Energy Management 101: What is energy management and what are the benefits?

by | Oct 27, 2020 | Data Management, Energy Efficiency, Resource Optimisation

From steam to compressed air, chilled water to motors, energy is vital to most manufacturing processes.

But how much energy is being used, what does that energy cost, are there opportunities to lower that cost?

Traditionally, cost was measured in monetary value, but increasingly other factors, such as carbon footprint and life cycle analysis are also being considered.

When you have a factory or plant to run, your most important job is to ensure the production or process target is being met.

But what if you could save money, optimise processes and reduce energy losses at the same time? With the benefits of energy management, you can.

Energy Management 101: What is energy management?

At its most basic level, energy management is the practice of reviewing and understanding how much energy your process is using and linking it to the quantity of production that you are achieving.

With that understanding, you can start digging more deeply.

  •  Are there trade offs that could be made to lower your energy bills or your carbon footprint, or to increase the reliability of your process? For example, switching from coal to natural gas in your boiler or installing solar panels to reduce your load on the grid.
  • Are there particular conditions or products that increase your energy bill? For example, switching production every 6 hours to minimise inventory vs. every 24 hours and using a warehouse, or making deep frozen products rather than chilled products.
  • Are some lines/pieces of equipment using more energy than expected, and could they be modified/replaced/updated? And are there different operating practices that could be put in place to save energy? For example, using hot product to preheat fresh material?

Why do companies need energy management?

Simply put, energy management can help companies save money, optimise processes and reduce their carbon footprint.

In most manufacturing processes, raw materials, labour and capital are usually the main components of operating cost.

This being the case, many operating facilities focus first on producing in-spec products at as high a capacity as possible with initiatives around equipment uptime and maintenance; waste minimisation; and productivity.

Energy use and the utilities infrastructure that supports the plant operation is often of secondary concern.

Boilers are often only noticed if they fail to deliver the required steam; chillers are ignored unless product temperature specifications are not met.

With a drive towards greater personnel efficiency, many sites have de-emphasised the need for on-site specialists who understand and monitor the utilities infrastructure closely, relying instead on periodic tune-up visits from vendors or even outsourcing the whole operation to third parties.

These third parties may have motivations other than energy minimisation.

They may focus exclusively on availability, for example operating the boiler so that it always has enough steam to meet a surge in demand by running it hard even when that’s not necessary.

While the spend on energy might not be the largest operating expense, it is often a significant spend and an area where there may be significant opportunity.

It is not uncommon that 15-25% of the energy bill can be eliminated if a good energy management system is put in place. This can result in hundreds of thousands in annual savings with payback under 2 years.

Furthermore, there is an increasing need to focus on carbon footprint – in many locations this is being monetised in the form of tax incentives or customer branding.

A good energy management system can help quantify carbon impacts resulting from process changes and from supplier selection.

How can companies manage their energy?

There are three main approaches to process improvement in general, and energy management in particular:

  1. Leverage experts in the field – at site, from corporate teams, vendors and consultants. There are often a range of best practices and equipment design approaches that can be deployed to improve efficiency while maintaining availability.
  2. Leverage data – energy systems are complex, often with several hundred data points being generated every few seconds. Pulling all that data together, cleaning out erroneous or misleading points, and then consolidating into an easily accessible format is a significant undertaking.  Visualising the consolidated data and interrogating it with statistical tools to identify the root causes of high energy use and what past operating conditions have offered the best performance can be very impactful.
  3. Leverage the fundamentals – as well as statistical tools, you can use mechanistic modelling to understand the underlying physics and chemistry of the process to look for alternative process designs or operating philosophies that can reduce the overall energy footprint.  For example, you can review discharged hot and cold streams to see if their energy could be recovered; or you could investigate operating pressure to see if similar performance could be achieved with lower pump/compressor loading.

What are the key things to consider regarding energy management?

Today, the leading energy management companies deploy and integrate all three of these factors (experts, data and fundamentals).

They employ teams of subject matter experts with decades of experience in utilities systems (boilers, refrigeration, compressed air, cooling tower operation, HVAC, solar, large motors) and use their input to guide solutions, data visualisations and troubleshooting “expert systems”.

They have software capable of consolidating, cleaning and presenting the vast amounts of process data in both standardised reports (designed with expert input) and free-form review (for process troubleshooting and live investigation).

Ideally, the data consolidation will also link to statistical tools to facilitate both conventional analysis by direct human interaction and “machine learning” pattern recognition.

The subject matter experts and data-led analysis should also be complemented by solid fundamental engineering and mechanistic modelling, to investigate and capture one-off design changes; to encode and leverage expert process knowledge; and to integrate directly with process data.

There is much talk these days of Digital Twins and Hybrid Models – computer representation of your plant, that suggests how the real-world asset should be working and/or could be tweaked to improve performance.

Above all, people pay attention to things that are perceived as impactful and actionable.  Simple actions like quantifying the cost of energy use or setting up performance metrics can have a big impact.

Making that sort of data timely and easily accessible, and matching goals to clearly defined activities can turbocharge that impact.

