Free Energy Policy & Economic Energy Strategy Report Sample

for an Manufacturing Plant

Energy Policy: UK

1. Energy Policy & Economic Energy Strategy for an Organisation
1.0 Introduction
The company wants to evaluate the potential of using Combined Heat and Power (CHP) and Photo Voltaic (PVT) for energy and for selling in the future. Manufacturing is a highly competitive enterprise and even small changes in cost savings are helpful. Cost savings is one reason and the impetus to become environmentally responsible and sustainable is a second reason. The pressure to integrate alternative energies is very high right now due to new regulations at all levels; locally, nationally, and internationally. On the positive side, the UK government and the EU are offering incentives that can help cover the costs of installation.
1.2 Purpose of Study
The report was carried out in order to put together 1) an energy policy and 2) a future economic energy strategy for the manufacturing company. The two actions are necessary because the energy saving strategy is now well organized and needs structure. Energy efficiency has improved recently but the company wants to set up a process for continual energy efficiency improvement
1.2.1 Energy Focus of Study

Present company focus is on exploring the following topics.

procurement of energy,
sources of their energy requirement, and
improve and/or modify the energy usage to reduce costs
The operating hours per year are considered equal to 2400 hours/year therefore the approximately 525 kWe capacity unit is used as the average value in calculations for the report. (See Table A-1 for details)

• The energy/fuel mix in meeting the company’s energy requirement in the short term.

Assume 2400 working hours / year
1.26 GW hrs of electricity /year
2 GW hrs of oil / year
Energy capacity amounts to 500 kWe+ that meets the power demand, and 608 kWt, of the thermal demand is met. The heat demand is on average 833 kWt.
Energy need to be filled is approximately 525 kWe capacity unit on average. The costs amount to approximately €200,000 per unit with an additional €50,000.
1.2.2 Achieving continued security of supply in the long term
Good planning is the key to ensuring continued supply into the long term. A management strategy that has worked for other companies is to adopt alternative energy strategies, reduce greenhouse gasses (GHG) and increase performance by adopting Lean manufacturing strategies. The three steps are a lot of change at one time so the adoptions of new techniques for energy production, pollution reduction and Lean manufacturing can be adopted slowly and carefully. Planning ahead and including all stakeholders in discussions or at least adopting transparency, each layer of new activities will be more sturdy and durable.
The objectives of change need to be kept in focus so that projects are all focused on the end goal for cost savings, energy efficiency and energy sales while meeting the benchmarks to meet those goals. •1.3 Incentives in Ireland
The 2020 goal set by the Northern Ireland (NI) Executive’s Strategy Energy Framework is to produce 40 percent of electricity from renewable strategies. The Northern Ireland Renewable Heat Incentive (RHI) is separate from the rest of the UK based on the uniqueness of the Northern Ireland. Sixteen MW of renewable heating capacity have been installed since the beginning of the NIRHI; the 16 MW was implemented since May 2012 with the aid of incentives (DE&CC 2013). (See Table A-1 for relevant UK & EU incentives )
Approximately 50 percent were biomass boilers (a possible CHP scenario) and the second highest number of applications is for solar thermal heating (DE&CC 2013. The Department of Enterprise, Trade and Investment (DETI) worked out new tariffs for non-domestic scenarios (DE&CC 2013). Typically, both building mounted and ground mounted solar PV installations are aided with government incentives.
Microgeneration solar projects are going to be addressed in Northern Ireland before the Northern Ireland Renewable Obligations closes in 2017. The strategy will be similar to existing UK Feed in Tariffs (DE&CC 2013).
The Northern Irish RHI is designed to aid non-domestic renewable heat generators since the fossil fuel prices do not allow renewable to compete. The three main goals of RHI are to create attractive capital costs for renewable, and enhance the understanding and awareness of renewable. A potential attractive incentive is the biomass tariff that includes CHP in the category of 100 kWth and above up to but not including 1000 KWth at NI levels of 1.5 pence per kWh (Detini 2014). The installation needs to be finished or first commissioned from 1 September 2010.

