energy efficiency barriers – problem 1,2,3

They are at the end of political and economic capital and old Generation assets have a problem – they are competing with innovation that promotes efficiency. The problem is not new, just reborn ideals that have new tools available. Recently the ACT Energy Minister said it very well (as reported this week in the RENeweconomy ) as the real issue is not that wind, solar and other technologies are added to the grid. It’s that old and inefficient generators are refusing to leave. Therefore new renewables are not the problem.

Looking at the problems of our energy system as a whole CO2Land org sees, just like our bills read – three pricing areas that can be improved. Or should we say need to be addressed.

Problem 1 – the price of energy is set by a market mechanism that in Australia is opportunistic. Old inefficient generators can remain viable by gaming based on availability and triggers to elevate prices. So long as they remain the ‘baseload’ capability and sufficient ‘events’ occur in the market they will remain viable. With or without a renewable target review, the Old King Coal will remain. But we will pay more – not less. Why? Like an old car it needs maintenance and those costs must be passed through. Of course the fuel cost factors in too.

Problem 2 – the Grid system is a capital hungry beast. Both transmission and distribution networks (poles and wires) are encouraged to overinvest. Overinvestment is encouraged in the name of reliability and capability. How can this be necessary? Our regulatory system set the network charges and penalties. When the prices are set for the charges (network tariffs) the weighted cost of capital and the need for maintenance and cash injections need to be reliably for at least 5 years is part of the formulae. Estimated is approximately 10% more is payed than need be – with or without a carbon price – OK!

So what should we do? Agree to keep up prices or encourage a write down of the asset – In 1996 or thereabouts the answer was do no maintenance other than priority works. The system had sufficient redundancy that it could take it. In this way privatisation can look promising. Then some time later the capital injections will be required again and up go costs – it does sound very much like todays 2014 talk too does it not!

Problem 3 – the issue of managing costs to consumers. This is the vexed issue – the supply side believes costs should go up, demand side costs should go down. Therefore you could say energy efficiency means demand decreases and prices will go down. But, think this Problem 2 shows the networks are overinvested and cost will be recovered even if not actually expended – they can be anticipated! Then think Problem 3, the market anticipates events 5% of the time and this accounts for 20% of the costs. A nice little earner lost if you change that!

We know some of you will be saying but a capacity market will fix that, just change the rules will be your cry. The reality those with the courage to change things will have 5 years to bring about the change and then need to predict 2 years in advance. They will need to establish how to impose penalties on the gamers. And, we know the gamers are very good at lobbying for no change. They might even say climate change bah humbug!

But, you know all three problems have another issue: Each problem area participant can be asked what does efficiency mean to you – The answers are very likely to differ and that is an issue for policy makers too. Think this – Federal government will side with security of supply, state with balance of supply and local and consumers with the cost of supply. Makes for interesting responses does it not!

Policy – Position – Agenda – where does it sit?

The President of the Solar Council made the point: The political position of denying does not matter in the end. From that we can conclude that ultimately the posturing will change as the influences around them change and the policy models too will change.

If you have rang a Call Centre recently it is very likely you might have been confronted with ‘its policy of ‘. No longer do they say is ‘the position of ‘. Why is this?

Policy – the business dictionary like to say it is the declared objectives to achieve and preserve – the free dictionary likes to say a plan or course of action intended to influence and determine. Most others say something very similarly, so we can conclude the meaning is a rule or contract when used as a noun. We can say the synonyms can also include a Rule, Strategy, Plan, Procedure, and Dogma, Program. All of which is a Guiding Principle.

Our point. You have every right to question if it is an appropriate course of action. Why because it indicates the decision is primarily based on material interest.

Position – Think the right or appropriate space. Where your point of view could also be described a thesis or the laying down of a proposition.

It also can be characterised by the unsolicited offer to an existing customer with wording such as ‘you do not need to do a thing’. Then some time later you are penalised because you did not object. Do you want an energy use example?

Well think this: Step by step the instructions are tweaking you into being positioned. However, is this an acceptable principle? Maybe, so long as the policy is accountable.

Then there is the issue of what is the purpose of the policy. In the name of justice is often cited. It then must be broken down into for whom? If it is for the workplace, than it is vague. If it is for welfare, it is wide reaching. Here lies a problem, it can be vague and wide reaching and have no other purpose other than to be resisted and discarded. In effect the agenda you did not know about.

Back to the Call Centre: Do they have an agenda? We can assume they want you to accept what they do is the correct position. You will than accept that their view is correct, and they can say we have wide reaching evidence of the acceptance of our policy – you can conclude the agenda was for acceptance of the positioning.

