ENVOGUE | ENERGY TRENDING | Issue2 1

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ENVOGUE Energy

Trending

July’14 Edition

ENERGY EFFICIENCY | NEW CHALLENGES | NEW PERSPECTIVES IN THIS ISSUE

It has been quite a hectic and busy schedule for most of us at E-Cube Energy. Our audit team is almost done with a 6 month long assignment of auditing over 4000 motors across 4 manufacturing locations, while our development team back in Kolkata has been busy wrapping up the preparations for the launch of EnView Motor Tool- Independent cloud based motor performance assessment tool.

In this edition of EnVogue of we have tried to cover pretty interesting mix of topics ranging from the role of data analytics in driving energy efficiency to policy issues around the PAT scheme. We at E-Cube Energy aspire to change the way energy efficiency services are sought and delivered. EnVogue is one of our multiple initiatives in being able to do so. We would be happy to have your feedback on the content covered and areas where you would like our editorial team to focus on in some of the next editions. Till then happy reading! Efficiently Yours,

Umesh Bhutoria

CEO SPEAK

The E-Cube Perspective

Why mandating energy audits won’t foster energy efficiency? Page 2

Innovate to lead- How to make PAT Scheme bigger & better? Page 3

Pricing of ESCerts & Abatement Costs? Page 4

The E-Cube Advantage

H Plant Energy Optimizations Tool Page 5

The India story

Challenges to implementing energy efficiency in Iron & Steel sector Page 6

Data Analytics Highlights from survey and white paper released on Energy Data Analytics Page 7

Food for thought!

Why should your firm invest in Data? Page 8

Innovation Highlight!! E-Cube Energy is working on developing a cloud based H Plant energy optimization tool for the Textile Industry. H Plants consume about 15% of total electricity consumption of a typical spinning mill. This tool empowers energy managers on optimizing energy consumption in the H Plants while also introducing them to data driven approach to drive energy efficiency within their individual plants. .

Sector in focus:

Iron & Steel

ENVOGUE | ENERGY TRENDING | Issue2 2

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Expanding the scope of PAT Scheme, including all industries with annual consumption of over 3000 MTOE with specific

energy reduction targets would be a better way to strengthen existing markets and foster energy efficiency.

Government should focus on developing Information

Management Systems and Measurement & Verification protocols and of course ensuring strict compliances.

The E-Cube Perspective:- Mandating Energy Audits- Why it won’t foster energy efficiency investments?

Recent gazetted notification mandated Designated Consumers to have energy audits conducted by Accredited Energy Auditors within a stimpulated time frame and period specificed in the EC Act.

Though the intent of making such a move in driving energy efficiency is evident, it falls short of making any significant impact on energy efficiency investments.

For industries out of the perview of the PAT scheme, regulatory compliance is the last thing that would impact decisions on energy efficiency investments.

3 reasons why we feel that mandating energy audits won’t foster energy efficiency investments!

1. Industries decide who they want to work with?

Energy Efficiency market place has changed, industries today look at a lot of sophisticated value added support when it comes to implementing energy efficiency. Verification from a pool of experts is fine, but limiting who to hire to evaluate energy saving potential is going a bit too far.

2. Shifts focus from “savings” to “regulatory documentation and compliance”

For industries obligation on anything other than energy saving shifts focus to “documentation & compliance” and disrupts the market in a negative way.

3. Limits “economic bandwidth” of SMEs

Most of the DCs outside of the PAT scheme (After deepening exercise is over) would be SMEs, with limited economic bandwidth for investment in energy efficiency. Imagine an industry with connected load of 1 MW having to get audits conducted in a scheduled manner, it just adds to costs and takes away economic bandwidth, they would have otherwise used to invest in energy efficiency. Lowering down the costs of audit would have a further negative impact on the quality of assessments.

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PAT Scheme:- How to make it bigger & better?

Unarguably PAT Scheme is one of the maintsays of India’s strategy in the Global Climate deal negotiations. Its almost less than a year for us to enter into the 2nd compliance cycle.

While a lot of improvements and advancements have happened in the way the entire regime has been managed, but may be it is time to bring in some innvovation and send out a strong signal to the markets, something that could create investor confidence and foster energy efficiency investments.

10 Ways in which PAT Scheme could be made bigger & better:

1. Lay out plans to gradually Include all industries with over 3,000 MTOE of annual energy consumption.

2. Simiply target setting process, “de-link” sector specific perspective, provide unit specific targets.

3. Announce regime upto 2020 or beyond. Build industry and investor confidencne.

4. Remove the requirements of mandatory audits, focus on developing robust information management system connecting SDAs, DCs and national authorities.

