INDUSTRIAL ENERGY EFFICIENCY. Energy Efficiency Training week June 2016 Vida Rozite
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1 INDUSTRIAL ENERGY EFFICIENCY Energy Efficiency Training week June 2016 Vida Rozite 2015
2 Welcome and congratulations! Sources: qz.com, sofiaecho.com, blog.vita.it, New York Times
3 INTRODUCTION Tuesday 7 June Topics covered: OBJECTIVES SURVEY THE AGENDA PRACTICAL ISSUES ROUNDTABLE INTRODUCTIONS 2015
4 Objectives Discuss why industrial energy efficiency should be promoted Learn about and discuss policies, programmes and measures to support industrial energy efficiency Get insights into efforts in other countries Get ideas on how industrial energy efficiency can be supported in your country
5 Survey What are you most interested in? Assessing industrial energy use Key issues to consider when developing policies and programmes Energy management Best practices and success factors in other countries Assessing and reporting results
6 The agenda - Tuesday Where to start trends and making the case Coffee and tea break Vida Where to start - Indicators and data Eric Lunch Toolkit Investment and policies Nigel Coffee and tea break Toolkit Policy and programme options Vida Where to get help? Technology collaboration programmes Boat trip? Thore
7 The agenda - Wednesday Review Vida What are the steps Energy management Coffee and tea break What are the steps Energy management Lunch Bettina Bettina Site visit to Schneider Electric
8 Site visit Timing: Wednesday Site: Schneider Electric Logistics: Meet after lunch in front of Australian Embassy Bus Autocar Arrival Leaving Back in front of Australian Embassy
9 The agenda - Thursday Review Vida What are the steps Lessons learned and success factors Coffee and tea break Vida What are the steps: Experiences in China, India and Mexico Lunch Motor system programmes Rita, Conrad Coffee and tea break Did it work? Evaluation and reporting Vida Review of success factors and quiz Vida
10 Who are the trainers? Eric data, indicators Nigel finance and investments Thore technology cooperation Bettina energy management Conrad & Rita motor systems
11 Practical issues Set up of sessions Discussion and questions Exercises Your role Coffee breaks (no cups in this room!) Lunches Facillities Use of phones and computers Emergencies ( )
12 Roundtable Name and where you are from One thing that you want to learn during this week One thing that you know a lot about
13 Expertise in the room Programme design Programme development Programme implementation Auditing Training and capacity building Evaluation Energy management
14 1. PATTERNS AND THE CASE FOR INDUSTRIAL ENERGY EFFICIENCY Topics covered: WHY INDUSTRIAL ENERGY EFFICIENCY? TRENDS BUSINESS CASE? WHO NEEDS TO BE CONVINCED? MULTIPLE BENEFITS ENERGY EFFICIENT PROSPERITY 2015
15 Scenario 1 There has been a change of government and the incoming government wants a range of options for interventions to rapidly increase energy efficiency How do you identify, prioritise and quantify these options? What information can you provide to stakeholders to make a case for your suggested programme or approach (how will you convince your managers and convince industry to participate)?
16 Energy demand is increasing Primary energy demand, 2035 (Mtoe) Share of global growth United States Brazil Europe Africa Middle East Eurasia India China Japan Southeast Asia Africa Middle East Latin America 8% 10% Eurasia 8% 5% OECD 4% 65% Non-OECD Asia
17 Role of industry in the global energy system Industry accounts for 37% of total final energy use
18 Share of industrial energy use OECD NON-OECD
19 Evolution of industrial energy use China 1990 EU China 2012 EU
20 Industrial energy use in India
21 Industrial final energy use India Share of energy-intensive industry has remained relatively stable Strong growth in iron & steel and chemicals & petrochemicals sub-sectors However, nearly half of industrial energy use is reported under nonspecified
22 Industrial energy use in China
23 Industrial final energy use - China Largest growth in energy use between 2003 and 2012 Energy-intensive industry has grown from around 65% of industrial final energy use since 1990 Iron & steel energy use increased by more than 500%
24 Industrial energy use in Mexico
25 Mexico s Energy Profile Total final energy consumption per sector by 2013 Transport 43% Residential 15% Services 3% Agriculture, forestry, fishing 3% Non-specified and nonenergy 6% Source: IEA data, Energy Efficiency Market Report 2015 Industry 30%
26 Mexico s final energy consumption by industry
27 Changes in industrial energy use
28 Industrial energy use in Kazakhstan
29 Industrial energy use in Ukraine
30 Why policies and programmes? Significant public good (climate, energy security, development, prosperity) Potentials are unexploited Not happening fast enough A lot of barriers What are the key barriers in your countries? Technical? Market? Behaviour and attitudes? Finance? Energy prices? Institutional?
