1. Energy Management
PPKSE 06/07 SAA

2. Introduction
Electrical energy management refers to the optimal utilization of every kWh consumes by the consumers and the minimization of the total electricity consumption.
The aims of energy management:
To optimize the present operations
To promote the wise and efficient utilization of electrical energy
To reduce the cost of electricity in industry or household.

3. Energy management involves:
Adopting a strategic corporate approach by gaining commitment within the company for a continuing effort to control energy use in the building.
Appointing an energy manager who will be responsible for overall coordination of the program.
Setting up an energy monitoring and reporting system, collecting and analyzing energy usage data.
Undertaking energy audit to determine where and how efficiently energy is used.
Preparing an energy management policy.
Implementing energy saving measures.
Implementing staff awareness and training program.
Regularly reporting the savings achieved. Feedback reinforces staff commitment and leads to successful energy management practices.

4. Electrical energy audit
The best way to determine the electricity consumption in a factory is by conducting an electrical energy audit.
The rationale behind conducting energy audits is:
To provide the information needed to establish or improve energy management program
To provide a baseline against which to compare the results of any management initiatives.

5. 3 levels of audit:
Level 1 audit (overview) – gather data to evaluate overall energy consumption of the site on annual basis.
Level 2 audit (energy use audit) – detailed site energy input and energy use.
Level 3 audit (analysis audit) – detailed metering down to half-hourly time interval. Detailed recommendation including costs, savings, financing option and investment analysis.

6. Cost benefit analysis 1. Simple payback method
Acceptable if inflation and interest rates are low and the period of payback is short.
SPB = cost of energy saving proposal / (annual saving – annual cost of saving)
Annual saving include energy and demand savings.
2. Discount cash flow and net present value
A present value analysis is where all future costs are converted into an equivalent present value.

7. Consider an investment with a present value (PV) at an annual interest rate, r (%). After n years, the future or terminal value is:
Alternatively, we can say that an amount of TV ringgit at the end of year n is worth only PV ringgit today:
Define:
Terminal value factor
Present value factor
Thus: PV = TV x PVF
TV= PV x TVF

8. To determine accurately the payback period, we need to use the cumulative present value (CPV) factor:
3. Net present value and discount cash flow with fuel escalation
The cost of fuel will be higher than it is today, so the annual amount of money saved by an efficiency measure could increase with time.
To account for that potential, it is handy to have a way to include a fuel price escalation factor in the present value analysis.

9. Escalation ratio, d:
r is discount rate (%)
a is escalation rate or inflation rate of fuel cost (%)
Net present cost of fuel is:
Where:
C1 is fuel cost in first unit of time (period 1)
n is number of year

10. There are 3 categories of cost in net present value analysis:
Recurring fuel cost –present annual fuel cost which include gas and electricity with escalation rate, a(%).
Recurring non-fuel cost – extra operational and maintenance for such system annually with escalation rate.
Non-recurring cost – other equipments and installation for the system.

11. Example 1 Domestic hot water system
Assess two options: a fully electric system and a solar system with electric boot. Determine which system is cheaper over a 20 year period. Interest rate is assumed to be 14.5%.
Recurring fuel costs: electricity costs are RM357 for the electric system and RM119 for the solar-assisted system in year 1. Nominal rise in electricity charges is 10%.
Recurring non-fuel costs: none
Non-recurring costs: tank for fully electric system costs RM465 and its installation a further RM290. The tank for solar-assisted system costs RM475, solar collector RM910, frost protection RM141 and installation a further RM520.

12. Solution example 1 1st step: Determine escalation ratio
Discount rate, r =14.5%
Escalation rate, a = 10%
Escalation ratio, d
2nd step: Calculate each type of cost for both options and finally the total costs
Option 1: Fully electric system
Non-recurring costs = = RM755
Recurring fuel cost

13. Total cost of option 1 = non-recurring cost + recurring fuel cost + recurring non-fuel cost
Total cost = = RM 5568
Option 2: Solar assisted system
Non-recurring costs =
= RM 2046
Recurring fuel cost =
Total cost of option 2 = = RM 3650

14. Electrical energy tariff
Billing period: time interval to which energy bill refers.
Commodity charge: charge made by utility based only on the amount of energy supplied.
Demand charge: charge made by utility based on peak demand power in a given month, usually averaged over 15-minute period, no matter what time of day it occurs.
Block tariff: a tariff in which commodity and/or demand is divided into discrete blocks. The unit costs in each block are constant but different blocks may be charged at different rates. Normally, the initial block is charged at the highest rate, with subsequent blocks charged at decreasing rates.

