Auditing: Facility Energy Use


This entry discusses the energy audit and assessment processes, including the analysis of utility data, walk-through assessments, detailed assessments, and the reporting of results. This article will also provide a brief history of energy auditing, as well as a look toward the future.


Energy assessments are associated with energy conservation programs and energy efficiency improvements. However, cost containment (usually associated with utility cost savings) is always the most sought after result. Changes that reduce operating expenses sometimes save little energy (e.g., correcting a power factor) or may increase energy use (e.g., replacing purchased fuel with opportunity fuel). Often known as energy audits, an older term that is being replaced by “energy assessments,” these analyses of facility or system performance are aimed at improving performance and containing operating costs. Facilities that may be audited for energy use can be commercial or institutional buildings, industrial plants, and residences; examples of the systems that may be audited include air conditioning, pumping, and industrial production lines. The end of this article contains important references on the subject of energy assessment.[1,2]

Energy assessments today owe much to the National Energy Conservation Policy Act of 1978. This act resulted in the Institutional Conservation Program, a nationwide program of the U.S. Department of Energy (DOE) which called for matching grant funding to implement energy efficiency retrofits in secondary schools and hospitals. Directed by state energy offices, energy assessments predicted savings from these retrofits. A corresponding national DOE program is the Industrial Assessment Center (IAC) program,[3] which provides assessments of manufacturing plants and also educates university students about energy conservation. Sometimes pollution prevention, waste reduction, and productivity improvement projects are included with the energy assessments because the techniques for analyzing such projects are similar. Other DOE-sponsored assessment programs include the Federal Energy Management Program[4] for federal facilities and plant-wide assessments for private industries have also led to informative case studies and energy-efficient technology transfer.

The following section discusses the process of conducting an energy assessment, including pre-assessment activities, the actual assessment, and reporting of findings.


The energy assessment process may be conducted by a single user of a relatively unsophisticated software package that focuses on a few simple energy issues or a team of professional engineers who analyze problems using sophisticated software and complex calculations. The individual energy assessor might conduct assessments of residences as a city or utility service, and provide simple printouts of recommended changes for homeowners with some savings data and perhaps cost estimates. The more expensive and detailed assessments by teams of engineers may be reserved for large buildings and industrial complexes. In those cases, the feedback is often in the form of a formal technical report containing conceptual designs that allow capital decisions to be evaluated and made about proceeding with further analysis and planning.

The main objective of all assessments is to identify, quantify, and report on cost containment projects that can be implemented in a facility or system. These projects go by several names: energy conservation opportunity (ECO), energy conservation measure (ECM), energy cost reduction opportunity (ECRO), assessment recommendation (AR), and others. These projects are the heart of any energy analysis.

Assessments are characterized by the level of effort required and by the capital necessary to accomplish the recommended measures. The simplest type is a walkthrough or scoping assessment and may result in no more than a list of possible projects for consideration. More complex, detailed assessments result in a formal technical report showing calculations of savings and implementation costs. Walkthroughs and detailed assessments may be subdivided into projects requiring little capital and capital intensive projects. These low-capital projects are sometimes tasks that employees such as maintenance personnel should be accomplishing as part of their regular duties, sometimes known as maintenance and operation (M&O) opportunities,. ASHRAE designates the assessments and projects by levels: Level I—Walkthrough Assessment, Level II—Energy Survey and Analysis, and Level III—Detailed Analysis of Capital Intensive Modifi-cations.[5] The most common measure of financial merit is simple payback although life cycle costing may be used and is required by some federal programs under the Federal Energy Management Program.[6]


Pre-Assessment Activities

Pre-assessment visit activities allow the assessment team to learn about the facility prior to an actual visit and should include obtaining the facility’s energy consumption history. Often important clues about cost-containment projects come from historical information available from the facility or system operators’ records for all significant energy streams. All assessments should be preceded by a review of at least 12 consecutive months of bills. In the case of energy, both energy in common units such as kilowatt hour (kWh), thousand cubic feet (MCF), or million British thermal unit (Btu) and cost in dollars should be graphed so that fluctuations in usages and costs are visible. The American National Standards Institute provides examples of these graphs.[7] Electrical demand in kilowatt (kW) or kilovolt ampere (kVA) should be plotted also, as should load factors and energy use, and energy cost indices in the case of buildings. Cost savings measures that can be identified from this review may result from inappropriate tariffs and tax charges, for example. This information gives an indication of possible projects to pursue during future phases of the assessment.

