03 - 01 Eacm Material

Subject code: 15A02706 EADSM
LECTURE NOTES
ON
ENERGY AUDITING AND
DEMAND SIDE MANAGEMENT
IV B. Tech I Semester (JNTUA-R15)
Dr.D.CHANDRA SEKHKAR, M.Tech, P.hD, MISTE

Professor & HOD
Department of Electrical and Electronics Engineering

VEMU INSTITUTE OF TECHNOLOGY::P.KOTHAKOTA
NEAR PAKALA, CHITTOOR-517112
(Approved by AICTE, New Delhi & Affiliated to JNTUA, Anantapuramu)
Dept of EEE VEMU I.T Page 1

SYLLABUS
UNI –I: INTRODUCTION TO ENERGY AUDITING

Energy Situation – World and India, Energy Consumption, Conservation, Codes, Standards and
Legislation. Energy Audit- Definitions, Concept, Types of Audit, Energy Index, Cost Index, Pie Charts,
Sankey Diagrams, Load Profiles, Energy Conservation Schemes. Measurements in Energy Audits,
Presentation of Energy Audit Results.
UNIT -II: ENERGY EFFICIENT MOTORS AND POWER FACTOR IMPROVEMENT

Energy Efficient Motors , Factors Affecting Efficiency, Loss Distribution , Constructional Details ,
Characteristics - Variable Speed , Variable Duty Cycle Systems, RMS Hp- Voltage Variation-Voltage
Unbalance- Over Motoring- Motor Energy Audit.Power Factor – Methods of Improvement, Power factor
With Non Linear Loads
UNIT –III: LIGHTING AND ENERGY INSTRUMENTS FOR AUDIT
Good Lighting System Design and Practice, Lighting Control, Lighting Energy Audit - Energy
Instruments- Watt Meter, Data Loggers, Thermocouples, Pyrometers, Lux Meters, Tong Testers,
Application of PLC’s
UNIT –IV: INTRODUCTION TO DEMAND SIDE MANAGEMENT
Introduction to DSM, Concept of DSM, Benefits of DSM, Different Techniques of DSM – Time of Day
Pricing, Multi-Utility Power Exchange Model, Time of Day Models for Planning. Load Management,
Load Priority Technique, Peak Clipping, Peak Shifting, Valley Filling, Strategic Conservation, Energy
Efficient Equipment. Management and Organization of Energy Conservation Awareness Programs.
UNIT –V: ECONOMICS AND COST EFFECTIVENESS TESTS OF DSM PROGRAMS

Basic payback calculations, Depreciation, Net present value calculations. Taxes and Tax Credit –
Numerical Problems. Importance of evaluation, measurement and verification of demand side
management programs. Cost effectiveness test for demand side management programs - Ratepayer
Impact Measure Test, Total Resource Cost, Participant Cost Test, Program Administrator Cost Test
Numerical problems: Participant cost test, Total Resource Cost test and Ratepayer impact measure test.
TEXT BOOKS:
1. Industrial Energy Management Systems, Arry C. White, Philip S. Schmidt, David R. Brown,
Hemisphere Publishing Corporation, New York, 1994.
2. Fundamentals of Energy Engineering - Albert Thumann, Prentice Hall Inc, Englewood Cliffs, New
Jersey, 1984.
REFERENCES:
1. Economic Analysis of Demand Side Programs and Projects - California Standard Practice Manual,
June 2002 – Free download available online
http://www.calmac.org/events/spm_9_20_02.pdf
2. Energy management by W.R. Murphy & G. Mckay Butter worth, Heinemann publications, 2007.
3. Energy management by Paul o’ Callaghan, Mc-graw Hill Book company-1st edition, 1998
4. Energy efficient electric motors by John .C. Andreas, Marcel Dekker Inc Ltd-2nd edition, 1995.

UNIT - I
INTRODUCTION
Energy Situation – world and India, energy consumption, conservation, codes,
standards and Legislation.
Energy Situation – World and India
Energy problems are now being largely ignored, despite their continuing importance. The near-
disappearance of energy from the U.S. public agenda is apparent in the scant attention given to
energy topics by the media and by public figures. Some suggestions for governmental action
were stimulated by the rise in gasoline prices in the Spring of 1996, but the matter was treated as
a short-term anomaly -- not as a harbinger of more severe difficulties to come.
This lack of long term concern is perhaps natural, because fuel supplies are generally ample and
prices are still relatively low; with the real cost of gasoline in 1994 only one half the costs in
1981. However, we believe that neglect of potential future difficulties is highly imprudent. We
summarize belo w the considerations that lead us to this conclusion. (This Background Paper was
prepared by members of the Panel on Public Af fairs of the American Phys ical Society.
It is meant to reflect the considerations that underlie the Statement on "Energy: the Forgotten
Crisis" issued by the American Physical Society. This paper has not been revie wed by the
Society.)
I. Energy: An Essential for Society

1. Adequate energy supplies are crucial to our pattern of life.
o Without adequate energy supplies our society cannot function. The transportation
sector is particularly vulnerable to energy disruptions and uncertainties. Economic
gro wth, as well as projected population growth of 1 %/year for the U.S. and and
1.7%/year for the world will create increased energy demands.
2. Coupling between energy and the economy has been reduced, but it is still a reality.
o Because of the increased efficiency of energy use and because of modal shifts in
our economy, the ratio of U.S. energy use to GDP has decreased by 32 % from
19,000 BTU/$ in 1973 to 12,900 BTU/$ in 1995 (1992 dollars).
o The rate of improvement in this ratio has fallen sharply since 1986. In the first
period since the oil embargo (1973-86), the GDP (in constant dollars) rose by
41%, while energy consumption rose by less than 0.1 %. However, in the the next
period (1986-1995), the GDP rose by 23 % while energy consumption rose by
17%. On the other hand, energy use on a per capita basis has been relatively
constant, dropping by about 14 % in the decade following the oil embargo, but by
1995 rising most of the way back to ward the 1973 value.
o Since 1975, electricity use has increased almost in lock-step with GDP, rising
72% from 1975 to 1995, while the GDP rose 74 % (in constant dollars).

3. The rest of the world has justifiable aspirations that will entail greater energy use.
o Energy consumption is growing much more rapidly in the still developing
countries than in the industrialized countries of the Organization for Economic
Cooperation and Development (OECD). For example, during 1970-1990 energy
consumption increased 178 % for non- OECD As ia (5.3 % per year) compared to
36% for the OECD (1.6 % per year). Within several decades, these and other
developing countries are likely to outstrip the OEC D countries in total energy
consumption.
II. Fossil Fuels, the Main Source of Energy.
4. Fossil fuels continue to be the mainstay of our energy economy.

o Fossil fuels (petroleum, natural gas, and coal) provided 84 % of primary energy
used in the U.S. in 1995; petroleum contributed about 40 % of total primary
energy.
5. U.S. dome stic petroleum supplies are limited.
o U.S. proven reserves of crude oil have declined for 7 consecutive years. Low oil
prices and a lack of good petroleum prospects are major factors in the downturn in
domestic drilling and the success rates. U.S. proven oil reserves dropped from 32
billion barrels (Bb) to 22.5 Bb bet ween 1977 and 1994. Although the total amount
of remaining recoverable oil in the U.S., both discovered and anticipated, is
estimated to be significantly greater than the proved reserves alone -- perhaps in
the rough neighborhood of 100 Bb -- this total is considerably less than the
amount of oil already produced.
o In spite of new Alaskan production, U.S. oil production dropped from 9.6 million
barrels per day ( Mb/d) in 1970 to 6.5 Mb/d in 1995. Alaskan production dropped
from 2.0 Mb/d in 1988 to 1.5 Mb/d in 1995. Production from the lower-48 states
dropped from 9.4 Mb/d in 1970 to 5.0 Mb/d in 1995.
o The number of discoveries of large fields in the U.S. has greatly decreased and it
seems unlikely that many ne w large fields of oil and gas will be found in the U.S.
Since 1980 no discovered field has more resources (estimated ultimate recovery)
than the top 100 previously discovered oil or gas fields.
6. Reliance on oil imports creates proble ms for the U.S. and other nations.
o The U.S. trade deficit on net petroleum inputs was $48 billion in 1995, which was
about 30 % of the total trade deficit and 7 % of total imports.
o U.S. net petroleum imports have risen 31 % since the oil embargo (6.0 Mb/d in
1973 to 7.9 Mb/d in 1995). The fraction of U.S. oil from imports (in quad/y) was
about 50 % in 1995, and is projected to rise to about 60 % in 2010.
o The OPEC fraction of the world oil market is projected to rise from 40 % in 1990
to 57 % in 2015, as a result of the fact that OPEC countries have a large fraction of
remaining oil resources.

7. World dependence on oil from the Middle East entails military and economic risks.
o The Middle East continues to be a region of potential political instability. The
U.S. fought the 1991 Persian Gulf War in part to defend the unimpeded flow of
oil to OEC D nations.
o Dependence on Persian Gulf oil has motivated U.S. arms shipments to that region
and increased military involvement.
o Europe and Japan have partially prepared themselves for future petroleum
shortages by using cons iderably higher gasoline prices ($4/gallon) to raise
revenue and moderate demand.
8. Natural gas and coal are considered by some to be the "bridging fuels" of the
future.
o U.S. proven natural gas reserves dropped from 200 trillion cubic feet (TCF) to
164 TCF from 1983 to 1994. (1 TCF is about one quad.) The present rate of
consumption is 21 TCF/y. Resources may be as high as 1000 TCF, but it is not
clear how much of this can be converted to proven reserves. There are very large
resources of coal, but their mining and use entails major environmental problems.
III. Environmental Aspects of Energy.

9. Com bustion of fossil fuels is harm ful to air quality in many cities.
o 40 urban areas violate at least one of the U.S. ambient air quality standards,
adversely affecting human health. Many foreign cities have considerably worse
air quality problems. Automobiles contribute about one-half of the cities' air
pollution.
10. Ene rgy production and use can adve rsely affect the environment.
o Energy use and production generally entail adverse environmental impacts. These
can arise from both routine and accidental releases of pollutants, the preemption
of land (and rivers), and the accumulation of waste products. A more efficient use
of energy can contribute to reducing these effects.
11. Com bustion of fossil fuels and climate change.
o The atmospheric concentration of greenhouse gases has risen 30 % since pre-
industrial times, resulting in an increased radiative forcing of the climate system.
If current trends in fossil fuel use continue, carbon dioxide concentrations will
double in the next century.
o According to the Intergovernmental Panel on Climate Change (I PCC, 1995),

changes in weather and temperature patterns, particularly the spatial pattern of
temperature changes, all point to "a discernible human influence on global
climate”.
o IPCC and others estimate that the global average temperature will change by the
end of the next century by 2 oC (4 oF) -- although the actual change could easily
be twice or half this value. The aggregate impacts of changes in temperature,
precipitation, and sea-level, while uncertain, are likely to be harmful to both
human and natural systems.

IV. U.S. Energy Demand and the Needs of the Future.

12. Buildings and appliance s consume about 40% of U.S. energy; there are great
opportunities to reduce the se energy require ments.
o Ne w building diagnostic computer codes allow architects opportunities to use new
energy-management techniques. For example, from 1973-1985, the average
ceiling insulation in new U.S. single-family houses increased from R14.4 to
R26.7 and wall insulation increased from R10 to R12.5. The need for space
heating in ne w large buildings and houses can be decreased b y more than 50 % on
a cost-effective basis. Because of the long lifetime of buildings and the
incomplete application of energy standards for buildings, the national transition to
more energy efficient buildings will be slo w. However, an EIA study found that
houses built after 1988 consume only 59 % as much natural gas as those built
before 1980.
o From 1972 to 1990, ne w refrigerator energy usage dropped from 2000 k wh/year
to about 800 kwh/year.
o About one-fourth of U.S. electricity is used for lighting. Long-lived compact

fluorescent lamps use only 30 % as much energy as incandescent bulbs.
Considerable improvements in lighting efficiency have been accomplished on an
economic basis with high frequency ballasts, and advanced control circuits. The
cost effectiveness of these lamps improves as the fraction of the time they are
operated increases.
13. Transportation alternatives are an extremely important challenge.
o Because transportation uses 2/3 of U.S. petroleum and over 1/4 of U.S. energy, it
is a very critical target for energy savings.
o Since the oil embargo of 1973-74, the number of registered passenger cars has
risen from 102 million to 147 million, an increase of 44 %. The DOE's Energy
Information Administration projects that vehicle miles traveled by light duty
vehicles will increase by 1/3 by 2015. The U.S. is saving huge amounts of fuel
and billions of dollars a year because the current standard (average) fuel economy
for new automobiles of 27.5 miles/gallon is t wice the 1973 fleet average of 13.5
miles/gallon.
V. Non-Fossil Energy Sources.

14. Alternatives to fossil fuels are nuclear (fission and fusion), solar (photovoltaic,
biofuels, wind, hydro, and solar thermal), tidal, and geothermal.
o These energy sources are sufficient to sustain the Earth's economy, but in most
cases the costs are not now competitive with fossil fuels.
15. Rene wable energy sources are not widely replacing fossil energy sources.
o Hydroelectric po wer has remained relatively constant over the past two decades.
Wind energy has grown considerably, but still contributes relatively little.
Geothermal (not strictly renewable) has grown considerably, but is sho wing signs
of depletion.

16. Nuclear fission's role will diminish without ne w initiatives.

o In 1995 nuclear energy's share of the electricity generated by utilities was 22 % in
the United States, 76 % in France and 33 % in Japan. Nuclear energy has risen
from a negligible contributor to U.S. electricity generation in 1970 to the second
largest source (after coal, and before natural gas and hydro) in 1995, substantially
moderating the need for fossil fuel sources.
o No new reactors have been ordered in the U.S. for more than 20 years. Several
versions of improved reactors are expected to be available for pre-licensing
shortly, but there are no immediate prospects for U.S. utility purchases. Two such
reactors are being completed in Japan.
o No decisions have been reached in the U.S. on the location of either interim or
permanent nuclear waste repositories, and it is not clear that a coherent, politically
acceptable, nuclear waste disposal program can be established in the near future.
o Little work is continuing toward the design of reactors and fuel cycles that
attempt to address simultaneously the problem of long term fuel supply and the
danger of the proliferation of nuclear weapons.
o Replacing the present 100-gigawatt nuclear capacity with combined-cycle gas-
fired plants would require about 4.5 trillion cubic feet of natural gas, equal to over
20% of the present total U.S. natural gas consumption.
17. Fusion energy, at be st, will not be available for several decades.
o In research facilities many parameters critical to commercialization of fusion
energy have improved dramatically, but the commercialization date for fusion
remains uncertain.
VI. Some Energy Policy Issues

18. Science and technology have had major successe s.
o Energy R& D has produced new and improved products and accelerated market
penetration, such as: combined-cycle power plants, compact fluorescent bulbs,
enhanced nuclear safety, more efficient automobiles, high bypass ratio jet engines
for airplanes, improved building designs, catalytic converter muff lers, improved
photovoltaic cells, more reliable wind mills, and so forth.
o R&D is necessary to enhance development of future energy sources and to

improve end-use energy efficiency.
19. U.S.Government Energy R& D

o Energy R&D is carried out consistent with the DOE mission, although its relative
share of the DOE budget has been in steady decline over the past 18 years. While
the overall DOE budget has stayed fairly level since 1978, at about 1 % of the total
federal budget, DOE's energy R&D budget has currently dropped by about 74 %
(in constant dollars) from the 1978 budget. As a percentage of the DOE budget,
energy R&D has gone from 45 % of the total DOE budget request in 1980 to 18 %
in 1995. To place these figures in perspective, in 1995 the total federal investment
in energy R& D (expenditures for all agencies) was about 0.5 % of total U.S.
energy expenditures.

20. The federal governme nt has an essential role in addressing problems with long time
horizons?
o When the private sector is not addressing issues that pose threats to the national
security and well-being, federal involvement may become necessary. Industry
will typically invest in products which have a relatively short payback period.
Ho wever, energy problems may require several decades of development and
success is not assured. Individual private companies may prefer to wait for others
to develop a technology, and then modify aspects of that technology for their
purposes. Thus, there is likely to be insufficient industry investment in important
long term R& D projects. Federal help is then needed to fill the gap. This should
be done with a stability in funding that goes beyond the yearly Congressional
budget cycles.
21. National ene rgy policy options.
The AP S statement on "Energy: the Forgotten Crisis" concludes that "Low-cost oil
resources...are rapidly being depleted," that pollution is a threat to human health and the
environment, and that changing climate patterns may be expected from massive reliance
on fossil fuels. These conclusions indicate the need for action by the nation. We present
the follo wing illustrative policy options that respond to these conclusions. Their
presentation does not necessarily signify endorsement, but it illustrates a range of options
that we think worthy of consideration and further analysis.
a. Means for establishing national energy priorities and policies.
The long-term decline in general energy research funding, and the severe
fluctuations in funding individual energy technologies demonstrate the need for a
coherent, long-term, and bi-partisan, U.S. energy policy. One possible step
towards this goal could be the establishment of a permanent, bipartisan
presidential commiss ion to provide a continuous revie w of energy policy.
b. Ene rgy education and com m unications initiatives.
It is desirable to increase efforts, especially within the education programs of the
Department of Energy, to educate the public -- particularly students, teachers, and
consumers -- about the vital contribution of energy to our national well-being and
the fundamental issues and problems surrounding its production and use.
c. Measure s to promote efficient and prudent use of energy.
Technological improvements in energy efficiency provide the most readily
accepted means for restraining energy consumption. These have had remarkable,
although not well-enough noticed, success over the past two decades. Further
gains may be achievable through R&D efforts directed to ward cost-effective
technological improvements. Consideration also should be given to the
implications of possible additional measures, such as: (i) gasoline taxes to reduce
the use of oil; (ii) higher fuel economy standards for passenger cars, the extension
of fuel standards to additional classes of vehicles (e.g. light trucks, minivans), or a
revenue-neutral "feebate" system of sales taxes and rebates designed to encourage
the purchase of vehicles with good fuel efficiency; and (iii) increased energy
standards on buildings and appliances.

d. Measures to encourage non-fossil source s for energy production.

For rene wable energy sources that may be approaching competitiveness in some
regional markets, such as solar thermal electricity and wind energy, the
maintenance or extension of moderate financial incentives could speed the large-
scale introduction of the technology. This would permit the evaluation of its
economic and environmental merits. For more expensive technologies, such as
photovoltaic power, it may be desirable to spur technological development
through more direct assistance in research, development, and test deployment.


Energy Codes and Standards

What are energy codes?
Energy codes are a subset of a broader collection of written legal requirements known as building
codes, which govern the design and construction of residential and commercial structures.
Building codes protect individuals from substandard living and working conditions by setting
minimum standards for acceptable practice. Energy codes address increasing the energy
efficiency of building systems.
How do they work?
Energy codes reference areas of construction such as wall and ceiling insulation, windo w and
door specifications, HVAC equipment efficiency, and lighting fixtures. Usually, there are t wo
methods for compliance. The most common method is the prescriptive approach, in which the
code stipulates the stringency of the materials and equipment the builder must use. For the
performance approach, the code allocates a total allowable energy use for a building, and the
builder can choose the materials and equipment that will meet this target.
Where did they come from?
In the United States, national model energy codes were created in response to the energy and
economic crises of the 1970s. In 1978, Congress passed legislation requiring states to initiate
energy efficiency standards for new buildings. Since then, energy codes have undergone
significant improvements. The 1992 Energy Policy Act ("EPAct") mandated that all states must
review and consider adopting the national model energy standard. The Energy Policy Act of 2005
specified the most current model energy codes at the time of its passage (2004 IECC supplement,
AS HRAE 90.1-2004). Today, AS HRAE Standard 90.1-2007 and the 2009 International Energy
Conservation Code (IECC) are the national model energy codes, and each is updated on a three-
year cycle.
Int ro du ction
Energy codes provide minimum building requirements that are cost-effective in saving energy.
The energy saved is a cost savings to the building owner through lo wer monthly utility bills, and
smaller and thus less expensive HVAC equipment. More than 2/3rds of the electricity and 1/3rd

of the total energy in the U.S. are used to heat, cool, and operate buildings. This means that
implementing and enforcing energy codes will result in fe wer po wer plants and natural resources
being used to provide electricity and natural gas. It also means fe wer emiss ions to the
atmosphere. Emissions have been linked to smog, acid rain, and global warming. In the U.S.
most buildings are constructed to meet minimum energy code requirements; therefore energy
codes contribute to sustainability by saving energy and protecting the environment.
Energy codes are effective in reducing per capita energy usage (energy use per person). The per
capita energy use in California has remained steady due to its active use and enforcement of
energy codes for buildings, while energy use in the rest of the U.S. has increased.
Fig.1. Total Electricity Use, per capita, 1960-2001 (estimated for California for 2000 and 2001)
De sc riptio n
A. Commonly Used Energy Codes
The U.S. Energy Conservation and Pr oduction Act (ECPA) requires that each state certify that it
has a commercial building code that meets or exceeds ANS I/ AS HRAE/IES NA Standard 90.1-
1999. In this sense, "commercial" means all buildings that are not low-rise residential (three
stories or less above grade). This includes office, industrial, warehouse, school, religious,
dormitories, and high-rise residential buildings. The process is administered by the Department
of Energy. AS HRAE 90.1 is the most commonly used energy code for commercial and other
non-residential buildings. The Model Energy Code ( MEC), now the International Energy
Conservation Code (IECC), is the most commonly used residential energy code by states. The
IECC also has a commercial section that allo ws the use of AS HRAE 90.1 for compliance. The
International Residential Code (IRC) is also used by some states. The NF P A has commercial and
residential energy codes based on AS HRAE Standards 90.1 and 90.2 (low-rise residential). The
status of energy codes by states is available from the Building Codes Assistance Project (BCAP).
Some states, such as Florida and California, have independently developed and adopted their
own energy codes. Some states and jurisdictions do not yet have energy codes despite the federal
requirement.