15. Demand tariff: a tariff in which the size of certain kWh blocks is determined by peak demand. This rate allows smaller energy consumers to take advantage of the lower kWh charge when their energy usage is high.
Time-of-use (TOU) tariff: a tariff that incorporates different charges for commodity supplied (and rate of supply) at different times, such as during peak periods, off-peak periods or weekends.
Most rates (tariffs) include a charge for power factor either:
By assuming a power factor in kW charge
By charging for kVA
By charging for power factor below a given value
By charging for kVARs.

16. Example 2
Suppose a building uses 500,000kWh and has a peak demand of 1000kW. The tariff schedule is:
Determine the total bill for the building.
Blocks (kWh)
Charge (cent/kWh)
1.First 50,000 kWh
7 cents/ kWh
2. Next 200 kWh / kW
6 cents/ kWh
3. Next 300 kWh / kW
5 cents/ kWh
4. All excess
4 cents/ kWh

17. Solution example 2:
Amount of kWh in block 2 = 200 x 1000 = 200,000 kWh
Amount of kWh in block 3 = 300 x 1000 = 300, 000 kWh
Block 1: 50,000 x RM0.07 = RM3,500
(500,000 – 5,000 =450,000 kWh remaining)
Block 2: 200,000 x RM0.06 = RM12,000
(450,000 – 200,000 = 250,000 remaining)
Block 3: 250,000 x RM0.05 = RM12,500
Total charge for 500,000kWh = = RM 28,000

18. Tariff for industrial sector
The electrical tariff to the major industrial sector may consist of:
A power factor charge
A charge for the total kWh consumed
A kW maximum demand charge during the peak hour period
There are 4 types of tariff available for the industrial sector in Malaysia namely tariff D, El, E2 and E3.
Tariff D is a low voltage tariff and is meant for consumers taking supply below 6.6-kV.
Tariff E1 and E2 are the medium voltage tariffs for consumers taking supply at 6.6-kV to 66-kV.
Tariff E3 is a high voltage tariff and is meant for consumers taking supply of 132-kV and above.

19. Tariff E2 and E3 are the dual tariff structure with peak and off-peak demand rate.
By definition from the Tenaga National Berhad (TNB) Malaysia, the peak period is the period between 0800 hours and 2200 hours while the off-peak period is the period between 2200 hours and 0800 hours.
For industrial tariffs, if the average power factor of a factory is any of the following:-
a) Below 0.85 and up to 0.75 lagging, a supplementary charge of 1.5% for each 0.01decrement below 0.85 and up to 0.75 lagging will be added to the bill for that month.
b) Below 0.75 lagging in addition to (a), a supplementary charge of 3% for each 0.01 decrement below 0.75 lagging power factor will be added to the bill.

20. Power factor management
The power factor in an industrial installation is normally lower than what is accepted by the power supplier.
When power factor is below designated level, utility authority often has a provision for a separate additional penalty charge.
Low power factor increases losses in electrical distribution and utilization equipment such as in wiring, motors and transformers.
An increases power factor will lead to reduced losses in transformers and cables.

21. Power factor management
Several methods of correcting low power factor:
Using capacitor hanks
Switched capacitors
Synchronous motors.
The usual method today to improve power factor in industrial installation is to install shunt capacitors.
A shunt capacitor acts as a generator of reactive power.

22. Load management
A system that modify the pattern of electrical energy use in order to improve the efficiency of the overall system.
It is viewed by many in terms of its ability to shave system’s peak to improve load factor.
Load factor is the ratio of average power demand to the peak power demand and it is a measure of the effectiveness of load management.

23. 3 methods in load management to manage electrical energy use:
Peak clipping
Valley filling
Load shifting
Peak clipping – reduce system demand during peak load hours to decrease peak capacity and defer the need for new capacity.
Valley filling - to increase demand during off-peak hours to better utilize available capacity at low operating cost.
Load shifting - combines the benefits of peak clipping and valley filling by moving existing load from on-peak hours to off-peak hours.