Energy efficiency on the stream. Energy efficiency management practices
Companies with high energy costs are already familiar with the ISO 50 001 standard. Its provisions cover numerous aspects of management, from process organization to its regulatory and methodological support. However, the standard itself is too comprehensive and universal to provide ready-made recipes for implementing an energy efficiency management system for a specific company. This article aims to summarize the experience of creating real systems of this class, provide a description of the business management process, and outline the key challenges at each stage. We believe that both the described business process and the identified challenges are common to Russian enterprises, and we hope that this article provides, if not a ready-made recipe for creating such a system, at least its framework, its foundation! We hope this article can help current and future energy managers in their challenging quest for energy efficiency!
In one form or another, almost every Russian industrial enterprise has always been involved in optimizing energy consumption. For some, the task of reducing energy consumption was truly important — new energy-saving technologies were explored, energy-efficient equipment was purchased, technical accounting and control of energy consumption were established. For others, energy efficiency solutions were more of a "fashion statement," something along the lines of closed windows, posters about the need for savings, and replacing incandescent bulbs with more economical ones.
The new times have brought the challenge of energy savings to the level of the global agenda, linking them with ecology, social challenges, and international competition. The ESG (Environment, Social, Government) agenda has forced enterprises to include energy efficiency and related greenhouse gas emissions into their "general" KPIs. Energy efficiency has ceased to be an exclusive issue of reducing production costs and has reached the level of corporate strategy, company mission, and has become a significant factor in market value and the sustainability of the entire business.
With such inputs, energy efficiency could no longer be something situational, based solely on experience and, to a large extent, the desire of technologists to improve it. It is clear that the need has arisen for regular activities aimed at purposefully managing the continuous optimization of the consumption of various types of energy and other resources that, in one way or another, influence ESG indicators. Moreover, due to the global nature of the ESG agenda and the market’s need for uniform rules for evaluating companies' achievements in this area, such activities should also be largely identical, pursue the same goals, and use similar management tools.
The emergence of the ISO 50 001 standard in these circumstances was inevitable!
This article will not delve into the description and interpretation of its provisions, especially since the standard itself is easy to read and quite understandable. From the numerous recommendations of the standard, we will try to isolate the key business process of energy efficiency management and talk about the pitfalls that, in our experience, will most likely be encountered when creating an energy efficiency management system at any Russian (and not only) enterprise.
So, what should the energy efficiency management business process look like?
The standard describes it strictly within the concept of the Deming PDCA cycle (Plan, Do, Check, Act), but we will allow ourselves to start not with planning but with accounting. Here is a description of the business process around which all our considerations and thoughts will be presented, both in this article and in subsequent ones. So:
In our presentation of the stages, there are 8 instead of 4, but this is just a clarification of what actually should happen in the Deming cycle in the context of energy efficiency management.
How can this process be implemented in practice and what will you have to face?
1. Accounting! As a rule, enterprises have implemented what is called commercial accounting for purchased energy carriers — electricity, heat, etc. The level of such accounting is usually quite high, not going down to the details of energy consumption for specific units and aggregates. However, technical accounting, which ideally should provide the necessary detail, is usually fragmented, does not cover the entire fleet of "energy-intensive" equipment, and the data available may raise questions about the quality and timeliness of the collected data. In our experience, the problem of coverage completeness and quality of energy resource consumption technical accounting exists at all enterprises.
Since all the other steps of the business process will be, to put it mildly, ineffective without detailed low-level technical accounting of energy resource consumption, it is possible and necessary to set the following task for the accounting process: the accounting system should not only collect all available data from meters and sensors of SCADA systems and similar, but also:
If such accounting is established, it will provide a correct picture of energy resource consumption for all elements of the technological process, equipment units, and subdivisions. With the necessary quality and periodicity over time. After that, you can proceed with greater confidence to the next steps of the business process.
