Energy Performance KPI

In many organisations, Energy KPI is always been carried by the Energy Manager and its subordinate. This KPI is usually refers to the overall energy performance of the organisation or plant. Common mistake occurred where the KPI is located at wrong managerial level and is not getting fully support from cross-sectional department.

In order to have an effective energy management system, energy performance KPI should be well established and cascaded at all level including the top management. The task in establishing the KPI would be on the energy manager. However he/she must ensure that the energy KPI is cascaded and each KPI in the end must support the overall energy efficiency objective of the company. The KPI owned by each department must be controllable within the department functions, and linked to the overall energy performance. The KPI is not necessarily only on the energy matters, but it could be for example on the activity on maintenance frequency for heat exchanger. Again, it depends on the jobs scope of the staff.

In establishing the energy KPI, Specific, Measureable, Achievable, Realistic or Practical and finally Timely-bound or in general S.M.A.R.T approach is applied. This approach will prevent the energy KPI be redundant to other staff or department. This will enable the top management to give a clear direction and objectives to the staff and department in achieving the company goal. The common mistake of the organization is by establishing energy KPI, but shared to all departments. This will provide a multi interpretations and unclear objective to the department, furthermore to the staff. Energy activity will become nobody business, nobody accountable for the activities. Therefore it is important that the KPI must be specific and linked to each department. The energy KPI after all must be linked to achieve the synergy result.

To support an effective KPI, energy index or specific energy index for example total energy consumed for that particular month over the production output (GJ or kWh/ tonnage), is the best total energy KPI. This will enable the management to measure the achievement and review the energy performance. This parameter will be the key monitoring parameter for the company. Some top management will carry energy KPI in monetary term or energy price. This is ok as long as this KPI is being linked with the real energy usage index. The danger of this energy price index is that the company may get confusion as the energy price fluctuating. We may see the energy index goes down by virtue of the energy price dropping, but in reality the energy consumption is status quo or may be increase.

It is advisable for the company to analyse its historical data when establishing the energy KPI parameter. This is to ensure that the KPI is achievable. Another alternative to establish achievable energy KPI is to refer to the best practices, design data or plant performance test data. For the newly setup factory or equipment, the design data is more likely to be used. Best practice data is the last resort to be used as best practices data may differ in terms of technology, operational mode and geographical location of that particular equipment.

Practicality of the KPI is also an important key factor for an effective energy KPI. Always establish energy KPI that is practical to be implemented and do not too ambitious. For example, to carry out steam trap survey or thermal infrared diagnostic for heat loss t steam system, it is more practical to do it once or twice a year a year as it involves cost of services and the work load of doing this exercise. Another example is boiler cleaning exercise, it is difficult to establish fix frequency of this activity as it depends on the operation schedule, it is sufficient to ensure it is cleaned each and every time during maintenance day.

Finally, KPI that has been set must have time bound to ensure its effectiveness, practicality, and its impacts to the operation. This time bound will be a platform to the management to review the KPI during the management review. On the energy KPI, the management must be aware that many factors influence the parameters for e.g. operation scenario, fuel prices, retrofitting activities, shutdown, start-up, plant expansion and etc. Therefore all these factors must be considered when reviewing the KPI.

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Global Warming Reduces Available Wind Energy

A switch to wind energy will help reduce greenhouse gas emissions — and reduce the global warming they cause. But there’s a catch, says climate researcher Diandong Ren, a research scientist at the University of Texas at Austin in a paper appear in the AIP’s Journal of Renewable and Sustainable Energy: rising temperatures decrease wind speeds, making for less power bang for the wind turbine buck.

The prevailing winds in the “free” atmosphere about 1,000 meters above the ground are maintained by a temperature gradient that decreases toward the poles. “For example, Wichita, Kansas is cooler, in general, than Austin, Texas,” Ren says. “The stronger the temperature contrast, the stronger the wind.” But as the climate changes and global temperatures rise, the temperature contrast between the lower latitudes and the poles decreases slightly, because polar regions tend to warm up faster. And as that temperature contrast becomes weaker, so too do the winds.

Wind turbines are powered by winds at lower altitudes — about 100 meters above the ground — where, Ren says, “frictional effects from local topography and landscapes further influence wind speed and direction. In my study, I assume that these effects are constant — like a constant filter — so wind speed changes in the free atmosphere are representative of that in the frictional layer.”

