PÖYRY POINT OF VIEW BLOG / 30 Jun 2016
The drive towards more efficient operations & designing for Energy Efficiency
This article originally appeared on the E2 Energy Efficiency For Industry website, whereby E2 contributing Editor David Appleyard spoke to Mikko Kuusisto, Industrial Energy Efficiency manager at Pöyry.
E2: Please highlight some of the current key global/regional business developments that affect energy efficiency investment.
MK: I think the European Union has taken a large role in this. Now we have the EED [Energy Efficiency Directive] so at least big companies have some responsibility to restrict energy consumption. Companies in the public sector have to follow guidance which is given by the local government and unions. Of course then, companies have to think of how they would reach those targets. Countries have lot of directing from EU, and they are implementing various sustainable programmes as required from them, for example the EED, setting targets in 2020 and 2030; Clean air for Europe targets for 2030; and the Roadmap to a Resource Efficient Europe - flagship initiative of the Europe 2020 plan. This strategy supports the shift towards a resource-efficient, low-carbon economy to achieve sustainable growth.
In addition, Directive 2010/31/EU on the energy performance of buildings aims to improve the energy performance of buildings in the EU, taking into account various climatic and local conditions. It sets out minimum requirements and a common methodology and covers energy used for heating, hot water, cooling, ventilation and lighting.
The low oil prices are naturally making space for some investments, in renewables for example, slower, but not for long because low-carbon requirements will decrease oil consumption. Nonetheless, EU targets in energy savings and emissions by 2020 are difficult to reach, seven member states have not even established energy audits. Countries need to put more effort to reach these targets, and thus energy efficiency investments are needed. Many countries are also moving to finish using fossil fuels and nuclear, replacing them with technologies such as wind, sun, biomass and geothermal. On the other hand, investors are looking for new opportunities after the banking crisis and a period of poor performance. This is opening some space for energy efficiency investments. Companies have to make themselves cost efficient and always they are following the energy prices, and of course this has been always the case. Although the costs have increased they have tried to select the most efficient way to purchase energy or produce for themselves. So this has been maybe the bigger driver.
E2: What are the key considerations industrial & commercial sectors should take into account in delivering their energy efficiency plans?
MK: Legislation, EU and local legislation, things are tightening in this respect. Also how to realistically ensure efficient energy supplies - efficiency means the price in the future of the selected energy source, and how to predict price realistically. Starting from design, is the selected process or building energy efficiently designed? Are things measured, are we measuring relevant information in process, or building in order to make right decisions and cut energy consumption and/or the bill? How is energy management organised? Think always if there is possibility (is it more efficient?) in new energy technology like solar panels, heat pumps, renewables, an on-site boiler perhaps, maybe even wind. It’s also worth noting that small separated energy supply from heat pumps and heat recoveries can have better profitability now than when compared with a few years back. Efficient replacement investments improve performance. For the industrial and commercial sectors the EU and countries themselves are setting guidelines and norms, and the direction is toward more efficient operation in all aspects. Most probably, energy management programmes will become more popular. For instance, such systems are already a way to avoid obligatory audits every four years for big companies within Europe. An energy management system gives you a lot of nsight into which processes or operations within your company are the most energy hungry and where saving is possible.
E2: How can investment in more advanced technology support energy efficiency goals?
MK: We have clear country targets in the EU of 20% from 2014 to 2020. When we need to remove old hardware or equipment, companies can invest in more efficient technology. We have to count on removal of old plant and replacement with higher efficiency new ones. According to EU statistics most savings are expected from multi-sector ‘cross cutting’ policies (44%), followed by buildings (42%), industry (8%) and transport (6%). As technology improves, pay back times get pushed down. Examples of improved technologies include solar panels, LED lighting, wind power and ground source or geothermal heat. These technologies can also provide a surplus over the ‘conventional’ energy efficiency technologies, like heat recovery, frequency controllers or high efficiency motors. Existing energy efficiency measures fall into two camps, low or no cost and those that need investment. From the investment side you have to select those measures which you find in the energy auditing. You find your biggest investments and the most profitable savings are without investments. And money is not very loose, so sometimes even good ideas can be left without implementation.
E2: How can boosting energy efficiency for industrial and commercial businesses improve economic performance?
MK: It is important to manage energy issues, whether it is a building or in the manufacturing sector. Building an energy management system is one solution. Defining baseline energy consumption (i.e. improving awareness) is very important phase to start. Here, improved and modern metering systems can provide great help. Following that, good quality and hands-on energy audits can provide lots of savings opportunities in process, behaviour, mode of operation and more that may previously not have been explored. Energy audits can be organised jointly with material efficiency audits and they could focus on energy but also on all resources, materials and waste handling. If they all are analysed, there certainly exist more savings potentials. In a typical manufacturing plant, there are hidden things which never come to daylight without certain technical skills related to systems and also energy efficiency methodology adoption.
There is a growing interest in financing project implementation because good investments can be hard to find at the moment due to the markets not giving much back to financiers. Innovative financing models can be institutions, for example financing spin-offs or research work, but also small community financing for local energy production such as a local power plant for a small community also selling heat and electricity to the grid.
E2: Considering the next few years, what in your view are the likely trends in energy efficiency?
MK: Within the EU, some countries are much behind in this respect. In EED implementation, only 16 countries have done real results. You have this problem that different countries at the moment are on different levels on the implementation side. There is a big risk that not all countries are capable of carrying out this programme. However, voluntary programmes regarding energy efficiency have proved to be successful, at least in Finland, and probably the flow of investors coming into this field with be much stronger. Meanwhile, solar power plants are expected to grow to over 1000 MW, wind turbines still growing beyond 10 MW. In the heavy process industry I believe that conventional heat recovery is still what will be built in the next years. Some trends will continue, such as LED lighting, motor efficiency, improved control, and heat pumps. For buildings, I believe metering and control systems will see investment, insulation will see investment, new passive or nearly zero heat loss houses will be built. Also the self-sufficiency trend continues with small energy units of solar and wind and the two-way transmission of electricity on the grid.
E2: Looking forward, how will further advances in technology, policy and markets support future energy efficiency goals?
MK: It is expected that policy is not getting easier anywhere in the world, due to increased awareness. Climate change is the biggest reason for this. Even if the goals are / will be tougher, continuous improvement in engineering and equipment technology is the enabler in this picture. Electric vehicle breakthrough is expected, and there is a potential for CO2 emissions reduction. Battery technology will improve. For solar and wind power, end user gains are expected based on lower prices, as well as efficiency gains through lighting with new technology and controls, such as LED. In terms of Industrial energy efficiency, the heat pump is coming more into industrial applications. Lower temperature levels can be utilised, enabling waste heat recovery from low temperature levels. District heat from geothermal sources is also anticipated. As an example a test is ongoing in Espoo, Finland, with a 2000 m deep bore, and expectedly producing a maximum of 40 MW. Efficiency can also be found in industrial symbiosis, where a producer’s waste can be used as another’s raw material, delivering raw material and processing savings.
Thanks to E2 contributing editor, David Appleyard, for kind permission to republish this interview on our website.