Tuesday 27 February 2018

Growing up I loved anything to do with the future – particularly the 21st century. TV21 was the comic to read and it was full of stories about life in the 21st century, Thunderbirds, space travel etc.  In some respects reality has not lived up to those dreams, although Elon Musk is doing his best to make them come true , but in other ways we already live in a world long described by science fiction – universal communicators for all (mobile phones), and a giant computer that can answer any question (the internet).

 

When I started to really think about and practice energy management, it was back in the 20th century and it seems as if some of the ways of thinking about energy management remain stuck in the 20th century.  Now we are nearly 20% of the way through the 21st century, (hard to believe I know), we need to refresh our thinking and bring energy management into the 21st century.

 

Let’s consider some aspects of energy management and efficiency and compare 20th century thinking and 21st century thinking.

 

Aspect 20th century thinking 21st century thinking
Energy audits Energy audits lead to projects being implemented.

Energy audits should be mandatory.

Energy audits on their own don’t lead to anything – there needs to be top level commitment & energy audits are just a tool to use when you are committed to addressing energy efficiency.

Energy audits need to feed into better business cases that identify, value and risk appraise all sources of value, i.e. all the energy and non-energy benefits.

The benefits of improving energy efficiency The benefits are energy cost savings. The direct environmental benefits e.g. tonnes of CO2 avoided may be a social benefit for CSR reporting. There are multiple non-energy benefits – many of which are far more strategic and interesting to decision makers than mere energy cost reduction.

Energy savings may be the least attractive benefit of a project that improves energy efficiency and should be sold last – as a co-benefit to the non-energy benefits.

Monitoring and Targeting (M&T) and Measurement and Verification (M&V) There should be enterprise level M&T with some project specific M&V on large projects. Anything else beyond that, sub-metering etc., is expensive. M&T, M&V, data collection and analysis is cheap. The advent of big data analytics can identify savings opportunities even in systems that are believed to be close to optimum.

Monitoring is a part of ISO 50001’s Plan, Do, Check, Act cycle and is embedded into every Energy Management System.

Energy Service Companies (ESCOs) & Energy Performance Contracts (EPCs) ESCOs and EPCs are the answer to all our problems. ESCOs and EPCs are applicable in some limited circumstances, mainly in the public sector. They are not the only answer and they definitely don’t work at all in most sectors. ESCOs and EPCs are only one of many ways to bring finance to energy efficiency projects.
Measurement of energy saving It is hard to measure because it is a counter-factual and is invisible. It can’t be metered. Units of energy saved can be metered and calculated just like units of energy delivered.
Energy efficiency is somehow special It is a stand alone activity. It is a “crusade”. It should have a higher priority than everything else. Energy efficiency is part of an integrated energy (& resource) solution including self-generation, demand response etc. Good energy management is one aspect of good management.
Project development Project development is non-standardised and every project is developed and documented in a different way. Every project developer has some “secret sauce” in developing projects even when the technologies are well known and standard. Project development and documentation can be standardised using systems such as Investor Confidence Project’s Investor Ready Energy EfficiencyTM.

Standardization of project development and documentation is essential for aggregation and growing the finance market. Project developers don’t really have “secret sauce”.

Making the business case The business case is purely about capital expenditure versus the value of the energy savings over the life of the project. The business case is about the capex versus the value of multiple energy and non-energy benefits over the life of the project, of which energy savings is just one. The non-energy benefits may be more strategic and attractive to decision makers than just energy savings.
Risk and uncertainty Energy efficiency projects have low, or even “zero risk”. This was often stated even though we had no data and in fact outcomes were uncertain. Recognition that energy efficiency projects do have risk although we often can’t quantify the risk at the moment. Risk is generally low across portfolios of projects & becoming better known and understood but for individual projects actual risks are less well known.
Energy management A practice that is hard to systematise and is highly dependent on individuals. A practice that can be systematised and embedded into the operation of an enterprise through the application of ISO 50001.
The value of a kWh saved Is the same at all times and in all locations. Is highly time and location specific.
Project development Optimise the components. Optimise systems e.g. integrated design (which is still not very common at all).
Energy prices Always go up. Go up and down.
The availability of investment There is no money for energy efficiency. There is a lot of money for energy efficiency – just a shortage of well developed, bankable projects
Chief Financial Officers (CFOs) and Finance Directors Chief Financial Officers are stupid for not investing in these “no brainer” projects with very rapid payback periods. CFOs may be rational in not investing i.e. they may have more strategic things to invest in, or they may consider the benefits uncertain because they have not seen the evidence or they don’t believe the assessment.
Low hanging fruit There are a lot of no-cost and low-cost projects that can be implemented easily – “low hanging fruit”. There still are many no-cost and low-cost measures that could be implemented through better energy management (EnMS) and applying ISO 50001. We should however ban the phrase as even no-cost and low-cost measures require effort.
Energy efficiency Comes about through specific retro-fit projects with the aim of reducing energy costs. Comes about through retro-fit investments, investment into plant and building refurbishments carried out for other, non-energy, reasons, and through investment in new plant and buildings that improve the average efficiency of the sector.
Renewables One day they may be viable. They are cost effective in many situations.
Energy storage “Electricity cannot be stored”.

Only viable in massive hydro-electric schemes.

The holy grail of energy studies.

Available in several forms.

Rapidly becoming cheaper.

Economically viable in many situations behind the meter and in the grid.

 

FAB.



Comments

There are 2 comments on “21st century energy management”:

  • Ted Kidd on February 27th, 2018 at 3:12 pm said:

    I have issue with 2 or 3 of these, but overall this is fantastic!



  • Nate Adams on February 27th, 2018 at 5:44 pm said:

    I LOVE this post! Go Non-Energy Benefits! Those are what really sell these projects. I love too that you state energy audits don’t lead to action, so true!

    And yes, let’s ban the phrase “low hanging fruit”! I wrote a piece for GreenTech about how it is poisoned.

    One thing to challenge you on, though, we think that individual projects ARE predictable, if you go far enough. You have to avoid the low hanging fruit thinking.

    Individual project predictability may be THE most important issue, too. If homeowners or project owners feel there is a lot of risk to their project, they are unlikely to execute the project. So we need to get better at predicting them. Deeper projects are more predictable, but they are expensive and viewed as risky. That needs to change.

    Perhaps it should be called the Project Owner Confidence Project. =) Happy to chat more about this if you like.



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Dr Steven Fawkes

Welcome to my blog on energy efficiency and energy efficiency financing. The first question people ask is why my blog is called 'only eleven percent' - the answer is here. I look forward to engaging with you!

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