Ren calculates that a 2-4 degree Celsius increase in temperatures in Earth’s mid to high-latitudes would result in a 4-12 percent decrease in wind speeds in certain high northern latitudes. This means, he says, that with “everything else being the same, we need to invest in more wind turbines to gain the same amount of energy. Wind energy will still be plentiful and wind energy still profitable, but we need to tap the energy source earlier” — before there is less to tap.

Source: Science Daily

RE and EE highlight in Malaysia Budget 2011

The Malaysia government commitments toward green technology and energy efficiency are continued. This is shown during recent 2011 budget announced the Prime Minister. This will foster the development of renewable energy and energy efficiency in the country. Below are the highlight of the budget related to the RE and EE matters.

* Pioneer Status and Investment Tax Allowance for the generation of energy from renewable sources and energy efficiency activities to be extended until Dec 31, 2015.

* Import duty and sales tax exemption on equipment for the generation of energy from renewable sources and energy efficiency to be extended until Dec 31, 2012.

* Tax exemption on the income derived from trading of Certified Emission Reductions certificate to be extended until year of assessment 2012.

* Import duty and excise duty exemption duty to franchise holders of hybrid cars will be extended until Dec 31, 2011 with excise duty to be given full exemption. This incentive is also extended to electric cars as well as hybrid and electric motorcycles.

* Government will implement the Feed in Tariff (FiT) mechanism under the Renewable Energy (RE) Act to allow electricity generated from RE by individuals and independent providers to be sold to electricity utility companies.

Feed_In_Tariff (FIT)

There is much talked about the FIT here in Malaysia currently. Below is the definition of FIT from Wikipedia. It was successfully implemented in Europe particularly in Germany and Spain, and spurred the RE business in Europe. We are still awaiting what is the tariff looks like once announced by the Government of Malaysia. Definitely, it will make RE player waiting anxiously. It is surprise to know that historically, this FIT was started in US in 1978 during the tenure of President Jimmy Carter, a country that still yet to ratify the Kyoto Protocol.

A feed-in tariff (FiT, feed-in law, advanced renewable tariff^[1] or renewable energy payments^[2]) is a policy mechanism designed to encourage the adoption of renewable energysources and to help accelerate the move toward grid parity.

It typically includes three key provisions^[3]

• guaranteed grid access
• long-term contracts for the electricity produced
• purchase prices that are methodologically based on the cost of renewable energy generation and tend towards grid parity.

Under a feed-in tariff, an obligation is imposed on regional or national electric grid utilities to buy renewable electricity (electricity generated from renewable sources, such as solar power, wind power, wave and tidal power, biomass, hydropower and geothermal power), from all eligible participants.^[4].

The cost-based prices therefore enable a diversity of projects (wind, solar, etc.) to be developed, and for investors to obtain a reasonable return on renewable energy investments. This principle was first explained in Germany's 2000 RES Act:

“The compensation rates…have been determined by means of scientific studies, subject to the provision that the rates identified should make it possible for an installation – when managed efficiently – to be operated cost-effectively, based on the use of state-of-the-art technology and depending on the renewable energy sources naturally available in a given geographical environment.” (RES Act 2000, Explanatory Memorandum A)^[5]

As a result, the rate may differ among various source of power generation, installation place (e.g. rooftop or ground-mounted), projects of different sizes and, sometime, by technology employed (solar, wind, geothermal, etc.). The rates are typically designed to ratchet downward over time to track technological change and overall cost reductions. This is consistent with keeping the payment levels in line with actual generation costs over time.

In addition, FITs typically offer a guaranteed purchase for electricity generated from renewable energy sources within long-term (15–25 year) contracts ^[6]. These contracts are typically offered in a non-discriminatory way to all interested producers of renewable electricity.

As of 2009, feed-in tariff policies have been enacted in 63 jurisdictions around the world, including in Australia, Austria, Belgium, Brazil, Canada, China, Cyprus, the Czech Republic, Denmark, Estonia, France, Germany, Greece, Hungary, Iran, Republic of Ireland, Israel, Italy, the Republic of Korea, Lithuania, Luxembourg, the Netherlands, Portugal, South Africa, Spain, Sweden, Switzerland, Turkey^[7], and in some (nowadays, a dozen) states in the United States ^[8], and is gaining momentum in other ones as China, India and Mongolia.