If pollution and waste are to be considered, such things as annual waste summaries and pollution information, as required by government regulators under the Clean Air Act or other legislation, should be reviewed. Water bills contain information about sewer charges as well as water consumption. Obtaining the tariff schedules for the various charges are important and all monthly charges should be recomputed to assure there are no mistakes. Tariffs in general are not well understood by users, who may not have the time or personnel to review the charges for errors. There are two important results of recalculation. First, the reviewer can reassure the client that the charges are correct (this can be comforting to most clients who have no good idea about the correctness of charges) and the reviewer can identify the rare error.

Second, facility energy bills and associated tariffs provide information so that the assessor can develop the avoided cost of energy (and demand) applicable to each billing account. The avoided cost usually is not evident directly in the tariff and typically the units for avoided costs are the same as the units of pricing. For example, the avoided cost of electrical energy measured in $/kWh may contain the block cost, fuel adjustment, and perhaps other charges. Sometimes the avoided cost is developed by dividing cost for a period by the consumption in the same period. This provides useful results for certain analyses, but such things as demand and fixed periodic charges may cause this approach to yield significant errors when calculating cost savings.

Simple facility layout maps should be provided to show building floorplans, define building areas, and illustrate major equipment locations. Additional layouts of convenient size (e.g., 8V2″ X 11″) are useful for notations by assessment team members during both the walkthrough and the detailed assessment visit.

Walkthrough Assessments

Walkthrough assessments usually have three major outcomes: the identification of potential energy conservation projects; the identification of the effort, including skills, personnel and equipment required for a detailed assessment; and an estimation of the cost of a detailed assessment. The need for data recording may be identified at this time and arrangements to install sensors and loggers can begin. Self-contained, easily-installed loggers may be installed at this time (the walkthrough visit may be a useful time to place logging equipment and other requests for data if a detailed visit will follow at a reasonable time for retrieving the loggers and data).

The walkthrough visit also provides an opportunity to obtain plant information that will be valuable in conducting the detailed assessment. Such data includes building and industrial process line locations and functions, and the locations of major equipment, mechanical rooms, or electrical control centers, meters, and transformers. Major energy users and problems often can be identified during a walkthrough visit. A manager or senior employee familiar with processes, systems, and energy consumption should accompany the energy expert during the walkthrough assessment.

On occasion, the walkthrough assessment may reveal that further detailed assessment work would not be particularly fruitful, and thus it may end the assessment process. If a detailed assessment is to follow, the result of the walkthrough should be a letter-type report with a general identification of potential projects and an effort or cost estimate for the detailed assessment. Generally, there will be no calculation of savings in this initial report. The walkthrough (in addition to its preceding discussions) provides an opportunity to obtain information about any previous energy assessments. Plant personnel should also be asked about any in-house studies to save energy, reduce waste, and increase productivity that may have been undertaken.

Detailed Assessments

The goal of detailed assessments is to gather accurate technical data that will allow the assessment team to prepare a formal, technical report describing projects that can be implemented in the facility to contain costs. The effectiveness of cost saving projects generally depends on calculation of reductions in energy use, demand, and, if waste and productivity issues are also considered, then the cost effects of reducing waste or pollution and increasing productivity should also be calculated. Such calculations require carefully obtained, accurate data. The detailed assessment often involves a team of engineers and technicians, accompanied, when necessary, by facility personnel, compared to the walkthrough assessment which is usually performed by fewer persons.

Even for one-day visits such as those exemplified by DOE’s IAC program, the visit can be divided into a tour of the plant equivalent to a walkthrough, and a period of detailed data gathering, equivalent to a detailed assessment, as personnel revisit key areas of the plant to gather data and observe processes.

At this time, data necessary to compose a good description of the facility should be collected if the preliminary activities and walkthrough have not satisfied this need. A good assessment report contains a facility description, complete with facility layout showing the location of major areas and equipment. The projects described in the report should refer to the applicable facility description section to maintain continuity and perspective.

