The world of energy is fundamentally a technical and complex subject with its own set of jargon. Here we try to explain some of the key concepts and terms that surface in any discussion about energy and energy efficiency.
Energy – lots of meanings but fundamentally the ability to do work. The more energy you have the more work you can do. Measured in many units but most familiarly in kWh (kilowatt hours), and for bigger amounts MWh (megawatt hours), GWh (gigawatt hours) and TWh (terawatt hours).
NB correct use of kWh, not KWH or kWHrs or any other variation.
Energy consumptions in a year for comparison:
Energy efficiency – doing the same work with less use of energy. Not the same as energy conservation which is more about doing less work.
Energy Performance Contract (EPC) – contract form in which a supplier (usually called an ESCO) undertakes energy efficiency projects in a clients building or facility and guarantees that a set level of savings will be achieved. Often, but not exclusively, associated with the use of third party finance.
Energy Services Company (ESCO) – An ESCO is a company that identifies and delivers energy efficiency improvements, usually with a guaranteed level of savings. There is much confusion about the term ESCO and the business models employed by ESCOs. The basic idea behind the ESCO model is that after the projects have been implemented the energy bills should be reduced by a sufficient amount to cover repayment of capital expenditure and other costs such as on- going monitoring. The ESCO provides some form of guarantee that energy cost savings will exceed the repayments of capital, thus providing net savings to the project host from the beginning of the contract. ESCOs offer Energy Performance Contracts (EPC) sometimes called Energy Savings Performance Contracts (ESPC). EPC / ESPCs can be funded by the client or by a third party investor. The ESCO / EPC model originated in the USA and has been widely used in the US public sector (the ‘MUSH’ market – Municipalities, Universities, Schools and Hospitals) but has not yet been widely replicated outside the public sector. The EPC has been widely copied around the world with various modifications but due to various problems, not the least of which is that the MUSH market in the US is largely funded by cheap public sector capital, has never really taken off to the extent that its enthusiastic supporters believe it should.
Primary energy – the ultimate sources of the energy that we use. Includes; coal, oil, gas, solar energy, wind energy, biomass, geothermal and the energy in nuclear fuels. Primary energy is converted to energy carriers such as petrol, diesel, heating oil, natural gas and electricity.
Managed Energy Services Agreement (MESA) – contract form growing in popularity in the USA in which the service provider undertakes to pay the clients energy bills and implements energy efficiency measures (often with an EPC contractor) and profits from the savings produced.
The energy management matrix – The energy management matrix was developed in the 1990s and is a tool used to assess the status of an organisation’s success in energy management. It can cover energy policy, organisation, information systems, marketing and communications and investment. The matrix can help management and external agents to assess the current state of play and to monitor progress over time.
Power – the rate at which energy is transferred, used or transformed. Power is the rate of doing work. If you walk up a flight of stairs carrying a weight you will use the same amount of energy as if you run up the same stairs carrying the same weight. The power expended, however, will be greater when running because the same amount of work is done in a shorter time. Power can be measured in many units including horsepower (hp) but most often in watts (W), kilowatts (kW), megawatts (MW) or gigawatts (GW).
Power outputs for comparison:
Renewables – energy sources that are continuoulsy replenished by nature such as solar, wind, hydro or geothermal.
Fossil fuels – fuels derived from the decomposition of ancient lifeforms such as coal, oil and gas. Note that some natural gas may be formed by other processes.
Shale gas – natural gas trapped in shale formations rather than the ‘conventional’ sources of natural gas. Shale gas is recovered by hydraulic fracturing (“fracking”).
Fracking – the process of using a pressurised fluid to open up fractures in shale gas formations. The fractures allow the gas to flow to the collection well.
Hydrocarbons – an organic molecule consisting of carbon and hydrogen in different ratios. Fossil fuels and many of the chemicals derived from them are hydrocarbons.
Green Deal – UK government created programme that seeks to improve the energy efficiency of Britain’s housing stock in which consumers can borrow money to install energy saving measures and the repayments are added to the energy bills and tied to the house, not the owner.
Negawatt – term coined by energy analyst and guru Amory Lovins. Usually used to describe a unit of energy saved by energy efficiency but in reality it is a unit of power, a unit of saved energy would be a negawatt hour.
Kyoto Protocol – international agreement which came into force in 2005 setting binding targets on industrialised countries to reduce emissions of greenhouse gases including carbon dioxide.
Greenhouse gases – (GHG), atmospheric gases that contribute to the greenhouse effect (atmospheric warming) which include; carbon dioxide (CO2), water vapour (H2O, methane (CH4), nitorus oxide (N2O) and ozone (O3).
Jevons Paradox – Jevons paradox, or rebound effect, is the proposition that technological progress that increases the efficiency with which energy is used tends to increase, rather than decrease, the rate of consumption of that resource. This ‘paradox’ is occasionally used to argue that increasing efforts to improve energy efficiency is futile.
The Pareto Principle – The Pareto Principle, or 80/20 rule, says that 20 per cent of any portfolio of buildings, or 20 per cent of the equipment or processes within a facility, will account for 80 per cent of the energy usage and therefore it is better to focus attention on that 20 per cent. In any particular situation the exact numbers are unlikely to be 80/20 but the principle still holds, focus on those areas that are likely to yield the biggest result. This is particularly true in large property portfolios.
ISO50001 – ISO50001 is the first internationally recognised standard to set out an integrated set of processes and tools to help organisations to implement an energy management system.
Monitoring and Targeting (M&T) – Monitoring and Targeting (M&T) is the process of collecting energy usage data, setting a consumption target, and then comparing usage to the target figure. This process enables on-going management of energy as well as identification of high-spending areas that may provide investment opportunities.
Normalized Performance Indicators (NPIs) or benchmarks – NPIs, also known as benchmarks, are useful for comparing energy performance of large numbers of buildings or similar facilities. Examples of NPIs include energy/m2 for buildings corrected for weather and hours of use; energy per hectolitre of beer corrected for product mix, packaging mix and size of brewery; or energy per connection for mobile phone operators corrected for variables such as cell sites per connection, voice traffic per cell station and cooling degree days. NPIs or benchmarks are extremely useful for comparing performance between facilities or companies.
Measurement and Verification (M&V) – M&V is a systematic way of assessing actual energy savings from energy efficiency projects. It grew out of the International Performance and Measurement Protocol (IPMVP) originally supported by the US Department of Energy in the 1990s and now operated by EVO, an international not-for-profit organisation.
Marginal Abatement Cost Curves (MACC) – The Marginal Abatement Cost Curve (MACC) presentation of energy saving opportunities gained prominence in 2008 when it was used by McKinseys in its study of energy efficiency potential (McKinsey 2008). The MACC shows the cost of avoiding a tonne of CO2 emissions using different technologies and graphically illustrated the cost effectiveness of most energy efficiency measures compared to renewable energy sources with many efficiency measures having negative costs, implying they are profitable without subsidy.
Dr Steven Fawkes
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