Three Powerful Utility Bill Analysis Methods For the Energy Manager

ABSTRACT
Utility Bill Tracking systems are at the center of an effective energy management program. However, some organizations spend time and money putting together a utility bill tracking system and never reap any value. This paper presents three utility bill analysis techniques which energy managers can use to arrive at sound energy management decisions and achieve cost savings.

INTRODUCTION
Utility bill tracking and analysis is at the center of rigorous energy management practice. Reliable energy management decisions can be made based upon analysis from an effective utility bill tracking system. From your utility bills you can determine:

– whether you are saving energy or increasing your consumption,
– which buildings are using too much energy,
– whether your energy management efforts are succeeding,
– whether there are utility billing or metering errors, and
– when usage or metering anomalies occur (ie. when usage patterns change)

Any energy management program is incomplete if it does not track utility bills. Equally, any energy management program is rendered less effective when its utility tracking system is difficult to use or does not yield valuable information. In either case, fruitful energy savings opportunities are lost.

Many practical energy managers make the smart choice and invest in utility bill tracking software, but then fail to recover their initial investment in energy savings opportunities. How could this be?

This paper introduces three simple and useful procedures that can be performed with utility bill tracking software. Just performing and acting upon the first two types of analysis will likely save you enough money to pay for your utility bill tracking system in the first year. The three topics are Benchmarking, Load Factor Analysis, and Weather Normalization as shown in Table 1.

BENCHMARKING
Let’s suppose you were the new energy manager in charge of a portfolio of school buildings for a district. Due to a lack of resources, you cannot devote your attention to all the schools at the same time. You must select a handful of schools to overhaul. To identify those schools most in need of your attention, one of the first things you might do is find out which schools were using too much energy. A simple comparison of Total Annual Utility Costs spent would identify those buildings that spend the most on energy, but not why.

Benchmarking Different Categories of Buildings
When benchmarking, it is also useful to only compare similar facilities. For example, if you looked at a school district and compared all buildings by $/SQFT, you might find that the technology centers administration buildings were at the top of the list, since administration buildings and technology centers often have more computers and are more energy intensive than elementary schools and preschools. These results are expected and not necessarily useful. For this reason, it might be wise to break your buildings into categories, and then benchmark just one category at a time.

Different Datasets
You can benchmark your buildings against each other (as we did in our example) or against publicly available databases of similar buildings in your area. Energy Star’s Portfolio Manager allows you to compare your buildings against others in your region. Perhaps those buildings in your portfolios that looked the most wasteful are still in the top 50th percentile of all similar buildings in your area. This would be useful to know.

Occasionally, management decides that their organization needs to save some arbitrary percentage (5%, 10%, etc.) on utility costs each year. Depending upon the goal, this can be quite challenging, if not impossible. Energy managers can use benchmarking to guide management in setting realistic energy management goals. For example, our school district energy manager might decide to create a goal that the three most energy consuming schools use only $0.80/SQFT. Since this is about as much as the lowest energy consuming schools are currently using, this could be an attainable goal.

If you can find a dataset, you may also be able to benchmark your buildings against a set of similar buildings in your area and see the range of possibilities for your buildings. In any case, benchmarking will focus your energy management efforts and provide realistic goals for the future.

Rules of Thumb
New energy managers often search for a “rule of thumb” to use for benchmarking. An example could be: “If your building uses more than $2/SQFT/Year then you have a problem.” Unfortunately, this won’t work. Different types of buildings have different energy intensities. Moreover, different building locations will require differing amounts of energy for heating and cooling. In San Francisco, where temperatures are consistently in the 60s, there is almost no cooling requirement for many building types; whereas in Miami, buildings will almost always require cooling. Different building types, with their characteristic energy intensities, different weather sites, and different utility rates all combine to make it hard to have rules of thumb for benchmarking. However, energy managers whose portfolios are all close by, can develop their own rules of thumb. These rules will most likely not be transferable to other energy managers in different locations, with different building types, or using different utility configurations.

Benchmarking Buildings in Different Locations
There are some complications associated with benchmarking. Suppose you were the energy manager of a chain store, and you had buildings in different national locations. Then benchmarking might not be useful in the same sense. Would it be fair to compare a San Diego store to a Chicago store, when it is always the right temperature outside in San Diego, and always too hot or too cold in Chicago? The Chicago store will constantly be heating or cooling, while the San Diego store might not have many heating or cooling needs. Comparing at $/SQFT might help decide which store locations are most expensive to operate due to high utility rates and different heating and cooling needs.

Some energy analysts benchmark using kBtu/SQFT to remove the effect of utility rates (replacing $ with kBtu). Some will take it a step further using kBtu/SQFT/HDD to remove the effect of weather (adding HDD), but adding HDD (or CDD) is not a fair measurement, as it assumes that all usage is associated with heating. This measurement also does not take into account cooling (or heating) needs. Many thoughtful energy managers shy away from benchmarking that involves CDD or HDD.

Different Benchmarking Units
Another popular benchmarking method is to use kBtu/SQFT (per year), rather than $/SQFT (per year). By using energy units rather than costs, “rules of thumb” can be created that are not invalidated with each rate increase. In addition, the varying costs of different utility rates does not interfere with the comparison.
Benchmarking Summation
Benchmarking is a simple and convenient practice that allows energy managers to quickly assess the energy performance of their buildings by simply comparing them against each other using a relative (and relevant) yardstick. Buildings most in need of energy management practice are easily singled out. Reasonable energy usage targets are easily determined for problem buildings.

