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The objective of an energy efficiency assessment is to build a greater understanding of how energy is used within a company and to identify ways to reduce costs through the more efficient use of energy.

It involves the comprehensive analysis of energy use within a process, facility, site or organisation and using that analysis to identify and evaluate ways to improve energy performance.

The level of analysis undertaken will determine the level of accuracy and number of opportunities found. A range of approaches based on certain key principles can be followed, however. This can enable companies to increase the level of rigour and resources invested in assessments over time, as areas of potential and priority are identified.

Essential components of a successful assessment

Energy management practices should be undertaken at a level appropriate to the size and resources of the business. This is also true for energy efficiency assessments.

The level of rigour applied to an assessment determines the extent of the insights and benefits gained. An initial scoping review across the organisation can identify the key energy-using areas that assessments should focus on. Initial assessments could be used to identify the potential for savings within the business and secure resources for more detailed assessments.

The principles of a well-planned energy efficiency assessment in one area of an organisation can often be applied to similar sites, technologies or processes.

Best practice energy efficiency assessments have several key components in common.

Planning and resources

An energy efficiency assessment requires proper planning and resourcing, coupled with a communication strategy that engages with all relevant stakeholders. Planners may consider a progressive approach to conducting the assessments in particular areas of the business, with a plan to complete assessments of the whole business process over a period of time.

The project plan for an energy efficiency assessment should detail the objectives and scope of the assessment. This includes the activities that will be undertaken, timing, personnel, financial and technical resources, expected deliverables, as well as potential risks and the strategies to manage them.  The plan should also outline actions to be taken post-assessment, including reporting on outcomes and timelines for tracking, reviewing and potentially undertaking future assessments. The assessment project plan often evolves as the project team is established.

The amount and cost of energy use for the organisation can be a guide as to the level of resources dedicated to the assessments.

People and skills

The value of an energy efficiency assessment can be dramatically increased by seeking the input of  stakeholders within the organisation.  The necessary skill sets may exist within disparate parts of an organisation, which reinforces the need to use a team-based and company-wide approach.

Ideas for energy efficiency improvements can be found at all levels of the organisation from shop floor operators through to corporate office. Relevant stakeholders also include the people who have influence over capital and operating budgets, people with the authority to make changes to processes and procedures, and people who have a role in implementing energy efficiency improvements.

Energy efficiency assessors should include not only those with energy and process expertise, but also people external to the process who can provide alternative perspectives and encourage different ideas.  A cross-silo approach to the assessment often results in more innovative solutions.

The EEO Assessment Handbook provides advice on establishing a project team for the energy assessment, and a listing of suggested project team members. Refer to page 18.

The document, Functional Skills for an Energy Efficiency Assessment, outlines the range of skills that were required to conduct energy efficiency assessments to the EEO Assessment Framework and highlights the importance of multi-disciplinary teams.

The US Environmental Protection Agency’s Teaming up to save energy provides guidance on building an energy management team with descriptions of the likely barriers to be encountered and engagement techniques to overcome them.  The document includes checklists and many useful tips. It is applicable to multiple sectors and organisation sizes.

Using external resources

The capacity of organisations to undertake energy efficiency assessments will vary depending on the available resources and skills. Depending on factors such as an organisation’s energy expenditure, size and resource availability, it may be reasonable to create full-time positions that are dedicated to improving energy efficiency or deploying existing internal resources to particular assessment tasks.  For other organisations it may make more sense to source external technical expertise. External experts can also offer specialist advice to fill skills or knowledge gaps.

A wide range of energy services companies support specific aspects of an assessment, including data collection, opportunity identification and analysis, facilitation, and reporting.

If external experts are required, ensure the cost of the external expertise does not outweigh the benefits that could accrue if projects are successfully implemented.

Preparing a focused scope of works helps to clarify the job, the expectations, and the input required to facilitate their work. The scope of works should contain the principles discussed in these pages to ensure that consultants perform thorough assessments. It also ensures accurate cost estimates can be obtained from different firms. The scope should also clearly outline how analysis and recommendations will be presented for findings to be incorporated into business cases. This includes any assumptions made in the estimation of project costs and energy savings.

Energy audits determine how efficiently energy is being consumed, identify energy and cost-saving opportunities, and highlight potential improvements in building services and occupant comfort. Three energy audit standards are available from Standards Australia:

NSW’s Energy Saver Scope of Work provides assistance in engaging an energy provider and establishing the scope of work and associated expectations.

