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

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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

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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  
SURPLUS IMPROVEMENT
(8.7-5.0)/5.0
(10-5)/5
(5.25-5)/5 IN PERCENTAGE 75
OR 5 100 MULTIPLYING FACTOR
7.5 OR 2
10
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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.

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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.

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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.

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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 59 MW
• CAUSTIC SODA 394 MW
• COKE OVEN 200MW
• TEXTILES 506MW
• DISTILLERIES 2000MW
• IRON/STEEL 362MW
• PULP/PAPER 850MW
• PLYWOOD 50MW
• RICE MILLS 1000MW
• SPONGE IRON 225MW

• H2SO4 125MW
• BREWERIES 400MW
• CEMENT 100MW
• COMMERCIAL 350MW
• DAIRIES 70MW
• FERTILISER 1000MW
• MM FIBRE 523MW
• PETROCHEM 500MW
• REFINERIES 232MW
• SOL.EXTRN 350MW
• TYRES 180MW

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ENERGY SAVING POTENTIAL

• IRON AND STEEL 10
• FERTILISER 15
• TEXTILES 25
• CEMENT 15
• PULP AND PAPER 25
• ALUMINIUM
  10
• SUGAR
  20
• PETROCHEMICALS
  15
• GLASS / CERAMICS
  20
• REFINERIES
  10
• EFFICIENT PUMPSETS
  30
• LIGHTING
  75

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EVALUATION OF ENERGY SAVING POTENTIAL BENEFITS
AND COSTS

• DIRECT ENERGY SAVINGS
• INDIRECT ENERGY SAVINGS
• COMFORT/PRODUCTIVITY INCREASES.
• OPERATION AND MAINTENANCE COST REDUCTIONS
• ENVIRONMENTAL IMPROVEMENTS

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

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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

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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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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.

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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

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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  
 
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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.

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THANK YOU ONE AND ALL FOR THE NICE OPPORTUNITY

• ANY CLARIFICATIONS?