Energy Management Principles: Applications, Benefits, Savings

Energy.

Chapter 1

Introduction

Abstract

This chapter introduces the concept of energy management, its importance in human affairs today, and the purpose of the book. Around the world, in industrial and non-industrial nations alike, there is a growing awareness of the vital role energy plays in the economy. Efficient energy use can save money while at the same time mitigating environmental consequences due to emissions from internal combustion engines and power plants. The world is at a historic balance point where large emerging economies in Asia and South America are experiencing a rapid growth in demand for energy. How this demand is met has far-reaching consequences. Energy management is an important tool for enabling humankind to meet the challenges of the future: providing employment, food, and security for the next generations, in an environmentally sound manner.

Keywords

Oil embargo; oil prices; energy crisis; purpose of book; definitions; energy management; load management; energy quality; available work

Introduction

Energy is essential to life and survival. Reduced to bare essentials, stripped of thermodynamics, economics, and politics, this is how we must view it.

Energy may well be the item for which historians remember the last half of the twentieth century, as it marked the beginning of a new era of change, an era of possibly greater fundamental significance than the Industrial Revolution. For several centuries mankind grew lazy, lulled into complacency by the ease with which multitudes could be fed, housed, and transported using the abundant supplies of low-cost energy that were readily available.

Then, in less than a decade (1973–1981) the bubble that had taken 114 years to swell (since Drake’s first well in 1859) finally burst. Long unheeded warnings took on a prophetic aspect as fuel shortages and rising costs nearly paralyzed industrial economies and literally shocked the world into an inflationary period that lasted years.

It is remarkable that our lives could be so affected by one perturbation to the world economy. Figure 1.1 shows what this perturbation was—initially, a tenfold increase in crude oil prices in less than a decade, followed by two decades of relatively constant prices as efficiency measures were invoked worldwide to curtail demand. Then, at the beginning of the new millennium, prices skyrocketed again, more than tripling in 8 years. Note that Figure 1.1 shows the average annual oil prices, so the spikes and dips are smoothed out. Following 2008 the global recession brought about a drop in demand, causing the price to plummet, but in 4 short years it returned to hover near US$100 per barrel. Next, as the U.S. dramatically moved to become a net exporter of oil, the OPEC countries, principally Saudi Arabia, began flooding world markets with oil, causing a precipitous plunge in the average price. Over a period of a few months it dropped from US$95.85 per barrel in September 2014 to US$40 per barrel in August, 2015.

Figure 1.1 Average historic oil prices.

One thing is certain—low oil prices undercut the incentive for higher cost renewable energy and for electric or hybrid vehicles. Low prices also detract from efforts to reduce greenhouse gas emissions. A more draconian objective is to push higher cost shale oil, tar sands, or offshore oil producers out of the market, and even drive them to bankruptcy.¹ A certain sign of this is a rapid increase in the number of idle drilling rigs, as has occurred in early 2015. On the one hand this leads to a loss of jobs; on the other hand, cheap fuel reduces transportation and manufacturing costs, so it is not without some short-term economic benefit.

Of course, in reality the problem is much more complex, involving not only oil prices but also the uneven geographical distribution of energy resources, the exponential growth of populations and fuel consumption, the desires of poorer nations throughout the world, political and national security considerations, and long-term environmental effects.²

Tragically, the finiteness of energy resources can be a cause for moving the world into war. Resources of all types are essential to war, and in themselves can be causes for the rise and fall of nations. Twenty-five centuries ago, Greece denuded its forests building ships to continue the Peloponnesian wars; in 1940, Germany seized the Rumanian oil fields at Ploesti when it could no longer import petroleum due to the British blockade; a year later Japan attacked the U.S. Pacific fleet at Pearl Harbor in order to gain access to oil and mineral resources in the South Pacific. In the Six Day War (1967), the Israelis captured the Egyptian oilfields in Sinai, while in its 1980 attack on Iran, Iraq went after the large Abadan refinery complex and other strategic points in Iran’s oil-producing western province of Khuzestan. Later, Iraq’s invasion of Kuwait in 1990 and its threatening of the vast oil resources of Saudi Arabia triggered the first Gulf War and indirectly went on to cause a huge turmoil in the Middle East that has continued for more than two decades at an enormous cost in lives and money.