31 Energy efficiency is not strategic? Need to focus on adding value not just saving energy or cutting costs What are strategic values for industry? What are strategic values for policy makers?
32 Multiple benefits: from savings to value creation Competitiveness ability to enter new markets, reduced production costs etc. Production Operations and maintenance capacity utilisation, improved product quality etc. improved operation, reduced need for maintenance etc. Working environment Environment site environmental quality, worker health and safety etc. air pollution, solid waste, wastewater, reduced input materials etc.
33 Accelerate energy efficiency in industry Multiple Benefits Flow Costs Productivity Product quality Manage supply disruptions Competitiveness Growth Employment Individual Firms Energy demand Energy imports Economic growth Employment Economy
34 Multiple benefits Numerous multiple benefits Quantification is difficult but possible There is a value in estimates Quantifications contribute to more robust financial assessments and better decisions Quantifications reduce payback and show better return on investment Further work needed on industry-level assessments to develop methodologies
35 Scenario There has been a change of government and the incoming government wants a range of options for interventions to rapidly increase energy efficiency How do you identify, prioritise and quantify these options? What information can you provide to stakeholders to make a case for your suggested programme or approach (how will you convince your managers and convince industry to participate)?
36 Toolkit Industrial energy efficiency policies and programmes Topics covered: BARRIERS KEY ISSUES TO CONSIDER TYPES OF INTERVENTIONS STAKEHOLDERS EXAMPLES OF TYPES OF PROGRAMMES AND POLICY PACKAGES 2015
37 Identify priorities Review existing policy frameworks and national context Consult with stakeholders understanding industry and their barriers, priorities & needs Analyse policies in other countries Establish partnerships Pilot or test approaches Programme development steps Build in mechanisms for monitoring and evaluation Think about how to check compliance at the outset Capacity building and training for staff and stakeholders Long-term is more effective than short-term
38 Key issues to consider National, regional and economic factors Strategic policy objectives Energy consumption in the industry sector Structure of industry Energy intensity of companies Ratio of small and medium enterprises to large Resources in companies Degree of presence of companies on the global market Availability of services, expertise and techologies Legal landscape Acceptance of government intervention
39 What are your objectives? Save energy in general Save electricity Avoid need for new energy capacity Counteract climate change Make environmental improvements Stimulate business development Create new jobs Improve business competitiveness
40 All businesses? What is your target group? Energy intensive (large? small?) businesses Small and medium sized enterprises? Businesses in a certain sector? Businesses in a certain region? Businesses that know nothing of energy efficiency? Businesses that are already engaged in energy efficiency?
41 What barriers need to be addressed? Limited information on energy efficiency opportunities - No time and resources to source and analyse information Limited in-house skills and expertise to identify and implement projects Focus on day-to-day cash flow and limited access to capital for energy efficiency investments These are barriers that typically affect all types of companies But companies are heterogeneous and each type of sub-segment may encounter additional specific barriers to energy efficiency implementation
42 What are the barriers of your target group? Lack of awareness No information on energy use Not a priority Insufficient capacity Lack of cooperation & exchange Lack of access to technologies (no innovation, price) Risks (including perceived risks) No access to finance (internal & external) Difficult to assess benefits No assessment of cost of doing nothing Energy prices are low Benefits split between several actors
43 What are the attitudes of your target group? Big is better (we need large motors!) We have always done things this way Lack of management interest Leadership wants to avoid new costs Income is more interersting than savings New technologies are risky No incentives for staff (extra work!) No time for energy efficiency Energy is not a big cost for us
44 Barriers Access to finance Average investments are small Difficult to understand Companies lack capacity Financial institutions lack capacity Difficult to measure outcome Energy efficiency projects are boring? Relatively invisible Equipment is often embedded Lack of standardisation
45 Challenges for programme developers/practitioners Bias towards supply side Lack of relevant data and difficulties with measurement EE is invisible No big assets Energy efficiency often cuts across government organisational boundaries Utility regulation and tariffs Energy subsidies
46 Policy categories INFORMATION (workshops, campaigns, case studies) CAPACITY BUILDING (training, networks, audits) REGULATORY AND LEGAL (targets, reporting, audits) FISCAL AND FINANCIAL (taxes, subsidies) TECHNOLOGY INNOVATION ACCELERATION (grants, research programmes)
47 Scenario Your managers notify you that they need a programme design outline by tomorrow! What are the main energy efficiency barriers of your target group? What types of programme elements do you include to counteract barriers?