*Code implementation depends upon the voluntary adoption of the code by local jurisdictions.
(Source: Building Codes Assistance Projects)
Ne w federal commercial and multi-family high-rise residential buildings must meet standards in
10 CFR 434, based on the ANS I/ AS HRAE/IES NA Standard 90.1-1989. The U.S. Department of
Navy ( DON) and Department of Defense ( DOD) use ANSI/ AS HRAE/IES NA 90.1-1999 rather
than 10 CFR 434. Government low-rise residential energy standards generally comply with
ENERGY STAR. The U.S. Department of Energy's Federal Energy Management Pr ogram
(FEMP ) oversees the efforts to reduce energy and impacts to the environment at federal sites.
Modifications to existing buildings often need to meet new building requirements or

ANS I/ AS HRAE/IES NA Standard 100-1995 – Energy Conservation in Existing Buildings. A
common method of reporting energy performance for existing and new buildings is described in
ANS I/ AS HRAE Standard 105-1984 (RA 99) –Standard Methods of Measuring and Expressing
Building Energy Performance.
B. Scope of Energy Codes

Energy codes generally dictate requirements for the building's envelope, mechanical, and
lighting (nonresidential only) requirements. Energy codes must be easy to understand for
architects and builders to use and code officials to enforce. For this reason codes cannot
incorporate all good design practices and should not be confused with good practice. For
instance, significant energy can be saved by considering building orientation, limiting
infiltration, planting trees, and using passive solar design strategies. Yet these are not mandated
in most energy codes at this time. Also, if durability of building materials were considered,
energy could be saved in the manufacturing and installation of replacement materials throughout
the life of the building. But durability is not considered in energy codes at this time.
Energy codes strive to provide cost-effective criteria. For example, commercial building criteria
in AS HRAE 90.1 generally has a payback period of less than 10 years and residential building
criteria in AS HRAE 90.2 generally has a payback period of less than 20 years. See resource page
Life-Cycle Cost Analysis.
Building envelope requirements in codes generally include minimum insulation levels for walls,
roofs, and floors, as well as window requirements. These generally vary with climate region,
since more insulation is cost-effective in cold or extremely hot regions.
Mechanical system requirements include minimum equipment efficiency requirements, insulation

requirements for ducts and piping, and controls for off-hours and dead bands (commercial).
Commercial building requirements for lighting include total building wattage requirements for
interior and exterior lighting. Controls are generally required to assure lighting is turned off when
facilities are unoccupied. This can be achieved through programmable controls or occupancy
sensors.
C. Prescriptive versus Performance Criteria
Codes generally have prescriptive and performance paths for compliance. Prescriptive paths are
easy-to-use tables that contain required minimum or maximum values. Performance paths are

used to trade one energy saving meas ure for another. For instance, if the wall insulation does not
meet the prescriptive requirements, but the ceiling insulation exceeds the prescriptive
requirements, then using a performance method may show compliance of the whole building
with the code. Prescriptive paths are commonly used for typical buildings in states with newly
adopted codes. Once designers become familiar with performance software, these become more
popular. Some performance methods can be used to show energy savings beyond code, and are
used for sustainability programs or state tax credits.
In prescriptive tables, opaque elements such as walls and roofs will have requirements in terms
of thermal resistance (R-values) and thermal transmittance (U-factors). The U-factor includes the
effects of insulation as well as framing members and interior and exterior finishes. The "overall"
R-value is the reciprocal of the U-factor. The "added" R-value is the R-value of the added
insulation, which is a simpler way of stating the requirement since insulation materials are
labeled for R-value. The effect of framing and building materials other than insulation does not
have to be calculated for prescriptive tables with "added" R-value requirements. For fenestration
(windo ws and associated frames) the requirements are in terms of U-factor and solar heat gain
coefficient (S HGC). Some codes have pre-calculated U-factors for walls, roofs, or windo ws so
that the pre-calculated values can be easily compared to the prescriptive requirements.
For walls with thermal mass (such as concrete, masonry, adobe, or logs) R-values are not a true
indicator of energy performance. These materials have a relatively low R-value, yet buildings
constructed with these materials perf orm well and are comfortable in many climates. Thermal
mass absorbs heat, thereby reducing and delaying the effects of outdoor temperature extremes on
the HVAC system, especially when temperatures fluctuate with highs or lo ws bet ween 50 to
75°F (10 to 25°C). In most climates, buildings with insulated mass walls will save energy
compared to buildings without mass with the same R-value. In many southern and western
climates, mass walls without insulation will perform as well as non-mass walls with insulation. In
commercial buildings where cooling demand often peaks in the afternoon due to the loads from
people and equipment, walls with thermal mass can absorb and lessen this peak. Since the mass
reduces peaks in mechanical system loads, first costs for HVAC equipment may also be reduced
in some climates. Most energy codes allow an adjustment for wall thermal mass in the
prescriptive portion.
The performance paths in energy codes generally allow the use of an easy-to-use computer trade-
off program or a detailed energy budget method. Generally the more complicated the compliance
tool, the more flexibility the designer is allo wed. Trade-off tools also allow for innovation in
design and materials. COMcheck™ is an easy-to-use program for determining commercial
building compliance for AS HRAE 90.1, IECC, and many state codes. REScheck™ (formerly
MECcheck) is an easy-to-use program for determining residential building compliance with the
MEC, IECC, and many state codes. A detailed computer-based energy analysis program such as
DOE2 and Visual DOE4.0 calculate yearly energy consumption on an hourly basis. Such
programs are useful when using the energy budget method because other simpler compliance
tools do not take into account special features of the building or its components. The energy
budget method compares the annual energy use of a building that meets prescriptive requirements
with the proposed building to determine compliance. Codes provide rules and guidelines for the
energy budget method.

Legislation
The legislation:
 implements the carbon pricing mechanism for Australia to reduce carbon pollution and
move to a clean energy future
 sets out ho w the carbon pricing mechanism will be run, and what businesses will have to
do
 links the carbon price to the Carbon Farming Initiative and to credible schemes overseas
 provides for assistance to emissions intensive and trade exposed industries through the
Jobs and Competitiveness Program and to electricity generators to ensure energy security
 excludes emiss ions from agriculture, the land sector, and the combustion of biomass,
biofuels and biogas from the mechanism
 sets up a Clean Energy Regulator to administer the carbon pricing mechanism, the
National Greenhouse and Energy Reporting scheme, the Renewable Energy Target and
the Carbon Farming Initiative
 sets up an independent Climate Change Authority, which will advise the Australian
Government on the setting of carbon pollution caps and periodic revie w of the carbon
pricing mechanism and other climate change la ws
 applies an effective carbon price to transport fuels used in rail, shipping and aviation
(fuels used by motorists and in light commercial vehicles are excluded), to off-road use
of transport fuels by businesses (other than in the agricultural, forestry and fishery
industries), and to synthetic greenhouse gases
 provides a refundable tax offset for conservation tillage equipment, and
 assists those Australian households that need it most, including pensioners and low- and
middle-income earners
The Clean E nergy Legislative Package and related legislation

Cl ea n En er g y Act 20 1 1 — c o m m e nc e d on 2 April 20 1 2
The Clean Energy Act 2011 is the central Act of the Package. It sets up the carbon pricing
mechanism (the mechanism) and deals with assistance for emissions-intensive trade-exposed
industries (the Jobs and Competitiveness Program) and the coal-fired electricity generation
sector.
It contains rules for who is covered, the Opt-in Scheme as well as what sources of carbon
pollution are included, the obligation to surrender emissions units, caps on the amount of carbon
pollution from 1 July 2015, international linking, monitoring, enforcement, appeal and revie w
provisions.
Cl ea n En er g y Re gula tor Act 20 11 — c o m m e n ce d on 2 Ap ril 2 01 2
The Clean Energy Regulator Act 2011 sets up the Clean Energy Regulator as a statutory
authority that will administer the carbon pricing mechanism, National Greenhouse and Energy
Reporting Scheme, the Renewable Energy Target and the Carbon Farming Initiative.

Cli m ate Ch a ng e Aut ho rity Act 20 1 1 — co m m e n ce s on 1 July 20 12
The Climate Change Authority Act 2011 sets up the Climate Change Authority, which will
begin on 1 July 2012. The Authority will advise the Australian Government on the setting of
carbon pollution caps and periodic review of the carbon pricing mechanism and other climate
change laws.
This Climate Change Authority Act 2011 also sets up the Land Sector Carbon and Biodiversity
Board, which will advise on the implementation of land sector measures.
Cl ea n En er g y (Con seq u ential Am en d m ent s) Act 20 11
Different parts of the Clean Energy (Consequential Amendments) Act 2011 will start at different
times, depending on the element of the mechanism to which they relate or the specific legislation
that it amends.
This Act makes amendments to other laws to ensure that the mechanism is integrated with
existing la ws, regulatory schemes and processes. It includes changes that ensure:
 the National Greenhouse and Energy Reporting scheme supports the mechanism (the
consolidated NGER Acts as of 2 April 2012 and 1 July 2012 , are now available on
Comlaw)
 the Australian National Registry of Emiss ions Units covers the mechanism, as well as the
Carbon Farming Initiative
 the Regulator covers the mechanism, Carbon Farming Initiative, the Renewable Energy
Target and the National Greenhouse and Energy Reporting scheme
 the Regulator and Authority are set up as statutory agencies and regulated by public
accountability and financial management rules
 that carbon units and their trading are covered by la ws on financial services and regulated
by the Australian Securities and Investment Commiss ion
 that activities related to emiss ions trading are covered by la ws on money laundering and
fraud
 synthetic greenhouse gases are covered by an effective carbon price by extending existing
Regulation of those substances
 the taxation treatment of emissions units for the purposes of GST and income tax is clear,
and
 the Regulator can work with other regulatory bodies, including the Australian Securities
and Investments Commission, the Australian Competition and Consumer Commiss ion
and Austrac.

ENERGY AUDITING
Energy audit- definitions, concept, types of audit, energy index, cost index, pie
charts, Sankey diagrams, load profiles, Energy conservation schemes.
Measurements in energy audits, presentation of energy audit results.
Energy Audit
An energy audit is an assessment of ho w much energy a home consumes and the development of a
plan to make the home more energy efficient. An energy audit cannot only reveal ways to help
conserve precious energy; it can also save you significant amounts of money by maximizing energy
efficiency in your household. During an audit, an expert examines the building for energy leakages
(such as air leaks) as well as ways to maximize energy usage (such as with more efficient lighting
and heating/cooling systems).
Definition of Energy Audit

An energy audit is a review of current energy costs so that a company can achieve savings. An
audit is conducted by a company's in-house personnel or by a professional energy audit firm. If
an audit firm does the audit, they either charge a flat fee or ask that you pay them a percentage of
the savings achieved. The three types of energy audit are a preliminary audit, the general audit
and an investment grade audit, according to Gard Analytics.
Definition
An ene rgy audit is an inspection, survey and analysis of energy flows for energy conservation in
a building, process or system to reduce the amount of energy input into the system without
negatively affecting the output(s).
History
Energy audits initially became popular in response to the energy cris is of 1973 and later years.
Interest in energy audits has recently increased as a result of growing understanding of human
impact upon global warming and climate change.
Principle
When the object of study is an occupied building then reducing energy consumption while
maintaining or improving human comfort, health and safety are of primary concern. Beyond
simply identifying the sources of energy use, an energy audit seeks to prioritize the energy uses
according to the greatest to least cost effective opportunities for energy savings.
Home energy audit
A home energy audit is a service where the energy efficiency of a house is evaluated by a person
using professional equipment (such as blo wer doors and infrared cameras), with the aim to
suggest the best ways to improve energy efficiency in heating and cooling the house.
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An energy audit of a home may involve recording various characteristics of the building envelope
including the walls, ceilings, floors, doors, windows, and skylights. For each of these components
the area and resistance to heat flow (R-value) is measured or estimated. The leakage rate or
infiltration of air through the building envelope is of concern, both of which are strongly affected
by windo w construction and quality of door seals such as weather stripping. The goal of this
exercise is to quantify the building's overall thermal performance. The audit may also assess the
efficiency, physical condition, and programming of mechanical systems such as the heating,
ventilation, air conditioning equipment, and thermostat.
A home energy audit may include a written report estimating energy use given local climate
criteria, thermostat settings, roof overhang, and solar orientation. This could show energy use for
a given time period, say a year, and the impact of any suggested improvements per year. The
accuracy of energy estimates are greatly improved when the homeowner's billing history is
available sho wing the quantities of electricity, natural gas, fuel oil, or other energy sources
consumed over a one or two-year period. A home energy audit is often used to identify cost
effective ways to improve the comfort and efficiency of buildings. In addition, homes may
qualify for energy efficiency grants from central government.
Industrial energy audits

Increasingly in the last several decades, industrial energy audits have exploded as the demand to
lo wer increasingly expensive energy costs and move to wards a sustainable future have made
energy audits greatly important. Their importance is magnified since energy spending is a major
expense to industrial companies (energy spending accounts for ~ 10 % of the average
manufacturer's expenses). This growing trend should only continue as energy costs continue to
rise.
While the overall concept is similar to a home or residential energy audit, industrial energy audits require
a different skill set. Weatherproofing and insulating a house are the main focus of residential energy
audits. For industrial applications, weatherproofing and insulating often are minor concerns. In industrial
energy audits, it is the HVAC, lighting, and production equipment that use the most energy.
Concept
Energy Concepts specializes in Energy Audits and Energy Star certifications in the East Texas
area. We are proud to announce our most recent partnership in the Home Performance with
Energy Star program.
If you are considering building a ne w home, Energy Concepts can provide the expertise to help
design your new home’s energy efficiency. For existing home purchases, an energy audit can
provide you with a detailed analysis sho wing you potential problems with your future home.
Types of Audits and Reviews

The Audit Process
In general, a typical audit includes the following sequential steps:
• Scheduling an opening conference to discuss the audit objectives, timing, and report
format and distribution.
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• Assessing the soundness of the internal controls or business systems and operations.
3
• Testing the internal controls to ensure proper operation.

• Discussing with management all preliminary observations.
• Discussing with management the draft audit report and their responses, if available, prior
to release of the final audit report.
• Following up on critical issues raised in audit reports to determine if they have been
successfully resolved.
Audits
Types of Audits and Reviews:
1. Financial Audits or Reviews
2. Operational Audits
3. Department Reviews
4. Information Systems Audits
5. Integrated Audits
6. Investigative Audits or Reviews
7. Follow-up Audits
Financial Audit
A historically oriented, independent evaluation performed for the purpose of attesting to the
fairness, accuracy, and reliability of financial data. CS ULB's external auditors, KP M G, perform
this type of review. CS ULB's Director of Financial Reporting coordinates the work of these
auditors on our campus.
Operational Audit
A future-oriented, systematic, and independent evaluation of organizational activities. Financial
data may be used, but the primary sources of evidence are the operational policies and
achievements related to organizational objectives. Internal controls and efficiencies may be
evaluated during this type of review.
Department Review
A current period analysis of administrative functions, to evaluate the adequacy of controls,
safeguarding of assets, efficient use of resources, compliance with related laws, regulations and
University policy and integrity of financial information.
Inform ati on System s (IS) Audit

There are three basic kinds of IS Audits that may be performed:
1. General Controls Review

A revie w of the controls which govern the development, operation, maintenance, and
security of application systems in a particular environment. This type of audit might
involve reviewing a data center, an operating system, a security software tool, or
processes and procedures (such as the procedure for controlling production program
changes), etc.
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2. Application Controls Review

A revie w of controls for a specific application system. This would involve an
examination of the controls over the input, processing, and output of system data. Data
communications issues, program and data security, system change control, and data
quality issues are also considered.
3. System Development Review

A review of the development of a ne w application system. This involves an evaluation of
the development process as well as the product. Consideration is also given to the general
controls over a new application, particularly if a new operating environment or technical
platform will be used.
Integrated Audit
This is a combination of an operational audit, department review, and IS audit application
controls review. This type of review allows for a very comprehensive examination of a functional
operation within the University.
Investigative Audit
This is an audit that takes place as a result of a report of unusual or suspicious activity on the part
of an individual or a department. It is usually focused on specific aspects of the work of a
department or individual. All members of the campus community are invited to report suspicions
of improper activity to the Director of Internal Auditing Services on a confidential basis. Her
direct number is 562-985-4818.
Follow-up Audit
These are audits conducted approximately six months after an internal or external audit report has
been issued. They are designed to evaluate corrective action that has been taken on the audit
issues reported in the original report. When these follo w-up audits are done on external auditors'
reports, the results of the follo w-up may be reported to those external auditors.
Types of energy audit

The term energy audit is commonly used to describe a broad spectrum of energy studies ranging
from a quick walk-through of a facility to identify major problem areas to a comprehensive
analysis of the implications of alternative energy efficiency measures sufficient to satisfy the
financial criteria of sophisticated investors. Numerous audit procedures have been developed for
non-residential (tertiary) buildings. Audit is required to identify the most efficient and cost-
effective Energy Conservation Opportunities (ECOs) or Measures (ECMs). Energy conservation
opportunities (or measures) can consist in more efficient use or of partial or global replacement of
the existing installation.
When looking to the existing audit methodologies developed in IEA-ECBCS Annex 11, by
AS HRAE and by Krarti (2000), it appears that the main issues of an audit process are:
• The analysis of building and utility data, including study of the installed equipment and
analysis of energy bills;
• The survey of the real operating conditions;
• The understanding of the building behaviour and of the interactions with weather,
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occupancy and operating schedules;
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• The selection and the evaluation of energy conservation measures;

• The estimation of energy saving potential;
• The identification of customer concerns and needs.
Common types/levels of energy audits are distinguished below, although the actual tasks
performed and level of effort may vary with the consultant providing services under these broad
headings. The only way to ensure that a proposed audit will meet your specific needs is to spell
out those requirements in a detailed scope of work. Taking the time to prepare a formal
solicitation will also assure the building owner of receiving competitive and comparable
proposals.
Generally, four levels of analysis can be outlined ( AS HRAE):
• Level 0 – Benchmarking: This first analysis consists in a preliminary Whole Building

Energy Use (WBEU) analysis based on the analysis of the historic utility use and costs
and the comparison of the performances of the buildings to those of similar buildings.
This benchmarking of the studied installation allo ws determining if further analysis is
required;
• Level I – Walk-through audit: Preliminary analysis made to assess building energy

efficiency to identify not only simple and lo w-cost improvements but also a list of energy
conservation measures (EC Ms, or energy conservation opportunities, ECOs) to orient the
future detailed audit. This inspection is based on visual verifications, study of installed
equipment and operating data and detailed analysis of recorded energy consumption
collected during the benchmarking phase;
• Level II – Detailed/General energy audit: Based on the results of the pre-audit, this type
of energy audit consists in energy use survey in order to provide a comprehensive
analysis of the studied installation, a more detailed analysis of the facility, a breakdown
of the energy use and a first quantitative evaluation of the ECOs/EC Ms selected to
correct the defects or improve the existing installation. This level of analys is can involve
advanced on-site measurements and sophisticated computer based simulation tools to
evaluate precisely the selected energy retrofits;
• Level III – Investment- Grade audit: Detailed Analysis of Capital-Intensive

Mo difications focusing on potential costly ECOs requiring rigorous engineering study.
Benchmarking
The impossibility of describing all possible situations that might be encountered during an audit
means that it is necessary to find a way of describing what constitutes good, average and bad
energy performance across a range of situations. The aim of benchmarking is to answer this
question. Benchmarking mainly consists in comparing the measured consumption with reference
consumption of other similar buildings or generated by simulation tools to identify excessive or
unacceptable running costs. As mentioned before, benchmarking is also necessary to identify
buildings presenting interesting energy saving potential. An important issue in benchmarking is
the use of performance indexes to characterize the building.
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These indexes can be:

• Comfort indexes, comparing the actual comfort conditions to the comfort requirements;
• Energy indexes, consisting in energy demands divided by heated/conditioned area,
allowing comparison with reference values of the indexes coming from regulation or
similar buildings;
• Energy demands, directly compared to “reference” energy demands generated by means
of simulation tools.
Walk-through or Preliminary Energy Audit (PEA)

The preliminary audit (alternatively called a simple audit, screening audit or walk-through audit)
is the simplest and quickest type of audit. It involves minimal intervie ws with site-operating
personnel, a brief review of facility utility bills and other operating data, and a walk-through of
the facility to become familiar with the building operation and to identify any glaring areas of
energy waste or inefficiency.
Typically, only major problem areas will be covered during this type of audit. Corrective
measures are briefly described, and quick estimates of implementation cost, potential operating
cost savings, and simple payback periods are provided. A list of energy conservation measures
(EC Ms, or energy conservation opportunities, ECOs ) requiring further consideration is also
provided. This level of detail, while not sufficient for reaching a final decision on implementing
proposed measure, is adequate to prioritize energy-efficiency projects and to determine the need
for a more detailed audit.
Considerable savings are possible through small improvements in the “house keeping” practices,
and the cumulative effect of many such small efficiency improvements could be quite
significant. These can be identified by a short survey, observation and measurements. Many
energy conscious industries have already achieved considerable progress in this area.
Approach to Preliminary Energy Audit (PEA)
This essentially involves preliminary data collection and analyses. The PEA is based on
collection of available data, analysis, observation and inference based on experience and
judgment is carried out within a short time.
The PEA is the first step in implementing an energy conservation programme, and consists of
essentially collecting and analyzing data without the use of sophisticated instruments. The ability
and experience on the part of Energy Auditor will influence the degree of its success.
Normally the results of the audit would depend on:-
Experience of the auditor Availability and completeness of data
Physical size of the facility Depth of analysis of available data
Complexity of operations within the facility Awareness of energy matters within the facility
Broadly, the audit is carried out in Six steps:-
1. Organize resources
• Manpo wer/time frame
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• Instrumentation
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2. Identify data requirements

• Data forms
3. Collect data
a. Conduct informal interviews
• Senior management
• Energy manager/Coordinator
• Plant engineer
• Operations and production management and personnel
• Administrative personnel
• Financial manager
b. Conduct plant walkthrough/visual inspection
• Material/energy flow through plant
• Major functional departments
• Any installed instruments, including utility meters
• Energy report procedures
• Production and operational reporting procedures
• Conservation opportunities
4. Analyze data
a. Develop data base
• Historical data for all energy suppliers
• Time frame basis
• Other related data
• Process flo w sheets
• Energy-consuming equipment inventory
b. Evaluate-data
• Energy use-consumption, cost and schedules
• Energy consumption indices
• Plant operations
• Energy savings potential
• Plant energy management program
• Preliminary Energy Audit
5. Develop action plan
• Conservation opportunities for immediate implementation
• Projects for further study
• Refinement of corporate energy
• Resources for detailed energy audit
• Systems for test
• Instrumentation: portable and fixed
• Manpo wer requirements
• Time frame
6. Implementation
• Implementation identified low cost/no cost projects
• Perform detailed audit
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The PEA is essentially, as the name implies a preliminary data collection and its analysis
process. Readily available data on the plant’s energy systems and energy –using processes or
equipment are obtained and studied. The operation and condition of equipment are observed by
going around the plant. These provides basis to develop recommendations for immediate short
term measures and to provide quick and rough estimates of savings that are possible and
achievable. A preliminary study usually
Identifies and assesses obvious areas for energy savings such as stream leaks, compressed air
leaks, poor or miss ing insulation, condensate recovery, idling equipment, deterioration and
deficiencies in combustion and heat transfer equipment etc. and serves to identify specific areas
for the detailed plant energy study.
Detailed Energy Audit (DEA)

