoc approaches according to the characteristics of each particular site. Therefore, a general
methodology is not applicable for such activities.
2 Preliminary Feasibility Study Approaches
AGA Manual—GKCO Consultants (1982) developed a cogeneration feasibility (technical and
economical)evaluation manual for the American Gas Association, AGA. It contains a “Cogeneration Conceptual
Design Guide” that provides guidelines for the development of plant designs. It specifies the following steps to
conduct the site feasibility study:
a) Select the type of prime mover or cycle (piston engine, gas turbine or steam turbine);
b) Determine the total installed capacity;
c) Determine the size and number of prime movers;
d) Determine the required standby capacity.
According to its authors “the approach taken (in the manual) is to develop the minimal amount of information
required for the feasibility analysis, deferring more rigorous and comprehensive analyses to the actual concept
study.” The approach includes the discussion of the following “Design Options” or design criteria to determine
(1) the size and (2) the operation mode of the CHP system.
Isolated Operation, Electric Load Following—The facility is independent of the electric utility grid, and is
required to produce all power required on-site and to provide all required reserves for scheduled and
unscheduled maintenance.
Baseloaded, Electrically Sized—The facility is sized for base loaded operation based on the minimum historic
billing demand. Supplemental power is purchased from the utility grid. This facility concept generally results in
a shorter payback period than that from the isolated site.
Baseloaded, Thermally Sized—The facility is sized to provide most of the site’s required thermal energy using
recovered heat. The engines operated to follow the thermal demand with supplemental boiler fired as required.
This option frequently results in the production of more power than is required on-site and this power is sold to
the electric utility.
In addition, the AGA manual includes a description of sources of information or processes by which background
data can be developed for the specific gas distribution service area. Such information can be used to adapt the
feasibility screening procedures to a specific utility.
3 Cogeneration System Selection and Sizing.
The selection of a set of “candidate” cogeneration systems entails to tentatively specify the most appropriate
prime mover technology, which will be further evaluated in the course of the study. Often, two or more
alternative systems that meet the technical requirements are pre-selected for further evaluation. For instance, a
plant’s CHP requirements can be met by either, a reciprocating engine system or combustion turbine system.
Thus, the two system technologies are pre-selected for a more detailed economic analysis.
To evaluate specific technologies, there exist a vast number of technology-specific manuals and references.
A representative sample is listed as follows.
Mackay (1983) has developed a manual titled “Gas Turbine Cogeneration: Design, Evaluation and Installation.”
Kovacik (1984) reviews application considerations for both steam turbine and gas turbine cogeneration systems.
Limaye (1987) has compiled several case studies on industrial cogeneration applications. Hay (1988) discusses
technical and economic considerations for cogeneration application of gas engines, gas turbines, steam engines
and packaged systems. Keklhofer (1991) has written a treatise on technical and economic analysis of combined-
cycle gas and steam turbine power plants. Ganapathy (1991) has produced a manual on waste heat boilers.
Usually, system selection is assumed to be separate from sizing the cogeneration equipment (kWe). However,
since performance, reliability and cost are very dependent on equipment size and number, technology selection
and system size are very intertwined evaluation factors. In addition to the system design criteria given by the
AGA manual, several approaches for cogeneration system selection and/or sizing are discussed as follows.
Heat-to-Power Ratio
Canton et al (1987) of The Combustion and Fuels Research Group at Texas A&M University has developed a
methodology to select a cogeneration system for a given industrial application using the heat to power ratio
(HPR). The methodology includes a series of graphs used 1) to define the load HPR and 2) to compare and
match the load HPR to the HPRs of existing equipment. Consideration is then given to either, heat or power
load matching and modulation.
Sizing Procedures
Hay (1987) considers the use of the load duration curve to model variable thermal and electrical loads in
system sizing, along with four different scenarios described in Figure. Each one of this scenarios defines an
operating alternative associated to a system size. Oven (1991) discusses the use of the load duration curve to
model variable thermal and electrical loads in system sizing in conjunction with required thermal and electrical
load factors. Given the thermal load duration and electrical load duration curves for a particular facility,
different sizing alternatives can be defined for various load factors. Eastey et al. (1984) discusses a model
(COGENOPT) for sizing cogeneration systems. The basic inputs to the model are a set of thermal and electric
profiles, the cost of fuels and electricity, equipment cost and performance for a particular technology. The
model calculates the operating costs and the number of units for different system sizes. Then it estimates the
net present value for each one of them. Based on the maximum net present value, the “optimum” system is
selected. The model includes cost and load escalation. Wong, Ganesh and Turner (1991) have developed two
statistical computer models to optimize cogeneration system size subject to varying capacities/loads and to
meet an availability requirement. One model is for internal combustion engine and the other for unfired gas
turbine cogeneration systems. Once the user defines a required availability, the models determine the system
size or capacity that meets the required availability and maximizes the expected annual worth of its life cycle
cost.
 Lecture 16

ENERGY PERFORMANCE ASSESSMENT OF COGENERATION AND TURBINES (GAS,

STEAM)
Cogeneration systems can be broadly classified as those using steam turbines, Gas turbines and DG sets. Steam turbine
cogeneration systems involve different types of configurations with respect to mode of power generation such as
extraction, back pressure or a combination of backpressure, extraction and condensing.
Gas turbines with heat recovery steam generators is another mode of cogeneration.
Depending on power and steam load variations in the plant the entire system is dynamic. A performance assessment
would yield valuable insights into cogeneration system performance and need for further optimisation.
In certain cases, the efficiency of individual components like steam turbine is addressed specifically where performance
deterioration is suspected. In general, the plant performance will be compared with the base line values arrived at for the
plant operating condition rather than the design values.
Performance Terms and Definitions
Example. Small Cogeneration Plant. A distillery plant having an average production of 40 kilolitres of ethanol
is having a cogeneration system with a backpressure turbine. The plant steam and electrical demand are 5.1
Tons/hr and 100 kW. The process flow diagram is shown in figure. Gross calorific value of Indian coal is
4000kCal/kg

Fig.25 Cogeneration plant

Calculations :
Step 1 : Total heat of steam at turbine inlet conditions at 15kg / cm2 and 250°C, given h1 =698 kCal/kg
Step 2 : Total heat of steam at turbine outlet conditions at 2 kg/cm2 and 130°C, given h2 = 648 kCal/kg
Step 3 : Heat energy input to turbine per kg of inlet steam (h1– h2) = (698-648) = 50 kCal/kg
Step 4 : Total steam flow rate, Q1 = 5100 kg/hr Power generation = 100 kW Equivalent thermal energy = 100 x 860 =
86,000 kCal /hr
Step 5 : Energy input to the turbine = 5100 x 50 = 2,55,000 kCal/hr.
Step 6 : Energy input= 2,55,000, Energy Output= 86,000, Power generation efficiency of the turbo alternator
=(Output/Input)x 100 = 34%
 Step 7 : Efficiency of the turbo alternator = 34% Given efficiency of Alternator = 92 %, Efficiency of
gear transmission = 98 %

Step 8 : Quantity of steam bypassing the turbine = Nil

Step 9 : Coal consumption of the boiler = 1550 kg/hr
Step 10: Overall plant heat rate, kCal/kWh = Mass flow rate of steam x ((Enthalpy of steam, kCal/kg – Enthalpy of feed
water, kCal/kg)/ Power output, kW = 5100 x (698 – 30)/ 100 = 34068 kCal/kWh
* *Note: The plant heat rate is in the order of 34000 kCal/kWh because of the use of backpressure turbine. This value will
be around 3000 kcal/kWh while operating on fully condensing mode. However with backpressure turbine, the energy in
the steam is not wasted, as it is utilised in the process. Overall plant fuel rate including boiler = 1550/100 = 15.5 kg coal /
kW
 Lecture 17

What is the difference between Pump and Compressor?

