Justifying a Power Management System

Convincing facility owners of the need for a power management system involves justifying capital investment and calculating the return on that investment. The process can be simple — even if your company already has energy-efficient programs in place. Those programs have likely reduced the electricity bill, but they can only go so far, and they do nothing to address the total cost of power for your facility.

In 2001, the Federal Aviation Administration (FAA) began analyzing flight data from aircraft in real time in order to prevent in-flight problems, reduce the risk of plane crashes, and save lives. FAA officials argued that flight data recorders should be used to prevent crashes, not just reconstruct what went wrong after a crash. Many industrial facility managers have reached a similar conclusion regarding their electrical power systems. Implementing a comprehensive power management system can prevent electrical system problems, save money, and improve power quality and reliability. In this article, you'll learn about one company's successful foray into continuous power quality monitoring — and the tips you need to do the same.

Convincing facility owners of the need for a power management system involves justifying capital investment and calculating the return on that investment. The process can be simple — even if your company already has energy-efficient programs in place. Those programs have likely reduced the electricity bill, but they can only go so far, and they do nothing to address the total cost of power for your facility.

Determining the Need

True power costs consist of three main components: electrical energy costs, power distribution costs (e.g., capital equipment, depreciation, and maintenance), and downtime costs.

Electrical energy costs are the primary reason companies install power monitoring equipment. They are easy to identify because they're right on the electric utility's bill. However, these savings are only a small part of the total savings opportunity.

Power distribution costs represent a huge investment. Harmonics, poor voltage regulation, unbalance, feeder loading, and poor power factor all accelerate the degradation and destruction of power system components. Most facility managers budget for equipment replacements, upgrades, and modifications each year, so it may be possible to avoid or postpone some of those capital expenditures.

Lost production time because of equipment failures and unexplained shutdowns also hits companies hard. To determine the total downtime costs of your facility, factor in the monetary losses for idle workers, overtime, scrap, lost sales, and reduced inventory.

Compared to energy, accelerated aging and downtime costs are hidden and, therefore, not usually included in the power management system proposal. One of your goals should be to address those hidden costs.

After you understand all the costs involved, both true and hidden, it's also a good idea to compare your company's electricity costs to other raw materials used in its manufacturing processes. Most industrial manufacturing companies have experts whose sole function is to maximize the raw materials used in production.

Unfortunately, many senior managers don't realize that they should study electricity cost, quality, and reliability. They view the cost of power as a fixed cost. It doesn't have to be. In fact, a comprehensive power management system that yields energy cost savings, improved power quality, capital equipment optimization, and reliability improvements can be expected to save at least 4% of your company's total power cost. To determine what dollar amount that percentage will represent, you need a benchmark — an estimation of the total cost of power for your facility. You can calculate your total cost of power by following these steps:

  1. Determine the average price for electricity at all facilities. Corporate purchasing personnel can supply this information.
  2. Estimate the costs related to each plant's investment in power system equipment. This can be difficult. Unless you can estimate all the costs associated with owning and maintaining electrical distribution systems for every branch facility, it's probably best to use estimates of depreciation costs for such equipment.
  3. Estimate the cost of production losses caused by poor power quality. You can obtain this figure by using IEEE 1346 guidelines or estimated numbers of PQ-related events at each facility. Data from EPRI's Distribution Power Quality Program indicates that the average industrial overhead distribution feeder experiences 42 events each year that would likely affect some process equipment. If you multiply 42 by an average of $5,000 per event, you'd get an estimate of $210,000 per year.

As an example, here's how one company calculated its total power cost. The company's annual electric bills totaled $12 million for its 13 U.S. manufacturing facilities. The plants range in peak demand from several hundred kilowatts to 5MW, with annual power bills between $250,000 and $1,000,000. The average price for electricity at the 13 facilities costs between 3.5 cents and 7.5 cents per kilowatt-hour. Next, the power system equipment depreciation estimates for all 13 facilities totaled $1 million. Finally, the company estimated their production loss costs using the EPRI data. For all facilities, that figure reached $3 million. This adds up to an annual total power cost of $16 million.

