PowerLogic

Solutions
Volume 5, Issue 1

Justifying A Power Management System

A recent front-page article in USA Today reported that the Federal Aviation Administration plans to analyze flight data from aircraft in real time in order to prevent in-flight problems, reduce the risk of plane crashes, and save lives. Rather than rely on flight data recorders to reconstruct what went wrong after a crash, the FAA argued, why not use the data to prevent crashes altogether? Many industrial facility managers have reached the same conclusion about their electrical power systems. By employing sophisticated power monitoring equipment to analyze historical and real-time data, they can reduce the cost of electricity and improve its quality and reliability. Their conclusion? Intelligent analysis of power data prevents electrical system problems and saves money. But industrial facility managers must convince senior management to establish a power management program. How do you justify the capital expenditure for equipment, and how do you calculate the return on investment to bolster your case? Even if your company already has energy efficiency programs in place, you can still make a case for an enhanced system. Your current program probably does address the problem, but does it address the total cost of power for your facility?

In This Issue we discuss power management systems: how you can justify using one, and how it can save you money while avoiding electrical system woes

Justifying a Power Management Program

Power costs have three main components : energy costs, power distribution costs (capital expenditures) and total downtime costs. Energy costs are easy to identify: theyre right on the electric utilitys bill. Energy management is the primary reason companies install power monitoring equipment. But the savings from energy costs are often only a small part of the total savings opportunity. Power distribution costs represent a huge investment. How much do you spend on electrical equipment maintenance related to power quality? Harmonics, poor voltage regulation, unbalance, feeder loading, and poor power factor all accelerate wear and loss of life for power system components. Most plants budget for equipment replacements, upgrades, and modifications each year. How much of this capital expenditure can be avoided or postponed?

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Downtime costs lost production and productivity due to equipment failures and unexplained shutdowns can be very costly as well. What is the true cost of downtime in your facility? Factor in such costs as idle workers, overtime, scrap, lost sales, and reduced inventory this figure can be quite high.

Site 2

Power Management Operations Internet/Intranet

Remote Connections Existing Telephone Communications

Site 1

Power Management Operations can help you with Data collection Data analysis Engineering analysis Monthly reports Plant comparisons

Like an iceberg, many power costs are hidden Figure 1: Using your existing Ethernet communication system, a below the surface and Square D power monitoring system can upload data from remote sites may not be noticed. The and provide real-time and historical data at any PC on your LAN/WAN. goal of your proposed power management program should be To determine the dollar amount that percentto uncover those hidden costs. When age will represent, you need to estimate the you understand all of the costs, you can total cost of power for your facilities. To begin to make the case for a power calculate this cost, follow these steps: management program. 1. Determine the annual electric bills and

Determine the True Cost of Power

Start by comparing your companys electricity costs to other raw materials used in your manufacturing processes. Most industrial manufacturing companies have experts whose sole function is to maximize raw materials used in production processes. Design and process engineers continuously monitor their systems to make more efficient use of copper, aluminum, steel, and plastic in product designs. Purchasing agents are always on the lookout for better supplier contracts and better raw materials at lower cost. Unfortunately, many senior managers dont devote the same attention to electricity cost, quality, and reliability. They view the cost of power as a fixed cost, but this doesnt have to be the case. In fact, Square D experience has shown that a comprehensive power management program involving energy cost savings, improved power quality, capital equipment optimization, and reliability improvements, can save at least four percent of your total cost of power. The results of a power management program are gradual a few thousand dollars saved here, a few thousand dollars there but it doesn't take long to add up to real money.

average price for electricity at all your facilities. These figures are often obtained from corporate purchasing. 2. Estimate the costs related to each plants investment in power system equipment. This can be difficult. Unless you can devise a way to estimate all costs associated with owning and maintaining electrical distribution systems in your facilities, the best course is to estimate depreciation costs of capital power system equipment. 3. Estimate the cost of production losses due to poor power quality. You can determine this figure using IEEE 1346 guidelines or by using estimated numbers of power quality-related events at each facility. Electric Power Research Institute (EPRI) data from the Distribution Power Quality Program indicates that the typical industrial overhead distribution feeder, used to serve an industrial plant, experiences 42 events each year in which some process equipment would likely be affected. Multiply 42 times an average of $5,000 downtime cost per event, and you get an estimate of $210,000 per year in production losses due to poor power quality.

PowerLogic Solutions is a publication of Square D Companys Power Management Operation. Each issue presents a common power system problem, and offers guidance on how to solve it.

