Accurate Allocation of energy in production processes - the importance of using metamodels
Many companies struggle with correctly monitoring, allocating and distributing
direct and indirect energy consumption over all internal and external customers,
users or products. In this age of rising commodity costs and additional
attention to sustainability, the advantages of adequately allocating energy are
nonetheless substantial:
1. Real-time mapping of energy throughout process flows makes it easier
to detect deviations in energy conversions during production processes,
find the root causes and reduce losses.
2. Using exact and objective keys for allocating energy consumption
speeds up periodic P&L and CSR reporting and makes for more accurate
reports.
3. Continuous, real-time distribution of energy cost among users increases
transparency and raises awareness with them.
Although most companies already struggle with integrating correct data from
metered equipment, this is only the first - albeit important - step. The crux is
fully understanding the nature and efficiency of energy conversions processes;
energy inflows and outflows to different customers; fixed and variable costs
and corporate structures. By using metamodels - designed for and maintained
by energy managers - all this information is added to the initial metered data
and processed in such a way that any change from an energy point of view
instantly leads to adjustments in the energy allocation.
This white paper reviews emerging trends and challenges in energy allocation
and examines the working and benefits of using specific metamodels at the
level of energy management software.
Many companies struggle with correctly monitoring, allocating and distributing
direct and indirect energy consumption over all internal and external customers,
users or products. In this age of rising commodity costs and additional
attention to sustainability, the advantages of adequately allocating energy are
nonetheless substantial:
1. Real-time mapping of energy throughout process flows makes it easier
to detect deviations in energy conversions during production processes,
find the root causes and reduce losses.
2. Using exact and objective keys for allocating energy consumption
speeds up periodic P&L and CSR reporting and makes for more accurate
reports.
3. Continuous, real-time distribution of energy cost among users increases
transparency and raises awareness with them.
Although most companies already struggle with integrating correct data from
metered equipment, this is only the first - albeit important - step. The crux is
fully understanding the nature and efficiency of energy conversions processes;
energy inflows and outflows to different customers; fixed and variable costs
and corporate structures. By using metamodels - designed for and maintained
by energy managers - all this information is added to the initial metered data
and processed in such a way that any change from an energy point of view
instantly leads to adjustments in the energy allocation.
This white paper reviews emerging trends and challenges in energy allocation
and examines the working and benefits of using specific metamodels at the
level of energy management software.
commodity costs, like depreciation costs, operational costs and maintenance, to the internal customers. A graph-based model which includes commodity conversions will be very helpful in implementing this application. All in all, three steps are needed to correctly allocate commodity costs to a company’s internal customers. Assigning cost centers The first step in building a cost allocation application model is to assign cost centers to all nodes in the graph based model. Four types of nodes exist in the graph model: source nodes, conversion nodes, distribution nodes and sink nodes. Source nodes apply to acquired commodities on the one hand and locally generated ones on the other (e.g. electricity from wind turbines or solar plants). For acquired commodity types the monthly invoices will be assigned to their cost centers. For locally generated commodity types, the depreciation costs, operational costs and maintenance costs will be assigned. Conversion nodes are used for industrial installations which convert one or more commodity types into others. A typical example would be the conversion of natural gas into heat, which is distributed across the site via a pipeline network of superheated pressurized water. The costs for the conversion installation like depreciation costs, operating costs and maintenance costs are assigned to their cost center. Distribution nodes are used to bundle all the sources of a single commodity type and distribute the commodity among the other conversion, sink or distribution nodes of the same type. Even when distribution nodes for the same commodity type form a hierarchy, cost allocation is no problem as long as all the distribution nodes of the same type have the same cost center. Depreciation costs and maintenance costs for the distribution network on the site can be assignedtotheircostcenter. Typicallythedistributionnodewillalsodealwith lossesin the distribution network which represent a cost. These losses will be distributed to the sink nodes according to their usage, ensuring these loss costs will be assigned to the internal customers automatically. For example a site converts natural gas and water into steam. This steam is distributed over the site via a pipeline network. This pipeline network represents an investment which is depreciated on a regular interval and will also require maintenance. Pipes corrode and need replacing or valves break down and need replacement as well. Tiny leaks in the pipeline network cause pressure drops and represent losses. All these costs are addressed by the distribution node. 20
