An Evolving View of Energy Management (guest post by George Belich)

I have been in this industry a long time and have seen an tremendous evolution of energy management over the years. The pedal is to the metal now with technology, sustainability and education moving along at a rapid pace. So in the grand scheme of things I would like to offer a personal overall perspective how I now see energy management.

At the core of coarse are metering and sensor technologies along with sophisticated control devices. The IoT will allow for more points of data and control that we ever dreamed about 20 years ago. In another 10 to 20 years these points will be accessed by multiple systems and multiple users in real time.

The next logical process to the view are the building management and SCADA systems that interface with these devices in order to maintain an operational balance between cost effective performance and effective human environments. Equipment failure and human intervention will cause this to go out-of-balance at some point in time.

Then we introduce in solar, cogeneration, combine heat and power, wind, fuel cells, battery storage and more into the operations so now there is a different complexity to the situation. These introductions also bring the utility into the picture with policies and market programs such as Demand Response  and Demand Side Management that provide revenue or savings back to the end customers and their operators.

Now comes the data integration part of the process where the control data, metering data, utility billing data, weather data and facility information data such as occupancy, holidays, utility events, product output  and more must come together and provide analytics and actionable items. These systems are many, operate on many platforms and may be specialized in the particularly facility venue such as schools, manufacturing, office buildings and more. This is where the ‘Big Data’ of energy management begins and where the focus of understanding how to get more out of the operations and controls of the facility. And more. Used wisely  this information can help to lower your peak demands, lower your baselines and most of all lower your costs.

Now having said all of the above, how can we manage energy without managing the physical assets being monitored and doing the monitoring (ala, meters, sensors and relays). Maintenance systems have been around a while but I am not sure how much they have been used in the energy management process. Preventative and predictive maintenance of a facilities assets can be greatly enhanced with utility data so if there is a process why not use it and if there is not why not put one in place.  Faulty controls, sensors, meters and relays can cost more in the decision making process than ignoring them.

Over the last several years sustainability programs have been evolving to provide corporations more social visibility and overall view of their environmental concerns and performance. This is where the energy data and performance data provide a great deal of input. Not just on the financial side but on the Green House Gas side of the reports. Sustainability provides an additional case for energy management that did not exist several years ago.

This summary can run on with much more detail but is intended only to generate some  larger thoughts on energy management. The above drawing is a clear visual of this process and shows a size and scope of what energy management can be. These circles encompass various levels of personnel and skill sets in an organization that all must be engaged to have what could true energy efficiency. How active are you or you want to be in these functional areas?

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Vendere l’efficienza energetica alla direzione aziendale

Often, industrial facility managers must convince upper management that an investment in system efficiency is worth making. The problem is that sometimes communicating this message can be more difficult than the actual engineering behind the concept. A corporate audience usually responds more readily to cash flow impacts than to a discussion of best efficiency points. By adopting a financial approach, the facility manager can relate system performance and efficiency to corporate goals and “win over” the senior management who make the final decision on capital investments in system upgrades.

In order to overcome the obstacles often encountered in the process of convincing upper management that a given investment in energy efficiency is worth making, you should consider the following points:

1. Gain some insight on/understand corporate priorities

Corporate officers are accountable to a chief executive, a board of directors, and an owner (or shareholders, if the firm is publicly held). These officers must generate revenue that exceeds the cost of owning and operating the facility. Plant equipment—including system components—are assets that must generate an economic return.

Plant capacity regularly has top priority, relate process improvement to capacity increase possibilities.

Finance officers seek investments that are most apt to demonstrate a favourable return on assets. When faced with multiple investment opportunities, these officers will favour options that lead to the largest and fastest returns.

This corporate attitude might lead industrial decision makers to conclude that system efficiency is a luxury that they cannot afford. This difference frequently exists between purchasing (equipment) and plant operation.

Many organisations consider only the initial purchase and installation costs of a system. However, plant designers and managers will benefit from evaluating the life-cycle cost of different solutions before installing major new equipment or carrying out a major overhaul. Plant operations can be a significant source of savings, especially because energy efficient equipment can minimise energy consumption and plant downtime. Make use of the concept of “total costs of ownership”.

It is also important for the company/corporate management to subscribe to Responsible Care/Sustainability principles; to be truly engaged in meeting environmental standards; and to be serious about OSHA aspects, among other things.