Power Management Program Case Study

One manufacturer successfully managed the total cost of power for the past three years. The PQEM Services group from Square D (see sidebar below) provided remote data collection and analysis services for the manufacturer. The manufacturer calculated its total cost of power as the first step in the program. The annual total cost of power, $16 million, included the following expenditures: Annual electric bills totaled about $12 million for the 13 U.S. manufacturing facilities. The plants range in peak demand from several hundred kilowatts to about five megawatts, with annual power bills of between $250,000 and $1 million. The price for electricity at these facilities was between 3.5 and 7.5 cents per kilowatt-hour. Like most companies, the manufacturer did not maintain costs associated with power quality and reliability problems. PQEM estimated those costs using the EPRI data (42 power quality-related events a year at each facility, at a cost of $5000 per event for a total of $210,000 per facility). Multiply that by 13 facilities and the figure reached almost $3 million. Capital power system equipment depreciation estimates for all 13 facilities came to about $1 million. Once the manufacturer established its total annual power costs at $16 million, PQEM estimated the potential savings from a power management program to be between $320,000 and $640,000 a year, based on the industry average of two- to four-percent annual savings. Because the power management program will generate additional savings in aggregate billing and corporate power purchasing after utility deregulation takes full effect, the benefits multiply. As an added benefit, the power management program will be useful in establishing baselines to ensure that electric utility power quality is maintained after deregulation.

The Three-Step Process

The power management program consists of three steps: Step 1: Installation of sophisticated power monitoring devices on key circuits. Industrial circuit monitors provide low-cost means metering of basic electrical parameters like voltage, current, power and power factor; they also capture high-speed sag and swell events, harmonic distortion, and other power system anomalies. They store information in on-board memory, ensuring seamless data collection even if there are problems with the central workstation. Square D circuit monitors have alarm capabilities, and power management experts can custom-configure each device to its circuit. Overcurrent alarms, for instance, are configured based on an individual circuits overcurrent device setting. The manufacturer found that it needed 10 to 25 circuit monitors at each facility. Step 2: Connect the monitoring devices to a central workstation through an existing communications network. The manufacturer used existing Ethernet-based communications network, with T1 telephone lines connecting the facilities, to transmit the power system data to a central workstation (figure 1). Ethernet communications modules allow steady-state data logs to be uploaded about every hour, and

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The Square D Power Management Operation offers complete power quality consulting services to ensure that power problems do not impact your operation. Contact our power management experts for information about the following: Power Quality Consulting Energy Management Consulting Harmonic Filters Power Factor Correction Power Management Training and Technical Support Digital Simulation Studies Remote Monitoring Services Data Collection and Analysis Our number is 1-888-PWR-MGMT.

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alarms to be uploaded within seconds. Facility engineers have access to historical and real-time power system information through the manufacturers Intranet.

Step 3: Use the reports and analysis to drive savings in the facilities. The data is managed by PQEMs experts who collect the data logs and alarms, analyze the information and identify savings opportuniFigure 2. Waveform capture, displayed in System ManagerTM software, illusties. PQEMs power trates three events: 1utility fuse clears fault; 2 substation circuit breaker management opens and recloses; 3 returning out-of-phase voltage damages siliconengineers use controlled rectifiers (SCRs) and shuts down the plant. sophisticated that the events could not be prevented. The software tools to perform the analyses, and power management program, however, create monthly reports for each plant site. showed that the number of utility events were These reports form the basis of corporatenot out of human control. Voltage sag and wide quarterly reports that compare the interruption data (figure 2) was recorded at cost and quality of electricity throughout the facilitys main circuit monitor. This event the corporation. lasted only a quarter of a second, yet its effect shut down the production process for four hours. Examples of Savings PQEM power quality experts showed that the event should not have caused an interruption to Energy Management the plant, exposing a coordination problem on The manufacturer, like many other compathe electric utility distribution circuit. nies, had already performed energy management upgrades to its lighting, heating Capital Optimization and cooling, and motor systems. Even so, Most savings associated with optimizing the the power management program identified companys investment in its electric power additional savings. One facility reduced its equipment have been straightforward. One annual electricity bill by $23,000 by proving plant, for example, needed to add load to an that the plant qualified for its utilitys highexisting substation. Prior to installation of the load-factor rate. Another plant identified power monitoring system, the plant would $4,000 in natural gas savings by reducing have taken snapshot readings with a current its boiler pressure with a small investment probe, or recorded periodic readings of the in better controls. The plant also discovered analog ammeter on the substation in order to with electricity measurements on its onsite assess loading on the circuit. Trouble is, generator that it could reduce the firm current loading on the circuit was cyclical, demand in its existing interruptible rate with normal variations of hundreds of amps with the electric utility, saving an additional over a few seconds. Snapshot readings were $13,000. not effective in assessing the true loading on the substation, so the plant would have had to Power Quality hire an outside testing firm to perform accuAnother plant was plagued by events on the rate measurements on the circuit. utility system. The plant engineers assumed