2. Forecasting and analysis of consumption and identification of anomalies. Here, a false sense of simplicity may arise. The task may not be solved by simply comparing the current consumption figure with some other — the past period, planned, normative, or benchmark. The question here may even be — what, actually, to compare with what? Simply an increase in consumption can be associated with completely objective circumstances — an increase in production, seasonality, equipment repairs, a change of contractors, etc. In addition, it is necessary not only to see a current figure and its difference from some comparison basis, but to see a trend — will everything continue to worsen, or are there factors suggesting that this is a one-time moment that does not require a thorough response. That is, forecasting is needed, and this is a non-trivial task in any field!
In our practice, the basis for analysis and forecasting in most cases has been the specific energy consumption per unit of output. This is an obvious and good indicator, with which it is clear how to work, but unfortunately, it is not always applicable. In a number of technological processes, especially auxiliary ones, it is not possible to directly link energy consumption to the unit of output. In this case, consumption itself remains the analyzed indicator, but more complex approaches are used to analyze it than simply comparing it to standards. Here, when analyzing, various indirect indicators can be taken into account, the composition of which depends on the essence of the technological process and can be quite unique from enterprise to enterprise.
The task of forecasting the energy efficiency indicator can also be specific to the enterprise. To begin with, you can go the way of simple linear prediction models, building a forecast based on averaging the indicator values over past periods. To improve the accuracy of the forecast, such a model can be gradually complicated by taking into account various external and technological factors — weather conditions, planned changes in operating modes and equipment specifications, planned changes in the nomenclature, quality, and quantity of output, etc. For subsequent generations of energy efficiency management systems, it is possible to move on to forecasting methods based on the use of machine learning and neural networks.
3. Factor Analysis of Anomaly Causes. Once you have a clear understanding of what constitutes an anomaly, you can and should move on to analyzing its causes. Here, we enter the realm of very specific methods of such analysis, based on a technical understanding of the specific stage of the technological process. Both the set of factors and the methods for their determination are entirely dictated by the physics and chemistry of the analyzed technological process. If you are analyzing the electricity consumption of a pumping unit, you cannot do without analyzing the technical condition and efficiency of the unit, its head characteristics, the chemical and physical composition of the pumped fluid, operating conditions, etc. In other cases, completely different factors will work, but the task of Factor Analysis is not only to identify the causes of anomalies at the grassroots level but also to combine all such causes into a comprehensive picture across the entire organizational and technical structure of the enterprise. This is necessary for a more effective organization of the subsequent response program and elimination of the causes of anomalies.
In addition to technological analysis, regular audits of the energy system and an annual energy analysis can also be involved in identifying the causes of anomalies, the need for which is also indicated in the ISO 50 001 standard. Unlike formalized factor analysis, audits and energy analysis will allow the use of the intuitive experience of employees, which cannot be formalized at this time.
4. Calculation of Energy Efficiency Potential. This is a crucial step in energy efficiency management, as this is where we can define our potential for significant improvement. Knowing the total potential for benchmark energy resource consumption across the enterprise, and having the ability to show the "price of the question," we can set a long-term goal in this area, correctly determine the direction, and justify investments in energy efficiency. However, this will require understanding the methods for calculating the potential. Here, as with factor analysis, the methods for calculating potential are also very specific to the analyzed technological process. But the good news is that, having figured out the anomaly factors, we have laid much of the groundwork for potential calculations! Moreover, if the specifics of the process are too complex to formalize, we can always implement the simplest method of determining the benchmark using benchmarking.
In our experience, this stage of the energy efficiency management business process may not be mandatory for implementation from the very start of system creation. You can wait with this until the main stages have been implemented. But an ideal energy efficiency management system cannot be considered such without addressing this task.
5. Measure Selection. This is a paramount task, without organizing a solution for which nothing will work! It is the implemented measures that will provide the desired effect in the form of reduced energy consumption. All other stages support this! Their tasks are to provide everything necessary for the competent and efficient selection of measures.