2. Measure the cash flow impact of the system efficiency

System efficiency and performance improvement projects can move to the top of the list of corporate priorities if proposals respond to corporate needs. Corporate challenges are many and varied, and this in turn opens up more opportunities to “sell” system efficiency as a solution. Opportunities for upgrading existing systems can be found in the inefficiencies that develop over time—such as changing system requirements, routine wear and tear, and poorly optimised controls. Once selections are made, the task becomes one of communicating the proposals in corporate (cash flow) language.

The first step is to identify and evaluate the total cash flow impact of a system efficiency measure. One proven way to do this is through a life-cycle cost analysis, as stated earlier. The result— a net gain or loss on balance—can be compared with other investment options or with the anticipated outcome of doing nothing.

The various aspects of plant efficiency interrelate. Energy efficiency , degree of automation, operational procedures, yield on raw material and waste production, process control, all these have their own and interrelated impact on plant efficiency. The best projects are those that combine these aspects.

3. Present the finances of system improvements

A simple (and widely used) measure of project economics is the payback period. This is the period of time required for a project to “break even” in terms of costs—the time needed for the net benefits of an investment to accrue to the point where they equal the cost of the initial outlay.

The simple payback equals the initial investment divided by the annual benefit. It is not an exact economic analysis as it doesn’t consider the time value of money, but is easy to use and understand. More sophisticated analyses take into account factors such as discount rates, tax impacts, and the cost of capital. One approach involves calculating the net present value of a project, which is defined in this equation:

Net present value = present worth of benefits – present worth of costs

Another commonly used calculation for determining the economic feasibility of a project is internal rate of return (IRR). This is defined as the discount rate that equates future net benefits (cash) to an initial investment outlay. This discount rate can be compared to the interest rate at which a corporation borrows capital.

Many companies set a threshold (or “hurdle”) rate for projects, which is the minimum required IRR needed for a project to be considered viable (if you don’t know this, it is important to find out before presenting your case for investment). Future benefits are discounted at the threshold rate, and the net present worth of the project must be positive in order for the project to be a “go”.

Besides the payback criteria, other arguments can be used to put a project up for approval, e.g. permit requirements, safety issues, product quality, etc.

4. Relate system efficiency to corporate priorities

Saving money in itself should be a strong incentive for implementing an energy efficiency project. Still, that may not be enough for some corporate decision makers. Some suggestions for interpreting the benefits of energy cost savings include the following:

  • A new source of permanent capital: regardless of how the investment is financed—borrowing, retained earnings, or third-party financing—the annual savings will be a continuing source of funds.
  • Added shareholder value: shareholder value is the product of two variables: annual earnings and the price-to-earnings (P/E) ratio. Multiplying the earnings increment (annual savings) by the P/E ratio yields the total new shareholder value attributable to the system efficiency improvement.
  • Improved reliability and capacity utilisation: the efforts required to achieve and maintain energy efficiency will largely contribute to operating efficiency. By improving system performance, the facility manager can improve the reliability of plant operations.
  • Improvement in the bottom line: energy savings are cost reductions and thus improve the operating profits of the company.

5. Approach

A proposal for a system improvement project can be made attractive to corporate decision makers if the facility manager does the following:

  • Identifies opportunities for improving system efficiency
  • Determines the life-cycle cost of attaining each option and which external requirement will benefit from the action
  • Identifies the option(s) with the greatest net benefits or prioritise the options
  • Collaborates with financial staff to identify current corporate goals
  • Generates a proposal that demonstrates how the energy efficiency benefits will directly respond to current corporate needs
  • It will also work the other way around : from the opportunities in the process on one side and the various demands on the other plant manager can choose beforehand which projects they should start giving the available staff and money

Il Sole ha già vinto (lo dice Deutsche Bank)

Deutsche Bank says solar market is massive, will generate $5 trillion in revenue by 2030. It describes solar plus storage as next the killer app, and says even in India there will be 25% solar by 2022.

india_solar_1

Deutsche Bank has produced another major report that suggests solar will become the dominant electricity source around the world as it beats conventional fuels, generates $5 trillion in revenue over the next 15 years, and displaces large amounts of fossil fuels.

In a detailed, 175-page report, the Deutsche analysts led by Vishal Shah say the market potential for solar is massive. Even now, with 130GW of solar installed, it accounts for just 1 per cent of the 6,000GW, or $2 trillion electricity market (that is an annual figure).

But by 2030, the solar market will increase 10-fold, as more than 100 million customers are added, and solar’s share of the electricity market jumps to 10 per cent. By 2050, it suggests, solar’s share will be 30 per cent of the market, and developing markets will see the greatest growth.