Understanding energy use

Developing an understanding of energy use and relating energy to core business activities can bring many insights into the relationship between energy and productivity.

Data collection

Gathering new data typically begins with high-level data that is readily available.

Invoice data can be summarised based on the types of energy used and the processes or sites where the energy is used, expressed as a proportion of total energy use. This information is often available in existing financial or greenhouse gas accounting systems, or can be sourced from energy providers. Energy users can request that energy retailers provide more detailed metering data on which the invoices are based.

This type of high-level analysis of energy use can enable the company to prioritise and focus their time and resources on areas where the greatest energy improvements are likely to be found.  However, information at this level is relatively vague as it represents the aggregated energy spend for an entire facility or business unit.  To derive full value from the assessment process, a much deeper understanding of energy use is required.

An initial analysis of available data often uncovers data gaps where greater information is required, and identifies key energy-using areas or processes which should be prioritised for more detailed analysis.

Several technologies and techniques can be used to measure energy use within a facility or process. Temporary meters can be hired and used on a short-term basis, or permanent meters can be installed where appropriate. It is important to ensure that the measurement frequency and the time period over which the measurements are taken sufficiently capture a representative operational period. Intraday, daily, monthly or seasonal variations may need to be measured and taken into account.

The data set can then be augmented using other sources, such as automated control systems such as SCADA or PLC systems, and other instrumentation. Discussions with facility or process managers, accounting personnel, environmental reporting staff, and other people around the site can often uncover other data sources which can be incorporated in the energy analysis.

In addition to energy usage data, it is important to collect data on other variables such as production throughput, ambient temperature, process parameters, operating modes or profiles.

Combining energy data with other business data can also provide a deeper understanding of the relationship between energy use and other business variables. For example, the energy use per unit of production may differ according to production volumes. Changes in environmental conditions may impact energy use patterns. Other information such as organisational changes, growth projects, planned shutdowns, and other business plans can also have a significant impact on energy use.

A rich collection of energy and business data enables a comprehensive understanding of the factors that influence variations in energy use.

The EEO Energy Savings Measurement Guide provides detailed guidance on different energy measurement techniques (pp. 7–69).


Analysis of energy data can be used to calculate an energy baseline that establishes the relationship between energy use and business activity. In its most basic form, the energy baseline relates energy expenditure to business output over a specific time period. For example, a manufacturing plant may calculate the energy baseline from energy use data and production data for a given time period.

Analysis can yield many insights into the reasons for variations in energy consumption, efficiency and productivity. Graphs and statistics often raise questions which stimulate further investigation, resulting in a more in depth and accurate understanding of energy use and the opportunities that may exist within an organisation. Different analysis techniques can reveal a range of insights.

Common analysis techniques include:

  • Graphs of energy use over time (seasonal, monthly, weekly, daily, hourly) – Understanding the reasons behind energy use patterns and changes in energy use in relation to business activities can often yield new insights.
  • X-Y plots of energy use versus production or other parameters – This technique can reveal whether or not there are relationships between energy use and production. It can also highlight if any production thresholds exist where a dramatic change in energy use occurs.
  • Benchmarking – Using energy performance indicators reveals whether a process, facility or business unit is operating at its optimum performance level. Benchmarking can be used to compare actual energy use with theoretical (calculated or simulated) energy use.  Comparisons with other plants, sites, processes, shifts, operators, or other aspects, can be drawn.
  • Pinch analysis – Pinch analysis is a design method based on graphical analysis that can be used to optimise the design of complex thermal systems so as to maximise heat recovery.  For processes or plants with complex flows of hot and cold streams, pinch analysis can be used to evaluate whether there are further opportunities for better heating and cooling through the placement of heat exchangers at optimum locations within the process. This method requires engineering expertise.
  • First principles (theoretical calculations) – A theoretical calculation of estimated energy use can be used to assess systems which cannot easily be measured. Theoretical models are less costly to interrogate than changing the actual system, allowing different scenarios to be explored through the manipulation of operating modes, variables and parameters.
  • Energy-mass balance (EMB) – The practice of balancing the energy and materials flows within a site, facility, or individual equipment or machinery can provide a deep understanding of energy and material flow. This modelling can indicate where energy is exiting the process through heat or steam losses, and where opportunities to improve efficiency may exist.

