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Understanding Energy Costs

3.4 Understanding Energy Costs

Understanding energy cost is vital factor for awareness creation and saving calculation. In many industries sufficient meters may not be available to measure all the energy used. In such cases, invoices for fuels and electricity will be useful. The annual company balance sheet is the other sources where fuel cost and power are given with production related information.

Energy invoices can be used for the following purposes:

• They provide a record of energy purchased in a given year, which gives a base-line for future reference
• Energy invoices may indicate the potential for savings when related to production requirements or to air conditioning requirements/space heating etc.
• When electricity is purchased on the basis of maximum demand tariff
• They can suggest where savings are most likely to be made.
• In later years invoices can be used to quantify the energy and cost savings made through energy conservation measures

Fuel Costs

A wide variety of fuels are available for thermal energy supply. Few are listed below:

• Fuel oil
• Low Sulphur Heavy Stock (LSHS)
• Light Diesel Oil (LDO)
• Liquefied Petroleum Gas (LPG)
• COAL
• LIGNITE
• WOOD ETC.

Understanding fuel cost is fairly simple and it is purchased in Tons or Kiloliters. Availability, cost and quality are the main three factors that should be considered while purchasing. The following factors should be taken into account during procurement of fuels for energy efficiency and economics.

• Price at source, transport charge, type of transport
• Quality of fuel (contaminations, moisture etc)
• Energy content (calorific value)

Power Costs

Electricity price in India not only varies from State to State, but also city to city and consumer to consumer though it does the same work everywhere. Many factors are involved in deciding final cost of purchased electricity such as:

• Maximum demand charges, kVA

(i.e. How fast the electricity is used? )

• Energy Charges, kWh

(i.e., How much electricity is consumed? )

• TOD Charges, Peak/Non-peak period

(i.e. When electricity is utilized ?)

• Power factor Charge, P.F

(i.e., Real power use versus Apparent power use factor )

• Other incentives and penalties applied from time to time
• High tension tariff and low tension tariff rate changes
• Slab rate cost and its variation
• Type of tariff clause and rate for various categories such as commercial, residential, industrial, Government, agricultural, etc.
• Tariff rate for developed and underdeveloped area/States
• Tax holiday for new projects

Example: Purchased energy Bill

A typical summary of energy purchased in an industry based on the invoices

Unfortunately the different forms of energy are sold in different units e.g. kWh of electricity, liters of fuel oil, tonne of coal. To allow comparison of energy quantities these must be converted to a common unit of energy such as kWh, Giga joules, kCals etc.

Electricity(1 kWh) = 860 kCal/kWh (0.0036 GJ)

Heavy fuel oil (Gross calorific value, GCV) =10000 kCal/litre ( 0.0411 GJ/litre)

Coal (Gross calorific value, GCV) =4000 kCal/kg ( 28 GJ/ton)