“Over the next 5-10 years, we expect new business models to generate a significant amount of economic and shareholder value,” the analysts write in the report. Within three years, the economics of solar will take over from policy drivers (subsidies),

Their predictions are underpinned by several observations. The first is that solar is at grid parity in more than half of all countries, and within two years will be at parity in around 80 per cent of countries. And at a cost of just 8c/kWh to 13c/kWh, it is up to 40 per cent below the retail price of electricity in many markets. In some countries, such as Australia, it is less than half the retail price.

The case for solar will be boosted by the emergence of cost-competitive storage, which Deutsche describes as the “next killer app” because it will overcome difficulties in either accessing the grid or net metering policies. “We believe reduction(a) in solar storage costs could act as a significant catalyst for global solar adoption, particularly in high electricity markets such as Europe,” it writes.

“As we look out over the next 5 years, we believe the industry is set to experience the final piece of cost reduction – customer acquisition costs for distributed generation are set to decline by more than half as customer awareness increases, soft costs come down and more supportive policies are announced.

“While the outlook for small scale distributed solar generation looks promising, we remain equally optimistic over the prospects of commercial and utility scale solar markets.

At utility scale, parity is also drawing near. Just four years ago, the ratio of coal-based wholesale electricity to solar electricity cost was 7:1. Now, says Deutsche Bank, this ratio is now less than 2:1 and it could likely approach 1:1 over the next 12-18 months. In some markets, it already is cheaper. And in India, that ratio could fall to 1:1 this year, with major ramifications for coal projects such as those in the Galilee Basin.

deutsche solar rise

“We believe utility-scale solar demand is set to accelerate in both the US and emerging markets due to a combination of supportive policies and ongoing solar electricity cost reduction. We remain particularly optimistic over growth prospects in China, India, Middle East, South Africa and South America.”

The Deutsche Bank report follows recent reports such as that by Agora Energiewende, which found that solar could fall below 2c/kWh by 2050. This week, the Abu Dhabi National Bank said that based on recent solar prices, even an oil price of $US10/barrel could not compete with the technology.

Gas needed a price of less than $5mmmbtu to compete, and that wasn’t happening anywhere. Last month, fossil fuel consultancy Wood McKenzie said solar farms were cheaper and displacing planned gas-fired generators in the US, despite the low cost of gas in that country.

Still, Deutsche Bank reported that while it is becoming increasingly clear that solar is now competitive with conventional electricity generation in many global markets, there is still some policy uncertainty that could impact investor sentiment and overall supply/demand fundamentals.

“That said, we believe the dependence on subsidies has decreased significantly compared to a few years ago and demand drivers are also increasingly more diverse as well as sustainable.

“We expect solar sector’s dependence on subsidies to gradually decrease over time, policy outlook to become more supportive and economics to take over politics over the next 3 years.”

Deutsche Bank said that despite the 30 per cent compound annual growth over the past 20 years, the solar industry is still roughly 1 per cent of the 6,000GW or $2 trillion electricity market.

“Over the next 20 years, we expect the electricity market to double to $US4 trillion and expect the solar industry to increase by a factor of 10. During this timeframe, the solar industry is expected to generate $5 trillion of cumulative revenue.

“By the year 2050, we expect global solar penetration rates to increase to 30%. We also see solar penetration rates increasing more rapidly in developing economies. India for example has recently announced targets to reach 100GW of solar capacity by 2022.”

If that occurred, solar would account for 25 per cent of total capacity in India. “We believe the opportunity would be even bigger if companies start adding services to the solar PV offering and venture into adjacent markets such as wind and hydro.”

Another two of the big markets are in the Middle East and central and south America. There, solar is already at grid parity in the wholesale market, And in areas where there is no grid, then solar is the obvious option.

“Even today, (with about) 20% of the world’s population does not have access to grid electricity,” it notes. “Due to declining costs and ability to deploy the technology without really developing the grid, we expect policy makers in developing countries to proactively promote solar .”

E’ nata: pubblicata la norma ISO 50002

Ultima nata della famiglia 50000 la norma ISO 50002 descrive le modalità di esecuzione degli energy audits, fondamentali per ogni intervento efficenziale.

Abstract

ISO 50002:2014 specifies the process requirements for carrying out an energy audit in relation to energy performance. It is applicable to all types of establishments and organizations, and all forms of energy and energy use.

