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PRODUCTIVITY IMPROVEMENT THROUGH ENERGY EFFICIENCY

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					PRODUCTIVITY IMPROVEMENT THROUGH ENERGY EFFICIENCY
PRESENTATION
BY

D.S.HANUMANTHA RAO B.E.(Hons); PGDM (IIMA)
FORMER MEMBER, TAMIL NADU ELECTRICITY REGULATORY COMMISSION
CHENNAI
DS H RAO 1

ENERGY EFFICIENCY
COMPRISES OF ENVIRONMENTALLY FRIENDLY INDUSTRIAL PROGRAMMES, GIVING COMPETITIVE ADVANTAGE TO ENTERPRISES THROUGH SAVINGS IN ENERGY CONSUMPTION, SUBSTITUTION OF MATERIALS WITH NO LOSS OF QUALITY OR PERFORMANCE, BUT LESS SPECIFIC ENERGY CONSUMPTION AVOIDANCE OF WASTE OR EMISSIONS LEADING TO LESS HANDLING OF MATERIALS OR WIP AND OPTIMISATION OF OPERATING PLANT PROCESSES LEADING TO LOWER COSTS AND HIGHER PRODUCTIVITY
DS H RAO 2

• •

•
•

BASICS TO ENERGY EFFICIENCY
• The product cost structure in any typical industry is made up of 50 % materials, 25 % energy, 15 % labour and 10 % overheads. • Hence materials, energy and labour applications get priority for savings. • All the above components so far had little attention.
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T TO IMPROVE THE PROFITABILITY OF THE ENTERPRISE NORMAL +5 % PRICE OR OUTPUT 105 -5 %COSTS

REVENUE
COSTS-MATERIALS COSTS- ENERGY

100
50 20

105

100
50 15

50
20

52.5
21

COSTS-LABOUR
OVERHEADS

15
10

15.8

15.8

15
10

10.5

10.5

NET SURPLUS SURPLUS IMPROVEMENT
IN PERCENTAGE MULTIPLYING FACTOR

5

96.3

99.8

10

(8.7-5.0)/5.0 (5.25-5)/5 75 % OR 5% 7.5 OR 2

(10-5)/5 100 % 4 10

Why energy efficiency? I
• India faces a peak power shortage of 13 % and energy shortage of 9 %. To meet the existing shortage and also future demand 100000 mw is proposed to be added till 2012, needing an investment of Rs.800000 crores. • India has neither financial or natural resources to add this capacity nor it is environmentally sustainable.
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Why energy efficiency? II
• India is also highly dependent on imported oil to meet the energy demand, which raises the question of energy security of the nation. • Immense potential exists in this aspect of energy efficiency, particularly in the use of pumps, heating, ventilation and air conditioning an lighting areas
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POTENTIAL SAVINGS IN INDUSTRY
• AROUND Rs. 10000 CRORES- IN
   


  

EFFICIENT ENERGY PROCUREMENT PRACTICES, IMPROVED CAPACITY UTILISATION, UPGRADING OF PROCESS TECHNOLOGY AND EQUIPMENT, UPGRADING OF BOILERS, POWER HOUSE EQUIPMENT AND UTILITIES, USE OF COMBINED HEAT AND POWER AND WASTE HEAT RECOVERY, AUTOMATED CONTROL SYSTEMS, BETTER LAYOUT AND COMPUTERISATION OF DAY TO DAY MONITORING.
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TOTAL ENERGY MANAGEMENT
• A SUSTAINED AND PLANNED ACTIVITY. • AN INTEGRATED APPROACH. • MORE EFFICIENT USE OF ENERGY WITHOUT REDUCING PRODUCTION LEVELS OR LOWERING PRODUCT QUALITY, EMPLOYEE MORALE OR ENVIRONMENTAL STANDARDS.  EVOLVE AN OVERALL ENERGY STARTEGY  CREATE ALROUND PARTICIPATION AND TOTAL COMMITMENT FROM TOP MANAGEMENT.  IMPLEMENT A SYSTEMATIC MANAGEMENT ACTION PLAN.
DS H RAO 8