The major data obtained, however, pertains to the cost containment projects to be described in the detailed assessment report. Energy projects fall into four major areas, the first three technical and the final one administrative in nature:

• Turning off equipment that is used or idling unnecessarily

• Replacing equipment with more efficient varieties

• Modifying equipment to operate more efficiently

• Administrative projects dealing with energy procurement

Often data for the administrative projects is obtained from contracts, billing histories, and interviews with managers and energy suppliers. Data for the administrative projects are relatively easier to obtain than that for the technical projects, and may in fact be obtained as part of preassessment or walkthrough activities.

Technical data for equipment turn-off, replacement, or modification generally is more difficult to obtain, and mostly will be obtained during the detailed assessment phase. It involves gathering equipment size data such as power or other capacity ratings, efficiencies, load factors (which may be a function of time), and operating hours. Size data is relatively easy to obtain from nameplate or other manufacturer specification information. Estimates of equipment sizes and efficiencies often are unreliable. Every major piece of equipment and system should be considered for possible savings, and equipment should be inspected for condition and to determine if it is operating properly. Efficiencies, while often not directly obtainable from data available in the facility, may be obtained from the manufacturer. Efficiency data as a function of load is desirable, because efficiency generally varies with load.

The most difficult and unreliable data to collect often are load factors and operating hours. Equipment loading is often estimated because measurements are expensive and difficult to make. Installing measurement equipment may require shutdown of the equipment being monitored, which may present production or operating problems. If the load varies with time, then measurements should be made for a long enough period to cover all possible loadings. If the load variation is predictable, covering one period is sufficient. If the variation is unpredictable, then the measurement only gives data useful to show what a turn-off, equipment change, or modification would have saved for that period. For equipment with a constant load, a one-time measurement will be adequate, but even a onetime measurement may be difficult to obtain. Because of the difficulty measuring and unpredictability of loading, load factors are often estimated. Savings are proportional to these load factors, and thus erroneous estimates of load factors can lead to large errors in savings estimates. Whenever possible, load factors should be based on measured data.

Operating hours can also be unreliable because they are often obtained from interviews with operators or supervisors, who may not understand exactly what is being asked, or who simply may not have accurate information. Time of operation errors are difficult to eliminate. Gross errors such as those that may be made about equipment turn-off after normal operating hours can sometimes be eliminated by an after-hours visit by the assessment team. Measurements of annual equipment operating hours are useful because project savings usually are measured on an annual basis. Only rarely is this possible (for example, a project subject to measurement and verification for performance contracting purposes might yield a year of measured data, but such projects are relatively rare). Relatively inexpensive measurements can be made of operating hours for short periods by self-contained loggers that measure equipment on/off times. The operating schedule for each building or production area is needed, including information about breaks in operation such as lunch and information about holidays.

Technical and physical data useful in identifying projects, calculating savings, designing conceptual projects or management procedures to capture the savings, estimating implementation costs, and composing the facility description may be obtained in any phase of the assessment process. Some information will have been obtained prior to the walkthrough assessment visit, but during the walkthrough, additional information can be obtained about operation, function, production, and building information. Function or production information for the various areas of the facility is needed. For all types of facilities, general construction information about the buildings should be gathered, including wall and roof types; wall and roof heights and lengths; and lighting and HVAC system types, numbers of units, controls, and operating hours. An inventory of equipment should also be assembled.


All energy assessment reports have a similar format. There should be an executive summary, a recommendation section, a facility description, and an energy consumption analysis, though not necessarily in that order. The recommendations are the heart of the report. Although they often appear after other major sections in older reports, modern usage has them appearing earlier, after the executive summary. The executive summary generally appears first, but is written last to summarize the other sections. Other parts such as disclaimers, acknowledgements, and appendices may be used as necessary.

Recommended Projects

Assessment recommendations are the most important part of the report and contain the technical analysis of the facility’s energy usage. These recommendations should be clear, with the source of data documented and the analysis technique described with sample calculations. The details of manual calculations should be given and subject to independent verification. Analyses whose most important calculation is multiplying some portion of the utility bill by a “rule of thumb” percentage to establish savings for a project are not suitable.