This listing of analysis techniques is not exhaustive. There are many other engineering, logistical, and experimental methods that may be employed to develop a better understanding of energy use.

Further information on the techniques presented above can be found in the EEO Assessment Handbook (pp. 46–49).

Further guidance on conducting EMBs can be found in Chapter 2 of the Energy Savings Measurement Guide (pp. 25–43). EMB case examples are also available for the following sectors:

Identification of opportunities

The process of opportunity identification ideally uses the data which has been analysed to identify areas where energy saving opportunities may exist.  Providing the results of this energy analysis to a broad range of people throughout the organisation can often result in further ideas and insights.

The importance of involving a cross-section of personnel to identify opportunities cannot be understated.  Workshops are a common means of gathering the relevant experts to discuss the data and information gathered during the energy assessment and brainstorm potential ideas and opportunities.  Further collaboration can be achieved through focus groups, site visits, staff suggestions, and consultation with suppliers or external experts.

All identified opportunities should be documented in a ‘register of opportunities’ or similar document. This often becomes an enduring record used to track ideas and outcomes, and revisit potential opportunities if operating conditions or energy prices change.

The EEO Assessment Handbook includes a chapter on ‘Identifying potential opportunities’ (pp. 74–92), which also explores how to organise and run an opportunities workshop.  Included are worksheets for planning the energy efficiency workshop, workshop recruitment, and developing the workshop agenda.

Detailed analysis of selected opportunities

The detailed investigation phase determines the feasibility of each opportunity, and provides decision-makers with the information they need to make a final investment decision. Further analysis is often required before a decision is made on what opportunities to implement. This may require investment in equipment to improve measurement accuracy or time spent collecting more data.

Businesses often have established practices for evaluating and seeking funds for new projects, such as project charters or templates. Energy efficiency opportunities that merit a more detailed analysis should use these existing processes.

A whole-of-business approach improves the understanding of the overall costs and benefits of energy efficiency opportunities. Project risks also need to be understood and addressed.

Other factors which may be considered in this analysis are:

  • shutdowns or downtime required to implement the change
  • changes in production output
  • changes in other process inputs, such as water or raw materials
  • changes in maintenance costs
  • hardware changes that make spare parts inventories obsolete
  • business plans or forecasts that affect the lifetime or throughput of the process that is being changed
  • costs of training or new skills that might be required.

Comprehensive and detailed analysis builds confidence in the findings amongst the project team and senior management.

Detailed guidance on the estimation, evaluation and measurement of energy efficiency opportunities can be found in the Energy Savings Measurement Guide.

The Energy Efficiency Council (EEC) provides the Best Practice Guide to Measurement and Verification of Energy Savings, detailing measurement practices for investigating energy use or verifying the energy savings of an implemented project.

Business decisions and implementation

Existing business processes should be used to arrive at decisions on energy efficiency opportunities. This helps integrate energy efficiency into the organisation as a regular business activity. If external experts are used to help conduct the energy efficiency assessment, their findings should be documented in a way that facilitates their integration with internal business case or project planning processes.

In some cases, one manager may be able to review and approve requests based on information gathered during a detailed analysis. Larger projects often need to go through more extensive approval processes.

The quality of analysis and rigour of the energy efficiency assessment underpin the project proposal, and are instrumental in alleviating perceived risk.

The US Department of Energy’s Guiding Principles for Successfully Implementing Industrial Energy Assessment Recommendations provides 11 implementation principles that aim to integrate project implementation into the energy assessment process. The principles in the document are derived from companies that have conducted successful energy assessments with tangible returns for the business. A series of checklists, templates and scorecards are included as an appendix.

Refer to the Business Case and Beyond section of the EEX website for a series of case studies on companies getting their business cases approved.

The US EPA’s Elevate energy management to senior managers is targeted at those responsible for energy management in medium to large organisations and who need advice on the motivations and language of senior managers. An understanding of how energy management aligns with senior management can help achieve favourable business decisions.

Tracking and communication − closing the loop

Opportunities implemented as a result of the assessment process must be monitored over time to determine their effectiveness. Measurement and verification can yield further insights into energy use, track any issues or unintended consequences that have resulted from a change, and build internal knowledge and expertise in energy management.

Communicating the status and outcomes of an energy efficiency assessment to senior managers and the rest of an organisation establishes a shared understanding and basis for action. It also records valuable lessons and helps build senior management support for future energy management initiatives.

