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Guidelines on Energy Management
2.1 Background
India's energy intensity per unit of GDP is higher by 3.7 times
that of Japan, 1.4 times that of Asia and 1.5 times that of USA,
indicating very high energy wastage, and thus potential of substantial
energy saving. The increasing liberalization of global trade through
WTO and growing competition have made productivity improvement
and energy cost reduction as the most important benchmarks for
economic success.
This calls for concerted efforts by industry to reduce energy
intensity for their products. India's projected economic growth
i s slated at 7.4 percent in the period 1997-2012 (Planning Commission).
This would necessitate commensurate growth of commercial energy
resources, most of which is expected to be from fossil fuels and
electricity. To bridge peak power shortages (13 to 15%) and average
shortages (8 to lo%), India would require fresh capacity addition
of nearly 100000 MW (assessed by Central Electricity Authority),
more than 75% of which is likely to be coal based. This would
require an investment of the order of Rs.800000 crores. This poses
a great challenge to a developing country like India. India needs
a paradigm shift in approach to overall energy policy issues -
a shift from supply domination to an operational efficiency improvement
of existing power generating stations, T&D losses reduction,
and most importantly the end use efficiency improvements.
In view of the above, integrated resource planning and demand
side management (DSM) including active promotion of efficiency
in end uses of energy should evidently constitute our long-term
energy strategy. The policy goals and concepts will have to be
shifted from energy conservation to energy efficiency and from
energy inputs to the effectiveness of energy use and energy services
for all sectors of economy.
The industry sector, a major consumer of energy, has significant
potential to improve its end-use energy efficiency resulting in
reduced energy consumption and cost minimisation. This is more
so crucial for the energy intensive sectors like, cement, fertilizer,
and iron & steel, etc.
2.2 Energy policy statement
Having a well-defined energy policy at corporate level, is the
first significant step towards achieving long-term goals of energy
management in the industry. A corporate level energy policy would
give objectivity, purpose and motivation to all the efforts made
throughout the organisation in improving energy efficiency and
managing best end-use of energy. Although several leading Indian
companies have a focus on energy efficiency and energy management
aspects, this commitment has not been formalised in all cases
through a company-wide energy management policy.
If commitment to managing energy is left to operate on an unofficial
or adhoc basis, it can be derailed or its impact lessened by changes
in personnel, whether among top managers or co-ordinators. Where
commitment is informal, the loss of a key decision maker at any
of these levels can undermine energy management activities. Additionally,
unless commitment is formally endorsed, there is also a danger
that other priorities will crowd out the attention given to energy
management whether in terms of managerial time or allocation of
staff and resources. Furthermore, unless responsibilities and
accountability for energy consumption are clearly written down
and routinely distributed to all relevant employees, they cannot
easily be included in staff performance evaluations.
It is a well-established fact that a formal written energy policy
acts both as:
- a public expression of an organisation's commitment to energy
management
- a working document to guide energy management practices and
provides continuity
These two aims suggest that the policy should be published in
two parts.
Part 1, comprising of an expression of commitment and summary
of general principles, for publication and dissemination.
Part 2, the detailed operating policy containing commercially
sensitive information and procedures, for internal circulation
and operationalisation. A sample of energy policy guidelines is
given below.
2.1.1 Sample energy policy contents
Part 1
- Declaration of top management commitment to, and senior
and middle management's involvement in, energy management
- Statement of policy
- Statement of objectives, separated into short and long-term
goals
Part 2
- An action plan specifying work programme over a time frame
- Budgeted resource requirements including staffing complement,
investment and training needs necessary to achieve the objectives
of the program
- Assigned responsibility and accountability for actions
outlined, specifying individuals by name and position
- Description of energy management cell's responsibility,
structure, membership and reporting mechanisms
- Appoint cell representative for each department and specification
of internal and external lines of communication
- Statement of review procedure, defining milestones and
mechanisms for assessing overall progress and value for money
as well as appraising the performance of individual members
of staff.