Do you have a position on the renewable energy policy? Talking at – yes there was some disagreement, the Chairperson of the Australian Institute of Energy, on 5 June 2014, it was clear the definition of what was effective as the tools for success was not obvious. What we are saying is that ‘any action’ taken must be clearly a benefit over the established position. For instance: Solar is technologically superior as a generator. Energy Efficiency reduces the need to generate. They both affect the transport needs of the energy. They both can be local fixes in constrained areas of the network, and conversely they can affect negatively in areas of a distribution system that has not any capacity issue. It gets even more perverse when you consider the transmission network – moving from one distribution area to the next. The battle then becomes who can best serve in the supply demand balancing equation! Answer, it can be both. However, we are then talking about energy security. In this aspect the reference is to the balance between sustainability and reliability and cost efficient power. When we do we are speaking in terms of the national security.

For another discussion we might talk about energy conservation verses energy efficiency. Hint – the definitions must be addressed before you can proceed.

 

Bidding process – The White – ERF Paper

Lets talk more about the bidding process, assuming you managed to read the Energy Reduction Fund White Paper released 24 April 2014. We talked about profiling you risk in our post ‘The White – ERF Paper’ on 2 May 2014. It has been attracting worldwide interest. What we don’t know is why it is so. We can only speculate many are expecting a ‘big bang’ or ‘flip flop’ for the policy. Regardless, it is better than doing nothing, so lets assume we can get past the regulatory uncertainty and look at things assuming you business can access the funds, has eligible projects, and has in place safeguard mechanisms.

First question you need to ask is are you strategic or tactical in your approach – or a hybrid. We might suggest hybrid is a good hedge. Why because you can be reactive to changes without being too hung up on risk factors. Also, providing funding could be as easy as the 2014/2015 Federal Budget being approved, without the specialist legislation. Yep, the good ole executive bypass is possible. But that is the government’s risk.

To bid in you need to create a program with a project size that has a prospect of being awarded funding. We note that some say, and repeated by Energetics (a consulting firm that is known to influence policy on Climate), claim 2,000 t CO2 equivalent abatement will get you a jersey. However, remember this is a reverse auction – the lowest price wins! There is no guarantee the best project will win. You could be forgiven for getting a little suspicious over who and what will be rewarded.

That said, the usual suspects for the preparation to be included in the bidding, may actually preclude you too! Namely, the requirement of ‘additionality’ for the projects. Back in 2012, August 14 – CO2Land org looked a little harder at additionality and its association with the word ‘real’ (concluding real was used as a synonym) and found:

  • Specifically ISO 14064-2 (project accounting) does not include ‘Real’ because during development of ISO 14064-2 ‘Real’ was regarded as a programmatic rule/criteria, which is outside the scope of ISO 14064-2.
  • ISO 14064-2 is a standard rather than a program
  • ISO 14064-2 (Clause 5.4) specifies the following requirement in regards to additionality: “The project proponent shall select or establish, justify and apply criteria and procedures for demonstrating that the project results in GHG emissions reductions or removal enhancements that are additional to what would occur in the baseline scenario.”
  • Additionality is incorporated into ISO 14064-2 is based on the core principles of ISO standards in general, i.e. that ISO standards not be a barrier to trade (WTO-TBT – anyone following development of ISO 14067 (product) will know this is a major issue). As such, ISO standards must be policy-neutral (extended to include program-neutrality). This is of course very important for market confidence.
  • ISO 14064 deals with the concept of additionality by requiring that the GHG project has resulted in GHG emission reductions or removal enhancements in addition to what would have happened in the absence of that project. It does not use the term “additionality”…Thus the project proponent may apply additionality criteria and procedures, or define and use boundaries consistent with relevant legislation, policy, GHG programmes and good practice.”
  • Although the concept/requirement of additionality is within the requirements of ISO 14064-2, the simple reason why the ‘term’ additionality is not present within the requirements of ISO 14064-2 is because of certain sensitivities/perceptions/politics of certain parties involved in the development of the standard –

And, the following references helpful in gaining a more complete understanding:

Oh dear, I wonder if they understand the standard says the concept should be policy- neutral. Why to give confidence to the market, elementary is it not?

But, here comes the good news. If you are aware, adopt a pragmatic approach, and are proactive in that you go low first up and go early you might just get there for your funding. All you got to do is keeping improving on your targets into the future.

What projects might have the better chance of winning a place. Energy Efficiency projects are probably the best suited for the auction process and the pre-qualification needs.

The conclusion: If you have done nothing meaningful before about your energy use. You can now be rewarded? Good policy, hey!

To ponder, Mark Jackson – a professional, asked in the Australasian Renewable Energy and Carbon Professionals Group on LinkedIn: “Is anyone else getting a sense that renewables are not getting a fair airing…budget etc”.

IPAT the Difference – Technical

Its simple mathematics (part 3): subject – calculus & the Affinity Laws

Technology is the third variable in IPAT. It can be good and it can be bad. Technology allows things to be made for a much lower price on one hand, meaning that a lot more people have the ease of financial access to the products. On the other hand, technology allows more efficient use of resources, so environmental degradation is reduced by a percentage factor.

An example of the benefits of technological efficiency is found in the Affinity Laws and their application to motors. The International Energy Agency has estimated that 45% of global electricity consumption is by motors. It is estimated that 20% of global electricity consumption is by the motors that drive pumps (Pump Lifecycle Costs: A Guide to LCC Analysis for Pumping Systems, Europump and Hydraulic Institute, 2001).