5. Use the national information management system to collect monthly returns (KPI based), invest in data analytics.

6. Make pricing of ESCerts dynamic, factor opportunity costs as well.

7. Allow monthly trading of ESCerts, continous buying selling of ESCerts for DCs.

8. Let banks and funds trade in ESCerts, that ways it can be used as a collateral.

9. Include bilateral trading from 3rd phase, will improve on energy efficiency project financing mechanisms.

10. Let the prices be market driven, no artifical boost to markets by providing cap or a floor.

Make PAT Scheme the corner stone

of all strategies towards building up

industrial energy efficiency

markets. M&V, ESCOs etc will

happen on its own when the

markets have a long term and

fundamental view.

Easier said than done, to increase the capacity and outreach of PAT Scheme, significant investments have to go in creating adequate infrastructure. But then it is better to push one BIG agenda then to push several small agendas. It is in our opinion the only way to develop an inclusive energy efficiency strategy.

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The E-Cube Perspective:- Pricing of ESCerts & Abatement Costs

We are into the last year of the First Compliance Phase of the PAT Scheme, Form 1 for the 2nd year of the first cycle have been submitted,perhaps it is the right time for us to be talking about ESCert pricing. While our team was working on creating expected ESCert prices for our clients (DCs under PAT Scheme), we came up with some interesting inferences on how the pricing may impact any TOE abatement initiatives over and above the Business As Usual “BAU” scenario.

We considered a few cases assuming certain % of energy split between coal and electricity (neglected Gas and Oil as the % contribution towards overall energy consumption was very less)

Case 1 Case 2 Case 3

Coal Electricity Coal Electricity Coal Electricity

Cost in Rs 119537.14 2093023.26 597685.70 1162790.70 1075834.26 232558.14

Consumption in MTOE 10.00 90.00 50.00 50.00 90.00 10.00

% Contribution 10% 90% 50% 50% 90% 10%

Cost in Rs/MTOE 11,953.71 23,255.81 11,953.71 23,255.81 11,953.71 23,255.81

% Contribution towards cost 1,195.37 20,930.23 5,976.86 11,627.91 10,758.34 2,325.58

Total Cost/MTOE in Rs 22,125.60 17,604.76 13,083.92

As we would see from the table above, for an industry which uses 90% of energy in the form of electricity, stands to loose out on ~Rs 4500/Mtoe (If case 2 is considered as the base scenario), whereas an industry using 90% of the energy in the form of coal stands to gain ~ Rs 4500/Mtoe. Pricing of ESCertrs is going to be a tricky afftair especially when energy consumption pattern from all sectors are taken into account together. There has to be way to neuralise this difference that arises out of varying energy mix, perhaps have sector wise ESCert pricing!

Unlike emission reductions, energy efficiency yields savings under business as usual scenario, when the savings under BAU scenario are removed the cost of ESCerts play a very vital role in fostering investments (esepcially from compliance perspective). Following is the Marginal Abatement Cost Curve we created for Spinning Indutsry, ESCert costs have to be really higher than the current expected values.

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MACC- PAT Scheme Spinning Industry

H Plant Air Fow TFO Speed Optimisation TFO ADLS BEP H Plant Ring Frame Carding

ENVOGUE | ENERGY TRENDING | Issue2 5

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The E-Cube Advantage:- Cloud Based Humidiciation Plant Optimiser Tool

In the last edition of EnVogue we saw how Humidification Plants in Textile sector contribute to overall energy consumption and the energy saving potential it has to offer. In this edition we explore how small efforts on optimizing air flow can yield substantial savings without changing the in room conditions to a great deal.

How to explore the opportunity to optimize/save?

Most OEMs design H Plant with certain “cushion”.

90% of the energy consumption in H plants is to circulate air. Demand and Supply side optimization around such “cushion” could yield significant energy savings.

Challenge is to be able to fix operational parameters in accordance with the change in ambient conditions.

Data driven decisions can help H Plant Operators and Energy Managers to optimize accurately and without effecting the in room conditions!

E-Cube Energy is currently developing an online cloud based tool that provides real time data to clients on the overall air flow and water addition requirements to manage set conditions inside a room/facility. This way the operator is able to take data driven decisions to optimize the air flow and hence cut down on energy consumption.

How does the EnView H Plant Tool help?

It allows user to set up as H plants as you want with details such as Heat Load, Room Volume, Air Flow Details, Power consumption etc.

Links your plant’s location and collects real time weather information and alerts on the air and water requirements to mainta in the room conditions at set parameters.

Provides assistance on optimization of air flow and water consumption.

User gets email and SMS alerts every 8 hours on the demand and supply pattern.

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AIR Required Actual Flow Optimised Flow

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Savings Via Optimisation in KW (5%)

Savings Via Optimisation as per requirment

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EnView cloud based energy information management and analytics portal is equipped to bridge this gap both at unit and industry level.

