Evaluate Energy-Related Utilities

April 14, 2015
Use a systems approach to calculate the impact cost of every utility stream.

For all of us who work in the process and manufacturing industries, focus has always been on production. Utilities almost always get a back seat. We consider a utility to be something where you open a tap and it flows! Nevertheless, this mentality is changing and several sites now follow the cost center approach for energy accounting. While energy accounting is important and should be done by everyone, I continue to do energy assessments at sites where utilities are considered a “cost of doing business” and these costs are not properly determined.


The most common utility streams are compressed air, steam, chilled water (and/or glycol), hot water, thermal fluid, plant water and nitrogen. A plant produces (or procures) these utilities and distributes them individually through a complex network of piping throughout the site. Generally, flowmeters located on the headers at transfer points provide proper accounting for these utility streams. It’s extremely important to install flowmeters and calibrate them periodically. These devices are our counters and determine utility consumption by different cost centers. Understanding the usage of different utility streams can significantly enhance an engineer’s ability to optimize operations and understand operating costs and, thus, often can identify substantial energy-saving opportunities.

Every energy assessment should target the energy-related utility streams and define the impact (or marginal) cost of each stream. An energy engineer should be able to determine the impact cost of every utility stream at the point of use and develop a key performance index (KPI) for that system. For compressed air systems, you can define its KPI as $/cfm. Steam, on the other hand, often is distributed at different pressure levels and a KPI for each pressure level should be calculated as $/1,000 lb. You can calculate KPIs for chilled water (and/or glycol), hot water, thermal fluids and pumped plant water as $/kgal. Think of impact cost as the true savings possible by reducing the consumption of that utility stream.

You should calculate the impact cost KPI using a systems approach; this almost always will require some level of data analysis and modeling. Plant engineers can calculate these impact costs using one of the following methodologies:

1. Simple spreadsheet level analysis
2. System-level energy assessment software tools such as those available from the U.S. Department of Energy (www.energy.gov/eere/amo/software-tools)
3. High-fidelity dynamic system models that represent real-time process or plant data.

Once KPIs are calculated, the energy engineer should trend the impact costs over time, factoring in different production rates, seasonalities, etc. This will provide a significant understanding of the true impact that energy-savings projects can have when implemented. Let me share a couple of examples to illustrate the importance of calculating impact costs.

1. A ¼-in. compressed air leak can cost a plant almost $8,500 annually. The leakage rate can be calculated from the orifice (or choked flow) equations, but if we didn’t have the impact cost, it would be very difficult, if not impossible, to get an estimate on the annual cost of that leak.

2. A ¼-in. steam leak from a 150-psig header can release 250 lb/hr of steam. Knowing the steam impact cost at $8/1,000 lb provides us with the ability to estimate that the steam leak costs $17,000 annually.

So, whether it be simple improvements, such as fixing leaks or large projects, plant and energy engineers should calculate the impact cost of the energy-related utility streams and trend them. Accounting for the energy, and creating a strong awareness of the impact costs with KPIs, will create a responsible environment at the plant. In one of my energy assessments at a large petrochemical plant, I found myself looking at colored tags (red, yellow and green) in different places. My plant contact told me they represented a color-coded dollar-value-equivalent energy savings for a possible repair/modification project — be it a leak, failed trap, insulation, etc. The red tag meant annual energy savings of $15,000 or more; yellow, between $5,000–$15,000; and green, less than $5,000.

I hope all of you are applying some similar kind of methodology or will do so in the future, and set up a priority list to rid the plant of all its red tags, then yellows, and finally, the greens!

Riyaz Papar, PE, CEM, is director, Global Energy Services, at Hudson Technologies Company, Pearl River, N.Y. He has more than 20 years of experience in industrial energy systems and with best practices.  He also is a U.S. Department of Energy (DOE) Steam Best Practices senior instructor and a DOE steam energy expert. He has provided energy consulting services in 100+ industrial plants in the U.S. and internationally. You can email him at [email protected].

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