Just as for energy analysis reports, individual assessment recommendations usually follow a fairly uniform outline. There is a short description followed by a summary of energy and cost savings, and of the implementation cost and financial measure of merit (often simple payback). Akin to the facility description section of an assessment report, there is an observation section which describes the existing situation, problems, and recommended changes, including designs or management techniques proposed to capture the savings. Then there is a calculation section which shows the results in energy, demand, and cost savings, and an implementation cost section, which develops the implementation cost and the financial measure of merit, either payback or some more sophisticated method.

If computer analysis is used to calculate savings, the program should be a recognized program applied by a trained user. Inputs and outputs should be carefully considered for accuracy and feasibility. If locally developed spreadsheets are used, then a sample calculation should be given in the body of the report for each important result. Avoid “black-box” analyses where little or nothing is known about the algorithm being applied in user-developed computer programs or spreadsheets that are not widely recognized.

For some assessment recommendations (e.g., a simple turn-off recommendation for equipment operating unnecessarily after hours), implementation can follow without further study. However, for more complex projects (e.g., replacing an air-blown material mover with a mechanical conveyor), additional design and engineering may be required before implementation. The design level of energy assessment reports is conceptual, not detailed, in nature. The cost analysis in the implementation section for such conceptual designs should give management sufficient information to decide whether to go forward with the project. Also, if additional design and engineering are required, then an investment in further study will be needed before a final decision.

When the result of an assessment recommendation is dependent upon the accomplishment of a separate recommendation, then the recommendation should be calculated in both the independent and dependent mode. For example, if an assessment recommendation reduces natural gas consumption in a facility, saving energy and money, and if in the same analysis a recommendation is made to change suppliers to achieve a less expensive cost of natural gas energy, then the project to change suppliers depends on the accomplishment of the project to reduce gas consumption; if it is not accomplished, the savings due to the supplier change will be greater. The effect of the project to change suppliers should be calculated both as though the consumption reduction would not occur (the independent case) and as if the consumption reduction would occur. In the latter, dependent case, the effect of changing suppliers is affected by the reduction in consumption. In this case, savings from the project to reduce consumption also depends on making the supplier change, and that project can be calculated in both the dependent and independent modes. To avoid a complicated mix of projects and calculations, in some cases where a single large project is composed of several smaller, related projects, a hierarchy of projects and dependencies can be established to guide the dependency calculations. The $100 million LoanSTAR program that placed energy-efficient retrofits in public buildings in the state of Texas pioneered this approach.[8]

Each project should refer to the plant description for the location of systems and for information about equipment; similarly, it should refer to the energy consumption section when that area is important to the recommendation.

Assessment recommendations are an acceptable place to show the environmental effect of each recommendation by calculating the carbon equivalent, or NOX, reduction due to reducing energy use. Emission factors are available for various areas of the country that can be used for these calculations.

Implementation information, including warnings about possible personnel and equipment safety issues should be given in each assessment recommendation. Safety issues should receive prominent, obvious display.

Plant Description

Plant description information is obtained during all phases of the assessment process. This part of the report may be divided into a facility description and a process description, and it provides context for the rest of the report. The facility description describes the buildings, their construction, major production areas, and equipment locations. Transformers and meter locations for energy streams should be shown. A building layout should be included to show major production areas and equipment locations, particularly those important to the energy analysis being described in the report.

The process description should describe each major process that goes on in the plant, starting with the procurement of raw materials—giving sources and delivery methods—and proceeding until products are packaged, perhaps warehoused, and shipped. Emphasis should be placed on points in the process where major amounts of energy are consumed and on the machines that are involved in that energy usage. It is important to include a process flow diagram for each process.

At some point, either in the facility or process description, the major energy consuming equipment in the plant should be listed. If waste is to be considered, then points in the process where waste is generated are especially significant, and in that case a table of waste streams, handling equipment, and storage locations should be included.

