In today’s dynamic business environment, commercial and industrial (C&I) consumers face mounting pressure to manage energy costs effectively while maintaining operational efficiency. With energy expenses constituting a significant portion of operating budgets, organisations are increasingly turning to strategic energy cost management processes to optimise energy usage, minimise expenses and enhance competitiveness.
Effective energy cost management for C&I consumers includes monitoring, analysis and optimisation of energy usage to reduce expenses. This process entails identifying improvement opportunities, implementing energy-saving measures and verifying results. It encompasses equipment upgradation, adoption of energy-efficient technologies and implementation of best practices for conservation. By reducing energy consumption and waste, companies can enhance their sustainability, environmental performance and operational efficiency. Lowering energy costs directly contributes to increased profitability, especially for energy-intensive industries, while also helping reduce the carbon footprint for a more sustainable future. It also helps in complying with energy efficiency regulations, mitigating risks associated with energy price fluctuations and avoiding potential penalties. Efficient energy cost management benefits both businesses and the environment by delivering financial savings and environmental advantages.
Trends in energy savings
According to the Bureau of Energy Efficiency (BEE), the cumulative electricity consumption by all sectors (industrial, domestic, agriculture, commercial) stood at 1,296,300 GWh during 2022-23. Of the total consumption, the industrial sector accounted for the largest share (41.16 per cent), followed by the domestic (25.77 per cent), agricultural (17.67 per cent) and commercial (8.29 per cent) sectors.
The adoption of energy efficiency schemes/programmes reduced the overall electricity consumption by 249.89 BUs, leading to a 19.28 per cent reduction in the electrical energy requirement across various sectors of the economy in 2022-23. The domestic sector had the highest contribution, accounting for 80.12 per cent of the total electrical energy savings from all energy efficiency interventions during 2022-23.
The adoption of energy efficiency schemes/programmes resulted in overall energy savings of 50.81 million tonnes of oil equivalent (mtoe) in 2022-23. Various energy efficiency measures led to overall thermal energy savings of 25.28 mtoe, while overall electricity savings stood at 307.33 BUs. These energy savings translated into monetary savings worth Rs 1,883.12 billion per annum. The equivalent reduction in CO2 emissions was around 306.57 million tonnes (mt) annually.
The energy efficiency schemes at both national and state levels, carried out by BEE and other agencies, led to a reduction of 33.35 mtoe in demand-side energy consumption. The industrial sector contributed 61 per cent of the total energy savings while the domestic sector contributed
30 per cent. The remaining sectors contributed around 8.13 per cent of total energy savings during 2022-23.
Energy cost management
From implementing energy-efficient technologies and equipment upgrades to adopting demand-side management strategies and leveraging data analytics, effective energy cost management requires a comprehensive and proactive approach tailored to the specific needs and objectives of each organisation.
Investing in energy-efficient technologies, such as LED lighting, HVAC systems and energy management systems, can generate significant cost savings by reducing energy consumption and lowering utility bills. Conducting energy audits and assessments to identify areas of inefficiency and implementing targeted efficiency upgrades are essential steps in this process. Additionally, participating in demand response programmes allows C&I consumers to adjust their energy usage in response to grid conditions or utility incentives. By curtailing non-essential electricity consumption during peak demand periods or participating in demand-side management initiatives, organisations can earn financial incentives and reduce overall energy expenses.
Embracing renewable energy sources, such as solar PV systems or wind turbines, can help C&I consumers reduce reliance on traditional fossil fuels, reduce electricity price volatility and enhance sustainability credentials. Investing in on-site renewable energy generation or entering into power purchase agreements with renewable energy providers can deliver long-term cost savings and environmental benefits. Moreover, implementing strategic energy procurement practices, such as hedging strategies, forward contracting and supplier diversification, can help C&I consumers mitigate risks associated with energy price fluctuations and volatile market conditions. By leveraging market intelligence and negotiating favourable contract terms, organisations can secure competitive energy rates and optimise procurement budgets.