ENERGY STRATEGY
• COMPREHENSIVE POLICY AND PLAN. • BOTH LONG AND SHORT TERM. • ENCOMPASSES GENERATION, CONVERSION AND UTILISATION OF ENERGY. • ACHIEVABLE GOALS OF ENERGY COST REDUCTION. • MAKING OPTIMUM USE OF CAPTIVE , COGENERATION AND WASTE HEAT RECOVERY. • MATCHING PRUDENT STANDARDS OF SPECIFIC ENERGY CONSUMPTION.
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PARTICIPATION
• TOTAL COMMITMENT FROM THE TOP MANAGEMENT. • A FORMAL RESULT ORIENTED ENERGY MANAGEMENT COMMITTEE TO COORDINATE MULTI DIVISIONAL EFFORTS, MOTIVATION FOR ENERGY SAVING.
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ACTION PLAN - STEPS
• SELF MOTIVATION THAT ENERGY HAS TO BE SAVED AND ENERGY CONSERVATION AS A WAY OF LIFE. • BASE LINE PRELIMINARY AUDIT • DETAILED ENERGY AUDIT AND MANAGEMENT STUDY. • PARTICIPATIVE DISCUSSIONS WITH THE CONCERNED EXECUTIVES. • QUANTIFICATION OF BENEFITS AND ENERGY ACCOUNTING • MOTIVATION OF ALL BY CONFERENCE, BULLETINS POSTERS, CONTESTS ETC. • USING EXPERTS AND TRAINING SHOP FLOOR PEOPLE IN ENERGY CONSERVATION.
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MANAGEMENT BARRIERS TO ENERGY EFFICIENCY
• LACK OF THRUST, DIRECTION AND ACCOUNTABILITY

• • •
• • •

LACK OF MANDATORY ENERGY EFFICIENT STANDARDS. LACK OF ENERGY EXPERTS OR CONSULTING SUPPORT. REVEALS THE INEFFICIENCY OF OPERATING PERSONNEL.
PRODUCTION OVERRULING OTHER CONSERVATION EFFORTS. NO INCENTIVE FOR BEING EFFICIENT. INADEQUATE DECISION MAKING.

• •

NOT AWARE OF REAL BENEFITS OF EFFICIENCY. ESCAPIST REASONS FOR NOT ABLE TO BE EFFICIENT LIKE OLD EQUIPMENT, POOR QUALITY OF INPUTS LIKE COAL POWER AND MATERIALS
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FINANCIAL AND ECONOMIC BARRIERS TO ENERGY EFFICIENCY
• ENERGY PRICES DISTORTED • RESOURCE CONSTRAINTS.

• LACK OF SIMPLE FINANCING MECHANISM FOR SMEs
• NOT ADEQUATE INCENTIVES FOR ENERGY

CONSERVATION OR ENERGY EFFICIENT INVESTMENT PLANS.
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TECHNICAL BARRIERS
• OUTDATED TECHNOLOGIES AND PLANTS. • ECONOMIES OF SCALE AND HIGHER SPECIFIC ENERGY CONSUMPTION. • NO SPECIFIC R & D EFFORT FOR ENERGY EFFICIENCY. • NO PLANNED MODERNISATION • INEFFICIENT PLANTS ARE RESOLD AND NOT DISMEMBERED.
DS H RAO 14

STEPS TO ENERGY EFFICIENCY AT INDUSTRY LEVEL
• UNDERSTAND YOUR ENERGY COSTS. • MAKE A COMPARISON WITH PAST CONSUMPTION AS WELL AS BENCHMARK LEVELS. • UNDERSTAND WHEN AND WHAT TYPE OF ENERGY IS USED. • UNDERSTAND WHERE AND WHAT TYPE OF ENERGY IS USED. • MATCH USAGE TO NEED. • MAXIMISE SYSTEM EFFICIENCIES. • OPTIMISE ENERGY SUPPLY AND REDUCE COSTS.
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UNDERSTAND YOUR ENERGY COSTS I
• THE COSTOF ELECTRICITY DEPENDS ON DEMAND RATE, ENERGY CONSUMPTION, TIME OF USE AND POWER FACTOR. • THE TARIFF DEPENDS ON ANNUAL CONSUMPTION OF ENERGY, PEAK OR OFF PEAK DEMAND, VOLTAGE AT THE METERING POINT, ANY INTERRUPTIBLE AGREEMENT WITH THE SUPPLIER, PURPOSE FOR WHICH POWER AND ENERGY ARE USED AND THE OWNERSHIP OF TRANSFORMER.
DS H RAO 16

UNDERSTAND YOUR ENERGY COSTS II
• FUEL COST ADJUSTMENT CHARGES, REBATE OR PENALTY FOR MAINTENANCE OF POWER FACTOR, ADDITIONAL DEMAND, TAX ON SALE OF ELECTRICITY, ELECTRICITY DUTY AND RENTALS FOR METER, TIME SWITCHES ETC • ABOVE ALL INITIAL DEVELOPMENTAL COST OF ACCESSING ADEQAUET POWER BY WAY OF POWER PURCHASE AGREEMENT • WHAT IS THE LIFE CYCLE COST OF OPERATING THE FIRM, OR ANY EQUIPMENT?
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UNDERSTAND WHEN ENERGY IS USED
• DEMAND PROFILE OR LOAD DURATION CURVE. • ANALYSIS OF LOADS – VITAL, ESSENTIAL

