Energy Audits 101

The term energy audit is commonly used to describe a wide variety of energy-related functions. Definitions range from a very simple and inexpensive process to one of high complexity, involving a detailed data analysis of simulated energy use, along with microeconomic numbers. Audits can be performed on all facility types and may include the entire facility or be limited to targeted areas of the...


The term energy audit is commonly used to describe a wide variety of energy-related functions. Definitions range from a very simple and inexpensive process to one of high complexity, involving a detailed data analysis of simulated energy use, along with microeconomic numbers.

Audits can be performed on all facility types and may include the entire facility or be limited to targeted areas of the facility, specific equipment or isolated processes/ systems. All utility services—electric, gas/oil, water, sewage/waste disposal and steam—can be part of an audit, which may also include environmental impact parameters, particularly consideration of refrigerants, boiler emissions, fuel storage and chemical process applications.

Energy audits can provide the basic groundwork for:

  • Major equipment and structural retrofits.

  • Development of energy service performance contracts.

  • Compliance with governmental laws and regulatory codes.

  • Corporate energy planning.

  • Documentation for grant proposals and funding approval.

  • LEED certification.

  • Project financing.

The primary intent of this article is to provide a methodology, sample checklist and structured definition for various types of energy audits, while explaining their similarities, differences and applications. With a framework of audit types, including their associated scopes, deliverables and approximate cost ranges, professional engineers should be able to more confidently prepare audit proposal requests, audit services contracts, proposal responses and contract negotiations, as well as provide performance guarantees.

Getting started

The first thing energy professionals and facility managers need to be aware of is end-user expectations. This way, they can best specify the audit that meets a project's objectives without undue complexity, time delay and expense.

In its most basic definition, an energy audit serves the purpose of identifying energy usage within a facility, process or equipment, and then identifies opportunities for conservation, called energy conservation measures (ECMs).

All audits should include the following:

  • Data Acquisition . Identify where and how a facility, process or equipment uses energy, along with the costs and utility issues affecting the energy consumption.

  • Data Analysis . Perform analysis to identify ECMs, which, when implemented, will make the energy usage more efficient, less expensive and/or more environmentally friendly.

  • Recommendations . Present a final report detailing what was found, areas for improvement and recommended actions, usually accompanied with some type of economic justification.

The complexity and documentation required, along with the available budget, will usually dictate the type of audit performed. Because audits are somewhat customized for each site's particular needs, they will tend to vary somewhat in content. While no exact, hard-and-fast rules dictate the type and cost of an audit, most audits will generally fall within one of the following three categories:

1. Walk-Through Audit, Simple Audit, Preliminary Audit, Screening Audit or Basic Audit . This is the simplest, quickest and least costly type of audit. Its purpose is to be a big-picture survey of the structure, process or equipment, and then to identify areas for potential energy savings. Only basic information is obtained regarding energy usage and utility issues, and a visual inspection is performed during the walk-through of the facility to determine if there are any operational savings opportunities. Minimal interviewing of site operational personnel may be performed during the walk through. It's important to note that detailed measurements, metering or testing are normally not performed in this class of audit.

Typically, this type of audit will uncover major problem areas and those opportunities for simple and/or quick paybacks. A quick comparison of the facility's energy use index (EUI) (in BTU/sq.ft.) against industry standard published indexes can provide an estimate of the possible savings potential. The final report format is simple, and if the results indicate appreciable savings opportunities, a more advanced type of audit can be justified.

2. Site Energy Audit, Mini Audit, General Audit or Complete Site Audit . The site energy audit basically enhances the walk-through audit process by the inclusion of detailed data collection including: utility rates and contracts; energy usage profile; specific measurement, metering and/or testing of energy utilization equipment; and even structural components, as required for documentation. Interviews will be conducted with various site operations and business personnel to better understand the facility's operational parameters and business needs.

