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Knowledge Based Energy & Environmental Services
The Total Energy
Management System
Shishir Athale
Companies have a large scope to reduce their energy costs. Global energy intensity
data indicate that Indian companies could reduce energy costs between 15% and
40%. Since energy costs often exceed the profit before tax of a company, such
reduction has a disproportionately high impact on a company’s profitability. The
Total Energy Management System, as its name suggests, is an organisation-wide
effort to reduce energy costs and sustain the profitability of an organisation.
30 March, 2015
Shishir Athale provides energy and environmental improvement services
on a guaranteed performance basis.
The Total Energy Management System
30 March, 2015
Document no: SUDNYA -SKA-PHO-01.01
Date of Publication 30 March, 2015
The Total Energy Management System
Shishir Athale
© 2014-2015 Shishir Athale
All rights reserved.
Published in India.
This document and the information contained within are subject to change without notice.
No part of this document may be reproduced in any form or by any means, including but
not exclusive to electronic, mechanical, photocopying, etc. without the prior written
permission of
Shishir Athale
All other company or product names mentioned herein are trademarks of their respective
owners.
Names used in examples and illustrations are fictitious unless specified otherwise.
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Shishir Athale
30 March, 2015
The Total Energy Management System
Contents
Contents ..................................................................................................................... 1
List of Figures ............................................................................................................. 1
List of Tables .............................................................................................................. 1
Introduction .......................................................................................................... 1
Is it possible to reduce energy costs? ..................................................................... 2
Barriers to Energy Efficiency .................................................................................. 6
Overcoming Barriers to Energy Efficiency ............................................................... 7
The Total Energy Management System .................................................................. 9
List of Figures
Figure 1: Energy Intensities - Global average, India and the OECD .......................... 2
Figure 2: Cost Trends in Selected Industries ........................................................... 5
Figure 3: Barriers to Energy Efficiency Improvement .............................................. 6
Figure 4: Your Bridge to Greener Pastures .............................................................. 7
Figure 5: The Total Energy Management System .................................................... 9
List of Tables
Table 1: Electrical energy usage reduction by Indian Companies Source: National
Awards on Energy Conservation – 2013, BEE, Government of India ........... 3
Table 2: Thermal energy usage reduction by Indian Companies Source: National
Awards on Energy Conservation – 2013, BEE, Government of India ........... 4
Shishir Athale
Page 1
30 March, 2015
The Total Energy Management System
Introduction
Energy generation and usage are major sources of green-house gas
emissions that lead to climate change. While there are many ways to
deal with climate change and the green-house gas effect, a very large
effort is being made to generate energy in a more benign manner, mainly
from renewable sources such as wind, solar, bio-mass or hydro-power.
Much less emphasis has been placed on reducing the use of energy,
though this is what energy using organisations can do directly and which
can have considerable impact on their profitability. This paper will
present data to show that Indian companies have a large scope to reduce
their energy usage, and because energy costs often exceed profits before
tax, reducing energy costs is a very good way to increase profitability of
the company. It will further describe the barriers to improving energy
efficiency and suggest the Total Energy Management System as an
effective method to reducing energy costs, and maintaining them at the
low level attained to ensure long-term profitability.
Shishir Athale
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The Total Energy Management System
30 March, 2015
Is it possible to reduce energy costs?
If energy is not used, then all emissions associated with it would be
avoided, hence reducing energy usage is a logical answer to reducing the
emissions of green-house gases. It is reasonable to question whether
this is possible, and if so, by how much. By comparing our national
energy intensity, i.e. the amount of energy that we, as a nation, use to
generate a unit of GDP with that of other countries, we obtain a first
order estimate of whether or not energy usage reduction is possible.
Energy intensity as defined here is expressed as kg of oil equivalent per
US$ of GDP. All forms of primary energy use are converted into an oil
equivalent, and the GDPs are expressed in US$ equivalent at constant
Purchasing Power Parity (as of 2005). For use in Figure 1 below the
global average energy intensity each year has been taken to be 100, and
all other energy intensities have been taken as ratios of that. The figure
shows that India’s energy intensity is about the World Average; the
energy intensity of the OECD, a group of 38 developed countries, is
about 75% of the world average, i.e. about 25% less than ours. A study
by the International Energy Agency and the OECD reported in 2009 that
the OECD could reduce its manufacturing energy use by 20 to 30% if
their companies adopted the Best Available Technologies, i.e. their energy
intensity could drop to about 50% of India’s current energy intensity. At
Figure 1: Energy Intensities - Global average, India and the OECD
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Shishir Athale
30 March, 2015
The Total Energy Management System
a national level therefore, we should be able to reduce our energy usage
by about 50% and yet maintain our level of economic activity!