This would be a comprehensive energy study using portable energy monitoring instruments. The
essential part of this audit is carrying out various measurements and analyses covering
individually every significant energy consuming plant item/processes, to determine their
efficiencies and loss of energy at that point, and potential energy savings.
The Detailed plant energy study is a comprehensive analyses and evaluation of all aspects of
energy generation, distribution and utilization within plant. The analyses is based on consistent
and detailed accounting of all energy inputs into a system and all energy outputs from a system
which results in the development of energy and mass balance. At the plant level, the analyses
require time series data on a daily, monthly, or yearly basis, on the quantities of all forms of
primary energy flowing into the plant, e.g. coal, fuel, oil, electricity, etc. And production figures
of major products, by-products and waste products, at the department or sectional level.
Information is required on the quantity of energy forms consumed, and the production figures of
intermediate products. At the equipment level, in addition to the quantities of energy forms and
material products, process parameters such as temperature, pressure, flow rate, etc. are also
required.
Data generation and collection is an essential and critical element of a detailed energy audit
study. Difficulties in getting data required generally arise due to unavailability of historical
records. The acquisition of actual operating data through existing or ne w permanently installed
instruments or portable test instruments cannot be overemphasized in this context.
Measurements are critical in any serious effort to conserve energy. Apart from helping to
quantify energy consumption, measurements also provide a means to monitor equipment
performance and check equipment condition. Examples of measurements and instrument types
are:
1. Flo w/ Velocity: Orifice plate, Picot tube, Ventura tube, Turbine meter, Vortex shedding
flow meter
2. Temperature: Thermometers - Bimetallic, Resistance etc., Thermocouple, Radiation
pyrometer.
3. Pressure: Bourdon gauge Diaphragm gauge, Manometers
4. Stack Gas Analys is: Orsat apparatus, Oxygen analyzers, Carbon dioxide analyzers,
Carbon monoxide analyzers.
5. Heat flow: Thermography equipment
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6. Electrical: Multimeter, Ammeter, Wattmeter, Power Factor meter, Light meter
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7. Stream Trap Testing: Stethoscope, Ultrasonic Detector

The duration of DEA, studies depend on plant size and complexity. Whereas preliminary energy
study can be carried out in a fe w days, the detailed study would require anywhere from few
weeks to months to years of effort.
Long term approach
These are still short term solutions. The opportunities for improving the efficiency of energy use
in the long term, ho wever, lie in applying techniques and technologies of conservation to ne w
plants. Proper attention to the efficient use of energy at the design stage is vitally important.
General audit
The general audit (alternatively called a mini-audit, site energy audit or detailed energy audit or
complete site energy audit) expands on the preliminary audit described above by collecting more
detailed inf ormation about facility operation and by performing a more detailed evaluation of
energy conservation measures. Utility bills are collected for a 12 to 36 month period to allo w the
auditor to evaluate the facility's energy demand rate structures and energy usage profiles. If
interval meter data is available, the detailed energy profiles that such data makes possible will
typically be analyzed for signs of energy waste. Additional metering of specific energy-
consuming systems is often performed to supplement utility data. In-depth intervie ws with
facility operating personnel are conducted to provide a better understanding of major energy
consuming systems and to gain insight into short and longer term energy consumption patterns.
This type of audit will be able to identify all energy-conservation measures appropriate for the
facility, given its operating parameters. A detailed financial analysis is performed for each
measure based on detailed implementation cost estimates; site-specific operating cost savings,
and the customer's investment criteria. Sufficient detail is provided to justify project
implementation.
Invest ment-grade audit
In most corporate settings, upgrades to a facility's energy infrastructure must compete for capital
funding with non-energy-related investments. Both energy and non-energy investments are rated
on a single set of financial criteria that generally stress the expected return on investment (ROI ).
The projected operating savings from the implementation of energy projects must be developed
such that they provide a high level of confidence. In fact, investors often demand guaranteed
savings. The investment-grade audit expands on the detailed audit described above and relies on
a complete engineering study in order to detail technical and economical issues necessary to
justify the investment related to the transformations.
Simulation-based energy audit procedure for non-residential buildings

A complete audit procedure, very similar to the ones proposed by AS HRAE and Krarti (2000),
has been proposed in the frame of the AUDITAC[10] and HARMO NAC[11] projects to help in the
implementation of the EPB (“Energy Performance of Buildings”) directive in Europe and to fit to
the current European market.
The follo wing procedure proposes to make an intensive use of modern BES tools at each step of
the audit process, from benchmarking to detailed audit and financial study:
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• Benchmarking stage: While normalization is required to allo w comparison bet ween data
recorded on the studied installation and reference values deduced from case studies or
statistics. The use of simulation models, to perform a code-compliant simulation of the
installation under study, allows assessing directly the studied installation, without any
normalization needed. Indeed, applying a simulation-based benchmarking tool allows an
individual normalization and allows avoiding size and climate normalization.
• Preliminary audit stage: Global monthly consumptions are generally insuf ficient to allow
an accurate understanding of the building’s behaviour. Even if the analysis of the energy
bills does not allow identifying with accuracy the different energy consumers present in
the facility, the consumption records can be used to calibrate building and system
simulation models. To assess the existing system and to simulate correctly the building’s
thermal behaviour, the simulation model has to be calibrated on the studied installation.
The iterations needed to perform the calibration of the model can also be fully integrated
in the audit process and help in identifying required measurements and critical issues.
• Detailed audit stage: At this stage, on-site measurements, sub-metering and monitoring
data are used to refine the calibration of the BES tool. Extensive attention is given to
understanding not only the operating characteristics of all energy consuming systems, but
also situations that cause load profile variations on short and longer term bases (e.g.
daily, weekly, monthly, annual). When the calibration criteria is satisf ied, the savings
related to the selected ECOs/EC Ms can be quantified.
• Investment-grade audit stage: At this stage, the results provided by the calibrated BES
tool can be used to assess the selected ECOs/EC Ms and orient the detailed engineering
study.
Specific audit techniques

Infrared the rmography audit
The advent of high resolution thermography has enabled inspectors to identify potential issues
within the building envelope by taking a thermal image of the various surfaces of a building. For
purposes of an energy audit, the thermographer will analyze the patterns within the surface
temperatures to identify heat transfer through convection, radiation, or conduction. It is
important to note that the thermography ONLY identifies S URF ACE temperatures, and analysis
must be applied to determine the reasons for the patterns within the surface temperatures.
Thermal analysis of a home generally costs bet ween 300 and 600 dollars.
For those who cannot afford a thermal inspection, it is possible to get a general feel for the heat
loss with a non contact infrared thermometer and several sheets of reflective insulation. The
method involves measuring the temperatures on the inside surfaces of several exterior walls to
establish baseline temperatures. After this, reflective barrier insulation is taped securely to the
walls in 8-foot (2.4 m) by 1.5-foot (0.46 m) strips and the temperatures are measured in the
center of the insulated areas at 1 hour intervals for 12 hours (The reflective barrier is pulled away
from the wall to measure the temperature in the center of the area which it has covered.). The
best manner in which to do this is when the temperature differential (Delta T) bet ween the ins ide
and outside of the structure is at least 40 degrees. A well insulated wall will commonly change
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approximately 1 degree per hour if the difference bet ween external and internal temperatures is
an average of 40 degrees. A poorly insulated wall can drop as much as 10 degrees in an hour.
Pollution audits
With increases in carbon dioxide emissions or other greenhouse gases, pollution audits are no w a
prominent factor in most energy audits. Implementing energy efficient technologies help prevent
utility generated pollution.
Online pollution and emission calculators can help approximate the emiss ions of other prominent
air pollutants in addition to carbon dioxide.
Pollution audits generally take electricity and heating fuel consumption numbers over a t wo year
period and provide approximations for carbon dioxide, VOCs, nitrous oxides, carbon monoxide,
sulfur dioxide, mercury, cadmium, lead, mercury compounds, cadmium compounds and lead
compounds.
ENERGY INDEX
Energy may be purchased in various units, for example, coal in tones; gas in ft3, m3, therms; oil
in gallons, litres, tons, barrels etc. the relevant conversion units from one system to the other are
given below:
Units and conversion factors.

General Assu med efficiency in electricity
1 short ton (ton) = 2000 lb generation
1 metric ton (tonne) = 1000 kg (for calculating "primary energy")
1 ton = 0.907185 tonne
1 barrel = 42 U.S. gallons = 159.0 liters Source DOE/EI A OEC D/IEA
1 barrel of crude oil ~ 0.136 tonne
1 square mile = 640 acres = 2.590 km2 nuclear power 0.320 0.33
1 hectare = 10-2 km2 = 2.471 acres
hydroelectric 0.332a 1.00
Energy units
1 calorie (thermochemical) = 4.184 J biomass 0.332a
1 calorie (15 °C) = 4.1858 J wind and solar 0.332a 1.00
1 calorie (IT) = 4.1868 J geothermal 0.163 0.10
1 calorie (mean) = 4.1900 J
1 Btu = 251.9958 calories a. Set equal to efficiency for fossil fuels.
1 Btu (thermochemical) = 1054.35 J
1 Btu (59 °F) = 1054.80 J Heat content of fuels
1 Btu (IT) = 1055.06 J
1 Btu (mean) = 1055.87 J MBtua GJa
1 kilowatt-hour (kWh) = 3.6 x 106 J
1 kilowatt-hour (kWh) = 3412 Btu (IT) Nominal equivalents:
1 therm = 100,000 Btu 1 barrel of crude oil 5.80 6.12
1 electron-volt = 1.6022 x 10-19 J 1 tonne of crude oil 39.68 41.87
Large-scale units 1 short ton of coal 25.18 26.57
1 quad = 109 MBtu = 1015 Btu
1000 ft3 of natural gas 1.000 1.055
1 exajoule (EJ) = 1018 J
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1 terawatt-year (TWyr) = 8.76 x 1012 kWh Average for U.S., 1995:

1 bbl petroleum prod 5.358 5.653
Quada EJ
1 ton coal 20.852 22.000
1 quad 1.000 1.055 1000 ft3of natural gas 1.028 1.085
1 EJ 0.948 1.000 1 bbl petroleum products:
1 TWyr (100 % effic) 29.89 31.54 propane 3.836 4.047
1 TWyr (33 % effic) 90.6 95.6 aviation gasoline 5.048 5.326
109 tonne coal equiv 27.76 29.29 motor gasoline 5.253 5.542
109 barrel oil equiv 5.80 6.12 distillate fuel oil 5.825 6.146
109 tonne oil equivb 39.68 41.87 residual fuel oil 6.287 6.633
109 tonne oil equivc 42.43 44.77 Other:
1 cord dry woodb 21.5 22.7
a. Based on IT Btu. 235 c
1 tonne U 8 x 107 8 x 107
b. As used by OECD/IEA (Ref. 4).
c. As used in Ref. 6. a. 1 MBtu = 106 Btu (IT); 1 GJ = 109 J
Unit s of power b. 1 cord of dry wood = 1.25 ton
1 watt (W) = 1 J/sec
c. Ignoring n-capture in 235 U and 238U.
1 horsepo wer = 746 W
106 bbl of crude oil/day ~ 2.12 quad/yr
Exam ple 1:
An office block uses 40X103 gallons of fuel oil per year for heating purposes. The
calorific value is 175 X103 Btu/gal. The fuel consumption may be expressed in litres or m3.
40X103 gal = 40 X1034.545 litres = 182X103 litres = 182 m3
The calorific value may be quoted as 103 J/L
175X103 Btu/gal = 175X103 X0.2321 X103 J/L = 40600X103 J/L = 40.6X109 J/L
The total theoretical heat available becomes:
(a) 40X103 gal X 175X103 Btu/gal = 7.00 X109 Btu/year
(b) 182X103 L X 40600X103 J/L = 7.39X1012 J/year
(c) 182 m3 X 40.6 X109 J/L = 7.39 X1012 J/year
Exam ple 2:
Consider a company using three energy forms – oil, gas and electricity. The annual
energy consumption is shown below in various energy units. Each of these energy types may be
represented as a percentage of the total energy used and tabulated as an energy balance.
Energy type Consum ption Energy Energy (J) Energy (Wh)
Oil 10X103 gal 1.775X109 Btu 1.872X1012 0.520X109
Gas 5X103 therm 5X103 therm 0.526X1012 0.146X109
Electricity 995X103 KWh 995X103 KWh 0.358X1012 0.995X109
Total 2.754X1012 1.661X109
Note: Calorific value of oil: 18.3X10 Btu/lb; Density of fuel: 9.7 lb/gal
16
Percentage Energy Balance:

Energy Form Percentage
Oil 67.9
Gas 19.1
Electricity 13.0
Total 100.0
Energy index is a useful parameter to monitor and compare energy consumption of specific
products manufactured by the industry.Energy index is the figure obtained by dividing energy
consumption by production output, and the index may be calculated weekly, monthly or
annually. Although the total energy indices are sufficient for monitoring purposes, a record of the
individual energy indices should be maintained. In the event of an increase or decrease (due to
perhaps a conservation measure) in energy index, the particular source can be investigated
immediately.
Exam ple 3:
If the company in Example 2 produces 100 X103 tons of a particular product, calculate the ebergy
indices.
Oil energy index: 0.520X109 Wh/100X109 = 5.20X103 Wh/ton of product
Gas energy index: 0.146X109 Wh/100X109 = 1.46X103 Wh/ton of product
Electricity energy index: 0.995X109 Wh/100X109 = 9.95X103 Wh/ton of product
Total energy index: 1.661X109 Wh/100 X109 = 16.61X103 Wh/ton of product
COST IN DEX
The cost index is another parameter which can be used to monitor and assess energy
consumption by a company. The cost index is defined as the cost of energy divided by the
production output. An individual cost index can be determined for each energy form and for the
total energy consumption by the company.
Exam ple 1:
Table belo w sho ws energy costs for a company using coke, gas and electricity. This company
produces 15X103 tons per year. Calculate cost indices.
Energy Type Consum ption Costs

Coke 1.5X103 (tons) 108.0X103
Gas 18 X103 (therms) 3.6X103
Electricity 1 X109 (Wh) 22.5X103
Total 134.1X103
Coke cost index = 108.0 X103/15 X103 (tons) = 7.2/ton

Gas cost index = 3.6 X103/15 X103 (tons) = 0.2/ton
Electricity cost index = 22.5 X103/15 X103 (tons) = 1.5/ton
Total cost index = 134.1 X103/15 X103 (tons) = 8.9/ton
REPRESENTATION OF ENERGY CONSUMPTION

Several methods of representing energy flows and energy consumption are available and these
17
may be graphical or tabular. Most popular among them are Pie chart and the Sankey diagram.
18
Pie Chart
Energy usage is plotted on a circular chart where the quantity of a particular type is represented
as a segment of a circle. The size of the segment will be proportional to the energy consumption
using a particular fuel (energy form or source) relative to total energy use. The energy units must
be rationalized to the same units.
A pie chart (or a circle graph ) is a circular chart divided into sectors, illustrating proportion. In
a pie chart, the arc length of each sector (and consequently its central angle and area), is
proportional to the quantity it represents. When angles are measured with 1 turn as unit then a
number of percent is identified with the same number of centiturns. Together, the sectors create a
full disk. It is named for its resemblance to a pie which has been sliced. The sizes of the sectors
are calculated by converting between percentage and degrees or by the use of a percentage
protractor. The earliest known pie chart is generally credited to William Playfair's Statistical
Breviary of 1801.
The pie chart is perhaps the most widely used statistical chart in the business world and the mass
media. However, it has been criticized, and some recommend avoiding it, pointing out in
particular that it is difficult to compare different sections of a given pie chart, or to compare data
across different pie charts. Pie charts can be an effective way of displaying information in some
cases, in particular if the intent is to compare the size of a slice with the whole pie, rather than
comparing the slices among them. Pie charts work particularly well when the slices represent 25
to 50 % of the data, but in general, other plots such as the bar chart or the dot plot, or non-
graphical methods such as tables, may be more adapted for representing certain information.
Example
The following example chart is based on preliminary results of the election for the European
Parliament in 2004. The table lists the number of seats allocated to each party group, along with
the derived percentage of the total that they each make up. The value in the last column, the
derived central angle of each sector, is found by multiplying the percentage by 360°.
Group Seats Percent (%) Cent ral angle (°)
EUL 39 5.3 19.2
PES 200 27.3 98.4
EF A 42 5.7 20.7
EDD 15 2.0 7.4
ELDR 67 9.2 33.0
EPP 276 37.7 135.7
UEN 27 3.7 13.3
Other 66 9.0 32.5
Total 732 99.9* 360.2*
*Because of rounding, these totals do not add up to 100 and 360.

The size of each central angle is proportional to the size of the corresponding quantity, here the
number of seats. Since the sum of the central angles has to be 360°, the central angle for a
14
quantity that is a fraction Q of the total is 360Q degrees. In the example, the central angle for the
15
largest group (European People's Party (EPP )) is 135.7° because 0.377 times 360, rounded to one
decimal place(s), equals 135.7.
Exam ple: Stu dent Grades

Here is ho w many students got each grade in the recent test:
A B C D
4 12 10 2
And here is the pie chart:
Pie Chart - A special chart that uses "pie slices" to show relative sizes of data.
Imagine you just did a survey of your friends to find which kind of movie they liked best.
Here are the results:
Table: Favorite Type of Movie
Comedy Action Romance Drama SciFi
4 5 6 1 4
You could sho w that by this pie chart:
It is a really good way to show relative sizes: it is easy to see which movie types are most liked,
and which are least liked, at a glance.
You can create graphs like that using our Data Graphs (Bar, Line and Pie) page.
Ho w to Make Them Yourself
First, put your data into a table (like above), then add up all the values to get a total:
16
Comedy Action Romance Drama SciFi TOTAL

4 5 6 1 4 20
Next, divide each value by the total and multiply by 100 to get a percent:
4 5 6 1 4 20
4/20 = 20% 5/20 = 25% 6/20 = 30% 1/20 = 5% 4/20 = 20% 100%
No w you need to figure out ho w many degrees for each "pie slice" (correctly called a sector).
A Full Circle has 360 degrees, so we do this calculation:
4 5 6 1 4 20
4/20 = 20% 5/20 = 25% 6/20 = 30% 1/20 = 5% 4/20 = 20% 100%
4/20 × 360° 5/20 × 360° 6/20 × 360° 1/20 × 360° 4/20 × 60°
360°
= 72° = 90° = 108° = 18° = 72°
No w you are ready to start drawing!

Draw a circle.
Then use your protractor to measure the degrees of
each sector.
Sankey Diagram
Sankey diagram s are a specific type of flow diagram, in which the width of the arro ws is sho wn
proportionally to the flow quantity. They are typically used to visualize energy or material or
cost transfers between processes.
Applications
They are also commonly used to visualize the energy accounts or material flow accounts on a
regional or national level. Sankey diagrams put a visual emphasis on the major transfers or flows
within a system. They are helpful in locating dominant contributions to an overall flo w. Often,
Sankey diagrams sho w conserved quantities within defined system boundaries,
typically energy or mass, but they can also be used to show flows of non-conserved quantities
such asexergy. Sankey Diagrams drop their arrows when energy is being used.
16
One of the most famous Sankey diagrams is Charles Minard's Map of Napolean's Russian
Campaign of 1812. It is a flo w map, overlaying a Sankey diagram onto a geographical map. It
was created in 1869.
Sankey diagrams are named after Irish Captain Matthew Henry Phineas Riall Sankey, who used
this type of diagramin 1898 in a publication on the energy efficiency of a steam engine (see
reproduction in[1], page 8). While the first charts in black and white were merely used to display
one type of flow (e.g. steam), using colors for different types of flows has added more degrees of
freedom to Sankey diagrams.
17
Show it with Sankey Diagrams

Phosporus in the natural environment and the food chain has been a topic of several posts on my
blog. So it didn’t come as a surprise to find yet another diagram on phoshphorus flows over
at Nels’s MF A Diagram blog (one of the blogs I follow closely, see blogroll).
MF A diagrams have their focus on the nodes and the build-up of stocks. Sometimes they get a
touch of Sankey diagram with the arro ws having different magnitudes. The MF A diagram belo w
is for phosphorous flo ws in China 2008 (original source: Min Qiao, Yuan- Ming Zheng, Yong-
Guan Zhu, 2011. Material flo w analysis of phosphorus through food consumption in t wo
megacities in northern China). Values are in tonnes.
We can detect arrows with three different brush widths (my guess is 1px, 2px and 4 px), each
standing for a value range into which the actual flow quantity falls. This may, ho wever, bes
somewhat misleading when having a quick glance at the diagram.
I quickly “translated” the above diagram to a Sankey diagram with flo w values being actually to
scale.
Here it is quite clear where the major phosphorus flows are located (from food production via
urban consumption to se wage treatment plant and solid waste disposal: 2923 out of 5374 tons
end up here). The other flo ws are comparatively small, with the phoshporous flow going directly
to the aquatic system worth a mention. Two small flo ws in the center of the diagram are
18
negligible, they are in fact so tiny in comparison to the major flows that they even don’t show up
(or just as a hairline) here.
I have therefore added a minimum width of 1 px for small flows so that the annual 17 tons from
urban consumption and the 1.9 tons from rural consumption to the solid waste disposal are at
least visible (albeit not to scale with the other flows any more).
Load Profiles
Introduction
The energy load profile (hereafter referred to as simply "load profile") is an estimate of the total
energy demanded from a power system or sub-system over a specific period of time (e.g. hours,
days, etc). The load profile is essentially a two-dimensional chart showing the instantaneous load
(in Volt-Amperes) over time, and represents a convenient way to visualize how the system loads
changes with respect to time.
Note that it is distinct from the electrical load schedule - the load profile incorporates a time
dimension and therefore estimates the energy demand (in kWh) instead of just the instantaneous
load / power (in kW).
19
Why do the calculation?