A pump is a machine that moves a fluid (either liquid or gas) from one place to another. A compressor is a machine that
squeezes a gas into a smaller volume and (often) pumps it somewhere else at the same time.
In principle, any liquid can be handled by any of the pump designs. Where different pump designs could be used, the
centrifugal pump is generally the most economical followed by rotary and reciprocating pumps. Although, positive
displacement pumps are generally more efficient than centrifugal pumps, the benefit of higher efficiency tends to be offset
by increased maintenance costs.
Since, worldwide, centrifugal pumps account for the majority of electricity used by pumps, the focus of this chapter is on
centrifugal pump.

The equations relating rotodynamic pump performance parameters of flow, head and power absorbed, to speed are known
as the Affinity Laws:
Where:
Q = Flow rate
H = Head
P = Power absorbed
N = Rotating speed
Efficiency is essentially independent of speed
Flow: Flow is proportional to the speed
Q1 / Q2 = N1 / N2
Example: 100 / Q2 = 1750/3500
Q2 = 200 m3/hr
Head: Head is proportional to the square of speed
So H2 = 400 m
Power(kW): Power is proportional to the cube of speed
kW2 = 40
As can be seen from the above laws, doubling the speed of the centrifugal pump will increase the power consumption by 8
times. Conversely a small reduction in speed will result in drastic reduction in power consumption. This forms the basis for
energy conservation in centrifugal pumps with varying flow requirements.
Losses are of two types: static and friction head.
Static head is simply the difference in height of the supply and destination reservoirs.
Friction head (sometimes called dynamic head loss) is the friction loss, on the liquid being moved, in pipes, valves and
equipment in the system.

Remember:
Electrical power input to pump-----˃Pump shaft power----------- ˃ Hydraulic power
ɳ motor ɳ pump
Energy Conservation Opportunities in Pumping Systems
■ Ensure adequate Net Positive Suction Head (NPSH) at site of installation
■ Ensure availability of basic instruments at pumps like pressure gauges, flow meters.
■ Operate pumps near best efficiency point.
■ Modify pumping system and pumps losses to minimize throttling.
■ Adapt to wide load variation with variable speed drives or sequenced control of multiple units.
■ Stop running multiple pumps - add an auto-start for an on-line spare or add a booster pump in the problem area.
■ Use booster pumps for small loads requiring higher pressures.
■ Increase fluid temperature differentials to reduce pumping rates in case of heat exchangers.
■ Repair seals and packing to minimize water loss by dripping.
■ Balance the system to minimize flows and reduce pump power requirements.
■ Avoid pumping head with a free-fall return (gravity);
Use siphon effect to advantage:
■ Conduct water balance to minimise water consumption
■ Avoid cooling water re-circulation in DG sets, air compressors, refrigeration systems,
cooling towers feed water pumps, condenser pumps and process pumps.
■ In multiple pump operations, carefully combine the operation of pumps to avoid throttling
■ Provide booster pump for few areas of higher head
■ Replace old pumps by energy efficient pumps
■ In the case of over designed pump, provide variable speed drive, or downsize / replace impeller or replace with correct sized
pump for efficient operation.
■ Optimise number of stages in multi-stage pump in case of head margins
■ Reduce system resistance by pressure drop assessment and pipe size optimisation
Compressor
Air compressors account for significant amount of electricity used in Indian industries. Air compressors are used
in a variety of industries to supply process requirements, to operate pneumatic tools and equipment, and to meet
instrumentation needs. Only 10 – 30% of energy reaches the point of end-use, and balance 70 – 90% of energy of
the power of the prime mover being converted to unusable heat energy and to a lesser extent lost in form of
friction, misuse and noise.
Compressor Performance
Capacity of a Compressor
Capacity of a compressor is the full rated volume of flow of gas compressed and delivered at conditions of total
temperature, total pressure, and composition prevailing at the compressor inlet. It sometimes means actual flow
rate, rather than rated volume of flow. This also termed as Free Air Delivery (FAD) i.e. air at atmospheric
conditions at any specific location. Because the altitude, barometer, and temperature may vary at different
localities and at different times,
it follows that this term does not mean air under identical or standard conditions.
Compressor Efficiency Definitions
Several different measures of compressor efficiency are commonly used:
volumetric efficiency, adiabatic efficiency, isothermal efficiency and mechanical efficiency.
Adiabatic and isothermal efficiencies are computed as the isothermal or adiabatic power divided by the actual
power consumption. The figure obtained indicates the overall efficiency of compressor and drive motor.
The calculation of isothermal power does not include power needed to overcome friction and generally gives an efficiency
that is lower than adiabatic efficiency. The reported value of efficiency is normally the isothermal efficiency. This is an
important consideration when selecting compressors based on reported values of efficiency.