Automatic reporting and normalizations of SEC based on KPIs can help SMEs to

track performance, analyze energy consumption trends and go in for process optimization.

The India Story! Challenges & Roadblocks in implementing Energy Efficiency in the Iron & Steel Sector

Iron and steel is one of the 8 sectors under the ambit of Perform, Achieve and Trade scheme. Iron and steel industry as a sector contributes around 2 percent of India’s GDP.

Under the current regime of PAT Scheme all Designated Consumers from the Iron & Steel consume around 15% of the total energy consumed by all DCs, which cogently underscores the importance of this sector as well as its scale.

High energy efficiency improvement potential can be attributed to the highly energy intensive manufacturing sub processes. There are several roadblocks in the road to efficiency for the iron and steel industry –

Area Description

Information & Data Management

Majority of the industry in terms of number of plants comes under the unorganized sector. Lack of information and data management has led to the formation of a void with respect to authentic data sets availability.

Such unavailability of data sets can impede efforts for implementing and incorporating energy efficiency practices since allied instrumental activities like benchmarking would be impossible.

Normalization & Key Performance Indicators

Lack of relevant data sets has rendered the process of normalization implausible. A pool of data sets is required for providing an account of different kinds of variation in factors like coal properties, fuel mix, product mix, raw material mix etc. which would play a vital role in the process of normalization.

Technology Up gradation & Process Limitations

Sponge iron constitutes a majority section of the designated consumers in the Iron and steel sector. Sponge Iron making process heavily relies on coal which is used both as reducing and heating agent. Waste heat utilization in the form of pre heating or power generation are the only two energy consumption reduction options besides going in for process retrofitting or optimizations, which again is limited because of the non availability of accurate data sets.

The anticipated deepening of the PAT scheme (reducing the threshold level to 20,000 MTOE) would result in the inclusion of a lot of additional consumers in the Iron and steel sector, especially from the unorganized sector.

The perpetual issues in the Iron and steel sector have to be dealt with firmly so as to bring about a transition to the state of energy efficiency. This further reinstates the need of Iron & Steel sector having to invest in centralized energy information management system linking DCs, SDAs and BEE, Data is one of the fundamental premises of PAT Scheme, inaccurate and ambiguous data can lead to incorrect assessments both at target setting and compliance stage.

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Data Analytics:- Highlights from Survey & White Paper on Energy Data Analytics

In April 2014, E-cube surveyed over 90 executives, academicians, OEMs and consultants from Energy and allied sectors to ascertain the perspective on the present energy scenario in industries, the scope of data analytics in driving energy efficiency practices and to identify the key enablers that are likely to influence industrial energy efficiency strategy in the coming years. Following are the key highlights from the survey and subsequent white paper released by E-Cube Energy.

"Over and above the key takeaways from the survey as noted above, some very interesting findings also transpired. For example, even though the survey revealed the unanimous agreement among respondents regarding the benefits of data analytics, surprisingly only 46% considered data analytics as something that (would) add significant value to their core energy efficiency (work) strategy."

Getting started is always the key; there is a change required in the overall thought process, to bring in a new way of looking at exploring energy efficiency measures and investing in them. Like in most cases change comes from the top, perhaps CXOs need to take a lead and challenge the overall thought process by asking the following key strategic questions:

You can download a copy of the report from the link http://www.slideshare.net/eetpl/energy-data-analytics

90%

of the respondents believe that

"energy optimisation" is the best

cost reduction strategy.

98%

of the respondents

agree that "energy

efficiency" is going to be

a key energy

optimising strategy

89%

of the respondents

believe "Data

Analytics" is the next

frontier to drive energy

efficiency strategies.

80%

of the respondents will use Data Analytics, as

it is an excellent

way to track long term

health of the unit/system

89%

of the respondents

stressed that

capacity building is required to maximise

the returns from Data Analytics

How does the company’s energy consumption and

management compare with peers, best-in-

class and global players?

How can data accquired be

utilised to make overall strategic

road map?

What are the gaps? Is there a

need to review the company’s long-

term energy consumption

goals?

Is there an effective

monitoring system and processes in place to achieve

stated objectives? What kind of KPIs and dashboards

are desired?

Very often a change of view-point is needed more than a change of panorama

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Food for thought! :- Why should your firm invest in Data?

E-Cube Energy Trading Pvt Ltd 9, Old China Bazaar Street, 6th Floor, Room No 90

Kolkata- 700 001,West Bengal

+91 33 6509 0005

bd@eetpl.in | www.en-view.com | www.eetpl.in

From opportunity assessment to monitoring energy savings to tracking financial returns,

Data is everywhere.

It’s only ironical that most firms have not yet started to

invest in Data. In the info graphic on the right hand side, we look at the TOP 3 reasons for your company to consider

investing in Data!