1. Transform your transformers
The picture here shows that a transformer can also fail. That will happen especially with old transformers that suffered under the fatigue of heating and cooling cycles.
The lifetime of a transformer is between 25 and 40 years. How old is your transformer?
Talking about your transformer means here that we focus on stepdown transformers that are purchased by enterprises like yours, which get their energy from the medium voltage power grid.
As these transformers are installed after the main meter, you pay its losses. When the transformer is more than 20 years old, it is very probable that today’s transformers are much more efficient and will remain cooler.
This week, an expert of large distribution transformers in the United States told me that the net present value of the losses in the lifetime of such transformers are mostly between 50 and 100% of the purchase price. In other words, the typical lifetime losses are a bit lower than the transformer investment itself. Remember that the Simple Payback Time is, especially with transformers, not the right parameter to decide, which one to take. That is because they have such a long life, much longer than this payback period.
How can you save energy with a new transformer?
Buy a good one. Today's transformers are much better than when your current (old) transformer was purchased. The USA energy agency EPA tells that significant total life time cost savings are obtained if the new transformer is chosen BETTER than the law requires. Remember that you can deduct them for a long time from the taxable profit.
Buy the right one. This is not about quality but size. Your today’s transformer is maybe dimensioned for a much higher power than is consumed most of the time. That choice is made to have a transformer that is able to work under all circumstances. You can purchase a new smaller transformer, based on the average power instead of the maximum possible power. This will decrease the losses because the transformer will function for many % of the operation hours in the best possible efficiency area. This is visible in the figure to the left, where you see the efficiency of the transformer as function of its load.
You can always use the old transformer when there is a peak demand, automatically switching it on and off. Of course you will need to find the space for two transformers but the new transformer will be smaller.
By the way, that will make it cheaper than a full size replacement.
The transformer will be less efficient when the power factor of all the consumers in the enterprise is low.
The power factor tells how well the current and voltage are in phase with each other. In the diagram the power factor is assumed to be 1.
You can correct (increase) a low power factor with electronics and it will decrease not only the losses in your transformer but also the reactive power that you are using (and paying!). So you are saving in two ways.
2. Financial metrics
If the payback time > 3 years ....
In the first article of this newsletter I talked already about choosing the correct financial parameters to assess an investment like for example a transformer.
Everybody uses the Simple Payback Time (SPT). What’s wrong with it? Why is this parameter so bad? I learnt the "why" from the training company for energy experts: sellingenergy.com in California.
The main reason is that the payback time is incomplete. It is talking only about the start period of the Energy Conservation Opportunity (ECO), forgetting the years thereafter, when it still contributes to your success.
The great danger of this parameter is that there is an unwritten rule that it MUST be shorter than three years or they kill your project idea. And that is hindering the Energy Transition!
The funny thing is that a payback time of three years corresponds with a return on investment (ROI) of 33%. And they call that low! When the Government sells bonds of 10% yield (and that will not happen in these times), then there is a run to the banks, everybody wants this bond, which yields much less than our ECO. Actually, if you look to an ECO like a professional investor does, you want to see two characteristics:
Good yield percentage;
A high predictability of the savings, each year.
So if the SPT and ROI aren't good, which parameters are better?
One of them is the Net Present Value (NPV). It takes the difference between the positive and negative cash flows in the WHOLE lifetime of the ECO, as you see in the diagram on the left. If the difference is positive, then you are a winner. To be fair, you have to discount the future cash flows with a certain percentage, but a spreadsheet will do that for you. This discounting percentage is not the same as inflation! It is much more a decrease in value of a future cash flow in your own perception. It often represents the opportunity cost. That means, you miss the opportunity to put money in some other thing which has a higher yield. You may also increase the discount rate because you associate a risk with the predicted savings. For example the risk that something will happen and you cannot realise these savings anymore.
The other parameter is the Savings to Investment Ratio or SIR. It is the ratio of this NPV to the investment. It represents a money machine concept, in the following way: if the SIR is N, it means that every dollar you put in this ECO, the machine will spit out N dollars in todays value (that means discounted). See the image on the left.
You can see an example of the NPV and SIR in the issue of April 7, in the article with the ventilation example. There is a spreadsheet file that you can download and look both these parameters. You find it in the same article at point 6.
Now, if you consider not only the savings on the energy bill but add the collateral benefits of the ECO, you can add the related savings, each year again. That will have a great impact on the NPV and SIR!
With or without the collateral benefits, better financial parameters will increase the amount of approved projects, increase your personal success and help the Energy Transition.
I hope this helps to make Energy Efficiency more appreciated.
3. Collateral benefits
On April 19, I had a blog on collateral benefits and I would like to give an example of them, to illustrate the last statement in the previous article about the financial metrics.
Take an office with an energy bill of $40 per square metre per year. Now compare it with its payroll costs per square metre per year. With 10 m2 per employee this might be $4000, that is 100x the energy cost.
Now comes the trick.
If you invest in a better air treatment system and are able to save energy and increase comfort at the same time in a way that increases productivity, you save on both the energy and on the staff costs. If this productivity increase is for example only six minutes per day or 1% of a workday, and this persists on average over the whole year, then you gain 1% of $4000 or $40 per year per square meter.