Though this is true for the entire national economy, a question that
might be raised is whether such reductions are possible in our
companies. So what have individual companies achieved? The Bureau
of Energy Efficiency Energy conducts the National Energy Conservation
Awards Scheme every year. Data from some of the companies that
participated in 2013 is reproduced in Table 1 (Improvement in Electrical
Energy Usage) and in Table 2 (Improvement in Thermal Energy Usage)
below. The large reduction in energy usage by these companies is
remarkable.
From these examples we might fairly conclude that substantial energy
use reduction may be possible in our companies, especially if we have
not taken any significant action, or do not have a systematic programme
to do so. Understanding the barriers to energy efficiency improvement
might help us to design our programme better, so we will next turn our
attention to this.
Table 1: Electrical energy usage reduction by Indian Companies
Source: National Awards on Energy Conservation – 2013, BEE, Government of India
Ref
Company
Units
Electrical Energy
Before
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
Ashok Leyland Unit II, Hosur, TN
Sirpur Paper Mills Ltd,. Adilabad, AP - Water Usage
Durgapur Steel Plant, Durgapur, WB - Skelp Mill
Divisional Manager's Office, W R, Vadodara, GJ
Durgapur Steel Plant, Durgapur, WB - Coke Oven, Coal & Chemical
Rallis India Ltd, Dahej, Bharuch, GJ
Rallis India Ltd, Dahej, Bharuch, GJ
Bannari Amman Sugars Ltd Unit 4, Thandrampattu, Tiruvannamalai,
TN
Lady Jackson Main Hospital, Western Railway, Dahod, GJ
Jindal Stainless Ltd, Hissar, HR
Divisional Railway Hospital, Vadodara, GJ
Kalyanpur Cements, Banjari, Rohtas, BR
Jagadambe Polymers Pvt Ltd, Balasore, OR
Divisional Manager's Office, S C Railway, Vijayawada, AP
Ruchi Soya Industries Ltd, Indore, MP
Toyota Kirloskar Auto Parts Pvt Ltd, Bidadi, KN
Mahindra & Mahindra Ltd, Zaheerabad, Medak, AP
Rexam HTW Beverage Can India Ltd, Panvel, MH
Sirpur Paper Mills Ltd,. Adilabad, AP
Shishir Athale
After
D
kWh/ Eq Vehicle
m3/ t Paper
GCal/ TCS
kWh/ m2
GCal/ TCS
kWh/ t Metribuzin
kWh/ t Pendimethalin
2,709
108.7
0.0
31.1
1.6
6,530
2,329
642
63.9
0.0
19.2
1.1
4,400
1,605
76.3%
41.2%
39.8%
38.3%
33.5%
32.6%
31.1%
kWh/ t Cane
30.1
21.5
28.8%
MWh
kWh/ t
kWh/ m2
kWh/ t Cement
kWh/ t
kWh/ m2
kWh/ t
kWh/ Axles & Prop.
kWh/ Eq Vehicle
kWh/1000 cans
kWh/ t Paper
69.6
440
112
98
617
65
63
102
96
4.9
1,999
51.1
325
85
75
475
51
49
83
78
4.1
1,689
26.5%
26.1%
24.1%
23.1%
23.0%
21.4%
21.1%
18.9%
18.2%
17.6%
15.5%
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The Total Energy Management System
30 March, 2015
Table 2: Thermal energy usage reduction by Indian Companies
Source: National Awards on Energy Conservation – 2013, BEE, Government of India
Ref
Thermal Energy
Company
Before
1.
LG Electronics India Pvt Ltd, Greater NOIDA, UP
2.
Sirpur Paper Mills Ltd,. Adilabad, AP
3.
Rallis India Ltd, Dahej, Bharuch, GJ
4.
Mahindra & Mahindra Ltd, Zaheerabad, Medak, AP
5.
7.
Ruchi Soya Industries Ltd, Indore, MP
Bannari Amman Sugars Ltd Unit 4, Thandrampattu, Tiruvannamalai,
TN
Kothari Sugars and Chemicals Ltd, Sathamangalam, Ariyalur, TN
8.
Vedanta Aluminium Ltd, Smelter Plant 1, Jharsuguda
9.
Jindal Stainless Ltd, Hissar, HR
6.
10.
Star Paper Mills Ltd, Saharanpur, UP
11.
APM Industries Ltd, (Orient Syntex), Bhiwadi, Alwar RJ
12.
Rallis India Ltd, Dahej, Bharuch, GJ
13.
IOL Chemicals & Pharmaceuticals Ltd, Barnala, PB
MCal/ no.
