**1. Introduction**

The problem of increasing energy e fficiency is connected with the historical development of managemen<sup>t</sup> systems. One of the purposes of industrial production managemen<sup>t</sup> has always been to increase productivity. In periods when energy resources were cheap, electricity costs were an insignificant part of production costs and were an accounting item rather than an important managemen<sup>t</sup> task [1]. Energy consumption was controlled by the accountant as part of overhead costs.

With rising energy prices, the share of energy costs in the value of the created product has increased significantly. It took a change in production processes to reduce these costs and energy managemen<sup>t</sup> became part of the managemen<sup>t</sup> system. This change was particularly evident in the development of European managemen<sup>t</sup> in the last third of the 20th century [2]. During this period, an independent energy managemen<sup>t</sup> area was formed, which is able to provide organizations with e fficient use of production resources [3,4]. Having become part of the managemen<sup>t</sup> system, energy managemen<sup>t</sup> has been included in the solution of a wide range of environmental and social problems and has become an integral part of the organization's image [5,6].

We aimed to study the energy e fficiency of enterprises in Kazakhstan [7]. In Section 2, we look at issues of improving energy e fficiency in industrial systems and the relationship of energy e fficiency with creating value for the client. Section 3 is devoted to the research methodology and description of the source data. Section 4 contains an analysis of the results, which are discussed in Section 5. General conclusions are drawn and prospects for future research are determined in Section 6.

#### **2. State of the Art**

#### *2.1. Increasing of Energy E*ffi*ciency of Industrial System*

Improving the energy efficiency of enterprises plays an important role at all managemen<sup>t</sup> levels. At the national and regional levels, efficient use of energy helps to ensure a territory's energy independence and often ensures its political independence. The ability to create a product with fewer resources, including energy, allows organizations to increase customer satisfaction and increase their own competitiveness. Combining the interests of the state and business in improving energy efficiency has allowed the creation of a set of energy managemen<sup>t</sup> tools.

Based on modern research, three categories of energy managemen<sup>t</sup> tools were identified: compulsory, incentive, and educational.


Moreover, high complexity of sectoral energy systems becomes an objective barrier to energy efficiency growth in the industry. Production systems of industrial facilities with auxiliary components are not standardized and may differ significantly one from each other. This creates obstacles to creating generalized solutions and therefore does not allow for economies of scale. It also prevents and even leads to refusal of implementing potentially feasible energy-saving technologies [8]. The individual features of some energy-efficient technologies also prevent their implementation at industrial facilities [9].

Companies are constantly improving their production and managemen<sup>t</sup> optimization processes. Industrial companies lack accessible and effective methods to address energy efficiency issues in production management. Six Sigma, Lean Manufacturing, and Total Quality Management are popular concepts used in many industries around the world, but each of them does not pay due attention to energy efficiency and environmental issues. Bunse et al. [3] suggested that future research should give preference to new control concepts, new visualization approaches, and evaluation methods in order to integrate energy efficiency into production management.

Thanks to the British government, companies use the "Matrix of Energy Management" [10], which makes it possible to understand and evaluate existing energy use patterns that track and measure future improvements and identify energy saving opportunities. The matrix is a five-level structure, which is analyzed on the basis of six main directions of energy management: energy policy, organization commitment, information systems, marketing, and investment. It enables companies to

conduct self-assessments through analysis, identify areas for the development of energy management, and formulate measures for improvement not directly related to international standards.

Singh et al. [11] asserted that successful continuous improvement provides many opportunities to achieve the reduction of production cost while simultaneously growing client satisfaction. Ni et al. [12] found that continuous improvement positively influences organizational learning and leads to overall performance improvements. However, studies have found a time gap between continuous learning and improved efficiency. Jeyaraman et al. [13] in turn showed that staff responsibility, strong leadership, and access to relevant data are the main drivers of successful continuous improvement. Albliwi et al. [14] confirmed to a certain extent this conclusion by summarizing the factors of failure to create, maintain, and develop continuous improvements in enterprises, among which the main factors were the lack of committed management, insufficient communication, and insufficient training of operators.

The energy efficiency of the system can be increased through a holistic approach, where the study of individual components and functions is accompanied by the study of production systems and their external and internal customers. One of the possible strategies to find solutions that improve the effectiveness of the system is Value Stream Mapping (VSM). However, according to Faulkner et al. [15], the usual VSM methods do not count how energy contributes to value creation because they do not account for energy flows. Efficient energy managemen<sup>t</sup> requires not only identification and use of a methodological approach, but also knowledge of energy efficiency methods and tools [16,17].

Svensson et al. [18] showed that modern VSM models underestimate the importance of the energy aspect, and there have been few studies and proposals for adding energy aspects to VSM [15]. Therefore, Alvandi et al. [19] argued that VSM does not take into account energy and resource consumption from a system-wide perspective, as it is limited to presenting the flow of a product family or individual product.

