Managing your energy consumption could be very challenging predominantly during present electricity tariff and escalation of oil & gas prices. With the increasing of other production cost such as raw material and labour, reducing the energy cost may the only way for the company to remain competitive and stay in the business. This blog discusses all related issues in managing your energy consumption efficiently and in a systematic way.

Blog ini membincangkan mengenai sistem pengurusan tenaga dan pengunaan tenaga dengan cekap.

Monday, December 27, 2010

Energy Performance KPI

In many organisations, Energy KPI is always been carried by the Energy Manager and its subordinate. This KPI is usually refers to the overall energy performance of the organisation or plant. Common mistake occurred where the KPI is located at wrong managerial level and is not getting fully support from cross-sectional department.

In order to have an effective energy management system, energy performance KPI should be well established and cascaded at all level including the top management. The task in establishing the KPI would be on the energy manager. However he/she must ensure that the energy KPI is cascaded and each KPI in the end must support the overall energy efficiency objective of the company. The KPI owned by each department must be controllable within the department functions, and linked to the overall energy performance. The KPI is not necessarily only on the energy matters, but it could be for example on the activity on maintenance frequency for heat exchanger. Again, it depends on the jobs scope of the staff.

Employee_AlignmentIn establishing the energy KPI, Specific, Measureable, Achievable, Realistic or Practical and finally Timely-bound or in general S.M.A.R.T approach is applied. This approach will prevent the energy KPI be redundant to other staff or department. This will enable the top management to give a clear direction and objectives to the staff and department in achieving the company goal. The common mistake of the organization is by establishing energy KPI, but shared to all departments. This will provide a multi interpretations and unclear objective to the department, furthermore to the staff. Energy activity will become nobody business, nobody accountable for the activities. Therefore it is important that the KPI must be specific and linked to each department. The energy KPI after all must be linked to achieve the synergy result.

To support an effective KPI, energy index or specific energy index for example total energy consumed for that particular month over the production output (GJ or kWh/ tonnage), is the best total energy KPI. This will enable the management to measure the achievement and review the energy performance. This parameter will be the key monitoring parameter for the company. Some top management will carry energy KPI in monetary term or energy price. This is ok as long as this KPI is being linked with the real energy usage index. The danger of this energy price index is that the company may get confusion as the energy price fluctuating. We may see the energy index goes down by virtue of the energy price dropping, but in reality the energy consumption is status quo or may be increase.

It is advisable for the company to analyse its historical data when establishing the energy KPI parameter. This is to ensure that the KPI is achievable. Another alternative to establish achievable energy KPI is to refer to the best practices, design data or plant performance test data. For the newly setup factory or equipment, the design data is more likely to be used. Best practice data is the last resort to be used as best practices data may differ in terms of technology, operational mode and geographical location of that particular equipment.

Practicality of the KPI is also an important key factor for an effective energy KPI. Always establish energy KPI that is practical to be implemented and do not too ambitious. For example, to carry out steam trap survey or thermal infrared diagnostic for heat loss t steam system, it is more practical to do it once or twice a year a year as it involves cost of services and the work load of doing this exercise. Another example is boiler cleaning exercise, it is difficult to establish fix frequency of this activity as it depends on the operation schedule, it is sufficient to ensure it is cleaned each and every time during maintenance day.

Finally, KPI that has been set must have time bound to ensure its effectiveness, practicality, and its impacts to the operation. This time bound will be a platform to the management to review the KPI during the management review. On the energy KPI, the management must be aware that many factors influence the parameters for e.g. operation scenario, fuel prices, retrofitting activities, shutdown, start-up, plant expansion and etc. Therefore all these factors must be considered when reviewing the KPI.


  1. The KWH/Tonnage is a KPI which is used to give the management a clear picture of a factory's energy consumption.
    What if there are multiple units or plants in a factory and each one of them should manage their own energy. What KPI's can be used for plant specific energy management?

  2. sorry for very late reply, i was in Mid-East, and just come back. related to your concern, then we should used the kpi that reflects the operation/specific process in that department/area. First and foremost is to identify the variables, easy to say but this is the tough part.