Estimating the energy demand is important for the sizing of energy storage devices, e.g.
batteries, as the required capacity of such energy storage devices depends on the total amount of
energy that will be drawn by the loads. This calculation is also useful for energy efficiency
applications, where it is important to make estimates of the total energy use in a system.
When to do the calculation?
A load profile needs to be constructed whenever the sizing of energy storage devices (e.g.
batteries) is required. The calculation can be done once preliminary load information is available.
Calculation Methodology
There are two distinct methods for constructing a load profile:
1) Autonomy method is the traditional method used for backup power applications, e.g.
UP S systems. In this method, the instantaneous loads are displayed over an autonomy
time, which is the period of time that the loads need to be supported by a backup power
system in the event of a po wer supply interruption.
2) 24 Hour Profile method displays the average or expected instantaneous loads over a
24 hour period. This method is more commonly associated with standalone po wer s ystem
applications, e.g. solar systems, or energy efficiency applications.
Both methods share the same three general steps, but with some differences in the
details:
▪ Step 1: Prepare the load list
▪ Step 2: Construct the load profile
▪ Step 3: Calculate the design load and design energy demand
20
Step 1: Prepare the Load List

The first step is to transform the collected loads into a load list. It is similar in form to
the electrical load schedule, but is a little simplified for the purpose of constructing a load
profile. For instance, instead of categorizing loads by their load duty (continuous, intermittent or
standby), it is assumed that all loads are operating continuously.
Ho wever, a key difference of this load list is the time period associated with each load item:
In the autonomy method, the associated time period is called the "autonomy" and is the number
of hours that the load needs to be supported during a po wer supply interruption. Some loads may
only be required to ride through brief interruptions or have enough autonomy to shut do wn
safely, while some critical systems may need to operate for as long as possible (up to several
days).
In the 24 hour profile method, the associated time period is represented in terms of " ON" and
" OFF " times. These are the times in the day (in hours and minutes) that the load is expected to be
s witched on and then later turned off. For loads that operate continuously, the ON and OFF time
would be 0:00 and 23:59 respectively. A load item may need to be entered in t wice if it is
expected to start and stop more than once a day.
Calculating the Consu med Load VA

For this calculation, we are interested in the consumed apparent power of the loads (in VA). For
each load, this can be calculated as follo ws:
Where is the consumed load apparent power (VA)

is the consumed load power (W)
is the load power factor (pu)
is the load efficiency (pu)
21
Step 2: Construct t he Load Profile

The load profile is constructed from the load list and is essentially a chart that sho ws the
distribution of the loads over time. The construction of the load profile will be explained by a
simple example:
Load profile constructed for this example
Suppose the following loads were identified based on the Autonomy Method:
De scription Load ( VA) Autonomy (h)

DCS Cabinet 200 4
ESD Cabinet 200 4
Telecommunications Cabinet 150 6
Computer Console 90 2
The load profile is constructed by stacking "energy rectangles" on top of each other. An energy
rectangle has the load VA as the height and the autonomy time as the width and its area is a
visual representation of the load's total energy. For example, the DCS Cabinet has an energy
rectangle of height 200 (VA) and width 4 (hours). The load profile is created by stacking the
widest rectangles first, e.g. in this example it is the Telecommunications Cabinet that is stacked
first.
For the 24 Hour method, energy rectangles are constructed with the periods of time that a load is
energized (i.e. the time difference bet ween the ON and OFF times).
22
Step 3: Calculate Design Load and Energy Demand

De sign Load
The design load is the instantaneous load for which the po wer conversion, distribution and
protection devices should be rated, e.g. rectifiers, inverters, cables, fuses, circuit breakers, etc.
The design can be calculated as follo ws:
Where is the design load apparent po wer ( VA)
is the peak load apparent power, derived from the load profile ( VA)
is a contingency for future load gro wth ( %)
is a design margin ( %)
It is common to make considerations for future load gro wth (typically somewhere between 5 and
20%), to allow future loads to be supported. If no future loads are expected, then this
contingency can be ignored. A design margin is used to account for any potential inaccuracies in
estimating the loads, less-than-optimum operating conditions due to improper maintenance, etc.
Typically, a design margin of 10 % to 15 % is recommended, but this may also depend on Client
preferences.
Exam ple : From our simple example above, the peak load apparent po wer is 640VA. Given a
future gro wth contingency of 10 % and a design margin of 10 %, the design load is:
VA
De sign Energy Demand
The design energy demand is used for sizing energy storage devices. From the load profile, the
total energy (in terms of VAh) can be computed by finding the area underneath the load profile
curve (i.e. integrating instantaneous power with respect to time over the autonomy or 24h period).
The design energy demand (or design VAh) can then be calculated by the following equation:
Where is the design energy demand ( VAh)
is the total load energy, which is the area under the load profile ( VAh)
is a contingency for future load gro wth as defined above ( %)
is a design contingency as defined above ( %)
Exam ple : From our simple example above, the total load energy from the load profile is
2,680VAh. Given a future growth contingency of 10 % and a design margin of 10 %, the design
energy demand is:
Vah
23
Energy Conservation Schemes

Development of an energy conservation programme can provide savings by reduced energy use.
Ho wever, it is economical to implement an energy conservation program only when savings can
offset implementation cost over a period of time. Potential areas of conserving energy and a
logical analysis of the methods or techniques of conservation would provide a systematic and
disciplined approach to the entire conservation strategy as a sequel to the energy audit. Some
established conservation trends are replacement, retrofit, process innovation, fuel conservation
and co-generation.
It is generally considered that investment for energy conservation should be judged by exactly the
same criteria as for any other form of capital investment. Energy conservation measures may be
classified on an economic basis and fall into the follo wing three categories:
(a) Short term: These measures usually involve changes in operating practices resulting in
little or no capital expenditure.
(b) Medium term : Lo w-cost modifications and improvements to existing equipment where
the pay-back period is less than t wo years and often under one year.
(c) Long term : Modifications involving high capital costs and which frequently involve the
implementation of new techniques and new technologies.
While the first two categories together can achieve savings of the order of 5 -10 %, capital
expenditure using existing and ne w technology may achieve a further 10-15 %. It is impossible to
give a comprehensive list of all items in each category but selected examples are given for each
section.
Short- term energy conservation schemes
Items in this group can be considered as a tightening of operational control and improved
housekeeping.
(a) Furnace efficiencies: Greater emphasis should be placed on minimum excess combustion
air. Oxygen levels of flue gases should be continually monitored and compared with
target values. Oil burners must be cleaned and maintained regularly.
(b) Heat exchangers: In the case of heat where useful heat is transferred from product
streams to feed streams, careful monitoring of performance should be carried out to
determine optimum cleaning cycles. Frequency of cleaning will generally increase as a
result, with consequent improved heat recovery.
(c) Good housekeeping: Doors and windo ws should be kept closed as much as possible
during the heating season. Wear natural light is sufficient, do not use artificial light.
Avoid excessive ventilation during the heating season. Encourage staff to wear clothing
appropriate to the temperature of the working areas.
(d) Use of steam: Major steam leaks should be repaired as soon as possible after they occur:
often a firm specializing in ‘on stream’ maintenance can be used. One crude distillation
columns where live steam is used for stripping purposes, the amount required should be
optimized and carefully controlled.
24
(e) Electrical po wer: In industries where all the electrical po wer is ‘imported’ conservation
measures can reduce the annual electricity costs by 10–15 percent. Steam driven turbines
may prove more economical as prime movers. Natural air cooling may be sufficient and
therefore induced–draught fans may be taken out of commission. Pumping costs can
sometimes be saved by utilizing gravity to move products from one tank to another.
Where possible, use off-peak electricity.
Medium -term energy conse rvation sche mes
Significant savings in energy consumption are often available for quite modest outlays of
Capital based on a pay-back period of less than t wo years,
(a) Insulation: Improving insulation to prevent cold air leaking into the building and also,
improving insulation thickness was determined at a time when fuel oil was Rs 6 per tone
and, consequently, at present fuel oil prices, optimum thicknesses have increased
appreciably. In addition, in older plants lagging may have deteriorated to varying
degrees. For an outlay of Rs25000, savings of Rs60000 per annum were achieved.
In all oil refinery the lagging on the process steam system was up rated to new optimum
thicknesses and the Rs20000 invested in the project was recouped within a year
(b) Heating Systems: Improving the time and temperature control of the heating systems in
buildings should result in substantial energy savings.
(c) Replacing air compressors
(d) Instrumentation: To measure and control the energy conservation parameters, adequate
instrumentation must be provided or operators will soon lose interest in maintaining
efficiencies if they are working with inadequate an unreliable instruments.
(e) Process modifications: Many of these schemes will depend on the nature of the industry
concerned, however, one general scheme will be considered. Steam condensate, if
uncontaminated, may be used as boiler feed water. Improved condensate return systems
can increase the amount recovered. The effect will be to increase the heat recovered in
the condensate and at the same time reduce raw water and treatment costs.
In one instance 10000 Kg/h of condensate was recovered for an investment of Rs10000;
the pay-back time was less than six months.
(f) Burners: The control and amount of atomizing stream is important and often in furnaces
and boilers the amount of atomizing steam is far in excess of design.
In a hospital t wo fuel oil-fired boilers were examined and in some instances it was found
that 1 kg steam/kg fuel oil was being utilized. The oil burners were replaced and the
atomizing steam requirements are no w 0.1 kg steam/kg fuel oil. The pay-back for an
outlay of Rs12000 was ten months.
(g) Electrical Po wer Savings: Considerable savings may be made by adjusting the electrical
power factor correction.
25
Capacitors were installed in one particular company at a cost of Rs 10000. The po wer factor
was increased from 0.84 to 0.97 reducing the maximum demand level by over 14 percent.
The pay-back time was nine months.
To increase plant capacity t wo feed pumps may be run in parallel to achieve the required feed
rate. When replacement, for mechanical reasons, becomes necessary it is more economical
to replace the pump by a single pump having a higher capacity.
Long-term energy conse rvation sche mes
To obtain further economics in energy consumption required the spending of significant
amounts of capital, although, in many cases, the return on capital for the long-term
investment may not be as good as that of the medium term. Full financial evaluation is
needed, using the appraisal techniques discussed in Unit- V, to ensure the investment is
economically viable.
(a) Heater modifications: The installation of heating tubes and air pre-heaters to extract
more heat from furnace flue gases.
(b) Improved Insulation: Additional lagging of heated storage tanks. This type of project
often comes within the medium-term group.
(c) Heat recovery: improved heat recovery in the processing areas by additional heat
exchange schemes.
Many of the energy projects that have been outlined may be adopted by a wide variety of
companies. However, some are more specific in their application and it is necessary to
consider the contribution of energy costs to companies and energy usage by different
industries.
The ABCs of Energy Conservation Schemes can be used as a checklist to identify the areas
of deficiency and adopt the right approach for energy savings.
A B C
Adjustable frequency drives Balancing energy Co-generation
Ambient air reset controls Blow-down controllers Chiller optimization
Analysis of audit results Break-even analysis Copper fins in cooling/ heating
D E F
Demand control Economizer control Fenestration techniques
Delay monitoring and avoidance Efficient equipment selection Filter loading control
DDC management systems Energy audit and analysis Fan efficiency optimization
G H I
Glazing systems for heat gain Heat energy tacking Insulation
Gas cooling Heat recovery methods Infiltration control
General housekeeping High efficiency criteria Inspections
J K L
Job-task analysis Kettle heat control Lighting
Joint sealing and testing kWh and kW reduction Load calculation/shedding
Justify retrofits keg temperature control Life-cycle cost analysis
M` N O
26
Ma intenance Non conventional methods Occupancy sensors
Metering Novel technologies Optimization
Monitoring Natural gas use Over-rating avoidance
27
P Q R
Peak demand shaving Quality Retrofits
Power factor corrections Return air systems
Pay-back period Rate of return
S T U
Solar energy Time of day U-values
Steam traps Thermostat settings Utilities
Selection criteria Temperature control Utility meter close to site
V W X,Y,Z
Variable air volume boxes water conservation XTMR losses
Variable supply air set point waste heat recovery Yearly cost and savings
Voltage selection water treatment Zone controls
Measurements in energy audits

A home energy audit can help you find some surpris ing ways to save energy and money.
Conserving energy at home is a great idea for many reasons. It cuts do wn on energy costs, and
because most of the energy we use comes from fossil fuels, using less is beneficial for the
environment, too.
In many ways, saving energy can be pretty simple. You can find dozens of different ways to
conserve — such as turning down your thermostat in the winter, putting a blanket on your water
heater or switching to more efficient light bulbs. But most homes are so inefficient that even
after you’ve done all the easy home improvements, there are still dozens of ways to save money
and energy. How do you identify them all and then decide which to do first?
Unfortunately, the improvements that save you the most energy over time tend to be expensive.
Before you spend hundreds — or even thousands — of dollars on home improvements, such as
buying a new furnace, installing insulation or putting in new windo ws, it’s nice to know ho w
much energy they’ll actually save. Just as important, you’ll want to know ho w long these home
energy upgrades will take to pay for themselves and start saving you money.
These questions aren’t just for older homes — ne w homes often have significant energy
problems, says Ken Riead of Hathmore Technologies in Independence, Mo. Riead is a home
energy rater (one type of certification for home energy auditors). He trains other energy raters
and has been working in the field of energy efficiency and rene wable energy since the 1970s.
“New houses typically aren’t as solidly constructed as older houses,” Riead says. “New homes
can leak more air, causing health and comfort problems, and the quality of the wood and other
building components can be poor. Insulation is often very sloppily installed and, in many cases,
miss ing entirely.”
A home energy audit can help, he explains. “Most homeowners aren’t knowledgeable about ho w
to look for these problems, nor ho w to properly correct them. Unless your home is an Energy
Star home or has undergone energy testing, you will likely experience high energy bills and
comfort problems, so it is well worth having an energy audit performed,” Riead says.
28
Presentation of Energy Audit Results
29
ENERGY AUDITING & DEMAND SIDE MANAGEMENT (15A02706)
30
UNIT – II
ENERGY EFFICIENT MOTORS
Energy efficient motors, factors affecting efficiency, loss distribution,
constructional details, characteristics – variable speed, variable duty cycle systems,
RMS hp – voltage variation – voltage unbalance – over motoring – motor energy
audit.
ENERGY EFFICIENT MOTORS:
Energy efficient motors (EEM) are the ones in which, design improvements are
incorporated specifically to increase operating efficiency over motors of s tandard
design (see figure). Design improvements focus on reducing intrinsic motor losses.
Improvements include the use of lower-loss silicon steel, a longer core (to increase
active material), thicker wires (to reduce resistance),thinner laminations, smaller
air gap between stator and rotor, copper instead of aluminum bars in the rotor,
superior bearings and a smaller cooling fans, etc.
Energy-efficient motors operate with efficiencies that are typically 4 to 6% higher
than the standard motors. In keeping with the stipulations of the BIS, energy-
efficient motors are designed to operate without loss in efficiency at loads between
75% and 100% of rated capacity. This may result in major benefits in varying load
applications. The power factor is about the same or may be higher than for
standard motors. Furthermore energy-efficient motors have lower operating
temperatures and levels, greater ability to accelerate higher-inertia loads, and are
less affected by supply voltage fluctuations.
Energy efficient motors cover a wide range of ratings and the full load efficiencies
are higher by 3 to 7%. The mounting dimensions are also maintained as per IS1232
to enable easy replacement. As a result of the modifications to improve
performance, the costs of energy-efficient motors are higher than those of standard
motors by about 30%. The higher cost will often be paid back rapidly in saved
operating costs, particularly in new applications or end-of-life motor replacements.
In cases where existing motors have not reached the end of their useful life, the
economics will be less positive.
Because the favorable economics of energy-efficient motors are based o savings in
operating costs, there may be certain cases which are economically ill-suited to
energy-efficient motors. These include highly intermittent duty or special torque
applications such as hoists and cranes, traction drives, punch presses, machine
tools and centrifuges.
In addition, energy efficient designs of multi-speed motors are generally not

available. Further, energy-efficient motors are not yet available for many special
applications, e.g. for flame-proof operation in oil-field or fire pumps or for very
low speed applications (below 750 rpm). Also, most energy-efficient motors
produced today are designed only for continuous duty cycle operation.
Given the tendency of over-sizing on the one hand and ground realities like:
voltage, frequency variations, efficacy of rewinding in case of a burnout, on the
other hand, benefits of EEMs can be achieved only by careful selection,
implementation, operation and maintenance efforts of energy managers. Summary
of energy efficiency improvements in EEMs is given in the following Table.
Energy Efficient Motors
Power Loss Area Efficiency Improvement
2
1. Stator I R Use of more copper and larger conductors increase cross
sectional area of stator windings. This lowers resistance (R) of
the windings and reduces losses due to current flow (I).
2
2. Rotor I R Use of larger rotor conductor bars increase size of cross
section, lowering conductor resistance (R) and losses due to
current flow (I).
3. Iron Use of thinner gauge, lower loss core steel reduces eddy
current losses. Longer core adds more steel to the design,
which reduces losses due to lower operating flux densities.
4. Friction & Use of low fan design reduces losses due to air movement.
Windage
5. Stray Load Loss Use of optimized design and strict quality control procedures
minimizes stray load losses.
Measures adopted for energy efficiency address each loss specifically as

under:
FACTORS AFFECTING EFFICIENCY AND LOSS DISTRIBUTION
A fundamental issue that can affect a motor’s energy usage is its suitability for the
intended application. Motors are designed to operate most efficiently at their
nameplate rating. The nameplate rating of the motor is commonly disregarded by
motor users! Imagine in a sugar mill, their supply voltage is 480V but the
nameplate voltages of motors are 440V, 460V, and 480V. No doubt 50% of their
motor inventories were rewound. Selecting the wrong motor for a particular
application or operating the motor outside its recommended parameters will
decrease the motor’s performance, introducing additional losses into the electrical
system.
There are many factors affecting performance of AC motor that will affect its
efficiency and will end-up burn motor windings. Restoring motor efficiency after
rewound becomes a problem.
As long as nobody is given the responsibility for company-wide electric motor
asset management, employees in the production environment will continue to act
on an ad hoc basis, maintaining, repairing, and replacing motors in the same way
they have in the past. The obvious driver for change usually escapes notice since
the losses that are generated by a sub-optimal motor are scattered among different
cost centers: energy consumption, material waste, lost revenue, extra working
hours, reduced productivity, reduced production quality, et cetera. By assigning an
individual — either inside the company or outsourced — to electric motor asset
management, electric motors will receive the focus they deserve.
A. Motor Performance
There is a wealth of information about a motor’s performance buried in the
characteristics of the electrical signals at the motor’s terminals. With the motor’s
nameplate data and these electrical characteristics, it is possible to quantify many
energy savings opportunities for a given motor. The fundamental electrical
characteristics include the voltage, current, and frequency data for each phase. By
collecting data on these fundamental characteristics, monitoring devices can
provide additional information needed to maximize energy savings including:
• Voltage variations
• Voltage unbalance
• Motor load (based on current)
• Total harmonic distortion
• Power Factor
B. Voltage Variance
Induction motors are at times operated on circuits of voltage other than those for
which the motors are rated. Under such conditions, the performance of the motor
will vary from the rating, as shown in Figure 2. The following are some of the
operating results caused by small variation of voltage:
• Motor temperature
• Power factor
• Starting torque
• Slip
From Figure 2, a 10% voltage variation increase motor load by 2.5 – 3.5%, reduce
efficiency by 1%, reduce power factor by 10%, and etc.
C. Voltage Unbalance
Voltage unbalance (including single phasing) is both a leading cause of motor
failures and a major contributor to energy losses in motors. The subsequent current
unbalances that result produce additional losses in the motor. The effect of
unbalanced voltages on polyphase induction motors is equivalent to the
introduction of a “negative sequence voltage” having a rotation opposite to that
occurring with balanced voltages. This negative sequence voltage produces in the
air gap a flux rotating against the rotation of the rotor, tending to produce high
currents. The unbalance voltage is defined as:
The impacts of voltage unbalance are as follows:
• Increase in winding temperatures. The increase in winding temperature causes

additional power losses and a significant drop in motor efficiency
• Increase vibrations and noise

D. Motor load
Motor load increases when there are stresses coming from bearing and unusual
mechanical loads. 50% of machinery problems, electric motor in particular are
caused by excessive load due to unbalance, misalignment, and belt tension. Figure
3, 4, and 5 showed the impact of misalignment to motor load.
Other stresses such as: heat, power supply anomalies, humidity, and contamination
work in conjunction with time to degrade components. Motors will survive for
several hundred thousand operating hours when these stresses are minimized with
the use of technologies to maintain the motor and its drive systems as well as well
trained technical personnel.
E. Total Harmonic Distortions
Harmonic distortion is the change in the waveform of the supply voltage from the
ideal sinusoidal waveform. It’s caused by the interaction of distorting customer
loads with the impedance of the supply network. Its major adverse effects are the
heating of transformers, capacitors, induction motors, and the overloading of
neutral conductors that are not rated to carry large currents. Therefore, monitoring
Total Harmonic Distortion (THD) is very important to utilities.
F. Power Factor
The term power factor is defined as a ratio of the current drawn that produces real
work to the total current drawn. Like most aspects of modern electrical systems,
power factor is a complex issue intertwined with utility rate structures, economic
consideration and system capacities.
2
Stator and Rotor I R Losses
These losses are major losses and typically account for 55% to 60% of the total
2
losses. I R losses are heating losses resulting from current passing through stator
2
and rotor conductors. I R losses are the function of conductor resistance and the
square of current. Resistance of conductor is a function of conductor material,
length and cross sectional area. The suitable selection of copper conductor size will
reduce the resistance. Reducing the motor current is most readily accomplished by
decreasing the magnetizing component of current. This involves lowering the
2
operating flux density and possible shortening of air gap. Ro tor I R losses are a
function of the rotor conductors (usually aluminum) and the rotor slip. Utilization
of copper conductors will reduce the winding resistance. Motor operation closer to
2
synchronous speed will also reduce rotor I R losses.
CORE LOSSES
Core losses are those found in the stator-rotor magnetic steel and are due to
hysteresis effect and eddy current effect during 50 Hz magnetization of the core
material. These losses are independent of load and account for 20-25% of the total
losses.The hysteresis losses which are a function of flux density are reduced by
utilizing low-loss grade of silicon steel laminations. The reduction of flux density
is achieved by suitable increase in the ore length of stator and rotor. Eddy current
losses are generated by circulating current within the core steel laminations. These
are reduced by using thinner laminations.
Friction and Windage Losses
Friction and windage losses result from bearing friction, windage and circulating
air through the motor and account for 8-12% total losses. These losses are
independent of load. The reduction in heat generated by stator and rotor losses
permits the use of smaller fan. The windage losses also reduce with the diameter of
fan leading to reduction in windage losses.
Stray Load-Losses
These losses vary according to square of the load current and are caused by
leakage flux induced by load currents in the laminations and account for 4 to 5% of
total losses. These losses are reduced by careful selection of slo t numbers,
tooth/slot geometry and air gap.
Constructional Details
The efficiency of energy efficient motors is higher due to the following
constructional features:
1. By increasing the amount of copper in the motor (≥60%) which reduces the
resistance (Ohmic) loss in the winding & temperature rise. Performance
improves because of increased thermal mass.
2. Use of more & thinner laminations of high quality motor steel reduces core
losses in the stator and rotor.
3. Narrowing of air gap between stator and rotor increases the intensity of
magnetic flux, thereby improving the motor ability to deliver the same
torque at reduced power. Increasing the length of stator and rotor increases
the net flux linkages in the air gap to the same effect.
4. More complex rotor bar designs enable good starting torque with efficient
full speed operation.
5. Improved overall design reduces windage losses and stray load losses.
Applications
Energy efficient motors hold their efficiency better at part loads enhancing their
advantage over standard motors. Economic benefits of installing energy efficient
motors can be recognized in three situations:
• In a new applications (Plant expansion)
• In lieu of rewinding of failed motors
• Proactive replacement for in-service standard motors
Energy efficient motors are more cost effective than standard motors in the above
cases. Efficient of EEMs is 4 – 6 % higher compared to the efficiency of standard
motors.
Energy efficiency motors run cooler, and therefore have potentially longer life than
their standard efficiency counterparts.
Characteristics – variable Speed, Variable Duty Cycle Diagrams
The single most potent source of energy savings in induction motor system
lies not in the motor, but rather in the controls that govern its operation. Adjustable
speed, intelligent controls and other ways of modifying or controlling motor
behavior hold great promise for improving performance and efficiency in drive
systems.
Need for using controls
Induction motors are well suited to single speed, constant output
applications. However, there are large numbers of motor/ load/ system
combinations where single speed operation does not efficiently meet the process
requirements, usually due to two common factors.
• Oversized motor: motors are often oversized for their loads causing not only
reduced efficiency, but also reduced power factor, and in many cases
increased energy consumption in the load because of reduced slip.
• Varying Load: Many applications require modulated output from a
motor/load/system. These systems are sized to provide the maximum output
under the worst operating conditions, but rarely require this much flow (output).
The excess energy is wasted, usually by some form of throttling.
Controlling motor speed to load requirements provides many benefits, including
increased energy efficiency and improved power factor. Adjustable speed
capability can significantly improve productivity of many manufacturing
processes by reducing scrap, enabling quality manufacturing during transition
times and allowing more control over start up and shut down.
Following are the benefits of VSDs:
• Matching motor and load to output
• Improved process precision
• Improved power factor
• Improved tool life
• Increased production & flexibility
• Faster response
• Extend operating range
• Electrical isolation
• Driving multiple motors
• Throttled load saving (throttling is the most energy inefficient operation)
3)
• Cube-law load savings (P∞N
RMS HORSEPOWER LOADING
There are great applications especially in hydraulics and hydraulically-driven
machines that have greatly fluctuating load requirements. In some cases, the peak
loads last for relatively short periods during the normal cycle of the machine. At
first glance, it might seem that a motor would have to be sized to handle the worst
part of the load cycle. For example, if a cycle included a period of time where
18HP is required, then the natural approach would be to utilize a 20 HP motor. A
more practical approach to these types of “duty cycle loads” takes advantage of an
electric motor’s ability to handle substantial overload conditions as long as the
period of overload is relatively short compared to the total time involved in the
cycle.
The method of calculating whether or not the motor will be suitable for a
particular cycling application is called the RMS (root mean squared) horsepower
loading method. The calculations required to properly size a motor for this type of
application are relatively simple.
The RMS calculations take into account the fact that heat buildup within the
motors is very much greater at a 50% overload than it is under normal operating
conditions. Thus, the weighted average horsepower is what is significant. RMS
calculations determine the weighted average horsepower.
In addition to reducing the size and cost of a motor for a particular application,
RMS loading also helps improve the overall efficiency and power factor on a duty
cycle-type load. For example, when an oversized motor is operated on a light
load, the efficiency is generally fairly low. So working the motor harder (with a
higher average horsepower) will generally result in improved overall efficiency
and reduced operating cost. In order to use the RMS method of horsepower
determination, the duty cycle has to be spelled out in detail as shown in the
following example.
In order to determine the RMS loading for the previous cycle, we can use the
formula:
The easiest way to approach this type of calculation is to make several columns as
shown below and fill in the details underneath.
2 2
Step Horsepower HP Duration (seconds) HP x Time
1 3.0 9.0 3 27.0
2 7.5 56.3 10 563.0
3 2.5 6.3 12 75.6
4 12.5 156.3 3 468.8
Total 28 1134.4
In this case, the total time of the cycle is 28 seconds and the summation of
horsepower squared times time for the individual steps in the cycle is 1134.4.
When inserted into the equation, the RMS horsepower comes out to be:
At first glance, it appears that a 7-1/2 HP motor would be adequate to handle the
loading required by this duty cycle. One further check has to be made and that is
to determine if the motor has adequate pullout torque (breakdown torque) to
handle the worst portion of the duty cycle (12.5 hp load for 3 seconds) without
stalling. In this case, one would have to refer to the manufacturer’s data for the
motor and determine the percent of pullout torque that is available.
VOLTAGE VARIATON AND VOLTAGE UNBALANCE
Voltage unbalance degrades the performance and shortens the life of a three-phase
motor. Voltage unbalances at the motor stator terminals causes phase current
unbalance far out of proportion the voltage unbalance. Unbalanced currents lead
to torque overheating, which results in a shorter winding insulation life.
Voltage unbalance is defined by the National Electrical Manufacturers
Association (NEMA) as 100 times the absolute value of the maximum deviation
of the line voltage from the average voltage on a three-phase system, divided by
the average voltage. For example, if the measured line voltages are 462,463, and
455 volts, the average is 460 volts. In this case, the voltage unbalance is:
(460-455)/ 460*100=1.1%
It is recommended that the voltage unbalances at the motor terminals not exceed
1% Common causes of voltage unbalance include:
• Faulty operation of power factor correction equipment
• Unbalanced or unstable utility supply
• Unbalanced transformer bank supplying a three-phase load that is too large
for the bank
• Unidentified single-phase to ground faults
• An open circuit on the distribution system primary
The efficiency of a rewound, 1800-RPM, 100-hp motor is given as a function of