Who can work on energy management solutions?

Ultimately, the rubber of energy decisions meets the road at plant operational level.

To be successful, the people making the minute-to-minute decisions on which equipment to operate and what setpoint to choose, must be enabled to make the best decisions possible and encouraged to consider energy impacts alongside other critical factors such as safety, throughput and quality.

To enable the operations team to make those choices, they need a well-designed and easy to use data system and a process design that allows them to make good choices.

These systems need to be procured and developed by a skilled process design team and need to be aligned to a site and corporate strategy that includes energy minimisation in the corporate objectives.

This typically comes about through having an active corporate energy or sustainability team, and through the championing of the effort by a C-level executive.

Who benefits from energy management?

At the end of the day, most companies are in business to make money.

While energy is rarely the primary factor in operating expenses, it usually has a significant impact on the economic bottom line.

Minimising the energy expense usually goes hand-in-hand with reducing the environmental impact of a process, so there’s often some significant win-win opportunities available.

More subtly, understanding how and where energy is used in a process can also be leveraged to take advantage of market dislocations or supply issues – there may be price breaks on electricity at night, creating opportunities to change production patterns, for example.

Or there may be a spike in spot prices for natural gas, favouring greater use of electrical power.

What are the benefits of energy management?

A good energy management system should be to provide insights into both the minute-to-minute operational decisions:

  • Day-to-day procurement choices
  • Week-to-week production schedules
  • Year-to-year equipment & process design choices.

The resulting benefits include:

  • Lower costs
  • More flexible operations
  • Better insights into the impact of choices around product mix & operating schedule
  • Lower carbon footprint
  • Improved facility performance.

1 – Lower Costs

A good energy management system should help you reduce the overall use of energy – both heat and power – leading to a direct cost saving in terms of the utility bills.

On top of that, though, having all the data together in a single, well organised platform will make summarising and organising that data easier, saving time and producing clearer reports on things like plant Key Performance Indicators (e.g. for daily site review) and Carbon Intensity (e.g. for quarterly Sustainability reporting).

The system should also provide a comparison of the factors between sites.  The automation of the aggregation and presentation of this data can greatly reduce the manual effort to produce these reports, saving valuable engineering and accounting time.

The system should also include active “watchers” to keep an eye on critical energy use steps, producing alerts and warnings to help operators, maintenance specialists and process engineers respond more quickly to energy-wasting situations.

These may be immediate issues (e.g. wrong valve opened leading to loss of hot water) or more gradual factors (e.g. a gradual increase in compressor loading indicating increased air leaking).

While the cost benefit of avoided issues can be difficult to quantify, the value of quick responses and directed maintenance can be significant.

Of course, there is huge benefit available if the energy management system can be extended to cover process performance as well.  The same data, tools and reporting methods that address the utilities operations can be applied (with some care and modification) to the broader process – improving process yield, plant capacity and uptime, product quality and equipment maintenance – allowing the plant operator to reap significant additional benefits.

2 – More flexible operations

A good energy management system can provide data to help make decisions on the cost impact of making changes.

For example, one can use the validated historical data in the system to quantify the cost implications (in terms of energy, but also in terms of downtime, waste and quality) for switching from one product to another, helping plant making smart decisions about how long to schedule batches (e.g. run longer trading warehousing cost for operational savings) or how to sequence batches (e.g. run vanilla then strawberry then chocolate rather than the reverse).

A good energy management system should also help one take advantage of market dislocations or changes in operating/government policy.

If, for example, you operate a combined heat and power system, you may have some flexibility over the amount of power vs. steam that you produce.  If the spot price of power on the open market increases, you may choose to rebalance towards producing most power with your CHP to save money.

Similarly, you may choose to operate your refrigeration plant differently in winter vs. summer or during hot afternoons as opposed to cooler nighttime.  If set up properly, the tool should alert you to the opportunity and help translate from kW and °C to $ and £.

3 – Lower Carbon Footprint

Your carbon footprint is a function of Scope 1 (directly consumed e.g. fuel in your boiler), Scope 2 (indirectly consumed e.g. the fuel that your electricity supplier used) and Scope 3 (associated with the production of your raw materials or the use of your product – e.g. the energy used by the farmer to grow, harvest and deliver the crop).

In most cases, then, your carbon footprint is directly tied to the energy that you consume, but there are complications.  You may be able to select different fuels (e.g. natural vs. landfill gas for your boiler), different electricity suppliers (e.g. solar vs. local CHP vs. grid) and operating modes (e.g. fresh vs. recycled feedstock; canned vs. bottled product).  You may be able to select different feedstocks and coproduct mixes.

It requires a lot of careful planning and calculation to accurately quantify your carbon footprint, and it may be changed by external factors (such as government regulation or supplier choices), so having an updatable, automated calculation system can be extremely helpful.

4 – Better insights into the impact of choices around product mix

Many agricultural processing facilities involve disaggregating a natural product (corn, rapeseeds, milk) into its constituent parts to produce both primary products  of interest (corn starch, vegetable oil, cheese) and coproducts (corn oil/gluten, rapeseed meal, whey).

