Energy Monitoring and The RoI Conundrum

During my younger days when I moved to Pune, India, I was surprised to make note, that the weekly off for industrial area was on Thursdays (It still continues that way, I guess). The reason, as I found out was that the government utility company was load-shedding on that day to manage energy distribution & maintenance.

While things have improved on energy generation, transmission and consumption, the utility costs still remain very high. For a typical enterprise, energy costs are amongst top 3 operational expense lines. Enterprises can play an important role in controlling the wastage and optimizing energy usage– if only acknowledged and monitored.

I believe, Energy consumption monitoring is a first and crucial step for energy management. For some reason, this activity has not got deserved attention and mostly the monitoring is manual and is done only to reconcile utility company bills at the end of the month. In many cases there is tremendous opportunity to save utility costs and optimize on operating expenses that is missed completely.

With the advent of IoT (Internet of Things), many devices such as digital energy meters, water meters, gas meters etc. can be easily connected to the existing internet infrastructure to provide monitoring services and effectively control utilization. Digital meters with RS-485 or IP interface are available at reasonable costs (starting at INR 5000 or US$ 80) allowing one to monitor and control a host of parameters such as KWh, Power Factor, Line Frequency etc. real-time.

The key question often asked though is, can energy monitoring solution justify its cost or have substantial Return on Investment (RoI)? I believe there are tremendous business benefits of energy monitoring solution and if linked to business outcomes, can help solve the RoI puzzle. Here are a few key points.

1.       Energy Consumption Productivity Co-relation:

The big benefit of the energy monitoring solution is its ability to co-relate energy consumption data with various business outcomes.

a.       The most basic co-relation can be of equipment rating against its actual consumption. It’s amazing how simple this seems but yet how much is this ignored.

To quote from the energy monitoring blog here, “The project (energy monitoring) and resulting data uncovered the fact that the biggest energy user in the plant, the refrigeration system, was using five times the amount of electricity that it should and had been doing so for perhaps as long as 30 years. The local utility had previously done an energy audit and completely missed the problem. … There is a good chance I would have missed it, too, without the real-time and historical data from the monitoring system.”

b.      Comparing & benchmarking performance of similar equipment against their energy consumption can be another benefit. This typically foretells any need for optimal configuration, need for maintenance etc.

Plant Name Energy Consumption Wk 13 Production – Wk 13 Ratio
Plant 1 19876 1235 16.09
Plant 2 25678 1465 17.52
Plant 3 12367 987 12.52

c.       Comparing production outcome against energy consumption can be a good efficiency parameter to monitor. This is useful parameter to assess efficiency of a plant. For campuses or buildings, it can be energy consumed per employee. Once this no. is benchmarked, one can look at various optimizing methods, green initiatives etc. in an objective manner. One tracking illustration from a manufacturing plant below clearly shows that all things same, Plant 3 is running at maximum energy efficiency.

2.       Monitoring Additional Parameters and Optimization

Manual method of energy monitoring usually captures KWh at regular intervals. The energy management solution can help monitoring various important parameters (Frequency, Power Factor, Line Frequency etc.), which provides overall utility health and can help optimizing overall electrical performance.

E.g. Power factor of 0.85 can typically mean 18% higher utility bill for a 100 Kw machine. If we can optimize this through regular monitoring and relevant corrective steps, it can reduce the utility bill substantially.

3.       Real-time Actionable Intelligence

Manual monitoring provides rear-view mirror of events that have already happened and provide very little real-time actionable intelligence. Real-time tracking can avoid potentially critical situations (e.g. voltage surge) due to timely action and can increase equipment life. This means reduction in AMC or on-site service costs, reduced down-time and equipment change.

4.       Trending, Alerts & Notifications

The trends, seasonality over the period (daily, weekly, monthly etc.) can provide good insights to the business and help optimize energy costs. Thresholds can be set for various parameters and whenever there is a breach, an immediate alert can be sent to concerned people/teams. This can be further integrated into a helpdesk tool for SLA tracking.

Evidently the energy monitoring solution not only helps with cost reduction but helps improve efficiency, make facility green and increase equipment life.

To quote from the same blog mentioned above, In several of our projects (energy monitoring), energy costs for the total facility were reduced 40% or more with no capital improvements required; the savings resulted entirely from changes in accountability, responsibility, operation, maintenance and control that were only possible because of the data from monitoring system.”

Our estimates show that typical energy costs can be reduced between 4 and 7% using energy monitoring solution, providing Return on Investment in less than a year. This is based on customer discussions and our own industry experience.

We at FlamencoTech have a complete energy monitoring solution as part of our Digital Blanket offering that contains software, hardware integration  with meters, integration with other business applications and customized real-time dashboards, reports as per business requirements.

- Ritesh Jayswal – CEO – FlamencoTech

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