Energy Advice

Climate Change Levy

Facts

Concern for the environment has been with us for a number of years and early discussions referred to global warming and the greenhouse effect.  Today, it is referred to as Climate Change.  Scientific opinion generally accepts that rising levels of greenhouse gas concentrations in the atmosphere will cause significant changes to global patterns.  In response to the scientific evidence and to pressure from environmental campaigners, climate change has moved from being a political issue to a business issue as Governments are increasingly implementing legislation that promotes positive environmental behaviour and penalises offenders.

Under the Kyoto protocol, developed countries have agreed that by 2008 to 2012, they will target reductions in CO2 emissions by an average of 5.2% below 1990 levels.  The UK’s target under this agreement is to achieve a 12.5% reduction in CO2 emissions by 2010. The Climate Change Levy (CCL) is a key part of the Government’s climate change programme and a principal funding mechanism for the Carbon Trust, the government-backed company established to take the lead on moving to a low carbon economy.

Costs

The Climate Change Levy (CCL) is a tax on an energy use in industry, commerce, agriculture and the public sector.  It was introduced in April 2001. The tax will vary in its effect as some organisations are eligible for discount and some energy sources or users of energy are exempt.  All UK businesses and public sector organisations pay the levy via their energy bills.  The full rate of levy is:

  • 0.43 p/k W h for electricity
  • 0.15 p/k W h for gas
  • 1.17 p/kilogram for coal
  • 0.96 p/kilogram for LPG
  • Fuel oils do not attract the levy as they are already subject to excise duty

The CCL is currently accompanied by a 0.3% reduction in employers National Insurance contributions.

Why Save Energy?

There are two main reasons for seriously considering the benefits of saving energy, one is environmental the other is economic.

Environmental

Whenever we use fossil fuels to heat our buildings, power our cars or generate electricity the by-products of combustion pollute the environment.  The main concern is the release of Carbon Dioxide (CO2) gas, which contributes to climate change.  There are also other pollutants released, dependent upon the fuel concerned.  Sulphur Dioxide (SO2) contributes to acid rain and Nitrogen Oxides (Nox) leads to low-level ozone, which affects our health.  By using less fuel to achieve the same end result, this can lead to low-level ozone which affects our health.  Also by using less fuel to achieve the same end result, through energy efficiency we reduce pollution and improve the environment.

There are other means of producing energy which are seen as “clean” in terms of CO2 production such as hydro, nuclear and renewables like wind and wave power.  However, environmentally they still have an impact.   What do we do with spent nuclear fuel?  Large dams for hydroelectric power flood eco-systems and affect wild life.  Wind power has its objectors to the visual and noise impact.  Therefore, the only way to ease all these problems is to use less energy to provide the services that we need.

One last point on the environmental issue is that “green purchasing” is becoming an ever-more important topic for consumers and investors.  Companies that can demonstrate an environmental awareness and responsibility can enhance their reputation and increase their market share.

Economic

Economically, energy efficiency is vital to the profitability of any company.  Energy cost savings go straight to the bottom line making the business more competitive, safeguarding profits and employment.

Unless energy efficiency has recently been thoroughly addressed within your organisation there are likely to be potential energy savings of between 10 and 20% readily achievable. Whilst 20% of energy costs may not be considerable in terms of turnover it will be significant in terms of increased profitability.

For example:

  • Consider a company with a turnover of £1,000,000
  • With a 10% profit margin, £100,000
  • Their energy cost may be £40,000
  • Achievable energy savings of 20% represent  £8,000
  • This an increase in profit of 8%

To achieve this by increasing sales would mean finding a market for another £80,000 of goods. This may not be so easy.

Strategies

Management Techniques

In order for any management programme to succeed it must have a strategic approach. There are many theories on how best to deliver this and in this section a 5-step approach is outlined.

The 5 steps are:

  1. Get Commitment
  2. Understanding
  3. Plan and Organise
  4. Implement
  5. Control and Monitor

Step 1 – Get Commitment

Support from the very top of the management structure is vital.  A visible commitment from senior managers will underpin a successful programme.  It will kick-start the programme and reassures everyone in the whole organisation that this is a serious issue.  An Energy Policy document signed by the Chairman, Chief Executive or the Board will demonstrate this commitment.

Step 2 – Understanding

This step requires evaluation of what energy is being used and what it costs.  There needs to be an understanding of where that energy is used within the organisation and where the waste is occurring.  From this knowledge realistic targets can be set for savings. However, it is not just energy information that needs to be understood – management strengths and weaknesses are also part of the picture, as is the anticipation of barriers to improved efficiency.  It may sound strange but in most organisations there will be personnel who fight against any change, even if it is for the better.

Step 3 – Plan and Organise

The targets for energy savings, derived from the ‘Understanding’ step will only be achieved if driven by detailed action plans.  The Energy Policy discussed in step 1 should be reviewed and updated with targets for savings and with time frames.  Each of the areas where waste was identified in step 2 should be addressed by one or more actions, which will reduce or eliminate the losses and these should be linked back to specific policy commitments.