voltage unbalanced and motor load in the following table
The general trend of efficiency reduction with increased voltage unbalanced is
observed for all motors at all load conditions.
Table: Motor efficiency under Conditions of voltage Unbalance
Motor Load %of Full Motor Efficiency, %
Voltage Unbalance
Nominal 1% 2.5%
100 94.4 94.4 93.0
75 95.2 95.1 93.9
50 96.1 95.5 94.1
Voltage unbalance is probably the leading power quality problem that results in
motor overheating and premature motor failure. If unbalanced voltages are
detected, a thorough investigation should be undertaken to determine the cause.
Energy and cost saving occur when corrective are taken.
Example:
Assume that the motor tested as shown in the above table was fully loaded and
operated for 8000 hours per year, with an unbalanced voltage of 2.5%. With
energy priced at $0.o5/kWh, the annual energy and cost saving, after corrective
actions are taken, are:
Annual energy saving = 100 hp*0.746kw/hp*8000hrs/yrs x (100/93-100/94.4)
=9517kwh
Annual cost saving = 9517 kwh x $0.05/kwh=$476
Over all saving may be much larger because an unbalanced supply voltage may be
power numerous motors.
OVER MOTORING
MOTOR ENERGY AUDIT
Five basic concepts of Energy conservation in Drive Power are as follows:
• Drive power is huge- think big,
• Motors are part of a system –think systems,
• Optimize the applications &process-deliver service,
• The further the downstream savings, the higher is the upstream benefits -
start downstream,
• Pursue integration package of savings opportunities rather than isolated
measures because many savings are inter –dependent –integrate measures
Energy Conservation in Electric Motors (load Equipment)

For improving the efficiency use of energy it is important to know the typical load
on the motor over its duty cycle. It would be misleading to measure only the
current drawn under load and draw conclusion. For example, a typical 25HP motor
draws about 60% of its rated full load current when delivering on ly 45% of its
rated output. Hence it is required to measure input power, current, voltage, power
factor, frequency, and speed of operation.
➢
Collection of nameplate details of motor and load equipment
Measurement of voltage, current, power, apparent power, power factor, frequency and
annual operating hours for major loads.
Calculation of load factor for major loads.
Checking for light loads on large motors
Check if valves are always used for flow control in pumps, fans and blowers.
Check if flow from pumps, fans and blowers are changing continuously.
Check if the set discharge pressure is at the lowest permissible limit of operation in the
compressor.
Check for proper maintenance of major equipment i.e. cleaning measuring temperature,
dust, vibration, noise, lubrication and coupled condition.
Power Factor Correction at Motor end

As noted earlier, induction motors are characterized by power factors less than
unity, leading to lower overall efficiency (and higher overall operating cost)
associated with a plant’s electrical systems. Capacitors connected in parallel
(shunted) with the motor are typically used to improve the power factor. The
impacts of PF correction include reduced KVA demand (and hence reduced utility
2
demand charges), reduced I R losses in cables upstream of the capacitor (and
hence reduced energy charges), reduced voltage drop in the cables (leading to
improved voltage regulation), and in increase in the overall efficiency of the plant
electrical system.
It should be noted that PF capacitor improves power factor from the point of
installation back to the generating side. It means that, if a PF capacitor is installed
at the starter terminals of the motor, it won’t improve the operating PF of the
motor, but the PF from starter terminals to the power generation side will improve
the benefits of PF would be only on upstream side.
The size of capacitor required for a particular motor depends upon the no -load
reactive KVA (KVAr) drawn by the motor, which can be determined only from no-
load testing of the motor. In general, the capacitor is then selected to not exceed
90% of the no-load KVAr of the motor. Higher capacities could result in
Over-voltages and motor burn-outs. Alternatively, typical power factors of

standard motors can provide the basic for conservative estimates of capacitor
ratings to use for different size motors. The capacitor rating for power factor
correction by direct connection to induction motors is shown in table.
Capacitor rating for power factor correction by Direct Connection of
Induction Motors
Motor Rating (HP) Capacitor rating (KVAr) for Motor Speed
3000 1500 1000 750 600 500
5 2 2 2 3 3 3
7.5 2 2 3 3 4 4
10 3 3 4 5 5 6
15 3 4 5 7 7 7
20 5 6 7 8 9 10
25 6 7 8 9 9 12
30 7 8 9 10 10 15
40 9 10 12 15 16 20
50 10 12 15 18 20 22
60 12 14 15 20 22 25
75 15 16 20 22 25 30
100 20 22 25 26 32 35
125 25 26 30 32 35 40
150 30 32 35 40 45 50
200 40 45 45 50 55 60
250 45 50 50 60 65 70
From the above, it may be noted that required capacitive kVAr increases with
decrease in speed of motor, as the magnetizing current requirement of a low speed
motor is more compared to the high speed motor for the same HP. Since a
reduction in line current and associated energy efficiency gains are reflected
backwards from the point of application of the capacitor, th e maximum improves
in overall system efficiency is achieved when the capacitor is connected across the
motor terminals, as compared to somewhere further upstream in the plant’s
electrical system. However, economies of scale associated with the cost of
capacitors and the associated labor cost will place an economic limit on the lowest
desired capacitor size.
POWER FACTOR IMPROVEMENT

Power factor – methods of improvement, location of capacitors, Pf with non linear
loads, effect of harmonics on power factor, power factor motor controllers.
Definition
The power factor of an AC electric power system is defined as the ratio of the
active (true or real) power to the apparent power
Where
Active (Real or True) Power is measured in watts (W) and is the power
drawn by the electrical resistance of a system doing useful work.
Apparent Power is measured in volt-amperes (VA) and is the voltage on an
AC system multiplied by all the current that flows in it. It is the vector sum
of the active and the reactive power.
Reactive Power is measured in volt-amperes reactive (VAR). Reactive
Power is power stored in and discharged by inductive motors, transformers
and solenoids
Reactive power is required for the magnetization of a motor but doesn't perform
any action. The reactive power required by inductive loads increases the amounts
of apparent power - measured in kilovolt amps (kVA) - in the distribution system.
Increasing of the reactive and apparent power will cause the power factor - PF - to
decrease.
It is common to define the Power Factor - PF - as the cosine of the phase angle
between voltage and current - or the "cosφ".
Power factor is an important measurement in electrical AC systems because

an overall power factor less than 1 indicates that the electricity supplier need
to provide more generating capacity than actually required
the current waveform distortion that contributes to reduced power factor is
caused by voltage waveform distortion and overheating in the neutral cables
of three-phase systems
Example - Power Factor
An industrial plant draws 200 A at 400 V and the supply transformer and backup
UPS is rated
200 A × 400 V = 80 kVA.
If the power factor - PF - of the loads is only 0.7 - only
80 kVA × 0.7 = 56 kW
of real power is consumed by the system. If the power factor is close to 1 (purely
resistive circuit) the supply system with transformers, cables, switchgear and UPS
could be made considerably smaller.
Any power factor less than 1 means that the circuit's wiring has to carry more
current than what would be necessary with zero reactance in the circuit to deliver
the same amount of (true) power to the resistive load.
A low power factor is expensive and inefficient and some utility companies may
charge additional fees when the power factor is less than 0.95. A low power factor
will reduce the electrical system's distribution capacity by increasing the current
flow and causing voltage drops.
"Leading" or "Lagging" Power Factors
Power factors are usually stated as "leading" or "lagging" to show the sign of the
phase angle.
With a purely resistive load current and voltage changes polarity in step and
the power factor will be 1. Electrical energy flows in a single direction
across the network in each cycle.
Inductive loads - transformers, motors and wound coils - consumes reactive
power with current waveform lagging the voltage.
Capacitive loads - capacitor banks or buried cables - generates reactive
power with current phase leading the voltage.
Inductive and capacitive loads stores energy in magnetic or electric fields in the
devices during parts of the AC cycles. The energy is returned back to the power
source during the rest of the cycles.
Typical Motor Power Factors
Power (hp) Speed (rpm) Power Factor
½ load ¾ load full load
0- 5 1800 0.72 0.82 0.84
5 - 20 1800 0.74 0.84 0.86
20 – 100 1800 0.79 0.86 0.89
100 - 300 1800 0.81 0.88 0.91
1 hp = 745.7 W
Methods of improvement
Power factor with Non-linear loads
A non-linear load on a power system is typically a rectifier (such as used in a
power supply), or some kind of arc discharge device such as a fluorescent lamp,
electric welding machine, or arc furnace. Because current in these systems is
interrupted by a switching action, the current contains frequency components that
are multiples of the power system frequency. Distortion power factor is a measure
of how much the harmonic distortion of a load current decreases the average power
transferred to the load.
Non-sinusoidal components
Non-linear loads change the shape of the current waveform from a sine wave to
some other form. Non-linear loads create harmonic currents in addition to the
original (fundamental frequency) AC current. Filters consisting of linear capacitors
and inductors can prevent harmonic currents from entering the supplying system.
In linear circuits having only sinusoidal currents and voltages of one frequency, the
power factor arises only from the difference in phase between the current and
voltage. This is "displacement power factor". The concept can be generalized to a
total, distortion, or true power factor where the apparent power includes all
harmonic components. This is of importance in practical power systems that
contain non-linear loads such as rectifiers, some forms of electric lighting, electric
arc furnaces, welding equipment, switched-mode power supplies and other
devices.
A typical multimeter will give incorrect results when attempting to measure the
AC current drawn by a non-sinusoidal load; the instruments sense the average
value of a rectified waveform. The average response is then calibrated to the
effective, RMS value. An RMS sensing multimeter must be used to measure the
actual RMS currents and voltages (and therefore apparent power). To measure the
real power or reactive power, a watt meter designed to work properly with non-
sinusoidal currents must be used.
LOCATION OF CAPACTIORS
Compensation can be carried out by a fixed value of capacitance in favorable
circumstances. Sometimes compensation is more-commonly effected by means of
an automatically controlled stepped bank of capacitors.
Note: when the installed reactive powers of compensation exceed 800kVAr and the
load is continuous and stable, it is often found to be economically advantageous to
install capacitor banks at high voltage.
Compensation at L.V:
At low voltage, compensation is provided by:
Fixed-valued capacitor;
❖
Equipment providing automatic regulation or banks which allow continuous
adjustment according to requirements, as loading of the installation changes.
Fixed Capacitors
This arrangement employs one or more capacitor (s) to form a constant level of
compensation. Control may be:
Manual: by circuit breaker or load-break switch;
Semi-automatic : by contactor;
❖
Direct connection to an appliance and switched with it.
These capacitors are applied:
At the terminals of inductive devices(motor and transformers)
❖
At bus bars supplying numerous small motors and inductive appliance for which
individual compensation would be too expensive;
In cases where the level of load is reasonable constant.
Automatic Capacitor Banks

This kind of equipment provides automatic control of compensation, maintain
within close limits, a selected level of power factor. Such equipment is applied at
points in an installation where the active power and/ or reactive -power variations
are relatively large, for example:
At the bus bars of a general power distribution board;
Power factor correction in non-linear loads

Passive PFC
The simplest way to control the harmonic current is to use a filter: it is possible to
design a filter that passes current only at line frequency (50 or 60 Hz). This filter
reduces the harmonic current, which means that the non-linear device now looks
like a linear load. At this point the power factor can be brought to near unity, using
capacitors or inductors as required. This filter requires large-value high-current
inductors, however, which are bulky and expensive.
A passive PFC requires an inductor larger than the inductor in an active PFC, but
costs less.
This is a simple way of correcting the nonlinearity of a load by using capacitor
banks. It is not as effective as active PFC. One example of this is a valley-fill
circuit.
Passive PFCs are typically more power efficient than active PFCs. Efficiency is not
to be confused with the PFC, though many computer hardware reviews conflate
them. A passive PFC on a switching computer PSU has a typical power efficiency
of around 96%, while an active PFC has a typical efficiency of about 94%.
Active PFC
An "active power factor corrector" (active PFC) is a power electronic system that
changes the wave shape of current drawn by a load to improve the power factor.
The purpose is to make the load circuitry that is power factor corrected appear
purely resistive (apparent power equal to real power). In this case, the voltage and
current are in phase and the reactive power consumption is zero. This enables the
most efficient delivery of electrical power from the power company to the
consumer.
Some types of active PFC are:
Boost
Buck
Buck-boost
Active power factor correctors can be single-stage or multi-stage.
In the case of a switched-mode power supply, a boost converter is inserted between
the bridge rectifier and the main input capacitors. The boost converter attempts to
maintain a constant DC bus voltage on its output while drawing a current that is
always in phase with and at the same frequency as the line voltage. Another switch
mode converter inside the power supply produces the desired output voltage from
the DC bus. This approach requires additional semiconductor switches and control
electronics, but permits cheaper and smaller passive components. It is frequently
used in practice.
For example, SMPS with passive PFC can achieve power factor of about 0.7–0.75,
SMPS with active PFC, up to 0.99 power factor, while a SMPS without any power
factor correction has a power factor of only about 0.55–0.65.
Due to their very wide input voltage range, many power supplies with active PFC
can automatically adjust to operate on AC power from about 100 V (Japan) to 230
V (Europe). That feature is particularly welcome in power supplies for laptops.
EFFECT OF HARMONICS
Harmonics distortion disrupts plants. Of greatest importance is the loss of
productivity. These occur because of process shutdowns due to the unexpected
failure of motors, drives, power supplies or just the spurious tripping of breakers.
In addition, maintenances and repair budgets can be severely stretched.
Table Effect of harmonics on various electrical equipment
EQUIPMENT CONSEQUENCES
capacitors blown fuses, Reduced capacitor life
Motors Inability of fully load, mechanical
fatigue reduced motor life
Fuses/ breakers False/ spurious operation and damaged
components
transformers Increases copper and iron losses,
reduced capacity, increased noise and
possible insulation failure
Unility meters Measurement errors/ higher billings
telephones interference (low frequency hum, noise)
Drives/ power supplies Miss-operation due to multiple zero
crossing
Cables Increased copper loss
PF MOTOR CONTROLLERS
Power factor can also be improved by using synchronous motors which can be
operated at leading power factor to compensate for loads with lagging power.
These synchronous motors are normally operated at no mechanical load and over-
excitation. Synchronous motors re very expensive and are used only in few
industries. Following problems (from JNTU previous years question papers)
describe these applications.
In recent years, solid-state control devices have been developed that, when
connected between a power source and an electric motor,
FIGURE Graphic and harmonic analysis of current of a DC motor drive.

FIGURE System line current before harmonic suppression.
FIGURE System line current after harmonic suppression.

FIGURE System harmonic current comparison before and aft harmonic

suppression.
FIGURE Single-phase power factor controller block diagram. Maintain an

approximately constant power factor on the motor side of the controller. These
devices are generally called power factor controllers. Most of the units are made
under a license of U.S. Patent 4,052,648 issued to F. J. Nola and assigned to
NASA.
The controller varies the average voltage applied to the motor as a function of the
motor load and thus decreases the motor losses at light-load requirements.
Single-Phase Motors
For application to single-phase motors, the power factor controller consists of a
triac, sensing and control circuits, and a firing circuit for the triac, as shown in Fig.
The power factor controller sensing circuit monitors the phase angle between the
voltage and current and produces a signal proportional to the phase angle. This
signal is compared to a reference signal that indicates the desired phase angle. This
comparison produces an error signal that provides the timing for firing the triac or
SCR and causes the phase angle to remain constant when the load changes. Typical
motor voltage and current waveforms are shown in Figs. If the phase angle
increases, the control circuit adjusts the triac firing angle to decrease the average
voltage applied to the motor. Conversely, if the phase angle decreases, the control
circuit adjusts the firing angle of the triac to increase the average voltage applied to
The power factor of the motor is the cosine of the phase angle between the motor
voltage and current. Therefore, with this control system, by maintaining the phase
angle constant, the motor operates at an approximately constant power factor over
the load range. The maximum power factor is the power factor of the motor at the
rated load with the triac full on. The minimum power factor will be determined by
the minimum voltage setting for no-load operation. This voltage setting must be
high enough to provide stable operation and prevent the motor from stalling on the
sudden application of load. However, the lower the no-load voltage, the higher the
power savings at no load.How are power savings achieved by decreasing the motor
voltage at light loads? The motor losses can be grouped into three categories:
1. Constant losses, such as friction and windage
2. Magnetic core losses, which are some function of the applied voltage
3. I2R losses, which are a function of the square of the motor current, includ ing
rotor losses
For a given load condition, the net losses, and hence the motor power input,
decrease with a decrease in voltage as long as the magnetic core losses decrease
more than the I2R losses increase. In addition, there is some increase in losses due
to harmonics added to the motor input voltage by the triac switching and the losses
in the controller.
In some instances, the increased harmonic content of the input voltage will result
in increased motor noise.
The amount of power saved with a power factor controller depends on the duty
cycle of the application. Typical power savings under various loads and duty
cycles are shown in Fig. 4.24. The power savings are shown as a percent of the full
voltage input and as a function of the percent running times at full load versus
running at a light load. To result in significant power savings, at least 50%
Single-phase power factor motor controller power savings. of the running time
should be at one-fourth load or less. Typical applications of this type may be drill
presses and cutoff saws used in production processes. Figure 4.22 shows an
oscilloscope picture of the motor voltage and current at no load for a single motor
controlled by a power factor controller. Figure 4.23 shows an oscilloscope picture
of the motor voltage and current of the same motor with load applied to the motor.
Note the constant angle between the zero crossing of the voltage and current in
both cases.
Three-Phase Motors
More recently, the application of power factor motor controllers has been extended
to three-phase motors. In some cases, this has been accomplished by adding a power-
saver module to existing
Three-phase power factor motor controller block diagram. solid-state three-

phase motor controllers. These solid-state controllers generally include other
features such as current limit, timed acceleration, phase unbalance,
undervoltage, and overload protection. The power factor control function is
accomplished by sensing the phase angle between the motor voltage and current.
This signal is fed back and compared with a reference, and the difference is used to
feed the input signal voltage to the SCRs in the power module.
The feedback voltage from the power factor sensing circuit will change the average
voltage applied to the motor in accordance with the load on the motor. This
reduces both the motor current and voltage under light-load conditions. The circuit
is designed to react to load changes to prevent stalling of the motor on
instantaneous load changes. Most of the controllers have provisions for setting the
minimum no-load voltage; this voltage is generally 65% of rated full voltage.
Figure 4.25 is a typical block diagram for the three-phase controller. The three-
phase power factor controllers have potential applications in which the duty cycle
for the motor is varying from light or no load to full load as a step function.
Examples of potential applications are ripsaws, conveyors, rock crushers, and
centrifuges.
The potential power saving when a power factor controller is an applied to a three-
phase motor is substantially lower than whe such a controller is applied to a single-
phase motor. Figure 4.26 illustrates the power saving when the controller is applied
to a three-phase motor for various duty cycles and loads. These curves depend on
the ratio of the no-load losses of the motor. However, it appears that the power
factor controller shows significant power savings only on those three-phase motor
applications in which the motor operates at no load or light loads over 75% of the
operating time. To apply a power factor controller properly, the load
characteristics, motor characteristics, and load cycle must be known. In addition,
one must determine how the controller-motor combination will respond to the load
cycle. Only then can the potential power saving and economic payback analysis be
made.
UNIT III
LIGHTING AND ENERGY INSTRUMENTS
Good lighting system design and practice, lighting control, lighting energy audit – Energy
Instruments – watt meter, data loggers, thermocouples, pyrometers, lux meters, tongue testers,
application of PLC’s
GOOD LIGHTING SYSTEM DESIGN AND PRACTICE
Lighting is an essential service in all the industries. The power consumption by the industrial
lighting varies between 2 to 10% of the total power depending on t he type of industry. In hotels,
lighting consumes up to 30% of total electrical energy. Innovation and continuous improvement in
the field of lighting has given rise to tremendous energy saving opportunities in this area.
Lighting is an area, which provides a major scope to achieve energy efficiency at the design stage,
by incorporating modern energy efficient lamps, luminaries and gears, apart from good operational
practices.
Basic Terms in Lighting System and Features
A. Lamps
Lamp is equipment, which produces light. The most commonly used lamps are described briefly as
follows:
• Incandescent lamps:
Incandescent lamps produce light by means of filament heated to incandescence by the flow of
electric current through it. The principal parts of an incandescent lamp, also known as GLS
(General Lighting Service) lamp include the filament, the bulb, the fill gas and the cap.
• Reflector Lamp:
Reflector lamps are basically incandescent, provided with a high quality internal mirror, which
follows exactly the parabolic shape of lamp. The reflector is resistant to corrosion, thus making the
lamp maintenance free and output efficient.
• Gas discharge lamps:
The light from a gas discharge lamp is produced by the excitation of gas contained in either a
tabular or elliptical outer bulb.
The most commonly used discharge lamps are as follows:
1) Fluorescent tube lamps (FTL)
2) Compact Fluorescent Lamps (CFL)
3) Mercury Vapor Lamps (HPMV)
4) Sodium Vapor Lamps (HPSV)