Once the company managers established the total annual power-cost figure, they estimated that the potential savings of a power management system would range from $320,000 to $640,000 per year, based on the industry average of 2% to 4% annual savings. The benefits multiply if they consider the additional savings in aggregate billing and corporate power purchasing that will result after deregulation takes full effect. As an added advantage, the power management system will help establish baselines to ensure that utilities maintain power quality after deregulation.

Tracking the Savings

Demonstrating a return on the company's investment in a power management system is as important as justifying the initial outlay. Each month — and for each plant site — facility engineers should collect data logs and alarms, analyze the information using the system software, and create monthly reports. These reports form the basis of corporate-wide quarterly reports that compare the cost and quality of electricity throughout the company. They also rank each utility's cost and quality.

One company's rankings showed that the highest-cost plant also had the worst power quality, recording as many as 60 voltage sags below 80% in a single quarter. Production losses due to these events were estimated at $69,000 in a single month. Comparing individual plant results with utility cost and power quality helps engineers prioritize and implement the most cost-effective measures.

Apart from creating monthly reports, you'll need to address these areas when you track power savings:

Energy management

Even if your company has already upgraded its lighting, heating and cooling, and motor systems, a power management system can provide additional savings. One facility reduced its annual electricity bill by $23,000 by proving that the plant qualified for its utility's high load-factor rate.

Another plant identified $4,000 in natural gas savings by reducing its boiler pressure with a small investment in better controls. The plant also discovered (with power measurements on its onsite generator) that it could reduce the firm demand in the utility's existing interruptible rate, saving an additional $13,000.

Power quality

If you're plagued by events on the utility system, a power management system can help control the number of these events.

For example, one facility repeatedly recorded voltage sags and interruptions at the main circuit monitor. These events lasted only a quarter of a second, yet their effects could shut down the production process for 4 hours. Engineers analyzing the monitoring data exposed a coordination problem on the electric utility distribution circuit, showing facility owners that these events were avoidable and should not have led to costly interruptions.

Capital optimization

Most savings associated with optimizing the company's investment in its electric power equipment are straightforward.

Consider the company that needed to add load to an existing substation. Prior to the installation of a power management system, plant engineers would have taken snapshot readings with a current probe or recorded periodic readings of the analog ammeter on the substation in order to assess circuit loading. But current loading on the circuit was cyclical, with normal variations of hundreds of amps over a few seconds. Snapshot readings were not effective in assessing the true loading on the substation. The engineers would have had to hire an outside testing firm to perform accurate circuit measurements.

With historical data from a power management system, the plant's engineers discovered that integrated 15-minute demand readings fell well below the rated capacity of the substation. They realized they could add the new load and defer the $52,000 cost of a new transformer installation.

Data from a power management system is also frequently used to optimize a plant's power system investment. Another plant demonstrated that additional load could be added to three circuits without modifications, saving the company $7,000.

To conclude this article, let's examine the power savings for the company that calculated their total power cost. To date, the company's power savings represents about 4.2% of its annual power management bill — exceeding the 2% to 4% estimate.

In addition, the 4.2% calculation is conservative for two reasons. First, the company credits an improvement only to the level that can be established with hard numbers. For example, the company's engineers discovered (during an initial site survey) that computer-numerically-controlled (CNC) machines were using isolated ground rods as their sole grounding means. Although the CNC manufacturer's installation manual required the ground rods, this was a violation of the National Electric Code and the source of circuit-board failures in the CNC machine (see Fig. 1, on page 42). The savings associated with the grounding misapplication could easily have been ten times higher if the problem had caused an injury or death.

Second, the company's savings net could have been cast wider. Benefits like fewer consulting fees, improved productivity, reduced maintenance time, and other “intangibles” make the actual savings much greater.

Of course, the results for your facility may differ in scope and magnitude, but one thing is certain: When you have a power management system that provides valuable, real-time information, you can avoid some expensive and dangerous problems.

Larry Ray is manager of power systems engineering at Square D/Schneider Electric in Knightdale, N.C. You can reach him at [email protected].

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