Adiabatic efficiency is defined as the ratio of work output for an ideal isentropic compression process to the work input
to develop the required head.
For practical purposes, the most effective guide in comparing compressor efficiencies is the specific power consumption
i.e. kW/volume flow rate , for different compressors that would provide identical duty.
Checklist for Energy Efficiency in Compressed Air System
• Ensure air intake to compressor is not warm and humid by locating compressors in well ventilated area or by
drawing cold air from outside. Every 4°C rise in air inlet temperature will increase power consumption by 1 percent.
• Clean air-inlet filters regularly. Compressor efficiency will be reduced by 2 percent for every 250 mm WC pressure
drop across the filter.
• Keep compressor valves in good condition by removing and inspecting once every six months. Worn-out valves can reduce
compressor efficiency by as much as 50 percent.
• Install manometers across the filter and monitor the pressure drop as a guide to replacement of element.
• Minimize low-load compressor operation; if air demand is less than 50 percent of compressor capacity, consider change
over to a smaller compressor or reduce compressor speed appropriately (by reducing motor pulley size) in case of belt driven
compressors.
• Consider the use of regenerative air dryers, which uses the heat of compressed air to remove moisture.
• Fouled inter-coolers reduce compressor efficiency and cause more water condensation in air receivers and distribution lines
resulting in increased corrosion. Periodic cleaning of intercoolers must be ensured.
• Compressor free air delivery test (FAD) must be done periodically to check the present operating capacity against its design
capacity and corrective steps must be taken if required.
• If more than one compressor is feeding to a common header, compressors must be operated in such a way that only one
small compressor should handle the load variations whereas other compressors will operate at full load.
• The possibility of heat recovery from hot compressed air to generate hot air or water for process application must be
economically analyzed in case of large compressors.
• Consideration should be given to two-stage or multistage compressor as it consumes less power for the same air output than
a single stage compressor.
• If pressure requirements for processes are widely different (e.g. 3 bar to 7 bar), it is advisable to have two separate
compressed air systems.
• Reduce compressor delivery pressure, wherever possible, to save energy.
• Provide extra air receivers at points of high cyclic-air demand which permits operation without extra compressor capacity.
• Retrofit with variable speed drives in big compressors, say over 100 kW, to eliminate the `unloaded' running condition altogether.
• Keep the minimum possible range between load and unload pressure settings.
• Reduce frequency of drainage as automatic timer controlled drain traps wastes compressed air every time the valve opens.
• Check air compressor logs regularly for abnormal readings, especially motor current cooling water flow and temperature,
inter-stage and discharge pressures and temperatures and compressor load-cycle.
• Compressed air leakage of 40 – 50 percent is not uncommon. Carry out periodic leak tests to estimate the quantity of leakage.
• Install equipment interlocked solenoid cut-off valves in the air system so that air supply to a machine can be switched off when not in
use.
• Present energy prices justify liberal designs of pipeline sizes to reduce pressure drops.
• Compressed air piping layout should be made preferably as a ring main to provide desired pressures for all users.
• A smaller dedicated compressor can be installed at load point, located far off from the central compressor house, instead of supplying air
through lengthy pipelines.
• All pneumatic equipment should be properly lubricated, which will reduce friction, prevent wear of seals and other rubber parts thus
preventing energy wastage due to excessive air consumption or leakage.
• Misuse of compressed air such as for body cleaning, agitation, general floor cleaning, and other similar applications must be discouraged
in order to save compressed air and energy.
• Pneumatic equipment should not be operated above the recommended operating pressure as this not only wastes energy bus can also lead
to excessive wear of equipment's components which leads to further energy wastage.
• Pneumatic transport can be replaced by mechanical system as the former consumed about 8 times more energy. Highest possibility of
energy savings is by reducing compressed air use.
• Pneumatic tools such as drill and grinders consume about 20 times more energy than motor driven tools. Hence they have to be used
efficiently. Wherever possible, they should be replaced with electrically operated tools.
• Where possible welding is a good practice and should be preferred over threaded connections.
• On account of high pressure drop, ball or plug or gate valves are preferable over globe valves in compressed air lines.
Lecture 18

Specific Energy Consumption (SEC)

SEC is a widespread term used by international energy agencies, e.g., [3], and in research studies, e.g., [38]. Nevertheless,
energy can only be converted from one form to another or transferred among systems, and cannot be destroyed or created
([39,40]). According to the first law of thermodynamics: “Although energy assumes many forms, the total quantity of
energy is constant, and when energy disappears in one form it appears simultaneously in other forms” ([39], p. 22). Thus,
energy cannot be “consumed” as such. It is the exergy, i.e., the measure of the quality and quantity of energy, that is
available for use [40]. However, exergy is rarely, if at all, mentioned in the literature addressing energy management and
using SEC. Instead, the same variable expressed in thermodynamic units per physical units is most often referred to as
specific energy consumption. The wording of the term can be misinterpreted, because it is the exergy that is used during the
process—the part of the energy that is available to be used for work. Some studies refer to the same term as “typical energy
demand”, e.g., power demand and heat demand per paper grade [38] or SEC—specific energy demand [41]. In conclusion,
it would be better to use the thermodynamically correct names, i.e., specific exergy consumption or specific energy use.
Nevertheless, although specific exergy consumption and specific energy use are thermodynamically correct, it could be
possible in theory that the change of names could cause some unforeseen/unintended challenges.
SEC is calculated as a ratio of energy used for producing a product:
 SEC for one single individual product for one single individual process:

Ex—the energy use of the single individual manufacturing process x and Px—physical unit of a single individual product x.
Meanwhile aggregated SEC (SECagg) for a group of products, e.g., for a sector, can be calculated as a ratio of the sum of all
the energy used with the sum of all the products produced, providing the production output has the same composition during
the time that is to be compared

∑E—sum of all the energy used and ∑P—sum of physical units of all products. Following the principles of above equations in
order to evaluate the usage of individual energy carriers for individual products or a sum of products the individual energy
carriers can be used instead.
ISO 50006:2017 [17] provides instructions on how energy performance indicators (EnPIs) and energy baselines
(EnBs) are established, used and maintained in the process of measuring energy performance within an organization, and how
to determine whether the energy performance meets the targets set by the organization. Energy performance is understood as
the “measurable results related to energy efficiency, energy use”. When establishing EnPIs, different characteristics of the
energy use, such as base load (e.g., fixed energy use) and variable loads, affected by production, occupancy, weather and other
factors, should be taken into consideration.
The energy performance can be influenced by different variables (weather conditions, production parameters,
operating hours and operating parameters) and by static factors connected to changing business conditions such
as market demand, sales and profitability. The relevant variables that can influence the energy performance
should be defined, quantified and isolated in terms of significance (ranging from no influence or little influence
to significant).
The organization sets quantitative references, meaning EnBs for each EnPIs in order to compare EnPIs values
over time and to quantify the changes in energy performance. The results of energy performance can be
expressed in SEC (e.g., kWh/unit), and when multiple forms of energy are used, conversion to a common unit of
measure should be performed in such a way that the conversion process includes the total energy used and the
losses. When comparing energy performance results, it is recommended that the EnPI and its corresponding
EnBs are normalized by modifying the energy data so that the changes in relevant variables which affect energy
performance are considered and the comparison is carried out under equivalent conditions.
When calculating energy savings for the industrial sector, SEC for energy-intensive industries is calculated as
follows [37]:

SEC is a convenient and easy-to-use energy efficiency indicator

with the potential for use in various benchmarking applications,
provided that it is calculated with adequate assumptions and
calculations to ensure its reliability.
Factors affecting the numbers for energy used and products, and therefore SEC:

Source: Lawrence A, Thollander P, Andrei M, Karlsson M. Specific energy consumption/use (SEC) in energy
management for improving energy efficiency in industry: Meaning, usage and differences. Energies. 2019
Jan;12(2):247.
Lecture 19

Source: Rajan GG. Optimizing energy efficiencies in industry. 2003.

Light emitting diode (LED) lighting description: Lecture 20
LED lighting fixtures are becoming increasingly common in installations in residential, commercial and
industrial applications. They function by passing DC voltage and current through a P-N junction in a
semiconductor material. When the turn-on threshold is passed in the device, light is emitted at a frequency and
color based on the band-gap of the semiconductor used. The LED is housed within a reflective cap, and can
then be mounted in any plastic housing that fits the application. A graphic of a typical LED can be seen in
Figure. Applications for this technology range from surface-mount indicators for printed circuit boards to fully
housed fixtures to replace commercial lighting units.