These coproducts may be further processes (corn sugar or ethanol, biodiesel, antipasto plates).  In most processes, there are operating choices that can send more or less material to a particular product, impacting the yield, capacity and energy use of the process.  Understanding all the implications of changing that product mix can be challenging, particularly when considering utilities.

Similar decisions are also made in many other processes – the product mix, the types of raw material selected, and the rate of production can all have a significant impact on energy used.

5 – Better insights into the impact of choices around operating schedule

Two aspects come to mind when considering operating schedule:

  • Cyclic effects (such as day / night; summer / winter) can impact both the ambient conditions (rate of heat leaking into a cold room; availability of solar power) and market conditions (e.g. cheaper power at night; more expensive gas in cold winters).
  • Processing choices (such as switching of raw material or product mix) can change both the fundamental performance of a plant (e.g. freshly cut wood may be cheaper for a biomass boiler, but the higher moisture content will reduce the energy output from the boiler) and the uptime/waste production (e.g. stopping to clean out lager from a bottling line before switching to stout).

6 – Improved facility performance

As well as quantifying the absolute amount of energy consumed, it is important to relate that to the quantity and type of products being produced.

You can save a lot of energy by shutting your plant down, but that’s rarely the economically optimal solution.

It is important to understand how much energy is being used to make each coproduct and account for that correctly – if you’re freezing a cooked product instead of a chilled product, for example, that will naturally require more energy.

You can improve your overall energy efficiency but still have a higher energy bill.  Detangling this sort of issue can help unmask inefficiencies or account for apparently worse performance and thus keep the team on track for improvements.

Similarly, if a product fails to meet specification and must be wasted, then all the energy used in its production is also lost.  Understanding when a product may not meet spec and rejecting it before costly/energy intensive processing steps can help mitigate some of the cost; catching the problem and correcting it quickly so that the product can be saved is even better.

Of course, a good data management and investigation system can be used more broadly than for just energy systems, so picking a system that can also provide insights into the process performance can not only open up additional energy savings opportunities, but also offer lucrative yield, capacity and maintenance insights.

What should good energy management systems have?

Good energy management systems combine software with expertise. Having one without the other can lead to missed optimisation opportunities.

Systems should have:

  •  A broad range of interfaces for data collection
  • The ability to structure, cleanse and contextualise the data – identifying and rejecting erroneous data, assigning appropriate units of measurement and associating with equipment
  • A robust architecture for storing and retrieving the time sequence of the data efficiently
  • A secure and easily maintained software platform
  •  Easy-to-use interfaces for visualising the data; creating dashboards and summaries; and creating alerts/calls to action
  • The ability to transform the data through calculations – for example to create KPI’s and performance correlations
  • The ability to manipulate the data for statistical analysis – both internally to the tool and, for more specialised activities, by exporting it to other software
  • The ability to call external tools and software to allow, for example, access to optimisation routines or digital twins
  • Access to experts in the underlying systems being monitored (e.g. boiler or refrigeration plant) who can help review data, provide insights into techniques for data review and presentation, and provide expert advice on equipment design, operation and maintenance, and recent developments in the field
  • Access to experts in mechanistic and data-based modelling who can help flesh out opportunities for process improvements and apply specialist tools to analyse and supplement the stored data.

Tips for choosing the right management system

When reviewing energy management systems, one should of course review all the usual software attributes (cost, ease of use, support, visibility).

For systems connecting to a processing plant, it is also important to consider how easy it is to connect to the different systems that produce / transmit the data – the data may reside in a Distributed Control System (DCS) or in local Programable Logic Controllers (PLC’s); it may sit in a Lab Information and Management System (LIMS) or in locally stored Excel / SQL databases; it may be available through a centralised process historian or only available from WiFi instrumentation.  Picking a system that has a wide and flexible array of data interfaces can greatly reduce the effort associated with setting up the system.

One should also consider the ongoing maintenance and support of the system – one key choice is whether to go with a local data server, so that the software and hardware reside onsite, or with a cloud-based system.

There are advantages to either approach, but cloud-based “Software as a Service” applications are increasingly popular.  The data is stored and backed up reliably and remotely, reducing the local IT burden.

Patches and updates can be applied immediately that issues are identified, rolled out seamlessly at source and are usually invisible to the users.

Security and data protection, once a clear bugbear for distributed systems, is still something to consider, but there have been great strides in this area and increasingly banking and other commercial activities are moving online.

Finally, when considering a supplier, it’s worth looking at the corporate capabilities of the supplier.

You will want to select a well-built software platform, but as mentioned earlier, it can be very powerful to also have access to subject matter experts for energy systems and a team that can also provide high-end mechanistic and data-based modelling capabilities.


Most manufacturing processes use energy to process raw materials into finished goods, and this energy can be a large operating expense. Good energy management can lower this expense, improve performance through process optimisation, and quantify carbon impact from process changes and supplier selection.

A good energy management system should help you understand how much energy is being used, how much that energy is costing and what opportunities there might be to lower that cost.

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