Energy efficiency improvement measures can be of several types:
The need to implement any measure should be justified by the identified problem and/or the possibility of approaching the benchmark potential, and should lead to a tangible effect in the form of reduced energy resource consumption (and/or greenhouse gas emissions). In this sense, any measure should be a separate micro-investment project, with an expenditure and revenue side, a calculation of effects and ROI. The method of calculating the effect is a non-trivial task, the solution of which is related to understanding how the technical changes being made affect energy efficiency.
The variety of measures is not infinite. Their diversity is related to the variety of equipment used and technological processes implemented. It makes sense to talk about creating a Knowledge Base on typical measures, especially since the Standard also recommends that we do this. Thus, the implementation of this part of the energy efficiency management business process should be linked to the creation of such a Base. An instance of such a Base should be a measure template with a specified impact technology, cost and effect item structure, and algorithms for calculating effects and ROI. This will also allow the creation of something like an expert system in which the transition from the identified cause of anomalies to the necessary measure will be unambiguous and automated.
6. Planning of Energy Consumption Indicators. Ideally, any Deming cycle should start with this task, but we deliberately placed it only in the 6th position, because a full-fledged plan should take into account the results of all previous steps. The plan is what we want to achieve in the next planning period. Obviously, for such a plan to have any relation to reality, it is necessary to take into account the forecast of the dynamics of energy efficiency indicators if nothing is done, the measures that we want to implement to correct the identified causes of anomalies, and our potential for improvement — the energy efficiency potential.
The planning methodology should take all of this into account! That is, for example, when determining the electricity consumption figure for a particular unit, we should know how it consumed before, how it will consume further with the given characteristics of its use in the planning period, whether we have seen any anomalies in past consumption, whether we know their causes, whether we know the way (measure) to eliminate them, whether we know what such a measure will allow us to save, whether we expect the manifestation of any other factors influencing energy efficiency in the future? Combining all of this together, we will get the desired figure, which we will use as a benchmark for the next period.
7. Formation of the Energy Efficiency Improvement Program. This stage is important, but not as interesting and specific as the previous ones. It is essentially a stage of fixing responsibilities for implementing the set of measures included in the Program. It is clear that this stage should be filled with all sorts of diagrams and reports that will allow managers at all levels to finally decide on priorities, goals, and methods for monitoring the achievement of results.
8. Implementation and Accounting for Measures. This stage may seem like a routine step — done/reported/checked; however, in reality, it is not that simple either. The main difficulty is determining the actual effect of implementing the measure! If the measure is planned based on a template (typical) measure, then the template has already defined the algorithm for calculation, including the actual effect, as well as the initial data necessary for such calculation. In our opinion, the ideal organization of accounting for the actual effect received from the measure should look like this:
At this stage, it is important not only to "record the profit/losses" but also to conduct a full analysis of what we wanted and what we got. If we see something in common between the failed measures, then our task is to figure it out. We will most likely need to adjust our understanding of the essence of the measure and the method of calculating the effects from it, and make the necessary changes to the Knowledge Base of typical measures. This will allow us to create not just an Energy Efficiency Management System, but also to lay in it elements of self-improvement!
Thank you for your attention! We have planned to publish several more articles on this topic, in which we will try to delve more deeply into the essence of the tasks solved at each stage of the business process described here. We are waiting for you!
In one form or another, almost every Russian industrial enterprise has always been involved in optimizing energy consumption. For some, the task of reducing energy consumption was truly important — new energy-saving technologies were explored, energy-efficient equipment was purchased, technical accounting and control of energy consumption were established. For others, energy efficiency solutions were more of a "fashion statement," something along the lines of closed windows, posters about the need for savings, and replacing incandescent bulbs with more economical ones.
The new times have brought the challenge of energy savings to the level of the global agenda, linking them with ecology, social challenges, and international competition. The ESG (Environment, Social, Government) agenda has forced enterprises to include energy efficiency and related greenhouse gas emissions into their "general" KPIs. Energy efficiency has ceased to be an exclusive issue of reducing production costs and has reached the level of corporate strategy, company mission, and has become a significant factor in market value and the sustainability of the entire business.
