Solwatt EPC: From Audit to Energy

Performance Contract Solvay Energy Services

Energy savings is key for sustainability

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Source: EEA

Energy efficiency index of European industry

Source: CEFIC

Greenhouse gas emissions index of European chemicals

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Executive summary

• Solwatt is a comprehensive programme designed by Solvay to implement an energy management system on large energy-intensive industrial sites.

• Solwatt complies with the EN16247-1&3 norm and most of the ISO50001:2011 norm.

• The review phase follows two streams: - The technical stream, aiming at documenting in an action plan a minimum of 10% savings

through a series of short payback incremental improvements. - The behavioural and management stream, aiming at fostering a lasting culture of energy

management and savings on the site, with a detailed structure of KPIs and KAIs.

• The implementation phase is run as follows: - KPIs and KAIs are put in place by the site. - Improvements requiring no capex (« quick wins ») are put in place by the site. - Improvements requiring capex (« investments ») are put in place jointly with Solvay, who

provides the necessary capital through an operating lease. Savings are then shared between the site and Solvay over a period of five years for each asset.

• The total programme takes five to eight years to be completed, and during that time savings are typically shared 70% for the site and 30% for Solvay.

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Agenda

Solvay Energy Services

Solwatt in brief

The energy performance contract

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sustainable chemistry SOLVAY: Building a new model of

9,940 million net sales

29,400 employees

117 sites

56 countries

15 Major R&I centers

2013 figures

25%

17% Automotive

& aeronautics

11%

Energy & environment

12% Agro, feed

& food

10% Building &construction

6% Electrical & electronics

19% Industrial applications

Consumer goods & healthcare

Solvay Energy Services: Best-in-class integrated energy management

A breakthrough energy efficiency approach

Innovating solutions to finance energy efficiency projects

Transforming access to energy markets

Optimizing & developing energy production

Leverage unmatched track record in CO2 reduction

Developing renewable energies

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€ 800M PURCHASE OF ENERGY FOR THE GROUP

1000MWe OF COGENERATION CAPACITY

14 M CER/ERU PRODUCTION CAPACITY / YEAR

300 EMPLOYEES 13 COUNTRIES

Transforming access to energy markets

• Direct access to energy markets

• Own dispatching unit

• Trading

• Demand management team

• Dispatches 20% of French gas industrial market

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Optimizing and developing energy production on sites

• Solvay Energy Services manages about 1400 MW of electricity production assets in Europe. We maximise the flexibility and reactivity of electricity consumption and production sites.

• 32 turbines in 6 countries : Argentina, Belgium, France, Germany, Italy, Spain

• Design, construction, maintenance and operation of energy assets

• Internalizing outsource assets

• Building new assets when market/subsidies opportunities

• Managing assets in a pool to optimize their value

Enhancing natural hedge

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Innovating solutions to finance energy efficiency projects

• Financing vehicle developed with and

• Small size projects (€ 5 to 50 m), with payback period over 3 years

• Allowing quick deployment

• Accelerating the energy transition

First project at Solvay’s Rare Earth plant in La Rochelle (France) (November 2013)

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Solwatt key figures*

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* at end 2014

70 industrial sites reviewed

2 000 validated short and medium term actions of which

40% already implemented

9 500 days spent on industrial sites

3 200 days of training

25 dedicated engineers, covering all geographical areas

130 M€ of identified yearly gains, of which 45 M€ (1/3) without capex

The sum of all identified Solwatt actions amounts to a yearly reduction of 600 000 tonnes of CO2

The Solwatt team has accumulated 210 years of industrial experience

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Agenda

Solvay Energy Services

Solwatt in brief

The energy performance contract

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2 main thrusts

Greenhouse gas emissions Levers: energy efficiency, industrial processes, clean technologies, more renewables in energy production and supply.

Sustainable Portfolio Management (SPM), at the heart of strategy Tool for analyzing the product portfolio and its alignment with the requirements and opportunities of sustainable development.

