Energy Management Measures

Evaluation and Financing

Energy Management

Carlos A. Santos Silva

Outlook

Energy Efficiency Measures

Project Evaluation

• Definitions

• Evaluation metrics

• Example

Financing Energy Efficiency

• Performance Contracts

• IMPVP

Energy Efficiency Measures

Implementing Energy Efficiency

Energy Audit

ECM

Design and Implementation

Measurement and Verification

Energy Conservation versus Energy Efficiency

Energy Conservation: use less of a certain energy service

• Eliminate Waste

• Rational use• Eliminate stand-by is a energy conservation measure

• Using natural light instead of artificial light

Energy Efficiency: use less energy resource for the same service

• More efficient appliances

• Alternative energy sources

• Alternative processes• Replace light bulbs by fluorescent lights

• Heating hater with solar energy

Implementing Energy Efficiency

Energy Audit

EE Measures

Design and Implementation

Measurement and Verification

Energy Efficiency Measures

Reducing load

Increasing efficiency

Reducing unit energy cost

Space heating and Cooling

Reduce heat exchange losses through the envelope

• Insulation

•Ceilings

•Floors

•Walls

•Light colored external surfaces

Reduce heat exchange losses through

windows

Reducing heating losses

• Open blinds and shades on sunny winter days, and close them at night

• Use an inexpensive door sweep to reduce air leakage under exterior doors

• Install Air-Lock vestibule system or revolving doors

• Reduce heat to unused rooms in the house, and close their doors.

Reducing cooling losses

• Open windows at night to bring in cool night air and close them and the blinds and shades during the day

• Shade west facing windows

• Plant trees that leaf out during the cooling season on the west and south sides of your house.

HVAC systems

• Reducing heating losses

– Set the air conditioning to a maximum of 20°C

– Close fireplaces when not working

• Reducing cooling losses

– Set the air conditioning to a minimum of 25°C

• All year round• Clean filters regularly

• Schedule automatic control

Hot Water

Boilers

• Reduce the temperature setting of your water heater to 40 °C maximum

• Reduce hot water loads

• Add an insulating wrap to older water tanks

•Due maintenance

• The main inefficiency source is lack of excess air

Appliances

Freezers and Fridges

• Regular operation

• Keep your refrigerator door closed whenever possible.

•Maintain your refrigerator between 3-5°C

•Maintain your freezer at -18°C.

•Disconnect fridges not very used or old

•Maintenance

•Unfroze once a year to avoid ice build-up

• clean dust out of the coils behind and/or under

Cooking appliances

Use microwave ovens for cooking small meals

Adjust the flame on gas cooking appliances so it is blue,

not yellow

Use toasters, kettles and coffee pots with time limited

shut off switches

House keeping

Run clothes and dishwasher only with a full load / or

use half load programs

• Air dry dishes in your dishwasher

• Wash clothes in cold water (40°C at the most)

Do not overload your dryer as it takes clothes longer to

dry.

Use irons with time limited shut off switches

• Switch it off even for small breaks

Entertainment

Shut down home computers or put them on sleep mode

when not in use.

Plug small electronics into a power strip so you can turn

them off at the same time.

Turn off the TV when no one is viewing it

Lighting

Use

Turn off lights when not in use.

Use task lighting whenever possible instead of brightly

lighting an entire room.

Control outdoor lights with sensors or timers so they

stay off during the day.

Ballasts

Ballasts limit the current through an electrical load

• inductive ballast used in fluorescent lamps limit the current otherwise it would rise to destructive levels due to the tube's negative resistance characteristic

• as simple as a series resistor (LED) or inductor, capacitors, or a combination thereof or as complex as electronic ballasts used with fluorescent lamps and HIDs

Electronic ballasts

An electronic ballast uses solid state electronic circuitry to provide the proper starting and operating electrical conditions to power discharge lamps

Electronic ballasts usually supply power to the lamp at a frequency of 20,000 Hz or higher, rather than the mains frequency of50 - 60 Hz;

• this substantially eliminates the stroboscopic effect of flicker, a product of the line frequency associated with fluorescent lighting

• as remains ionized in the arc stream, the lamp operates at about 9% higher efficacy above approximately 10 kHz.

Benefits

Electromagnetic BallastElectronic Ballast

HeatWastes internal energy which generates about 30ƒ C more

heat.Reduced heat internal losses less than 8 watts results in 5-10 percent

less air conditioning costs.

Light Flicker60 Hz frequency causes light flicker levels of 30 percent or

higher; can cause headaches and nausea.20,000-25,000 Hz produces virtually no detectable flicker; does not

cause headaches and nausea.