A site energy audit requires that a more detailed analysis of the data is performed with usage patterns and EUIs evaluated against established norms and guidelines. In many cases, a rough model of energy usage will be developed. This may use software models, and for an additional cost, may be a dynamic model reflecting various operating conditions during the day, month or year to assist in predicting energy conservation and potential savings opportunities. Finally, a financial analysis will be performed on each identified ECM to justify investment based on the customer's investment criteria.

This type of energy audit will usually identify and quantify all ECMs that meet reasonable investment justification. The report will provide sufficient detail narrative, sketches and documentation of the recommendations without additional study. This type of audit is normally sufficient for most applications where completeness and cost effectiveness is desired, without excessive detail or unnecessary depth.

3. Comprehensive Audit, Maxi Audit, Detailed Audit or Technical Analysis Audit . This final class of audit is the most complete, complex, time-consuming and expensive of all audits. Much of the detail and complexity may not be required or justified for many applications.

The comprehensive audit further enhances the data collection, modeling, financial analysis and reporting of the site energy audit. This audit type requires that all phases of energy purchase and utilization are identified, measured, documented and evaluated for inclusion in the final report. Technically, this audit should result in an energy model, which can account for most energy use and cost at a site. This requires that every structural and equipment system be modeled and evaluated for possible energy conservation opportunities. Extensive interviews are conducted with site operational and business personnel to fully appreciate the facility's operational parameters, as well as present and future business needs.

The analysis phase involves dynamic modeling of all the energy usage at the site, typically utilizing a software model, as well as for every ECM identified. The subsequent ranking of these ECM opportunities through financial analysis are then presented with specific recommendations. A typical financial analysis in this class audit involves full life-cycle investment analysis with consideration of taxes, depreciation and operation and maintenance impacts. Various financing and leasing options are usually included, along with specific vendor quotes for major-cost items.

The final report for this audit is all-inclusive, typically lengthy with detailed analysis, pictures and renovation documents. Sometimes this type of audit may require that the auditor provide certain performance and financial guarantees for his or her recommendations, as well as ongoing support services for the implementation and monitoring of the installed ECMs.

Reasons to perform this kind of audit:

  • An interest in substantial savings in the operating budget.

  • The need to obtain special financing.

  • Government grant applications.

  • Research and development project funding.

  • Documentation to meet a site's corporate energy/business qualifications.

Fees are typically directly proportional to the size of the facility and/or the quantity and complexity of equipment, the scope of the technical and financial analysis specified in the contract and the liability level/guarantee of the recommendations. Often, industrial sites do not perform this class audit on a gross site basis due to the excessive data collection and costs required.

Using the above description may prove useful in discussing the terms of deciding exactly what types of services will be required and, just as important, what services are not required. A typical result of this discussion may be a "hybrid" audit contract that initially uses a walk-through audit to set the stage from which negotiations can proceed on a very specific set of considerations for a site energy audit. This will limit the scope of the audit, reduce the data and time inputs and ultimately produce a more usable report at a lower cost.

In vogue

Regardless of the type of energy audit performed, the process has become more and more common, being that energy efficiency continues to gain popularity. For example, most jurisdictions now require state or local energy guidelines to be followed for new or renovation projects. And with the popularity and support for the U.S. Green Building Council's LEED (Leadership in Energy and Environmental Design) accreditation program, energy efficiency has taken a new holistic approach.

In addition, government regulations, new technologies, environmental concerns and emerging business services have created even more of a focus on the cost-effective strategy of energy conservation. But before end-users can start reaping its benefits, an energy audit must be utilized to identify how and where a facility should modify its operations.

Sample Audit Results for a Commercial Office Building
Staten Island, NY


Installed Cost

Energy Savings

Demand Savings

Cost Savings

Pay Back






By implementing all the recommended conservation measures at a cost of $682,283, the client could save $17,101 per year in financing costs, with a 10-year net-present value of $122,936.

