The Energy Challenge: Incentives for managing energy in resource facilities

Amin Almasi
Tuesday August 02, 2016
Written by Amin Almasi
Using energy more efficiently offers economic benefits because saving fuels and energy is a lot cheaper than buying them. A strategic approach to energy management allows a plant or organization to gain a better understanding of energy use and implement technologies, processes and practices that will decrease costs, improve profitability and reduce carbon emissions and wastes.

Energy is an essential business input and often constitutes a significant and growing line item of plant or company operating expenses. The cost of energy is usually projected to continue to rise due to many factors, a number of which are beyond the control of most plants, facilities and businesses. Often even reduction of oil or gas prices in source countries will have little effect on overall energy costs paid by consumers. Important factors include infrastructure costs to transmit and distribute energy, commodity prices, exchange rates, taxing factors and geopolitical situations. The introduction of new carbon price or carbon tax in some countries will place further upward pressure on energy prices and improve returns on energy efficiency investments.

In any plant, energy usually comprises a portion of operational costs. Too often, it comprises a considerable portion of total operational costs. As a very rough indication, 30-70 per cent of complete operating costs could be energy costs. For some plants and facilities, energy might not be responsible for a large percentage of operational costs; however, it is often the key source of greenhouse gas emissions and other environmental considerations. A reduction in energy use is often the primary means by which an organization can reduce its greenhouse gas emissions and improve environmental figures. Without an effective energy management system, inefficiencies in the business can go unnoticed and opportunities to improve energy use (and reduce emissions) may not be acted upon. Unnecessary energy expenditures erode profits and performance.

Saving Energy
Energy management is the key to saving energy in any plant and facility. Much of the importance of energy saving stems from the global need to save energy; this need affects energy prices, emissions targets, and legislation, all of which lead to several compelling reasons why operators and managers should save energy at their organization specifically. Typically, energy management involves the following steps:
  1. Metering energy consumption and collecting the energy data related to production, distribution and consumption.
  2. Finding opportunities to save energy and estimating how much energy each opportunity could save; it would typically analyze meter data to find and quantify routine energy waste, and it might also investigate the energy savings by each proposed improvement.
  3. Taking action to target the opportunities to save energy such as tackling the routine waste and replacing or upgrading the inefficient equipment; typically it should be started with the best opportunities first.
  4. Tracking progress by analyzing meter data to see how well energy-saving efforts have worked.
Many corporations and companies have historically placed energy management within the environmental function, as the energy usage is often used to report environmental compliance. However, plants that have achieved significant cost savings and reduced greenhouse gas emissions have cross-functional responsibility for energy management including the financial, engineering, operational and environmental roles. Companies have often found that rigorous management of energy and implementation of energy management tasks requires its recognition at the top levels of business. Placing energy management responsibilities within the business improvement has also led to more effective outcomes.

Facility management is an important part of the energy management. Facility management is a profession that encompasses multiple disciplines to ensure functionality of the solution by integrating personnel, place, equipment, facilities, processes and technology. One of the central tasks of energy management is to reduce costs for the provision of energy without compromising work processes, operation, reliability and availability. In particular, the availability and service life of the equipment and facilities, and the ease of operation should usually remain the same or ideally improve. Proper instructions and guidelines are required for dealing with the integration of energy management. Facility management and energy management deal with economic, ecological, risk-based and quality-based targets.power

Doing Our Part
As the global community unites to fix the high CO2 emissions, every plant and facility should have a clear view of the energy challenge and suitable energy management plan(s). New solutions, modern thinking and new technologies are needed to lead into an era in which plants and facilities can truly do much more while consuming much less energy.
Industrial plants consume various forms of energy in their day-to-day operation, including fuel gas, electrical energy, steam, etc. By constructing in-house combined cycle and cogeneration power generation units (such as gas turbine trains with steam generation heat recovery systems or engine units with heat recovery), many industrial facilities are able to internally meet their electricity and power demands. Depending on the availability, quality and cost of the external electricity supply, an industrial facility has the flexibility to either import electricity from the local grid or generate their own electricity. In many cases industries prefer to find a balance between generating a portion of their demand and importing from a local or national grid.

