ENERGY CONSERVATION -A KEY FACTOR FOR PRODUCTIVITY

1. ENERGY CONSERVATION -A KEY FACTOR FOR PRODUCTIVITY S. THANGARATHNAM MEMBER TAMIL NADU ELECTRICITY REGULATORY COMMISSION

2. OUTLINE Energy Policy of India Energy Conservation Act 2001 Energy Saving Potential in different sectors Energy Conservation (EC) limits � A look at 2050 Energy Conservation � Case studies Demand Side Management Standards and Labelling Funding Agencies ESCOS Energy Conservation � Tamil Nadu Scenario Energy Conservation and Productivity Energy Conservation � A key factor for productivity Conclusion

3. Source: BEE-IREDA Energy Policy of India � Short term Maximize returns from the existing assets Reduce losses in transportation and in end use Initiate action to reduce energy intensity of different consuming sectors and promote conservation through organizational and fiscal measures Initiate steps to meet the basic energy need of rural and urban households so as to reduce the existing inequities. Maximize satisfaction of demand for energy from indigenous resources

4. Source: BEE - IREDA Energy Policy of India � Medium term Progressive steps to substitute petroleum products by coal, natural gas and electricity Action for accelerated development of all renewable energy resources especially hydro potential Promote programmes to achieve self-reliance in energy sector Create appropriate organizational changes in consistent with the over all energy strategy

5. Sorces: BEE - IREDA Energy Policy of India � Long term Promote an energy supply system, largely based on renewable sources of energy Promote technologies of production, transportation and use of energy that are environmentally benign and cost effective

6. Energy Conservation Act 2001 EC Act 2001 empowers the union government and in some instances the state government to: Notify energy-intensive industries, establishments and commercial buildings as designated consumers Prescribe energy consumption norms and standards for designated consumers Direct designate consumers to appoint certified energy managers for efficient use of energy State Government to amend the energy conservation building codes to suit regional and local climatic conditions

7. Energy Conservation Act 2001-cont. Direct owners of commercial building to comply with the energy conservation building codes Direct mandatory display of labels on notified equipment and appliances Specify energy consumptions standards for notified equipment and appliances Prohibit manufacture, sale, purchase and import of notified equipment and appliances not confirming to standards

8. Energy Conservation Act 2001-cont. Under the provision of this Act the Bureau of Energy Efficiency (BEE) was established with effect from 1-03-2002 The mission of the BEE is to institutionalize energy efficiency services, promote energy efficiency delivery mechanisms, and provide leadership for improvement of energy efficiency in all sectors of the economy

9. Source: Powerline Potential for Energy Conservation India�s energy intensity per unit of GDP is higher compared to Japan, US and Asia by 3.7, 1.55 and 1.47 times respectively. This indicates inefficient use of energy but also substantial scope for energy saving. One unit of energy saved at the consumer end avoids nearly 2.5 to 3 times of capacity augmentation due to PLF, auxiliary consumption and T & D losses The conservative estimate of potential of energy saving in India is creating nearly 25,000 MW of new capacity

10. Source: Powerline Potential for Energy Conservation - Sector-wise

11. Source: Powerline Potential for Energy Conservation � Industrial Sector

12. Source: Powerline Potential for Energy Conservation � Agricultural Sector

13. Source: Powerline Potential for Energy Conservation � Commercial Sector

14. Source: Powerline Potential for Energy Conservation � Residential Sector

15. Source:IREDA-BEE EC limits� A look at 2050 Projected consumption of Household appliances (Units/Year)

16. Source: IREDA-BEE EC limits� A look at 2050 Projected efficiency of combustion technologies

17. Source: IREDA-BEE EC limits� A look at 2050EC options in the next 50 years

18. Source: IREDA-BEE Energy Conservation � Case Studies Century Rayon (planning and implementation) This Birla Group Industries is one of the largest manufacturers and exporters of viscose filament yarn The senior management of the Co. makes annual energy conservation plan drawing inputs from MIS, auxiliary plants and Energy Conservation Cell (ECC). Once the plan is in place, the budget is approved, targets are finalized and accountably is fixed. ECC coordinates, implements and monitor the entire activity through daily, weekly and monthly production review meetings comparing the factors like energy produced and energy consumed in relation to production Energy audits by outside consultants is also done to identify potential areas for energy conservation

