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(Extracted and adapted from UNIDO «Policies for Promoting Industrial Energy Efficiency in Developing Countries and Transition Economies«)


Industrial organisational systems with an emerging and rapidly expanding industrial infrastructure have a particular opportunity to increase their competitiveness by applying energy efficient best practices from the outset in new industrial facilities. Integrating energy efficiency into the initial design or substantial redesign is generally less expensive and allows for better overall results than retrofitting existing industrial facilities.


The principal business of an industrial facility is production, not energy efficiency. This is the underlying reason why market forces alone will not achieve industrial energy efficiency on a global basis, “price signals” notwithstanding. High energy prices or constrained energy supply will motivate industrial facilities to try to secure the amount of energy required for operations at the lowest possible price. But price alone will not build awareness within the corporate culture of the industrial firm of the potential for the energy savings, maintenance savings and production benefits that can be realized from the systematic pursuit of industrial energy efficiency. It is this lack of awareness and the corresponding failure to manage energy use with the same attention that is routinely afforded production quality, waste reduction and labour costs that is at the root of the opportunity.


The development of an energy efficiency international standard (ISO50001)

builds on existing standards and address all aspects of energy management, including: supply, equipment procurement practices, energy use, and any use-related disposal issues. The resulting standard is compatible with ISO 9001 and 14001.


The creation of an Industrial Standards Framework includes:
 – target-setting agreements,
 – an energy management standard,
 – system optimization training and tools,
 – capacity-building to create system optimization experts, now and in the future,
- a System Optimization Library to document and sustain energy efficiency gains


Companies that actively manage their energy use seek out opportunities to upgrade the efficiency of equipment and processes because they have an organizational context that supports doing this wherever cost effective, while companies without energy management policies do not.


A portfolio of industrial policies is needed that is designed to assist companies in developing this supporting context, while also providing consistency, transparency, engagement of industry in programme design and implementation, and, most importantly, allowance for flexibility of industry response.


Industrial energy efficiency—or conversely, energy intensity, which is defined as the amount of energy used to produce one unit of a commodity—is determined by the type of processes used to produce the commodity, the vintage of the equipment used, and the efficiency of production, including operating conditions.


Operational systems typically support industrial processes,

they are engineered for reliability rather than energy efficiency. Industrial systems that are oversized in an effort to create greater reliability, a common practice, can result in energy lost to excessive equipment cycling, less efficient part load operation, and system throttling to manage excessive flow. Waste heat and premature equipment failure from excessive cycling and vibration are side effects of this approach that contribute to diminished, not enhanced, reliability.

More sophisticated strategies, made possible through the emergence of modern controls, create reliability through flexibility of response—and redundancy in the case of equipment failure—rather than by brute force.


While the energy efficiency of individual system components, such as motors (85%-96%) and boilers (80%-85%) can be quite high, when viewed as an entire system, their overall efficiency is quite low. Motor systems lose approximately 55% of their input energy before reaching the process or end use work and steam systems lose 45%. (USDOE 2004b). Some of these losses are inherent in the energy conversion process; other losses are due to system ineffi ciencies that can be avoided through the application of commercially available technology combined with good engineering practices.


The presence of energy-efficient components, while important, provides no assurance that an industrial system will be energy efficient. System optimization requires taking a step back to determine what work (process temperature maintained, production task performed, etc) needs to be performed.


The relatively slow rate which industrial capital stock turns over can prove to be a barrier to adoption of energy efficiency improvements since new stock is typically more energy-efficient than existing facilities. Another barrier is the perceived risk involved with adopting new technology since reliability and maintenance of product quality are extremely important to commodity producers.


Optimizing industrial systems for energy efficiency


is not taught to engineers and designers at university—it is learned through experience. Systems are designed to maintain reliability at the lowest first cost investment, despite the fact that operating costs are often 80% or more of the life cycle cost of the equipment. Facility plant engineers are typically evaluated on their ability to avoid disruptions and constraints in production processes, not energy-efficient operation. Equipment suppliers also have little incentive to promote more energy-efficient system operation, since commissions increase when equipment size is scaled upward and educating a customer to choose a more efficient approach requires extra time and skill.


Plant engineering and operations staff frequently experience difficulty in achieving management support. Industrial managers are rarely drawn from the ranks of facilities operation—they come from production and often have little understanding of supporting industrial systems. This situation is further  exacerbated by the existence of a budgetary disconnect in industrial facility management between  capital projects (incl. equipment purchases) and operating expenses.


