ENERGY EFFICIENCY METRICS

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Baldwin Norman
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1 ENERGY EFFICIENCY METRICS Ian Househam

2 Overview of South Africa s Energy Efficiency Strategy Energy Efficiency Strategy set sectoral and economy-wide energy efficiency targets to be achieved by 2015 Targets are expressed as a percentage reduction in final energy demand relative to the business as usual proection Economy-wide: 12% Industry and mining: 15% Power generation (parasitic): 15% Commercial / public: 15% Residential: 10% Transport: 9% Interpret these as percentage reductions in final energy demand attributable to improvements in energy efficiency

usual proection Economy-wide: 12% Industry and mining: 15% Power generation (parasitic): 15% Commercial / public: 15% Residential:

3 Development of a system for monitoring energy efficiency Review of international best practice, and assessment of applicability in the South African context Review of the theoretical background to energy efficiency monitoring, and formulation of an idealised methodology for the South African context Wish list of data needed to perform monitoring under idealised approach Stakeholder consultation Assessment of actual data currently available Recommendations to fill data gaps Modified methodology to work with imperfect data Recommendations on institutional arrangements for energy efficiency monitoring: activities; staffing and resourcing levels; powers and responsibilities. Methodology handbook

monitoring under idealised approach Stakeholder consultation Assessment of actual data currently available Recommendations to fill data gaps Modified methodology to work with

4 Approaches to monitoring energy efficiency Proect-based approaches: observe the impacts of individual energy efficiency policies, programmes and proects infer that the aggregate change in energy efficiency is equal to the combined impacts of these policies, programmes and proects Indicators-based approaches: observe directly the aggregate change in energy efficiency infer that this change is due to a range of factors that may or may not include specific energy efficiency policies, programmes and proects

these policies, programmes and proects Indicators-based approaches: observe directly the aggregate change in energy efficiency

5 Approaches to monitoring energy efficiency Indicators-based Proect-based Bottom-up Odex index approach, developed under the EU Odyssee programme Approach mandated in the EU Draft Directive on Energy End- Use Efficiency and Energy Services Top-down Decomposition methodologies as used by e.g. Netherlands, Canada and New Zealand n / a

the EU Draft Directive on Energy End- Use Efficiency and Energy Services Top-down

6 Limitation of proect-based approach Proect-based approach to monitoring looks only at these factors Policies, programmes and proects designed to bring about improvements in energy efficiency ENERGY EFFICIENCY Other unidentified or unquantified factors tending to improve energy efficiency Factors, both identified and unidentified, tending to cause a worsening of energy efficiency

efficiency ENERGY EFFICIENCY Other unidentified or unquantified factors tending to improve

7 What is energy efficiency? At least three possible definitions: Theoretical minimum energy requirement for performing task energy actually used Current best practice energy requirement for performing task energy actually used Useful output obtained energy used The first definition is technically the most correct, but also probably the least useful The reciprocal of the final definition is more commonly called energy intensity

actually used Current best practice energy requirement for performing task energy actually used Useful

8 Energy intensity as an indicator of energy efficiency There is no unequivocal quantitative measure of energy efficiency. Instead, one must rely on a series of indicators relevant to the context New Zealand Energy Efficiency and Conservation Agency To what extent does a fall in energy intensity indicate an improvement in energy efficiency? At the micro-level, physical energy intensity (e.g. MJ / tonne of product) is a very good indicator of energy efficiency At the macro-level, economic energy intensity (e.g. TJ / $ of GDP) may be a very poor indicator of energy efficiency

does a fall in energy intensity indicate an improvement in energy efficiency? At the micro-level, physical energy intensity (e.g. MJ / tonne of product) is a very good indicator of energy efficiency At the macro-level, economic energy intensity (e.