Efficient energy use, therefore, not only increases one’s independence of external energy supplies, but also helps diffuse a potentially unstable international situation. Energy independence has been touted as a goal by several U.S. presidents beginning with Jimmy Carter. The same is true of other industrialized countries. However this goal has proven to be more elusive than first thought.

Responding to a Crisis

In 1973, the Community Concourse (six city-owned buildings in San Diego, California) used 21 million kWh of electricity per year at a cost of $270,000. By the end of 1975, the cost increased by 22% to $330,000 annually due to dramatic increases in electricity rates, even though stringent energy management measures had been instituted immediately following the oil embargo in October 1973. These measures, which included an employee awareness campaign, adjustment of lighting levels by delamping, changes to thermostat set-points, and revised operating procedures in the building HVAC systems among other actions, resulted in a savings of roughly 8 million kWh per year or 37% relative to the 1973 level. Without the energy management program, the cost of operating this facility in 1976 would have doubled to approximately $520,000 per year, to be paid by local taxpayers. This example describes what happened in six large municipal buildings. There are thousands of buildings throughout the U.S. and other countries for which similar stories may be told.

Meanwhile, farther to the north, citizens in Seattle were asked to approve participation in a nuclear power plant project. The project was under consideration because additional low-cost hydroelectricity capacity was no longer available.

After extensive investigation in 1976, Seattle decided not to participate in the new power project. Instead, the city proposed to undertake an energy management program and use the savings gained by more efficient energy use to offset future power needs. This bold proposal—not without the possibility of some severe economic penalties if Seattle’s optimism was overstated—hypothesized that nearly half (230 MW) of predicted future growth needed by 1990 could be met by an energy management program. The program included formation of a city office of conservation, residential insulation retrofit, new construction standards, appliance standards, energy use disclosure reports, heat pump projects, and energy management research and development. The program was a success. In 2008, Seattle launched another innovative energy management program with the title "Building a World-Class Conservation Power Plant."

Europe and the United Kingdom launched programs similar to those in the U.S. to address the energy crisis. They established new speed limits, curtailed use of automobiles on Sunday, imposed space heating temperature limits, and invoked new lighting standards. Even once the supply shortages were no longer a concern, Europe was left with a tenfold increase in oil prices compared to a few years earlier. This had a severe effect on European economies.

Two years after the 1973 embargo, Arizona moved to ban all new hookups of natural gas. Other states began reviewing energy supplies and uses. New Mexico proposed a tax on energy exported out of the state. Three years later, the California Public Utility Commission established priorities for natural gas use; it was prohibited as a fuel in generating plants. Over the next several years natural gas was to be phased out in industry; first as a boiler fuel, then for all process heat applications for which a substitute fuel—usually oil—could be found.

The impact varied from firm to firm. In a large manufacturing plant, the potential loss of gas-fired boiler capacity led to an investigation of heat recovery possibilities. It appeared possible to reclaim heat dissipated by several 4,600 hp air compressors; before, the heat was extracted by interstage coolers and discharged to the atmosphere from a cooling tower. (See Chapter 11).

In a smaller plant that manufactured agricultural antibiotics, the crisis meant that no natural gas was available to fuel a drying oven needed to expand the plant’s capacity. Looming in the future was the possibility of fuel curtailment, resulting in a shutdown of the plant’s boiler and existing drying ovens (Text Box 1.1).

Text Box 1.1

Jumping ahead three and a half decades to 2015, we can add an ironic footnote to the international concerns regarding natural gas shortages. History has reversed itself; today there are abundant supplies of natural gas, to the point that it is now being widely used as a utility power plant fuel, being cheaper than fuel oil and creating fewer environmental emissions.

Jumping back to the 1970s, Los Angeles passed an emergency ordinance following the oil embargo when it became apparent the city did not have sufficient fuel to meet all needs. Commercial users were asked to reduce electricity use by 20%, industry by 10% and residential consumers by 10%. The City set up an energy management program for its own facilities. (See Chapter 4).

One Southern California family installed florescent lighting, better insulation, and additional switches for lighting, as well as changed thermostat settings, and operated appliances more efficiently. As a result, annual electricity use for a family of four went from 6,859 kWh per year ($156/year cost) in 1972 to 3,868 kWh per year in 1974. By then, rising prices had brought the cost back up to $141/year; in 1975 the cost was the same as 1972, even though the usage had dropped to about 56% of pre-embargo level. Yet, without the energy management efforts extended by this family, they would have incurred a sharp increase—perhaps a doubling—of utility costs. A little more than 40 years have passed, yet we vividly recall these experiences, as it was our home.

