Unless you have had a thorough electrical power analysis of your facilities, there is every chance you are missing opportunities to reduce your electrical energy costs significantly. KEN FREESTONE explains.
How much of your facility’s electricity bill is wasted energy?
The question rarely arises with most finance managers and accountants. They more than likely assume that for cases where electricity is a large fraction of operating costs, all the obvious savings measures have been put in place. However, as is pointed out here, there is ‘undetected’ waste in many facilities.
For example, there may be:
- additional energy consumption because of high voltages in the distribution grid
- excessive demand charges because of low power factor, or
- losses in the building wiring – just heating up copper.
What sorts of savings may be available? Let’s think of a low number like five percent – that’s more than likely a conservative estimate.
The question that pops into your mind may be: the electrical installation has been designed by qualified engineers, so how could the above-mentioned losses be happening?
For one: high voltage in the distribution grid is outside most people’s control. As to the other two bullet points, the chances are that, despite the qualifications of the people designing and implementing the electrical installation, you are experiencing losses that could be avoided. How so? Because mostly electrical installations are ‘set and forget’. Your blood pressure was fine when you were an 18-year-old but, hey, at 54 it may do with a check-up – just to be sure – to be sure! No different to an electrical installation of an age much younger than 54 human years. Electrical loads change, more wiring has been added, tenants have changed, common area power requirements have moved with the times, the parking area needed an upgrade in lighting, new extractor fans have been installed etc.
The changes in your electrical installation cause changes in electrical energy bills and that’s unavoidable. Hopefully your accounting system sheets allocate charges home to the various profit centres. For example, sustained higher grid voltages will pump up electricity bills, but generally do that proportionally. The losses in electrical energy, however, do not necessarily distribute that way. Amortisation of investment required to reduce losses can be split up based on energy uptake for profit centres.
Typically, capital investment for reduction in energy loss requires an expectation of paybacks of longer than four to five years, with a shorter time for peak demand tariff structures. Before you decide to read no further, please consider that the hope of electricity prices coming down is forlorn! Australia’s electricity system is an oligopolistic, rent-seeking cohort of a few large companies and some state-owned enterprises that swell their state’s coffers. Australia’s 58,000 kilometres of transmission and 600,000 kilometres of distribution networks for a relatively small population just can’t deliver economies that a Denmark or Germany can.
Let’s look at the loss causing ingredients:
- Voltage fluctuates – in all grids, though some more than others. An allowable 10 percent variation upwards implies a 21 percent increase in energy. Your energy retailer is blind to such variations – they just read your meter. A power analysis of your premises will reveal if you have a worrying problem. If that is the case there are solutions, one being a voltage regulator or a series of them.
- Excessive demand – generally occurs because of large power flow fluctuations; for example, air-conditioning switching in and out, operation of elevators and other variable electrical loads. Networks pass the additional energy they have to carry by means of demand charges, which are usually billed separately to kilowatt-hour charges. To put that in perspective, if your installation consumes as much as 90 percent of the power supplied to you (the power factor), the poles and wire people carry nearly 50 percent more current as a result. Were the power factor to be increased to 95 percent, the excess of current to be supplied would an additional 31 percent. The reason for the demand charges is now plain: the additional current causes losses in the grid that are not reflected in the kilowatt-hours you pay for (i.e. energy wasted in getting it to your premises). A power analysis will reveal economies that can be made by improving your power factor(s).
- Losses in the building wiring – can often be reduced significantly. Let’s say your facility is a large consumer with a monthly bill of $10,000. If you are able to reduce losses by 2.5 percent, a very conservative number, annually you’d save $3000, but the figure could easily be double, particularly under conditions of high voltage as already explained. Within-building, low-power factors are another significant loss factor. A practical example will suffice. Cycling air-conditioning will cause power peaks in your building’s wiring, causing low power factors and, as already explained, that requires large current increases (and therefore large losses) within the building perimeter, all totalled up by your kilowatt-hour meter/s. These losses are generally not picked up by individual metering in tenant premises – they occur between main meters and sub-metering. More losses are caused by ‘harmonics’, basically very peaky current flow as a result of much computer equipment, electronic fluoro ballasts, high efficiency (inverter) air-conditioning, high bay lighting and LEDs etc. The harmonics can be ‘filtered out’ and reduce losses. A comprehensive power survey will reveal the opportunities for savings.
An engineers’ picnic?
That’s not what we are talking about here. The cost of a comprehensive power survey is peanuts compared to the potential power savings. A bit of less-than-rocket science analysis will reveal opportunities for sensible investment in equipment to reduce losses and bills, with attractive paybacks. For example, power factor correction can have paybacks of typically three years based on reduction in demand charges. Some measures can have longer paybacks but, when combined in a package of increased efficiency actions, they provide sensible investments and can future-proof the installation against further price rises in electrical energy.
Ken Freestone is CEO of Power Parameters Pty Ltd. He is a highly experienced executive in the electrical, communication and scientific products and services sector both in Australia and internationally. He has BSc in science, majoring in information systems, National Certificate III in electrical engineering and is an A-grade electrical mechanic. The combination of business and technical skills with the practical outlook of a tradesperson gives him a rare insight in problem-solving.
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