5) Metal Halide Lamps
B. luminaire:
Luminaire is a device that distributes filters or transforms the light emitted from one or more
lamps. The luminaire all the parts necessary for fixing and protecting the lamps, except the lamps
themselves. In some cases, luminaires also include the necessary circuit auxiliaries, together with
the means for connecting them to the electric supply. The basic physical principles used in optical
luminarie are reflection, absorption, transmission and refraction.
C. Control gear
The gears used in the lighting equipment are as follows:
➢
Ballast
The current limiting device, to counter negative resistance characteristics of any discharge lamps.
In case of fluorescent lamps, it aids the initial voltage build-up for starting.
➢
Igniters:
These are used for starting high intensity Metal Halide and Sodium vapor lamps.
D. ILLUMINANCE:
This is the quotient of the luminous flux incident on a element of the surface at a point of surface
containing the point, by the area of that element. The light ing level produced by a lighting
installation is usually qualified by the illuminance produced on a specified plane. In most, cases
this plane is the major plane of the tasks in the interior and is commonly called the working plane.
The illuminance provided by an installation affects both the performance of the tasks and the
appearance of the space.
F. Lux (lx)
This is the illuminance produced by a luminous flux of one lux, uniformly distributed over a
surface area of one square meter. One lux is equal to one luen per square meter.
G. Luminous Efficacy (Im/W)
This is the ratio of luminous flux emitted by a lamp to the power consumed by the lamp. It is a
reflection of efficiency of energy conversion from electricity to light form.
H. Color Rendering Index (RI)
Is a measure of the degree to which the colors of surfaces illuminated by a given light source
confirm to those of the same surfaces under a reference illuminant; suitable allowance having been
made for the state of Chromatic adaptation.
Data Loggers
Introduction
What is data logging?

It is the process of using a computer to collect data through sensors, analyze the data and save and
output the results of the collection and analysis.
Data logging is commonly used in scientific experiments and in monitoring
systems.
DATA LOGGER
A data logger (also data logger or data recorder) is an electronic device that records data
over time or in relation to location either with a built in instrument or sensor or via external
instruments and sensors.
They generally are small, battery powered, portable and equipped with a microprocessor,
internal memory for data storage and sensors.
Some data loggers interface with a personal computer and utilize software to activate the
data logger and view and analyze the collected data, while others have a local interface device
(keypad, LCD) and can be used as a stand-alone device.
The sensors may communicate with the logger through a cable or wireless link and m ay
sense temperature, humidity pressure flow, wind speed, current, voltage, resistance and most of
other physical parameters that are important in monitoring and controlling processes.
One of the primary benefits of using data loggers is the ability to automatically collect data
on a 24-hour basis.
DATA LOGGING Vs DATA ACQUISITION
The term data logging and data acquisition are used interchangeably.
However in historical context they are quite different.
A data logger is a data acquisition system, but a data acquisition system is not necessarily a
data logger.
Data loggers typically have slower sample rates.
APPLICATIONS
Soil moisture level recording.
Road traffic counting
Vehicle testing
Monitoring of relays status in railway signaling
THERMOCOUPLES
Introduction
In electrical engineering and industry, thermocouples are widely used temperature sensors.
They are cheap and interchangeable standard connectors, and can measure a wide range of
temperatures.
Thermocouples alloys are commonly available as wires.

What is thermocouple sensor?
A thermocouple is a thermocouple device used to measure temperatures accurately.
It consists of two dissimilar metals having different thermal and electrical properties joined
together at one end so that potential difference generated between the contact points measures the
temperature.
Principle of operation:
The principle is that when one junction is heated, an EMF is produced causing a current to flow
round the loop. The EMF generated is given by logE = Alogt+B
Where t = temperature and A& B are constants
depending upon the wires forming the junction.
Thermocouples Types:
A Thermocouple is available in different combinations of metals or calibrations.
The four most common calibrations are J, K, and T & E.
The high temperature calibrations are R, S, and C & GB.
Other types of Thermocouples include beaded wire Thermocouple & Thermocouple probe.
How do we choose a Thermocouple type?
Thermocouples are very often used in industry as they are simple & can be used to measure wide
range of temperatures
The following criteria are used in selecting a thermocouple:
Temperature range
Chemical resistance of thermocouple (or) sheath material.
Vibration resistance
Installation requirements.
Type K
Type K (chromel {90% nickel and 10% chromium}—alumel {95% nickel, 2% manganese,
2% aluminium and 1% silicon}) is the most common general purpose thermocouple with a
[9]
sensitivity of approximately 41 µV/°C, chromel positive relative to alumel. It is inexpensive, and
a wide variety of probes are available in its −200 °C to +1250 °C / -330 °F to +2460 °F range.
Type K was specified at a time when metallurgy was less advanced than it is today, and
consequently characteristics may vary considerably between samples. One of the constituent
metals, nickel, is magnetic; a characteristic of thermocouples made with magnetic material is that
they undergo a deviation in output when the material reaches its Curie point; this occurs for type K
thermocouples at around 350 °C. Wire color standard is yellow (+) and red (-).
It is the most commonly used for general purpose thermocouples.

It is inexpensive and available in wide variety or probes.
0 0
They are available in -200 C to 1350 C range.
Type E
Type E (chromel–constantan) has a high output (68 µV/°C) which makes it well suited to
cryogenic use. Additionally, it is non-magnetic. Wide range is −50 to 740 °C and Narrow range is
−110 to 140 °C. Wire color standard is purple (+) and red (-).
0
It has high output (68μv/ C) which makes it well suited for no. of applications.
Type J
Type J (iron–constantan) has a more restricted range than type K (−40 to +750 °C), but higher
sensitivity of about 55 µV/°C. The Curie point of the iron (770 °C) causes an abrupt change in the
characteristic, which determines the upper temperature limit. Wire color standard is white (+) and
red (-).
0 0
It is less popular than K due to its limited range (-40 C to 750 C)
Type T
Type T (copper – constantan) thermocouples are suited for measurements in the −200 to 350 °C
range. Often used as a differential measurement since only copper wire touches the probes. Since
both conductors are non-magnetic, there is no Curie point and thus no abrupt change in
characteristics. Type T thermocouples have a sensitivity of about 43 µV/°C.
0 0
It is available in the range of -200 C to 350 C.
COMMON THERMOCOUPLE TEMPARATURE RANGES
Calibration Temperature Standard. limits of Specific. Limits of
range error error
J 0 C to 750 C Greater than 2.2 C Greater than 1.1 C
K -200 C to 1250 C Greater than 2.2 C Greater than 1.1 C
E -200 C to 900 C Greater than 1.7 C Greater than 1.0 C
T -250 C to 350 C Greater than 1.0 C Greater than 0.5 C
Advantages & Disadvantages

Advantages
1. These are cheaper than the resistance thermometers.
2. These are very convenient for measuring the temperature at one particular point in a
piece of apparatus.
Disadvantages
1. They have lower accuracy.
2. Complex Circuitry.
Applications
Thermocouples are most suitable for measuring over a large temperature range up to
0
1800 C.
They are used as relays and also as protective devices in starters etc.
PYROMETER
Introduction
Pyrometer is any non-contacting device that intercepts and measures thermal radiation.
This measure is used to determine temperature, often of the object’s surface.
Pyrometer was originally coined to denote a device capable of measuring temperatures of
objects above incandescence (i.e. objects bright to human eye).
Pyrometer is used for measurement of high
temperature RADIATION PYROMETER
Optical pyrometers work on the basic principle of using the human eye to match the
brightness of the hot object to the brightness of a calibrated lamp filament inside the instrument.
The optical system contains filters that restrict the wavelength-sensitivity of the devices to a
narrow wavelength band around 0.65 to 0.66 micons.
APPLICATIONS
Pyrometers are suited especially to the measurement of moving objects (or) any surfaces that
can’t be reached (or) can’t be touched.
0
Pyrometers are used to measure wide temperature ranges above 1700 C.
LUX METER
Lux meters (or) Light meters measures illumination in terms of luxes (lx).
A Lux is equal to the total intensity of light that falls on a one square meter surface i.e., one
foot away from the point source of light.
Most lux meters consist of a body, light sensor & display.
The light that falls on to the light sensor contains energy i.e., converted to electric current. In
turn the amount of current depends on the amount of light that strikes the light sensor. Lux
meter read the electrical current, calculate the appropriate value and output the result to
an analog, digital (or) video display.
The light usually contains different colors at different wavelengths; the reading represents
the combined effects of all the wavelengths.
Typically standard colors (or) colors temperature are expressed in degrees klv. The
0
standard color temperatures for the calibration of most lux meters is 2856 K Selecting
lux meter requires an analysis of performance specifications, display types
& special features.
Performance specifications include sensor diameter, illumination range, accuracy, lux

resolution, humidity range and optimum temperature range.
Several display types are available i.e. Analog devices display values on a dial usually with
a needle (or) pointer.
Digital devices display values as numbers or letters.
Some lux meters are portable, handheld devices other are designed to sit atop desk or bench
top.
Tongue testers
In electrical and electronic engineering, a current clamp or current probe is an electrical device
having two jaws which open to allow clamping around an electrical conductor. This allows
properties of the electric current in the conductor to be measured, without having to make physical
contact with it, or to disconnect it for insertion through the probe. Current clamps are usually used
to read the magnitude of a sinusoidal current (as invariably used in alternating current (AC) power
distribution systems), but in conjunction with more advanced instrumentation the phase and
waveform are available. Very high alternating currents (1000 A and more) are easily read with an
appropriate meter; direct currents, and very low AC currents (milliamperes) are more difficult to
measure.
Types of current clamp
Current transformer
A common form of current clamp comprises a split ring made of ferrite or soft iron. A wire coil is
wound round one or both halves, forming one winding of a current transformer. The conductor
around which it is clamped forms the other winding. Like any transformer this type works only
with AC or pulse waveforms, with some examples extending into the megahertz range.
When measuring current, the subject conductor forms the primary winding and the coil forms the
secondary.
This type may also be used in reverse, to inject current into the conductor, for example in EMC
susceptibility testing to induce an interference current. Usually, the injection probe is specifically
designed for this purpose. In this mode, the coil forms the primary and the test conductor the
secondary.
Iron vane
In the iron vane type, the magnetic flux in the core directly affects a moving iron vane, allowing
both AC and DC to be measured, and gives a true RMS value for non-sinusoidal AC waveforms.
Due to its physical size it is generally limited to power transmission frequencies up to around 100
Hz.
The vane is usually fixed directly to the display mechanism of an analogue (moving pointer) clamp
meter.
Hall Effect
The Hall Effect type is more sensitive and is able to measure both DC and AC, in some examples
up to the kilohertz (thousands of hertz) range. This type was often used with oscilloscopes, and
with high-end computerized digital multimeters, however, they are becoming common place for
more general use.
Multi-conductor
Traditional current clamps will only work if placed around one conductor of the circuit under test
because if it is placed around both, the magnetic fields would cancel. A relatively recent
development is a clamp meter that has several sensor coils around the jaws of the clamp. This type
can be clamped around standard 2 or 3 conductor single phase cables and will provide readout of
the current flowing through the load. A version for three phase circuits does not currently exist, but
in such circuits the individual conductors are usually accessible.
Clamp meter
An electrical meter with integral AC current clamp is known as a clamp meter, clamp -on ammeter
or tong tester.
In order to use a clamp meter, only one conductor is normally passed through the probe; if more
than one conductor is passed through then the measurement would be the vector sum of the
currents flowing in the conductors and would depend on the phase relationship of the currents. In
particular if the clamp is closed around a two-conductor cable carrying power to equipment the
same current flows down one conductor and up the other, with a net current of zero. Clamp meters
are often sold with a device that is plugged in between the power outlet and the device to be tested.
The device is essentially a short extension cord with the two conductors separated, so that the
clamp can be placed around only one conductor.
The reading produced by a conductor carrying a very low current can be increased by winding the
conductor around the clamp several times; the meter reading divided by the number of turns is the
current, with some loss of accuracy due to inductive effects.
Clamp meters are used by electricians, sometimes with the clamp incorporated into a general
purpose multimeter.
It is simple to measure very high currents (hundreds of amperes) with the appropriate current
transformer. Accurate measurement of low currents (a few milliamperes) with a current
transformer clamp is more difficult.
UNIT – IV
DEMAND SIDE MANAGEMENT – I
Introduction to DSM, concept of DSM, benefits of DSM, different techniques
of DSM – time of day pricing, multi – utility power exchange model, time of
day models for planning.
Introduction to DSM
Demand side management (DSM) has been traditionally seen as a means of

reducing peak electricity demand so that utilities can delay building further
capacity. In fact, by reducing the overall load on an electricity network, DSM has
various beneficial effects, including mitigating electrical system emergencies,
reducing the number of blackouts and increasing system reliability. Possible
benefits can also include reducing dependency on expensive imports of fuel,
reducing energy prices, and reducing harmful emissions to the environment.
Finally, DSM has a major role to play in deferring high investments in generation,
transmission and distribution networks. Thus DSM applied to electricity systems
provides significant economic, reliability and environmental benefits.
When DSM is applied to the consumption of energy in general—not just

electricity but fuels of all types—it can also bring significant cost benefits to
energy users (and corresponding reductions in emissions). Opp ortunities for
reducing energy demand are numerous in all sectors and many are low-cost, or
even no-cost, items that most enterprises or individuals could adopt in the short
term, if good energy management is practiced.
Concept of DSM
Cost reduction – many DSM and energy efficiency efforts have been introduced in
the context of integrated resource planning and aimed at reducing total costs of
meeting energy demand;
Environmental and social improvement - energy efficiency and DSM may be

pursued to achieve environmental and/or social goals by reducing energy use,
leading to reduced green house gas emissions;
Reliability and network issues – ameliorating and/or averting problems in the

electricity network through reducing demand in ways which maintain system
reliability in the immediate term and over the longer term defer the need for
network augmentation;
Improved markets - short-term responses to electricity market conditions

(“demand response”), particularly by reducing load during periods of high market
prices caused by reduced generation or network capacity.
Advantages to Demand Side Management
1. Better usage of existing generating and distribution infrastructure.

2. Less efficient/environmentally unfriendly generating capacity can be
decommissioned.
3. Load can be matched to variable renewable energy availability.
4. Lower generating and transmission costs.
5. Lower transmission and distribution losses.
6. Reduction in “spinning reserve” costs.
7. Less intrusive load shedding.
8. More consumer growth capacity.
9. Better maintenance opportunities.
10. More availability (less black-outs).
The aims of the DSM are:
• To introduce the concept of demand-side management for residential,

commercial and industrial energy users.
• To give an overview of the different types of demand-side measures.
• To show how housekeeping and preventative maintenance in commerce and
industry can be used to reduce energy demand.
• To describe energy auditing and routine data collection and monitoring, and
to indicate their benefits.
• To outline information dissemination on demand-side management.
• To provide an overview of the major implementation challenges for DSM
Programmes.
Benefits of DSM
Demand Side Management (DSM) is a program that encourages energy users to

make use of energy efficient designs. DSM presents a great chance for different
power utilities to limit their GHG emissions while promoting energy conservation
as well as lower emissions. This DSM approach is actually aimed at both the
customers and the utility companies encouraging lower and more effective energy
consumption. The following are a few benefits of DSM.
1. Environmental benefits
Rather than building new electrical plants for responding to the increase in
customer demand for electricity, electricity producers could possibly attempt to
limit the demand for power. Usually, they offer incentives of special programs
having lower tariffs as well as higher efficiency appliances. This greatly assists in
meeting the environment protection goals since it is going to reduce the emissions
of pollutants into the atmosphere.
2. Controls load
It is an undeniable fact that the demand for electricity varies from one p erson to the
next and there is a huge difference between night and day consumption. On the
other hand, utility firms prefer constant usage in order to make the most out of
their investment. Such a problem is easily solved with the assistance of demand
side management. In such cases, lower night tariffs are introduced or other
financial incentives to ensure constant power usage.
3. Cost effective
Through using the DSM approaches, you can be able to save a lot of money in
electrical costs as well as maintenance costs. There is a large market nowadays of
energy efficient appliances that you can use. Through using these appliances, the
energy consumption will go down significantly and thus you will not require
spending as much money in comparison to other firms that do not use the DSM
approach.
The major drawback of DSM is that DSM based resolutions usually increase the
complexity of the situation and they are not competitive.
• Reducing generation margin.
• Improving efficiency of system operation.
• Improving transmission and distribution grid investment and operation efficiency.

• Managing demand-supply balance in system with intermittent renewable and
distributed power systems.
- Reduction in customer energy bills.
- Reduction in need for new power plant, transmission and distribution network.
- Stimulating economic development.
- Creating long term jobs due to new innovation and technologies.
- Increases the competitiveness of local enterprises.
- Reduction in air pollution.
- Reduces dependency on foreign energy source.
- Reduction in peak power prices for electricity.
- reducing dependency on expensive imports of fuel,
- reducing energy prices, and
- reducing harmful emissions to the environment.
Different techniques of DSM
• Night-time heating with load switching.

• Direct load control: remotely controllable switch that can turn power to a
load or appliance on or off.
• Load limiters: limit the power that can be taken by individual consumers.
• Commercial/industrial programs: i.e. load-interruptible programs.
• Frequency regulation: dealing with fluctuation in frequency.
• Time-of-use pricing: reflect the production and investment cost structure
where rates are higher (lower) during peak (off-peak) periods.
• Demand bidding: customer reduces the consumption of electricity at a
certain predetermined price.
• Smart metering: tracking amount of electricity using to manage costs and
consumption.
Time of day pricing

It is widely recognized that the cost of producing electricity varies from hour to
hour. This conclusion holds true under virtually any method of calculating costs.
As indicated previously, the most significant type of cost is marginal cost. The
marginal cost of producing electricity varies widely, depending upon the total load
and the particular generating units used to serve this load. The theory behind time-
of - day rates is simply to vary the price of electricity in accordance with

fluctuations in production costs. When the cost of production is high, the price
would also be high. Conversely, when the cost of production is low, the price
would be low.
Time of day pricing is actually a special case of marginal cost pricing. Since
marginal cost theory suggests that prices should be equal to marginal cost s, and
marginal costs vary from hour to hour, the price of electricity should logically vary
from hour to hour. The efficiency advantages of such a pricing system are readily
apparent. For example, if additional electricity costs 20 cents per KWH at a
particular moment, it is hardly efficient to charge just 3 cents per KWH. If the
utility charged the higher amount, some (perhaps many) customers would cut
down on their usage of electricity by adjusting thermostats, turning off lights, and
the like. Obviously, for these "flexible" or "adjustable" uses, customers are willing
to pay the lower amount of 3 cents per KWH, but not 20 cents. Yet for every KWH
which is eliminated, the utility's costs will be reduced by 20 cents. The situation is
economically inefficient: the utility spends 20 cents per KWH to produce
electricity which is worth far less to its customers. If the utility charged a price
equal to the marginal cost of producing electricity, consumers would continue only
those uses which were worth as much as the cost of producing the electricity.
The equity advantages of time- of - day pricing are also apparent. To illustrate,
there are two customers who are the same in every way except for their
consumption patterns. The first customer only uses electricity l ate at night when
the marginal costs of production are very low, like 1 cent per KWH; the second
customer only uses electricity at the peak usage hours of the day when the
marginal costs of production are very high, like 10 cents per KWH. Given their
usage, it is hardly fair to charge them same price. Under a time- of -day pricing
system, this inequity can be corrected because the nocturnal user is charged less
than the peak- hour consumer.
Practical Difficulties with Time- of - Day Pricing
In theory, marginal cost pricing can be applied with a high degree of exactness: a
different price is charged every hour, depending upon the marginal costs of the
system. In fact, many utilities use this type of pricing system when they
interchange power with other utilities. The actual marginal costs of the selling
utility are calculated for each hour when the power is interchanged; this rate is
used as the price charged the purchasing utility.
Realistically, such a pricing system cannot be applied to all customers, even
though it is theoretically possible. When two utilities interchange power, a rather
substantial amount of electricity is normally involved. Thus, the transaction cost of

calculating the bill under such a complicated pricing system is small, relative to the
tot al value of the transaction. But if the transaction costs per KWH are very high
for small customers, a complicated pricing system would not be appropriate.
Can Time- of - Day Pricing be Practically Applied to Industrial Customers
For smaller industrials and large commercial customers, the situation is less clear.
Although it might be impractical to implement a time- of - day pricing system
where the price changed every hour, it does seem feasible to adopt a more
simplified approach with two or three different price levels. If properly designed,
this approach would be a major improvement over the timeless rates now used; it
could be simple enough for customers to understand and modify their usage
patterns, if they wished.
For residential and small commercial customers, there are considerable practical
difficulties with adopting a universal time- of - day pricing system. Metering costs
alone are a major obstacle. Also, these customers are less likely to acquire the
necessary knowledge to adapt their purchasing decisions to a time - of - day pricing
system.
Multi-utility power exchange model
Multi-utility relates to companies offering a wide range of services and/or
products. In the business market, this type of service provision usually relates to
energy, environmental services, waste issues, infrastructure and/or telecom
services. In the consumer market, it often concerns a combined offering of services
in the field of energy and digital products and servic es (telephony, internet and
television). Providers like these are also referred to as multi-service providers. So it
often concerns services and products in relation to public utilities. Multi-utility has
a relation with cross-selling, offering complementary products and services.
In a multiple (multi-utility or multi-country) integrated system setting, each
integrated system “speaks” with its neighbor in terms of spot prices at their
common borders; they buy or sell energy at the spot price of the specific instant
and location. The resulting operating point is the same as the one achieved under a
fully centralized dispatch. When dispatching the utilities, the control center
associated to each system must not discriminate between its own generators’ power
and power offered by the neighboring systems through tie-lines, except for
economic reasons. A multi-utility setting consisting of three coordinated areas is
shown in Fig. 1. Each regional ISO operates its own power system and interacts
with the RSC. When power exchanges are to be scheduled, the RSC starts an
iterative procedure in which the utilities send tie-line power-flow information to

the RSC
Time of day models for planning

Time of day modeling procedures integrated into the four-step travel demand
modeling process offer a more accurate and robust mechanism for obtaining time-
of-day based estimates of travel demand and link volumes. These procedures
account for differences across trip purposes, modes, and origin-destination pairs.
Some of the issues that motivate the modeling of travel demand by time of day
include, but are not limited to the following:
• Design hour traffic volumes for roadway design and level of service analysis
• Transit analysis
• Vehicular emissions and air quality analysis
• Assessing impact of congestion management programs
• Evaluating travel demand management strategies
• Evaluating variable (time-of-day based) pricing policies
• Analysis of peak spreading (time of day of travel choices)
• Analysis of intelligent transportation systems
DEMAND SIDE MANAGEMENT – II