48 EXAMPLES OF PROGRAMMES Topics covered: TYPES OF PROGRAMMES MATCHING PROGRAMMES TO CONTEXT LESSONS LEARNED SUCCESSES TYPES OF RESULTS EVOLUTION OF PROGRAMMES 2015
49 Energy management IEA recommendations High-efficiency industrial equipment and systems Energy efficiency in small and medium sized enterprises Complementary policies (data, access to finance, phasing out energy subsidies, buildings and appliances/equipment)
50 Companies Policy makers (national and local) Financial sector Energy service providers Standards developers Equipment manufacturers/vendors Energy providers/utilities Roles for multiple stakeholders opportunities for partnerships What is the business case for each stakeholder?
51 Voluntary measures Networks, workshops, information Voluntary targets Voluntary certification Voluntary agreements Benefits: High industry acceptance Effective if linked to incentives Challenges: Ensuring results
52 Germany energy efficiency networks Type: Voluntary network (regional not sectoral) Objective: Stimulate peer-to-peer learning Approach: Facilitation of regional networks Incentives: Access to information and knowledge Results: Companies cooperating in networks increase their efficiency twice as fast as the German industrial average Evolution: Plans to have 500 networks in Germany, concept has been exported to other countries
53 US Superior Energy Performance Programme Type: Voluntary certification Objective: Increase ISO certification Approach: Training and tools Incentives: Recognition (platinum, gold, silver awards) Results: 40 certified facilities, average 10% energy cost reduction in 18 months with annual savings of USD 87, ,000 (30% savings in 3 years) Evolution: Better integration with other programmes, expansion to hospitality sector, universities, federal organisations, water and waste-water plants
54 US Better Plants Type: Voluntary target Objective: Reduce energy intensity by 25% over 10 year period Approach: Access to experts, help analysing, networking, tools Incentives: Recognition (certificates of achievement) Results: 160 companies (2400 facilities), saved 457 trillion BTU (USD 2.4 billion in energy costs), 2.1% above business as usual annual improvement rate, some have met targets and have set new goals
55 Germany energy management Type: Voluntary certification (fiscal incentive) Objective: Increase ISO or similar certification Approach: Offer of tax rebate Incentives: Tax rebate Results: 3,400 facilities certified (half of all ISO certifications) Evolution: Companies must demonstrate 1.3% annual energy savings (or lose tax rebate)
56 Ireland Large Industry Energy Network (LIEN) Type: Voluntary agreement (20 years) Objective: Reduce energy use, stimulate energy management Approach: Energy management, targets, annual audit, reporting performance Incentives: Access to specialists, tools and support Results: 180 participants (20% of total primary energy consumption, 54% of industrial), 770 GWh energy savings (2013), 333 GWh (2014), most savings from operational changes (not capital instensive)
57 Sweden programme for Improving EE in Energy-Intensive Industry Type: Voluntary agreement with mandatory energy management and reporting (fiscal incentive) Objective: Increase energy management, reduce electricity consumption Approach: Training courses, workshops, guides Incentives: Tax rebate Results: 110 companies participating, 1,247 opportunities were identified and implemented, with an average payback of 1.5 years, 1.45 TWh saved (EUR 43 million per year) Evolution: No new entrants, will wind down in 2017 (infringement of EU state subsidy rules)
58 Mandatory requirements Mandatory performance requirements Mandatory energy audits Mandatory energy managers Mandatory reporting Mandatory actions on energy suppliers or utilities Benefits: Better guarantee of results Challenges: Industry resistance Checking compliance
59 Australia Energy Efficiency Opportunities programme Type: Mandatory audits and reporting Objective: Reduce energy demand and increase priority of energy efficiency (via board involvement) Incentives: Mandatory approx 100 companies per year subject to desktop compliance check, also technical support, guidance documents Results: opportunities of PJ (2.7% of Australian annual energy consumption) identified, 54% of the opportunities were implemented, giving savings of 89 PJ and financial benefit of AUD 808 million per year, awareness of energy efficiency raised companies Evolution: Discontinued due to change in government
60 United Kingdom Energy Savings Opportunity Scheme Type: Mandatory audits and reporting (EU wide requirement) for large companies Objective: Comply with EU regulation, reduce energy use, stimulate energy management Approach: Audits, energy management, involvement of board, focus on data collection and management, simplified reporting (online) Incentives: Mandatory, access to specialists, tools and guidance documents Results: Started in 2014,estimated to generate 3 TWh savings
61 Policy options to facilitate Why? access to finance To improve financial returns To reduce risks (including perceived risks) To increase the availability of funds How? fiscal means grants increase energy prices reduce financing costs reduce transaction costs
62 Fiscal and financial measures Reduced energy taxes linked to investment or actions Reduced tax on energy efficient equipment Energy pricing and taxes Grants Preferential loans Funds
