Need for Energy Accounting

You know in which power is a critical infrastructure for the growth of our economy. The power sector has to be commercially and financially viable and be able to attract fresh investments in sequence to spur our country's economic growth. Therefore, you have studied in previously that the financial health of most of the power utilities is a matter of grave concern and their AT&C losses have reached an alarming level.

For a country that generates over one lakh MW of power even a little percentage of loss translates into an extremely large amount of power in absolute terms. Preventing this loss would efficiently serve as capacity addition, thereby decreasing the demand-supply gap and improving supply.

Even 1% reduction in AT&C losses would provide substantial financial advantages to the utilities.

Technical losses could be reduced by system improvement, e.g., through reducing overloading of lines and transformers, improvement of voltage profile, etc. But these measures require large capital investments.  Therefore, commercial losses could be decreased at a comparatively lesser cost and in a shorter time frame by administrative and legislative action along with greater financial gains. We require searching out the quantum of such losses and taking action to decrease them.

There are several other reasons why power utilities should undertake energy accounting. We list some of these here.

1. A comprehensive energy accounting system would enable the utility to quantify losses in various segments of the system and pinpoint the areas in which lead to high commercial losses.

Energy auditing, about that you will study in the next unit, would give the means to identify the areas of leakage, wastage or inefficient use. This would help in identifying measures appropriate for reduction of T&D losses.

Therefore the first and foremost reason for energy accounting in a power utility is to record the available energy  and attribute energy consumption and losses in the power generation, distribution and transmission system. Energy costs depend on the amount of energy consumed and its price.

2. Energy accounting will make it possible to compare energy use and cost between the several components of the power supply system and to monitor how energy use changes over time. This information will help those responsible for managing energy costs - maintenance staff, site managers, and others - to get feedback on how well their utility is performing.

3. Energy problems and billing errors could be tackled and identified. Through consistently tracking energy use, you could identify problems in the system. A sudden unexplained increase in energy consumption, for instance, would need investigation of the cause. Billing errors could also be caught.

4. Energy accounting would give a basis for prioritizing energy capital investments and preparing a more accurate budget. You could identify operations or segments in that the utility incurs the highest energy costs and consider targeting them for energy management and cost reduction efforts.

5. With the help of energy accounting, power utilities could evaluate the success of their energy conservation and management efforts. Did they save as much energy as they thought they would from their energy conservation efforts?

Such questions could be answered only by energy accounting.

Utilities could create incentives for energy management. Energy management is still not a priority for a majority of the utilities. There is apparently little incentive to take on this task. But if the power distribution utilities realize the advantages of increasing energy savings and reducing energy costs, they could appreciate the required for energy management. Energy accounting makes it probable to set quantifiable energy cost reduction goals that could be used to augment the budget.

For any organization, it is significant to be clear about how it will use the energy accounting information to serve its broad goals of

a.    managing energy costs;

b.    promoting energy and environmental awareness; and

c.    managing resource costs.

This will need a clear statement of specific objectives that would determine the functions of energy accounting.