Estimated opportunity: When installed in commercial facilities, LED lighting

Fig.26 Typical single LED
semiconductor and housing
fixtures provide dramatic advantages in both energy savings and maintenance
requirements when compared with traditional incandescent, halogen incandescent or
fluorescent lighting systems. A typical commercial facility can have hundreds or
thousands of lighting fixtures, all of which consume an amount of power based on
the type of luminous device used. Consider a single lighting fixture, such as one in a
home. A single traditional incandescent lamp might use anywhere from 40 W to 100
W of power to provide higher or lower levels of light. One of the most typical
specifications is for 100 W lamps, so let’s use that for the sake of comparison. That
means, if you were to run it for six hours every day for a year, the lamp would
annually consume: 100 W * 365 days * 6 hours/day = 219 kWh Almost 90% of this
energy is lost in the form of heat, while only a small fraction goes to producing light.
A traditional incandescent light illuminated at 100 W produces approximately 1,600
lumens.
Assuming that the goal is to achieve that amount of illumination, comparable lighting fixtures can be found in
halogen incandescent, compact fluorescent and LED technologies, and energy use comparisons can be made.
Table 5 shows the same calculation shown above for the various lighting technologies, and the cost to operate a
single fixture for a year.
Return on investment: The energy savings from using a LED in a fixture is clear to see based on the results in
Table 5. Let’s assume that a given facility has 100 luminary units. At $0.12 per kWh, 100 units of the 1,600 lumen LED fixture
will cost $528 per year to operate. That is $72 less than the fluorescent fixture, $1,488 less than the halogen incandescent, and
$2,100 less than the traditional incandescent annually. The natural counterargument to that monetary savings, is of course, the
initial cost of the LED units. For the single luminary unit from the previous example, the traditional incandescent lamp costs
roughly $4.00, while the LED costs $40.00. At ten times the expense, factoring in only the energy savings, it would take only
two years to pay off the cost of the LED fixtures, a very short return on investment. What then, of the more efficient fluorescent
lamp? Here, as well as in the comparison with incandescent technologies, another benefit of LED fixtures shines—they have a
lifetime of approximately 50,000 hours. That compares to roughly 2,000 hours for incandescent lamps and 10,000 hours for a
fluorescent lamp. Additionally, when an LED reaches its end-of-life, it simply becomes dimmer, rather than “burning out” like a
traditional lamp. This drastically reduces maintenance costs at a facility. Not only are replacement lamps additional costs, but
electrician hours must be billed to cover those replacements. In facilities with high ceilings and hundreds of lights, the costs can
be dramatic. With LED fixtures, units need to be replaced much less frequently, resulting in much lower maintenance costs. The
combination of direct energy savings and fractional maintenance costs make LED lighting fixtures an attractive and economical
way to save both energy and money in commercial and industrial facilities.
Table. Annual consumed by 1,600 lumen lighting fixtures
Power quality and energy conservation Lecture 21
There are generally two categories of PQ solutions that claim to save energy.
PF correction equipment:
• Black/green boxes with capacitors in them
• PF correction capacitors
• Harmonic filters
Other PQ solutions:
• Soft starters
• Harmonic mitigating transformers (HMT)
• Conservation voltage reduction (CVR) equipment
• Surge protection devices
• “Smart” receptacles/plug strips to eliminate “vampiric loads”
The first category, “Power factor (PF) correction equipment”, includes the most common solutions that provide real
opportunities for savings. These solutions can provide energy bill savings, but the actual savings result from reduction in
penalties, not real kW or kWh savings, generally. It save money but not appreciable energy. The second group, “Other PQ
solutions”, generally offers much less or no real savings but these are often promoted as significant savings in an effort to
have a quick payback and return on investment (ROI).
Harmonic filters and power factor correction : A manufacturer of harmonic filters claims that their filter reduces currents and
harmonic energy losses in the main transformer, resulting in significant energy savings to the facility. It reduces energy
consumption significantly by several percentage points of the current energy consumption. The claim points out that the
currents in the transformer are reduced significantly, and that harmonic heating in the transformer is reduced significantly. It
points out that eddy current related loss in the transformer is proportional to the square of the frequency. Actual/realistic
range of payback: The harmonic filter does reduce 60 Hz fundamental current in the transformer, which is the same benefit
as ordinary power factor correction. However, these savings are much less than 1% of the energy load.
Harmonic mitigating transformers (HMTs)
Description:
HMTs are phase-shifting transformers of various configurations (wye/zig-zag, delta/zig-zag, etc.) that allow recirculation of third
harmonic currents on the secondary of the transformer (instead of allowing them to flow into the delta windings and cause
additional losses in the transformer and upstream). They are typically low loss (winding and core) transformers and inherently save
energy versus standard transformers. They are often used in pairs or multiple sets for higher order harmonic cancellation (5th, 7th,
11th, 13th, etc.). In this way, they eliminate the harmonic currents upstream of the transformer(s) and reduce copper losses.

Stated/claimed savings or payback: Up to 20% energy savings versus standard transformers or loss reduction of 30%.
Actual/realistic range of payback: Loss reduction is possible (based on example given earlier) but 30% loss reduction may equal
1–2% or so of actual energy savings (or points of efficiency).

Soft starters Description: Many people believe that the use of soft starters will reduce the peak demand on their energy bill and
many (unknowing) salesmen sell this benefit. Generally, we believe that it is an innocent oversight based on the lack of
understanding. Stated/claimed savings or payback: Reduces peak demand and reduces kW billing by a certain amount depending
on the size of the motor versus the total load. Actual/realistic range of payback: Soft starters reduce the peak draw of (primarily
reactive) current during a motor starting condition that typically lasts 3–10 seconds. This short period is a small fraction of a 15-
minute average demand window where the utility records peak demand. Soft starters are useful for reducing the voltage drop
caused by large inrush currents to motors during the starting condition but do not save energy or demand.
Conservation voltage reduction (CVR) products
Description: For years, electric utility companies have practiced voltage reduction, often called “brownouts” to reduce load
on their power system. The thought was that constant impedance loads would draw less current and, thus, less power.
Simply stated, for many lighting loads (i.e., residential), this is true but it also results in lower light intensity, perhaps below
acceptable levels. For other constant impedance loads that require a certain amount of heat generated (i.e., electric dryer, hot
water tank, heater, etc.) the load may draw less kW instantly but will require longer thermal cycles to achieve the goal of
heating or drying. For constant power (i.e., motor) loads, there is no savings benefit because if the voltage goes down, the
current goes up. Also, from a utility point of view this increased current translates into a need to provide increased reactive
power. On a stressed utility line, finding sufficient VARs is a problem. As a result, the action of reducing the voltage in this
condition only exacerbates the problem. The concept of CVR has been instituted into electronic and magnetic component
low voltage designs that are installed with the promise of significant energy savings. Stated/claimed savings or payback: 3–
13% of energy and demand. Actual/realistic range of payback: Less than 2% on aggregate systems (i.e., multiple types of
loads) and up to 13% in rare cases on a specific load. Typically cost per load installing it on a specific piece of equipment
may be more economical building into the equipment or by using fixed tap regulation.