Step 4 – Implement

Launching an energy/environmental campaign is high profile and the work put into Steps 1, 2 and 3 will pay off with a slick, well prepared approach.  Initially the no-cost actions are important to get momentum and show rapid savings demonstrating the benefits to the business.  However, these actions must also run alongside other complimentary management issues such as training and raising awareness.  Raising awareness of all personnel throughout the organisation from Boardroom to Cleaner is essential to get everyone ‘on board’ and playing their part.  Communication is another important issue.  Let everyone know what successes are being achieved and praise the people involved.

Earlier in Step 2, part of the understanding was to anticipate barriers to implementation. That early planning will now pay dividends as those barriers are overcome allowing a smooth implementation phase.

Step 5 – Control and Monitor

Once the programme is underway it is important that the benefits can be measured and reported.  Monitoring and Targeting is vital to this step.  A comprehensive M&T system will pay dividends many times over.  However M&T on its own will not show the whole picture. Remember that management issues are involved and re-evaluating strengths and weaknesses are also required.

Information from this step should be used to look back at the Policy statements, the targets and roles and responsibilities.  In other words the 5 steps are cyclical.  Go back and review, modify understanding with the knowledge gained, refine plans where necessary, introduce new targets where further waste has been identified, implement the new actions and monitor again.

Electric Motors and Drives

In the UK nearly half of all electricity use is for motive power.  In the industrial sector this rises to 65% of electrical energy used in motors.

The majority of motors in use are AC (alternating current) induction motors.  These motors are low cost, reliable and they are available in a range of sizes and speeds.  AC motors use electricity to generate magnetic fields that turn the motor.  Some of the energy is lost within the motor through friction, magnetic losses in the cores, resistive losses in the conductors and stray flux losses.  The first two losses (friction and magnetic) are fixed regardless of the load on the motor whilst the last two (resistive and flux) vary with the load.  It is for this reason that lightly loaded motors are inefficient.

The cost of an electric motor can be deceptive and in particular the annual energy cost to run the motor can amount to ten times its purchase cost.  Therefore ensuring that the motor is correctly selected for its intended purpose is vital.

Many motors are tucked away (including motors used in compressors) in places where they are not seen, they have become an accepted part of the structure and their use in not noticed.  Savings can be achieved by asking questions about each motor in use:-

  • Is the equipment still required?
  • Can the Compressor be turned off?
    • e.g. during lunch times or non-productive periods
  • Is it possible to reduce the load on the motor?
  • Can the speed of the motor be reduced?
    • e.g. investigate all opportunities for reducing operating speeds, as this has a big impact on running costs.  There is a cube law between the speed of a motor and its power consumption.  Hence, if the speed can be halved the power consumption is only one eighth that of full speed. There are a number of ways to change the speed of a motor.  Where a fixed speed is required savings may be achieved by:-
      • Changing the pulley ratio on a belt drive.
      • Changing to a slower speed motor.
      • Changing the gearboxratio.
    • Where multiple speeds are required:-
      • Install a variable speed drive (VSD) compressor, these units are also optimized to have soft start facilities (which reduces wear and tear on the drive system)

When replacing a compressor always ensure that it is fitted with high efficiency motor (IE4), these are built to higher tolerances using better materials and are therefore more efficient by 3% or 4%.  Often there is only a very small difference in the purchase cost of the IE4.

Compressed Air

In most instances compressed air is an essential resource and it is sometimes referred to as the fourth utility after gas, electricity and water.  There is a common misconception that air is free! Air is only free – until it is compressed, then it becomes 10 times more expensive than electricity and it is therefore often the most expensive commodity used in processes.  The cost and effects on the environment are not readily observed so its impact is lost on the user.  An action plan should be implemented to identify the cost and potential savings in the system:-

  • Estimate annual running costs
  • e.g. size of motor (kW) x running hours/day x days/annum x cost of electricity/kWh
  • Set up a leak reporting and repair system
    • e.g. Anglian Compressors Limited can survey your system using the latest ultrasonic detection equipment.  We would use tags to identify the leaks and produce a report detailing the actual cost to your business.  This report will also contain recommendations as to how these leaks can be repaired.
    • No load tests during non production periods can be carried out to prove the total amount of leakage on the system, this will enable you to identify the efficiency of your system.
    • Ensure that zero-loss drains are used instead of timed, float or manual drains.  This is one of the quickest ways of obtaining a pay-back.
  •  Check the maintenance program for your system.
    • e.g. regular maintenance is essential to minimize energy use.  The major cost of running an air compressor is energy.  Over the life of the compressor capital cost is 15%, maintenance is 10% and 75% is energy.
  • Consider waste heat recovery.
    • e.g. Can the waste heat from the compression process be used elsewhere for heating or drying.  About 80% of the energy used by the compressor is rejected as waste heat
  • Check controls
    • e.g. The compressor should not be left running when air is not needed. Anglian Compressors Limited can offer advice on various compressor management systems that will ensure your system operates at the lowest acceptable pressure, only run the most suitable compressor at any time and shut the system down when it is not required.

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