Energy accounting helps in establishing the energy input and quantum consumed by/billed to various categories of consumers, identifying high loss areas, and evolving strategies and action plans for reduction of losses. Energy accounting is as fundamental to energy management as cost accounting is to financial management. It can be one of the most cost-effective tools that an organization can use to cut energy costs and conserve energy. The energy accounting by itself does not reduce energy demand or costs. However, it is the basis to identify weaknesses and to select and prioritize appropriate measures for the improvement of the energy system. For example, energy accounting can raise the awareness about reducing energy demand and help in energy conservation efforts. In fact, there are many more reasons why your utility should go in for energy accounting. Let us explain them in the context of the power sector.

Need for Energy Accounting

Power is a critical infrastructure for the growth of our economy. The power sector has to be financially and commercially viable and be able to attract fresh investments in order to spur our country’s economic growth. However, 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 like India, which generates over one lakh MW of power, even a small percentage of loss translates into a very large amount of power in absolute terms. Preventing this loss would effectively serve as capacity addition, thereby reducing the demand-supply gap and improving supply. Even 1% reduction in AT&C losses would provide substantial financial benefits to the utilities.

Technical losses can be reduced through system improvement, e.g., by reducing overloading of lines and transformers, improvement of voltage profile, etc. But these measures require large capital investments. However, commercial losses can be reduced at a comparatively lesser cost and in a shorter time frame through administrative and legislative action with greater financial gains. We need to find out the quantum of such losses and take action to reduce them.
There are many other reasons why power utilities should undertake energy accounting. We list some of these here. A comprehensive energy accounting system would enable the utility to quantify losses in different segments of the system and pinpoint the areas that lead to high commercial losses. Energy auditing, about which you will study in the next unit, would provide the means to identify the areas of leakage, wastage or inefficient use. This would help in identifying measures suitable for reduction of T&D losses. Thus the first and foremost reason for