Sink nodes represent the internal customers in the company. These nodes have cost centers assigned to them. The costs assigned to these cost centers will - obviously - be the distributed costs from the other nodes based on the sink node’s commodity consumption. Selection of the reporting period The second step is choosing a reporting period. It is typically based on the firm’s overall financial reporting schedule and not determined by the requirements of energy management. Monthly or quarterly reporting periods are therefore common. The result would look like the picture below. All costs and losses for the selected period of time have been assigned to the nodes. They can now be used to allocate all direct and indirect costs to the sink nodes. Example graph based model with CHP and hot water conversions Source node Electricity grid connection Usage: 100 Gross prod: 150 Loss: 0 Distribution node Electricity Usage: 90 Usage: 80 Sink node Building product line 1 Source node Wind turbine Usage: 140 Gross prod: 50 Conversion node Combined heat power Gross prod: 100 Usage: 80 Usage: 130 Sink node Building product line 2 Source node Natural gas grid connection Usage: 300 Distribution node Natural gas Usage: 150 Conversion node Hot water boilers Conversion node Hot water Loss: 10 Usage: 100 Gross prod: 150 Loss: 10 Usage: 80 Source node Water grid connection Usage: 200 Distribution node Water Loss: 50 Usage: 80 Sink node Building product line 3 Loss: 40 Loss: 10 Figure 5: Graph-based model example with usages and gross productions.. Distribution of commodity costs to internal customers For each reporting period the following steps will be taken: 1. Distribution of acquired commodity costs to internal customers, 2. Distribution of generated commodity costs to internal customers, 3. Distribution of converted commodity costs to internal customers, 4. Translation of converted commodity usages to primary commodity usages, 5. Distribution of commodity usages to internal customers, 6. Total cost calculation per internal customer. 21
- Page 1 and 2: Condugo Accurate allocation of ener
- Page 3 and 4: Many companies struggle with correc
- Page 5 and 6: Market drivers impacting energy man
- Page 7 and 8: A brief history of energy managemen
- Page 9 and 10: What exactly are metamodels? ‘To
- Page 11 and 12: Position of key people and responsi
- Page 13 and 14: Hierarchical vs. graph-based metamo
- Page 15 and 16: logically link the old and the new
- Page 17 and 18: A detailed graph-based versioned me
- Page 19: 2. Allocating shares to sinks and c
- Page 23 and 24: associated with an acquired commodi
- Page 25 and 26: Not all companies have the same nee
- Page 27 and 28: Condugo is a young company - founde
- Page 29 and 30: Metamodels are starting to show up
S<strong>in</strong>k nodes represent <strong>the</strong> <strong>in</strong>ternal customers <strong>in</strong> <strong>the</strong> company. These nodes have<br />
cost centers assigned to <strong>the</strong>m. The costs assigned to <strong>the</strong>se cost centers will<br />
- obviously - be <strong>the</strong> distributed costs from <strong>the</strong> o<strong>the</strong>r nodes based on <strong>the</strong> s<strong>in</strong>k<br />
node’s commodity consumption.<br />
Selection <strong>of</strong> <strong>the</strong> report<strong>in</strong>g period<br />
The second step is choos<strong>in</strong>g a report<strong>in</strong>g period. It is typically based on <strong>the</strong> firm’s<br />
overall f<strong>in</strong>ancial report<strong>in</strong>g schedule and not determ<strong>in</strong>ed by <strong>the</strong> requirements<br />
<strong>of</strong> <strong>energy</strong> management. Monthly or quarterly report<strong>in</strong>g periods are <strong>the</strong>refore<br />
common.<br />
The result would look like <strong>the</strong> picture below. All costs and losses for <strong>the</strong> selected<br />
period <strong>of</strong> time have been assigned to <strong>the</strong> nodes. They can now be used to<br />
allocate all direct and <strong>in</strong>direct costs to <strong>the</strong> s<strong>in</strong>k nodes.<br />
Example graph based model with CHP and hot water conversions<br />
Source node<br />
Electricity grid<br />
connection<br />
Usage: 100<br />
Gross<br />
prod: 150<br />
Loss: 0<br />
Distribution node<br />
Electricity<br />
Usage: 90<br />
Usage: 80<br />
S<strong>in</strong>k node<br />
Build<strong>in</strong>g product<br />
l<strong>in</strong>e 1<br />
Source node<br />
W<strong>in</strong>d turb<strong>in</strong>e<br />
Usage: 140<br />
Gross<br />
prod: 50<br />
Conversion node<br />
Comb<strong>in</strong>ed heat<br />
power<br />
Gross prod: 100<br />
Usage: 80<br />
Usage: 130<br />
S<strong>in</strong>k node<br />
Build<strong>in</strong>g product<br />
l<strong>in</strong>e 2<br />
Source node<br />
Natural gas grid<br />
connection<br />
Usage: 300<br />
Distribution node<br />
Natural gas<br />
Usage: 150<br />
Conversion node<br />
Hot water boilers<br />
Conversion node<br />
Hot water<br />
Loss: 10<br />
Usage: 100<br />
Gross prod: 150<br />
Loss: 10<br />
Usage: 80<br />
Source node<br />
Water grid<br />
connection<br />
Usage: 200<br />
Distribution node<br />
Water<br />
Loss: 50<br />
Usage: 80<br />
S<strong>in</strong>k node<br />
Build<strong>in</strong>g product<br />
l<strong>in</strong>e 3<br />
Loss: 40<br />
Loss: 10<br />
Figure 5: Graph-based model example with usages and gross <strong>production</strong>s..<br />
Distribution <strong>of</strong> commodity costs to <strong>in</strong>ternal<br />
customers<br />
For each report<strong>in</strong>g period <strong>the</strong> follow<strong>in</strong>g steps will be taken:<br />
1. Distribution <strong>of</strong> acquired commodity costs to <strong>in</strong>ternal customers,<br />
2. Distribution <strong>of</strong> generated commodity costs to <strong>in</strong>ternal customers,<br />
3. Distribution <strong>of</strong> converted commodity costs to <strong>in</strong>ternal customers,<br />
4. Translation <strong>of</strong> converted commodity usages to primary commodity<br />
usages,<br />
5. Distribution <strong>of</strong> commodity usages to <strong>in</strong>ternal customers,<br />
6. Total cost calculation per <strong>in</strong>ternal customer.<br />
21
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