The language of the policy statement should be very succinct.
For example:
- The declaration of commitment might say: "As part
of our environment strategy, this organisation is committed
to responsible energy management and will practice energy
efficiency throughout all of our facilities, plant and equipment,
wherever it is cost effective to do so"
- The policy statement might be: "The policy of this
organisation is to control energy consumption in order to:
- -Avoid unnecessary expenditure
-Improve cost-effectiveness, productivity and working conditions
- -Reduce greenhouse gas emissions and protect the environment
- Some goals might be stated as:
- To buy fuels at the most economically advantageous cost
- To utilise fuels as efficiently as is practicable
-To reduce the amount of pollution, particularly CO2 emissions
caused by our
energy consumption
- And, to reduce, wherever possible, our dependence on fossil
fuels through the
use of renewable energy and recoverable energy in the plant
• Finally, some immediate objectives might be identified,
such as:
- To gain control over energy consumption by reviewing and
improving purchasing, operating, motivation and training practices
- To invest in a program of energy saving measures which will
maximize returns
on investment in order to generate funds which can be re-invested,
in whole or
part, in further energy management activities
-To sustain these energy efficiency gains by establishing
and maintaining a
management information system designed to ensure that information
is delivered
to those who need it on time and in a form which supports
their managerial
decision making.
Actual drafting of energy policy will depend on that organisation's
corporate culture and management style. The policy will get
wider acceptance if all the concerned parties have been given
the opportunity to contribute to its formulation. All departmental
representatives should be invited to make submissions to this
when the policy is first formulated and again when it is reviewed.
After the policy is drafted, it should be formally adopted and
ratified by the Board of Directors of the organisation.
2.3 Policy guidelines
2.3.1 Top management commitment
Demonstration of top management's participation in energy
management and encouragement to the employees for the same is
very important to the shop floor workers. In fact, the CEO should
make this visible to them. It sends right message for the employees
at the lower end, which ensures their participation in this
process. Top management commitment could be in the form of framing
company's energy policy, and regular review of energy management
projects and motivating employees on matters pertaining to energy
conservation.
2.3.2 Energy management cell
All energy intensive industries should have a dedicated energy
management cell with a full time 'Energy Manager' who will be
responsible for overseeing its operations. The energy management
cell should provide necessary structure and formalise the process
of energy conservation thereby enhancing its efficacy with full
support from top management. Besides energy manager, the cell
should also have skilled persons in different disciplines. The
cell should interact with manufacturing and other divisions
like production, engineering, maintenance, utilities, and even
finance. This will help in carrying out its activities like
planned internal and external energy audits, conceptualisation
and implementation of projects in close coordination with respective
departments/divisions, carrying out educational campaigns etc.
Thus, the cell will become the focal point for effective energy
management in the plant. This dedicated working will also bring
to the fore the energy issues in the minds of personnel working
in different areas and will influence their decision-making.
2.3.3 Small group activities
To achieve the best results, all employees from top to bottom
should be involved in energy management activities. Under this
concept, a cross-functional team at the shop floor conceptualises
a project, carries out measurements and implements with the
help of concerned departments in the plant. Monitoring of its
successful operation and actual savings realised are projected.
This exercise creates awareness and gives a sense of confidence,
ownership and achievement to employees for their contribution
in this area. It was found during the course of field study
and survey that plants using this activity have developed a
culture of energy saving and the plant has benefited a lot in
terms of sustainability of energy savings identified through
this process.
2.3.4 Capability enhancement l training and motivation
Development of human capacity is very crucial to generate
new and innovative ideas in-house for promoting energy management.
The companies should develop specific training modules related
to energy efficiency and management as part of its HRD training
policy. This can be done by encouraging the plant personnel
to participate in both internal and external training programs/workshop
on these topics. The staff should be encouraged to publish achievements
in energy management in both external and internal publications.