With such inputs, energy efficiency could no longer be something situational, based solely on experience and, to a large extent, the desire of technologists to improve it. It is clear that the need has arisen for regular activities aimed at purposefully managing the continuous optimization of the consumption of various types of energy and other resources that, in one way or another, influence ESG indicators. Moreover, due to the global nature of the ESG agenda and the market’s need for uniform rules for evaluating companies' achievements in this area, such activities should also be largely identical, pursue the same goals, and use similar management tools.
The emergence of the ISO 50 001 standard in these circumstances was inevitable!
This article will not delve into the description and interpretation of its provisions, especially since the standard itself is easy to read and quite understandable. From the numerous recommendations of the standard, we will try to isolate the key business process of energy efficiency management and talk about the pitfalls that, in our experience, will most likely be encountered when creating an energy efficiency management system at any Russian (and not only) enterprise.
So, what should the energy efficiency management business process look like?
The standard describes it strictly within the concept of the Deming PDCA cycle (Plan, Do, Check, Act), but we will allow ourselves to start not with planning but with accounting. Here is a description of the business process around which all our considerations and thoughts will be presented, both in this article and in subsequent ones. So:
- Accounting for consumption and distribution of its readings down to the level of energy-consuming equipment units and stages of the technological process.
- Forecasting and analysis of consumption and identification of anomalies — unplanned increases or decreases in consumption now and for the projected period ahead.
- Factor analysis of anomaly causes — detailed analysis taking into account production indicators, operating modes and technical condition of equipment, environmental factors and external conditions.
- Calculation of energy efficiency potential — benchmark consumption for each equipment unit under current conditions.
- Selection of a measure that can eliminate the cause of the anomaly and bring energy consumption indicators closer to the benchmark potential.
- Planning energy consumption indicators for the next planning period, taking into account the production business plan and target (planned to be achieved) energy efficiency indicators.
- Formation of an energy efficiency improvement program — a schedule of measures whose implementation will allow achieving target energy efficiency indicators with a positive economic effect.
- Implementation and accounting for measures, accounting and analysis of the actual effects from them, adjustment of the regulatory and methodological basis of energy efficiency.
In our presentation of the stages, there are 8 instead of 4, but this is just a clarification of what actually should happen in the Deming cycle in the context of energy efficiency management.
How can this process be implemented in practice and what will you have to face?
1. Accounting! As a rule, enterprises have implemented what is called commercial accounting for purchased energy carriers — electricity, heat, etc. The level of such accounting is usually quite high, not going down to the details of energy consumption for specific units and aggregates. However, technical accounting, which ideally should provide the necessary detail, is usually fragmented, does not cover the entire fleet of "energy-intensive" equipment, and the data available may raise questions about the quality and timeliness of the collected data. In our experience, the problem of coverage completeness and quality of energy resource consumption technical accounting exists at all enterprises.
Since all the other steps of the business process will be, to put it mildly, ineffective without detailed low-level technical accounting of energy resource consumption, it is possible and necessary to set the following task for the accounting process: the accounting system should not only collect all available data from meters and sensors of SCADA systems and similar, but also:
- Distribute aggregated consumption indicators to levels down, right down to specific units of energy-consuming equipment.
- Identify erroneous and/or missing readings, complete them according to certain rules, implementing the function of a "virtual meter."
- Summarize the consumption picture at all levels into a single balance, calculate losses and imbalances.
If such accounting is established, it will provide a correct picture of energy resource consumption for all elements of the technological process, equipment units, and subdivisions. With the necessary quality and periodicity over time. After that, you can proceed with greater confidence to the next steps of the business process.
2. Forecasting and analysis of consumption and identification of anomalies. Here, a false sense of simplicity may arise. The task may not be solved by simply comparing the current consumption figure with some other — the past period, planned, normative, or benchmark. The question here may even be — what, actually, to compare with what? Simply an increase in consumption can be associated with completely objective circumstances — an increase in production, seasonality, equipment repairs, a change of contractors, etc. In addition, it is necessary not only to see a current figure and its difference from some comparison basis, but to see a trend — will everything continue to worsen, or are there factors suggesting that this is a one-time moment that does not require a thorough response. That is, forecasting is needed, and this is a non-trivial task in any field!