LOAD FACTOR ANALYSIS
Once you have identified which buildings you want to make more efficient, you can use Load Factor Analysis to concentrate your energy management focus towards reducing energy or reducing demand.

What Load Factor is
Load Factor is commonly calculated by billing period, and is the ratio between average demand and peak (or metered) demand. Average demand is the average hourly draw during the billing period.

What Load Factor Means
High Load Factors (greater than 0.75) represent meters that have nearly constant loads. Equipment is likely not turned off at night and peak usage (relative to off peak usage) is low.

Low Load Factors (less than 0.25) belong to meters that have very high peak power draws relative to the remainder of the sample. These meters could be associated with chillers or electric heating equipment that is turned off for much of the day. Low Load Factors can also be associated with buildings that shut off nearly all equipment during non-running hours, such as elementary schools.

Load Factors greater than 1 are theoretically impossible , but appear occasionally on utility bills. Isolated instances of very high or low Load Factors are usually an indicator of metering errors.

One school, Tyler MS, consistently has a much lower Load Factor than the others (hovering consistently around 20%). Low Load Factors can be ascribed to either very high peak loads or very low loads during other hours. In this case, we cannot blame the Load Factor problem on “peaky” cooling loads, as the problem exists all year. A likely cause can be that Tyler MS is doing a better job at shutting off all lighting and other equipment at night than the other schools. One school (Jackson MS) typically has higher Load Factors than the other schools. One reason may be that lighting, HVAC and other equipment is running longer hours than at Tyler MS.

A good energy manager would investigate what building operational behavior is contributing to the low Load Factor values (and consequently relatively high demand) for Tyler MS, and would investigate whether the demand could be decreased. Inquiring about whether Jackson MS is turning off equipment at night is also advisable.

Load Factor Rules of Thumb
Load Factor analysis is an art, not a science. Different building types (i.e. schools, offices, hospitals, etc.) will have different Load Factor ranges. Since hospitals run many areas 24 hours a day, one might expect higher Load Factors than for schools, which can turn off virtually everything at night. Also many things contribute to a particular building’s Load Factor. A building left on 24 hours a day can still have a low Load Factor if there are large peaks each month – for example, a 20 bed hospital that has a scheduled MRI truck visit once each month. The MRI demand is large, and can greatly impact the Load Factor of a small facility.

Like Benchmarking, you can determine your own rules of thumb for your buildings, however, your range of acceptable Load Factors will vary based upon building type and climate. Rules of Thumb may not be that helpful though. Like Benchmarking, just identifying the buildings with unusually high and low Load Factors, relative to the other buildings in the portfolio, should be sufficient.

Load Factor Summation
Load Factor can be used to identify billing and metering errors, buildings that are not turning off equipment, and buildings with suspiciously high demands. While Benchmarking can identify buildings most likely to yield large energy efficiency payoffs, Load Factor Analysis can point to easily resolved scheduling and metering issues.

WEATHER NORMALIZATION
Another important utility bill analysis method is to normalize utility bills to weather. Weather Normalization allows the energy manager to determine whether the facility is saving energy or increasing energy usage, without worrying about weather variation.

Suppose an energy manager replaced the existing chilled water system in a building with a more efficient system. He likely would expect to see energy and cost savings from this retrofit.

A quarter-million dollar retrofit is difficult to justify with results like this. And yet, the energy manager knows that everything in the retrofit went as planned. What caused these results?

Clearly the energy manager cannot present these results without some reason or justification. Management may simply look at the figures and, since figures don’t lie, conclude they have hired the wrong energy manager!

There are many reasons the retrofit may not have delivered the expected savings. One possibility is that the project is delivering savings, but the summer after the retrofit was much hotter than the summer before the retrofit. Hotter summers translate into higher air conditioning loads, which typically result in higher utility bills.

Hotter Summer -> Higher Air Conditioning Load -> Higher Summer Utility Bills

In other words, the new equipment really did save energy, because it was working more efficiently than the old equipment. The figures don’t show this because this summer was so much hotter than last summer.

If the weather really was the cause of the higher usage, then how could you ever use utility bills to measure savings from energy efficiency projects (especially when you can make excuses for poor performance, like we just did)? Your savings numbers would be at the mercy of the weather. Savings numbers would be of no value at all (unless the weather was the same year after year).

Our example may appear a bit exaggerated, but it begs the question: Could weather really have such an impact on savings numbers?

It can, but usually not to this extreme. The summer of 2005 was the hottest summer in a century of record-keeping in Detroit, Michigan. There were 18 days at 90degF or above compared to the usual 12 days. In addition, the average temperature in Detroit was 74.8degF compared to the normal 71.4 degF. At first thought, 3 degrees doesn’t seem like all that much; however, if you convert the temperatures to cooling degree days, the results look dramatic. Just comparing the June through August period, there were 909 cooling degree days in 2005 as compared to 442 cooling degree days in 2004. That is more than double! Cooling degree days are roughly proportional to relative building cooling requirements. For Detroit then, one can infer that an average building required (and possibly consumed) more than twice the amount of energy for cooling in the summer of 2005 than the summer of 2004. It is likely that in the Upper Midwestern United States there were several energy managers who faced exactly this problem!

