13.

ENERGY MANAGEMENT AND ENERGY

AUDITING
13.1 INTRODUCTION
Electricity is the most flexible form of energy needed for all
types of activity; hence due to this reason there is a rapid
growth in the electric power demand from various categories of
consumers. Electric power is considered to be the engine of the
economic growth, especially in developing country like India
with the progress of agriculture, industrial and commercial
sectors largely depending on it. It is also a basic necessity for
the domestic sector. Since much of the power generated is
based on fossil fuels, it is a very precious commodity and
should be used in an efficient manner.
In the latest decades of twentieth century, India has been facing an
acute crisis with the power generation not keeping up with the
demand.

Energy audit is a tool to sense the opportunities to

save energy. Energy audit plays a vital role in reducing the gap
between the energy demand and supply. In a developing country
like India, the energy audit with in utilities to enable to know the
losses in various segments and devises packages to bring down the
losses within the standard limits. So energy management and
energy audit is very important for a developing country like India.
13.2 ENERGY MANAGEMENT

13.2.1 Types of Energy Management in Power Sector:

Energy management is classified in power sector into three

categories

1. Generation side management

2. Transmission side management

3. Demand side management

Generation side management deals with managing generating

station for fuel requirement, maintenance, scheduling etc and
thereby managing the generated power of a plant.
Transmission side management deals with the maintenance of
protective equipment, installation of new transmission line,
power flow etc. Demand side management deals with the
distribution of power, scheduling of load. In distribution
system, we deal with the demand side management of a power
system.
Demand side management is also classified as:

(a) Need based energy management (b) Demand based energy

management

Need based energy management forecast the load according to

the need of a consumer. Demand based energy management
forecast the load according to the demand for the load.
13.2.2 Demand Side Management
Electricity end-use efficiency has the potential to play a key
role in reducing the need for large dams. By managing
electrical loads and maximizing the use of efficient electrical
technologies, demand for electricity can be tempered and the
need for large dams reduced. Many of these efficiency
measures and technologies are cost effective at today’s
electricity prices and therefore provide real cost savings to
energy users.
• Energy efficiency improvements provide multiple benefits:

1. Financial Benefits

Higher efficiency has direct and indirect financial benefits to

Consumers and society by reducing the need for additional supply
and/or distribution facilities, lowering customer energy costs, reducing
equipment maintenance, creating opportunities for reducing
equipment size, and mitigating risks from future price fluctuations.

2. Social Benefits

Efficiency investments can stimulate economic development and local

job opportunities, improve energy security, and improve the quality of
living and working conditions.
3. Environmental Benefits

Higher efficiency reduces both the direct emissions from On-site

energy use, and the environmental impacts resulting from fossil fuel
and electricity production and transmission.

While it is the public interest to use energy more efficiently, several

market barriers exist which prevent energy users and utilities from
making otherwise rational investments in efficient technologies and
practices. For example, consumers often do not have access to new
technologies, or cannot afford the extra cost involved or the financing
that could pay for these costs out of the savings. Utilities often view
efficiency in terms of loss of market share, and when trying to meet a
growing demand tend to think first of new power supply options.
 It has often been left to governments, therefore, to put
policies and programs in place that encourages both consumers
and utilities to undertake energy efficient investments and
programs.

When an energy efficiency improvement program is

carried out by a power utility or by a government or private sector
organization as part of a strategic plan to manage electricity
demand, it is called a Demand Side Management (DSM) program.
DSM is especially important to power planners in growing
economies where installation of an inefficient infrastructure today
means many years of wasted power.
13.2.3 Objective of DSM in Different Types of Economy

Table 13.1 shows a objective of DSM in different types of economy

type of kWh per Examples Objectives of DSM
Economy Capital
Low Electricity 500 Parts of Africa and Manage peak demand and reduce
Use Asia losses
Rapidly Growing 800 – China, India, and Maximize efficiency and minimize
Economies 1400 Latin America peak demand in new equipment and
facilities
Stable 7500 OECD Meet new growth by increasing
Industrialized efficiency and load management in
Economies both existing and new stock
Economies with Limit peak demand in high growth
Uneven Growth sectors or regions