63 China Utility-based EE Finance Programme Type: Funding (support from IFC and GEF) Objective: Stimulate energy efficiency, remove financial barriers, improve capacity of local banks, improve access to finance Approach: partial risk guarantees, technical assistance, information and loans Results: loans of over USD 700 million and financed 226 energy efficiency and renewable energy projects financed (2013)
64 South Africa s Standard Offer Model Type: Utility driven energy efficiency Objective: Reduce electricity demand Approach: Utility provider purchases verified energy demand reduction projects from its customer for a period of three years at a fixed rate Results: Between its inception in October 2011 and the end of 2013, about 245 projects have been registered, realising demand savings of 118 MW and energy savings of GWh Evolution: Discontinued in 2014 due to ESKOM s financial difficulties
65 Targeting SMEs Similar approaches but more support Streamlining requirements There is a big difference between small and medium Smart use of partners (access, trust) Supply chain opportunities Access to finance
66 Key issues Tailor to national circumstances Integrated approaches Information capacity finance Incentives Circumstances change Target groups may change Evolution Creating a drive for energy efficiency (phasing out government support)
67 10: Did it work evaluation and reporting Topics covered: WHY EVALUATE? TYPES OF EVALUATIONS? STEPS IN EVALUATION REPORTING AND USING RESULTS 2015
68 Why evaluate? Document and report results and benefits (e.g. gain support for programme continuation) Benefits can include energy savings, emissions reductions etc. Identify ways to improve current and future programmes Support energy demand forecasting and resource planning
69 What can we evaluate? Impact evaluation (direct and indirect benefits, energy and demand savings, multiple benefits, cost-effectiveness) Process evaluations (operations and scope for improvements, satisfaction levels, participation) Market evaluations (how supply of energy efficiency products and services has been affected)
70 Steps for evaluation Define evaluation objectives and metrics Select evaluation approach (who will conduct the evaluation, methodology, what sould be covered) Define data collection requirements (including these in programme reporting requirements will save resources!) Ensure that monitoring supports evaluation (what data, how often) Ensure funding for the evaluation
71 Metrics for impact evaluation Estimates of gross energy (and/or demand) savings Estimates of net energy (and/or demand) savings separating out impacts resulting from other factors Estimates of multiple benefits Challenge: cannot directly measure savings and benefits need to compare with counterfactual (situation without the programme)
72 More metrics Energy intensity Specific energy use Energy performance Investment Private sector funds leveraged Profitability of projects payback period Number of options identified Number of options implemented Government costs Costs per saved MJ (but costs for whom?)
73 Savings/impact hierarchy Energy efficiency measure Energy efficiency project/in company Energy efficiency programme Energy efficiency programme portfolio
74 Methods for data and information gathering Desktop review e.g. audit reports Relatively cheap Depends on quality of documents Surveys Relatively cheap Low response rates Interviews Deeper insights Resource intensive, not always representative Focus group Case studies More comprehensive discussion Deep insights in one company Might be difficult to organise Bias towards successful cases
75 Baseline or counterfactual Situation without programme but consider changes during programme period Consider: Weather Occupancy Production level Products Other key factors? For net impact: Free riders: Companies that would have done energy efficiency irrespective of programme Rebound: Savings from energy are invested in processes that increase energy demand
76 Reporting Data confidentiality agreements Tailoring messages to audience Purpose of reporting? Internal vs. External What channels websites, newsletters, print
77 Discussion Experiences with evaluations? How have you overcome challenges? How to keep costs down? Responses to evaluations?
78 11: Success factors, key issues and lessons learned Topics covered: SUCCESSES IN DIFFERENT CONTEXTS WHAT WORKS WHERE WHAT ARE KEY ISSUES WHAT IS THE NARRATIVE 2015
79 Scenario Your manager has asked you to prepare a training on industrial energy efficiency programmes What key issues would you highlight
80 Resources and where to find more information 2015
81 Resources IEA Policies and Measures Database Institute for Industrial Productivity databases US Industrial Assessment Centres IEA Technology Collaboration Programmes Global Energy Efficiency Accelerator Platform (Sustainable Energy for All) International Partnership for Energy Efficiency Cooperation (IPEEC)
82 More resources Policy Pathway on Energy management programmes: try.pdf Multiple benefits chapter on productivity and competitiveness : enef_ofenergyeficiency.pdf SME Policy Pathway: Energy Management Action Network (EMAK): Global Superior Energy Performance (GSEP): Industry
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