How is an energy manager going to show savings from a chilled water system retrofit under these circumstances? A simple comparison of utility bills will not work, as the expected savings will get buried beneath the increased cooling load. The solution would be to apply the same weather data to the pre- and post-retrofit bills, and then there would be no penalty for extreme weather. This is exactly what weather normalization does. To show savings from a retrofit (or other energy management practice), and to avoid our disastrous example, an energy manager should normalize the utility bills for weather so that changes in weather conditions will not compromise the savings numbers.

More and more energy managers are now normalizing their utility bills for weather because they want to be able to prove that they are actually saving energy from their energy management efforts.

In many software packages, you can establish the relationship between weather and usage in just one click. Because the one-click “tunings” that the software gives you are not always acceptable, it does help to understand the underlying theory and methodology so that you can identify the problem tunings and make the necessary adjustments. The more you know about the topic the better. The section that follows explains in a little more detail the basic elements of weather normalization.

How Weather Normalization Works
Rather than compare last year’s usage to this year’s usage, when we use weather normalization, we compare how much energy we would have used this year to how much energy we did use this year. Many in our industry do not call the result of this comparison, “Savings”, but rather “Usage Avoidance” or “Cost Avoidance” (if comparing costs). Since we are trying to keep this treatment at an introductory level, we will simply use the word Savings.

When we tried to compare last year’s usage to this year’s usage, we saw disastrous results. We used the equation:

Savings = Last year’s usage – This year’s usage

When we normalize for weather, we use the equation:

Savings = How much energy we would have used this year – This year’s usage

The next question is how to figure out how much energy we would have used this year? This is where weather normalization comes in.

First, we select a year of utility bills to which we want to compare future usage. This would typically be the year before you started your energy efficiency program, the year before you installed a retrofit, or some year in the past that you want to compare current usage to. In this example, we would select the year of utility data before the installation of the chilled water system. We will call this year the Base Year .

Next, we calculate degree days for the Base Year billing periods. Because this example is only concerned with cooling, we need only gather Cooling Degree Days.

Base Year bills and Cooling Degree Days are then normalized by number of days. Normalizing by number of days (in this case, merely, dividing by number of days) removes any noise associated with different bill period lengths. This is done automatically by canned software and would need to be performed by hand if other means were employed.

To establish the relationship between usage and weather, we find the line that comes closest to all the bills. This line, the Best Fit Line, is found using statistical regression techniques available in canned utility bill tracking software and in spreadsheets.

The next step is to ensure that the Best Fit Line is good enough to use. The quality of the best fit line is represented by statistical indicators, the most common of which, is the R2 value. The R2 value represents the goodness of fit, and in energy engineering circles, an R2 > 0.75 is considered an acceptable fit. Some meters have little or no sensitivity to weather or may have other unknown variables that have a greater influence on usage than weather. These meters may have a low R2 value. You can generate R2 values for the fit line in Excel or other canned utility bill tracking software.

This Best Fit Line has an equation, which we call the Fit Line Equation, or in this case the Baseline Equation. The Fit Line Equation might be:

Baseline kWh =
(5 kWh/Day * #Days ) + ( 417 kWh/CDD * #CDD )

Once we have this equation, we are done with the regression process.

Base Year bills ~= Best Fit Line = Fit Line Equation

The Fit Line Equation represents how your facility used energy during the Base Year, and would continue to use energy in the future (in response to changing weather conditions) assuming no significant changes occurred in building consumption patterns.

Once you have the Baseline Equation, you can determine if you saved any energy. How? You take a bill from some billing period after the Base Year. You then plug in the number of days from your bill and the number of Cooling Degree Days from the billing period into your Baseline Equation.

Suppose for a current month’s bill, there were 30 days and 100 CDD associated with the billing period.

Baseline kWh =

( 5 kWh/Day * #Days ) + ( 417 kWh/CDD * #CDD )

Baseline kWh =
( 5 kWh/Day * 30 ) + ( 417 kWh/CDD * 100 )

Baseline kWh = 41,850 kWh

Remember, the Baseline Equation represents how your building used energy in the Base Year. So, with the new inputs of number of days and number of degree days, the Baseline Equation will tell you how much energy the building would have used this year based upon Base Year usage patterns and this year’s conditions (weather and number of days). We call this usage that is determined by the Baseline Equation, Baseline Usage.

Now, to get a fair estimate of energy savings, we compare:

Savings = How much energy we would have used this year – How much energy we did use this year

Or if we change the terminology a bit:

Savings = Baseline Energy Usage – Actual Energy Usage

where Baseline Energy Usage is calculated by the Baseline Equation, using current month’s weather and number of days, and Actual Energy Usage is the current month’s bill.

So, using our example, suppose this month’s bill was for 30,000 kWh:

Savings = Baseline Energy Usage – Actual Energy Usage

Savings = 41,850 kWh – 30,000 kWh

Savings = 11,850 kWh

SUMMARY
Utility Bill Tracking is at the center of a successful energy management system, but the bills must be used for sound analysis for any meaningful reduction in energy usage. By applying three analysis methods presented here (Benchmarking, Load Factor Analysis, and Weather Normalization), the energy manager can develop insight which should lead to sound energy management decisions.

