Energy management standards: an incentive for industrial system energy efficiency?

Robert Williams, Aimee McKane and Riyaz Papar propose the wider use of energy management standards to promote and recognize industrial energy efficiency practices – such as optimization of industrial energy systems – around the world. And these energy efficiency practices include industrial cogeneration.

by Robert Williams, Aimee McKane, and Riyaz Papar

Energy management standards address all aspects of energy from procurement of energy supply to end-uses and utilization of any waste heat. Incorporating energy management standards into the ISO family of quality and environmental management standards would enable their application worldwide. The goal is to make the continuous improvement of energy system efficiency across all industry sectors an integral part of corporate management culture.

System optimization

Managers of industrial facilities always seek pathways to more cost-effective and reliable production. Materials utilization, labour costs, production quality and waste reduction are all subject to regular management scrutiny to increase efficiency and streamline practice. The purchase of energy from outside sources at the lowest possible price that preserves reliability of service has also become a central concern in this era of high prices and constrained supply. However, energy efficiency, particularly as it pertains to systems, is typically not a factor in this decision-making equation.

Equipment manufacturers have improved the performance of individual system components (such as motors, steam boilers, pumps and compressors) to a high degree but these components only provide a service to the users’ production process when operating as part of a system. Industrial electric motor and steam systems consume huge amounts of energy and can be very inefficient (see Figure 1).

A UK chemicals plant takes advantage of CHP. Industrial manufacturing sites can achieve greater energy efficiency and lower emissions by adopting the technology (npower Cogen)
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In the US manufacturing sector, on an energy first-use basis, electricity is responsible for 39% of energy consumption and fuels/steam for 61%. Electric motor and steam systems offer one of the largest opportunities for energy savings, a potential that has remained largely unrealized worldwide. Both markets and policymakers tend to focus exclusively on individual system components, with an improvement potential of 2%-5% per component versus 20%-50% for complete systems, as documented by programme experiences in the US, UK and China.

Energy management can be practiced anywhere as long as personnel are trained properly. Here, Chinese engineers are learning how to optimize energy systems as part of a UNIDO pilot programme
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Improved energy system efficiency can contribute to an industrial facility’s bottom line at the same time when improving the reliability and control of these systems. Increased production through better utilization of equipment assets is frequently a collateral benefit. Optimizing the efficiency of steam systems could potentially result in excess steam that can be used for cogeneration applications. Payback periods for system optimization projects are typically short – from a few months to three years – and involve commercially available products and accepted engineering practices.

With all of these benefits, one would expect system optimization to be standard operating procedure for most industrial facilities. However, most industrial managers are unaware of both the existing inefficiency of these systems or the benefits that could be derived from optimizing them for efficient operation. Inefficient energy use does not leave a toxic spill on the floor or a pile of waste material on the back lot – it is invisible. Even when it is audible, as is the case with a leaking compressed air system, plant personnel accept this situation as ‘normal’ because they have no other point of reference.

The skills required to optimize systems are readily transferable to any individual with existing knowledge of basic engineering principles and industrial operations. Training and educational programmes in the US and the UK have successfully transferred system optimization skills since the early 1990s.

Figure 1. Optimizing industrial systems is important because such systems are often inefficient – example of a pump system. Source: Don Casada, Diagnostic Solutions
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As a result of the United Nations Industrial Development (UNIDO) China Motor System Energy Conservation Program, 22 engineers were trained in system optimization techniques in Jiangsu and Shanghai provinces. Within two years after completing training, these experts conducted 38 industrial plant assessments and identified nearly 40 million kWh in energy savings.

Energy management standards

Plant engineers with an awareness of the benefits of system optimization still face significant barriers to achieving it. First, existing systems were typically not designed with operational efficiency in mind. As a result, basic design factors such as pipe size may be too expensive to retrofit and may require a work-around approach to do the best optimization project possible. Second, once the importance of optimizing a system and identifying system optimization projects is understood, plant engineering and operations staff frequently experience difficulty in achieving management support. This is also the case with industrial cogeneration. The reasons for these barriers are many, but central among them are:

Table 1. Energy savings from system improvements (China pilot programme)
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  • a management focus on production as the core activity, not energy efficiency
  • lack of management understanding of operational costs and equipment life-cycle cost, which is further exacerbated by inadequate communication between staff responsible for capital projects, including equipment purchase, and their colleagues dealing with plant operating expenses.

As a further complication, experience has shown that most optimized systems lose their initial efficiency gains over time due to personnel and production changes. Since system optimization knowledge typically resides with an individual who has received training, detailed operating instructions are not integrated with quality control and production management systems.

Energy usage in industry is generally viewed as a fixed rather than a manageable expense. Since production is the core function of most industrial facilities, it follows that the most sophisticated management strategies would be applied to these highly complex processes. With the advent of quality control and production management systems such as ISO 9000/14000, Total Quality Management, and Six Sigma, companies have instituted well documented programmes to contain the cost of production and reduce waste. To date, most companies have not integrated energy use and efficiency, including cogeneration, into these management systems, even though there are obvious links to operating costs and waste reduction.