In 2008, a detailed analysis by the European Commission concluded that "well-adapted feed-in tariff regimes are generally the most efficient and effective support schemes for promoting renewable electricity", going to grid parity.^[9]. This conclusion has been supported by a number of recent analyses, including by the International Energy Agency ^[10],^[11], the European Federation for Renewable Energy ^[12], as well as by Deutsche Bank ^[13]

Eight Emerging Large-Scale Clean Energy Sectors

This article is taken from the 'The Green Investing: Towards a Clean Energy Infrastructure Report', published by the World Economic Forum with the collaboration with New Energy Finance.

The four-year surge in investment activity in clean energy has spanned all sectors, all geographies and all asset
classes. What has begun to emerge as a result is  shape of the new lower-carbon energy infrastructure. No one can describe with certainty what the world’s energy system will look like in 2050. A substantial proportion of our energy will undoubtedly still be supplied by fossil fuels, but we can now be fairly certain that a future low-carbon energy system will include a meaningful contribution from the following eight renewable energy sources:
1. Onshore Wind
2. Offshore Wind
3. Solar Photovoltaic (PV)
4. Solar Thermal Electricity Generation (STEG)
5. Municipal Solid Waste-to-Energy (MSW)
6. Sugar-based Ethanol
7. Cellulosic and Next Generation Biofuels
8. Geothermal Power
Although these energy technologies – which constitute only a subset of the full range of opportunities – may not yet be fully cost competitive with fossil fuels, the economics of experience curves and oil and gas depletion are working powerfully to level the playing field. Renewable energy technologies are becoming cheaper
as they reach scale and operating experience. This trend has been obscured recently by surging commodity prices and supply chain bottlenecks, but with new industrial capacity coming on-line we are about to see prices drop as they come back in line with costs now that we are moving into a buyer's market. Solar PV electricity costs may become comparable with daytime retail electricity prices in many sunny parts of the world in the next 12 to 36 months, even without subsidies. Wind is already cost competitive with natural gas-fired electricity generation in certain locations without subsidies. Renewable energy is not generally subject to risks associated with fuel input costs. Increasing fuel prices by 20% increases the costs of generation by 16% for gas and 6% for coal while leaving renewable energy technologies practically untouched. The volatility of fuel prices alone should act to encourage utilities to build some proportion of renewable energy into their portfolios. And higher capital costs for many renewable energy technologies – and no fuel costs – mean that they will benefit more from reductions in effective interest rates than natural gas or coal. Indeed, in a world in which effective interest rates for energy projects drop 300 basis points, while fuel prices and carbon credit prices each rise by 20%, onshore wind becomes cheaper than natural gas, and geothermal and waste-to-energy not only beat natural gas, but are even cheaper than coal based power. Nuclear power is also set for a renaissance in many countries around the world. Nuclear’s share of total electricity production has remained steady at around 16% since the 1980s. Its contribution is clearly set to grow over the medium to long term, although it will always be limited by issues of cost, storage, safety and public resistance.

LEADERSHIP AND MANAGEMENT COMMITMENT

“Leadership is a process of creating environment that influence others to achieve group goals. People support an environment they try to create. – Dale Carnegie”

Managing your energy related issues in the organisation has always been misapprehended. Management team has always thought that energy has to be managed in a different unique way, and usually they will leave it to the technical team. The major issue in most organisations are lack of leadership and management commitment from the upper level management toward energy conservation and energy efficiency. Leaving the energy manager alone to handle the energy issues will be a major failure to the organisation. The leadership and management commitment element is the thrust to the successful energy management system.

To inculcate the energy efficiency and conservation culture, management has to demonstrate a visible leadership and commitment. The Figure 1‑1 below shows the pyramid of energy management system. The company vision toward energy efficiency has to be clear and well understood by the workers.

Figure 1‑1: Energy Management Pyramid

Dow Company Case Study

The 2015 energy intensity target for Dow is 25% reduction, on top of the 38% already achieved since 1990, is clearly a stretch goal. Dow has created a Strategy Board of very senior leaders charged with driving energy efficiency as part of Dow’s approach to climate change and energy policy. This leadership team establishes the company’s energy policy and goals and sets priorities. Each individual business then develops its own goals in support of the overall business strategy, provides resources and capital funding, and measures individual leader performance in delivering energy efficiency.