John Avina, President of Abraxas Energy Consulting, has worked in energy analysis and utility bill tracking almost 15 years. During his tenure at Thermal Energy Applications Research Center, Johnson Controls, SRC Systems, Silicon Energy and Abraxas Energy Consulting, Mr. Avina has managed the M&V for a large performance contractor, managed software development for energy analysis applications, created energy analysis software that is commercially for sale, taught over 200 energy management classes, created hundreds of building models and utility bill tracking databases, modeled hundreds of utility rates, performed numerous energy audits and set up and maintained M&V projects for a handful of 500 to 1000 unit big box store chains. Mr. Avina has a MS in Mechanical Engineering from the University of Wisconsin-Madison. He is a member of the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE), the Association of Energy Engineers (AEE), the American Solar Energy Society (ASES), and a Certified Energy Manager (CEM) and Certified Measurement and Verification Professional (CMVP).

China – Asia’s Energy Dragon

China is presently engaged in a massive effort to control its rising energy use while promoting the rapid growth of its economy. The numbers involved evidence the magnitude of the challenge: in real terms, China’s 2007 GDP was more than double that of 2000; the electric power sector added more than 90 GW of capacity in just one year; and 100 million tonnes of coal-equivalent energy savings are to be achieved by engaging nearly 1,000 of the economy’s largest energy-using enterprises. Though the Chinese leadership has demonstrated its eagerness to learn from international experience, there is simply no precedent for the proposed development path. The policies and programs that China has introduced are necessarily unique given the challenge that is confronted, and original approaches are being developed to implement these policies and programs in the country’s economy.

It is not just the scope of China’s energy efficiency endeavours that sets them apart. China’s administrative structure both enables and requires new approaches with a “Chinese character”. Within the structure of a mixed economy, referred to as “socialism with Chinese Characteristics”, the government retains considerable authority to shift the economies allocation of resources toward energy efficient industries and products. The vertical Integration of government agencies means that those in the central government that are responsible for defining energy efficiency policies are also present at the local level to monitor implementation. Pre-existing lines of communication, responsibility, and accountability can be turned toward the objectives of energy efficiency. The initial impression is that it is an ideal environment in which to make rapid progress in improving energy efficiency.

But the actual situation is much more complicated and often defies understanding by the international community. China is an economy in transition, both planned and market driven, and it is experiencing rapid development. Majority state-owned companies that respond well to government reward systems operate alongside private enterprises that respond more readily to price signals. The economies of some coastal provinces host advanced manufacturing facilities and a vibrant service sector, while the economies of interior provinces remain predominantly agrarian. Evaluations of China’s energy efficiency polices at the national level do not capture the variation found across these geographies of energy efficiency in China.

“Wealth is unevenly distributed across China’s provinces; per-capita income ranges from just CNY10,000 in Gansu to nearly CNY66,000 in Shanghai. China is the world’s largest energy producer and second-largest energy consumer (IEA 2008).”

China is home to some of the most advanced green companies – such as solar cell and wind turbine manufacturers – but on the other hand, as of 2000, coal use per unit of electricity in the power sector was more than 20 percent higher than the level in advanced economies.

The most advanced provinces of China have an average per-capita gross regional product of CNY66,000, while the figure for interior provinces is about one fifth that. In some special economic zones, industries pay market prices for energy, but in most of China retail energy prices remain subsidized. According to a recent study, one province has published building specific energy use data for 526 public buildings, but obtaining reliable energy use data for many other provinces remains difficult. To achieve the energy efficiency targets of the central government, the implementation of energy efficiency policies in China must succeed in all of these settings.

China’s growing experience in implementing energy efficiency policies holds lessons for many observers. Other economies in transition can learn from the mix of approaches that China is developing; even within China itself, one province can learn from the experiences of another. Energy businesses must understand the depth and breadth of energy efficiency programs both to gauge the impact of China’s development on international energy markets and to understand this enormous potential market for energy efficient products and services. And certainly, those who wish to understand China’s commitment to mitigating the environmental impacts of development should understand the many, varied geographies of energy efficiency in China.

China has a long history of pursuing energy efficiency and conservation. Now, having recognized the threat to energy security, sustainable economic growth, and the environment that is posed by rapid energy demand growth, China has placed energy efficiency and conservation as its highest priority energy strategy. Since issuing the Medium- and Long-term Plan for Energy Conservation in 2004, several important high-level actions has been taken to put China on a path toward less energy-intensive development. These have been greeted by observers with praise but also some skepticism.

The 11th Five-Year Plan has been the proving ground for China’s resource-conserving, environmentally friendly development strategy. China’s leadership and observers around the world are watching to see if the national energy efficiency and conservation policies can reduce the rate of energy growth of this rapidly growing industrial economy.

Previous studies, have pointed to the challenges of implementing energy policy in this economy, in which the forces of development, market reform, industrialization, urbanization and globalization have been unleashed. That is why this report has focused on implementation – to understand how the energy efficiency policies of the central government are being implemented by the provinces, local governments, sectors, and enterprises of China. Evidence of success in implementation provides an indication of the feasibility of the strategy, which dramatically impacts the world energy outlook. Moreover, successful implementation strategies might inform further efforts toward energy efficiency, both in and out of China.