Of the management systems currently used by industrial facilities across most sectors to maintain and improve production quality, we have selected ISO as the management system of choice because it has been widely adopted in many countries, is used internationally as a trade facilitation mechanism, is already accepted as a principal source for standards related to the performance of energy-consuming industrial equipment, and has a well established system of independent auditors to assure compliance and maintain certification. For the purpose of this discussion, ISO includes both the quality management programme (ISO 9001:2000) and the environmental management programme (ISO 14001), which can share a single auditing system.

We propose a link between ISO 9000/14000 quality and environmental management systems and industrial system optimization that is based on the creation of a framework. This industrial standards framework includes energy efficiency standards, policies, training and tools that have the net effect of making system optimization for energy efficiency as much a part of typical industrial operating practices as waste reduction and inventory management (Figure 2). The objective is a permanent change in corporate culture using the structure, language and accountability of the existing ISO management structure. The proposed Industrial Standards Framework is equally applicable in industrialized or industrializing countries.

The purpose of the framework is to standardize, measure and recognize industrial system optimization efforts, including waste heat recovery and the installation of on-site power generation. The framework builds on existing knowledge of ‘best practices’ using commercially available technologies and well tested engineering principles. The framework seeks to engineer industrial systems for reliability and productivity, as well as energy efficiency. Factories can use the framework to approach system optimization incrementally in a way that maximizes positive results and minimizes risk and downtime.

Figure 2. Industrial standards framework2
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A key element of the framework is a corporate energy management programme. Since ISO currently has no explicit programme for energy efficiency, the framework builds energy efficiency into an ISO continuous improvement programme (9001:2000 or 14001) through an ISO-compatible energy management programme. The corporate energy management programme that seems to offer the most straightforward, publicly accessible, ISO-friendly approach is the American National Standards Institute Management System for Energy (ANSI/MSE 2000:2005) developed by Georgia Institute of Technology. This standard is also compatible with Energy Star Guidelines for Energy Management.

Figure 3. How the ANSI/MSE 2000:2005 standard can be continually improved. Source: Georgia Tech
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ANSI/MSE 2000:2005 was developed by individuals with ISO certification experience and is quite suited for future consideration as an ISO standard. Formal integration of energy efficiency into the ISO programme certification structure (most likely as part of the ISO 14000 series), while desirable for the explicit recognition of energy efficiency as an integral part of continuous improvement, would be a resource- and time-intensive undertaking. Since the current ISO programme structure creates no specific barriers to the inclusion of energy-efficiency projects, immediate programme integration is not a high priority. Instead, the Industrial Standards Framework recommends the use and further testing of ANSI/MSE 2000:2005 in multiple countries with the long-term goal of seeking ISO recognition (Figure 3).

Figure 4. Interaction between technical and managerial staff in implementing energy management standards
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The primary role of government in the Framework is to develop and issue energy efficiency standards and to support the provision to industry, consultants and suppliers of training and tools to aid in compliance. A further role is to recognize outstanding efforts that exceed compliance requirements.

Standards for corporate energy management provide a framework for companies to integrate an energy efficiency ethic into their management practices – see Figure 4. Government-sponsored training would prepare plant engineers and emerging energy service companies with:

  • the skills to recognize energy efficiency opportunities, including on-site power generation, via training on system techniques
  • an understanding of standards requirements
  • knowledge and access to the software tools such as the System Optimization Library for use in developing and implementing projects
  • government-sponsored recognition based on verified energy savings provides industrial plants with the incentive to document and report project savings.

Engineers (plant-based and consulting) would need to be trained in the systems approach. These experts would provide awareness training to encourage plants to undertake system optimization improvements, conduct plant assessments to identify system optimization opportunities, work with plants to finance and develop projects based on these findings, and prepare case studies of successful projects. This cadre of experts will also form the nucleus for future training of additional experts.

Industrial plants are responsible for compliance with national standards for corporate energy management, which typically require:

  • an energy management team led by an energy co-ordinator with strong management support
  • policies and procedures to promote energy efficiency
  • projects to demonstrate continuous improvement in energy efficiency
  • monitoring and measurement to document achievement of annual energy efficiency goals.

These requirements can be achieved through the application of system optimization techniques (with their own staff or outside experts) to identify energy efficiency opportunities and use of the System Optimization Library to develop and document projects and work instructions in ISO-compatible (also MSE 2000:2005-compatible) language.

If the industrial plant is ISO-certified, the System Optimization Library can be used as a resource to incorporate new work instructions, projects and procedures into current ISO 9000/14000 programmes. The periodic ISO audit provides independent verification of compliance with written procedures and policies, and energy-efficient operation becomes part of the factory culture.