Load management, load priority technique, peak clipping, peak shifting, valley
filling, strategic conservation, energy efficient. Management and Organization of
Energy Conservation awareness Programs.
Load management
Load management is the process of balancing the supply of electricity on the
network with the electrical load by adjusting or controlling the load rather than the
power station output. This can be achieved by direct intervention of the utility in
real time, by the use of frequency sensitive relays triggering circuit breakers (ripple
control), by time clocks, or by using special tariffs to influence consumer behavior.
Load management allows utilities to reduce demand for electricity during peak
usage times, which can, in turn, reduce costs by eliminating the need for peaking
power plants. In addition, peaking power plants also often require hours to bring on-
line, presenting challenges should a plant go off-line unexpectedly. Load
management can also help reduce harmful emission, since peaking plants or
backup generators are often dirtier and less efficient than base load power plants.
New load-management technologies are constantly under development — both by
private industry and public entities.
Load Priority Technique
Load Priority Technique Works on individual loads priority for operation (in
service and out of service). This is mainly influenced by the production schedule.
The load priority could also be connected directly with the rate communication
system (i.e., differential tariff system). However in the present work, while
deciding priorities of various loads for operation, only production schedule is
considered in consultation with the concerned section superintendents.
In developing load priority technique, non-interruptible loads are classified as high
priority loads (to remain in ON condition) and the interruptible loads are classified
as low priority loads. Two priority lists are prepared in consultation with the
various section superintendents namely:-
1. Priority for switching OFF
2. Priority for switching ON
The load demand on the industry is continuously monitored at acceptable time

intervals. If the demand exceeds beyond the permitted limit then the “Low Priority
Loads” to the extent of exceeded value of load are cut-off. If the load demand is
less than the permitted limit then the loads which were interrupted in the previous
time slots were switched on based on the “priority for switching ON”.
The success of load priority technique is totally dependent upon the development
of various load priorities for operation which will not disturb the production
schedule and gives enough scope for reduction of load demand. This DSM
alternative creates possibilities for the consumers to reduce peaks and fill out
valleys in their load curves. Thus resulting in an almost flat load curve. It also
helps to maintain consumer lifestyle by reducing the unscheduled outages. As there
is a strict control over the maximum demand penalty for the consumer.
Peak Clipping
Clipping is a form of waveform distortion that occurs when an amplifier is
overdriven and attempts to deliver an output voltage or current beyond its
maximum capability. Driving an amplifier into clipping may cause it to output
power in excess of its published ratings.
Reduction of the maximum demand for electric power from an electrical utility,
often achieved by direct control of customer loads by signals directed to customer
appliances.
A common form of distortion in telephones and other auditory transmission
systems in which the peaks of the waveform are flattened off—to only one or two
per cent of their original height in severe peak clipping—transforming the
waveform into a sequence of rectangular pulses. When applied to speech it has
surprisingly little effect on its intelligibility, 80 or 90 per cent of words still being
correctly interpreted by listeners when the clipping is severe.
The DISTORTION caused when the GAIN of an amplifier is increased to a point
where the high points, or peaks, of the SIGNAL or WAVEFORM are cut off at a
level where the amplifying circuits are driven beyond their overload point. Also
called over-MODULATION.
Peak clipping may be avoided by gain reduction, COMPRESSION of the signal, or

by the use of a LIMITER.
Compare: RECTIFICATION, SWITCH.
Positive and negative clipping of a sine wave.

Peak clipping—where the demand peaks (high demand periods) are “clipped” and
the load is reduced at peak times. This form of load management has little overall
effect of the demand but focuses on reducing peak demand.
Peak Clipping - Or the reduction of the system peak loads, embodies one of the
classic forms of load management. Peak clipping is generally considered as the
reduction of peak load by using direct load control. Direct load control is most
commonly practiced by direct utility control of either service to customer facilities
or of customers' appliances. While many utilities consider this as means to reduce
peaking capacity or capacity purchases and consider control only during the most
probable days of system peak, direct load control can be used to reduce operating
cost and dependence on critical fuels by economic dispatch.
Peak Shifting
Peak Shifting is a highly cost-effective method of reducing electric utility
expenses. When electric utility commercial or industrial customers use electricity
can make a big difference on their monthly electric bills. By shifting the time of
day that electric power is used, a commercial or industrial customer can reduce
their "demand charge" portion of their electric bill during peak times of the day.
This reduces the overall cost of power each month for the customer.
Unlike most products, electricity can’t be stored after it's generated. Electricity
must be generated - and consumed - at the time of demand by a utility's customer.
Electricity usage continuously varies throughout the day, and varies from month- to-
month and season-to-season. Each day, there are "peak" demand periods of usage
during which time the electric utilities must generate additional amounts of electricity
to meet these peak demands for all of their customers.
To meet this additional peak demand for electricity utilities use “peaking
generators” also called "peaking plants" or simply "peakers." These peaking plants
are the least efficient methods of generating power, meaning they generate less
power with more fuel (and their associated greenhouse gas emissions) compared
with the utility's base-load generators. These peaking plants typically burn oil or
natural gas to produce the electricity and are brought on line only during "peak
periods" of the day and run for short periods.
While peaking generators generally cost less to build than other types of
generators, they also have relatively high fuel costs because they are typically
much less efficient in the use of fuel.
Therefore, "Peak Shifting" is a method that addresses shifts the time of day when
electricity is used; reducing the need for peaking plants and can reduce a
commercial or industrial customer's electric bills, if correctly implemented.
Because the vast majority of electricity is generated in direct, instantaneous
response to demand, costs of electricity differ dramatically between high demand
(“on peak”) and low demand (“off peak”) periods.
By installing energy storage on the grid, both utilities and consumers are able to
shift their demand out of on-peak periods and into off peak periods, flattening their
energy consumption profile:
This reduces energy costs for the average user on the system, regardless of whether
or not they are the user of time-shifted electricity. Commercial electric customers
on time-of-use rate schedules have a compelling financial opportunity in the form
of energy arbitrage. Peak shifting also lessens the total effect of electric vehicle
charging on the grid, and makes electric vehicles less expensive per mile.
Valley Filling
The process of making an energy production and delivery system more efficient by
encouraging additional energy use during periods of lowest system demand. Valley
filling programs are usually accompanied by load shifting programs, often with the
aim of shifting peak demand usage to low demand periods, but the term can refer
to any program or strategy aimed at filling the valley. An essential component of
nearly all demand-side management programs.
Valley Filling - Is the second classic form of load management and applies to both
gas and electric systems. Valley filling encompasses building off-peak loads. This
may be particularly desirable where the long-run incremental cost is less than the
average price of energy. Adding properly priced off-peak load under those
circumstances decreases the average price. Valley filling can be accomplished in
several ways, one of the most popular of which is new thermal energy storage
(water heating and/or space heating) that displaces loads served by fossil fuels.
Valley filling—where the demand valleys (low demand periods) are “filled” by
building off-peak capacities. This form of load manage-ment can be achieved by
thermal energy storage (water heating or space heating) that displaces fossil fuel
loads.
Strategic Conservation
Strategic Conservation - Is the load shape change that results from programs
directed at end use consumption. Not normally considered load management, the
change reflects a modification of the load shape involving a reduction in
consumption as well as a change in the pattern of use. In employing energy
conservation, the planner must consider what conservation actions would occur
naturally and then evaluate the cost-effectiveness of possible intended programs to
accelerate or stimulate those actions. Examples include weatherization and

appliance efficiency improvement.
Strategic conservation is the load shape change that results from utility-stimulated
programmes directed at end use consumption. This is represented schematically in
figure II.
Figure II.—Strategic load conservation

Not normally considered load management, the change reflects a modification of
the load shape involving a reduction in sales as well as a change in the pattern of
use. In employing energy conservation, the utility planner must consider what
conservation actions would occur naturally and then evaluate the cost-effectiveness
of possible intended utility programmes to accelerate or stimulate those actions. An
example is appliance efficiency improvement.
Strategic Conservation is a process that produces tools to aid decision makers in

identifying, prioritizing, pursuing, and protecting those specific tracts of land that
will most effectively and efficiently achieve the land trust's mission.
Energy Efficient Equipment
Energy consumed by appliances and equipment is a major source of greenhouse
gas emissions in Australia. Improving the energy efficiency of appliances is a key
objective for all Australian Governments.
The main policy tools that are used to improve the energy efficiency of appliances
and equipment, in the residential, commercial and industrial sector, and save
money for all Australians, are mandatory Minimum Energy Performance Standards
(MEPS) and mandatory Energy Rating Labels.
Since 1986 the Energy Rating Label has appeared on refrigerators and freezers in
New South Wales and Victoria. Since that time, the label has applied to more
product lines and is used in both Australia and New Zealand, with all states and
territories having regulations in place over time.
In 1992 a national body, the Equipment Energy Efficiency Program (E3) was
established to coordinate these activities. On 30 May 2012 the Greenhouse and
Energy Minimum Standards (GEMS) Bill 2012 was introduced into federal
Parliament with a proposed commencement date of 1 October 2012. Providing that
the legislation is passed, the E3 Program will operate under national legislation,
replacing the patchwork of state regulations the E3 Program has been operating
under to date.
The Program will continue to be administered by the Australian Government
(currently through the Department of Climate Change and Energy Efficiency), with
continued input from state and territory governments and the New Zealand
Government (through the Energy Efficiency Conservation Authority).
E3 reports to the Energy Efficiency Working Group (E2WG) under the National
Framework for Energy Efficiency (NFEE), and ultimately to the Select Council on
Climate Change. More recently the work of E3 has been adopted as a measure
under the National Strategy on Energy Efficiency and the National Part nership
Agreement on Energy Efficiency.
Products are considered for inclusion within the program on the basis that the
community will benefit from their regulation. The individual product energy
efficiency target is either the equivalent of world-best regulatory target or a more
stringent level developed specifically for Australia. This market intervention has
proved to be an extremely cost effective mechanism for reducing energy demand
and greenhouse gases produced by consumer appliances, commercial and
industrial equipment.
Efficient energy use, sometimes simply called energy efficiency, is the goal of
efforts to reduce the amount of energy required to provide products and services.
For example, insulating a home allows a building to use less heating and cooling
energy to achieve and maintain a comfortable temperature. Installing fluorescent
lights or natural skylights reduces the amount of energy required to attain the same
level of illumination compared with using traditional incandescent light bulbs.

Compact fluorescent lights use one-third the energy of incandescent lights and may
last 6 to 10 times longer. Improvements in energy efficiency are most often
achieved by adopting a more efficient technology or production process.
Energy efficiency and renewable energy are said to be the twin pillars of
sustainable energy policy and are high priorities in the sustainable energy
hierarchy. In many countries energy efficiency is also seen to have a national
security benefit because it can be used to reduce the level of energy imports from
foreign countries and may slow down the rate at which domestic energy resources
are depleted.
Energy efficiency is "using less energy to provide the same service".
The best way to understand this idea is through examples: When you replace a
single pane window in your house with an energy-efficient one, the new window
prevents heat from escaping in the winter, so you save energy by using your
furnace or electric heater less while still staying comfortable. In the summer,
efficient windows keep the heat out, so the air conditioner does not run as often
and you save electricity.
When you replace an appliance, such as a refrigerator or clothes washer, or office
equipment, such as a computer or printer, with a more energy-efficient model, the
new equipment provides the same service, but uses less energy. This saves you
money on your energy bill, and reduces the amount of greenhouse gases going into
the atmosphere.
Energy efficiency is not energy conservation. Energy conservation is reducing or
going without a service to save energy. For example: Turning off a light is energy
conservation. Replacing an incandescent lamp with a compact fluorescent lamp
(which uses much less energy to produce the same amount of light) is energy
efficiency.
Management and Organization of Energy Conservation awareness Programs
Most successful organizations and individuals set goals, develop plans to meet
them and continually monitor their progress. To put together a plan that will work
for the unique requirements of your company, follow these six easy steps:
Step 1 – Establish a clear vision: Create goals that are specific, measurable,
attainable, realistic and trackable ("SMART").
Step 2 – Create the team: Appoint an energy champion who will develop the
plan, obtain approval to proceed, build your team and manage
implementation. Build your team to include decision makers as well as a

diverse group that represents your workplace.
Step 3 – Know your workplace: Figure out who are your target audiences to
determine the tools you will use to communicate with them. Consider the
audience’s size, where it's located and whether it is located in multiple
facilities.
Step 4 – Develop your communications plan: Identify and document what
you need to say to your employees, and how to say it. Define your key
messages; choose a communications style that is consistent with that used in
your organization, and then list out the activities, schedule and budget you’ll
need to make your plan work.
Step 5 – Implement your plan: Educate your employees/occupants/students
in energy-conserving habits and behaviours. Deliver the activities you and
your team have selected. Monitor the program and its effects, and lead by
example.
Step 6 – Recognize and reward : Reward those who have contributed to
achieving your goals. Annual programs can help remind your employees and
occupants of their energy-saving habits and accomplishments.
Load Management Options
Direct Load Control (DLC) – Utility has control of directly switching off customer
loads
Interruptible Load Control (ILC) - Utility provides advance notice to customers to
switch off loads
Time of Use (TOU) Tariffs – price signal provided – customer decides response
Load management programmes—changing the load pattern and encouraging
less demand at peak times and peak rates:
- Load leveling
- Load control
Tariff incentives and penalties
Load leveling
Load levelling helps to optimize the current generating base-load without the need
for reserve capacity to meet the periods of high demand.
UNIT V
ENERGY ECONOMIC ANALYSIS
The time value of money concept, developing cash flow models, payback analysis,
depreciation, taxes and tax credit – numerical problems.
The time value of money concept
Money has time value. A rupee today is more valuable than a year hence. It is on
this concept “the time value of money” is based. The recognition of the time value
of money and risk is extremely vital in financial decision making.
REASONS FOR TIME VALUE OF MONEY

Money has time value because of the following reasons:
1. Risk and Uncertainty :Future is always uncertain and risky. Outflow of cash is in
our control as payments to parties are made by us. There is no certainty for future
cash inflows. Cash inflows is dependent out on our Creditor, Bank etc. As an
individual or firm is not certain about future cash receipts, it prefers receiving cash
now.
2. Inflation:In an inflationary economy, the money received today, has more
purchasing power than the money to be received in future. In other words, a rupee
today represents a greater real purchasing power than a rupee a year hence.
3. Consumption:Individuals generally prefer current consumption to future
consumption.
4. Investment opportunities:An investor can profitably employ a rupee received
today, to give him a higher value to be received tomorrow or after a certain period
of time.
Thus, the fundamental principle behind the concept of time value of money is that,
a sum of money received today, is worth more than if the same is received after a
certain period of time. For example, if an individual is given an alternative either to
receive `10,000 now or after one year, he will prefer `10,000 now. This is because,
today, he may be in a position to purchase more goods with this money than what
he is going to get for the same amount after one year.
Thus, time value of money is a vital consideration in making financial decision.
Let us take some examples:
EXAMPLE 1:A project needs an initial investment of `1,00,000. It is expected to
give a return of `20,000 per annum at the end of each year, for six years. The
project thus involves a cash outflow of `1,00,000 in the ‘zero year’ and cash
inflows of `20,000 per year, for six years. In order to decide, whether to accept or
reject the project, it is necessary that the Present Value of cash inflows received
annually for six years is ascertained and compared with the initial investment of
`1,00,000. The firm will accept the project only when the Present Value of cash
inflows at the desired rate of interest exceeds the initial investment or at least
equals the initial investment of `1,00,000.
EXAMPLE2:A firm has to choose between two projects. One involves an outlay of
`10 lakhs with a return of 12% from the first year onwards, for ten years. The other
requires an investment of `10 lakhs with a return of 14% per annum for 15 years
commencing with the beginning of the sixth year of the project. In order to make a
choice between these two projects, it is necessary to compare the cash outflows
and the cash inflows resulting from the project. In order to make a meaningful
comparison, it is necessary that the two variables are strictly comparable. It is
possible only when the time element is incorporated in the relevant calculations.
This reflects the need for comparing the cash flows arising at different points of
time in decision-making.
VALUATION CONCEPTS
The time value of money establishes that there is a preference of having money at
present than a future point of time. It means (a) That a person will have to pay in
future more, for a rupee received today. For example: Suppose your father gave
you `100 on your tenth birthday. You deposited this amount in a bank at 10% rate
of interest for one year. How much future sum would you receive after one year?
You would receive `110
Future sum = Principal + Interest
= 100 + 0.10 × 100
= `110
What would be the future sum if you deposited `100 for two years? You would
now receive interest on interest earned after one year. Future sum = 100 × 1.10
2
=`121
We express this procedure of calculating as Compound Value or Future Value of a
sum.
(b) A person may accept less today, for a rupee to be received in the future. Thus,
the inverse of compounding process is termed as discounting. Here we can find the
value of future cash flow as on today.
TECHNIQUES OF TIME VALUE OF MONEY
There are two techniques for adjusting time value of money. They are:
1. Compounding Techniques/Future Value Techniques
2. Discounting/Present Value Techniques
The value of money at a future date with a given interest rate is called future value.
Similarly, the worth of money today that is receivable or payable at a future date is
called Present Value.
Compounding Techniques/Future Value Technique
In this concept, the interest earned on the initial principal amount becomes a part of
the principal at the end of the compounding period.
FOREXAMPLE:Suppose you invest `1000 for three years in a saving account that
pays 10 per cent interest per year. If you let your interest income be reinvested,
your investment will grow as follows
This process of compounding will continue for an indefinite time period.
The process of investing money as well as reinvesting interest earned there on is
called Compounding. But the way it has gone about calculating the future value
will prove to be cumbersome if the future value over long maturity periods of 20
years to 30 years is to be calculated. A generalised procedure for calculating the
future value of a single amount compounded annually is as follows:
FUTURE VALUE OF MULTIPLE CASH FLOWS

5 MCV SURESH, ASST. Prof., DEPT OF EEE

Developing cash flow models
Discounted cash flow

In finance, discounted cash flow (DCF) analysis is a method of valuing a project,
company, or asset using the concepts of the time value of money. All future cash
flows are estimated and discounted to give their present values (PVs) — the sum of
all future cash flows, both incoming and outgoing, is the net present value (NPV),
which is taken as the value or price of the cash flows in question.
Using DCF analysis to compute the NPV takes as input cash flows and a discount
rate and gives as output a price; the opposite process — taking cash flows and a
price and inferring a discount rate, is called the yield.
Discounted cash flow analysis is widely used in investment finance, real estate
development, and corporate financial management.
Discount rate
The most widely used method of discounting is exponential discounting, which
values future cash flows as "how much money would have to be invested currently,
at a given rate of return, to yield the cash flow in future." Other methods of
discounting, such as hyperbolic discounting, are studied in academia and said to

reflect intuitive decision-making, but are not generally used in industry.
The discount rate used is generally the appropriate Weighted average cost of
capital (WACC), that reflects the risk of the cashflows. The discount rate reflects
two things:
1. The time value of money (risk-free rate) – according to the theory of time
preference, investors would rather have cash immediately than having to
wait and must therefore be compensated by paying for the delay.
2. A risk premium – reflects the extra return investors demand because they
want to be compensated for the risk that the cash flow might not materialize
after all.
Discounted cash flows
The discounted cash flow formula is derived from the future value formula for
calculating the time value of money and compounding returns.
Thus the discounted present value (for one cash flow in one future period) is
expressed as:
where
• DPV is the discounted present value of the future cash flow (FV), or FV
adjusted for the delay in receipt;
• FV is the nominal value of a cash flow amount in a future period;
• i is the interest rate, which reflects the cost of tying up capital and may also
allow for the risk that the payment may not be received in full;
d is the discount rate, which is i/(1+i), i.e. the interest rate expressed as a
deduction at the beginning of the year instead of an addition at the end of the
year;
• n is the time in years before the future cash flow occurs.
Where multiple cash flows in multiple time periods are discounted, it is necessary
to sum them as follows:
for each future cash flow (FV) at any time period (t) in years from the present time,
summed over all time periods. The sum can then be used as a net present value
figure. If the amount to be paid at time 0 (now) for all the future cash flows is
known, then that amount can be substituted for DPV and the equation can be
solved for i, that is the internal rate of return.
All the above assumes that the interest rate remains constant throughout the whole
period.
Discounted cash flows
The discounted cash flow formula is derived from the future value formula for
calculating the time value of money and compounding returns.
Thus the discounted present value (for one cash flow in one future period) is
expressed as:
where
• DPV is the discounted present value of the future cash flow (FV), or FV
adjusted for the delay in receipt;
• FV is the nominal value of a cash flow amount in a future period;
• i is the interest rate, which reflects the cost of tying up capital and may also
allow for the risk that the payment may not be received in full;
d is the discount rate, which is i/(1+i), i.e. the interest rate expressed as a
deduction at the beginning of the year instead of an addition at the end of the
year;
• n is the time in years before the future cash flow occurs.
Where multiple cash flows in multiple time periods are discounted, it is necessary
to sum them as follows:
for each future cash flow (FV) at any time period (t) in years from the present time,
summed over all time periods. The sum can then be used as a net present value
figure. If the amount to be paid at time 0 (now) for all the future cash flows is
known, then that amount can be substituted for DPV and the equation can be
solved for i, that is the internal rate of return.
All the above assumes that the interest rate remains constant throughout the whole
period.
Continuous cash flows
For continuous cash flows, the summation in the above formula is replaced by an
integration:
where FV(t) is now the rate of cash flow, and λ = log(1+i).