To provide a better standard of living, the government aims to achieve a 2020 per-capita GDP four times that of 2000. China’s leadership has recognized two looming obstacles to achieving this goal by energy intensive development. On the one hand, an insecure supply of energy may impede growth. On the other, rapid and unregulated growth in the energy sector might provide the necessary energy supply at an environmental cost that would threaten the improved standards of living that are the ultimate objective. Thus, reducing the economy’s energy intensity by 20 percent was set as an obligatory target in the 11th Five-Year Plan (2006-2010).

“In 2007, China’s population was 1.32 billion, up from 1.27 billion in 2000.”

This important change in China’s national energy policy is implemented first by the universal adoption of supporting, binding provincial energy intensity targets. The provinces have then responded by further decomposing those targets within their jurisdiction and by the adoption of policies and measures, which respond to centrally-issued requirements or convey national regulations to their jurisdiction. Evidence gathered to date shows that all provinces have taken action toward achieving their targets and that many provinces are well on their way toward delivering on this contribution to the national objective. However, a minority of provinces are not progressing at the planned pace, and many central measures have yet to achieve universal adoption.

The simple fact that data with regard to achievement of energy efficiency and conservation objectives is available represents a level of success. It shows that progress toward achieving change is being measured, which is a key step in accountability. In fact, a clear method has been established to evaluate the performance of provinces and key energy using enterprises. Various regulations and laws, issued both by central and provincial governments, suggest that the scores from these evaluations will effectively motivate action by turning the pre-existing methods of administrative performance review, reward, and public praise to the task of spurring energy efficiency and conservation.

Recent years have featured several attempts to reorganize the national energy agencies in order to clarify and consolidate responsibility for energy policy. The National Development and Reform Commission remains the key oversight body for implementation of energy efficiency and conservation in the 11th Five-Year Plan. But aggressive energy saving goals require that implementation activities push farther and deeper into the various sectors, which requires greater collaboration among the various Ministries and departments that are responsible for those sectors. Administration in China is vertically integrated, thus achieving the participation of various ministries enables the local offices of those ministries to deliver on the EE&C measures. Facilitating this collaboration is the objective of the recently established National Energy Commission.

China is large and diverse in many measures and especially so in terms of energy efficiency. From one province to the next there are large differences in energy intensity, and within a given industry there are vast differences in efficiency between top performers and laggards. To some extent this variation has been recognized in the pursuit of the EE&C agenda. Different provinces have been assigned different targets according to their situation. Industries are being pushed to benchmark against the top-performers in order to guide their improvements. And local governments have flexibility to experiment with different approaches to meeting their assigned targets. A one-size fits all approach does not suite China’s distinct geographies of energy efficiency, and the growing diversity of approaches is promising.

Within the power sector, the heat rate of thermal power plants and transmission and distribution line losses, are focused on as key indicators of energy efficiency. China has over 6,000 thermal power units, more than three-quarters of which have a capacity of less than 100 MW. The efficiency of the small thermal units is well below that of the large, over 600 MW, high-efficiency units that China has recently been deploying. Current policy aims to improve the overall efficiency of the power sector by shutting down small and aging plants. This policy is often unpopular with the small plants’ local stakeholders, but it has nonetheless succeeded in eliminating 23.4 GW of small power plants in 2007, and the average heat rate of thermal power stations improved from 356 to 345 grams coal-equivalent per kWh.

Continued culling of the small thermal power plants is likely to produce further efficiency gains. Recent increases to investments in transmission and distribution support this consolidation of capacity and are also expected to improve grid stability and reduce line losses. While working with the national generation and grid companies to improve supply-side efficiency, the government has also encouraged local governments to develop combined heat and power, which a large project in Beijing has shown to offer very high system efficiency.

“Secondary industry (mining and quarrying, manufacturing, production and supply of electricity, water and gas, and construction) provides nearly half of China’s GDP (NBS 2008b)”.

China’s iron and steel industry is by far the largest in the world and it is responsible for 18 percent of China’s final energy demand. It is also remarkably geographically dispersed and fragmented. The industry includes small producers using outdated technologies but also massive production groups with more than 30 million tonnes of relatively modern production capacity. As part of China’s broad economic reform process, the government reduced its direct operating control in the industry. As steel producers became independent, their inefficiencies were revealed. Correcting these inefficiencies led to a period of energy intensity improvements that continued until 2003. Now, the government is utilizing its close ties with the industry to promote further efficiency improvements through more aggressive industry restructuring.

Through agreements with provinces and individual companies, China has succeeded in eliminating over 46 million tonnes of inefficient steel making capacity. New capacity is required to meet the government’s requirements as to efficiency of scale, processes, and equipment.

Furthermore, more than 250 iron and steel enterprises are engaged in the Top-1000 Energy Consuming Enterprise program, which requires them to achieve specific energy intensity reductions, under the scrutiny of the provincial governments. Technology specifications and energy saving targets are thus amply provided, but finance is a potential weak link. Industry consolidation and foreign investment may provide some of the financing for energy efficiency improvements, but additional government financial support could hasten the deployment of efficient technologies. Groups such as the Asian Energy Investment Council are playing a key role in funding for these issues.

