ENERGY MANAGEMENT SYSTEMS ENERGY EFFICIENCY & ISO50001. Paul Stevenson Kazakhstan September 2014

ENERGY MANAGEMENT SYSTEMS ENERGY EFFICIENCY & ISO50001 Paul Stevenson Kazakhstan September 2014

Structure What is the purpose of an Energy Management System (EnMS) The business case for EnMS Good EnMS and ISO50001 standard Basic requirements for an effective EnMS

Purpose of an Energy Management System An energy management system is a methodical way of managing energy effectively within the framework of day-day business activities. The system is similar to others such as Quality Management (ISO9000 series), Environmental Management (ISO14001), etc. However, it s main purpose is to: Save energy and cut energy-related costs Other benefits are described later

Interactive session What do you think are the main reasons for an Enterprise wanting to improve its energy performance? Spend 10 minutes thinking Call out some answers

Why bother with Energy Management? Regardless of your views on manmade contribution to Climate Change, one thing is certain: Fossil fuel is a finite resource, and it is set to become increasingly expensive A company that is seen to act on Environmental and Energy issues is likely to succeed over their less diligent competitors

Business Case for good Energy Management: (1) Reduce energy costs Most industrial enterprises that implement EnMS achieve energy intensity reductions of 2-3% per year, against typical 0-1% reductions through Business as Usual (BAU). For an enterprise, with, say, $100 M energy consumption per year, a 2% improvement over BAU would save $2 M per year... This is 100% profit [how much extra turnover would you need to generate $2M profit?] The EnMS process often generates similar levels of non-energy savings, another $2M profit Increased competitiveness

Energy Costs ($) Typical energy performance of an industrial organization with EnMS Energy Costs ($) Units per 1000 kwh Before EnMS After EnMS Units per 1000 kwh From UNIDO

Using a re-melting furnace as an example 1. Reduce or eliminate losses 2. Try to recapture as much as possible of the flue gas 3. Maximize useful output! 1

Business Case for good Energy Management: 1(b) Future proofing Energy costs in Russia & Kazakhstan Have increased rapidly in recent years Are likely to continue increasing 10

Business Case for good Energy Management: (2) Additional non-energy savings Good control of energy centres often gives additional non-energy benefits For example, it may be that the metal output will be improved through better controls and this will reduce: Energy consumption Non-recoverable metal waste Non-recoverable consumable items Wasted man-effort Financially, these can be of the same order of magnitude as energy savings Also demonstrates environmental responsibility and control

What can I save? Energy: typically 20-25% on no and low cost savings Water: up to 30% Waste: typically 15 20% reduction

Business Case for good Energy Management: Other benefits 3. Improved process control and de-bottlenecking 4. Improved competitiveness: local and international markets 5. Financial justification of new investments more robust. Calculations are based on better quality information = Less risk 6. Legislative and other reporting. Reporting and verification requirements, including Kazakh laws or legislation on Energy Reporting/ Energy Efficiency 7. Reputational and supply chain perception. - Good PR and Image 8. Environmental responsibility: - Climate change and atmospheric pollution

Main Barriers to Energy Efficiency Energy efficiency is often seen as a distraction from core business. Management has more important issues to address Return on Investment from energy-saving measures may not be perceived as attractive and are high risk Existing energy management practices are considered optimal Facilities services are considered overhead costs We don t have time and resources No money to invest

EnMS success story A recent practical example of the results of managing energy is shown below for the Russian steel manufacturer NLMK. Modernisation programme increased production and decreased energy intensity at NLMK. Managing energy since 1999 resulted in 33 large energy efficiency projects and more than 1200 low-cost measures. In 2012 NLMK was ISO50001 certified. УДЕЛЬНАЯ ЭНЕРГОЁМКОСТЬ НЛМК Гкал на тонну стали 7.18 100% 7.10 99% 6.90 96% 6.58 92% 6.55 6.46 6.50 6.47 91% 90% 90% 90% 6.53 91% 6.62 92% 6.30 88% 6.12 6.10 85% 85% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

ISO 50001 Why a Standard? Promote global best practices in Energy Management recognised experts through consensus, amongst stakeholders and across countries Reinforce good energy management behaviours Builds Energy Management into business practices for continual improvement Promotes sustainable energy reductions by entrenching best practices Framework for promoting efficiency throughout the supply chain Credible International recognition of management practices Benchmarking of management practices

Energy Management Standard (EnMS): ISO 50001 Amalgamating best of all Energy standards into one internationally recognised standard. Has become the recognised World standard for energy management. Released August 2011 Aim: Demonstrate an organisation s credentials in maintaining and improving energy efficiency. ALL countries have agreed to adopt ISO50001 Will supersede EN ISO16001