-40% Reduction of Group carbon emissions intensity by 2025

88% of the portfolio analysed in 2015

Group presentation 2016 25/02/2016

Doing business, being responsible

To reduce your current fuel bill… at constant kms driven

Technological gaps vs. incremental improvements

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You can buy a new, fuel-efficient car

Reduce gas unit costs

Remodel your car (change tires, improve engine…)

Learn how to drive it better

With you current car, you can :

For industrial operations

Technological breakthroughs • Membrane electrolysis • Low temperature heat recovery

( ex. ANTARES project of PI) …

Sourcing

Equipment

Operations

Incremental improvements on: • Switch fuel • Renegotiate contract • Switch supplier • …

• Replace inefficient pieces of equipment (motors, pumps…)

• Recover energy via heat integration …

• Review operational parameters • Tighten operations management • Change mindsets • …

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A four-step process

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2 to 4 weeks 2 to 4 weeks 0 to 10 weeks

Steerco 1 Steerco 2 Kick off

1 to 2 months

Screening of the current situation

Idea Generation Off phase Idea validation Action plan Follow-up

Step 1 Step 2 Step 3 Step 4

Preparation

Screening of the current situation

Mindset & Behaviors Off phase Definition of

KPIs/KAIs EMS set up Follow-up

Step 1 Step 2 Step 3 Step 4

Behaviour and Management Stream

Technical Stream

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Key activities:

Final products:

• Diagnostic: identify losses and improvement areas • Idea generation and prioritization: run brainstorming sessions • Idea evaluation: create individual measure cards • Jointly build the new KPIs structure related to energy and propose their integration in the existing structure

• Master plan: define options to meet potential challenges of the current energy system of the plant • Short term implementation actions plan (technical + energy management) with associated financial consequences • KPIs-KAIs structures

Success relies on the involvement of the site

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1

2

Full support from site Management up to the highest level

3

4

Involvement of the BU (Industrial, Technical & Process Managers,…) for technical and political support (including the allocation of CAPEX for the implementation of Solwatt action plan)

Committed site teams • Availability of site engineers to Solwatt during the project phase • WCM / BPMI involved in the project for EnMS workstream • Participation of operators and shift leaders (during workshops, to answer the

questionnaire, to work on indicators and implement KAIs and quick wins)

Good communication site-wide, before, during and after the project

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Objective: reduce energy bill by 10% or more

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1 Create transparency

by delivering an objective diagnosis of

the situation to identify energy losses to

focus on

2 Foster creativity of

stakeholders at all levels of the plant and beyond by involving them all in

brainstorming sessions to generate many ideas

to save energy

3 Follow a structured

progressive evaluation process to filter out ideas

based on feasibility and payback and build an action

plan for the plant

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From idea to asset

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Ideas are generated through brainstorming sessions. The most promising are kept as opportunities

Opportunities are screened through an opportunity matrix and those retained are validated.

After detailed study, opportunities become actions without capex or actions with capex. Actions are validated and sequenced in an action plan.

Required capex is provided by Solvay. Once carried out, an investment becomes an asset.

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1/3 of savings require no capex

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Split of Savings according to payback M€/y (%)

(34%)

(30%)

no CAPEX

(36%) PB <3y

PB <1y

Cumulated CAPEX

Cum

ulat

ed s

avin

gs

1/3

1/3

1/3

Of savings with PB >1y and <3y

Of savings with PB<1y

Of savings with immediate PB

Illustration: Typical cumulated savings vs. cumulated CAPEX curve

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A transformation project towards sustainable results

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Rethinking energy indicators (KPIs)

and reporting tools and processes

The project of the site, for the site and by the site

An action plan aiming at creating a culture of energy

efficiency in the plant

The project relies on 3 aspects to transform the

way the plant’s employees see,

consume, manage energy.

This ensures the

continuous efforts of the plant to implement actions and strive for

energy efficiency in their daily job

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A KPI/KAI structure ensures sustainability of excellence in energy management

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Distance to excellence

Distance to excellence

Site manager

Unit manager (JS)

Production Manager (JF)

Shift leader

Operator

Monthly Weekly Daily Shift Continuous

1

2

KAI tracking 3

KAI tracking 4

KAI 5

Site manager cockpit

T

Time Min.

Target Max.

•3 •2 •1 •3 •2 •1 •3 •2 •1 •3 •2 •1

Target good

Target bad

•3 •2 •1 •3 •2 •1 •3 •2 •1

Weeks

Target

•9 •8 •7 •6 •5 •4 •3 •2 •1

Target bad

•3 •2 •1

Target good

•3 •2 •1 •3 •2 •1 •3 •2 •1 •3 •2 •1 •3 •2 •1 •3 •2 •1

KAIs are put in the hands of operators

KAIfor O2 excess and boiler utilisation rate

function of soda ash load

Illustration: KAI implementation during SOLWATT Torrelavega

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Agenda

Solvay Energy Services

Solwatt in brief

The energy performance contract

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If you lease a car… instead of buying it

Energy Performance Contracts for faster savings

You can get a better car faster !