Economies with Eastern Europe Upgrade current Infrastructure to

Older Inefficient high Efficiency
Infrastructure
13.2.4 Unique Features of Demand Side Management
There are several unique features of power sector DSM
which make both its evaluation and implementation very different
from power supply options. These unique features present a
challenge to power sector planners. There may be obvious country
benefits from DSM (investment deferred, and environmental and
social benefits etc.) but there may not be enough incentives for
utilities to invest in DSM programs or consumers to invest in more
efficient technology.
 Features of Demand Side Options are as follows:

1. DSM involves actions and investments by energy consumers as

well as Government and electrical utilities. DSM therefore has two
main cost components – the cost of the new end-use technologies
and practices themselves, plus the administrative and transaction
costs of the program or policy to encourage (leverage) their use.

2. The benefits of DSM depend mostly on energy saved, and

therefore they are strongly related to the costs and environmental
and social impacts of the displaced energy supply source.
2.The benefits of DSM depend mostly on energy saved, and therefore
they are strongly related to the costs and environmental and social
impacts of the displaced energy supply source.

3.The size of the electricity and demand savings from a DSM program
depends on the participation rate of energy consumers. This in turn
depends on the regulatory or other methods used to overcome market
barriers which might limit participation. The sustainability of savings
after a DSM program has been completed also depends on both the
life of the end-use technology and the degree of market transformation
achieved during the program.
13.2.5 Barriers in Demand Side Management

Compared with electricity supply options, DSM is

disadvantaged by several market barriers – conditions which limit
customer uptake of DSM measures or which reduce the incentive
for electrical utilities to invest in DSM programs.

Barriers affecting customer uptake include lack of information

and knowledge about energy efficiency, and financial
considerations such as affordability, competing investment
priorities, or access to financing.
 Barriers preventing electrical utilities from undertaking
DSM programs include lack of sufficient financial incentive
because of deregulation and restructuring, hidden subsidies for
other options, and lack of expertise and infrastructure to deliver
DSM programs.

These barriers can be removed through appropriate

government policy and regulation, and by careful design of
DSM programs.
Lack of Information and Knowledge:

For any product or service to be successful, consumers

must be aware of its benefits, they must be able to evaluate it
against alternatives, it must be widely available, and there
must be sufficient local expertise (technical and managerial) to
install and maintain the product.

Accelerated transformation of a market from conventional

to efficient electricity using products and services therefore
needs outside intervention in the initial stages.
• Effective solutions include:

• Information and product promotion provided through channels

well respected by industry, consumers, etc

• Training programs for suppliers and users of energy efficient

products and services in project audit, evaluation, design and
implementation.

• Minimum Efficiency Standards covering the manufacture and

sale of electricity using equipment.

• Labelling and endorsement of high efficiency electrical products

and selective government procurement of these products
Financing/Affordability

There are several financial barriers which limit energy

efficiency investments. Consumers with low credit ratings and
low income communities can often not afford the first cost of
energy-efficient equipment even when it pays for itself in the
long run.

Financial institutions are often not familiar with the net

financial benefits of energy efficiency investments.
Solutions that can remove some of these barriers include:

1. Innovative Financing Mechanisms

Including product leasing in which lease

payments are set equal to savings, performance contracting
where energy service companies provide a “turn key”
financing and implementation service, and revolving funds
which can be used to finance for energy efficient projects.
2. Creation of a Level Playing Field

For energy efficient and on-site renewable energy products

by removing subsidies to conventional supply options, and
moving to full environmental and social pricing of displaced
energy supply sources through resource taxation or other
methods.