For plants with different energy consumption patterns or facilities connected to local (or national) electrical grid, the energy consumption should be optimized during peak hours, or to move the time of high-energy use to off-peak times such as nighttime and weekends. Peak demand management does not necessarily decrease total energy consumption, but could be expected to reduce the need for investments in networks for meeting peak demands. An example is the use of energy storage units to store energy during off-peak hours and discharge them during peak hours.

Load management, also known as demand side management (DSM), is the process of balancing the supply of energy (for instance, electricity to a network) by adjusting or controlling the load rather than the energy generation output. This is mainly used in electricity networks of a plant or a factory. This can be achieved by direct intervention of the network in real time, by the use of frequency sensitive relays triggering circuit breakers (for instance, ripple control), by time clocks, or similar methods. The load management allows facilities and utilities to reduce demand for electricity during peak usage times, which can, in turn, reduce costs by eliminating the need for peaking power generation units (or importing expensive electrical power at peak hours). In addition, peaking power generation units often require some time (sometimes 20 minutes to 1 hour) to bring it online and it can present challenges particularly should a plant go off-line unexpectedly. The load management can also help reduce harmful emissions, since peaking power generation or backup generators are often dirtier and less efficient than base-load power generation units.

Reap Benefits
Energy management is the process of monitoring, controlling, and conserving energy in a plant or facilities; it is usually tried to minimize the total cost of the energy-related processes (supply, distribution and use). Plants and businesses can realize many benefits through effective ongoing energy management. Following are just some ways that implementing energy management systems and processes can achieve best practices and build value:
Significant savings: Plants and facilities that have taken a strategic approach to energy management and energy efficiency often find many opportunities with attractive payback periods and ongoing reductions in energy expenditure. Energy management improvements deliver ongoing financial benefits.
Improved risk management: Risks associated with rising energy prices and inefficient energy use include reputational risks, price volatility and operating cost risks, supply chain risks, energy security and climate change risk. Effective energy management is a core component of an effective risk management strategy.
Reducing greenhouse gas emissions: For most plants and facilities, managing energy use is the primary means by which they can manage their greenhouse gas emissions. Improving energy productivity and exploring different sources of energy can dramatically reduce the plant’s carbon footprint and associated carbon costs.
Reducing maintenance costs and improving reliability: Energy management actions can usually identify problems before they occur and reduce the load of machinery and equipment. This often improves production uptime, reduces labour and component costs, and extends the useful life of the asset. For instance, inefficient operation of many machineries is the sign of a developing issue and impending failure; through energy management exercises those issues can be identified and resolve; therefore higher reliability could be expected. 
Reducing personnel turnover: Businesses that actively monitor and manage their energy use often enjoy other indirect benefits, such as a more motivated workforce, demonstrable improvements in environmental performance and new means of staff engagement.
Improving productivity: Businesses are increasingly recognizing the link between energy performance and business productivity. Understanding energy use as a function of output and other performance metrics can identify productivity improvements through reduced resource consumption. Improvements in energy productivity are often accompanied by improvements in material use, utility use and use of other resources.

Power Generation and Distribution Management
Many oil, gas and resource facilities have in-house power generation and produce electrical power to meet their needs. Production of energy in a centralized power generation unit and transmitted via electric network to the energy customers is a common solution, but it could be associated with some power losses. Nowadays, many large plants and facilities should deal with distributed generation systems, especially power generation in local recovery units. Such a system could be cost effective, but complicated; sometimes such a distributed system is inevitable. These small distributed systems (for instance, several power generation units for power recovery) should be properly connected to the plant’s power system and participate directly in the energy system; it would have some problems with control such as a high amount of information and complicated management of small supplies of each unit. Application of an advanced overall power control system, such as an aggregation of some power generation units with its own local energy management system and some fix and variable loads is a common solution for some plants and facilities.

For many plants, an important aspect of power generation and distribution optimization is the interaction between the imported power (for instance, from a local or national electric grid network) and internally generated power.

This global resolve to save energy affects energy prices, emissions targets and legislation. At the organizational level the incentives to become more efficient by setting aggressive targets stem not only from these compelling motivations at the global scale, but is also an effective management strategy toward profitability at the plant level.

This article appears in the Spring 2016 issue of REM - Resource Engineering and Maintenance magazine.

Amin Almasi is a chartered professional engineer and rotating equipment consultant. He has authored more than 100 articles dealing with rotating equipment, condition monitoring, offshore, subsea and reliability. Contact him at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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