PoliciesIncentives for Energy Management

1
Policies/Incentives forEnergy Management
2
Three Major Problems

• America has three national priorities that
  provide a new and urgent need for saving energy
• Environmental Quality
• - reduce global warming
• - reduce acid rain
• Economic Competitiveness
• - reduce our cost of production
• - reduce industrial energy intensity
• - create jobs

3
Three Major Problems (cont)

• Energy security
• - reduce imports of oil
• - reduce vulnerability to oil embargo
• None of these goals can be fully attained without
  an energy efficient economy.

4
National Concerns

• Energy security
• - dependence on energy imports
• - reliance on OPEC
• Balance of payments
• Imported oil bills account for a major share of
  our negative balance of trade
• Energy policy
• - oil import fees
• - Btu tax
• - import limits
• - gasoline tax

5
Driving Factors In Major Investments for Business
and Industry

• Environmental regulations
• Product quality
• Productivity improvement

Energy relates to all three
6
Professional InterestEnergy Management
Jobs

• Plant energy manager
• Building/facility manager
• Utility energy auditor
• Utility energy analyst
• State/federal agency energy analyst
• Consulting energy auditor and analyst

7
History Federal Energy Efficiency Requirements

• Executive order 12902 signed by President
  Clinton on March 8, 1994 modified the energy
  efficiency requirements for Federal buildings
  that had been set by President Bush in Executive
  Order 12759 signed on April 17, 1991
• EO 12902 requires Federal buildings to
• Reduce energy consumption per square foot by 10
  between 1985 and 1995.
• Reduce energy consumption per square foot by 20
  between 1985 and 2000.

8
Federal Energy Efficiency Reqs. (contd)

• Reduce energy consumption per square foot by 30
  between 1985 and 2005.
• Reduce energy consumption in federal agency
  industrial facilities by 20 by 2005 as compared
  to 1990 (FEMP Program)
• EO 12902 also allows Federal agencies to
  participate in demand-side management (DSM)
  services offered by utilities

9
Demand Side Management

• Demand Side Management (DSM) describes a
  collection of utility programs to reduce the load
  that a customer places on an electric or gas
  utility
• DSM programs consist of
• energy efficiency improvements such as high
  efficiency lights, motors, and AC units
• peak demand limiting actions such as scheduling
  equipment so that unneeded devices are not turned
  on.

10
Current Events US Energy Policy

• The US Energy Policy
• Currently working its way through Congress
• Change to daylight savings time policy
• Policies for domestic oil and NG exploration

Source ACEEE Impacts of Energy Efficiency and
Renewable Energy on NG Markets, 2005
11
Differences in US House and Senate Positions for
Energy Legislation
12
(No Transcript)
13
Energy Efficiency Assumptions Used by the ACEEE
14
Policy Strategies How the Government Can Help

• Energy efficiency performance targets for
  utilities
• Expanded federal funding for energy efficiency
  and renewable energy deployment programs at DOE
  and EPA, including ENERGY STAR
• Accelerated appliance efficiency standards at
  both the federal and state levels
• Insuring more efficient new buildings through
  energy codes
• Better policies for rapid deployment of clean and
  efficient distributed generation technologies
• Renewable portfolio standards
• Public awareness campaigns by state and national
  leaders, coordinated with increased funding for
  implementation programs

15
Environmental Considerations

• Business and industry have realized that their
  energy use contributes to
• Global environmental problems (climate change,
  acid rain, and ozone depletion)
• Energy security problems of the United States
• Commercial and industrial energy use accounts
  for
• 45 of the CO2 released by burning fossil fuels
• 70 of the SO2 emitted by stationary sources

16
Environmental Considerations (cont)

• Business and industry use processes,
  refrigeration systems insulation containing CFCs
  - chlorofluorocarbons that contribute to the
  greenhouse effect and to ozone depletion.
• Commercial and industrial energy efficiency
  and energy conservation efforts can have
  substantial positive impacts on
• these national and global problems (WTO)
• bottom line of the companys balance sheet

17
Value of Energy Management

• U.S. industrial energy intensiveness reduced
  over 30 since 1973 (OPEC Embargo)
• Rapid technological advances in energy-using
  equipment and in commercial/industrial processes
• Additional efficiency opportunities
• Areas that may not have been improved yet
• Areas that have improved substantially
• 30 to 50 improvement potential in the energy
  efficiency of a typical commercial/industrial
  facility

18
TQM and Energy Management

• TQM an integrated approach to operating a
  facility
• Energy cost control should be part of overall TQM
  program
• TQM based on principle that front-line
  employees should have authority to make changes
  and other decisions at the lowest operating
  levels of a facility
• Energy management is a natural part of TQM
  employees should have some training in energy
  management so that they can make correct energy
  decisions.

