Example Regression

Analysis Task
Mei 2014

Example Data

Questions
1. What does the monthly consumption tell us about the plant
performance
2. What is the precentage change in annualised energy consumption
for the year ending in December 2011 V year ending August 2012
3. Is there a strong link between energy and production?
4. Is there a strong link between energy and the weather?
5. What would the multiregression formula be for production and
weather when used to predict the energy consumption
6. Develop a CUSUM graph based on multiregression formula in Q6
above and calculate the performance change in 2012 vs 2011 in
kWh
7. Is the performance improving for the organisation?
8. What area would you target based on the multiregression analysis

1. What does the monthly consumption tell us about the plant performance?

Figure 1: Monthly Energy Consumption Trend [kWh]

Answer:
The monthly performance alone tells us very little about the plant
performance aside from the fact that consumption is flat throughout each
year.
Discussion:
It can be seen from the graph above that monthly consumption identifies
that consumption is relatively flat throughout each year. There is no
seasonal demand identifiable; however a small decrease in consumption is
noticeable over this period (see the drawn line). It is however not possible
to identify with monthly consumption alone if this is due to the
introduction of energy improvement measures or a reduction in production
or some other variable which affects energy consumption onsite. Further
analysis is required in order to identify the true performance of the plant.
2. What is the percentage change in annualised energy consumption for the
year ending in December 2011 V year ending August 2012?
Answer:
The percentage change in annualised energy consumption between
December 2011 and August 2012 is a reduction of 3.5%.
Discussion:
The annualised value is determined by summing the previous 12 months
giving an annualised value. This is performed month on month in order to
identify the annualised trend of consumption. The graph below illustrates
the annualised consumption for the site. It can be seen that there is a
slight trend downwards.

Figure 2: Annualised Energy Consumption Graph [kWh]

An annualised graph is a good indication of which way energy

consumption is trending i.e. up or down and if there is a seasonal effect.
However it does not identify if the company is performing well as this
reduction may be due to a reduction in production or some other
contributing variable.

3. Is there a strong link between energy and production?

Figure 3: Energy Vs Production Regression Analysis Graph

Answer:
The link between Energy and Production is medium/strong given an R 2
value of 0.71.
Discussion:
Remember you will need a baseline (year), we use 2011. An R 2 value of
0.71 is acceptable for the prediction of energy for the generation of a
CUSUM graph however it is not ideal given the small number of data
points. This value of 0.71 illustrates that 71% of the energy consumed
onsite can be attributed directly to production levels. Given an R 2 value

such as this it is necessary to attempt to determine other drivers to

energy consumption in order to strengthen the model. If this is not
possible the equation of the line of best fit for this regression model can be
utilised until this relationship is strengthened or an additional
driver/drivers have been identified.
4. Is there a strong link between energy and the weather?

Figure 4: Energy Vs CDD's Regression Analysis Graph

Answer:
The link between Energy and Weather is medium given and R 2 value of
0.5437.
Discussion:
An R2 value of 0.5437 is not strong enough solely for the prediction of
energy consumption for the generation of a CUSUM graph. This value of
0.5437 illustrates that 54.37% of the energy consumption onsite can be
attributed to cooling degree days. It is necessary to find some other
driver/drivers to energy consumption that correlate to both production and
cooling degree days through the performance of multivariate regression
analysis.
5. What would the multiregression formula be for production and weather
when used to predict the energy consumption?

Table 1: Multivariate Regression Analysis Output

Answer:
Predicted Consumption = 37273.482 + (2.731*Production
[tonnes]) + (50.377*CDDs)
Discussion:
In order to generate the above equation we must first have confidence in
the effectiveness of the multivariate regression analysis. This is done by
examining three aspects of the multivariate regression analysis table as
highlighted in the table above:
i.
ii.

iii.

The adjusted R2 value (0,86) should identify a strong correlation

between consumption and the variables.
The Significance F value should be less than 0.05, illustrating that
there is less than 5% probability that the correlation which was
found was obtained by chance.
The P-value for each of the variables should be less than 0.05,
illustrating that there is less than a 5% probability that the variables
influence was obtained by chance.

Given that the multivariate regression analysis meets each of these

requirements the equation can be generated using the figures highlighted
in green in the table above. The figures in the table are multiplied by each
particular variables actual value for the analysis period i.e. 2012 in this
case. These values are then summed and added to the Intercept which
identifies the sites base load.
6. Develop a CUSUM graph based on multiregression formula in Q6 above
and calculate the performance change in 2012 V 2011 in kWh

Answer:
The graph below illustrates an energy reduction of 103,235kWh based on
predicted values using the multivariate regression analysis which was
performed on 2011 data.

Figure 5: CUSUM Analysis Graph [kWh]

Discussion:
A steady improvement in performance was realised in 2012 as can be
seen in the CUSUM graph. The reason for this should be identified and
understood in real life in order to ensure that this improvement is
sustained. Based on this improvement it is also recommended to reset the
baseline period to 2012 figures in order to normalise the graph once again.
7. Is the performance improving for the organisation?
Answer:
Yes, the performance of the organisation is clearly improving as the
CUSUM graph is trending downwards identifying a reduction of 103,235
kWh in 2012 when normalised to production and CDDs in 2011.
Discussion:
The CUSUM graph illustrates the cumulative sum of the differences
between actual and predicted energy consumption for a given period, in
this case 2012. Given a high Adjusted R2 value and P-values of less than
0.05 for the multivariate regression analysis performed on 2011 data as
outlined in Q6 above, energy consumption was predicted for 2012. This
predicted energy consumption was then subtracted from the actual energy
consumption in order to determine the difference for a given month. The
cumulative sum of the differences of each month is then calculated to
generate the CUSUM graph above. It was found during this analysis stage
that there was a reduction month on month identifying continuous
improvement within the plant.