With the power monitoring historical data, however, the plant was able to show that integrated 15-minute demand readings were well below the rated capacity of the substation. The plant was easily able to add the new load and defer the $52,000 cost of a new transformer installation. The program also is frequently used to maximize a plants power system investment. Another plant was considering load additions to existing transformers and circuits. They were able to demonstrate that additional load could be added to three circuits without modifications, saving the company $7,000. Site Surveys Even with state-of-the-art power monitoring and communications technology, there is no substitute for onsite assessments. Early in the power management process at each site, a team of experts, comprised of PQEM power experts and local staff, performed power quality and energy management audits. In the first site survey, the team identified a wiring and grounding problem (figure 3) that had widespread implications for the manufacturer. The team discovered that computer-numerically-controlled (CNC) machines used isolated ground rods as their only equipment grounding means (see PowerLogic Solutions, volume 3, number 2 at our website: http://www.powerlogic.com). While the manufacturers installation manual required this ground rod, PQEM showed that it is a

violation of the National Electrical Code, a safety hazard for employees, and that it was the source of printed circuit board failures in the CNC machine.

Estimating and Tracking the Return

Overall, the manufacturers power savings to date represent about 4.2% of its annual power management bill exceeding the two- to fourpercent estimate. This savings figure is conservative for two reasons. The manufacturer credits an improvement only to the level that can be verified. Savings associated with the CNC machine grounding error, for example, could easily have been ten times more than the amount associated with board replacements and lost production time. The manufacturer realized its savings net could be cast wider. The best method to track savings is to compare total manufacturing costs before implementing the program with total manufacturing costs after implementation. Such benefits as lowered consulting fees, improved productivity, reduced maintenance time associated with diagnosing machine problems, and other intangibles make the actual savings of the program much greater. Each quarter, PQEM presents the program results to the manufacturers senior management. The quarterly report is also used to track

480Y Grounded Source Safety Switch

Busway Line Isolation/ Suppression Device White wire tied to ground bus

Seal-Tight Conduit Voltage Regulator Neutral used as ground conductor; no ground wire

To other loads Metal Conduit Arrestor leads too long, coiled at ground bus CNC Machine

Wire strands broken under lug Safety Switch Metal Conduit Step-Down Transformer

Transformer

Vacuum cleaner plugged into step-down transformer receptacle on load side of line isolation, regulator devices

Stranded Conductor

Separate ground rod violates NEC; causes shock hazard, equipment failure

Ground Rod

Figure 3: Incorrect wiring and grounding, even though it was recommended in the manufacturer's instruction manual, presented a hazardous situation for employees and violated the National Electrical Code.

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Solutions
program savings, notify plant engineers of new program or website features, and highlight savings projects that may have widespread application. The report also ranked each electric utilitys cost and quality (figure 4). Rankings show that the highest cost plant also had the worst power quality, recording as many as 60 voltage sags below 80% in a single quarter. Monthly production losses due to these events were estimated at $69,000.

Figure 4: This chart, part of the power management quarterly report, compares average electricity cost across the corporations manufacturing plants.

The power management program has saved money for the manufacturer in other ways. To ensure that it would pass quality audits, one plant needed to verify that its products were being tested with voltages that met American National Standards Institute (ANSI) standard levels. Using historical voltages from the bus in question, plant engineers could verify compliance. This saved the plant $15,000.

While power management program results for your facilities may differ in scope and magnitude, it is obvious that the FAA was right: when you have the right information at the right time, you can avoid some very expensive and dangerous problems.

Test Your PQ Power Quotient

The following questions will test your knowledge of the information in this issue. Answers are to the right. 1. Total cost of electric power includes electricity, downtime, and accelerated depreciation. 2. Voltage sags due to faults on the electric utility system cannot be reduced in number or severity. 3. A remote power management program establishes baselines of power cost and quality to optimize future deregulation opportunities. 4. The three-step process involves installing monitoring devices on every circuit, connecting the devices through a special network, and generating reports to obtain savings.

are Registered Trademarks of Square D or related POWERLOGIC, SQUARE D, and companies. All other trademarks are the intellectual property of their respective companies. Bulletin No. 3000HO9902 10M DL May 1999 1999 Square D All Rights Reserved

Answers 1. True; pages 1 2. 2. False, the power management program can uncover many events that are avoidable; page 4. 3. True; page 3. 4. False, only on key circuits, and connected through the existing communication network; page 3.