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INTRODUCTION TO ENERGY EFFICIENCY INDUSTRY:
INDUSTRY PLAYERS’ PERSPECTIVE
ByZAINI ABDUL WAHAB
Committee Member-Treasurer & Strategic Initiatives
MAESCO
2015
Awareness Program For Malaysian Universities
OUTLINE
1. OVERVIEW OF ENERGY & ENERGY EFFICIENCY
2. INTRODUCTION TO ENERGY SERVICE INDUSTRY
3. BUSINESS POTENTIALS IN ENERGY EFFICIENCY
4. POTENTIAL CAREERS IN ENERGY EFFICIENCY INDUSTRY
5. CHALLENGES IN ENERGY EFFICIENCY INDUSTRY IN MALAYSIA & THE WAY FORWARD
OVERIEW OF ENERGY & ENERGY EFFICIENCY
TYPES OF ENERGY
ENERGY
PRIMARY(FROM
NATURAL SOURCE,
UNUSABLE)
Renewable
Biomass, biogas, solar,hydro
Non renewable
Oil, gas, coal
SECONDARY
(CONVERTED TO
USABLE ENERGY)
Electricity, steam
Overview Of Energy In Malaysia
Energy related Policies in Malaysia
There is a need to have a dedicated policy on energy efficiency at the national level &recommended by the study by government
Source: SEDA Malaysia
No clear national policy on energy efficiency yet
Malaysia’s Oil And Gas Reserves
CRUDE OIL : 5.46 billion barrels, NATURAL GAS : 88.00 trillion standard cubic feet RESERVE LIFE : Oil – 19 years, Gas - 36 years(source: PETRONAS (as at 1st January 2008)
Oil Production Trends
more on the decreasing trends from the early 90s
Source: PEMANDU
Oil &Gas Resources
Total resources addition has been shrinking despite increased in exploration activities.
Oil explorations activities today require bigger investmentsSource: PEMANDU
Management of Petroleum Energy Sector
PRIME MINISTER
Ministry of Internal Trade & Industry
Licenses for processing & refining of petroleum &manufacture of petrochemical products
Ministry of Domestic
Trade,Cooperative &Consumerism
Licenses for marketing & distribution
PETRONAS
Ownership, management &control of oil & gas resources &activities
Through Petroleum Development Act of 1974 & Petroleum Regulations of 1974 (amended in 1975 &1981)
Structure of Authorities in Electricity Sector
Refer to the right agencies on issues related to electricity based on their scope of authorities and functions
How primary energy is used to produce electricity for consumers
No matter the source, it takes a significant amount of energy to make electricity
Globally, more than 35% of the primary energy consumed on a daily basis is being used to make electricity
Source: Exxon Mobil Energy Outlook 2012
The Integrated And Intelligent Electricity System Of The Future
Source: IEA
Electricity Generation Mix In Malaysia: Oil To Gas Dependency
moved from oil dependent to gas &coal dependent for electricity generation.
The dependency on coal from Indonesia reduced from 84% in 2008 to 65% in 2011.
Source: Energy Commission
The reserve margin for 2013 is 31%•an installed capacity of 21,749 MW
•a peak demand of 16,562 MW•a minimum reserve margin of 25% would be required
source: National Energy Security Forum 2012
Trends Of Energy Use By Type Of Sources
The trend of usage is increasing &the biggest usage is for petroleum related products such as petrol for vehicles &followed is for natural gas &for electricity generation
Source: National Energy Balance 2012
Trends Of Demand, Supply &GDP Growth
GDP growth is strongly related to the increase of final energy supply &demand. Need to get the GDP to grow as are moving towards a developed country To change the trend of the energy demand to increase exactly according to the
GDP growth to show that we are not utilizing our energy resources effectively.
Source: National Energy Balance 2012
Latest electricity consumption sectoral forecast for Peninsula
Source: Energy Commission
Trends in Demands &Available Reserves
Malaysia is expected to become net oil importer by 2020 or earlier if the demand increase in the same period.
Coal is biggest imported energy source for Malaysia until 2030
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
2002 2010 2020 2030
Pe
rce
nta
ge
Coal Oil Gas Hydro Nuclear NRE Electricity Heat
Source: APERC 2006
The Prime Minister has announced in January 2015 that Malaysia is already a net importer of petroleum
Why EE is crucial for Malaysia?
Energy demand projected to increase from 2,000 PJ(2009) to 4,013 PJ(2030), average rate of 3.6% /year
Short term &long term measures that can be taken is through EE initiatives while working on looking for new energy sources (RE& alternative energy)
To balance and reduce the supply and demand gap
Source: EPU,2011
WE NEED TO
CREATE THE EE LINE!
TO QUANTIFY!
Movement Of Oil Prices: Crude Oil Prices (Dollar)
World oil price is directly affected by major events or crisis in the world
Will affect by supply quantity & demand from energy users.