Noise Vibration of electromagnetic field causes humming noise. No audible noise, less distracting.

Weight Heavy components coated in heavy protective material. Weighs about half as much as electromagnetic type.

EnergyRequires 30-40 percent more input for the same amount of

light output.Requires 30-40 percent less input for the same amount of light output.

Replace T5 and T8 fluorescent by LED

LED Fluorescent

Wattage 17-22 watts 25-32 watts

Lumens 1700-2200 2300-3100

Avg Cost $65/each $3-$5/each

Avg Life 50,000 hours 30,000 hours

Warranty 2-5 years 2-3 years

Replacement is easy but it may take long time…

Energy bills’ management

Tariffs

• ERSE

Schedule

Energy efficiency measures

Find out which is the best tariff (and retailer)

Change processes to avoid use of peak load during

peak time

• Signs

• Coaching

• Automatic switches

• Control

Project evaluation

What is it

Methodology for assessing the economic and financial (and

social and environmental) impact of proposed capital project

• Economic analysis assesses the net worth of a project• a mean to rank projects in terms of the efficient allocation of resource

• Financial analysis assess the budgetary implications

of the project • provides information on cash flows, borrowings, funding sources, etc.

Project evaluation steps

1. Identify service need and define objectives and scope

2. Identify options to accomplish the objectives

• Narrow down the options

3. Do the economic and financial analysis of the different options

• Identify benefits (avoided costs and saving costs)

• Identify investment and operation costs

• Evaluate net benefits

• Due risk analysis and sensitivity analysis

4. Rank and choose the best option

Definitions

Present value (Valor Actual)

PV is a future amount of money that has been discounted to reflect its current value, as if it existed today.

• The present value is always less than or equal to the future value because money has interest-earning potential, a characteristic referred to as the time value of money.

Time value of money is the principle that a certain currency amount of money today has a different buying power (value) than the same currency amount of money in the future.

• The value of money at a future point of time would take account of interest earned or inflation accrued over a given period of time

A dollar today is worth more than a dollar tomorrow

Discount rate (i)

to evaluate the real value of an amount of money today after a given period of time, economic agents compound the amount of money at a given interest rate

• Most calculations use the risk-free interest rate which corresponds to the minimum guaranteed rate provided by a bank's saving account for example• short-dated government bonds is normally perceived as a good proxy for

the risk free rate

• Compound interest is multiplicative. Interest is earned on the interest that has already accrued (credited) in addition to the principal (initial amount)

Present value calculation

The present value of a certain amount of money C is given by

• where n is the number of compounding periods between the present date and the date where the sum is worth C

• i is the discout rate for one compounding period (the end of a compounding period is when interest is applied, for example, annually, semiannually, quarterly, monthly, daily). • The interest rate i is given as a percentage, but expressed as a decimal in

this formula

Cash flow (CF)

Movement of money into or out of a business, project, or

financial product

• measured during a specified, limited period of time

• It corresponds to savings and earnings directed

related to the project implementation

Costs

value of money that has been used up to produce

something, and hence is not available for use anymore

• Investment costs – value used to buy an asset

required to the project

• Operation costs – value used to operate the asset

required to the project

• Fixed costs – value of money spent because there

is a project going on

Evaluation metrics

Net presente Value (VAL)

sum of the present values of the individual cash flows

(R) of the same project

• Where N is the number of periods (months, years)

under analysis

• i is the interest rate

• Rt is the cash flow in period t

NPV analysis

NPV > 0the investment would add value

to the firmthe project may be accepted

NPV < 0the investment would subtract

value from the firmthe project should be rejected

NPV = 0the investment would neither gain nor lose value for the firm

We should be indifferent in the decision whether to accept or reject the project. This project

adds no monetary value. Decision should be based on other criteria, e.g., strategic

positioning or other factors not explicitly included in the

calculation.

Payback period

period of time required for the return on an investment to "repay" the sum of the original investment

• The time value of money is usually not taken into account

• It does not account for future cash-flows

It gives an indication, but it should not really drive the decision

Internal Rate of Return (IRR)

annualized effective compounded return rate that makes

the NPV equal to zero

• Value of r that makes

• It has to be calculated iteratively• In MS Excel use” goal seek” function

IF IRR is higher than the cost of capital, accept the project

Financing Energy Efficiency

Energy Savings Performance Contracts

Alternative financing mechanism

designed to accelerate investment

in cost effective energy

conservation measures

• usually performed by ESCO and

the management of the facility

Contracting modelsShared Savings (energy savings):

the cost savings are split for a pre-determined

length of time in accordance with a pre-arranged

percentage

• client takes over some performance risk, hence it

will try to avoid assuming any credit risk

• The ESCO therefore assumes both performance

and the underlying customer credit risk

Savings Guarantee (cost savings):

the ESCO guarantees a certain level of energy savings and in this way shields the client from any performance risk.