Modern companies realize that energy managemen<sup>t</sup> is an effective tool for improving overall production efficiency, not just reducing energy costs. This approach is reflected in the provisions of ISO 50001, which describes the global energy managemen<sup>t</sup> standards in force since its adoption in 2011.

The development of energy managemen<sup>t</sup> required clarification of the applied concepts of "energy efficiency" and "energy conservation". Energy conservation is the process of reducing energy consumption through less consumption. It is a quantitative method of energy managemen<sup>t</sup> aimed at reducing non-productive losses. Energy efficiency determines the quality of control by estimating the ratios of input resource to energy flow and result to energy consumption [20]. The task of energy managemen<sup>t</sup> in this case is to obtain the maximum effect from each unit of energy consumed [21,22].

Over time, changes in the external environment have generated several economic and political factors that have changed the paradigm of managing energy costs. Multiple increases in energy prices were accompanied by increased public attention to environmental issues. As a result, the world community has moved towards the European Union's Greenhouse Gas Emissions Trading System (EU ETS) and the promotion of end-use optimization programs. To maintain their strategic competitive position, producers of industrial products with energy-intensive industries (oil and gas, metallurgical, etc.) had to move to a qualitatively new level of energy management.

In recent decades, significant progress has been made in the development of industrial energy management, but the overall level of energy efficiency remains inadequate. Researchers note that there is a significant potential for the introduction of already developed technologies to ensure high profitability of their implementation. However, a significant "energy efficiency gap" between the achievable and real levels has been formed [23]. Several studies focus on organizational "non-technical improvements", the implementation of which further increases the energy efficiency potential and widens the gap with the real level [24].

In the fight against global warming, the most important means is to improve energy efficiency in the industrial sector. In turn, industrial production thus increases the competitiveness of production and ensures sustainable development [25].

Even though energy managemen<sup>t</sup> has proved to be e ffective in ensuring profitability, in real production practice, methods of direct restriction of energy consumption are still used rather than system control of its use in product creation. In general, industrial enterprises, having defined the limitations of direct saving methods, have moved to a more systematic approach to reducing losses, changing consumption principles and methods of energy flow management. Piper wrote thatm in "the past twenty years, energy managemen<sup>t</sup> has repeatedly demonstrated itself as one of the most cost-e ffective ways to increase profitability" [26].

The problem of energy managemen<sup>t</sup> as an independent and important part of the managemen<sup>t</sup> system is especially topical for production enterprises, where 85% of the energy consumed is used to create a production processes [27]. The development of energy managemen<sup>t</sup> was formed in the directions of evaluation of programs and practices of energy audit [28,29], development and evaluation of programs and measures for industrial end-use energy policies, benchmarking energy e fficiency, and optimizing the power system or processes through statistical modeling [30].

Here are a few more definitions of energy management: "Energy managemen<sup>t</sup> is considered as the proactive and systematic, coordination of procurement, conversion, distribution and use of energy within a company, aiming on continuously reducing energy consumption and related energy costs" [31]; "To us, energy managemen<sup>t</sup> is: The e fficient and e ffective use of energy to maximize profits (minimize costs) and enhance competitive positions" [32]; and "In our research we define 'energy managemen<sup>t</sup> in production' as including control, monitoring, and improvement activities for energy efficiency" [3].

Energy Management (EM) is the smart and e fficient use of energy to maximize profit and strengthen competitive position. According to Petrecca [33], "energy managemen<sup>t</sup> means ensuring that users receive all the necessary energy, when and where it is needed, as well as the required quality, delivered at the lowest cost". The separation of energy managemen<sup>t</sup> into an independent managemen<sup>t</sup> function has finally taken shape in the last two decades according to Capehart et al. [34]. Of course, this goal should be achieved while ensuring adequate safety for both production and environmental needs. Thus, the ultimate goal of energy managemen<sup>t</sup> is the most e fficient and e ffective use of energy supplied [26], which a ffects not only the supply and distribution of energy, but also its final usage. Energy managemen<sup>t</sup> requires a systematic and ongoing approach, and it should not be confused with programs or projects that are time-limited, as noted by Piper [26].

#### *2.2. Connection of Energy E*ffi*ciency with Value Engineering for Customer*

Energy managemen<sup>t</sup> is developed on the basis of integration of the general managemen<sup>t</sup> theory, quality managemen<sup>t</sup> concept, and other modern methodological approaches of economic theories [35,36]. In the application of energy managemen<sup>t</sup> in production, the decisive role is played by the presence of a leader who consistently conducts the program of increasing the e fficiency of energy use [37]. However, an administrative solution along will not ensure success; energy managemen<sup>t</sup> programs provide for the participation of all members of the organization [38]. Large organizations consuming a significant amount of energy resources, as a rule, form special teams ensuring implementation of energy-saving programs [39]. Support of a leader from among top managers will ensure the e fficiency of such team [40].