IMPORTANT AND NORMAL IN ASSOCIATION WITH EQUIPMENT NEEDED FOR PRODUCTION • NIGHT LOAD, START UP LOAD, SHUT DOWN LOAD, WEATHER BASED LOADING, DUTYCYCLE LOADS, INTERDEPENDENT LOADS, PROBLEM BASED LOADS.
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UNDERSTAND WHERE ENERGY IS USED
• LOAD INVENTORY CALCULATIONS AND DIVERSITY FACTORS. • REDUCE ENERGY USAGE – CHANGE IN INITIAL NEEDS, DISCRETE USAGE, USAGE VARIATION WITH TIME, OLD TECHNOLOGY, DEFERRED MAINTENANCE, NO MONITORING OF ENERGY CONSUMPTION
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AREAS OF APPLICATION IN THE INDUSTRY
• • • • • • • • PROCESS SPECIFIC SYSTEMS. STEAM AND HOT WATER DISTRIBUTION. BOILER PLANT SYSTEMS. REFRIGERATION. FANS AND PUMPS. ELECTRIC MOTORS. COMPRESSED AIR. HEATING, VENTILATING AND AIR CONDITIONING SYSTEMS. • LIGHTING SYSTEMS. • WASTE HEAT RECOVERY
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ENERGY SAVING POTENTIAL
• • • • • • • • • • ALUMINIUM CAUSTIC SODA COKE OVEN TEXTILES DISTILLERIES IRON/STEEL PULP/PAPER PLYWOOD RICE MILLS SPONGE IRON 59 MW 394 MW 200MW 506MW 2000MW 362MW 850MW 50MW 1000MW 225MW • • • • • • • • • • • H2SO4 BREWERIES CEMENT COMMERCIAL DAIRIES FERTILISER MM FIBRE PETROCHEM REFINERIES SOL.EXTRN TYRES 125MW 400MW 100MW 350MW 70MW 1000MW 523MW 500MW 232MW 350MW 180MW
21

DS H RAO

ENERGY SAVING POTENTIAL
• • • • • • • • • • • • IRON AND STEEL FERTILISER TEXTILES CEMENT PULP AND PAPER ALUMINIUM SUGAR PETROCHEMICALS GLASS / CERAMICS REFINERIES EFFICIENT PUMPSETS LIGHTING
DS H RAO

10 % 15% 25% 15% 25% 10% 20% 15% 20% 10% 30% 75%
22

EVALUATION OF ENERGY SAVING POTENTIAL – BENEFITS AND COSTS
• DIRECT ENERGY SAVINGS • DIRECT IMPLEMENTATION

• • •

INDIRECT ENERGY SAVINGS COMFORT/PRODUCTIVITY INCREASES. OPERATION AND MAINTENANCE COST
REDUCTIONS

COSTS • • • DIRECT ENERGY COSTS INDIRECT ENERGY COSTS OPERATION AND
MAINTENANCE COST INCREASES. • TRAINING COSTS.

•

ENVIRONMENTAL IMPROVEMENTS

•

ENVIRONMENTAL EFFECTS.

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23

ENERGY SAVING PROJECTS
• NO COST – HOUSE KEEPING OR OPERATIONAL CHANGES • LOW COST – SOME INVESTMENT IN TECHNOLOGY • HIGH COST – SIGNIFICANT INVESTMENTS OF FUNDS FOR ACQUSITION AND INSTALLATION OF NEW TECHNOLOGY
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PROJECT DEVELOPMENT CYCLE
• PROJECT DEFINITION AND SCOPE

• TECHNICAL DESIGN
• FINANCING

• CONTRACTING • IMPLEMENTATION AND MONITORING
DS H RAO 25

PROJECT DEFINITION AND SCOPE - CRITERIA
• COST EFFECTIVENESS OF ENERGY SAVINGS OF THE PROJECT (IRR, NPV, CASH FLOW,AVERAGE PAY BACK) • SUATAINABILITY OF SAVINGS OVER THE LIFE OF THE EQUIPMENT/ SYSTEM. • EASE OF QUANTIFYING, MONITORING AND VERIFICATION OF SAVINGS. • AVAILABILITY OF TECHNOLOGY AND EASE OF ADAPTABILITY. • OTHER ENVIRONMENTAL AND SOCIAL COSTS AND BENEFITS.

