Blog: Evan Beaver, Senior Consultant, Energetics: "EEO and electricity generators: structuring an Assessment Plan"

02 Oct 2012Archived News Climate Change Matters

This article discusses how the electricity generating sector can best structure an Assessment Plan for the Energy Efficiency Opportunities (EEO) program. Much of this information will be common across sectors and timely as corporations who have just completed their first cycle prepare for the second cycle.

EEO is different

EEO requires different procedure to what generators may have applied in the past, particularly when compared to the most recent legislated obligation, the Generator Efficiency Standard (GES).

GES was principally an equipment optimisation program, focussed on achieving industry benchmarks for listed equipment at steady-state operation. Applied to true baseload plants, this approach yielded improvements in boiler function at certain operational points, but ignored the necessary interaction between the plant and the market. The increased penetration of semi-scheduled renewables to our network makes this approach less viable, as boilers must respond to market conditions and demand.

EEO is a more whole-of-business approach. This will necessarily include the same detailed equipment analysis as previously applied through GES and business-as-usual, but also include the interactions between equipment, such as boiler feed-pumps and boiler pressure, and the interaction between the plant and the market. At its core, EEO is a business-improvement program; the goal of which is an entrenched, continuous improvement program, focussed on energy efficiency. Because of this goal, compliance requires business systems, rather than efficiency improvement. There are no requirements to achieve efficiency standards, nor to implement projects. What is required is a detailed plan to entrench energy efficiency in your business, to make it part of your culture.

The Assessment Plan

This is the central document in EEO, which defines how your assessments are going to be undertaken, and is due to RET before 31 December 2012. The bulk of the AP describes how your business is going to address the 17 Key Requirements, the steps required to be compliant with the legislation.

The key to a successful and effective plan is to identify the components of your existing systems, and how they meet the legislated requirements. These guidelines were originally developed to be applicable across all sectors, to address the “information barrier” to identifying and implementing energy efficiency projects. Applied to the generator sector they may appear too prescriptive, as most generators have a very good understanding of their energy use and losses. In my experience, generators are already doing most of these in different ways, sometimes to a higher degree of detail than the regulations require, particularly Key Element 3 (KE3), which focusses on data and analysis.

The challenge then for energy managers writing an Assessment Plan is to identify which systems already meet the intent of the regulations, and mould them to meet the letter of the law. And the best way to achieve this is with a very solid foundation of what the regulations demand, and are trying to achieve. There is a large range of resources available through the EEO website to help with this. Alternately many corporations report benefit from the advice of experienced consultants, extremely familiar with the regulations, and with a background across a number of sites.

Research conducted while I was with RET suggests that for liable corporations there is a minimum compliance cost associated with EEO, but that businesses which seek to minimise their cost, that treat EEO as a purely compliance exercise, will derive little benefit. However, it was clear those corporations that spent a little more time and money on the process were more likely to yield significant benefits from the process.

I would argue that this approach is valid even for capital-constrained businesses with uncertain asset plans. As the EEO process encourages innovation and whole-of-business thinking, the ideas generated will include some zero to very low capital projects. As an example, one idea generated during the workshops merely involved standardised operator procedures, estimated to save $100-200 thousand each year, dependent on the number of incidents. EEO is about leveraging your internal capabilities in a more innovative way, a formalised system of thinking outside the box.

This too can be a secondary benefit of EEO; increased engagement of your workforce and a greater enthusiasm for work. Due to their large energy use, the guidelines give generators very little lee-way about how energy should be assessed and which processes will be assessed. This naturally leads to an “opportunity identification workshop”; a formalised, and I recommend facilitated, brain-storming workshop. As an engineer, this is some of the most interesting work I have been involved in, a chance to apply the fundamentals in new ways, of creating genuinely innovative solutions to long-standing problems. This type of problem solving is engineering at its most pure, what we were trained for, and it can be invigorating and engaging across staff levels. It is surely a nebulous and hard to quantify advantage, but from my experience the enhanced communications across business areas and the opportunity to change tasks for a while and go back to the fundamentals, helps create a more engaged and enthused workforce.

Flowing on from that, I also recommend aligning your EEO process with existing business goals, rather than the other way around. As an example, this is from the resource processing sector, one corporation had an existing safety program underway, aiming to regularly communicate safety messages to staff and establish a system of recording and prioritising safety projects. With the introduction of EEO it was a small step to include energy efficiency projects, identified by staff, and start to quantify those as well. After 5-years this program has proven extremely effective and reduced Lost Time Injuries year on year, but with minimal change to their business priorities, also yielded many cost-effective energy efficiency projects.

Lessons from the trials

As mentioned above, most generators will find benefit in assessing their whole plant through a structured workshop, rather than breaking it down to individual equipment items, or families of equipment. While other businesses, such as manufacturing and some resource processing sites, are able to assess individual processes or plant-lines effectively, this approach has limited application in a generator. The whole of cycle efficiency for a generator is based on the performance of the individual components, but also the interaction between these components, and then the interaction of this system with the market.

Following on from that, the workshop should involve staff from the whole production chain; from mine planning and fuel procurement, through all levels of plant staff, to corporate level environment managers, traders and senior management. Only with this level of communication and diversity of views can the maximum number of ideas be generated.

In all three trials I have attended the thermal-process expertise in-house is more than adequate to generate opportunities. Benefits come from using external consultants which can connect these experts and generate ideas. The boiler experts on-site know what the short-comings of their equipment are, which changes will yield the greatest benefits. The difficulty is in extracting, analysing and implementing these projects, within the constraints of the corporation and the market.

Will you find opportunities? Yes. The three trials yielded almost 400 idea, and early analysis suggests about a quarter of these will be cost effective over four years, with about 10 per site categorised as “low cost, low risk, implement immediately”. Despite repeated claims from the sector that efficiency is their business and that the program would not yield benefits, each of the trial participants reported unequivocally that the process was worthwhile and generated project ideas that otherwise would not have been discovered. Again the analysis is still in its infancy, but early results suggest that the 4-year payback opportunities were all implemented, sites would yield 2-3% improvement in annual efficiency. I would be surprised that even if your plant is a brand-new, super-critical plant, burning the best coal in the country, there were not opportunities, principally driven by the changes in the market since the plant was built. A well designed and implemented EEO process will shake these ideas lose.

Summarising; three key points

  1. Take the time and write your Assessment Plan very carefully. This plan is in place for 5-years and is designed to change your business and business culture. Make sure that change is advantageous as possible.
  2. Use your internal resources, for the corporation’s benefit, but also for staff benefits. Use this opportunity to engage your workforce and open new lines of communication
  3. Remain open minded and do what you can to encourage this attitude in your staff. If you engage with this process in a positive way you will definitely find benefits, beyond the costs.

I apologise if this seems daunting, but I really can’t stress enough how important it is to get your assessment plan right. This is due to RET 31 December 2012, but they are accepting drafts for comment before then, and there is a legislated window of consultation up to 9 months after this date. Keep in mind however that they will be extremely busy between now and then as 300 other companies seek feedback on new APs. Also worth noting is that RET staff will give feedback based on producing a compliant plan, rather than one which is tailored to your business needs and structure. You have probably gathered that this is an area I have a bit of experience in, and will happily discuss any ideas you might have. I am also taking requests for future newsletters, so please do not hesitate in contacting me if you have any topics, particularly related to EEO, that you would like discussed.

Thank you

Evan Beaver

B Eng (Mech), BSc

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