In our practice, the basis for analysis and forecasting in most cases has been the specific energy consumption per unit of output. This is an obvious and good indicator, with which it is clear how to work, but unfortunately, it is not always applicable. In a number of technological processes, especially auxiliary ones, it is not possible to directly link energy consumption to the unit of output. In this case, consumption itself remains the analyzed indicator, but more complex approaches are used to analyze it than simply comparing it to standards. Here, when analyzing, various indirect indicators can be taken into account, the composition of which depends on the essence of the technological process and can be quite unique from enterprise to enterprise.
The task of forecasting the energy efficiency indicator can also be specific to the enterprise. To begin with, you can go the way of simple linear prediction models, building a forecast based on averaging the indicator values over past periods. To improve the accuracy of the forecast, such a model can be gradually complicated by taking into account various external and technological factors — weather conditions, planned changes in operating modes and equipment specifications, planned changes in the nomenclature, quality, and quantity of output, etc. For subsequent generations of energy efficiency management systems, it is possible to move on to forecasting methods based on the use of machine learning and neural networks.
3. Factor Analysis of Anomaly Causes. Once you have a clear understanding of what constitutes an anomaly, you can and should move on to analyzing its causes. Here, we enter the realm of very specific methods of such analysis, based on a technical understanding of the specific stage of the technological process. Both the set of factors and the methods for their determination are entirely dictated by the physics and chemistry of the analyzed technological process. If you are analyzing the electricity consumption of a pumping unit, you cannot do without analyzing the technical condition and efficiency of the unit, its head characteristics, the chemical and physical composition of the pumped fluid, operating conditions, etc. In other cases, completely different factors will work, but the task of Factor Analysis is not only to identify the causes of anomalies at the grassroots level but also to combine all such causes into a comprehensive picture across the entire organizational and technical structure of the enterprise. This is necessary for a more effective organization of the subsequent response program and elimination of the causes of anomalies.
In addition to technological analysis, regular audits of the energy system and an annual energy analysis can also be involved in identifying the causes of anomalies, the need for which is also indicated in the ISO 50 001 standard. Unlike formalized factor analysis, audits and energy analysis will allow the use of the intuitive experience of employees, which cannot be formalized at this time.
4. Calculation of Energy Efficiency Potential. This is a crucial step in energy efficiency management, as this is where we can define our potential for significant improvement. Knowing the total potential for benchmark energy resource consumption across the enterprise, and having the ability to show the "price of the question," we can set a long-term goal in this area, correctly determine the direction, and justify investments in energy efficiency. However, this will require understanding the methods for calculating the potential. Here, as with factor analysis, the methods for calculating potential are also very specific to the analyzed technological process. But the good news is that, having figured out the anomaly factors, we have laid much of the groundwork for potential calculations! Moreover, if the specifics of the process are too complex to formalize, we can always implement the simplest method of determining the benchmark using benchmarking.
In our experience, this stage of the energy efficiency management business process may not be mandatory for implementation from the very start of system creation. You can wait with this until the main stages have been implemented. But an ideal energy efficiency management system cannot be considered such without addressing this task.
5. Measure Selection. This is a paramount task, without organizing a solution for which nothing will work! It is the implemented measures that will provide the desired effect in the form of reduced energy consumption. All other stages support this! Their tasks are to provide everything necessary for the competent and efficient selection of measures.
Energy efficiency improvement measures can be of several types:
- Technical measures — impact on "hardware." Replacement, modernization, maintenance, and repair are the essence of measures of this type. Their effect is a fundamental change in energy consumption indicators due to changes in the design and specifications of equipment.
- Operational measures — impact on operating methods. Changing operating modes, protecting equipment from external influences, optimizing the operating schedule with energy efficiency in mind. Their effect is to squeeze everything possible out of existing equipment.
