Setting the pace for change

20 Jul 2009Archived News Energetics in the News

PUBLISHED: WME Magazine, by Richard Collins, Energetics is quoted for our recent Energy Efficiency report outcomes.

Energy efficiency for many remains an opportunity lost, but organizations such as Incitec Pivot, Telstra and Thiess have found petajoule savings.

The politics of emissions trading are as muddy as quicksand, but the drivers behind increasingly urgent energy reform are crystal clear: volatile oil prices, steadily rising demand for energy and global imperatives such as climate change.

It is the scale and pace of the required change that sets the energy sector apart. The OECD expects global energy demand to expand 45 per cent between 2008 and 2030. In Australia, energy consumption throughout the 10 years to 2006/07 has increased at an average rate of 2.3 per cent a year.

The capital spending to meet this ongoing growth in demand is difficult to overplay. NSW on July 1 saw electricity prices jump 21 per cent to pay for $18 billion in new infrastructure over the next five years.

In Queensland, John Cole from the state’s Office of Clean Energy said business as usual will see demand for peak energy increase 75 per cent by 2020, costing an extra $15 billion in distribution networks alone. That’s $3 million for every additional MW.

The emissions picture is little better. Michele Rosano of Curtin University’s Centre for Cleaner Production uses the mining industry to illustrate the challenge if Australia adopted a 50 per cent emissions reduction target by 2050. It would translate to an 87 per cent reduction in greenhouse intensity – Australia has high emissions intensity rather than high energy intensity per se – which is a staggering five per cent improvement per year, five times the current rate.

Little wonder then that energy conservation and efficiency is finally starting to creep onto the national agenda. The $3.9 billion insulation rollout for homes was the first time a Federal Government has thrown serious money at the demand side.

In addition, COAG has been advancing the National Framework for Energy Efficiency and several states are pushing along with their own efficiency targets using market-based instruments. Studies prepared for the NFEE estimated that Australia could unlock savings – beyond business as usual - of 5 – 10 per cent through cost-effective energy efficiency improvements.

Other put it much higher, such as the International Energy Agency which estimates savings of more than 20 per cent. The EU may have listened, adopting an energy efficiency target of 20 per cent improvement by 2020. Practically then, where is Australia at?

Petajoules and payback
In 2006, the Howard Government introduced the Energy Efficiency Opportunities Act and required organizations using more than 0.5 Petajoules (PJ) of energy annually to study their saving opportunities and report publically.

Shortly after the December 31 reporting deadline, consultancy Energetics pulled together an analysis of 165 reports from organizations ranging from ABB Grain and Brisbane City Council to Woolworths and Xstrata. It found they had cumulatively assessed 934PJ of energy, equivalent to 25 per cent of total final energy use in Australia.

The companies identified 6,435 opportunities worth approximately 52PJ in energy savings. This equates to an average energy efficiency improvement of 5.6 per cent, which to be honest is pretty unimpressive when you consider the NFEE’s 5 – 10 per cent estimates are on top of business as usual energy savings. Let’s dig in though.

So far, about 32PJ of total savings are already being implemented or have corporate commitment. If all identified opportunities were implemented, Energetics estimates savings for the firms of more than $650 million a year.

“The total savings identified would require an upfront investment of about $1.1 billion, with a payback of just 20 months. This does not include energy price escalation or a price on carbon,” says its assessment.

“This indicates that companies are tending to report projects with modest capital cost and not reporting on more capital intensive projects.”

Nearly 70 corporations reported few or no savings from their first assessments, which Energetics found “unrealistic”. Many of the reports indicate an initial focus on short-term savings to a four-year benchmark in the legislation.

Some 38 per cent of the opportunities were likely to involve some modest capital spending, ranging from variable speed drive implementation to new or replacement process technologies. A further 32 per cent were likely to require “minor works” expense.

Energetics estimated more than $11 billion worth of energy use has been assessed, just over half the total energy use of the 165 reporting firms. Clearly we’re talking the big end of town here.

Oil, gas, mining and mineral processing accounts for more than half of the identified opportunities (27.76 per PJ), with manufacturing another 14.13PJ, followed by utilities, transport and storage sectors at a combined 9.34PJ and the commercial sector with 0.98PJ. The commercial sector on average reported the highest level of savings with the potential to cut energy use by 11 per cent. Worst was utilities, which identified savings of just 4.6 per cent of total energy use.

Real companies, real investments

Some 60 per cent of the identified efficiency opportunities related to “cross-cutting” technology such as boilers, steam systems, pumps, lighting and the like.

Another 31 per cent involved process improvement and technology, meaning activities such as fleet management, heat treatment and process controls.

Finally, 30 per cent were classed as operational or maintenance activities, such as fixing leaks.

“It is encouraging that companies are not simply looking at ‘traditional low-hanging fruit’ such as operational and maintenance improvements, and is looking at process and some capital improvements as well,” says the report.

“However, it is likely that much of the true energy efficiency potential will be achieved via the investment of higher levels of capital.”

A sample of projects and opportunities, then. Incitec Pivot identified 130 potential opportunities to improve efficiency at its Gibson Island facility in Brisbane and then culled it to 33, based on payback of less than four years. Eight have already been implemented, saving 0.14PJ per year, some two per cent of site use. One was Advanced Process Control softerware that automatically adjusts the operation of the ammonia plant, saving 30,000GJ (0.03PJ) of energy a year and boasting a payback of less than six months – and resulting in an extra five tones of product per day.

Telstra has implemented 153 initiatives within its ‘strategic network buildings’, which use 1.2PJ a year. It is looking into another 153. One being trialed is the use of flexible balls injected into the circulating water of a chiller to agitate the tube walls to reduce the build up of scale. Balltech claims a 10 per cent efficiency improvement for its system, which adds up given Telstra runs 223 chillers across 81 telephone exchange sites.

Mining services contractor Thiess used 7.63PJ of energy in 2007/08, mainly diesel in mobile equipment. It reduced 206 ideas from a site and a management workshop to 46 potential projects and has implemented four – payload management, automating mobile lighting equipment, plant idle-time management and turbo idle-down time. It expects annual energy savings of 150,800GJ, some 1.7 per cent, cutting the annual bill by $3.7 million and paying off inside two years.

Bunker Freight Lines assessed its prime movers and identified 32 opportunities with a payback inside the four-year benchmark. Eight have been investigated and offer the potential to reduce its 22ML annual fuel use by at least 12 per cent. Potential savings are worth at least $4.4 million for a one-off investment of $2,586,000 – a simple payback of seven months.

No energy for change
So what’s holding back a revolution in energy use? For starters, energy is just too far down the management pecking order; a key 2007 survey of manufacturers by the Australian Industry Group found annual electricity outgoings represented just 0.5 per cent of sales revenue, gas the same again for those who have it.

These bills are typically sent to the accounts department and treated as a low-cost utility. Rarely would the engineer, facility manager or environment manager get a look at them, yet they are the ones with the hands-on responsibility and technical ability.

Other barriers include imperfect information, the landlord/tenant problem where neither party invests in energy savings because they may not reap the reward, and regulatory failure that among other things sees network businesses lose if customers save energy.

Mandatory measures are starting to appear, such as the NSW Energy Saver Scheme requiring energy retailers and key market customers to find and fund energy savings. Yet so-called “demand side responses” remain at the margins, even as demand overload at the start of the year led to a forced electricity shutdown in Victoria and South Australia and a spoke in pool prices to the market cap of $10,000 per MWh. The scale and pace of the energy security challenge remains daunting.

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