Blueprint for Energy Cost Control

Despite the importance of planning in facility operations, too many facility executives abandon it when managing energy use. Instead, they undertake a series of uncoordinated activities that typically include equipment upgrades, system replacements and energy services contracting. In some cases, specific steps may even prove to be counterproductive. Too often, these measures simply mirror what other facility executives are doing without considering the needs of a particular facility. Implementing one “energy project of the month” after another may reduce the use of energy, but it isn’t energy management.While energy conservation measures implemented without an overall plan reduce energy use and costs, they do so with an unequal impact. Since energy conservation budgets are not unlimited, facility executives need to implement those that produce the most favorable returns in terms of energy and cost savings for a given investment in a given facility.Another problem with not having an energy management plan is missed opportunities. One of the key elements in an energy management plan is the identification of when, where and how much energy is used in the facility. Successful programs identify big energy users and focus efforts on them. Without that step, facility executives can’t know what measures will produce the best results.Lack of an energy conservation plan also leads to uncoordinated – and often counterproductive – efforts. For example, installing high efficiency central chillers will improve the overall efficiency of the chiller plant, but under electricity deregulation, the installation of an alternative drive chiller, such as an absorption chiller or engine-driven centrifugal chiller, might reduce costs even more. Or upgrading to T8 lamps and electronic ballasts without first considering the lighting needs of the space may result in inefficiencies due to the overlighting of some areas.Finally, lack of an energy conservation plan places the facility in a position where it must react to rather than anticipate marketplace changes in the supply and cost of energy. For example, deregulation is giving facilities the incentive to flatten electrical loads. Facility executives who have developed an energy management plan already know how their electrical loads vary with the time of day and the season of the year, so they are able to take steps to reduce load peaks.Once the loads have been reduced, facility executives can further reduce their electrical load during periods of high rates by, for example, installing engine-driven chillers or gas-fired absorption chillers. Without an energy conservation plan already in place, facility executives would have little time to react to the changes introduced by deregulation.
A facility’s energy management plan is a road map to efficiency. The plan identifies where the facility is currently in terms of energy efficiency, where the facility needs to be and how it is going to get there. To make the plan successful, it must include all three elements. Skipping one or more may save time, but it will not allow a facility executive to manage energy use.The energy management plan also should be flexible and able to respond quickly to changes in the marketplace. As facility executives have seen over the past year, the energy industry is volatile, with electricity price spikes, heating oil shortages and price instability.Finding Out Where You AreBefore a plan can be developed to manage energy use, the facility executive must understand how energy is used in a facility. What types of energy sources are used? How much does the facility use? When does the use take place? Where is the energy used? Why?Understanding energy use in the facility is the first step in developing an energy management plan, but this alone does not tell facility executives where they are. A facility might be highly energy efficient, or it might be an energy hog. Without a base of comparison, the facility executive will not know where a facility stands or how much opportunity exists for improvement.One method that can be used to help develop that understanding is benchmarking. Benchmarking compares the energy use in a given facility to the energy use of other similar facilities. Facilities can be benchmarked against published building energy use data. One source for published energy use data is the U.S. Department of Energy’s Commercial Buildings Energy Consumption and Expenditures. Listing energy use on a Btu per square foot basis for a wide range of facilities in different climates, the published data can be used to show where a particular facility stands in terms of energy efficiency relative to other similar facilities.For office buildings and K-12 school facilities, EPA’s Energy Star Label for Buildings program has developed an online energy benchmarking tool. The tool takes into account differences in factors like location and hours of operation and ranks a building on a scale of 1 to 100 for energy efficiency.Another method of benchmarking is to compare energy use in a given facility to the measured energy use in other similar facilities, particularly if those facilities are considered to be among the best in a class when it comes to energy efficiency. One must be careful, though, to compare only facilities that are truly similar. Differences in how the facility is used, the hours of operation and the energy-using systems will result in invalid comparisons.By determining the energy use pattern for the facility and comparing it to that of other similar facilities, facility executives can determine how energy efficient their operation is and how much room exists for improvement.Identifying OpportunitiesThe information gathered when identifying energy use patterns of the facility can be used to help identify energy conservation opportunities. Those patterns will show areas where energy use and costs are the highest and therefore offer the greatest potential for savings.In identifying opportunities for energy conservation, savings estimates must be developed for each item being considered. Those estimates can be used to determine the payback for the items, allowing comparisons to be made on the basis of savings produced and return on investment.Deregulation is generating additional opportunities for energy management and an even greater need for an energy management plan. Facility executives that have in place an energy management plan that takes into consideration the impact and requirements of electricity deregulation will be able to take advantage of the opportunities it creates. Those that don’t will end up paying higher rates for electricity – often higher than they were before deregulation.One of the key areas that must be addressed by the energy management plan under deregulation is real-time pricing. Under deregulation, electricity rates will vary by the hour based on a number of factors, including the total demand for electricity and what it costs the utility to meet that demand. As the demand increases, so will the cost of electricity. While the implementation details of how real-time pricing are still being worked out, real-time pricing’s impact on the cost of energy to facilities will be significant. Already, some users have found that the cost of electricity during periods of high demand has increased by a factor of between 25 and 100.Setting PrioritiesIdentifying opportunities tells a facility executive what can be done to reduce energy use but not which energy conservation activities should be completed first. Because the number of identified activities always exceeds the available funding, priorities will have to be established. There are several ways to establish priorities, including payback, load reduction factors and need.Payback is the most common method. Although many different variations of payback calculations have been used to evaluate energy projects, all look at the expense of implementing the project and the savings that will be produced. Those that offer the highest rate of return are typically selected first for implementation.Sometimes, producing the quickest payback is not the best way to go. In general, the greatest potential for energy savings in facilities lies in that facility’s major energy-using systems: the chillers, cooling towers, boilers and lights. If large savings are needed in a short period of time, then the big systems are the ones to start with. Because of their high energy use, even relatively small improvements in operating efficiency can result in large savings. However, if the goal of the energy conservation program is to achieve the highest energy efficiency possible, then it is best to start by minimizing building loads at their source first.Addressing building cooling loads at their source reduces the load on central equipment, such as building chillers. When it comes time to upgrade those central chillers, smaller units can be installed. Those smaller chillers will be more closely matched to the actual building cooling loads than if the chillers had been replaced before loads were reduced. Matching chiller capacity to actual cooling loads allows chillers to operate more efficiently, saving energy.There are times when a project’s payback is secondary to the need to reduce energy use. When a facility is facing a shortage or a curtailment, payback is not as important as achieving a reduction in use. For example, the past two summers have seen high demand for electricity in some regions of the country, demand so high that utilities have ordered cuts in electricity use in order to prevent possible widespread power outages. Faced with the alternative of reducing use or losing electrical service, facilities have taken steps to curtail their demand. These steps can be implemented effectively only if they have been planned ahead of time. When the utility is on the phone demanding a 5 or 10 percent reduction in electrical demand, it is too late to begin looking for electrical loads that can be reduced.The energy management plan should include items that can be implemented in short order. These items may cause some level of disruption in operations, and they may not be fully cost effective, but in situations where significant load reductions must be rapidly achieved, they may be the only alternative to loss of service or severe economic penalties.Most facilities have the potential to reduce energy use between 25 and 50 percent through upgrades to existing energy-using systems, changes in the way existing systems are operated and improvements in maintenance practices. Some measures will require significant investments in new equipment. Others will require simple operational changes and attention to details. But the programs that will be most effective are those that examine all options and carefully lay out a plan for managing energy use.