- Organizational measures — impact on operating personnel. To teach, explain, motivate, and/or compel. The least obvious, but often the most effective impact.
The need to implement any measure should be justified by the identified problem and/or the possibility of approaching the benchmark potential, and should lead to a tangible effect in the form of reduced energy resource consumption (and/or greenhouse gas emissions). In this sense, any measure should be a separate micro-investment project, with an expenditure and revenue side, a calculation of effects and ROI. The method of calculating the effect is a non-trivial task, the solution of which is related to understanding how the technical changes being made affect energy efficiency.
The variety of measures is not infinite. Their diversity is related to the variety of equipment used and technological processes implemented. It makes sense to talk about creating a Knowledge Base on typical measures, especially since the Standard also recommends that we do this. Thus, the implementation of this part of the energy efficiency management business process should be linked to the creation of such a Base. An instance of such a Base should be a measure template with a specified impact technology, cost and effect item structure, and algorithms for calculating effects and ROI. This will also allow the creation of something like an expert system in which the transition from the identified cause of anomalies to the necessary measure will be unambiguous and automated.
6. Planning of Energy Consumption Indicators. Ideally, any Deming cycle should start with this task, but we deliberately placed it only in the 6th position, because a full-fledged plan should take into account the results of all previous steps. The plan is what we want to achieve in the next planning period. Obviously, for such a plan to have any relation to reality, it is necessary to take into account the forecast of the dynamics of energy efficiency indicators if nothing is done, the measures that we want to implement to correct the identified causes of anomalies, and our potential for improvement — the energy efficiency potential.
The planning methodology should take all of this into account! That is, for example, when determining the electricity consumption figure for a particular unit, we should know how it consumed before, how it will consume further with the given characteristics of its use in the planning period, whether we have seen any anomalies in past consumption, whether we know their causes, whether we know the way (measure) to eliminate them, whether we know what such a measure will allow us to save, whether we expect the manifestation of any other factors influencing energy efficiency in the future? Combining all of this together, we will get the desired figure, which we will use as a benchmark for the next period.
7. Formation of the Energy Efficiency Improvement Program. This stage is important, but not as interesting and specific as the previous ones. It is essentially a stage of fixing responsibilities for implementing the set of measures included in the Program. It is clear that this stage should be filled with all sorts of diagrams and reports that will allow managers at all levels to finally decide on priorities, goals, and methods for monitoring the achievement of results.
8. Implementation and Accounting for Measures. This stage may seem like a routine step — done/reported/checked; however, in reality, it is not that simple either. The main difficulty is determining the actual effect of implementing the measure! If the measure is planned based on a template (typical) measure, then the template has already defined the algorithm for calculation, including the actual effect, as well as the initial data necessary for such calculation. In our opinion, the ideal organization of accounting for the actual effect received from the measure should look like this:
- The responsible employee reports on the implementation of the measure.
- On a regular basis (once a day will be quite enough!), the data needed to calculate the effects is collected (through a person or in the relevant information system).
- The algorithm for calculating the actual effects is processed on this data. Sometimes this algorithm is simply a comparison of the obtained consumption figure with the planned one, sometimes it is a complex calculation taking into account modes, production indicators, etc.
- The daily effect calculated in this way participates in the analysis of results and the assessment of how much the implemented measure helped achieve the goals set for it.
At this stage, it is important not only to "record the profit/losses" but also to conduct a full analysis of what we wanted and what we got. If we see something in common between the failed measures, then our task is to figure it out. We will most likely need to adjust our understanding of the essence of the measure and the method of calculating the effects from it, and make the necessary changes to the Knowledge Base of typical measures. This will allow us to create not just an Energy Efficiency Management System, but also to lay in it elements of self-improvement!
Thank you for your attention! We have planned to publish several more articles on this topic, in which we will try to delve more deeply into the essence of the tasks solved at each stage of the business process described here. We are waiting for you!