A recent column (“Beware of Energy Efficiency Lifecycles,” August 2022) cautioned how the priority given to energy efficiency can fluctuate rapidly in many companies. In this column, we return to the same basic issue, but from a different perspective: quantifying the value of an energy efficiency program. Once again, I draw on the insights and experiences of my neighbor and coauthor Beth Jones.
In many chemical plants and oil refineries, energy costs are second only to raw material costs. Entire departments are devoted to optimizing raw material choices and product slates, using planning models, supply strategies and online optimization. Apart from buying energy at the lowest possible cost, and lowering the carbon footprint of energy sources, most companies consider energy to be an inevitable cost of doing business. However, energy use is not just a concern for the utilities department, and you, as an energy manager, must separate the cost of doing business from the cost of doing business well. Focusing on energy leads to other benefits, such as a lower environmental impact and a cultural change toward reducing waste, but the priority and scope of any energy management program must be determined by its economic value. How do we assess this?
At a corporate level, we need to start by determining the company’s energy use and energy cost, beginning with large sections of the organization and drilling down as far as is practical. Use the data available and already understood by the organization. Energy information can come from site utility bills, internal cost accounting, and/or the utilities procurement group. Often, the search for data is as enlightening as the actual results. Was the information easy or difficult to collect? What does it tell you about each site? Are total company or division costs combined and analyzed already?
It is highly instructive to draw an energy balance diagram, with a box representing each unit, site or division, and lines entering or leaving to show energy consumed or produced, based on the detail available. Include all external sources of energy that cross the boundary, such as purchased electric power, fuel gas, solid or liquid fuel, purchased steam, or whatever else is consumed within the box. If feed or product streams are burned or consumed to produce energy, include those as well. Collect the nameplate capacity of each unit and its average operating rate, too.
A site energy balance provides great insights into overall energy usage. The main outputs are:
Site energy use = fuel gas rate × heating value + electricity rate
Site energy cost = fuel gas rate × price + electricity rate × electricity price
Site specific energy use = (site energy use)/(average feed (or major product) rate)
Now that you have an initial fix on the site’s energy profile, you can proceed toward estimating the value of potential energy savings with a combination of data and engineering judgment. From industry publications or data searches, determine the benchmark specific energy use for the technologies in each site, and scale the specific energy to the nameplate capacity of each process. Subtract the benchmark use from the actual energy use for each process and add up the potential savings for the site. If no benchmark is available or the available data are not detailed enough to apply a benchmark, choose a reasonable percentage of current use. As a rough guide, if no energy improvement program has been active in the last 5–10 years, a 10% saving is reasonable. Even relatively new and efficient units generally have a bit of refinement available (1–2%) through active energy management.
Compare your estimate of potential savings to the current total energy bill.
Can you afford to focus some resources on energy? Can you afford not to?
(For more information, see: Alan P. Rossiter & Beth P. Jones, Energy Management and Efficiency for the Process Industries, Wiley-AIChE, 2015, pp. 3–24)