Turning a tax into an opportunity

Published:  30 March, 2011

Schneider Electric, energy management, Rachel Cooper

The shift in financial emphasis of the CRC Energy Efficiency Scheme makes it imperative that organisations take substantial steps to measure their energy consumption and invest in solutions to lower it to avoid penalties when the scheme comes into effect. Rachel Cooper highlights some of measures that can be taken.

The changes announced in the Government spending review to the CRC Energy Efficiency Scheme have been described as a simple incentive to cut carbon emissions, de-coupled from a financial gain. Although the mechanics of the scheme are still unsure, it has been confirmed that allowances payments for 2011 have been scrapped which effectively creates a budget for participants to invest in direct measures to save energy.

Participants will need to pay for their 2011/12 emissions sometime between April and July 2012, but this is yet to be decided by the Government. This allows organisations to take control now. Participants in the scheme should take advantage of this window of opportunity to implement effective energy-management programmes that will reduce the cost of their CO2 allowances.

An effective energy-management programme consists of four key steps.

•measure

•fix the basics

•automate

•monitor, maintain and improve.

This does not have to be a fixed path, but all four elements must be addressed. It is an approach to energy management that works on a cyclical basis; to achieve the highest levels of energy efficiency, solutions have to be monitored and changed to make improvements. Statistics show that failure to maintain energy-management programmes can see consumption increasing again by up to 8% of any savings that have been made.

Measurement is a critical stage, and one that is often overlooked, but it must be considered to ensure that an organisation’s bid for carbon allowances, accurately calculates the energy it expects to consume to avoid being penalised for needing to buy additional credits at a later date. Data collection provides intelligence on power and energy consumption of specific processes and sites, which can then be compared and contrasted, is some of the most valuable information you can identify. Monitoring at low levels is relatively straightforward as electrical-equipment manufacturers have made significant advances in designing products embedded with measuring technology. Integrated solutions combining metering and monitoring with their primary function provide viable options in both new-build and retro-fit situations.

So how can a business lower its energy consumption and reduce its carbon emissions to avoid the ‘carbon tax’? There is an increasing number of energy-efficient products and technologies coming onto the market, which makes it easier for businesses and organisations to comply.

Schneider Electric, energy management, Rachel Cooper
Variable-speed drives on pumps and fans have the potential to save large amounts of energy — both used by pumps or fans themselves and the systems they serve.

One area that can often be overlooked when considering energy-efficiency improvements is the design of the electrical network. The correct design and selection of equipment and protective devices is critical to the reliability and longevity of a business’s electrical network and can have an impact on its energy usage. If there is a high level of resistance within the electrical system, more energy will be required.

Working with a design team of qualified engineers who understand the requirements of the electrical loads in the facilities will ensure the correct equipment is selected according to the business’s requirements. Electrical network design can include a detailed review of the existing design and installation, load-flow analysis to determine the exact status of the power system and cabling and earthing system design to ensure it complies with the latest regulations.

Looking at lighting, which can account for up to 40% of a business’s energy consumption, time clocks and scheduling solutions can be introduced to control lighting and heating. The use of these solutions is simple — the timer is programmed to switch lights and heating on and off at set times. For instance, these could be set to come on at 8 a.m. before employees arrive at work and switch off at 7 p.m. when the last person leaves the building. However, settings such as these would only be necessary during colder months and when the mornings and nights are dark. This means the programme needs to be adjusted to suit changing environmental conditions, which the UK experiences throughout the different seasons. This may seem common sense, but some companies are wasting thousands of pounds and generating unnecessary carbon emissions from not undertaking such simple tasks.

Another example of an energy-efficient solution is variable-speed drives. These are mainly used in manufacturing to control processes, but the technology can also be used in commercial premises where the speed of a particular process needs to be constant. For example, variable-speed drives can be used to control HVAC systems, such as ventilation, and control the speed of the fans, ensuring enough speed is maintained to ventilate a building properly without wasting energy.

A solution that has the potential to deliver substantial increases in energy efficiency is open architecture. This is an intelligent energy network that sets communications protocols that allow building-control systems from various suppliers to exchange information, synchronise equipment and achieve optimum building performance. Businesses can choose the best available options in terms of investment and functionality to achieve a building that uses less energy and, thus, costs less to run. Additional benefits include single-user interface, reduced training and maintenance costs and a future-proof system with flexibility for growth.

As well as managing energy within their organisation, businesses that consume significant amounts of energy are also likely to have peaks and troughs in their requirement of energy from the grid. The National Grid has recognised that it faces issues when it comes to ensuring it can meet the UK’s demand and has committed to providing a flexible solution that responds to increased demand and/or decreased supply.

The National Grid has been working with its customers to provide a number of management instruments that are utilised to respond to increased demand on the grid. One such management tool, and perhaps the most valuable instrument, is demand response, also known as Short Term Operating Reserve (STOR) programme. Organisations that participate in the scheme are paid to reduce their load through on-site generation or load reduction, or a combination of the two. Demand response is quickly proving to be one of the best solutions to provide a reliable and stable supply of electricity back to the grid, while protecting users against blackouts and brownouts. In addition, it can provide a revenue stream for the business and advanced notification of grid stress.

While the CRC Energy Efficiency Scheme has now effectively become a tax on participating businesses, requiring them to purchase allowances without receiving any recycled payments, its financial impact can be reduced or reversed by the implementation of effective energy-management programmes. If businesses then monitor and measure the impact any changes have, the savings achieved can be reinvested into further energy and cost-saving technologies.

Rachel Cooper is energy consultant with Schneider Electric.

Schneider Electric, energy management, Rachel Cooper
An effective energy-management programme has four key steps that work on a cyclical basis to achieve the highest levels of energy efficiency and reduce the cost of CO2 allowances.


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