A system and method for controlling an AC motor drive includes a control system programmed with an energy algorithm configured to optimize operation of the motor drive. Specifically, the control system receives input of an initial voltage-frequency command to the AC motor drive, receives a real-time output of the AC motor drive generated according to the initial voltage-frequency command, and determines a real-time value of a motor parameter based on the real-time output of the AC motor drive. The control system also inputs a plurality of modified voltage-frequency commands to the AC motor drive, determines the real-time value of the motor parameter corresponding to each of the plurality of modified voltage-frequency commands, and identifies an optimal value of the motor parameter based on the real-time values of the motor parameter. The control system maintains an input of a current modified voltage-frequency command when the real-time value of the motor parameter corresponds to the optimal value of the motor parameter.