1) Boiler/Chiller Replacement







2) Common Area/Garage Lighting







3) CHW/HW Pump VFD Existing Plant







4) CHW/HW Pump VFD New Plant







5) Window Replacement Package







6) Upgrade Elevators wit VVVF and AC drives







Phase One: Data Collection

Meeting with Key Facility Personnel

Establish a meeting with all key operating personnel to go over audit objectives and scope of work; facility rules and regulations; roles and responsibilities of project team members; and a description of scheduled project activities. This first step seeks to establish: operating characteristics of the facility; energy procurement sources; operating and maintenance procedures; preliminary areas of investigation; unusual operating constraints; anticipated future business expansions or changes; and other concerns related to facility operations.

Site and Facility Walk-through

Conduct a walk-through of the facility to observe the various operations firsthand, focusing on the major energy-consuming systems identified during the meeting with facility personnel. This includes the architectural, lighting and power, mechanical and process-energy systems.

Existing Available Document Review

Review available facility documentation with facility engineering representatives. This documentation should include all available architectural and engineering plans; facility operation and maintenance procedures and logs; and utility bills for the previous three years. It should be noted that the available plans should represent "as-built" rather than "design" conditions. Always field verify discrepancies between the systems and structure details evaluated as part of the audit, and those actually installed at the facility.

Facility Inspection

After a thorough review of the construction and operating documentation, the major energy-consuming equipment/ processes in the facility should be further investigated. Take field measurements where required to substantiate operating parameters.

Walk-through/Data Substantiation

Subsequent to the facility inspection, meet with the facility staff, including the major energy-consuming department or service, maintenance department/contractors and utility representatives. Review preliminary findings and the recommendations being considered. Given that the objective of the audit is to identify projects that have high value to the customer, seek management input at this point to establish the priorities that form the foundation of the energy audit.

Phase Two: Analysis Steps

Utility Analysis . The utility analysis is a detailed review of energy bills from the previous 12 to 36 months. This should include all purchased energy agreements, including electricity, natural gas, fuel oil, liquefied petroleum gas and purchased steam, as well as any energy generated on site. Billing data analysis should include energy usage, energy demand and utility rate structures. Normalize utility data for changes in climate and facility operation since it is used as a baseline to compute energy conservation measures (ECMs). Evaluate local deregulation options where real-time pricing will impact the outcome of ECM analysis. Also, utilities generally offer a comprehensive portfolio of rate tariffs and riders that can be tailored to the energy consumption and demand of the end-user. Where deregulation is active, energy can be purchased on contract from a number of third-party marketers. When it comes to using energy consumption/demand characteristics and renewable energy resources, available grants should not be ignored. Options may include: cogeneration; power generators for emergency power and peak shaving; solar panels, wind turbines and propeller towers; and waste-gas cogeneration.

Calculate Feasible ECMs . Energy audits should uncover both major facility modifications requiring detailed economic analysis, and minor operation modifications offering simple and/or quick paybacks. Develop a list of major ECMs for each of the major energy-consuming systems, such as envelope, HVAC, lighting, power and process. Utilizing collected data, finalize a list of ECMs to be reviewed with the facility manager.

Economic Analysis . Build models and simulations with software to reproduce field observations and develop a baseline to measure the energy savings potential of ECMs identified. Within the calculation, include the implementation cost, energy savings and simple payback for each of the ECMs.

Phase Three: Report Preparation

Prepare Audit Report . Summarize the results of findings and recommendations in a final report. The report should include a description of the facilities and their operation; a discussion of all major energy-consuming systems; and a description of all recommended ECMs with their specific energy impact implementation costs, benefits and payback. The report should also incorporate backup data and an executive summary with specific conclusions and recommendations.

Present and Review Report with Facility Management. Explain the process and all activities performed to substantiate the report's conclusions. Provide economic results as a formal presentation of the final recommendations. Explain the data on the benefits and costs to make a decision or set priorities on implementation of ECMs

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