19
Energy Management

• Energy Management the use of engineering
• and economic principles to control the cost
  of energy to provide needed services in buildings
  and industries.
• Most savings in energy costs will come from
  improvements in energy efficiency.
• Some savings will come from changing the patterns
  of energy use, and possibly shifting
• to other sources of energy.

20
Energy Cost Savings

• No-cost action and maintenance
• 5 to 15 percent savings
• Low-cost or short payback actions 15 to 30
  percent savings
• Higher-cost or longer payback actions 30 to 50
  percent savings

21
Financing Issues

• Federal, state, local, utility incentives
• USDA small business program
• Florida Wages program, SBC
• Lighting, HVAC, Solar rebates
• Database of State Incentives for Renewable Energy
  (http//www.dsireusa.org)
• ESCOs
• Equipment Leasing
• Performance Contracting

22
Alternative Financing Equipment Leasing / Direct
Financing
Audits, Construction
ESCO
One-Time Rebate
Payment for Services
Energy Component
UTILITY
HOST
Equipment Lease or Direct Loan
Debt Service
LENDER
23
Alternative Financing Shared Savings/
Performance Contracting
Audits, Construction, On-Going Monitoring
ESCO
One-Time Rebate Payment
Share of Energy Savings Guarantee of Hours of
Operation
Energy Component Based on Savings
UTILITY
HOST
Construction, Long-term Financing
Debt Service
LENDER
24
A Model Energy Management Program 3M
Company in St. Paul, MN

• A large diversified manufacturing company with
  more than 50 major product divisions makes
  50,000 products at over 100 US locations
• Corporate energy management objective to use
  energy as efficiently as possible in all
  operations
• Energy productivity has improved by 60 from 1973
  to 1995

25
A Model Energy Management Program (cont)

• Energy management savings 1973-1994 1.2
  billion
• Program staffed by 6 people who educate and
  motivate all personnel on benefits of energy
  management
• 3M expects to substantially reduce emissions of
  waste gases and liquids, to increase energy
  recovered from wastes, and to constantly increase
  the profitability of their operations.

26
Energy Efficiency Technologies 3M

• High efficiency motors
• Variable speed drives
• Computerized facility management systems
• Variable air volume systems for HVAC
• Steam trap maintenance
• Combustion systems improvements
• Cogeneration
• Thermal insulation
• Waste stream utilization
• Industrial process improvements

27
Programs Implemented by 3M

• Conservation
• Maintenance procedures
• Utility operation optimization
• Efficient new designs
• Retrofits through energy surveys
• Process changes
• Major process improvements that reduce energy
  costs
• Integrated manufacturing techniques
• Better equipment scheduling to increase use
  factors
• Use of non-hazardous solvents

28
Programs Implemented by 3M

• 3M sets energy efficiency goals and then measures
  the results against a set standard in order to
  determine the success of the programs.
• For the period 1990 to 1995, they set a goal
• of a 20 energy efficiency improvement per pound
  of product or square foot of area.
• 3M continues to stress industrial productivity
  through the efficient use of energy

29
Some Energy Basics
1 match 1 BTU
30
Some Energy Basics

• 1 ton Coal 25 million Btu 25 MMBtu
• 1 therm Natural Gas 100,000 Btu
• 1 Cord Wood 20 35 million Btu
• (pick-up truck ½ Cord)

31
How much energy is in one kWh?
1 kWh 3,412 Btu Example electric
space heater conversion to heat
3,412 Btu Heat
kWh meter
32

• 1 Btu of energy raises the Temperature
• of 1 lb of water 1 ?F.
• This allows us to find things like
• How much energy does it take for a 2 minute
  shower ?
• Hint Assume 3gal of water/min
• Density of Water8.3lb/gal
• Answer 2,490 Btu/shower 0.7298 kWh/shower

33
Is it cheaper to heat with electricity or oil?
Assume the electric heater is 100 efficient and
1 kWh costs 8 cents, and the oil heater is 80
efficient and oil costs 1.30 per gallon and each
gallon contains 140,000 Btu.
Another Example
Answer Elec 23.45/MMBtu Oil
11.61/MMBtu