Further, leveraging advanced data analytics and energy monitoring tools enables C&I consumers to gain actionable insights into energy usage patterns, identify opportunities for optimisation, and track performance metrics in real time. By continuously monitoring energy consumption, organisations can detect anomalies, implement corrective measures, and drive continuous improvement in energy efficiency and cost management.
Implementing a robust energy cost management process has several benefits for C&I consumers. It enables cost reduction through optimised energy usage and efficiency measures, thereby improving financial performance. Also, proactive energy management mitigates risks associated with energy price volatility, regulatory changes and supply disruptions, ensuring operational stability and resilience. Embracing renewable energy and efficiency initiatives enhances sustainability efforts, reducing the carbon footprint and bolstering brand reputation. Further, organisations gain a competitive advantage by managing energy costs effectively, maximising operational efficiency, lowering overhead expenses and redirecting resources towards strategic investments and growth initiatives.
Big industry majors are increasingly adopting energy efficient solutions. For instance, JSW Steel has implemented ISO 50001 across all its manufacturing locations to promote energy management best practices. Sustainable management and efficient use of energy are achieved at JSW through specific energy consumption targets set in the Perform, Achieve and Trade (PAT) cycles. JSW Steel has set up a state-of-the-art energy management centre equipped with a supervisory control and data acquisition system. At JSW Steel Coated Products Limited, the use of electric vehicles for material transfer has been initiated in line with the company’s objectives to achieve carbon neutrality by 2030. Vedanta Limited has also been at the forefront of implementing energy efficiency initiatives. Recently, Vedanta Limited launched an advanced energy management system across its power plant at its Lanjigarh smelter. It will help monitor the energy performance parameters of 120 critical electrical assets, thereby enhancing energy efficiency levels across the plant.
Government initiatives to promote energy efficiency
Government policies and programmes, aimed at promoting energy efficiency, include various initiatives led by BEE, the Ministry of Power and the National Action Plan on Climate Change. The Standards and Labelling Programme, launched by the BEE in 2006, empowers consumers by providing essential information on energy-saving appliances. During 2022-23, the programme covered 14 mandatory appliances and 20 voluntary appliances. This scheme led to savings of 81.6 BUs of energy annually and remains the largest contributor to electrical energy savings. Direct cool refrigerators, colour televisions, frost-free refrigerators and room air conditioners account for the maximum share of energy savings, among the labelled appliances. This programme has led to an annual reduction of 58.19 mt of carbon dioxide emissions.
The PAT scheme accelerates energy efficiency across industries, converting energy savings into tradable certificates to incentivise efficiency improvements. The ongoing PAT Cycle VI projects substantial energy savings and carbon dioxide avoidance by March 2023. Interventions in large industries, discoms, railways and buildings under the PAT scheme have resulted in total energy savings of 15.67 mtoe (thermal energy savings of 1.43 mtoe and 16.61 MUs of electrical energy savings) under PAT Cycles IV and V.
Meanwhile, leading PSU Energy Efficiency Services Limited (EESL) has been implementing several energy efficiency projects. Recently, it launched an e-commerce platform. With more and more consumers in discovering and purchasing products online, the portal offers energy-efficient appliances and products at affordable prices to customers. At present, the platform offers energy-efficient LED bulbs, inverter LED lamps and fans. In due time, EESL will expand the offerings to include 5-star bulbs and other luminaires, super-efficient ACs, energy-efficient motors, e-bicycles and induction cookstoves.
Conclusion
Overall, energy cost management plays a critical role in enhancing the financial viability, operational resilience, and sustainability of large commercial and industrial consumers. By adopting a strategic and holistic approach to energy management, organisations can optimise energy usage, reduce expenses and unlock long-term value. Embracing energy efficiency, demand response, renewable energy integration, procurement optimisation, and data-driven insights empowers C&I consumers to navigate complex energy landscapes, mitigate risks and leverage opportunities for growth and innovation in an increasingly competitive marketplace.