China’s manufacturing industries play a dual role in the drive to improve energy intensity. First, they are improving the energy efficiency of the products that they supply to the Chinese market. And second, they are reducing their own energy intensity by increasing the value added of their products while improving the energy efficiency of their facilities. China’s coastal manufacturing hubs, and especially the special economic zones within those areas, are the incubators for this process. Despite the increasing privatization of businesses in these areas, the government maintains close cooperation with industry. Local officials are responding to EE&C objectives by favouring low energy intensity businesses in their jurisdiction. At the same time, manufacturers are motivated to bring efficient products to the marketplace by the central government’s promotion of those products. Continued efforts to deregulate energy prices will push manufacturers to further improve the efficiency of their operations. Success in the coastal development areas may subsequently be transferable to less-developed regions of China.

Though today the residential and commercial sectors are considerably less important than industry in China’s total energy consumption, they are areas of rapid demand growth. There is a large potential for energy efficiency in these sectors and the government has sought to improve their efficiency for many years. Recent policies have introduced higher energy reduction targets, particularly in the building sector, and expanded coverage by including more products under performance standards and labelling programs. Supervision and enforcement of these policies and programs is essential to slow the pace of energy growth in these sectors.

“China’s primary energy mix includes: coal (73 percent), oil (21 percent), gas (4 percent), hydro (3 percent), and nuclear (less than 1 percent). Large domestic coal resources and the economy’s heavy reliance on that fuel have been a source of energy security. However, since becoming a net oil importer in 1996, China’s energy imports have steadily grown”. Recent programs have provided enterprises with both incentives for producing efficient products for the residential and commercial sectors, as well as penalties for failure to comply with minimum energy performance standards.

Importantly, these provisions are backed by recent amendments to China’s Energy Conservation Law. Early evidence indicates that provincial and local governments are strengthening supervision and enforcement activities during the 11th Five-Year Plan period. The rapid expansion of building floor space and appliance usage creates a challenging environment in which to develop such supervision, but also shows its necessity. The vast infrastructure that is now being deployed will shape future energy consumption in these sectors for decades to come.

One area where China has a uniquely large potential for reducing energy demand is among the state-funded institutions. These institutions are responsible for a massive building stock; over 100 million square meters, which includes both office buildings and residential housing.

The energy consumption per unit area of these buildings is much higher than similarly purposed buildings in Europe and Japan. A process was initiated in 2001, under the leadership of the Government Offices Administration of the State Council (GOASC), to understand energy usage of state-funding institutions, and then design and implement an EE&C program to reduce that usage. The program that has emerged from this process includes building energy monitoring, building retrofits, improved vehicle management, and government procurement of energy efficient products. GOASC reports that electricity consumption per square meter of building area fell from 81.3 kWh in 2005 to 73.1 kWh in 2008 as a result of these programs.

China has deployed a wide variety of implementation strategies to its diverse geographies of energy efficiency. Just as importantly, it is gathering continuous feedback on the performance of these strategies and using it to make adjustments and improve performance. This process, which in China is sometimes referred to as ‘feeling the way across the river’, will provide experience that will guide the expansion of China’s energy efficiency and conservation programs in the remainder of the 11th Five-Year Plan and beyond, as China strives to create a resource conserving and environmentally friendly development path.

Conclusions:
A challenge that China faces with regard to energy efficiency in the residential and commercial sectors is the need to improve energy intensity without impending economic development. As analysis has illustrated, increasing income increases energy consumption in the residential sector. Energy efficiency, especially as implemented through building and product standards, offers a promising approach to improving energy intensity while increasing the competitiveness of domestic manufacturers.

The role of enterprises is crucial in improving energy efficiency. Some assignment of responsibility, including the penalties for non-compliance and awards for exceptional performance that are specified in the national policies, spur action at the local level. The bottom-up approach of the manufacturers will improve the effectiveness of policies implemented at the national level.

As for the government, a nationwide monitoring system for civil buildings will be needed to strengthen implementation of energy efficient policies. To this end, further action such as establishing a comprehensive data gathering system and increasing the capacity to monitor appropriately will be necessary.

Finally, public consciousness and awareness of energy saving is still a difficult barrier in the residential and commercial sectors. It takes time to change not only public consciousness but also attitudes and behaviour. Therefore, it is essential to continuously inform the public about how much energy can be saved through the use of energy efficient appliances and equipment

Solomon King, Director of Asia Pacific Sales, Power insider magazine.

For all information on the Asia Power Market please visit;

Energy Explained Simply

Energy, it is fair to say, is a very vague concept. So where does one go to learn more? Does one have to take a physics course? I don’t think so, and to test my theory, I have tried to explain energy as briefly as I can, right here.

Energy 101

Energy is what makes the world go round. Literally. Every neuron that sparks in your brain, every electron that fires down a wire, every molecule burning in a fire, carries with it a sort of momentum that it passes on like a baton in a complex relay race. The batons are flooding in all directions all around us and across the universe – they are energy and we have learned how to harness them.

The actual word “Energy” is a much abused term nowadays – because energy is used to represent such a disparate range of phenomena from heat to light to speed to weight, and because it seems to be able to change forms so readily, it is cannon fodder for pseudo-scientific and spiritual interpretation. However, you will be pleased to hear that it actually has a very clear (and consistent) nature.