19. Source: IREDA-BEE Energy Conservation � Case Studies Century Rayon (Savings achieved)

20. Source: IREDA-BEE Energy Conservation � Case Studies Heavy Water Board (planning and implementation) Heavy Water Board is an independent unit under the Department of Atomic Energy. India is the second largest producer of heavy water. It is a highly energy intensive unit with 70 % production cost. This high technology under went many challenges and setbacks. Having mastered the technology from seventies till nineties there was a paradigm shift in the focus from � production at any cost� to �production with least cost�. Tremendous efforts were taken and extensive energy audits were carried out in the plants to reduce wasteful energy and the plants were re-optimized to operate at highest possible efficiency. Extensive energy saving measures were carried out in waste heat recovery system, recycling of effluent water, re-optimizing of hydraulic loop by impeller trimming and by the use of variable speed drive, re-optimizing of cooling water and refrigeration system using innovative and integrated system designs.

21. source:IREDA-BEE Energy Conservation � Case Studies Heavy Water Board (Savings achieved)

22. Demand Side Management DSM means managing the demand for power among some or all its customers to meet current or future needs. Under this process the demand is shifted from peak to off peak hours there by reduce the need of buying expensive imported power during peak hours. DSM enables to better manage their load curve and enhance the profitability Potential energy saving through DSM is treated at par with new additions on the supply side in MWs and DSM can reduce the capital needs for power capacity expansion

23. Source: Powerline Demand Side Management � Case study One of the first DSM programme was undertaken by the Ahmedabad Electricity Company (AEC) in 1994. Two ESCOS worked with AEC to implement efficient lighting and reactive power compensation by installing capacitors at its HT and LT services This has led to peak load saving of 10 percent.

24. Standards and Labelling Energy efficiency standards basically involves a set of procedures and regulations that define the energy performance of manufactured products sometimes prohibiting the sale of products in which energy consumption is higher than the minimum standard Energy efficiency labels on the other hand, informative markers affixed to manufactured products that provide consumers with the details necessary for making informed purchases.

25. Standards and Labelling � Action Plan Under EC Act, 2001, BEE will formulate and implement S & L programme BEE is to notify the equipment and appliances and set up institutional mechanism for administration of S & L programme BEE conducts test and analyze the results to enable label setting and implementation These activities are slated for completion by October 2004

26. Funding Agencies In recent years there has been growing urgency to implement energy conservation projects. Given this, financing of such projects acquires new significance. Financing backing for such projects has been coming from various agencies including multilateral and bilateral financiers, commercial banks and financial institutions.

27. Funding Agencies- Contd. Internal Agencies Indian Renewable Energy Development Agency (IREDA) � Offers loan up to 75 % of equipment cost Petroleum Conservation Research Association- (PCRA) offers 50 % subsidy on conducting audit ICICI � Manages USAID funds. Lends 50 % of project cost at 9 % Interest rate IDBI � Manages ADB fund under Energy Management Consultancy and Training (EMCAT) programme. Commercial banks: Only SBI has committed EE programme. The other banks that have shown interests are Bank of Baroda, Canara Bank and Syndicate Bank

28. Funding Agencies � contd. External Agencies: World Bank has played a key role in financing EE projects with its own funds and has participated with other international agencies. ADB is also playing a bigger role in promoting EE projects. It sanctioned $ 150 million loan under Industrial Energy Development Project in 1994 Among the bilateral agencies , the role of USAID has been most significant. USAID provides Rs. 1.08 billion to Ministry of power, ERCs and power utilities to develop appropriate market oriented policy environment

29. Energy Services Companies (ESCOS) Energy services companies (ESCOs) are single point providers of energy solutions to the industry. ESCOs are to carry out energy audits, identify the feasible options for saving energy, arrange finance and implement energy efficiency projects. This would help understand energy needs of industrial clients and come up with solutions that can be implemented without the clients incurring production losses. Therefore ESCOs allow clients to minimize financial risks associated with energy efficiency projects. However, the growth of ESCOs has not taken off in India, primarily because industries are wary of fly-by-night operators who are only keen to maximize their profits without sufficient dedication to services they would provide. While for ESCOs problems of establishing baselines would make risks associated with energy efficiency projects high.