Source: Carnovale, D.J. and Barchowsky, A., 2015. Energy savings—realistic expectations for commercial facilities.
Lecture 22
DEMAND SIDE MANAGEMENT
Demand side management (DSM) has been traditionally seen as
a means of reducing peak electricity demand so that utilities can
delay building further capacity. In fact, by reducing the overall
load on an electricity network, DSM has various beneficial
effects, including mitigating electrical system emergencies,
reducing the number of blackouts and increasing system
reliability. Possible benefits can also include reducing
dependency on expensive imports of fuel, reducing energy
prices, and reducing harmful emissions to the environment.
Finally, DSM has a major role to play in deferring high
investments in generation, transmission and distribution
networks. Thus DSM applied to electricity systems provides
significant economic, reliability and environmental benefits.
Advantages to Demand Side Management
1. Better usage of existing generating and distribution
infrastructure.
2. Less efficient/environmentally unfriendly generating
capacity can be decommissioned.
3. Load can be matched to variable renewable energy
availability.
4. Lower generating and transmission costs.
5. Lower transmission and distribution losses.
6. Reduction in “spinning reserve” costs.
7. Less intrusive load shedding.
8. More consumer growth capacity.
9. Better maintenance opportunities.
10. More availability (less black-outs).
Different techniques of DSM
• Night-time heating with load switching.

• Direct load control: remotely controllable switch that can turn power to a
load or appliance on or off.

• Load limiters: limit the power that can be taken by individual

consumers.

• Commercial/industrial programs: i.e. load-interruptible programs.

• Frequency regulation: dealing with fluctuation in frequency.

• Time-of-use pricing: reflect the production and investment cost structure

where rates are higher (lower) during peak (off-peak) periods.

• Demand bidding: customer reduces the consumption of electricity at a

certain predetermined price.
Fig. 27 Load adjustment in DSM
• Smart metering: tracking amount of electricity using to manage costs
and consumption.
Peak Clipping , Peak Shifting, Valley Filling, Load leveling
Peak clipping
Peak clipping where the demand peaks (high demand periods) are “clipped” and the load is reduced at peak times. This
form of load management has little overall effect of the demand but focuses on reducing peak demand.

Peak Shifting
Peak Shifting is a highly cost-effective method of reducing electric utility expenses. When electric utility commercial or
industrial customers use electricity can make a big difference on their monthly electric bills. By shifting the time of day that
electric power is used, a commercial or industrial customer can reduce their "demand charge" portion of their electric bill
during peak times of the day. This reduces the overall cost of power each month for the customer.
Unlike most products, electricity can’t be stored after it's generated. Electricity must be generated - and consumed - at the
time of demand by a utility's customer.

Valley Filling
The process of making an energy production and delivery system more efficient by encouraging additional energy use
during periods of lowest system demand. Valley filling programs are usually accompanied by load shifting programs, often
with the aim of shifting peak demand usage to low demand periods

Load leveling
Load levelling helps to optimize the current generating base-load without the need for reserve capacity to meet the periods
of high demand.
 Lecture 23

Case Study:
Paper Plant
Source: BEE
Module-IV Lecture 24
Financial Analysis
In most respects, investment in energy efficiency is no different from any other area of financial management. So
when your organization first decides to invest in increasing its energy efficiency it should apply exactly the same
criteria to reducing its energy consumption as it applies to all its other investments. It should not require a faster
or slower rate of return on investment in energy efficiency than it demands elsewhere. The basic criteria for
financial investment appraisal include:
• Simple Payback - a measure of how long it will be before the investment makes money, and how long the financing term
needs to be.
• Return on Investment (ROI) and Internal Rate of Return (IRR) - measure that allow comparison with other investment
options.
• Net Present Value (NPV) and Cash Flow - measures that allow financial planning of the project and provide the company
with all the information needed to incorporate energy efficiency projects into the corporate financial system. Initially, when
you can identify no or low cost investment opportunities, this principle should not be difficult to maintain. However, if your
organization decides to fund a rolling program of such investments, then over time it will become increasingly difficult for
you to identify opportunities, which conform to the principle. Before you'll reach this position, you need to renegotiate the
basis on which investment decisions are made. It may require particular thoroughness to ensure that all the costs and benefits
arising are taken into account. As an approximate appraisal, simple payback (the total cost of the measure divided by the
annual savings arising from it expressed as years required for the original investment to be returned) is a useful tool. As the
process becomes more sophisticated, financial criteria such as Discounted Cash Flow, Internal Rate of Return and Net
Present Value may be used. If you do not possess sufficient financial expertise to calculate these yourself, you will need to
ensure that you have access, either within your own staff or elsewhere within the organization, to people who can employ
them on your behalf. There are two quite separate grounds for arguing that, at least long after their payback
periods such measure does not need to be written off using fast discounting rates but can be regarded as adding to
the long term value of the assets. For this reason, short term payback can be an inadequate yardstick for assessing
long after their payback periods. Such measure does not need to be written off using fast discounting rates but can
be regarded as adding to the long term value of the assets. For this reason, short term payback can be an
inadequate yardstick for assessing longer term benefits. To assess the real gains from investing in saving energy,
you should use investment appraisal techniques, which accurately reflect the longevity of the returns on particular
types of technical measures.
Cash Flow Model
Cash flow is basically the cash available after all expenses are paid. Generally there are two kinds of cash flow;
the initial investment as one or more instalments, and the savings arising from the investment. This over simplifies
the reality of energy management investment. There are usually other cash flows related to a project. These
include the following:
• Capital costs are the costs associated with the design, planning, installation and commissioning of the project;
these are usually one-time costs unaffected by inflation or discount rate factors, although, as in the example,
installments paid over a period of time
will have time costs associated with them.
• Annual cash flows, such as annual savings accruing from a project, occur each year over the life of the project;
these include taxes, insurance, equipment leases, energy costs, servicing, maintenance, operating labour, and so
on. Increases in any of these costs represent negative cash flows, whereas decreases in the cost represent positive
cash flows.
Factors that need to be considered in calculating annual cash flows are:-
• Taxes, using the marginal tax rate applied to positive (i.e. increasing taxes) or negative (i.e. decreasing taxes) cash
flows.
• Asset depreciation, the depreciation of plant assets over their life; depreciation is a "paper expense allocation"
rather than a real cash flow, and therefore is not included directly in the life cycle cost. However, depreciation is
"real expense" in terms of tax calculations, and therefore does have an impact on the tax calculation noted above.
For example, if a Rs.10,00,000 asset is depreciated at 20% and the marginal tax rate is 40%, the depreciation would
be Rs.200,000 and the tax cash flow would be Rs.80,000 and it is this later amount that would show up in the
costing calculation.
• Intermittent cash flows occur sporadically rather than annually during the life of the project, relining a boiler once
every five years would be an example.
The time value of money concept
Money has time value. A rupee today is more valuable than a year hence. It is on this concept “the time value of
money” is based. The recognition of the time value of money and risk is extremely vital in financial decision
making.
REASONS FOR TIME VALUE OF MONEY
Money has time value because of the following reasons:
1. Risk and Uncertainty :Future is always uncertain and risky. Outflow of cash is in our control as payments to
parties are made by us. There is no certainty for future cash inflows. Cash inflows is dependent out on our
Creditor, Bank etc. As an individual or firm is not certain about future cash receipts, it prefers receiving cash
now.
2. Inflation: In an inflationary economy, the money received today, has more purchasing power than the money
to be received in future. In other words, a rupee today represents a greater real purchasing power than a rupee a
year hence.
3. Consumption: Individuals generally prefer current consumption to future consumption.
4. Investment opportunities: An investor can profitably employ a rupee received today, to give him a higher
value to be received tomorrow or after a certain period of time.
Thus, the fundamental principle behind the concept of time value of money is that, a sum of money received
today, is worth more than if the same is received after a certain period of time. For example, if an individual is
given an alternative either to receive `10,000 now or after one year, he will prefer `10,000 now. This is because,
today, he may be in a position to purchase more goods with this money than what he is going to get for the same
amount after one year.
Thus, time value of money is a vital consideration in making financial decision.
There are two techniques for adjusting time value of money. They are:
1. Compounding Techniques/Future Value Techniques
2. Discounting/Present Value Techniques
The value of money at a future date with a given interest rate is called future value. Similarly, the worth of
money today that is receivable or payable at a future date is called Present Value.
 Lecture 25
Financial Analysis Techniques
Investment analysis tools relevant to energy management projects will be discussed.
1. 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:

Example 1:
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 project is.

Advantages
A widely used investment criterion, the payback period 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 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.
• It is a measure of a project's capital recovery, not profitability.
• Despite its limitations, the simple payback period has advantages in that it may be useful for evaluating an
investment.
Example 2: The payback criterion prefers A, which has a payback period of 3 years, in comparison to B, which
has a payback period of 4 years, even though B has very substantial cash inflows in years 5 and 6.
 Simple Interest

Compound Interest

Example 3:
A company borrows Rs.30,00,000 to finance a new boiler installation. If the interest rate is 10% per annum and the
repayment period is 5 years, let us calculate the value of the total repayment and the monthly repayment value, assuming
(i) simple interest and (ii) compound interest.
(i) Assuming simple interest:
Total repayment = 30,00,000 + (10/100 x 30,00,000 x 5) = Rs.45,00,000
Monthly repayment = 45,00,000 / (5 x 12) = Rs.75,000
(ii) Assuming compound interest
Repayment at end of year 1 = 30,00,000 + (10/100 x 30,00,000) = Rs.33,00,000
Repayment at end of year 2 = 33,00,000 + (10/100 x 33,00,000) = Rs.36,30,000
Similarly, the repayments at the end of year 5 can be calculated:
Repayment at end of year 5 = Rs. 48,31,530
Alternatively, the above equation can be used to determine the compound interest repayment value.
It can be seen that by using compound interest, the lender recoups an additional Rs.3,31,530.
It is not surprisingly lenders usually charge compound interest on loans.
Time Value of Money
A project usually entails an investment for the initial cost of installation, called the capital cost, and a series of
annual costs and/or cost savings (i.e. operating, energy, maintenance, etc.) throughout the life of the project. To
assess project feasibility, all these present and future cash flows must be equated to a common basis. The
problem with equating cash flows which occur at different times is that the value of money changes with time.
The method by which these various cash flows are related is called discounting, or the present value concept.
For example, if money can be deposited in the bank at 10% interest, then a Rs.100 deposit will be worth
Rs.110 in one year's time. Thus the Rs.110 in one year is a future value equivalent to the Rs.100 present value.
In the same manner, Rs.100 received one year from now is only worth Rs.90.91 in today’s money (i.e. Rs.90.91
plus 10% interest equals Rs.100). Thus Rs.90.91 represents the present value of Rs.100 cash flow occurring one
year in the future. If the interest rate were something different than 10%, then the equivalent present value
would also change. The relationship between present and future value is determined as follows:
Example 4:
The future value of the investment made at present, after 5 years will be:
FV = 22,20,000 x (1 + 8/100) 5= Rs.32,61,908.40
So in 5 years the initial investment of 22,20,000 will accrue Rs.10,41,908.40 in interest and will be worth Rs.32,61,908.40.
Alternatively, it could equally be said that Rs.32,61908.40 in 5 years time is worth Rs.22,20,000 now (assuming an annual
interest rate of 8%). In other words the present value of Rs.32,61,908.40 in 5 years time is Rs.22,00,000 now.
The present value of an amount of money at any specified time in the future can be determined by the following equation.

The net present value method calculates the present value of all the yearly cash flows (i.e. capital costs and net savings)
incurred or accrued throughout the life of a project, and summates them. Costs are represented as a negative value and
savings as a positive value. The sum of all the present values is known as the net present value (NPV). The higher the net
present value, the more attractive the proposed project.
The present value of a future cash flow can be determined using the equation above. However, it is common practice to use
a discount factor (DF) when calculating present value. The discount factor is based on an assumed discount rate (i.e.
interest rate) and can be determined by using equation. The product of a particular cash flow and the discount factor is the
present value (PV).
Net Present Value
The net present value (NPV) of a project is equal to the sum of the present values of all the cash flows associated
with it. Symbolically,

Where NPV = Net Present Value

CFt = Cash flow occurring at the end of year 't' (t=0,1,….n)
n = life of the project
k = Discount rate
The discount rate (k) employed for evaluating the present value of the expected future cash flows should reflect the risk of the
project.
Example 5:
To illustrate the calculation of net present value, consider a project, which has the following cash flow stream:
The cost of capital, k, for the firm is 10 per cent. The net present value of the proposal is:

The net present value represents the net benefit over and above the compensation for time and risk.
Hence the decision rule associated with the net present value criterion is: "Accept the project if the net present value is
positive and reject the project if the net present value is negative".
Advantages
The net present value criterion has considerable merits.
• It takes into account the time value of money.
• It considers the cash flow stream in its project life.
Return on Investment (ROI)
ROI expresses the "annual return" from the project as a percentage of capital cost. The annual return takes into
account the cash flows over the project life and the discount rate by converting the total present value of ongoing
cash flows to an equivalent annual amount over the life of the project, which can then be compared to the capital
cost. ROI does not require similar project life or capital cost for comparison.
This is a broad indicator of the annual return expected from initial capital investment, expressed as a percentage:

ROI must always be higher than cost of money (interest rate); the greater the return on investment better is the investment.
Limitations
• It does not take into account the time value of money.
• It does not account for the variable nature of annual net cash inflows.
Internal Rate of Return Lecture 26

This method calculates the rate of 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
annual 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 eq:

For continuous cash flows

For continuous cash flows, the summation in the above formula is replaced by an integration:
CFt value will be negative if it is expenditure and positive if it is savings.
In the net present value calculation we assume that the discount rate (cost of capital) is known and determine the
net present value of the project. In the internal rate of return calculation, we set the net present value equal to zero
and determine the discount rate (internal rate of return), which satisfies this condition.
Example 6: To illustrate the calculation of internal rate of return, consider the cash flows of a project:

The internal rate of return is the value of " k " which satisfies the following equation:
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.
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 7:
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.
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, 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
Lecture 27

Profitability index
Another technique, which can be used to evaluate the financial viability of projects, is the profitability index. The profitability
index can be defined as:
The application of profitability index is illustrated in Example.
Example 8: Determine the profitability index for the projects
The annual cash flows should be multiplied by the annual discount factors for a rate of 8% to determine the
annual present values, as shown in the Table below:

It can be seen that over a 10 year life-span the net present value for Project 1 is
Rs.10,254.00, while for Project 2 it is Rs.10,867.80.
For Project 1: Profitability index =10254/30,000 = 0.342
For Project 2: Profitability index =10867/ 30,000= 0.362
Project 2 is therefore a better proposal than Project 1.
Factors Affecting Analysis
Following are some important considerations:
• The capital value of plant and equipment generally depreciates over time
• General inflation reduces the value of savings as time progresses. For example, Rs.1000 saved in 1 year's time will be worth
more than Rs.1000 saved in 10 years time. The capital depreciation of an item of equipment can be considered in terms of its
salvage value at the end of the analysis period. The Example illustrates the point.

Example 9
It is proposed to install a heat recovery equipment in a factory. The capital cost of installing the equipment is
Rs.20,000 and after 5 years its salvage value is Rs.1500. If the savings accrued by the heat recovery device are as
shown below, we have to find out the net present value after 5 years. Discount rate is assumed to be 8%.
It is evident that over a 5-year life span the net present value of the project is Rs.4489.50.
Had the salvage value of the equipment not been considered, the net present value of the project would have been only Rs.3468.00.
 Lecture 28

Present Value Method

Real value
Inflation can be defined as the rate of increase in the average price of goods and services. In some countries, inflation is
expressed in terms of the retail price index (RPI), which is determined centrally and reflects average inflation over a range
of commodities. Because of inflation, the real value of cash flow decreases with time. The real value of sum of money (S)
realised in n years time can be determined using the equation.

Where RV is the real value of S realized in n years time. S is the value of cash flow in n years time and R is the inflation
rate (%).
As with the discount factor it is common practice to use an inflation factor when assessing the impact of inflation on a
project. The inflation factor can be determined using the equation.

The product of a particular cash flow and inflation factor is the real value of the cash flow.
RV = S x IF
 Example 10:
Recalculate the net present value of the energy recovery scheme in previous Example, assuming the
discount rate remains at 8% and that the rate of inflation is 5%.

The Example shows that when inflation is assumed to be 5%, the net present value of the project reduces from Rs.4489.50
to Rs.4397.88. This is to be expected, because general inflation will always erode the value of future 'profits' accrued by a
project.
Sensitivity and Risk Analysis
Many of the cash flows in the project are based on assumptions that have an element of uncertainty. The present
day cash flows, such as capital cost, energy cost savings, maintenance costs, etc can usually be estimated fairly
accurately. Even though these costs can be predicted with some certainty, it should always be remembered that
they are only estimates. Cash flows in future years normally contain inflation components which are often "guess-
timates" at best. The project life itself is an estimate that can vary significantly.

Sensitivity analysis is an assessment of risk. Because of the uncertainty in assigning values to the analysis, it is recommended
that a sensitivity analysis be carried out - particularly on projects where the feasibility is marginal.
How sensitive is the project's feasibility to changes in the input parameters?
What if one or more of the factors in the analysis is not as favourable as predicted?
How much would it have to vary before the project becomes unviable?
What is the probability of this happening?
Suppose, for example, that a feasible project is based on an energy cost saving that escalates at 10% per year, but a sensitivity
analysis shows the break-even is at 9% (i.e. the project becomes unviable if the inflation of energy cost falls below 9%). There
is a high degree of risk associated with this project - much greater than if the break-even value was at 2%.

Many of the computer spreadsheet programs have built-in "what if" functions that make sensitivity analysis easy. If carried
out manually, the sensitivity analysis can become laborious -reworking the analysis many times with various changes in the
parameters. Sensitivity analysis is undertaken to identify those parameters that are both uncertain and for which the project
decision, taken through the NPV or IRR, is sensitive. Switching values showing the change in a variable required for the
project decision to change from acceptance to rejection are presented for key variables and can be compared with post
evaluation results for similar projects. For large projects and those close to the cut-off rate, a quantitative risk analysis
Sensitivity and risk analysis should lead to improved project design, with actions mitigating against major sources
of uncertainty being outlined.
The various micro and macro factors that are considered for the sensitivity analysis are listed below.
Micro factors
• Operating expenses (various expenses items)
• Capital structure
• Costs of debt, equity
• Changing of the forms of finance e.g. leasing
• Changing the project duration
Macro factors
Macro economic variables are the variable that affects the operation of the industry of which the firm operates. They cannot be
changed by the firm's management.
Macro economic variables, which affect projects, include among others:
• Changes in interest rates
• Changes in the tax rates
• Changes in the accounting standards e.g. methods of calculating depreciation
• Changes in depreciation rates
• Extension of various government subsidized projects e.g. rural electrification
• General employment trends e.g. if the government changes the salary scales
• Imposition of regulations on environmental and safety issues in the industry
• Energy Price change
• Technology changes
The sensitivity analysis will bring changes in various items in the analysis of financial statements or the projects, which in turn
might lead to different conclusions regarding the implementation of projects.
 Lecture 29
Depreciation
In accountancy, depreciation refers to two aspects of the same concept:
1. The decrease in value of assets (fair value depreciation), and
2. The allocation of the cost of assets to periods in which the assets are used (depreciation with the matching principle).
The former affects the balance sheet of a business or entity, and the latter affects the net income that they report.
Any business or income producing activity using tangible assets may incur costs related to those assets. If an asset is
expected to produce a benefit in future periods, some of these costs must be deferred rather than treated as a current
expense. The business then records depreciation expense in its financial reporting as the current period's allocation of such
costs. This is usually done in a rational and systematic manner. Generally this involves four criteria:
• cost of the asset,
• expected salvage value, also known as residual value of the asset,
• estimated useful life of the asset, and
• a method of apportioning the cost over such life
Methods of depreciation
There are several methods for calculating depreciation, generally based on either the passage of time or the level of
activity (or use) of the asset.
Straight-line depreciation
Straight-line depreciation is the simplest and most often used method. In this method, the company estimates the
salvage value of the asset at the end of the period during which it will be used to generate revenues (useful life). (The salvage
value is an estimate of the value of the asset at the time it will be sold or disposed of; it may be zero or even negative. Salvage
value is also known as scrap value or residual value.) The company will then charge the same amount to depreciation each
year over that period, until the value shown for the asset has reduced from the original cost to the salvage value.
Straight-line method:

For example, a vehicle that depreciates over 5 years is purchased at a cost of $17,000, and will have a salvage value of
$2000. Then this vehicle will depreciate at $3,000 per year, i.e. (17-2)/5 = 3. This illustrates the straight-line method of
depreciation. Book value at the beginning of the first year of depreciation is the original cost of the asset. At any time
book value equals original cost minus accumulated depreciation.
book value = original cost − accumulated depreciation
Book value at the end of year becomes book value at the beginning of next year. The asset is depreciated until the book
value equals scrap value.
Declining-balance method (or Reducing balance method)
Depreciation methods that provide for a higher depreciation charge in the first year of an asset's life and gradually decreasing
charges in subsequent years are called
accelerated depreciation methods. This may be a more realistic reflection of an asset's actual expected benefit from the use
of the asset: many assets are most useful when they are new. One popular accelerated method is the declining balance
method. Under this method the book value is reduced by a fixed percentage each year.
Depreciation in year = Depreciation rate * Book Value at start of year
The most common depreciation rate used is double the straight-line rate. For this reason, this technique is sometimes referred
to as the double-declining-balance method. To illustrate, suppose a business has an asset with $1,000 original cost,
$100 salvage value, and 5 years of useful life. First, the straight-line depreciation rate would be 1/5, i.e. 20% per year. Under
the double-declining-balance method, double that rate, i.e. 40% depreciation rate would be used.
When using the double-declining-balance method, the salvage value is not considered in determining the
annual depreciation, but the book value of the asset being depreciated is never brought below its salvage value,
regardless of the method used. Depreciation ceases when either the salvage value or the end of the asset's
useful life is reached.
Since double-declining-balance depreciation does not always depreciate an asset fully by its end of life, some
methods also compute a straight-line depreciation each year, and apply the greater of the two. This has the
effect of converting from declining-balance depreciation to straight-line depreciation at a midpoint in the
asset's life.
With the declining balance method, one can find the depreciation rate that would allow exactly for full
depreciation by the end of the period, using the formula:
where N is the estimated life of the asset (for example, in years).
Activity depreciation
Activity depreciation methods are not based on time, but on a level of activity. This could be miles driven for a
vehicle, or a cycle count for a machine. When the asset is acquired, its life is estimated in terms of this level of
activity. Assume the vehicle above is estimated to go 50,000 miles in its lifetime. The per-mile depreciation rate
is calculated as: ($17,000 cost - $2,000 salvage) / 50,000 miles =$0.30 per mile. Each year, the depreciation
expense is then calculated by multiplying the number of miles driven by the per-mile depreciation rate.
Sum-of-years-digits method
Sum-of-years-digits is a depreciation method that results in a more accelerated write-off than the straight line
method, and typically also more accelerated than the declining balance method. Under this method the annual
depreciation is determined by multiplying the depreciable cost by a schedule of fractions.
depreciable cost = original cost − salvage value
book value = original cost − accumulated depreciation
Units-of-production depreciation method
Under the units-of-production method, useful life of the asset is expressed in terms of the total number of units
expected to be produced:
Example 11:
Suppose, an asset has original cost $70,000, salvage value $10,000, and is expected to produce 6,000 units.
Depreciation per unit = ($70,000−10,000) / 6,000 = $10
10 × actual production will give the depreciation cost of the current year. The table below illustrates the units-of-
production depreciation schedule of the asset.

Depreciation stops when book value is equal to the scrap value of the asset. In the end, the sum of accumulated
depreciation and scrap value equals the original cost.
Composite depreciation method
The composite method is applied to a collection of assets that are not similar, and have different service lives. For
example, computers and printers are not similar, but both are part of the office equipment. Depreciation on all assets
is determined by using the straight-line-depreciation method.
Example 12:
Asset Historical Salvage Depreciable Life Depreciation
cost value cost per year
Computers $5,500 $500 $5,000 5 $1,000
Printers $1,000 $100 $ 900 3 $ 300
Total $ 6,500 $600 $5,900 4.5 $1,300
Composite life equals the total depreciable cost divided by the total depreciation per year. $5,900 / $1,300 = 4.5
years.
Composite depreciation rate equals depreciation per year divided by total historical cost. $1,300 / $6,500 = 0.20 =
20%
Depreciation expense equals the composite depreciation rate times the balance in the asset account (historical cost).
(0.20 * $6,500)= $1,300. Debit depreciation expense and credit accumulated depreciation. When an asset is sold,
debit cash for the amount received and credit the asset account for its original cost. Debit the difference between the
two to accumulated depreciation. Under the composite method no gain or loss is recognized on the sale of an asset.
Theoretically, this makes sense because the gains and losses from assets sold before and after the composite life will
average themselves out. To calculate composite depreciation rate, divide depreciation per year by total historical cost.
To calculate depreciation expense, multiply the result by the same total historical cost. The result, not surprisingly,
will equal to the total depreciation Per Year again.
Commonsense requires depreciation expense to be equal to total depreciation per year, without first dividing and then
multiplying total depreciation per year by the same number.
 Lecture 30

Tax depreciation
Most income tax systems allow a tax deduction for recovery of the cost of assets used in a business or for the production of
income. Such deductions are allowed for individuals and companies. Where the assets are consumed currently, the cost may
be deducted currently as an expense or treated as part of cost of goods sold. The cost of assets not currently consumed generally
must be deferred and recovered over time, such as through depreciation. Some systems permit full deduction of the cost, at least
in part, in the year the assets are acquired. Other systems allow depreciation expense over some life using some depreciation
method or percentage. Rules vary highly by country, and may vary within a country based on type of asset or type of taxpayer.
Many systems that specify depreciation lives and methods for financial reporting require the same lives and methods be used
for tax purposes. Most tax systems provide different rules for real property (buildings, etc.) and personal property (equipment,
etc.).
Capital allowances
A common system is to allow a fixed percentage of the cost of depreciable assets to be deducted each year. This is often
referred to as a capital allowance, as it is called in the United Kingdom. Deductions are permitted to individuals and
businesses based on assets placed in service during or before the assessment year.
Canada's Capital Cost Allowance are fixed percentages of assets within a class or type of asset. Fixed percentage rates are
specified by type of asset. The fixed percentage is multiplied by the tax basis of assets in service to determine the
capital allowance deduction. The tax law or regulations of the country specifies these percentages. Capital allowance
calculations may be based on the total set of assets, on sets or pools by year (vintage pools) or pools by classes of assets.
Tax lives and methods
Some systems specify lives based on classes of property defined by the tax authority. Canada Revenue Agency specifies
numerous classes based on the type of property and how it is used. Under the United States depreciation system, the
Internal Revenue Service publishes a detailed guide which includes a table of asset lives and the applicable conventions.
The table also incorporates specified lives for certain commonly used assets (e.g., office furniture, computers, automobiles)
which override the business use lives. U.S. tax depreciation is computed under the double declining balance method
switching to straight line or the straight line method, at the option of the taxpayer.
IRS tables specify percentages to apply to the basis of an asset for each year in which it is in service. Depreciation first
becomes deductible when an asset is placed in service.