ISO 50001 What will it do? Provide public and private sector with management strategies to increase energy efficiency, reduce costs and improve energy performance Assist in making better use of existing energy using assets Create transparency and facilitate communication on the management of energy resources Assist facilities in evaluating and prioritising the implementation of new energy-efficient technologies Facilitate energy management improvements for greenhouse gas emission reduction projects Allow integration with other organisational management systems such as environmental, quality, health and safety

ISO50001: Based on Plan-Do-Check-Act continual improvement system Continual Improvement Energy Policy Energy Planning Management review Implementation & Operation Checking Monitoring, measurement and analysis Internal audits of EnMS Nonconformities, correction, corrective and preventive action System Diagram, including the ISO 50001 Standard elements

ISO50001 accreditation also leads to... Reputational benefits o Public Relations o Looks good on letterheads, Annual reports, etc o Environmental Groups/ Local Stakeholders Demonstrates an organisation s... o o Environmental credentials Commitment to maintaining and improving energy performance over time

Effective EE campaign Five key steps to an effective, long term EE campaign: 1. Develop an effective Energy Management system 2. Establish a robust baseline position 3. Energy Action plan no / low cost 4. Energy Action plan investment opportunities 5. Regularly review and adapt

1. Develop an effective Energy Management system Top down commitment, support (and resource) Written energy (and environmental) Policy - link with legislation on reporting, savings, etc Carry out Energy Audits: (1) general: identify saving opportunities: no/low cost and outline ideas for investment opportunities; (2) detailed: follow-up/ specialist: for larger investment EE opportunities identified in general audit. Can be several. Internal and external benchmarking/ comparison with others Set target savings: - Tie in with the policy - Absolute (eg kwh) or relative/performance (eg kwh/t)) - Ensure these harmonize with legislation. Action plan: strategy of how the policy will happen: - Specific energy saving activities - Dates/ by whom/ before and after monitoring/ verification/ etc

2. Establish a robust baseline position Annual energy consumption - as kwh, $, t CO2 and fuel split: - Reported at regular intervals: weekly or monthly (1) for entire site; (2) at important energy centres Output/ production and relevant units (tonnes, units, etc): - Reported at same regular intervals (1) for entire site; (2) at important energy centres. Identify meaningful measure(s) energy performance (eg kwh/t) Calculate energy performance at regular intervals: (1) for entire site; (2) at important energy centres Ideally, for two recent years of data

3. Energy Action plan: no cost / low cost Mostly from recommendations identified in general audit Staff awareness, engagement and training: - why we are doing this/ how they can be involved/ - small behaviour changes can give excellent no-cost savings Additional sub-metering requirements Early attention to the easy low cost EE activities, including - Boilers / steam - Compressed air - Lighting and controls Do before the investment EE opportunities. Investments will then have better data/ better financial justification Monitoring, verification and reporting

4. Energy Action plan: investment Generally higher cost but big saving opportunities Often = business critical equipment, don t want to get it wrong! Sometimes opportunities identified in general audit but insufficient data or specialist skills to analyse Sometimes own staff recognize or equipment needs modernizing anyway Detailed audits: Investment EE opportunities, BUT - with much better cost and energy data - less risk of over-sizing the unit - better financial justification/ less risk For large investments, may require follow-up feasibility study Link with normal investment cycles marginal cost of EE unit Monitoring, verification and reporting

5. Regularly review How are we performing relative to our targets and our plan? Top Management: continued input, interest, endorsement Be prepared to change plan as new info becomes available. Be prepared to re-audit site at regular intervals, especially for large investment opportunities. This ensures the savings are sustained!

Traditional Approach to Energy Management Costs are high, an audit is done Audit identifies easy savings opportunities Management says costs are high again; where s that last audit? The process starts again Low cost capital work is pursued and completed. Additional savings opportunities are shelved 0 5 years 10

Senior management want to help us reduce costs Effective approach to energy management Easy Savings are just the start As more savings opportunities are identified there are now systems to lock them in This new model is saving energy and boosting production! Savings are sustained and increased Technical Development Expansion 0 5 10

ENERGY SAVINGS Interactive Exercise: Management and Technical Issues We have: (1) Generally Low cost Energy Management opportunities (2) Investment / Technical energy efficiency opportunities, If we were to show them on this graph, where would we expect them to be? COST

ENERGY SAVINGS Exercise - Management and Technical Issues If we were to make a comparison of energy cost savings and investment cost, one might expect to produce a graph like this: COST

ENERGY SAVINGS Exercise - Management and Technical Issues Improved management at energy centres can offer excellent savings, often at only a fraction of the investment costs Management Techniques Investment/ technology solutions COST

Summary A good Business Case can be made for effective energy management systems Effective EnMS provide continual energy performance improvement Legislation shouldn t be the main driver ISO 50001 facilitates the introduction of energy best practices into an organization Commitment from the Senior management Team and Board of Directors is essential