However, with the increasing market competition which resulted in lower
profit margin, there is much pressure to lower production cost and increase
productivity. One such area is energy consumption / demand charges.
For industrial E2 tariff the maximum demand charges is RM21.70 for each kW.
For example a plantís average power demand is 2000kW for each half hour
period over the month, the demand charges shall be 2,000 x 21.70 = RM
43,400. However if there is one specific 30 minute time period where the
client has inadvertently started several equipment of high power consumption
at the same period and causing the maximum demand to rise to 2,200kW, the
demand charges for the month would amount to RM 47,740. (Increase of
The energy charges is a separate component and is based on the actual peak
and off peak energy consumed for the month multiplied by the peak and off
peak energy unit cost respectively. Hence if the client institute an energy
saving program, there must be a measurable benchmark such as kWh /
production unit. As production rate varies over the different shifts and
days of the month, the management can use this information to chart out the
effectiveness of their energy efficiency program.
Another common problem that the
plant may encounter is the Power Factor Penalty. This occurs when the
Capacitor Banks in the Main Switchboards deteriorate or fail, and unable to
generate the reactive power (VARs) to maintain the power factor above 0.85.
Below this threshold, the power factor penalty is levied on the client and
the quantum is proportional to the power factor shortfall and the energy
bill for the particular month.
As such, it is important for industrial consumers to start monitoring their
energy efficiency and their production output. With this data, the client is
able to formulate strategies to reduce energy / maximum demand costs through
proper scheduling and equipment upgrade, and consequently improving