The guidelines are

“New at time of installation.
Accreditation is assigned to the installation at time of application.
Heating for space, water/liquid and process heating” (Detini 2014).
Microgeneration Certification Scheme (MCS) or Solar Keymark technologies are acceptable if installed by MCS registered installer (Detini 2014).
1.4 Alternative Energy Technologies
1.4.1 CHP
A good question is ‘What cost savings can be achieved if the current energy needs are met by a CHP unit?’ but first the technique needs to be described. A CHP unit is a heat engine that generates power in the form of electricity and excess heat. The Combined Cooling, Heat and Power (CCHP) is also known as tri-generation because both heat and cooling as well as electricity are generated. The power to run the unit can be fuel combustion or solar energy from a solar heat collector. CHP and CCHP are sustainable techniques; power generation is efficient because the fuel is consumed in a thermodynamically efficient process. No waste heat is generated because waste heat is considered thermal energy, and it is energy that can be use where the factory needs thermal energy.
1.4.2 Disadvantages to CHP
Kerr (n.d.) describes six disadvantages that he calls barriers, to installing CHP and they are listed below.
The market and the incentive frameworks are not coordinated. The difference between natural gas prices and electricity prices can weaken the risk / return profile of CHP plants when compared to traditional methods.

Electricity and fuel (mainly natural gas) prices are volatile making CHP a higher risk venture.

CHP is not yet recognized as a strategy that is important to meeting the goals of Climate Change policies
The traditional infrastructure is invested in natural gas meaning that the “UK energy market lacks consistent signals to investors to site generating assets . . . the optimize the opportunity for heat and recovery utilization” (Kerr n.d.: 11)

No motivation for developing a heat transmission infrastructure.

Support mechanisms from government regulatory bodies is not well-developed.
1.4.3 Ideas for Energy Efficiency Improvement Activities

In the winter the heat demand can be met with some increased boiler capacity.

excess power could be looked at for selling back to the grid at times of low usage from the CHP system
Excess heat can be captured from the CHP system using a steam turbine to input heat back into the manufacturing process or to heat space such as the manufacturing floor or offices
1.5 PV
The prices of PV cells are falling and the cost is less than nuclear power for energy at this time. The prices are expected to continue to decrease, but even more attractive is Sheffield development for spray-on solar cells (Postles 2014). The new technique is expected to reduce the cost of solar electricity. A new material called Perovskite makes spray-on cells possible. The material is a good choice based on its features of high efficiency and low materials cost. Peroskvite has a 19 percent efficiency that compares to 10 percent for organic solar cells and 25 percent for silicon cells. The faster application of spray-on can encompass some cost savings, too. High efficiency solar cells are designed to concentrate the solar energy and demonstrate efficiencies of about 40 percent or even more; efficiency of solar cells continues to increase while costs continue to decrease (Bett 2009).
The advantages of PV or Perovskite solar cells includes the abundant source of the sun’s energy and the fact that of all the alternative power energies, solar demonstrates the highest power density (Smil 2006). The future security of the company will be well-served by installing a PV installation because the structures need very little maintenance, and the system last for a century or longer (Chianese, et al. cited by Energy People 2014). No operating costs are accrued by solar.
1.6 Greenhouse Gasses (GHG) and Carbon Trading
The UK government passed the Carbon Reduction Commitment based on the cap and trade method of emissions trading. CHP energy consumption and heat imports for companies participating do not have to give up their emissions allowances due to air pollution infractions. The strategies of emissions trading and heat imports from participants are incentives to “develop the market for heat in the UK” (Kerr n.d.). CHP in the UK is used in about 90 percent of UK CHP electrical capacity is used by industries (Kerr n.d.). The EU Directive 2004/008EC Promotion of Cogeneration based on a useful heat demand in the Internal Energy Market Article 12(2) regulates the method for calculating the CHP primary energy savings. Quality Index (QI) were modified to meet Article 12(2) requirements as follows . . .
“that GQCHP Schemes with a total installed capacity of <1 MWe provide > 0% primary energy savings compared with the Directive’s harmonized reference values for separate production of heat and electricity;
that GQCHP Schemes with a total installed capacity of >1MWe provide >10%primary energy savings; and
that GQCHP Schemes with a total installed capacity of >25MWe have an overall efficiency of at least 70% (based on Net Calorific Value)” (Kerr n.d.).
1.7 Energy and GHG Assessments
The steps that need to be implemented to carry out energy and greenhouse gas assessments are presented in the EPA Toolkit (2014). The following five steps are the major assessment strategies that must be carried out to make careful planning possible. Good assessments will allow the optimum design for the company.
Assess the use of energy on the floor of the factory and note the efficient use of energy and more importantly wasteful activities like running machines when not in use, lighting portions of the manufacturing floor when not in use and appropriate loads for motors.
An energy audit can be carried out as a way to observe how energy end uses and energy efficiency are working together or at odds. The energy audit is an opportunity to identify energy waste and correct the problem. Meters for measuring the amount of energy used are suggested by the EPA to raise awareness of energy use and aid in identifying waste.
Value stream mapping is a tool that recognizes energy as a value steam. The technique is good for making improvements and for planning for the future.