Another sign of management commitment can be observed through the allocation of resource, financial budget and time. (continued)

ENERGY MANAGEMENT SYSTEM (2)-An Effective Way in Managing Your Energy Consumption

Planning and Implementation. Implementing an energy saving project could be easy. After identifying the potential energy saving, implementing it would be just like other ordinary projects. However to make a sustainable energy management process, planning plays an important role. Plan-Do-Check-Action cycle is the best approach to adopt for continuous improvement of energy management. In ensuring effective implementation, energy key performance indicator (KPI) has to be established from corporate level, department and equipment level.  A systematic planning and monitoring tool has to be in placed to ensure control the status and outcome of the energy saving implementation projects.

Energy Auditing and Management System Assessment. When carrying out an assessment or auditing for energy management, we must distinguish the different between the energy management system and energy performance technical audit. Energy Performance Auditing is a tool in identifying the potential energy saving measures in your organisation or process. It requires measurement, analysis and on-site activities. Whereas energy management system assessment is an ISO type of auditing which only focuses on the documentation and compliance to the manual. In some extent it would discuss on some technical area but not as detail as technical energy auditing.

Management Review. Reviewing the result of the energy saving initiatives is crucial in the organisation to see the impact and the effectiveness of the measures. The organisation may also want to review its energy policy and objectives to ensure it is stay significant to the current energy scenario and the company business. What company always overlook are the frequency and the platform of the review that shall be carried out. Management review shall be done in a fix frequency and at a dedicated platform, chaired by the top person in the organization. This platform shall be used to exchange result of energy saving initiatives to the management and at the same time cascading the vision and energy objective to the lower management.

ENERGY MANAGEMENT SYSTEM (1)-An Effective Way in Managing Your Energy Consumption

ENERGY MANAGEMENT SYSTEM-An Effective Way in Managing Your Energy Consumption

Managing your energy consumption could be very challenging predominantly during present electricity tariff hike and escalation of oil & gas prices. With the increasing of other cost of production such as raw material and labour, reducing the energy cost may the only way out for the company to remain competitive and stay in the business. The Energy Manager will again be the key person who is responsible for reducing the energy consumption.  With the demand from the Management to realize the saving and the same time to identify and implement the energy saving initiatives, an Energy Manager becomes the most odious position in the organisation. Most companies will end up in improving its energy consumption by energy saving projects, albeit achieving an energy efficient plant is not merely limited to projects only.

Achieving an energy efficient company or plant require a concerted effort and a systematic energy management. An Energy Manager is only a person to ensure that all the elements are executed accordingly, and it requires cooperation from cross functional department from technical, finance and administrative personnel.  However with a systematic energy management system, all the above can be achieved to ensure the sustainability of energy saving effort and not rely only to Energy Manager.

Similarly, like ISO9000 and 1SO14000 the first step for the company to start with is developing the Energy Management System Manual/Procedure. A systematic energy management encompasses various key important elements from leadership and commitment, company’s energy policy and objectives, roles and responsibilities, planning and implementation, energy performance auditing and system assessment, and management review.

Leadership and Commitment. While many organisations announced its commitment toward efficiency energy consumption and combating GHG emissions but so little has really demonstrated it. Leadership and commitment from the management in reducing its energy consumption must be visible. Energy key performance indicator must not merely be carried by the middle management and lower position, but also carried by person in the highest rank in the organisation. Not only that, the management should allocate an adequate financial support, resources in terms of manpower and also time.

Objectives and Energy Policy. The objectives and energy policy of the organisation must be clear and well understood by the employee. The organisation must set the target to achieve in a form of energy index. The department who responsible to carry out this task must be clearly stated and the commitment form the management.

Roles and Responsibilities. This encompasses the entire organisation from the top man in the company till the operator level. The energy team organisation chart must be developed and its role is clearly stated. In some extent, all of the staff who involve in the energy team must be recognized by the management and issued by an official appointment letter. The team may comprise Energy Manager, Leader, Champion and Executives/Engineer.

(continued)