The plants should develop schemes to motivate their employees
for sharing their ideas/ suggestions, slogans and also encourage
them to take initiative for implementing energy conservation
schemes etc. These could be in the form of monetary award, recognition
and could be linked to their annual appraisal system.
2.3.5 Monitoring and targeting
Monitoring and targeting of key energy parameters help the
industry to benchmark and compare its own performance over the
years. Many studies and reports have identified poor quality
of monitoring and record keeping as the key lacunae in energy
management practices at the unit level. Monitoring is a must
to keep track of performance of various energy consuming equipments
to assess their operating efficiencies. Proper instrumentation
in different sections of the plant and adequately trained staff
to operate and manage them is a key requirement for monitoring.
In fact, continuous monitoring would give better insight of
the day-to-day operations and thus help in efficient management
of the same.
Constitution of a small inspection group or 'Patrol', as is
the normal Japanese term, is also a useful tool to enforce energy
management. Patrols are normally undertaken by senior managers
who go around the plant and meet the workers, talk to them about
energy issues and plant's performance while asking them about
their duties and efforts for energy conservation and performance
improvement of equipments. This is very common in Japanese industries
and the senior managers or the head of works undertake this
exercise occasionally.
In the absence of energy consumption norms for various energy
intensive industries in the country, these industries have adopted
their own benchmarks. The common practice is to compare their
performance with the best specific energy consumption figure
in that particular sector/region or their own best figure achieved
in the recent past. This effort may not be enough. The plants
should also set their long-term goals and year-wise targets
may be framed to achieve these goals.
Few plants in the country have achieved specific energy consumption
figures which are very close to the best in the world, despite
all the constraints. All plants should carefully plan out a
roadmap leading to similar objective which will help them to
be least cost producer of their product and become competitive
globally.
2.3.6 Budget for energy conservation
Rational budgeting is a must for implementing energy saving
measures in the plant. This should be made available under guiding
policies of the company. However, each investment should be
evaluated thoroughly on its technical feasibility and economic
viability and IRR etc. Budget allocation should be done on yearly
basis and should be known to energy management cell at the start
of the year, for smooth execution of such activities. Top management
can retain the power for sanctioning larger investments, but
decision on small investments can be left to lower or middle
management.
2.3.7 Role of industry association and 'task force'
Industry associations can play an important role to spread
the culture of energy efficiency among its plants on a larger
scale. In few selected energy intensive industrial sectors,
such as, aluminium, cement, chlor-alkali, fertilizer, pulp &
paper, petrochemicals, refinery, and textiles, BEE has set up
a 'task force' of selected plants and association from that
sector with an objective to promote energy efficiency on a sectoral
basis. These forums could be utilised by these plants to showcase
successful case studies on energy conservation in their premises,
share best practices, keep track of international scenario,
technological advances occurring in their field and market conditions
etc. These forums can also help in framing energy consumption
norms and targets for that particular sector.
2.4 Energy management structure
The energy management function, whether vested in one 'energy
manager or coordinator' or distributed among a number of middle
managers, usually resides somewhere in between senior management
and those who control the end-use of energy. Exactly how and where
that function is placed is a decision that needs to be made in
view of the existing plant and corporate structure. Energy saving
is more of a technical activity though it needs support from human
resources for motivation and training, accounts department for
financing and Chief executive's office to kick-start these initially.
There is no single ideal home for all energy management activities
and the optimum location may alter with time as the organisation
will move from one phase of its energy management work to the
next.
The most important question in the bigger industries is to decide
whether all energy staff should be kept together in a combined
unit or should they be dispersed across the organisation. A single
unit will have its own advantages like shortest chain of command
and economies of scale while dispersed locations with responsibilities
delegated between sections may be more useful in the longer term
as a way of integrated energy management across organisation's
activities. Therefore, for large industries, it may be a better
option to adopt a middle path i.e. a centrally located energy
cell interacting with section specific units within a plant. Based
on plant needs identified in the survey and field visits, and
the Japanese experience in this area, a model organisation chart
for energy management structure is given in Figure
2.4.
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