I like to think of energy being a bit like money – it is a sort of currency that can be traded. It takes on various forms (dollars/pounds/Swiss francs) and can be eventually cashed in to achieve something. However, just like money, once spent, it does not vanish. It simply moves on a new chapter in its life and may be reused indefinitely.

To illustrate the point, let’s follow a ‘unit of energy’ through a visit to planet Earth to see what I mean. The [number] shows every time it changes currency (see the key below).

The energy in our story starts off tied up in hydrogen atoms in the sun [1]. Suddenly, due to the immense pressure and heat, the nuclei of several atoms react to form a brand new helium atom, and a burst of radiation[2] is released. The radiation smashes into other nearby atoms heating them up so hot [4] that they glow, sending light [2] off into space. Several minutes pass in silence before the light bursts through the atmosphere and plunges down to the rainforest hitting a leaf. In the leaf the burst of power smashes a molecule of carbon dioxide and helps free the carbon to make food for the plant [3]. The plant may be eaten (giving food ‘Calories’), or may fall to the ground and settle and age for millions of years turning perhaps to coal. That coal may be dug up and burned to give heat [4] in a power station, boiling water to supply compressed steam [5] that may drive a turbine [6] which may be used to generate electricity [7] which we may then use in our homes to heat/light/move/cook or perhaps to recharge our mobile phone [3]. That energy will then be used to transmit microwaves when you make a call [2] which will mostly dissipate into the environment heating it (very) slightly [4]. Eventually the warmed earth radiates [2] this excess of heat off into the void where perhaps it will have another life…

Energy currencies:

[1] Matter is energy, according the Einstein, and the quantity relates to mass according to E=mc^2 (c is a constant equal to the speed of light).

[2] Radiation (like sunlight) is a flow of energy, and energy content relates the frequency according to E=hf (h is the Planck constant).

[3] Chemical energy – the most complex energy, a mixture of different tensions in nuclear and electromagnetic force fields.

[4] Thermal (heat) energy- this is really just a sneaky form of kinetic energy [6 below] – small particles moving and vibrating fast are sensed by us as heat.

[5] Compression (or tension) energy – while compressed air is again a sneaky form of kinetic energy

[6], a compressed spring is different – it’s energy is more like chemical energy and is stored by creating tension in the force fields present in nature (gravity, electromagnetism and nuclear forces).

[6] Kinetic energy – is energy by virtue of movement (like a speeding bullet or unstoppable train)

[7] Electrical energy – this energy, like a compressed spring, is stored as stress in force fields, in this case electromagnetic force-fields.

This short story is testament to an enormous quantity of learning by our species, but there are some clear exclusions to be read into the story:

Energy fields (auras) or the energy lines in the body that conduct the “chi” (or life force) of Asian medical tradition
Energy lines on the Earth (aka Ley lines)
Negative or positive energy (as in positive or negative “vibes”)

These energy currencies relate to theories and beliefs that science has been unable to verify and thus they have no known “exchange rate”. Asking how many light bulbs can you power with your Chi is thus a nonsensical question, whereas it would not be for any scientifically supported form of energy. And since energy flows account for all actions in the universe, not being exchangeable would be rather limiting.

Where exactly is Energy kept?

This may sound like s strange question, we know Energy is kept in batteries, petrol tanks and chocolate chip cookies. But the question is, where exactly is it stored in those things?

Energy is stored in several ways:

as movement – any mass moving has energy by virtue of the movement, which is called Kinetic Energy

as matter – Einstein figured out that matter is just a form of energy, and the exchange rate is amazing – 1g = 90,000,000,000,000,000 joules (from E=mc^2)

as tension in force fields

That last one sounds a bit cryptic, but actually most of the energy we use is in this form – petrol, food, batteries and even a raised hammer all store energy in what are essentially compressed (or stretched springs).

What is a force field? Why on earth did I have to bring that up?

All of space (even the interstellar vacuum) is permeated by force fields. The one we all know best is gravity – we know that if we lift a weight, we have to exert effort and that effort is then stored in that weight and can be recovered later by dropping it on your foot.

Gravity is only one of several force fields known to science. Magnetic fields are very similar – it takes energy to pull a magnet off the fridge, and so it is actually an energy store when kept away from the fridge.

The next force field is that created by electric charge (the electric field). For many years this was though to be a field all on its own but a chap called James Clerk Maxwell realised that electric fields and magnetic fields are in some senses two sides of the same coin, so physicists now talk of ‘electromagnetic’ fields. It turns out that electric energy (such as that stored in a capacitor) consists of tensions in this field, much like a raised weight is a tension in a gravity field. Perhaps surprisingly, light (as well as radio waves, microwaves and x-rays) are also energy stored in fluctuations of an energy field.

Much chemical energy is also stored in electric fields – for example, most atoms consist of positively charged nuclei and negatively charged electrons, and the further apart they are kept, the more energy they hold, just liked raised weights. As an electron is allowed to get closer to the nucleus, energy is released (generally as radiation, such as light – thus hot things glow).