Best practice energy assessments include measurement and verification procedures with sufficient rigour to quantify the performance of energy efficiency investments and operational changes. The Best Practice Guide to Measurement and Verification of Energy Savings provides detailed guidance on the design and implementation of performance monitoring systems. Topics covered include measurement and verification, planning, selection of options, data management and balancing of cost and benefits.

The EEO Energy Savings Measurement Guide highlights rigorous energy measurement techniques. Further information on tracking assessment outcomes and reporting throughout an organisation can be found in the EEO Assessment Handbook (p. 106).

Additional energy efficiency assessments resources

Australian resources

  • Energy Savings Measurement Guide 2013 (Opens in a new window)
    • Department of Industry
    • PDF

    This guide provides detailed and best practice guidance on how to estimate, measure, evaluate and track energy efficiency opportunities. It provides in-depth information on capturing energy data, establishing an energy baseline, developing an energy mass balance, analysing potential energy efficiency opportunities and monitoring the performance of implemented energy efficiency initiatives. The resource was developed for large energy-using organisations, but the tools can be applied across multiple sectors and organisation sizes.

  • A Whole Systems Approach to Energy Efficiency in New and Existing Systems 2007 (Opens in a new window)

    This document is part of an online textbook to educate engineers on the process of energy efficiency assessments entitled Energy Transformed: Sustainable Energy Solutions for Climate Change Mitigation.   Lecture 1.4 of this textbook provides the reader with useful descriptions of the stages of the energy assessment, and techniques that can be employed throughout. This resource will be useful to personnel responsible for executing an energy assessment and is relevant to all organisation types.

  • AS 3596-1992 Energy management programs – Guidelines for definition and analysis of energy and cost savings 1992
    • Standards Australia

    These guidelines are intended to advise the user on the financial and energy data requirements to develop a business case for energy saving proposals. The intent is to provide a framework which standardises the projections and forecasts which are used to evaluate energy projects. This can be used by all organisation types and is aimed at personnel responsible for developing energy efficiency business cases.

    Note: There is a cost for downloading this resource

  • A Best Practice Guide to Energy Performance Contracts 2000 (Opens in a new window)

    This best practice guide from the Energy Efficiency Council provides an overview of energy performance contracting and guidance on whether EPCs are the most appropriate financing tool for your business, how to source an energy service company and put relevant contracts in place.

International resources

  • Guiding Principles for Successfully Implementing Industrial Energy Assessment Recommendations 2011 (Opens in a new window)
    • U.S. Department of Energy

    Drawing upon the advice of companies that have conducted successful energy assessments with tangible business outcomes, this document provides 11 “implementation principles” that aim to integrate project implementation into the energy assessment process. The document is designed to be used as an ‘at-a-glance’ guidebook which can be quickly referenced as needed. A wide range of useful checklists, templates and scorecards are included as an appendix.

  • Better Business Guide to Energy Saving 2013 (Opens in a new window)

    This guide can help you to conduct an initial walk-through assessment of your organisation to see what sort of energy use practices are in place. It can be a good way to start gaining a better understanding of how energy is being used and could help to identify energy saving opportunities with little or no cost. It is a resource that is best applied at the facility level.

    Note: Free registration is required to gain access to this document on the UK Carbon Trust website.

  • Saving Energy: Staff Awareness and Motivation 2009 (Opens in a new window)

    This fact sheet suggests ways to involve staff in an energy management system and for the purpose of conducting energy efficiency assessments. It provides advice on: setting up an energy team, researching current attitudes and behaviors, planning, as well as implementation, evaluation and review and maintenance of an energy management system. It is aimed at personnel responsible for energy managers in a medium-to-large organisation.

  • Saving energy in business: involving staff 2010 (Opens in a new window)
    • New Zealand Energy Efficiency and Conservation Authority
    • PDF 211 KB

    This fact sheet offers advice on how to keep employees interested in an energy efficiency program, with a strong focus on employee ownership of the program. This resource is briefer that the ‘Saving energy with people power’ resource, and is more suitable for small-to-medium organisations.

  • Stanford Energy Lectures 2007 (Opens in a new window)
    • Rocky Mountain Institute

    Lecture series (videos with PDF transcripts) consisting of five lectures where Amory Lovins discusses energy efficiency. Each video is approximately 1.5 hours long.  The topics are buildings, industry, transportation, implementation and implications.