3. Risk Sharing schemes

Risk sharing through the use of Eco-Efficiency Funds

secured by Government or industry associations.
Power Sector Restructuring

The global trend towards power sector deregulation and the

breaking up of utilities into separate generation and distribution
units is changing the fundamental notions of (centralized) energy
planning and DSM. This has lead to a short term lowering of
electricity prices and removed many of the incentives for
distribution utilities in particular to undertake DSM programs
which may otherwise be in the public interest. These distribution
utilities, however, are the ideal agents to deliver DSM programs as
they have direct contact with consumers and understand how they
use electricity.
Infrastructure/Capacity

Most power utilities do not have the technical expertise or

management capability to design and deliver DSM programs.
Governments often lack the expertise to use DSM Programs as
national policy tools, and the capability to regulate and
coordinate DSM activities. Finally, in many countries, there are
not enough private sector companies with the capability and
experience to develop and deliver turn key energy efficiency
projects. One solution is to set up DSM units or cells within
power utilities to design and deliver DSM programs.
This usually means bringing in expertise not normally found in a utility
such as marketing, technical assistance to customers, and energy
performance contracting. The setting up of a DSM cell and technical
assistance to train cell staff in DSM programming should be included
in all power sector restructuring or reform projects.

Governments should also build capacity and expertise in DSM

planning and coordination, utility regulation, and in the setting of
minimum efficiency standards. Finally, training should be provided to
large electricity users and new energy service companies on how to
develop, finance and implement turn-key energy efficiency projects.
 13.2.6 DSM has The Following Steps

• Identify planning objectives

• Develop load curves and demand forecasts

• Identify supply and DSM options and collect data on each

option

• Evaluate each option with respect to costs, benefits, size, life,

and

• environmental, social, cultural, and economic development

impacts
• Select most promising set of options

• Conduct risk analysis

• Conduct stakeholder view analysis with respect to

externality values or weights

• Conduct scenario analysis

• Develop action plan

13.3 ENERGY AUDIT

Energy audit is the tool, to analyze and make step by step

approach towards decision making for energy management. It
helps to balance the total energy input with its use. Energy
audit senses the opportunities to save energy.
13.3.1 Types of Energy Audit

The type of energy audit implementation depends upon:

1. Type of industry and its function,

2. Depth to which final audit is needed,

3. The magnitude and potential of cost reduction desired.

Energy audit helps in sorting out the ways to reduce energy

consumption per unit of product output or to reduce the cost of
operation. The type of energy audit implementation should give
energy conservation as a result.
The energy audit can be of two types:

1. Preliminary audit 2. Detailed audit

Preliminary audit is worked out in limited time slot (5 to 12

days). In this, the study is carried out on energy supply and required
demand. This study helps in giving status of progress of energy
management if designed earlier.

The detailed audit gives correct analysis of conservation of

energy and its cost. It formulates a detailed plan on the basis of
quantitative and control evaluation. It accounts for 97% of energy
utilized.
13.3.2 Role of Energy Audit and Energy
Auditing Steps

Energy audit increases awareness of energy

issues among people, which helps in increase
in productivity and minimizes losses.
Energy auditing consists of the following steps:

1. Planning

2. Basic data collection

3. Equipment test data

4. Data analysis

5. Low cost recommendation

6. Payback period

7. Action plan

8. Report
Energy auditing program should cover points as

1. Top management should assign the responsibilities of

energy accounting, auditing.

2. Energy supply and production data.

3. Priority-wise study of area requiring conservation.

4. Implementation of action plan.

13.3.3 Scope of Energy Audit

1. Latest and past consumption record should be studied

2. Survey for requirement of lights should be done, According to

requirement of auditing the main meter and sub- meters record
should be studied,

3. Latest consumption should be tallied with the actual

4. Compare consumption with other location, other firms, history

of data, and budget,
5. Rating and efficiencies of the equipment must be checked,

6. Controlling system of equipment must be checked,

7. If possible implementation of automatic control should be

introduced,

8. List of equipments requiring maintenance should be

studied,

9. New energy conserving techniques should be introduced,

10. Importance of energy management should be highlighted.