Energy Consumption Data

Energy analysis data can be obtained for composing this important section of the report before the plant is visited. For an assessment that is broad in scope, the manufacturer should be asked to provide copies of a minimum of 12 consecutive months of energy bills for analysis. Sometimes even more data is desirable for a detailed audit. Shorter periods will not cover a complete annual weather cycle. Industrial analyses, unlike analyses of commercial and institutional buildings, usually are independent of weather. However, some industrial projects are weather dependent. Particularly in the case of industrial buildings which are fully climate controlled, weather may be an important factor, and thus bills representing the full 12 months of usage are an extremely helpful amount to seek. They do not need to be for an annual or particular fiscal period from the standpoint of technical analysis, but they should be consecutive and as recent as possible. Copies of actual bills should be sought because summaries likely will not give information such as the applicable tariff, any taxes, late fees, and demand and power factor data. For a broad-based assessment, bills for all important energy streams should be obtained. For special emphasis on equipment or areas of production, only bills for relevant energy streams should be considered.

From the bills, relevant tables and graphs of energy consumption, demand, power factor, and costs should be prepared for each account or meter. Careful review of this data often reveals important data about such things as demand control possibilities, equipment usage, and production changes. It provides a starting point for in-plant discussions with management about cost reduction possibilities. For plants that do not have sufficient personnel to review and consider tariffs and bills carefully, such problems as incorrect billing for state sales tax, late fees, inappropriate tariffs, and the occasional error in billings may be revealed to the energy auditor before the first plant visit.

At this stage, the avoided cost of energy (and demand, if applicable) for each energy stream can be determined. Avoided cost, sometimes incorrectly called marginal cost, is the amount that the plant will save (avoid paying) if energy use or demand is reduced by one unit. Electricity probably will have a demand component to its billing as well as an energy cost. Demand charges for natural gas [e.g., in $/(MCF/day)/billing period], for steam [e.g., in $/(1000 lb/day)/billing period], and possibly for other energy streams are infrequent. Common energy costs that are often used for rapid analyses and comparisons, such as the cost per unit of electrical energy obtained by dividing total electric cost in a period by the total electric energy consumed in kWh (a common method that blends energy, demand, and all other charges such as the customer or meter charge into the result) should be developed in this section.

This data can also be used to analyze electrical load factors of the types used by utilities (electric load factor is the consumption of energy in a billing period divided by the peak demand and the total number of hours in the billing period). The resulting values can be compared to nominal values. In addition, a load factor called the production load factor can be developed if the operating hours of the main production area of the plant are available (production load factor may be called operating load factor and is the consumption of energy in a billing period divided by the peak demand and the number of operating hours in the billing period). In this case, the computed load factor can be compared to unity, which would represent the best possible use of the plant’s equipment during operating hours. Commonly, no plant or system actually achieves unity, so a production load factor of 75 or 85% may be considered good. As a diagnostic tool, if the production load factor exceeds unity, and nothing in the plant should be operating outside the main production hours, then unnecessary energy consumption after hours is indicated.

Executive Summary

This section of the assessment summarizes the report, and particularly the assessment recommendations. A table summarizing each assessment recommendation in the order that they occur in the report is very useful. Most often, these appear in descending order of estimated annual savings. The executive summary should give overall information about the total energy consumption and cost, as well as the common unit costs of energy that often are used for comparisons. Summary information about wastes and pollution prevention can be shown here as well.

The executive summary is the place to give and emphasize information that will enhance implementation of the recommended projects, and to provide warnings about safety and other implementation issues that may be repeated in the individual assessment recommendations.


The energy assessment process, including reporting, has been covered. For large facilities desiring to cut costs, the process that has been described will likely continue as a part of the cost-cutting process for a long time. Self-assessment procedures are available that can be used by smaller organizations that perhaps cannot afford to pay for an independent assessment.

These procedures include manuals to guide calculations1-9-1 and a simple spreadsheet approach designed for use by facility operators untrained in energy assessments.[10] Benchmarking for commercial and institutional buildings is ahead of the industrial sector where important advances are still being made. There has been great diversity (in quality and meaning) of the data available to set standards of comparison for industry. The summer conference of the American Council for an Energy Efficient Economy in 2005 discussed industrial benchmarking1-11-1 and more advances can be expected in this area.

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