Identifying Opportunities for Energy Savings

Energy is used in many ways, from heating to cooling to power and motion. Opportunities to lower energy use are available in all of these areas. The challenge is to identify the best areas for reducing energy consumption by balancing opportunities with their costs. It’s possible to find a positive net present value (NPV) for many different upgrades.

Energy Audits

For many building owners and managers, an energy audit is a worthwhile first step. Often there are some glaring opportunities that easily apparent. Old technologies that use lots of energy are an example. Energy audits can provide a list of items where deficiencies exist, which can be prioritized and addressed by order of value.

Technical Fixes

The low-hanging fruit for energy reduction efforts is through the application of technical fixes. In new-builds as well as in retrofit situations, older technologies are being supplanted by new. Many leading industrial companies such as 3M, GM, and Volvo Group have made great efforts to reduce their use of energy in their processes. For example, Volvo Group announced in May 2018 that they have successfully reduced their energy consumption by 25% at their US facilities! As a company in an energy-intensive business, Volvo Group’s savings is impressive, and impactful. Reducing costs, lowering environmental impacts, and increasing competitiveness and investor returns are all resulting benefits.

Technical fixes are also available for other large energy users such as multifamily buildings, hospitals, and hotels. Larger organizations may have in-house expertise, or work with management companies that dedicate staff to energy reduction efforts. Smaller and medium size organizations in these business areas also stand to benefit from significant cost savings, and a corresponding increase in profitability.

Operational Fixes

As noted in the article at the Volvo link (above), that company is going beyond technical fixes: “As we shift from technical changes — which tend to have a large one-time impact — to operational and behavioral changes that are more people-driven” the company’s objectives are to continue to reduce energy consumption.

Companies like Volvo Group are showing great leadership in their commitment to, and success in reducing energy consumption. The behavioral and operational changes are a frontier that is ahead for everyone, though for the time being, for most, it is the technical changes which will bear the quickest payback.

March 5, 2017September 3, 2020

Building Energy: Evaluate, Plan, and Act

An evaluation of energy use, energy assets and systems is a worthwhile undertaking for any large user of energy. Whatever the end use of the energy in question, a thorough evaluation provides a foundation or baseline for any planning and action that takes place after. Although the focus of this post is on building energy, the takeaway is equally valid for energy used to support industrial processes.

The goal of an energy evaluation is have enough information to create a strategy that upon implementation leads to lower costs and equal or better reliability. To find the best course of action for reducing energy costs and increasing reliability, an organization should make that evaluation comprehensive. To be comprehensive, think broad and deep. It should cover all aspects of power and heat consumption, including historical and anticipated consumption data, energy pricing, equipment condition, maintenance requirements, reliability, location, and so on.

How to Begin

Choose an Evaluation Plan

It may not be clear at first, but a decision will need to be made about whether the plan will include outside help. An internal team may be sufficient for when the broad set of energy assets are still in good operating condition, and if energy costs are satisfactory and a relatively small part of the budget. On the other hand, when energy costs are significant, and/or assets are unreliable, and causing extra maintenance or risk of failure, it’s probably worthwhile to bring in an external team. The external team adds some costs, but also brings expertise, and leaves the home team with the time to focus on their jobs.

In any case, an evaluation will start by evaluating energy assets as deployed at present. Look at the condition of those assets and factor in the amount of maintenance that’s required to keep them in working order. Connect those energy assets in the evaluation with energy consumption and pricing data.

Also consider your building’s energy needs at present, and anticipate what they will be in the future. Consider the expected remaining life expectancy of the equipment. Prioritize which needs are most urgent, and which ones are not.

Power Review

Have a professional evaluate your power consumption and the price you’re paying for it. Are there demand charges? At what point do they kick in? Are there other energy providers worth looking at?

Cooling & Refrigeration

How does cooling factor in? Is cooling something that’s used year round, or just at certain times of year? If cooling is a significant expense, a cooling demand estimate should be calculated. Chart it over time. Does cooling cause a spike in demand? Is that spike in demand causing expensive demand charges?

How does refrigeration factor in, if at all? If it does, an evaluation of refrigeration assets is probably worthwhile.

Heat Review

Review the demand and uses of heat. Space heating is typically seasonal. A heat loss calculation can be made to estimate demand for space heat over time.

Process heating is usually more consistent over time rather than tied to the heating season. Still, process heating demand may ebb and flow based on time of day, or with some periods peaking, and others where it’s non-existent. The more you know, the more useful the evaluation will be.

When you have all this information and data together, you can then make a judgement on the best course of action.

Nonlinear Effects of Efficiency Upgrades on Energy Use and Cost Savings

Care must be taken to factor in the nonlinear effects of asset upgrades. That is, when selecting efficiency upgrades, the energy reduction will count for more than the amount of efficiency increase. The cost savings will be greater. The following chart illustrates this using the examples of two sets of pumps; Pump #1 and Pump #2.

The example shows the nonlinear effects of an efficiency upgrade. Two choices are available in this example: an efficiency upgrade for two types of pumps, and the effects of an efficiency upgrade on each. With a much bigger drop in energy use connected with the efficiency upgrade of Pump #1, the example shows that cost savings are 3 times higher. This can seem to be surprising because the efficiency of the upgraded Pump #1 is still lower than the efficiency of Pump #2, even before an upgrade. To summarize this example, the graphic shows that the best upgrade, when faced with an either/or choice, is the one that decreases energy use the most, even though the increase in efficiency is much smaller.

A good example of this effect is the large but short-lived cash4clunkers program described below.

Taking Action on Findings

Your completed energy use evaluation should include a set of next step recommendations. The recommendations should be weighted with regard to level of urgency, amount of expected costs savings, and expected increase in energy security, if any. Those recommendations should be actionable in some way. The recommendation could be direct, such as recommending an investment in CHP. Or the recommendation may be to look more deeply into the calculus of an issue before significant capital is deployed or obligations are entered into.

Decisions will have to be made on how best to actuate changes. An internal team may be sufficient to manage the process if the fixes are simple. Alternatively, hiring an outside team will bring expertise to the process, and allow internal resources to be deployed in other ways.

Keeping Evaluations Up-to-date

If you’re a very large energy user, the energy evaluation should be templated and updated yearly. For moderate consumers of energy, the original evaluation should be updated with new data every few years at least.

Paying for Energy Upgrades

Investments can be made in a standard way; out of free capital, a lease, or with loans. As a further option, the equipment and installation can be obtained through an energy service agreement (ESA). With an ESA, there is no capital or lease required. You purchase power and heat from the 3rd party investor but you don’t own the assets at the start. Once the equipment is fully depreciated, you take full ownership.

Contact CIMI Energy for more information.

The Federal government’s “Cash for Clunkers” program from 1999 was a prominent example of this effect. The program was one where “clunkers”, low-efficiency cars and trucks were permanently scrapped and replaced by cars with significantly higher efficiency. Although the primary purpose of the program was billed as a stimulant for the economy, the government also recognized that a relatively small pool of older automobiles was providing CO2 emissions far beyond their numbers. A lot of money was already being spent on increasing automobile efficiency, but those marginal gains were outweighed by the smaller numbers of old gas guzzlers people were driving around. An incentive was set up pay people to scrap their “clunkers” and buy a new automobile with higher gas mileage. The program was controversial as it was mainly judged on the cost vs benefit of the economic effects, where the economic returns from higher new car sales were judged to be less than the $3 billion spent on the program. Nevertheless, the program undoubtedly had an outsized effect on reducing auto emissions nationwide.