The least well known force field is the strong ‘nuclear’ force. This is the forces that holds the subatomic particles (protons) together in the nucleus of atoms. Since the protons are all positively charged, they should want to repel each other, but something is keeping them at bay, and so physicists have inferred this force field must exist. It turns out their theory holds water, because if you can drag these protons a little bit apart, they will suddenly fly off with gusto. The strong nuclear force turns out to be bloody strong, but only works over a tiny distance. It rarely affects us as we rarely store energy with this energy field.

Now we understand force fields we can look at how molecules (petrol, oxygen, chocolate) store energy. All molecules are made of atoms connected to one other via various ‘bonds’ and these bonds are like springs. Different types of molecules have different amount of tension in these bonds – it turns out coal molecules, created millions of years ago with energy from the sun, are crammed full of tense bonds that are dying to re-arrange to more relaxed configurations, which is exactly what happens when we apply oxygen and the little heat to start the reaction.

The complexity of the tensions in molecules are perhaps the most amazing in nature, as it is their re-arrangements that fuel life as we know it.

What exactly is Heat then?

You may have noticed that I did not include heat as a form of energy store above. But surely hot things are an energy store?

Yes, they are, but heat is actually just a sort of illusion. We use heat as a catch all term to describe the kinetic energy of the molecules and atoms. If you have a bottle of air, the temperature of the air is a direct consequence of the average speed of the molecules of gas jetting around bashing into one another.

As you heat the air, you are actually just increasing the speed of particles. If you compress the air, you may not increase their speed, but you will have more particles in the same volume, which also ‘feels’ hotter.

Solids are a little different – the atoms and molecules in solids do not have the freedom to fly around, so instead, they vibrate. It is like each molecule is constrained by elastic bands pulling in all directions. If the molecule is still, it is cold, but if it is bouncing around like a pinball, then it has kinetic energy, and feels hotter.

You can see from this viewpoint, that to talk of the temperature of an atom, or of a vacuum, is meaningless, because temperature is a macroscopic property of matter. On the other hand, you could technically argue that a flying bullet is red hot because it has so much kinetic energy…

Is Energy Reusable?

We as a species, have learned how to tap into flows of energy to get them to do our bidding. So big question: Will we use it all up?

Scientists have found that energy is pretty much indestructible – it is never “used-up”, it merely flows from one form into another. The problem is thus not that we will run out, but that we might foolishly convert it all into some unusable form.

Electricity is an example of really useful energy – we have machines that convert electricity into almost anything, whereas heat is only useful if you are cold, and light is only useful if you are in the dark.

Engineers also talk about the quality (or grade) of energy. An engineer would always prefer 1 litre of water 70 degrees warmer than room temperature, than 70 litres of water 1 degree warmer, even though these contain roughly the same embodied energy. You can use the hot water to boil an egg, or make tea, or you could mix it with 69 litres of room temperature water to heat it all by 1 degree. It is more flexible.

Unfortunately, most of the machines we use, turn good energy (electricity, petrol, light) into bad energy (usually “low grade heat”).

Why is low grade heat so bad? It turns out we have no decent machine to convert low grade heat into other forms of energy. In fact we cannot technically convert any forms of heat into energy unless we have something cold to hand which we are also willing to warm up; our machines can thus only extract energy by using hot an cold things together. A steam engine relies just as much on the environment that cools and condenses water vapour as it does on the coal its belly. Power stations rely on their cooling towers as much as their furnaces. It turns out that all our heat machines are stuck in this trap.

So, in summary, heat itself is not useful – it is temperature differences that we know how to harness, and the bigger the better.

This picture of energy lets us think differently about how we interact with energy. We have learned a few key facts:

Energy is not destroyed, and cannot be totally used up – this should give us hope
Energy is harnessed to do our dirty work, but tends to end up stuck in some ‘hard to use’ form

So all we need to do to save ourselves is:

Re-use the same energy over and over
by finding some way to extract energy from low grade heat

Alas, this is a harder nut to crack than fission power, so I am not holding my breath. It turns out that there is another annoying universal law (the Second Law of Thermodynamics) that says that every time energy flows, it will somehow become less useful, like water running downhill. This is because energy can only flow one way: from something hot to something cold – thus once something hot and something cold meet and the temperature evens out, you have forever lost the useful energy you had.

It is as if we had a mountain range and were using avalanches to drive our engines. Not only will our mountains get shorter over time but our valleys will fill up too, and soon we will live on a flat plane and our engines will be silent.

The Big Picture

So the useful energy in the universe is being used up. Should we worry?

Yes and no.

Yes, you should worry because locally we are running out of easy sources of energy and will now have to start using sustainable ones. If we do not ramp up fast enough we will have catastrophic shortages.

No, should should no worry that we will run out, because there are sustainable sources – the sun pumps out so much more than we use, it is virtually limitless.

Oh, and yes again – because burning everything is messing up the chemistry of the atmosphere, which is also likely to cause catastrophe. Good news is that the solution to this is the same – most renewable energy sources do not have this unhappy side effect.

Oh, and in the really long term, yes we should worry again. All the energy in the universe will eventually convert to heat, and the heat will probably spread evenly throughout the universe, and even though all the energy will still be present and accounted for, it would be impossible to use and the universe would basically stop. Pretty dismal, but this is what many physicists believe: we all exist in the eddy currents of heat flows as the universe gradually heads for a luke-warm, and dead, equilibrium.