9 Bottom-up versus top-down CHANGES IN MICRO- LEVEL PHYSICAL ENERGY INTENSITY INDICATORS AGGREGATION ECONOMY-WIDE CHANGE IN ENERGY EFFICIENCY CHANGE IN MACRO- LEVEL ECONOMIC ENERGY INTENSITY INDICATOR DECOMPOSITION ECONOMY-WIDE CHANGE IN ENERGY EFFICIENCY ACTIVITY-LEVEL EFFECTS STRUCTURAL EFFECTS

CHANGE IN MACRO- LEVEL ECONOMIC ENERGY INTENSITY INDICATOR DECOMPOSITION

10 Illustrative example Data for a hypothetical industrial sector consisting of two industries Industry A Industry B Sector total Output Year 0 30 tonnes 120 items 66,000 Year t 28 tonnes 180 items 88,200 Energy consumption Year 0 Year t 240 GJ 196 GJ 240 GJ 342 GJ 480 GJ (7.27 MJ/ ) 538 GJ (6.10 MJ/ ) change -44 GJ +102 GJ +58 GJ Physical energy intensity Year 0 Year t 8 GJ / t 7 GJ / t 2 GJ / item 1.9 GJ / item - - % change -12.5% -5.0% Value added per unit of output Year 0 Year t 1000 / tonne 900 / tonne 300 / item 350 / item

11 Log-mean Divisia decomposition LMD decomposition is arithmetically the ideal approach as it yields no residual component The arithmetic looks complicated but is straightfoward to perform in a computer spreadsheet ( ) = t t E E F Y Y P,,0 0, ln ( ) = t t I I E E F I,0,, 0, ln, ( ) = t t S S E E F S,0,, 0, ln,

but is straightfoward to perform in a computer spreadsheet ( ) = t t E E F Y

12 Indicators required for decomposition analysis Decomposition analysis requires: Energy consumption indicator Activity-level indicator for every sector / sub-sector upon which the analysis is performed Analysis must be performed on every sector for which an energy efficiency target has been set Analysis at the level of industrial sub-sectors and individual industries provides a clearer picture of second- and thirdorder structural effects

performed on every sector for which an energy efficiency target has been set Analysis at the level of

13 Challenges (1) Industrial sector Widespread misunderstanding of energy efficiency targets, which may lead to a reluctance to share data needed for effective monitoring Detailed data on GDP disaggregated by sub-sector currently only available every 4-5 years Residential sector Almost complete absence of detailed data Need for comprehensive household energy surveys

on GDP disaggregated by sub-sector currently only available every 4-5 years Residential

14 Challenges (2) Commercial / public sector Energy consumption data disaggregated by sub-sector is not currently available Choice of an appropriate activity-level indicator: GDP / value-added? Floor-area? Number of employees? Transport sector Energy consumption data not disaggregated into passenger versus freight Minibus taxis!

indicator: GDP / value-added? Floor-area? Number of employees?

15 Driving force indicators of energy efficiency Not sufficient only to answer the quantitative question of whether the targets have been / are being met Need also to address the question of why targets are (or are not) being met what are the driving forces? Driving force indicators: Turnover of stock of energy-using equipment (including buildings) Awareness of energy costs Understanding of opportunities for improving energy efficiency Energy efficiency as a criterion in purchasing decisions (total cost of ownership)

Driving force indicators: Turnover of stock of energy-using equipment (including buildings) Awareness of energy costs

16 Economy-wide analysis % Intensity effect Structural effect Activity effect Share of GDP Intensity Weight Activity Energy Totals Residential Sub-totals Transport Commerce Industry Ag & fish

762418 0.2013389 12.12657 2.335398 2000 Intensity 224967.07 3320810 224947.5 106648.83 2922201 67012.

17 Industry sector analysis % Intensity effect Structural effect Activity effect Share Intensity Weight Activity Energy Total Construction Manufacturing Mining

39958326 2.901603 2001 0.505399261 17.67837794 2.062738 2000 Intensity 2920249 12732.58666 2751764.222 155752.

18 Thank you! Ian Househam

3. Factors Affecting Energy Intensity

13 3. Factors Affecting Energy Intensity A large body of literature addresses the measurement of energy efficiency and energy intensity. 1 In this chapter, we discuss various factors related to measuring