Product Mix

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Product Mix Throughput Adjustment of TargetsPMO

• Gareth Stace
• Dairy Energy Savings

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Are you meeting your second milestone target ?

• YES No worries
• NO Problem
• Are there a solutions ?
• Yes
• Need to find the right one for you

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Can you be re-certified along with the rest of
the sector if the sector passes the overall
target?

• DANGER
• Emissions Trading
• Ring Fencing

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What are the options open to you to avoid losing
the rebate ?

• Tolerance Band
• Regulatory Constraint
• Buy Carbon Dioxide Allowances
• Or Use PMO

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Has your Site Seen a Significant Drop in
Throughput, or a Change in the Mix of Products
the Site Produces?

• PMO is for you

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This is an Overview of PMO

• For greater scope of this tool
• See DEFRA Document CCA 08
• Guidance on How to Adjust Targets to Allow for
  Product Mix and Throughput Changes

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What Will You Need ?

• Good data
• Weekly, or monthly
• From base year, or even target period (two
  methods of calculation)
• Complying with qualitative requirements

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How Production EffectsYour Target
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There is no single required approach the
approach taken will depend on facilitys
circumstances

• Just a simple approach tackled here

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How is This Done ?

• The target is adjusted, not the data
• Need to establish a relationship between base
  data and performance in the target period
• Regression analysis

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Monthly Data for a Large DairyExample 1. Data
from base year
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Historic Recent Data
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Regression Chart for Electricity
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Regression Chart for Gas
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Perform the Calculation
Original milestone target 382.01 Target year
performance 561.78
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Method if no Base Year Data is Available

• Use data from the target period
• Slightly more difficult to calculate

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Monthly Data for a Large DairyExample 1. Data
from target period
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Historic Recent Data
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Regression Chart for Electricity
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Regression Chart for Gas
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Target Period CalculationHow Does it Differ ?

• Need to Calculate 3 different SECs
• SEC 1 Base year production applied to our new
  ymxc
• SEC 2 Target period production applied to our
  new ymxc
• SEC 3 Base year SEC from original data

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What Now ?

• Need to find a new SEC that will be the adjusted
  SEC
• SEC4 SEC3(SEC2/SEC1)

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Perform the Calculation

• SEC 1 Base year production (monthly) applied to
  our new ymxc
• y 332.38 32,828 3,346,139.37
• Therefore, y 14,257,510
• SEC 1 14,257,510 / 32,828
• SEC 1 434.31

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Perform the Calculation

• SEC 2 Target period production applied to our
  new ymxc
• y 332.38 17,054 3,346,139.37
• Therefore, y 9,014,604.52
• SEC 2 9,014,604.52 / 17,054
• SEC 2 528.59

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Perform the Calculation

• SEC 3 Base year SEC from original data
• SEC 3 451.08
• Need now to find SEC 4
• SEC4 SEC3(SEC2/SEC1)
• 451.08(528.59/434.31) 549.00
• New MS2 Target (SEC4 - 2.3) 536.38
• Target year performance 561.78

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Product Mix Issues
Throughput not the problem A shift from one
product produced to a more energy intensive
product since base year One possible answer is
multiple regression Excel will do this for
you Same calculation as throughput adjustment,
but with more than one m (ymxc)
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Historic Recent Data
Base Year Data Base Year Data Base Year Data
  Annual Monthly
Product A 147,346 12,279
Product B 98,231 8,186
Electricity 57,163,928 4,763,661
Gas 62,402,438 5,200,203
Base Year SEC (kWh/tonne) Base Year SEC (kWh/tonne) 486.88
MS1 Target SEC (kWh/tonne) MS1 Target SEC (kWh/tonne) 475.68
Target Year Data Target Year Data Target Year Data
  Annual Monthly
Product A 99,506 8,292
Product B 145,219 12,102
Electricity 73,901,907 6,158,492
Gas 76,687,547 6,390,629
Target Year SEC (kWh/tonne) Target Year SEC (kWh/tonne) 615.34
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Perform the Calculation (base year data)
Elec Elec Gas Gas
Intercept 3,302,948.37 Intercept 654,164.92
Product A 158.28 Product A - 194.18
Product B - 97.72 Product B 829.82

Total Intercept Product A Product B
  3,957,113.29 - 35.90 732.10
Apply the constants to the target year data with
the following equation
New SEC 3957113 (-35.908292) (732.112102)
/ (829212102)
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Perform the Calculation
New SEC 3957113 (-35.908292) (732.112102)
/ (829212102) New SEC 613.86 New MS2 Target
(New SEC 2.3) 599.75 Old MS2 target
475.68 Target year performance 615.34 Again
target year performance doesnt meet new target,
but goes a long way there
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What Next ?

• Look at your data
• If you are not going to meet your target, read
  CCA08 from DEFRA
• Perform some analysis
• See if that helps
• Most important, please contact me if you think
  that you will not meet your target

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Timetable

• Look at your data as soon as possible
• If you believe that this approach will not work
  for you, contact me soon
• All data to be submitted at the same time

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What I Will Do?

• Be on hand to assist members
• Issue a template for sites to submit all
  necessary information for DEFRA
• It will not be easy

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Gareth Stacegstace_at_dairyUK.orgTel. 020 7467
2602Fax. [phone]Dairy UK93 Baker
StreetLondon, W1U 6QQ