Modern managemen<sup>t</sup> increases the value of a product by attracting consumers to create it at all stages of the value chain [41,42]. Di fferent customer requests for consumer value generate di fferent energy demand, which is not considered an important part of the process, since it does not generate revenue, but only reduces costs [43].

Traditional VSM models do not su fficiently take into account energy managemen<sup>t</sup> capabilities, but Faulkner and Badurdeen included environmental factors and expanded the model to the Sustainable Value Stream Mapping (sus-VSM) format [15].

The sus-VSM model uses visual methods to evaluate the results of measuring energy consumption. Application of the model provides identification of the part of processes that consume significant energy resources, which allows further improvement of its use without compromising the creation of consumer value. However, modern sus-VSM still does not su fficiently take into account environmental and social factors and consumer needs. The lack of a clear methodology limits the widespread use of the model in various industries, since the inclusion of additional indicators in a number of production systems makes it more di fficult to use visual maps. Faulkner and Badurdeen [15] recommended further studies using the sus-VSM method for various configurations of production systems to assess their suitability for use and identify problems in assembly and data analysis.

The development of energy managemen<sup>t</sup> methods will increase the involvement of consumer requests in the processes of improving energy e fficiency.

Historically, the formation of the existing structure of the electric power industry of the Republic of Kazakhstan and economic relations in it was determined by the goal of preserving the potential of the industry and its further development. In the period of transition of the economy to market relations, since 1995, the privatization of the main electric power facilities and the restructuring of the industry have been carried out. The reform of the electric power sector has led to a change in the form of public administration of the industry. Electricity transmission is carried out through the national electric network, by the state company "KEGOC" JSC. The national electric network consists of a set of substations, switchgears, and inter-regional and interstate power lines with a voltage of ≥35 kV. Electricity production in the country is carried out by 138 powerplants (including renewable energy facilities) of various forms of ownership, most being private. Electricity distribution in Kazakhstan is carried out by 18 regional energy companies (RECs) and about 150 small transmission companies that control regional-level electric networks with a voltage of 0.4–220 kV.

#### **3. Materials and Methods**

#### *3.1. Kazakhstan Energy Data*

The program of the Government of the Republic of Kazakhstan "Energy Conservation—2020" provided for a reduction in the energy intensity of the gross domestic product by at least 40% by 2020 from the 2008 level. However, no significant improvement was achieved, about 100 energy conversation projects were implemented annually, and the program was canceled [7]. In terms of energy intensity, Kazakhstan's Gross Domestic Product (GDP) is 119th of 143 countries.

Since 2012, Kazakhstan has passed a series of legislative acts defining the basic requirements in the field of energy e fficiency. Currently, the law "On Energy Saving and Improving Energy E fficiency" is the main document. By 2020, the energy intensity of GDP should have decreased by 40%, but the government's goal was not met. Given the conditions for the availability of cheap fuel and maintaining low tari ffs for electricity and heat in Kazakhstan, energy conservation measures require significant investments and have relatively long payback periods. The main task of the state in achieving its goals to reduce the energy intensity of GDP is to create an e ffective legislative framework with the aim of stimulating energy e fficiency in energy-intensive sectors of the economy. According to the data of Ministry of Energy of Republic of Kazakhstan, the annual increase in electricity consumption in the republic is about 5%, while industry accounts for 58% of the consumption.

In 2017, a large-scale national study was conducted in Kazakhstan to assess production and transaction costs by the methodology Standard Cost Model (SCM), which was developed [44] to provide a simple and reliable method for assessing administrative costs incurred by governmen<sup>t</sup> and individual departments to determine the magnitude of administrative barriers and measure the impact of reduction policies on them. SCM is designed to measure the administrative consequences of established regulation and requirements for enterprises. SCM does not aim to answer whether the barrier is justified—it gives an answer about how much it costs the business. The essence of SCM is to divide regulation into its constituent parts in the form of so-called "information" (that is, requiring the provision of information to authorities or other parties) obligations or requirements and administrative actions for their implementation. In addition, the time spent on individual operations

are operationalized and evaluated. The total amount of time translated into money through labor and overhead costs gives the cost of the barrier from the standpoint of administrative costs.

The study examined the possibility of reducing the level of influence of state regulation om existing business relations with natural monopolies and the quasi-public sector. The tasks noted are an integral part of the energy managemen<sup>t</sup> content, which allowed the authors to use the data of the primary research for secondary processing and analysis of the e fficiency of energy costs at enterprises and organizations in Kazakhstan.