• If the savings are not enough to cover debt service, then the ESCO has to cover the difference.

• If savings exceed the guaranteed level, then the customer pays an agreed upon percentage of the savings to the ESCO

Source: Dreessen 2003

Measure & Verification

M&V Definition

• Process to quantify the savings associated with the implementation of energy efficiency

measures

– Measures energy, not the cost

– It is necessary to evaluate economic savings

– It is based in the application of a methodology

• International Performance Measurement and Verification Protocol (IPMVP)

• ASHRAE Guideline 14:Measurement of Energy and Demand Savings

• eeMeasure

IPMVP

M&V Protocol

(set of different documents)

Volume I – defines and presents thefundamental principles of M&V,

describes a framework for a detailed M&V,

Volume II - provides a comprehensive approach to evaluating building

indoor-environmental quality issues that are related to ECM design,

implementation and maintenance; suggests measurements of indoor

conditions to identify changes from conditions of the baseline period

Volume III - provides greater detail on M&V methods associated with new building construction (Part I),

and with renewable energy systems added to existing facilities (Part II)

Managed by Efficiency Valuation Organization

M&V Activities (IPMVP)

meter installation calibration and maintenance

1

data gathering and screening

2

development of a computation method and acceptable estimates

3

computations with measured data

4

reporting, quality assurance, and third party verification of reports

5

Application (IPMVP)

M&V Options

Operational Verification of ECM

Option A

Option B

Option C

Option D

Retrofit Isolation

(A or B)

• Only the performance of the systems affected by the ECM is of concern, either due to the responsibilities assigned to the parties in an energy performance contract, or due to the savings of the ECM being too small to be detected in the time available using Option C.

– Interactive effects of the ECM on the energy use of other facility equipment can be reasonably estimated, or assumed to be insignificant.

• Possible changes to the facility, beyond the measurement boundary, would be difficult to identify or assess.

– The independent variables, which affect energy use, are not excessively difficult or expensive to monitor.

• Sub-meters already exist to isolate energy use of systems.

• Meters added at the measurement boundary can be used for other purposes such as operational feedback or tenant billing.

• Measurement of parameters is less costly than Option D simulations or Option C non-routine adjustments.

• Long term testing is not warranted.

– There is no need to directly reconcile savings reports with changes in payments to energy suppliers.

Option A

Choosing M&V Option

Uncertainty management

Types of Error

• Errors occur in three ways: modeling, sampling, and measurement:

– Modeling. Errors in mathematical modeling due to inappropriate functional form, inclusion of irrelevant variables, exclusion of relevant variables, etc.

– Sampling. Sampling error arises when only a portion of the population of actual values is measured, or a biased sampling approach is used. Representation of only a portion of the population may occur in either a physical sense (i.e., only 20 of 1,000 light fixtures are metered), or in the time sense (metering occurring for only ten minutes out of every hour).

– Measurement. Measurement errors arise from the accuracy of sensors, data tracking errors, drift since calibration, imprecise measurements, etc. The magnitude of such errors is largely given by manufacturer's specifications and managed by periodic re-calibration.

Confidence and Precision

• Precision is the measure of the absolute or relative range within which the true value is expected to occur with some specified level of confidence.

• Confidence level refers to the probability that the quoted range contains the estimated parameter.

– Confidence refers to the likelihood or probability that the estimated savings will fall within the precision range

– A statistical precision statement (the ±20% portion) without a confidence level (the 90% portion) is meaningless.

• Savings are deemed to be statistically valid if they are large relative to the statistical variations

– savings need to be larger than twice the standard error

– If the variance of the baseline data is excessive, the unexplained random behavior in energy use of the facility or system is high, and any single savings determination is unreliable.

How to improve

• Where you cannot meet this criterion, consider using:

– more precise measurement equipment,

– more independent variables in any mathematical

model,

– larger sample sizes, or

– an IPMVP Option that is less affected by unknown

variables.

Statistical Measures

• Sample Mean

• Sample Variation

• Sample Standard Deviation

• Sample Standard Error

• Sample Standard deviation of the total

• Coefficient of variation

Absolute precision

Example

Example

Modeling errors

Routine adjustments modeling

Coefficient of Determination (R2)

Standard error of estimate

Example

• Occupancy is a measure of percent

occupancy in the building. – In this model 342,000 is an estimate of

baseload in kWh,

– 63 measures the change in consumption

for one additional HDD,

– 103 measures the change in

consumption for one additional CDD,

– 222 measures the change in

consumption per 1% change in

occupancy.

monthly energy consumption = 342,000 + (63 x HDD) + (103 x CDD) + (222 x Occupancy)

Implementation Example

Situation

More efficient light fixtures are installed in place of existing fixtures in a Canadian school, while

maintaining light levels.