A fixed fee for having the car available

A variable fee depending on miles driven

Fuel costs will have no impact on leasing costs

You will pay :

For industrial operations

Actions requiring capex can be implemented faster, with immediate savings. Typical 5-year profit sharing scheme is 70% for the plant and 30%for Solvay.

Fixed fees

Profit sharing

Maintenan- ce and operations

Costs are split between: • Paid over 5 years • Depends on total capex • Asset is amortized and transferred

after 5 years.

• Paid over 5 years • Depends on calculated

savings.

• Operation and maintenance is delegated to plant

• Fee is paid to plant for the service • Exceptional repair is cost of owner.

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Solution

▪ Preheat the condensate at the inlet of CC with the heat of the liquid at the outlet of CC (96°C).

▪ Installation of a new heat exchanger.

Impact

Investment: 100 k€ (+200 k€ for DT) Cost of steam: €15,00/tonne Steam saving: 2,74 tonne/hour Yearly savings: 360 k€ Payback: 0,8 year

Current state

▪ Liquid at the outlet of CC is cooled down with cooling water from 96°C to 35°C.

▪ Condensate at the inlet of CC is warmed up in the CC from 60°C to 96°C. To ensure a

correct energy balance a 2-step

flash tank is required

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Heat exchanger example

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Electrical motors example

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Solution

▪ Replace 20 motors ▪ Install 5 new motors with VSD ▪ Install 5 VSDs on existing motors ▪ Replace 4 pumps with smaller models

Impact Investment: 560 k€ Cost of electricity: P = €58,00/MWh Savings: (Er - Em) x Tm x P Er is previous hourly consumption Em is new hourly consumption Tm is hours per year Yearly savings: 919 k€ Payback: 0,6 year

Current state

▪ Overall number of motors > 200 - including Pumps, fans, mill and conveyor belt drives

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The profit sharing principle in an energy performance contract

• Capex is provided by Solvay.

• Implementation is jointly managed by the site and Solvay.

• Profit-sharing is based on calculated savings and paid quarterly.

• Asset operation and maintenance is delegated to the site against a fee.

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-1 000

-500

0

500

1 000

1 500

0 1 2 3 4 5 6 7 8 9 10

Client

SES

0%10%20%30%40%50%60%70%80%90%

100%

1 2 3 4 5 6 7 8 9 10

Client

SES

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Business plan

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Parameters Fees Statistics

Yearly spend: 20 000 Diagnosis fixed: 0 Actions identified: 100

Validated savings: 10% Maintenance: 2% Actions validated: 30

Quick wins: 25% Rent: 15% o/w with capex: 21

Investment need: 2 000 Share: 30% Average capex: 95

Corporate tax rate: 30%

SME gains: 3%

Customer view in '000 Euros

0 1 2 3 4 5 6 7 8 9 10

Savings without capex 300 500 500 500 500 500 500 500 500 500

Savings with capex 825 1 350 1 500 1 500 1 500 1 500 1 500 1 500 1 500 1 500

SME benefits 189 363 540 540 540 540 540 540 540 540

Collateral savings 11 19 20 20 20 20 20 20 20 20

Total savings 1 325 2 232 2 560 2 560 2 560 2 560 2 560 2 560 2 560 2 560

Rent on assets -158 -273 -300 -300 -300 -143 -27 0 0 0

Profit sharing on assets -330 -540 -600 -600 -600 -270 -60 0 0 0

Customer savings share 837 1 419 1 660 1 660 1 660 2 147 2 473 2 560 2 560 2 560

Effective share rate 63% 64% 65% 65% 65% 84% 97% 100% 100% 100%

Maintenance fees 26 38 40 40 40 24 3 0 0 0

Recurring Opex -12 -27 -30 -30 -30 -30 -30 -30 -30 -30

Customer Ebitda increase 851 1 430 1 670 1 670 1 670 2 141 2 446 2 530 2 530 2 530

SES Capex -800 -1 000 -200

Solwatt won the first price in the category “managerial innovation” at the Global Solvay Innovation Awards last Oct 18 2013

SOLVAY ENERGY SERVICES 25 rue de Clichy – 75009 Paris – France www.solvay.com

Pascal Guerin Business Development Director Tel + 33 426 190 125 Mob +33 642 076 512 pascal.guerin@solvay.com

Laurent Daoud Senior Expert Technology & Energy Efficiency Tel + 33 1 5356 6188 Mob + 33 6 3019 5796 laurent.daoud@solvay.com

Your contacts

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www.solvay.com

Game changer in Energy & CO2