30. Energy Conservation -Tamil Nadu Scenario TNERC issued the following directions in the recent tariff order related to Energy Conservation TNEB to conduct energy audits at the HT/LT level and its own generating stations TNEB shall complete 100 % metering within three years TNEB shall assess the T & D losses in each voltage level of the system and peg the losses at 16.25 % for the FY 04 TNERC have set performance benchmarks in respect of PLF, Auxiliary consumption and heat rate for thermal stations TNEB shall obtain ISO certification for all its thermal stations within one year and initiate action to obtain the certification for its T & D wings.

31. Energy Conservation -Tamil Nadu Scenario �Contd. TNEB shall adopt an integrated approach of cost per useful heat value (UHV) in the procurement, transport and usage of coal. TNEB shall explore the possibility of importing the coal and using of washed coal if technically and economically viable TNEB shall submit report on an action plan to create awareness on DSM measures among consumers TNEB shall submit a report on the feasibilities of enforcing the DSM measures to all HT Consumers TNEB shall propagate the use of EE devices such as CFL and capacitors TNERC has provided incentives in the tariff order for higher PF and Non-Peak hour usage of energy to enable the TNEB to manage the load curve better

32. Energy Conservation -Tamil Nadu Scenario �Contd. DSM is being implemented in Tamil Nadu by the following measures Grouping and staggering of agricultural feeder Imposing penalty for lower PF and Peak hour consumption TNEB has formed a separate cell for DSM which is analyzing the data to formulate DSM plans. They are also taking part in creating DSM /EC awareness among all group of consumers

33. Energy Conservation and productivity In broad sense, energy conservation means more efficient use of energy without reducing production levels and without sacrificing product quality, safety or environmental standards. Productivity is defined as the output of any production process, per unit of input. To increase productivity means to produce more with less. Traditional energy managers considered EC opportunities as independent of other industrial productivity related opportunities Energy-only recommendations had little impact on the productivity of manufacturing plant

34. Energy Conservation and productivity-Paradigm shift in approach Global competition made productivity improvement including energy cost reduction an important benchmark for economic success Productivity and Energy conservation are not mutually exclusive objectives Our approach to energy policy issues has been shifted from supply-dominated to an integrated approach incorporating with a judicious mix of investing in new capacity, increasing operational efficiency of existing system, reducing losses and efficient end use of energy and renewable technologies.

35. Source: renewingindia, icraindia Energy Conservation � A key factor to productivity Indian energy intensive industries (cement, Iron & steel, aluminum, textiles, paper, chlor-alkalis etc) consumes 65 % of Industrial energy Energy cost accounts for 40 % of Aluminum production cost 30 �35 % of Iron and Steel production cost 30 � 32 % of Cement production cost 30 % of Paper production cost 50 � 60 % of Chlor-alkalis production cost 12 �15 % of Textiles production cost

36. Source: Powerline Energy Conservation � A key factor to productivity -Contd

37. Energy Conservation � A key factor to productivity -Contd The potential for energy conservation is around 25 % in Indian Industries and 23 % for whole Indian economy No other constituent of manufacturing can influence the productivity to this great extent No other constituent of manufacturing can have a great potential for improvement in productivity Energy is a manageable expenses and it can be easily controlled through dedicated efforts. Energy Conservation is the quickest, cheapest and most practicable method of increasing the productivity. Hence Energy Conservation will be one of the most important factor to increase the productivity in the future

38. Conclusion The main reasons for higher specific energy consumption in Indian Industries are obsolete technology, lower capacity utilization and poor operating and maintenance practices. EC has received increased attention in India since the mid seventies but its impact is felt at a low face due to inhibiting attitudes, insufficient technical know-how, market distortions, high cost of efficient end use devices, capital shortage etc. There is a need to design interventions in terms of policies and institutions which addresses these issues and create incentives for energy conservation. Now that the EC Act, 2001 has given new impetus to the Energy Conservation issues and the ESCOs and the financial institutions are in place to implement the EC projects through performance guarantee contract mechanisms, energy conservation projects are bound to be successful in the future

39. Thank You