– This project was part of a broader program of the school board to hire a ESCO, who

would design, install and finance many changes in a number of schools.

– Payments under the contract are based on measured savings at the utility prices

prevailing at the time of signing the contract.

– Savings are to be demonstrated, according to an IPMVP adherent M&V Plan,

immediately after commissioning of the retrofit

– Since the owner controls operation of the lights, the contract specified that the M&V

Plan will follow Option A, using estimated operating hours

Factors Affecting the M&V Design

• All light fixtures are powered by a common 347-volt supply system dedicated to lighting. This situation makes power measurement simple.

• Operation of lights significantly affects heating energy requirements, so the interactive effect needed to be estimated.

• Operation of lights significantly affects mechanical-cooling requirements. However, since very little of the school is mechanically cooled and that space is usually vacant during the warmer weather, cooling interactive effects were ignored.

• School-board officials had difficulty accepting an arbitrary assumption of lighting operating periods. They agreed to pay for a carefully instrumented two-month period of logging lighting patterns in one school. This test This test would substantiate the estimated operating hours that would be agreed for all schools.

M&V Plan

• The measurement boundary of this ECM was drawn to include the lighting fixtures

connected to the 347-volt supply system.

– The heating interactive effect was determined by engineering calculations to be a

6.0%increase in boiler-output energy requirements, for the period from November

through March. Boiler efficiency in winter was estimated to be 79% under typical winter

conditions.

– The static factors recorded for the baseline included a lighting survey giving a

description, location, light level, and count of the number of operating and burned out

lamps ballasts and fixtures.

– 30 lighting loggers were placed in randomly chosen classrooms, corridors, locker

rooms, and offices and also in the gym and auditorium, for two months. This period

included the one-week spring holiday and two legal holidays.

Data

• For the 19 classroom loggers, the standard deviation among the readings for 6 recorded

school weeks was found to be 15 hours per week. With 19 x 6 = 114 readings, the standard

error in the mean values was computed to be 1.4 hours per week

Estimations

• Since the lighting retrofit was applied uniformly to all fixtures, the load-weighted

average estimated annual operating hours for this school were determined to be 2,996 (

3,000).

Savings calculation

• Baseline power measurements were made with a recently calibrated true rms watt meter of the three-phase power draw on the 347-volt lighting circuits

• From a thirty-second measurement on the input side of two lighting transformers, it was found that with all fixtures switched on, the total power draw was 288 kW.

– Seventy lamps (= 3 kW or 1%) were burned out at the time of the test. It was determined that the fraction burned out at the time of this measurement wasnormal.

• Since lighting loads establish the building electrical peak at a time when all lights are on, electrical demand savings will be estimated to be the same as the measured load reduction on the lighting circuits.

– The utility bills showed a lower demand during the summer holidays

• July and August lighting circuit demand is only 50% of the peak measured circuit load

• The marginal utility prices at the time of contract signing was CDN$0.063/kWh, CDN$10.85/kW-month, and CDN$0.255/m3 of gas.

Results: Savings in electricity

• After installation of the ECM, the lighting circuit power was re-measured as in the baseline test.

– The power draw was 162 kW with all lights on and none burned out.

– With the same 1% burnout rate as in the base year, the post-retrofit period maximum power would be 160. kW (=162 x 0.990). • The power reduction is 288. – 160. = 128 kW.

• Energy savings with no adjustments are 128 kW x 3.00 × 103 hrs/year = 384,000 kWh/year

• Demand savings are 128 kW for 10.0 months and 64 kW for 2.0 months, for a total of 1,410 kWmonths.

Results: Savings in gas

• Assuming the lighting savings are achieved uniformly over a 10 month period, the typical winter month electrical savings are 384,000/10 = 38,400 kWh/month.

• The associated boiler load increase is 6.0% of these electrical savings for November through March, namely:

– 6.0% x 38,400 kWh/mo x 5.0 months = 12,000 kWh

• Extra boiler input energy is:

– 12,000 kWh / 79% = 6.0% x 38,400 kWh/mo x 5.0 months / 79% = 15,000 kWh

• The gas being used in the boiler has an energy content of 10.499 kWh/m3, so the amount of extra gas is = 15,000 / 10.499 = 1,400 m3 gas

– The value of the extra gas used in winter is 1,400 x $0.255 = CDN$360.

total net savings = $39,500 – $360 = CDN$39,100.