After
D
93
56
40.0%
kCal/ t Paper
MCal/ t
Pendimethalin
kCal/ Eq Vehicle
11.8
7.4
37.0%
221
146
33.9%
414
290
30.0%
kCal/ t
388
284
26.7%
Steam % Cane
49.2
37.4
23.9%
kCal/ t
3.69
2.83
23.3%
MCal/ t
433
346
20.0%
MCal/ t
0.19
0.16
15.8%
kCal/ t Paper
4.21
3.59
14.7%
t Coal/ t
0.151
0.132
12.7%
MCal/ t Metribuzin
534
466
12.6%
MCal/ t
9.0
7.9
12.5%
Figure 2 below shows the cost trends in some selected industries. The
graphs show the sum of the accounting head for several companies
(selected at random) in the industry i.e. the thick red line which
represents energy costs is the sum of the energy costs of all selected
companies in the industry, and the thick blue line which represents the
PBT is the sum of the profits before tax of all selected companies in that
industry. In most cases it would be seen that the energy cost (thick red
line) and the profit before tax (PBT, the thick blue line) are inversely
related, i.e. when energy costs increase the PBT decreases, and vice
versa. In most cases the energy cost is greater than the PBT, thus a 1%
decrease in energy costs would result in a greater than 1% increase in
PBT!
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Shishir Athale
30 March, 2015
The Total Energy Management System
Figure 2: Cost Trends in Selected Industries
Shishir Athale
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The Total Energy Management System
30 March, 2015
Figure 3: Barriers to Energy Efficiency Improvement
Barriers to Energy Efficiency
Because there are many barriers to energy efficiency improvement there
is little progress in this front (except in the most determined
organisations), even though there is considerable awareness about the
need to save energy. Some of the barriers are shown in Figure 3 above.
Notice that it does not show technology and availability of finance as
major barriers, as we believe that there is considerable technical
information available from a large number of sources if only it is sought.
If the projects are developed well, availability of finance should not be an
obstacle, unless of course the financial health of the organisation is poor.
Even in such cases lenders might consider reducing energy costs as a
means of improving the financial health of the company and thus a
means of reducing the risk of the other loans made to the company.
When management looks across from where the organisation is presently
to the greener pastures of a more energy efficient world, a wide gap
caused by deficiencies in technology, management and policies is seen.
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Shishir Athale
30 March, 2015
The Total Energy Management System
The Policy Gap
The Management Gap
The Technology Gap
Figure 4: Your Bridge to Greener Pastures
Overcoming Barriers to Energy Efficiency
A management that is determined to reduce its energy costs can take
suitable action to lower the barriers to energy efficiency improvement.
Leadership by top management is necessary at all stages (as for most
initiatives that a company takes). This cannot be avoided! However,
once a decision is taken by the top management, the rest of the path is
easier. Comprehensive action in all areas is essential. Emphasizing only
the technical work and neglecting the managerial and organisational
measures may not yield the benefits that might be obtained through a
comprehensive programme to reduce energy costs.
The first need is to organise for energy efficiency. Adequate staff with
sufficient authority clear responsibilities must be made available for the
programme to reduce energy costs. Next, measures must be taken to
gain control on the use of energy. This usually means adequate metering
of energy use and production in each major area that uses energy.
Important relationships must then be extracted from the data gathered
and suitable reporting and communication systems must be installed.
Shishir Athale
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The Total Energy Management System
30 March, 2015
All this work requires people who are trained not just technically but also
in the management of energy. Often energy is believed to be a technical
issue and personnel in non-engineering functions are not enlightened
about how their functions affect energy use. Such imbalances detract
from efficient energy management. Employees from human relations,
procurement, finance as well as marketing may be able to contribute to
the programme and must be suitably trained and brought in to
participate in the effort.
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Shishir Athale
30 March, 2015
The Total Energy Management System
The Total Energy Management System
The Total Energy Management System is designed to include all elements
of the organisation in the programme to reduce energy usage and costs.
Figure 5 below shows the essential elements of the Total Energy
Management System. Embedded in the figure though not seen is the
idea that good evaluation of projects is necessary that includes all costs
and all benefits. This is an area where the manufacturing and finance
teams need to work closely together. The procurement group can also
help the project team in mitigating project risks through the use of
suitable contracting mechanisms.
Well-designed information systems keep track of savings and actual
performance of each measure taken. If a measure performs poorly for
any reason, this slippage is noticed and can be rectified soon to ensure
that savings are sustained, i.e. profits are maintained! We would be
happy to help you install a Total Energy Management System.
Figure 5: The Total Energy Management System
Shishir Athale
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The Total Energy Management System
For more information please contact:
Shishir Athale,
5 Raj Apartments,
28 Pushpak Park, Aundh,
Pune MH 411 007
India
Tel: +91 20 3590 1304
+91 98 22 40 72 14
e-mail: shishir@sudnya.com
URL: www.sudnya.com
30 March, 2015