There is no doubt that an increase of productivity can be the result of a better working environment because this comfort is the result of an improvement, which is there to enjoy the whole year.
In this way, the collateral benefits often have the same or higher order of magnitude than the savings on energy, which in our case might be the consequence of less energy conception of the motors in the ventilation system. Also here I refer to the article about ventilation on April 19.
Obviously, you still have to pay the new system. I didn't mention that here because I just want to compare two types of benefit, of which the collateral benefit is often forgotten by the energy engineer, which proposes the project. That's a chance lost to leverage all the positive aspects of the idea.
You can find many examples of collateral benefits that are at least of the same order of magnitude as the savings on the energy bill. An industrial example is the production of steel or bricks, where the heat recovery can not only decrease the energy consumption but also decrease the time that materials are in the thermal process, because they start the process, thanks to the heat recovery, already at a higher temperature.
Less time of the raw materials in the process means more productivity. This example of collateral benefit will probably have a greater effect on the mood of the decision-makers than a reduction on the energy bill. More productivity means more revenue for the same machines (=capital) employed in the factory. That is how an entrepreneur ticks.
4. Energy consultancy on a distance - getting the data
On April 21 I started already to write about consultancy on a distance in this newsletter.
I hope the idea of having a coach is appealing to you. It should, because a recent ICF report conducted by PwC suggests that the global coaching market value crossed $2,4 billion in 2019, expecting to grow annually by 6%.
As I explained two weeks ago, energy consultancy on a distance is a kind of B2B coaching: you as a client do the things to increase energy efficiency yourself, and I, as the Distant Energy Manager, look over your shoulder to assist you. And... you learn in the process.
If an energy consultant does the job herself, you learn much less.
Let's focus today further on the acquisition of data under this condition of remote consultancy. In some aspects the distance will create no problems, for other activities it is more complicated.
The less complicated part is what energy consultants, already before the health crisis, gave as homework to their customers. They said them to deliver their energy bills of two years or so and in addition a list of big consumers in their enterprise, like production lines, air compressors, lighting, ventilation systems, chillers and so on. This gives the energy consultant an idea of what is going on after the main meter. I can tell you that even large enterprises don't know anything about where their energy is going after their main meter.
So, having a list of the biggest consumers in the enterprise, the nameplate power of this equipment and the amount of hours that each of them is in operation puts you already in the small group of more or less energy transparent enterprises.
Then comes the difficult part. You want to measure it. In this way you can be more precise for each equipment and you can also know when they are consuming and how much. In other words, you have a time function of their consumption for your larger consumers. That puts you even into a very small group.
But what is much more interesting for you than just knowing to be exclusive, is that you have precious knowledge that can be applied to find Energy Conservation Opportunities (ECOs), also those that require very little investment. It is much like an electrocardiograph that shows 12 signals, which are synchronous to each other and allow the cardiologist to know really a lot about the patient. Likewise, this set of consumption curves has a similar format, allowing you to see things that an energy auditor cannot see during a visit of a couple of hours in your enterprise.
Like curve shapes on an electrocardiogram can be associated with some type of heart disease, also the consumption curves reveal situations in your enterprise that are easy to recognise, for example that an air compressor is working during periods that nobody is consuming air.
If I am describing this set of curves, you certainly think about the classical Energy Management System, which exists already in several enterprises. Those are fixed systems with cabling. They are very good to do this job, but they cost a good amount of money and are only in those enterprises, which are already convinced about energy management and monitoring. The problem is that I see very few of these enterprises. The most of organisations, though paying a significant sum on energy, still know nothing. It is too cumbersome and they see the bill just as a part of corporate life. They don't want to invest in such a monitoring system because they think to pay for just a bit of information.
What they need is a system like the electrocardiograph, a system that is very practical to be applied for a preliminary consumption study (behind the main meter) and can then be taken away.
I think it makes a lot of sense. Do you have to purchase an electrocardiograph just to know the state of your heart? Of course not, the cardiograph is and remains the property of the cardiologist!
In the same way, the single power meters (one for each big consuming equipment) and the data collection unit (which sends all data into the cloud) can be brought to the customer, be there for a week or more and then again taken away.
So, how can this be a solution for the energy consultancy on a distance?
1. The method that has been already available is that you put mobile power loggers on the installations that you want to measure and then you read their memories into a computer and put it all together into a spreadsheet. This was the method that we applied with our customers when I was at Siemens. It can be done on a distance. It is still the state of the art.
2. Another method is to have an Energy Management System in a mobile form, where the different sensors communicate with a central logger (also part of the mobile set), which sends the data to a cloud service for elaboration and presentation on your screen and that of the (remote) Energy Manager. This mobile set is the Energy Consumption Graph (ECG™) and was developed by Birdseye Energy Consulting GmbH. You can learn about it on the Youtube video (10 min.) “Strong diagnostics during the energy audit”.
Both systems can serve to send detailed data about the where/when-abouts of your energy after the main meter and help the Distant Energy Manager to make a diagnosis. Obviously the second system is much easier, gives better results and is more professional.
In one way or the other: without Energy Transparency, no therapy.