Lean Sigma Six strategies can be used to identify and correct energy waste.

1.8 Justification of the economic strategy
Adopting alternative energy methods at this time is highly advantageous, because of the incentives offered by the UK and the EU for both solar and CHP as well as other strategies like wind. CHP and solar energy work well together. The amount of energy can be used for the energy power that the factory needs, the excess heat can be used as thermal heat and CHP also has the capability to offer cooling during the summer months.
Money will need to be spent but the decisions on where to spend the money need to be wisely chosen. For example, the incentives that are offered by the EU and the UK are complicated and change as laws and directives are modified to refine them or make additions; therefore, a wise move is to spend money on an expert to unravel the information to find the most advantageous incentives for the company to use.
Although Kerr listed obstacles to installing CHP now, the obstacles are regulatory and do not necessarily effect the company to as great a degree as the positive impact of the cost savings possible.
1.9 Recommendation
The design option that looks very promising is using the CHP with biomass (wood or make deal with town to burn biomass waste). The CHP needs to be equipped with both heating and cooling to cover winter and summer needs. A steam turbine can be added to produce steam to route thermal energy back into the factory. The PV solar can start out small (the Sheffield spray-on design may be the most cost effective and certainly worth researching).
2.0 References
Bett, A (2009) Fraunhofer: 41.1% efficiency multi-junction solar cells. Renewable Energy Focus [online] http://www.renewableenergyfocus.com/view/753/fraunhofer-41-1-efficiency-multi-junction-solar-cells/ 12 April 2015]
Chianese, D., Realini, A., Cereghetti, N., Rezzonico, S., Bura, E., Friesen, G. , 2003. Analysis of Weather c-Si PV Modules. LEEE-TISO, University of Applied Sciences of Southern Switzerland, Manno
DE&CC (Department of Energy & Climate Change) (2013) UK Renewable Energy Roadmap Update 2013. November 2013. URN: 13D/259 www.gov.uk/decc
DETINI (Department of Enterprise, Trade and Investment). ‘Northern Ireland Renewable Heat Incentive.’ www.detini.gov.uk
Energy People. (2014) Advantages and Disadvantage of Solar Energy. [online] http://www.hienergypeople.com/advantages-and-disadvantages-of-solar-energy/ [12 April 2015]
Internationa; CHP/DHC Collaborative: Advancing Near-Term Low Carbon Technology. (2008) The iNternational Department for Business Enterprise and regulatory reform (BErr), Digest of UK Energy Statistics 2008 (DUKES 08)
Kerr, T. (n.d.) CHP/DHC Country Scorecard: United Kingdom. The International CHP/DHC Collaborative. [online] Department for Business Enterprise and regulatory reform(BErr), Digest of UK Energy Statistics 2008 (DUKES 08) (July 2008). International Energy Agency, France 16 pp. [12 April 2015]
Lean, Energy & Climate Toolkit: Achieving Process Excellence through Energy Efficiency and Greenhouse Gas Reduction. EPA, 43 pp [online] http://www.epa.gov/lean [12 April 2015]
Postles, H. (2014) Scinetists develop pioneering new spray-on solar cells. Media Relations, The University of Sheffield [online] http://www.sheffield.ac.uk/news/nr/spray-on-solar-cells-1.392919 [12 April 2015]
Report Brunisholz, MJ. (2013) (IEA) International Energy Agency. Photovoltaic Power Systems Programme: Annual Report 2013. Implementing Agreement on Photovoltaic Power Systems. St-Paul, Fribourg, Switzerland: Imprimerie 130 pp. ISBN 978-3-906042-22-0
Smil, V. (2006) Energy at the Crossroads. OECD Global Science Forum. [online] Conference on Scientific Challenges for Energy Research, 17-18 May 2006, Paris http://home.cc.umanitoba.ca/~vsmil/pdf_pubs/oecd.pdf
The above is from the renewable Northern Ireland Heat Incentive http://www.dardni.gov.uk/rhi-presentation.pdf
3.0 Appendix
*Energy Units 1 kW hr -= Energy Equivalent 3,412 Btu for Electricity

Energy Units for oil BTU

Operating hours per year are assumed to be 2400 hours/year; time value suggests a 525 kWe capacity unit on average. Compared to other companies that choose a larger scenario, this calculation was priced at 2 times $400 units lower.
Table A- 1 Examples of UK Incentives