Energy Efficiency should be Part of the Energy Matrix to Reduce Carbon Emissions by John DaizaEMEA, Expert Opinion, Featured, Natural Resources and Energy Tuesday, February 8th, 2011
To address the challenges posed by climate change, particularly with respect to carbon emission reductions, government policies mandated by many countries around the globe, are focusing primarily on renewables such as on-shore and off-shore wind, solar/photovoltaic, biomass/biogas, hydrogen-based fuel cells, tidal wave/oceanic power and other exotic and alternative energy applications and innovations. However, not enough emphasis, attention and priority are given to potentially the quickest, easiest and most-effective method and solution to reduce carbon emissions: Energy Efficiency.
Energy efficiency must play an integral part of the energy matrix not only because it is prudent, proven and practical, but because there are many strategic drivers and value-added benefits and advantages that our industrial — and cyber/information age — society can (and should) benefit from in terms of the supply side management (“SSM”) as well as from the demand side management (“DSM”) platforms. While the mathematical formula/algorithm on quantifying the cost-benefit ratio of energy efficiency can be a bit abstract and esoteric, for purposes of this article, energy efficiency can be qualitatively defined as producing more output with the same input. At its core, it is the best and most effective utilization of technologies, systems, procedures, practices and processes designed to maximize the output of a particular product. Energy efficiency can produce concrete benefits not only in terms of carbon emission mitigation, but concomitantly, it also achieves the following strategic drivers:
Reduction in consumption rates and preservation of precious (and scarce) hydrocarbon fuels and related natural resources (such as water and related commodities).
- Reduction of overall production and generation costs of energy (in kilowatt-hour of consumption per capita).
- Enhancement/optimization in thermal/load efficiency, reliability and sustainability of power plants and related T&D infrastructure (e.g., the latter by the “smart grid” method/mechanism).
- Reduction in overall energy costs to consumers (fixed and variable electrical and thermal energy expenditures).
- Provision for enhanced economic development and job creation.
The DSM dynamic of the energy efficiency model represents an opportunity for the consumer/end-user (whether residential, commercial or industrial) to play a key role in controlling his consumption profile. In essence, the consumer takes stock and control of his daily consumption rate by ensuring the use of less energy during peak hours and/or to move the time of energy use to off-peak times such as night-time and weekends (a concept called “peak-shaving”). He can also utilize more energy efficient appliances (such as air conditioners, water heaters and pumps, dish washers, and other electrical devices, instrumentation and controls). Thus, the consumer achieves cost-savings so that he has a quantifiable incentive to employ energy efficiency from a DSM standpoint. With a multiplier effect from the DSM model (i.e., this “one” consumer times potentially “millions” of consumers like him in every country and region of the planet) translates to less energy (and fuel) consumption and thereby less pollution (i.e., carbon emissions, etc.) that would otherwise be emitted into the atmosphere.
Therefore, the ability/willingness of electricity consumers to adjust to prices by altering the “elasticity” of the demand curve (i.e., during peak demand periods) plays an enormous contributing factor in reducing power consumption. However, peak demand management does not necessarily always decrease total energy consumption, but it is expected to reduce the overall need for large (and expensive) investments in new power plant applications (and, hence, less pollution).
On the supply side of the energy efficiency paradigm, the application which requires the most attention and focus by government agencies and multinational corporations is co-generation, or combined heat and power (“CHP”). CHP has historical roots in “captive” or “inside-the-fence” energy provision to heavy industries (such as auto factories, steel mills, aluminum smelters, petrochems and refineries and related manufacturing industries) as well as in countries which employ municipal district heating.
The innovative aspect of the CHP model is that, in addition to electrical and thermal energy (such as steam, heating and/or hot water), many CHP plants today also utilize chilled water (tri-generation); and a few of the CHP’s capture CO2 for industrial purposes. This latter concept is called “quad-generation”. The benefits, including for the environment, are enormously substantial. Some quad-generation applications can achieve thermal efficiencies in excess of 80%. In addition to the CHP’s being a key driver to its corporate “social responsibility” under-taking, this SSM application will produce energy cost savings and increased energy reliability, security and sustainability. Many CHP quad-gens will also result in a reduction in emissions of at least 40% per power plant.
In view of the environmental and cost benefits, it is clear that our global community should have more CHP plants (especially tri-gen and quad-gen facilities) from an SSM standpoint. However, this is not always obvious from an investment perspective. The operation, and hence long-term economic viability of the CHPs, is driven by heat demand (due primarily to the high initial capital cost structure). Therefore, from a life-cycle analysis standpoint, long-term thermal energy (e.g., steam, heating/hot water, chilled water, carbon capture, etc.) demand/consumption by off-takers/end-users is required. There is often a requirement to sell “over-the fence” (or “spill” or “wheel”) a substantial amount of electricity onto the power grid. If the tariff to be received by a generator is not sufficiently high enough (to produce reasonable returns), there is a significant disincentive to CHP development and thus a degradation in energy efficiency.
In recognition of this, several countries have incentive frameworks and programs to encourage co-generation, tri-generation and quad-generation. However, such benefits are often difficult to demonstrate in practice, invariably because the qualification criteria are unclear and very complex, the application process is quite cumbersome, there is lack of viable and credible incentive formulae/regime, the requirements for permitting and grid connection are extremely archaic and bureaucratic, and monopolistic utilities are unwilling to provide network access – especially where there may be questions over who is responsible for the costs of connection and new substation/switchyard synchronization.
The critical factor to easier and more efficient CHP development around the world is greater focus on the practicality of getting these schemes and applications on-line as rapidly as possible. Of most importance are simple permitting, straightforward procedures for obtaining feed-in tariffs and other incentives, and directing incumbent utilities and transmission/distribution firms to connect CHPs and facilitate ease of network access.
Implementation of these measures, from an SSM and DSM standpoint, would greatly encourage CHP development and application and constitute the quickest, easiest and most cost-effective means to achieving energy efficiency and emissions reduction: i.e., optimizing energy use and ensuring carbon footprint mitigation.