In addition, most optimized industrial systems lose their initial efficiency gains over time due to personnel and production changes. Detailed operating instructions are not integrated with quality control and production management systems. Without well- documented maintenance procedures, the energy efficiency advantages of high effi ciency components can be negated by clogged fi lters, failed traps and malfunctioning valves.


The purpose of the Framework is to introduce a standardized and transparent methodology into industrial energy efficiency projects and practices including: system optimization, process improvements, waste heat recovery and the installation of on-site power generation.


Effective target-setting agreement programmes are based on signed, legally-binding agreements with realistic long-term (typically 5-10 years) targets, require facility or company-level implementation plans for reaching the targets, require annual monitoring and reporting of progress toward the targets, include a real threat of increased government regulation or energy/GHG taxes if targets are not achieved, and
provides effective supporting programmes to assist industry in reaching the goals outlined in the agreements.


The key programme elements of a target-setting programme are:

- identifying energy-saving technologies and measures;
- benchmarking current energy efficiency practices;
- establishing an energy management plan (see section 4.3 below);
- conducting energy efficiency audits;
- developing an energy-savings action plan;
- developing incentives and supporting policies;
- measuring and monitoring progress toward targets, and
- programme evaluation.


The purpose of an energy management standard


is to provide guidance for industrial facilities to integrate energy efficiency into their management practices, including fine tuning production processes and improving the energy efficiency of industrial systems. Although the focus of this document is industrial energy efficiency, it is important to note that the energy management standards referenced here are equally applicable to commercial, medical, and government facilities.



Typical features of an energy management standard include:


- a strategic plan that requires measurement, management, and documentation for continuous improvement for energy efficiency;
- a cross-divisional management team led by an energy coordinator who reports directly to management and is responsible for overseeing the implementation of the strategic plan;
- policies and procedures to address all aspects of energy purchase, use and disposal;
– projects to demonstrate continuous improvement in energy efficiency;
– creation of an Energy Manual, a living document that evolves over time as additional energy saving projects and policies are undertaken and documented;
- identification of key performance indicators, unique to the company, that are tracked to measure progress;

- periodic reporting of progress to management based on these measurements.


The process of optimizing existing systems includes:


 – Evaluating work requirements;
 – Matching system supply to these requirements;
 – Eliminating or reconfiguring inefficient uses and practices (throttling, open blowing, etc);
 – Changing out or supplementing existing equipment (motors, fans, pumps, compressors) to better match work requirements and increase operating efficiency;
– Applying sophisticated control strategies and variable speed drives that allow greater flexibility to match supply with demand;
- Identifying and correcting maintenance problems, and upgrading ongoing maintenance practices.


Providing evidence that sufficient documentation exists to support the persistence of energy savings is a critical prerequisite to consider industrial energy efficiency projects for white certificates or carbon credits. Without such evidence, the value of these projects may be subject to deep discounts, since there would be no assurance that energy savings would persist over the life of the project (often ten years or more) without significant degradation in energy efficiency.


The key to an effective industrial energy efficiency policy


is to find a balance between consistency and flexibility. Consistency in programme message, goals, target industries and basic programme offerings is critical. When announcing an industrial programme, a policymaker should assume that industry will require at least a year to accept it and another year or more to respond. Most industries require at least 12-18 months for completion of an energy efficiency project after an assessment is done and opportunities have been identified.


A comprehensive training programme is typically required to create a cadre of system optimization experts who are prepared to identify energy efficiency measurements and to develop efficiency improvement projects. For maximum effectiveness, the training should be targeted to plant and consulting engineers, as well as equipment suppliers.


A core element of any industrial energy efficiency programme is an information campaign. This campaign is designed to introduce industry to the basic concepts of energy management and industrial system optimization.



Enabling partnerships are needed to:

 – build ownership in the proposed efforts to change existing practices and behaviours for greater energy efficiency;
- reach many industrial firms with the energy efficiency message through existing business relationships (such as with suppliers, trade associations, etc);
– develop credibility within specialized industrial sectors;
- ensure that proposed policies are practical given the current situation of industry in the country;
- engage the financial community and assist them in understanding the financial benefits of industrial energy efficiency;
- recruit the best talent to become trained in system optimization techniques; and
- successfully launch an industrial energy efficiency programme.