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26

TECHNICAL DESIGN
• THE PROPOSED NEW TECHNOLOGIES, PROCESS MODIFICATIONS, EQUIPMENT SPECIFICATIONS, REPLACEMENT OF PLANT AND EQUIPMENT ETC. • PRODUCT/TECHNOLOGY AND MATERIAL SUPPLY CHAIN • CAPITAL COST AND COMMERCIAL VIABILITY (IRR,NPV, CASH FLOW AND PAY BACK). • TECHNICAL COMPLEXITIES AND NEED FOR ANY ADDITIONAL SKILLS FOR INSTALLATION, OPERATION AND MAINTENANCE. • ORGANISATIONAL AND MANAGEMENT PLAN FOR IMPLEMENTATION, PERSONNEL NEEDS,STAFF TRAINING,AND OTHER LOGISTIC ISSUES.
DS H RAO 27

FINANCING OF THE PROJECT
• FUNDS AVAILABLE AS EQUITY AND LOANS. • PROPOSED DEBT EQUITY STRUCTURE, PHASING OF EXPENDITURE, RISKS INVOLVED AND MITIGATION STARTEGIES. • DUE DILIGENCE AND EFFICIENCY IN IMPLEMENTATION – INSPECTION , INSURANCE AND INFORMATION FOR LENDERS’ COMFORT
DS H RAO 28

CONTRACTING I
• TRADITIONAL CONTRACTS • EXTENDED TECHNICAL GUARANTEES/SERVICES • EXTENDED FINANCING TERMS – BASED ON SAVINGS • GURANTEED SAVINGS PERFORMANCE CONTRACTING. • SHARED SAVINGS PERFORMANCE CONTRACTING
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FEATURES OF DIFFERENT CONTRACTS

TRADITIONAL DESIGN

TECHNICAL GURANTEE

EXT. FINANCING

GURANTEDD SAVINGS

SHARED SAVINGS PERFORMANC E

CONTRACTOR’ S ROLE

ENERGY AUDIT, DESIGN, INSTALLATION AND COMMISSIONI NG
ENGINEERING

PLUS EQUIPMENT GUARANTEE AND MAINTENANCE

PLUS LEASING OR PAYMENT ON EXPECTED SAVINGS

PLUS GURANTEE THAT SAVINGS WILL PROVIDE DEBT SERVICE

PLUS FINANCIN OF MEASURES AND PAYMENT FROM A SHARE OF SAVINGS
PLUS PROPER MODELLING AND LEGAL SERVICES

SKILLS OF CONTRACTOR

PLUS AFTER SALES SERVICE

PLUS LEASING AND FINANCIAL SERVICES

PLUS PROPER MODELLING AND LEGAL SERVICES

FINANCE RISK

ON CUSTOMER ONLY

ON CUSTOMER ONLY

ON CUSTOMER AND CONTRACTOR
CAPACITORS AND TRANSFORME RS

ON CUSTOMER AND CONTRACTOR
COMPLETE PACKAGE

ON CONTRACTOR ONLY
COMPLETE PACKAGE

TYPICAL EQUIPMENT

ALL

MOTORS PUMPS AC

RELATIVE COMLEXITY

LOW

MEDIUM

MEDIUM

HIGH

VERY HIGH

DS H RAO

30

IMPLEMENTATION AND MONITORING
• DELAYS INVOLVE ADDITIONAL COSTS. AVOID LONG LEAD TIMES. GO FOR STANDARD EQUIPMENT • MANAGE OUT OF POCKET COSTS FOR TRAVEL, INSTALLATION AND CONSULTANTS FEES ETC. • COORDINATE ALL CONTRACTORS TO ENSURE THAT RISKS OF OVER-RUN OF COSTS AND TIME ARE MANAGED.
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CONCLUSION
• ENERGY SAVING IS A SUSTAINABLE ACTIVITY. • IT HAS THREE VITAL ISSUES – TECHNICAL, ORGANISATIONAL AND HUMAN BEHAVIOUR. • WELL DEFINED STRATEGY OF GAINING CONTROL, INVESTING AND MAINTAINING ENERGY EFFICIENCY PROJECTS ARE VITAL. • GOOD POLICY, ACTION PLANNING, MOTIVATION, COMMUNICATIONS,PRUDENT INVESTMENT AND MONITORING AND TARGETTING SAVINGS ARE ESSENTIAL. • ENERGY MANAGEMENT PAYS OFF SURE FINANCIAL SAVINGS, IMPROVED COMPETITIVENESS AND ENVIRONMENTAL PROTECTION.
DS H RAO 32

THANK YOU ONE AND ALL FOR THE NICE OPPORTUNITY
ANY CLARIFICATIONS?


				
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