Example DCF
To show how discounted cash flow analysis is performed, consider the following
simplified example.
• John Doe buys a house for $100,000. Three years later, he expects to be able
to sell this house for $150,000.
Simple subtraction suggests that the value of his profit on such a transaction would
be $150,000 − $100,000 = $50,000, or 50%. If that $50,000 is amortized over the
three years, his implied annual return (known as the internal rate of return) would
be about 14.5%. Looking at those figures, he might be justified in thinking that the
purchase looked like a good idea.
3
1.145 x 100000 = 150000 approximately.
However, since three years have passed between the purchase and the sale, any
cash flow from the sale must be discounted accordingly. At the time John Doe
buys the house, the 3-year US Treasury Note rate is 5% per annum. Treasury Notes
are generally considered to be inherently less risky than real estate, since the value
of the Note is guaranteed by the US Government and there is a liquid market for
the purchase and sale of T-Notes. If he hadn't put his money into buying the house,
he could have invested it in the relatively safe T-Notes instead. This 5% per annum
can therefore be regarded as the risk-free interest rate for the relevant period (3
years).
Using the DPV formula above (FV=$150,000, i=0.05, n=3), that means that the
value of $150,000 received in three years actually has a present value of $129,576
(rounded off). In other words we would need to invest $129,576 in a T -Bond now
to get $150,000 in 3 years almost risk free. This is a quantitative way of showing
that money in the future is not as valuable as money in the present ($150,000 in 3
years isn't worth the same as $150,000 now; it is worth $129,576 now).
Subtracting the purchase price of the house ($100,000) from the present value
results in the net present value of the whole transaction, which would be $29,576
or a little more than 29% of the purchase price.
Another way of looking at the deal as the excess return achieved (over the risk-free
rate) is (114.5 - 105)/(100 + 5) or approximately 9.0% (still very respectable). But
what about risk?
We assume that the $150,000 is John's best estimate of the sale price that he will be
able to achieve in 3 years time (after deducting all expenses, of course). There is of
course a lot of uncertainty about house prices, and the outcome may end up higher
or lower than this estimate.
(The house John is buying is in a "good neighborhood," but market values have
been rising quite a lot lately and the real estate market analysts in the media are
talking about a slow-down and higher interest rates. There is a probability that
John might not be able to get the full $150,000 he is expecting in three years due to
a slowing of price appreciation, or that loss of liquidity in the real estate market
might make it very hard for him to sell at all.)
Under normal circumstances, people entering into such transactions are risk-
averse, that is to say that they are prepared to accept a lower expected return for the
sake of avoiding risk. See Capital asset pricing model for a further discussion of
this. For the sake of the example (and this is a gross simplification), let's assume
that he values this particular risk at 5% per annum (we could perform a more
precise probabilistic analysis of the risk, but that is beyond the scope of this
article). Therefore, allowing for this risk, his expected return is now 9.0% per
annum (the arithmetic is the same as above).
And the excess return over the risk-free rate is now (109 - 105)/(100 + 5) which
comes to approximately 3.8% per annum.
That return rate may seem low, but it is still positive after all of our discounting,
suggesting that the investment decision is probably a good one: it produces enough
profit to compensate for tying up capital and incurring risk with a little extra left
over. When investors and managers perform DCF analysis, the important thing is
that the net present value of the decision after discounting all future cash flows at
least be positive (more than zero). If it is negative, that means that the investment
decision would actually lose money even if it appears to generate a nominal profit.
For instance, if the expected sale price of John Doe's house in the example above
was not $150,000 in three years, but $130,000 in three years or $150,000 in five
years, then on the above assumptions buying the house would actually cause John
to lose money in present-value terms (about $3,000 in the first case, and about
$8,000 in the second). Similarly, if the house was located in an undesirable
neighborhood and the Federal Reserve Bank was about to raise interest rates by
five percentage points, then the risk factor would be a lot higher than 5%: it might
not be possible for him to predict a profit in discounted terms even if he thinks he
could sell the house for $200,000 in three years.
In this example, only one future cash flow was considered. For a decision which
generates multiple cash flows in multiple time periods, all the cash flows must be
discounted and then summed into a single net present value.
Payback analysis
Payback period in capital budgeting refers to the period of time required for the
return on an investment to "repay" the sum of the original investment. For
example, a $1000 investment which returned $500 per year would have a two year
payback period. The time value of money is not taken into account. Payback period
intuitively measures how long something takes to "pay for itself." All else being
equal, shorter payback periods are preferable to longer payback periods. Payback
period is widely used because of its ease of use despite the recognized limitations
described below.
To calculate a more exact payback period: Payback Period = Amount to be
Invested/Estimated Annual Net Cash Flow 1 It can also be calculated using the
formula:
Payback Period = (p - n)÷p + ny
= 1 + ny - n÷p (unit:years)
Where
ny= The number of years after the initial investment at which the last negative
value of cumulative cash flow occurs.
n= The value of cash flow at which the last negative value of cumulative cash flow
occurs.
p= The value of cash flow at which the first positive value of cumulative cash flow
occurs.
This formula can only be used to calculate the soonest payback period; that is, the
first period after which the investment has paid for itself. If the cumulative cash
flow drops to a negative value some time after it has reached a positive value,
thereby changing the payback period, this formula can't be applied. This formula
ignores values that arise after the Payback Period has been reached.
Additional complexity arises when the cash flow changes sign several times; i.e., it
contains outflows in the midst or at the end of the project lifetime. The modified
payback period algorithm may be applied then. First, the sum of all of the cash
outflows is calculated. Then the cumulative positive cash flows are determined for
each period. The modified payback is calculated as the moment in which the
cumulative positive cash flow exceeds the total cash outflow.
Depreciation
In accountancy, depreciation refers to two aspects of the same concept:
1. The decrease in value of assets (fair value depreciation), and
2. The allocation of the cost of assets to periods in which the assets are used
(depreciation with the matching principle).
The former affects the balance sheet of a business or entity, and the latter affects
the net income that they report. Generally the cost is allocated, as depreciation
expense, among the periods in which the asset is expected to be used. This exp ense
is recognized by businesses for financial reporting and tax purposes. Methods of
computing depreciation, and the periods over which assets are depreciated, may
vary between asset types within the same business. These may be specified by law
or accounting standards, which may vary by country. There are several standard
methods of computing depreciation expense, including fixed percentage, straight
line, and declining balance methods. Depreciation expense generally begins when
the asset is placed in service. For example, a depreciation expense of 100 per year
for 5 years may be recognized for an asset costing 500.
Accounting concept
In determining the profits (net income) from an activity, the receipts from the
activity must be reduced by appropriate costs. One such cost is the cost of assets
used but not immediately consumed in the activity. Such cost so allocated in a
given period is equal to the reduction in the value placed on the asset, which is
initially equal to the amount paid for the asset and subsequently may or may not be
related to the amount expected to be received upon its disposal. Depreciation is any
method of allocating such net cost to those periods in which the organisation is
expected to benefit from use of the asset. The asset is referred to as a depreciable
asset. Depreciation is technically a method of allocation, not valuation, even
though it determines the value placed on the asset in the balance sheet.
Any business or income producing activity using tangible assets may incur costs
related to those assets. If an asset is expected to produce a benefit in future periods,
some of these costs must be deferred rather than treated as a current expense. The
business then records depreciation expense in its financial reporting as the current
period's allocation of such costs. This is usually done in a rational and systematic
manner. Generally this involves four criteria:
• cost of the asset,
expected salvage value, also known as residual value of the asset,
• estimated useful life of the asset, and
• a method of apportioning the cost over such life
Depreciable basis
Cost generally is the amount paid for the asset, including all costs related to
[5]
acquisition. In some countries or for some purposes, salvage value may be
ignored. The rules of some countries specify lives and methods to be used for
particular types of assets. However, in most countries the life is based on business
experience, and the method may be chosen from one of several acceptable
methods.
Net basis
When a depreciable asset is sold, the business recognizes gain or loss based on net
basis of the asset. This net basis is cost less depreciation.
Impairment
Accounting rules also require that an impairment charge or expense be recognized
[6]
if the value of assets declines unexpectedly. Such charges are usually
nonrecurring, and may relate to any type of asset.
Depletion and amortization
Depletion and amortization are similar concepts for minerals (including oil) and
intangible assets, respectively. Depreciation expense does not require current
outlay of cash. However since depreciation is an expense to the P&L account,
provided the enterprise is operating in a manner that covers its expenses (e.g.
operating at a profit) depreciation is a source of cash in a statement of cash flows,
which generally offsets the cash cost of acquiring new assets reuired to continue
operations when existing assets reach the end of their useful lives.
Historical cost
Depreciation is generally recognized under historical cost systems of accounting.
Some proposals for fair value accounting have no provision for depreciation
expense.
Accumulated depreciation
While depreciation expense is recorded on the income statement of a business, its
impact is generally recorded in a separate account and disclosed on the balance
sheet as accumulated depreciation, under fixed assets, according to most
accounting principles. Accumulated depreciation is known as a contra account,
because it separately shows a negative amount that is directly associated with
another account.
Without an accumulated depreciation account on the balance sheet, depreciation
expense is usually charged against the relevant asset directly. The values of the
fixed assets stated on the balance sheet will decline, even if the business has not
invested in or disposed of any assets. The amounts will roughly approximate fair
value. Otherwise, depreciation expense is charged against accumulated
depreciation. Showing accumulated depreciation separately on the balance sheet
has the effect of preserving the historical cost of assets on the balance sheet. If
there have been no investments or dispositions in fixed assets for the year, then the
values of the assets will be the same on the balance sheet for the current and prior
year.In other words it is a method of recovering capital expenditure in installments
which is called as depreciation.
Methods of depreciation
There are several methods for calculating depreciation, generally based on either
the passage of time or the level of activity (or use) of the asset.
Straight-line depreciation
Straight-line depreciation is the simplest and most often used method. In this
method, the company estimates the salvage value of the asset at the end of the
period during which it will be used to generate revenues (useful life). (The salvage
value is an estimate of the value of the asset at the time it will be sold or disposed
of; it may be zero or even negative. Salvage value is also known as scrap value or
residual value.) The company will then charge the same amount to depreciation
each year over that period, until the value shown for the asset has reduced from the
original cost to the salvage value.
Straight-line method:
For example, a vehicle that depreciates over 5 years is purchased at a cost of

$17,000, and will have a salvage value of $2000. Then this vehicle will depreciate
at $3,000 per year, i.e. (17-2)/5 = 3. This table illustrates the straight-line method
of depreciation. Book value at the beginning of the first year of depreciation is the
original cost of the asset. At any time book value equals original cost minus
accumulated depreciation.
book value = original cost − accumulated depreciation Book value at the end of
year becomes book value at the beginning of next year. The asset is d epreciated
until the book value equals scrap value.
Accumulated
B
deook
prevcaialutieoant aDtepreciation Book value at beginning of year expense in year
end of year
end of year
$17,000
$3,000 $3,000 $14,000
(original cost)
$14,000 $3,000 $6,000
$11,000
$11,000 $3,000 $9,000
$8,000
$8,000 $3,000 $12,000
$5,000
$2,000
$5,000 $3,000 $15,000 (scrap value)
If the vehicle were to be sold and the sales price exceeded the depreciated value
(net book value) then the excess would be considered a gain and subject to
depreciation recapture. In addition, this gain above the depreciated value would be
recognized as ordinary income by the tax office. If the sales price is ever less than
the book value, the resulting capital loss is tax deductible. If the sale price were
ever more than the original book value, then the gain above the original book value
is recognized as a capital gain.
If a company chooses to depreciate an asset at a different rate from that used by the
tax office then this generates a timing difference in the income statement due to the
difference (at a point in time) between the taxation department's and company's
view of the profit.
Declining-balance method (or Reducing balance method)
Depreciation methods that provide for a higher depreciation charge in the first year
of an asset's life and gradually decreasing charges in subsequent years are called
accelerated depreciation methods. This may be a more realistic reflection of an
asset's actual expected benefit from the use of the asset: many assets are most
useful when they are new. One popular accelerated method is the declining-
balance method. Under this method the book value is reduced by a fixed
percentage each year.
Depreciation in year = Depreciation rate * Book Value at start of year The

most common depreciation rate used is double the straight-line rate. For this
reason, this technique is sometimes referred to as the double-declining-balance
method. To illustrate, suppose a business has an asset with $1,000 original cost,
$100 salvage value, and 5 years of useful life. First, the straight-line depreciation
rate would be 1/5, i.e. 20% per year. Under the double-declining-balance method,
double that rate, i.e. 40% depreciation rate would be used. The table below
illustrates this:
Book value at Depreciation Depreciation Accu mulated Book value at
beginning of year rate expense depreciation end of year
$1,000
40% $400 $400 $600
(original cost)
$600 40% $240 $640 $360
$360 40% $144 $784 $216
$216 40% $86.40 $870.40 $129.60
$100
$129.60 $129.60 - $100 $29.60 $900
(scrap value)
When using the double-declining-balance method, the salvage value is not
considered in determining the annual depreciation, but the book value of the asset
being depreciated is never brought below its salvage value, regardless of the
method used. Depreciation ceases when either the salvage value or the end of the
asset's useful life is reached.
Since double-declining-balance depreciation does not always depreciate an asset
fully by its end of life, some methods also compute a straight-line depreciation
each year, and apply the greater of the two. This has the effect of converting from
declining-balance depreciation to straight-line depreciation at a midpoint in the
asset's life.
With the declining balance method, one can find the depreciation rate that would
allow exactly for full depreciation by the end of the period, using the formula:
,
where N is the estimated life of the asset (for example, in years).
Activity depreciation
Activity depreciation methods are not based on time, but on a level of activity.
This could be miles driven for a vehicle, or a cycle count for a machine. When the
asset is acquired, its life is estimated in terms of this level of activity. Assume the
vehicle above is estimated to go 50,000 miles in its lifetime. The per-mile
depreciation rate is calculated as: ($17,000 cost - $2,000 salvage) / 50,000 miles =
$0.30 per mile. Each year, the depreciation expense is then calculated by
multiplying the number of miles driven by the per-mile depreciation rate.
Sum-of-years-digits method
Sum-of-years-digits is a depreciation method that results in a more accelerated write-
off than the straight line method, and typically also more accelerated than the
declining balance method. Under this method the annual depreciation is
determined by multiplying the depreciable cost by a schedule of fractions.
depreciable cost = original cost − salvage value
book value = original cost − accumulated depreciation
Example: If an asset has original cost of $1000, a useful life of 5 years and a
salvage value of $100, compute its depreciation schedule.
First, determine years' digits. Since the asset has useful life of 5 years, the years'
digits are: 5, 4, 3, 2, and 1.
Next, calculate the sum of the digits: 5+4+3+2+1=15
2
The sum of the digits can also be determined by using the formula (n +n)/2 where
n is equal to the useful life of the asset in years. The example would be shown as
2
(5 +5)/2=15
Depreciation rates are as follows:
5/15 for the 1st year, 4/15 for the 2nd year, 3/15 for the 3rd year, 2/15 for the 4th
year, and 1/15 for the 5th year.
Book value Total Book
at Depreciation Depreciation Accumulated value at
beginning of depreciable rate expense depreciation end of
year cost year
$1,000 *
(original $900 5/15 $300 ($900 $300 $700
cost) 5/15)
$700 $900 4/15 $240 ($900 $540 $460
4/15) *
$460 $900 3/15 $180 ($900 $720 $280
3/15)
*
$280 $900 2/15 $120 ($900 $840 $160
2/15)
* $100
$160 $900 1/15 $60 ($900 $900 (scrap
1/15) value)
Units-of-production depreciation method

Under the units-of-production method, useful life of the asset is expressed in terms
of the total number of units expected to be produced:
Suppose, an asset has original cost $70,000, salvage value $10,000, and is
expected to produce 6,000 units.
Depreciation per unit = ($70,000−10,000) / 6,000 = $10
10 × actual production will give the depreciation cost of the current year.
The table below illustrates the units-of-production depreciation schedule of the
asset.
Book value
Book value at Units of Depreciation Depreciation Accum ulated
of
beginning production cost per unit expense depreciation at
year end of year
$70,000
(original 1,000 $10 $10,000 $10,000 $60,000
cost)
$60,000 1,100 $10 $11,000 $21,000 $49,000
$49,000 1,200 $10 $12,000 $33,000 $37,000
$37,000 1,300 $10 $13,000 $46,000 $24,000
$10,000
$24,000 1,400 $10 $14,000 $60,000 (scrap
value)
Depreciation stops when book value is equal to the scrap value of the asset. In the
end, the sum of accumulated depreciation and scrap value equals the original cost.
Composite depreciation method
The composite method is applied to a collection of assets that are not similar, and
have different service lives. For example, computers and printers are not similar,
but both are part of the office equipment. Depreciation on all assets is determined
by using the straight-line-depreciation method.
Asset Historical Salvage Depreciable Life Depreciation
cost value cost per year
Computers $5,500 $500 $5,000 5 $1,000
Printers $1,000 $100 $ 900 3 $ 300
Total $ 6,500 $600 $5,900 4.5 $1,300
Composite life equals the total depreciable cost divided by the total depreciation
per year. $5,900 / $1,300 = 4.5 years.
Composite depreciation rate equals depreciation per year divided by total

historical cost. $1,300 / $6,500 = 0.20 = 20%
Depreciation expense equals the composite depreciation rate times the balance in
the asset account (historical cost). (0.20 * $6,500) $1,300. Debit depreciation
expense and credit accumulated depreciation.
When an asset is sold, debit cash for the amount received and credit the asset
account for its original cost. Debit the difference between the two to accumulated
depreciation. Under the composite method no gain or loss is recognized on the sale
of an asset. Theoretically, this makes sense because the gains and losses from
assets sold before and after the composite life will average themselves out.
To calculate composite depreciation rate, divide depreciation per year by total
historical cost. To calculate depreciation expense, multiply the result by the same
total historical cost. The result, not surprisingly, will equal to the total depreciation
Per Year again.
Common sense requires depreciation expense to be equal to total depreciation per
year, without first dividing and then multiplying total depreciation per year by the
same number.
Tax depreciation
Most income tax systems allow a tax deduction for recovery of the cost of assets
used in a business or for the production of income. Such deductions are allowed for
individuals and companies. Where the assets are consumed currently, the cost may
be deducted currently as an expense or treated as part of cost of goods sold. The
cost of assets not currently consumed generally must be deferred and recovered
over time, such as through depreciation. Some systems permit full deduction of the
cost, at least in part, in the year the assets are acquired. Other systems allow
depreciation expense over some life using some depreciation method or
percentage. Rules vary highly by country, and may vary within a country based on
type of asset or type of taxpayer. Many systems that specify depreciation lives and
methods for financial reporting require the same lives and methods be used for tax
purposes. Most tax systems provide different rules for real property (buildings,
etc.) and personal property (equipment, etc.).
Capital allowances
A common system is to allow a fixed percentage of the cost of depreciable assets
to be deducted each year. This is often referred to as a capital allowance, as it is
called in the United Kingdom. Deductions are permitted to individuals and
businesses based on assets placed in service during or before the assessment year.
Canada's Capital Cost Allowance are fixed percentages of assets within a class or
type of asset. Fixed percentage rates are specified by type of asset. The fixed
percentage is multiplied by the tax basis of assets in service to determine the
capital allowance deduction. The tax law or regulations of the country specifies
these percentages. Capital allowance calculations may be based on the total set of
assets, on sets or pools by year (vintage pools) or pools by classes of assets.
Tax lives and methods
Some systems specify lives based on classes of property defined by the tax
authority. Canada Revenue Agency specifies numerous classes based on the type
of property and how it is used. Under the United States depreciation system, the
Internal Revenue Service publishes a detailed guide which includes a table of asset
lives and the applicable conventions. The table also incorporates specified lives for
certain commonly used assets (e.g., office furniture, computers, automobiles)
which override the business use lives. U.S. tax depreciation is computed under the
double declining balance method switching to straight line or the straight line
[7]
method, at the option of the taxpayer. IRS tables specify percentages to apply to
the basis of an asset for each year in which it is in service. Depreciation first
becomes deductible when an asset is placed in service.

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Subject code: 15A02706 EADSM

IV B. Tech I Semester (JNTUA-R15)

Dr.D.CHANDRA SEKHKAR, M.Tech, P.hD, MISTE

Department of Electrical and Electronics Engineering

Dept of EEE VEMU I.T Page 1

UNI –I: INTRODUCTION TO ENERGY AUDITING

UNIT -II: ENERGY EFFICIENT MOTORS AND POWER FACTOR IMPROVEMENT

UNIT –V: ECONOMICS AND COST EFFECTIVENESS TESTS OF DSM PROGRAMS

Dept of EEE VEMU I.T Page 2

I. Energy: An Essential for Society

Dept of EEE VEMU I.T Page 1

II. Fossil Fuels, the Main Source of Energy.

4. Fossil fuels continue to be the mainstay of our energy economy.

Dept of EEE VEMU I.T Page 2

III. Environmental Aspects of Energy.

o According to the Intergovernmental Panel on Climate Change (I PCC, 1995),

Dept of EEE VEMU I.T Page 3

IV. U.S. Energy Demand and the Needs of the Future.

o About one-fourth of U.S. electricity is used for lighting. Long-lived compact

V. Non-Fossil Energy Sources.

Dept of EEE VEMU I.T Page 4

16. Nuclear fission's role will diminish without ne w initiatives.

VI. Some Energy Policy Issues

o R&D is necessary to enhance development of future energy sources and to

19. U.S.Government Energy R& D

Dept of EEE VEMU I.T Page 5

Dept of EEE VEMU I.T Page 6

d. Measures to encourage non-fossil source s for energy production.

Dept of EEE VEMU I.T Page 7

Dept of EEE VEMU I.T Page 8

Energy Codes and Standards

Dept of EEE VEMU I.T Page 9

A. Commonly Used Energy Codes

Dept of EEE VEMU I.T Page 10

Dept of EEE VEMU I.T Page 11

Modifications to existing buildings often need to meet new building requirements or

B. Scope of Energy Codes

Mechanical system requirements include minimum equipment efficiency requirements, insulation

Dept of EEE VEMU I.T Page 12

Dept of EEE VEMU I.T Page 13

The Clean E nergy Legislative Package and related legislation

Cl ea n En er g y Re gula tor Act 20 11 — c o m m e n ce d on 2 Ap ril 2 01 2

Dept of EEE VEMU I.T Page 14

Cli m ate Ch a ng e Aut ho rity Act 20 1 1 — co m m e n ce s on 1 July 20 12

Cl ea n En er g y (Con seq u ential Am en d m ent s) Act 20 11

Dept of EEE VEMU I.T Page 15

Definition of Energy Audit

Industrial energy audits

Types of Audits and Reviews

• Testing the internal controls to ensure proper operation.

Inform ati on System s (IS) Audit

1. General Controls Review

2. Application Controls Review

3. System Development Review

Types of energy audit

• The selection and the evaluation of energy conservation measures;

• Level 0 – Benchmarking: This first analysis consists in a preliminary Whole Building

• Level I – Walk-through audit: Preliminary analysis made to assess building energy

• Level III – Investment- Grade audit: Detailed Analysis of Capital-Intensive