ISO 50002:2014 specifies the principles of carrying out energy audits, requirements for the common processes during energy audits, and deliverables for energy audits.

ISO 50002:2014 does not address the requirements for selection and evaluation of the competence of bodies providing energy audit services, and it does not cover the auditing of an organization’s energy management system, as these are described in ISO 50003.

ISO 50002:2014 also provides informative guidance on its use.

ScreenHunter_01 Jul. 15 14.45

Pronti per una calda estate? Fissata la T minima per la climatizzazione estiva

Il Governo nella seduta del 15 febbraio 2013 ha approvato lo schema di regolamento su conduzione, controllo, manutenzione e ispezione degli impianti termici.
Lo schema di regolamento integra la disciplina attualmente prevista (Dpr 412/1993) sulle ispezioni degli impianti di riscaldamento con una specifica disciplina di ispezioni e controlli per gli impianti di condizionamento (viene fissata la min T estiva a 26 °C).
nIl regolamento introduce anche semplificazioni per i cittadini: per gli impianti di climatizzazione invernale di potenza termica utile nominale compresa tra 10 kW e 100 kW alimentati a gas, metano o gpl e per gli impianti di climatizzazione estiva di potenza termica utile nominale compresa tra 12 e 100 kW l’ispezione dell’impianto è sostituita dall’accertamento del rapporto di controllo di efficienza energetica inviato dal manutentore o terzo responsabile.

Energia rinnovabile: uno sguardo critico

Many qualify electricity from solar panels or wind mills, in a poetical mode, as free energy.
There is no such a thing as free energy. It is renewable, but not free. It requires a large energy investment to produce solar panels or wind mills. It is imperative to use the proper tools to analyze any of the so called renewable sources of energy and dispel the notion that they represent free energy.
The objective of those renewable sources is to have a positive future flow of output energy, and that flow of renewable energy should be able to pay the initial investment in non renewable energy in a short period of time, say a maximum of 3 years. This standard indicates that we have a real innovation. Any Government financial support does not change the reality of our objective, fast payback of the energy investment.
This is the only objective we should have for a measure of reasonable sustainability and cut our dependency on foreign oil.
As you can deduct, this definition of sustainability is independent of the price of oil, as it should be. Let’s check the situation of the three most common projects for renewable sources with the standard mentioned above.
1. Ethanol: The future flow of renewable energy is negative. There is nothing left to pay for the humongous required energy investments-1 Gallon of ethanol, uses 1.85 Gallons of oil- If we do nothing, we will be better off in terms of energy consumption and emissions now and in the future. The government support, with all their financial help, cannot change the negative energy balance and the enormous increase in present emissions. Our goal is not fulfilled.
2. Wind Mills: The future flow of renewable energy is positive. However the very large investments in energy to engineer and build the units, including power lines, have an energy payback beyond 30 years.
This investment does not avoid the investment in carbon, gas, or nuclear power plants to cover the ~70% of the time they are not producing electricity. We are increasing dramatically the power consumption and emissions as we build the units now, for a meager yearly renewable volume of power. . Our goal is not fulfilled
2. Solar panels: The future flow of renewable energy is positive. The pay back for the initial energy consumption is beyond 50 years. Solar panels produce energy in average ~20% of the time. Any standard technology, let’s say small generators consuming natural gas, cost 1/30 of the energy cost of a solar panel for an equal total output.
We seem to be digging our own grave with gusto. None of those projects comply with the most elementary energy objective we have as a country; on the contrary, they produce a considerable spike of energy usage now, that could be avoided, and I doubt that they will ever have a proper pay back in created energy.
There is no wealth creation in these activities, no energy savings, only an immediate transfer of money from the Taxpayers to somebody else, destroying other Industries in the meantime.
Due to all kind of government money injected into these projects, and the high price of oil, money could be made. But if the price of oil goes below a certain threshold, boom, the project is no longer viable. See T. Boone Pickens suspending his wind mill project because oil went below US$60. Or the several bankruptcies in ethanol due to the higher price of corn in spite of all the subsidies! Millions of barrels of oil that we cannot afford to loose, thrown to the wind.
None of those programs complies with cutting CO2 emissions, a suspected objective anyway.
They make our dependence of foreign oil much worst, not better, using considerable high level engineering resources for naught.
There are enormous opportunities in energy savings and production in many Industries, with a positive balance of energy consumption and paybacks anywhere from 4 months to one year.