Today, industry accounts for one third of global energy demand and the potential for improvement in the efficiency with which industry uses its energy continues to be significant. However, energy efficiency opportunities in industry look different than they did at the end of the 1970s. Opportunities for gross energy waste elimination are less than 30 years ago. The most immediate opportunities in today’s industries involve the more effective utilization of existing energy resources through the active application of energy management techniques. Energy management standards broadly define what to manage and how to establish internal processes that will support a continuous improvement approach. These standards can be used to address system optimization goals for systems such as motor-drive, steam and process-heating; cogeneration; and the application of new, more efficient technologies. The options can be summarized as follows:

  • reduce the energy required to operate industrial systems through the application of system optimization techniques
  • achieve greater utilization of waste or under-utilized energy streams
  • explore alternatives to the way energy sources are currently used (such as direct heat versus steam, steam for mechanical drives, waste fuels or renewables)
  • apply new technologies to change the energy requirements of industrial processes.

Of all of these, new technologies typically require the greatest amount of capital investment and process disruption. The others can provide very attractive returns, frequently having simple paybacks of less than two years.

Through the application of energy management standards, industry has an opportunity to de-mystify and integrate energy efficiency into ongoing management practices. The potential benefits are significant. Cost optimization of industrial and motor systems alone would eliminate some 7% of global electricity demand. Available data suggests that the efficiency of such systems, which include pump, fan and compressor systems, could be improved by 20%-25%. Similar opportunities exist for reductions in fuel consumption by process heat and steam systems. This potential is seldom realized because of barriers such as lack of awareness or appropriate incentives.

Robert Williams is with the United Nations Industrial Development Organization (UNIDO), Vienna, Austria. Aimee McKane is with the Lawrence Berkeley National Laboratory, Berkeley, California, US. Riyaz Papar is with the Hudson Technologies Company, New York, US.


  1. ‘Energy Loss Reduction and Recovery in Industrial Systems – A Technology Roadmap’, Prepared by Energetics for the US Department of Energy, Office of Energy Efficiency & Renewable Energy, November 2004.
  2. McKane, Aimee, Wayne Perry, Li Aixian, Li Tienan, and Robert Williams. 2005. Creating a Standards Framework for Sustainable Industrial Energy Efficiency, published September 2005 in Proceedings of EEMODS 05, Heidelberg, Germany, 5-8 September 2005.

Industrial cogeneration

Results from a report published by the USDOE provide strong evidence as regards potential energy savings by increasing the use of cogeneration systems in the industrial sector.1 Cogeneration systems are the optimum choice for on-site generation, as they provide both power and steam (or process heat) with overall thermal efficiencies 20%-30% higher than conventional power systems. Energy savings accrue from a reduction in the energy losses associated with power generation inefficiencies. Despite the advantages, cogenerated steam currently only accounts for 8% of the steam demand. From a power perspective, cogeneration supplies only 14% of the manufacturing sector’s electricity demand.

Nevertheless, energy integration and use of cogeneration should be a key facet of energy system optimization and considered within the context of any energy management standard. Industrial cogeneration also allows for a higher economic utilization of waste streams (off-gas, high VOC-content waste liquids, by-products, bagasse, sawmill scrap, fiber, etc.) by using them as fuels. This leads to a direct offset (on an mmBTU basis) of higher purchased energy costs. While any power-consuming industry can potentially install cogeneration units, the plant, if power-balanced, must be able to use or export the recovered heat that will, in most cases, be in the form of steam. If the plant is thermally balanced, then any excess electricity can be exported to the local utility grid.

Traditionally, cogeneration was always targeted towards large or heavy industries such as forest products, chemicals and metals. This was mainly driven by the strong and simultaneous demand for both thermal energy and power. Market forces worked towards economies of scale and supported only the large-scale projects. Nevertheless, there is a significant opportunity in smaller and other steam-using industries such as food and beverage, plastics and rubber, and textiles.

Some examples of industrial cogeneration technologies include:

  • gas turbine, duct burners with heat recovery steam generator (HRSG)
  • gas turbine, duct burners with HRSG and steam turbine (back-pressure and/or condensing/extraction)
  • waste stream boiler (such as thermal oxidizer w/heat recovery) and steam turbine
  • microturbine with exhaust heat recovery
  • reciprocating gas engine with exhaust heat recovery
  • fuel cells with heat recovery.

There are also situations where mechanical equipment (centrifugal chillers, air compressors, pumps) is directly driven by a steam turbine and represents a special case of on-site power production and/or cogeneration. Alternatively, low-temperature heat (exhaust) from a topping-cycle steam or gas turbine can be used to drive industrial heat pumps and thereby constitute a special case of cogeneration.

Case study

A US pulp and paper mill was using 150,000 pounds (68,000 kg) per hour of 600 psig (41.4 bars) steam from a header and letting it down for the dryers at 175 psig (21 bars). The mill studied this scenario and decided to investigate using a back-pressure turbine instead of the pressure-reducing valve. The steam turbine would generate ~2.5 MW of valuable electric power (site cost: $50/MW). There would be an increase in the steam production to balance the turbine enthalpy difference and the incremental cost for that steam is $8/million pound ($18/million kg). The net result is about $700,000 of annual savings. With total project costs of about $1,500,000, the simple payback is about two years.

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