We have drawn each of the examples discussed above from our own experiences. The examples have one thing in common: they illustrate the response that was taken all over the world as people encountered rapidly escalating energy prices. Over the succeeding decades, the cumulative results were remarkable. As we will show, national energy use in many countries declined, while gross industrial output increased. These examples illustrate the practice and benefit of energy management.

Purpose of this Book

When energy problems caused by rapidly increasing demand in the face of dwindling fuel supply first became apparent in the early 1960s, the immediate response was to seek new supplies and alternative fuels. Later, consideration was given to the end-user as a means of conserving fuel and capital: by improving end-use efficiency, supply problems were automatically eased. The oil embargo of 1973 gave an additional stimulus to users—in both industrialized nations and in Third World countries—to make the most effective use of fuels and energy.

Approaching energy problems from the user’s end, rather than the supply end, introduces new challenges. First, the number of users is much greater than the number of suppliers, thus complicating the problem. Second, communication with users is difficult due to their number and diversity. Third, the full range of end-use technologies is not readily dealt with by legislative or regulatory controls, also due to diversity. Fourth, the technological sophistication of end-users varies widely, as do their capital resources, limiting the technical improvements that are feasible. Finally, the nearly infinite variety of uses invokes the need for a great many different technologies, materials, and equipment.

In concert with improving energy use efficiency, the substitution of renewable energy forms for fossil fuels also can help reduce greenhouse gas emissions. The subject of skepticism for many years, solar and wind generation have been expanding rapidly around the world. In our state of California, the main utilities have signed contracts that will make more than one-third of the electricity produced in the state come from renewable sources.³ The governor has proposed a goal of 50% renewable energy by 2030. In 2006, California enacted a comprehensive law to reduce greenhouse gases.⁴ This law, the first in the U.S., requires the state to reduce greenhouse gas emissions to 1990 levels by the year 2020. This is being accomplished by regulation, economic incentives, advanced technologies, and by cap and trade and other innovative programs. In 2015, California Governor Jerry Brown issued an Executive order to further reduce greenhouse emissions in the state to 40% below 1990 levels by the year 2030, paralleling the goals of the European Union.⁵

On the positive side, changes made by end-users can have an immediate (minutes) or short-term (months) impact on energy use and demand, compared to 5–10 years needed to add new energy supply capacity. The previous availability of energy, coupled with its low cost, resulted in situations in which there was little incentive for more efficient energy use. Both of these conditions have changed dramatically over the past few decades, along with greater awareness for environmental protection to avoid climate change. Now financial and other drivers to manage energy effectively are broadly available. Finally, even though the diversity of end-use technology is considerable, there are certain basic approaches or general principles that apply in a wide variety of applications.

The purpose of this book is to set forth these basic principles, provide examples, and supply a general methodology and the tools to implement it to manage energy use cost-effectively. In an effort to stress the practical, we provide examples throughout, such as those in this chapter.

Defining Energy Management

The energy industry uses many terms to describe different ways for using energy more effectively. The terms include energy management, demand-side management, energy efficiency, energy conservation, fuel switching, load management, and demand response, to name the most common. Table 1.1 shows common energy industry terms and the specific actions associated with them for managing energy more effectively. The subsections below define each term in more detail.

Table 1.1

Energy management terminology

Primary aspect.

Secondary aspect.

Energy Management and Demand-Side Management

The authors prefer the term energy management because it encompasses all aspects of managing energy, ranging from behavioral changes and better operation and maintenance practices to energy efficient equipment retrofits and process improvements to fuel conservation and energy recovery to temporary and permanent peak demand reductions and even to distributed energy resources.

Demand-side management is another term that encompasses all aspects of managing energy, but it is generally associated specifically with utility programs aimed at improving energy use at customer sites, the demand side of the meter. Perhaps the most widely accepted definition of demand-side management is the following: Demand-side management is the planning, implementation, and monitoring of those utility activities designed to influence customer use of electricity in ways that will produce desired changes in the utility’s load shape, that is, changes in the time pattern and magnitude of a utility’s load. Utility programs falling under the umbrella of demand-side management include: load management, new uses, strategic conservation, electrification, customer generation, and adjustments in market share.⁶,⁷ This definition can extend to suppliers of all forms of energy, not just electric