Getting to the Core of Energy Management

Demand-side solutions make it easyfor users to quantify—and curtail—energy use


At its core, the green movement is about reducing energy consumption, which in industry parlance is also known as demand-side energy management.

Successful demand-side management involves making energy consumers aware of how much energy they use on a regular basis, and then offering them effective ways of curtailing that use. The most effective methods for curtailing energy use are those that are easy for users to adapt.

For instance, it’s easy to convince most consumers that turning off the lights when leaving a room is a good way to save energy. However, it may not always be easy to get them to actually turn off the lights. It’s natural for someone to not turnoff a light because they think they’ll be returning to a room right away or because they’re distracted by other things and simply forget to hit the light switch.

Low energy user: Homes, particularly in moderate climates, have a relatively low energy consumption profileThat’s why light switches in many recently constructed office buildings are equipped with motion sensors that flip lights on when someone enters a room and then flips them off when the room is unoccupied for more than a few minutes.

Mid-range energy user: Office and commercial buildings are in the mid-range when it comes to energy consumption

Forward-thinking automation and control vendors are developing a broad range of these types of automatic energy saving devices to help consumers practice effective demand side energy management.

To see how automation and control vendors are attacking demand-side management, let’s look at the three major sources of energy consumption:

  • Homes
  • Office and commercial buildings
  • Industrial facilities, such as factories and processing plants.

Energy intensity, or the measure of energy consumed to produce a desired unit of product or service, varies widely across the energy-consumption spectrum. At the left end is a single home in a moderate climate. The home’s energy usage per person per year is quite low.

High-intensity user: Industrial facilities, such as food and beverage processing plants, are high-intensity users and typically get the highest return on investments in demand-side energy management solutions.At the right end of the spectrum are high- intensity industries such as steel making, petroleum refining, glass and cement, etc. Converting basic raw materials to finished goods is often measured in BTUs per ton and can be energy intensive.

In general, companies at the right end of the energy-intensity spectrum will reap the greatest return on investments in technology that helps them with demand-side energy management.

Vendors supplying technology and services for demand side energy management at the far right end of the consumption spectrum typically cater to companies engaged in the following industrial operations:

  • Petroleum and natural gas from well-head to distribution
  • Mines, metal mills, metal fabrication and treatment
  • Pulp mills
  • Factories producing food, beverages, consumer packaged goods, chemicals, pharmaceutical, semiconductors and electronics, vehicles, etc.
  • Water and wastewater plants and their distribution/collection infrastructure
  • High-tech buildings and campuses including laboratories, university campuses, and hospitals
  • Transportation networks including hubs for air, rail, and water

These users want energy-management solutions that complement automation equipment that already exists within their operations—such as industrial control and safety equipment or advanced applications that manage specialized production processes.

In almost all cases, the impetus for seeking energy-management solutions is a desire to cut operational costs. And in every case, the user wants to reap the cost savings that come from deploying energy-management technology without compromising the performance of the mission-critical applications that give the company its competitive edge in the marketplace.


The levels of demand management: To meet the needs of companies with high-intensity energy consumption profiles, vendors must offer solutions that attack the energy-management problem from multiple levels.

Multi-level approach to demand-side energy management

To truly meet the needs of companies with high-intensity energy consumption profiles, vendors must offer solutions that attack the energy-management problem from multiple levels. 

The levels start with the actual production processes or activities closest to value creation. The top level represents the corporate or organizational functions for environmental responsibility, government-mandated reporting, and risk management.


Level 1: Active energy management through process control

At level 1, solutions are controlling energy-intensive processes every hour of every day. These solutions optimize energy use while achieving the productivity, quality, and safety goals for producing products.

Solutions at this level include measurement and instrumentation devices that sense the process and provide feedback to the control system. They also include software that can provide dashboards for visualizing, analyzing, and reporting on all aspects of an operation that impact energy usage and cost.


Level 2: Energy management through realtime awareness and closed-loop accountability

Solutions at level 2 focus on two parts of the energy-intensity spectrum, starting with the left to middle area. Solutions in this space handle tasks such as metering, data collection, reporting and analysis, and data feeds for settlement services.

The level 2 solutions on the far-right side of the intensity spectrum give operations management real-time visibility of energy consumption in direct relation to the production output and business processes. They also embrace the smart-grid concepts of time-of-use, highly variable energy rates, and demand response. These solutions are designed for online integration with industrial control, instrumentation, and manufacturing execution systems. This enables direct costing of energy to the industrial activities.

The best level 2 solutions will come with workflow capabilities. Workflow enables accountability to energy-wasting events and situations through closed loop awareness, directions to take action, and an audit trail of actions performed.


Level 3: Energy management and activity based costing

Energy management has an emerging role in cost accounting. Energy cost is often treated as a highly variable fixed cost and allocated to the business on a predetermined ratio that rarely reflects real consumption.

Level 3 energy management applications enable activity based costing of energy as if it was a raw material. This allows proper allocation of costs to departments, tenants, products, and services on a daily basis so energy becomes a true operations management key performance indicator.

Knowing the energy component of the cost of goods sold may lead to different business decisions on what to make, where to make it, when to make it, and even if should be made at all.


Level 4: Enterprise energy usage reporting for environmental, health, safety, and sustainability

Most enterprises have internal or external mandates for reporting energy usage and green-house gas contribution. The external reports are for government at every level and for voluntary reporting of sustainability indexes. Internal reporting is the means of managing internal goals, projects, and capital investments.

Level 4 energy management solutions represent a category of enterprise software that has emerged to meet this need. These offerings provide the timely, accurate, and richly contextualized information needed to drive these enterprise software implementations and in turn make them much more effective.


True demand-side management

Any vendor that claims to offer true demand-side energy management solutions must offer a portfolio of software, hardware, and service solutions to manage the energy usage of energy- intensive organizations. Users should be able to start with basic measurement solutions to gain awareness of how much energy they are using. They should then be able to progress to active energy management to drive cost reduction, and feed reporting systems to achieve world-class energy efficiency and effectiveness.


Bill Schiel is Director of Global Business Development for Food, Beverage, and CPG Industries  Sustainable Operations with Invensys Operations Management.

For more on industrial demand-side energy management visit the Invensys Operations Management website.  

This article appears in the June Industrial Energy Management supplement to Control Engineering.

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