The basis of the Affinity Laws is that pump and fan flow rates are related to pressure and power consumption. The calculus is as follows (assuming the impeller diameter remains constant):

Law 1a Flow is proportional to shaft speed:

Law 1b Pressure or Head is proportional to the square of shaft speed:

Law 1c Power is proportional to the cube of shaft speed:

 

To make the maths simple, I will explain what the key points to understand out of the above formulae:

If you reduce the speed of a pump or fan by 10%, you will use approximately 25% less power. If you reduce the pump or fan speed by 20% you will halve the amount of power consumed.

But how do you control the motor speed. Easy, with capacitors incorporated into variable frequency technology (VFD’s). Their connection to a motor is like giving the motor an accelerator pedal, allowing them to back off the gas as appropriate. VFDs are like big buckets of electric charge. The charge comes into the bucket as an alternating current at 50 or 60 hertz (depending on the country you are in). In Australia it is 50 hertz. The VFD deals out the power at the hertz rate necessary to maximise motor operational efficiency. Sensors are often connected to the VFD telling it:

“Hey mate, the motor doesn’t need to be running at maximum speed at the moment, so back off”.

Now for some rough estimates of the potential benefits of VFDs applied on a mass basis. Say there is an opportunity to reduce the electricity consumption of half the pumps and fans in the world by an average of 25% from their current consumption (by slowing their speed by 10%). This is a conservative estimate that incorporates situations where the pump has to run at 100% capacity, where VFDs are already in operation and finally, it presumes only a 10% reduction in speed. The estimate means that total global power consumption of motors could be brought down from 20% of total electricity consumption to 17.5% of the total. Given the total electricity consumption from fossil fuels will be approximately 16 TWH in 2014 (based on estimates derived from 2011 data of the International Energy Agency), then there is the opportunity here to reduce fossil fuel generated electricity consumption by 400,000 MWh in that year. Given that each MWH generated from fossil fuels causes the emission of approximately one tonne of CO-2e, the emission reduction would be of the order of 400,000 tonnes of CO2-e in 2014.

Going back to consider the algebraic consequences in IPAT, carbon emissions make up a significant part of the calculations of the ecological footprint (approximately half). Therefore, if VFD technology is introduced on a mass scale EPM/WTB estimates there will be a noticeable reduction in per capita global gha.

Finally, a specific example of the benefits of VFDs. David Bartush, the aquatics facilities manager for the Blue Mountains City Council, near Sydney, introduced VFDs to the two x 15 kWh pumps to the Springwood leisure pool. The pump power consumption has reduced by 56 MWh per annum since.

In following newsletters we will look at other ways of reducing motor power consumption with more efficient motors, correct pump and pipe sizing and power factor correction.

 

ever heard of Climate Change Authority, Clean Energy Finance Corporation.

What? You never heard of Climate Change Authority, what about Clean Energy Finance Corporation.

The Energy Users Association of Australia (EUAA) would like to make sure you are up to speed, and encourage you to consider attending their important briefing in Sydney this Thursday, 30 August 2012.

Why would you know more for attending? Because Roman Domanski (Executive Director, EUAA) has engaged the CEO of the new Climate Change Authority, and the Chair of the new Clean Energy Finance Corporation to present the outline and effects of their charge. These two are responsible for advising the Government on the carbon price and the renewable energy target, amongst other things, and responsible for providing funding for clean energy, low carbon and energy efficiency projects.  Of course there is more to the program but you should check that out for yourself.

Because CO2Land org likes to know a little more, a short research brings up:

1. The Climate Change Authority was created as an independent body to provide advice on the Australian Government’s policies for reducing carbon pollution (reviewing the Renewable Energy Target, Pollution caps, carbon pricing and Carbon Farming Initiative):

  • Has a Board of nine members with skills in science, economics, climate change mitigation, emissions trading, investment and business.
  • The Board is supported by a CEO and support staff.
  • Importance is to make recommendations on the steps Australia should take towards the 2020 target and on the longer-term path towards the 2050 target.
  • The Authority will conduct regular, public reviews and its reports will be made public.

2. Clean Energy Finance Corporation (CEFC) is made up of a panel of experts appointed by the Government to advise on the design of the $10billion Clean energy package. The package is announced to:

  • encourage private investment and help overcome capital market barriers to commercialising clean energy technologies.
  • The expert review panel consults with key stakeholders and report with recommendations to assist with the drafting of legislation, allowing the CEFC to start operating from 2013-14.

CO2Land org notes that the EUAA and the agencies recognize that it is an act of being together that will be a success factor with putting a price on carbon pollution, and the establishment of responsible bodies that will help Australia meet the environmental and economic challenges of competing in a low-pollution world.

If you have any interest direct your queries direct to:

 

Energy Users Association of Australia

Suite 1, Level 2, 19-23 Prospect St

Box Hill  Vic  3218 Australia

T +61 3 9898 3900

F +61 3 9898 7499

W www.euaa.com.au