Source: www.wtrg.com
Average fuel price trend in RM/mmBtu for the energy sector in Malaysia
Challenges In Using Energy To Ensure Sustainable Energy Resources
For the policy makers, regulators, utility suppliers &users is the need to address impacts on energy costs &environment with the distortion in energy pricing from efficient use of energy among intensive energy users
0
10
20
30
40
50
60
70
80
90
100
Pri
ce (
RM
/M
MB
tu)
INDUSTRIAL DIESEL
GMSB WEIGHTED AVERAGE TARIFF
INDUSTRIAL LPG
INDUSTRIAL MFO63% discount
53% discount
67% discount
72% discount
70% discount
63% discount
RM22.06/MMBtu
RM15.00/MMBtuRM12.87/MMBtu
GAS PRICE TO POWER SECTOR RM6.40/MMBtu
RM14.31/MMBtu
RM10.50/MMBtu
What is ENERGY EFFICIENCY?
Using the same/less amount of energy
to produce the better Output
Using less energy to accomplish
the same task/to enjoy the same comfort level
Process ( Equipment/Operations)
INPUT OUTPUT
• Comfort level
• Production volume
• Quality• Safety
• Electricity• Fuel
THE BASIC APPROACH…
….but how Malaysia has been doing
it?
….we MUST CHANGE
THIS!
KENAPA KITA PERLU MENGGUNAKAN TENAGA DENGAN CEKAP?
SUMBER BAHAN API MAKIN TERHAD &AKAN HABIS
Keperluan semakin meningkat (Pertambahan penduduk,peralatan & kenderaan)
Persaingan mendapatkan bekalan & sumber tenaga semakin sengit(dalam negara & antara negara)
Harga bahan api semakin tinggi/mahal di pasaran tempatan & global
Kos penjanaan/carigali, penghantaran & pengagihan bekalan elektrik meningkat
KADAR TARIF/BIL ELEKTRIK MENINGKAT
Kos barang keperluan
Kos operasi syarikat
Kos pengangkutan
KRISIS!!!Jika tenaga tidak diuruskan dan digunakan dengan cekap
TOWARDS ENERGY EFFICIENT SCENARIO :NEW POLICY
Economically viable efficiency measures can halve energy demand growth to 2035
Source: IEA
GLOBAL ENERGY EFFICIENCY POTENTIALS
Energy efficiency potential used by sector in the New Policies Scenario
2/3 of the economic potential to improve energy efficiency remains untapped in the period to 2035
Source: IEA
Impacts Of Energy Efficiency Policies In Japan
1,327
1,273
1,192
1,101 1,101
1,059 1,059
1,000978
951
1,036
1,013
1,013
985
1,0491,091
1,051
1,0701,077
1,037
1,0441,021
1,059
1,036
1,038
1,050
1,1311,142
1,345
1,405
1,467
1,566
1,573
1,438
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
Fiscal Year
Pri
ma
ry e
ne
rgy
co
ns
um
pti
on
/ G
DP
Ton oil eq. / Billion
yen
2nd Oil Crisis
1st Oil Crisis
Source: METI/General Energy Statistics
10 years
Improvement by 30%
10% improved for 20 years
Main Improvements:• Energy Management• Energy Efficient
Equipment• Efficient Processes
Technologies• R&D
Energy Consumption Performance With National Energy Efficiency Implementation In Thailand
Through strong regulatory implementation framework, sustainable funding & holistic approach for focused sectors
ENERGY EFFICIENCY SCORECARD 2014
Source: American Council for an Energy Efficient Economy(ACEEE)
OVERVIEW OF ENERGY SERVICE INDUSTRY
What Is ESCO?
An Energy Service Company(ESCO) Develop and implement turnkey, comprehensive energy efficiency
projects
ESCOs offer performance-based contracts (i.e., contracts that tie the compensation of the ESCO to the energy savings generated by the project) as a significant part of their business
To ensure credentials, ESCOs must demonstrate the technical & managerial competencies to design & implement projects involving multiple technologies :
Lighting Motors & Drives Heating & steam systems HVAC Systems Control Systems Maximum Demand Controls Building Envelope Improvements
…at building/industrial facilities
SCOPES IN ENERGY SERVICE
Consultancy & AdvisoryDesign & Development Of Energy Efficient
Systems/TechnologiesFinancing & PurchasingImplementation & Project ManagementConstruction ManagementEnergy Performance Targeting, Monitoring &
VerificationTesting & CommissioningOperation & MaintenanceEnergy Analysis &ReportingRegulatory ComplianceStandards & Ratings
Registered in September 2000 n conjunction with the launching of the Malaysian Industrial Energy Efficiency Improvement Project (MIEEIP) by the Government-UNDP
OBJECTIVES To develop recognized ESCO
businesses in collaboration with Government & private sectors.
To actively promote the activity of cost reduction and efficiency standards of the industrial and commercial sector
To oversee the well being of it’s members
To facilitate and do all things necessary towards developing successful energy related projects.
To introduce related products and services for the industry
To foster healthy co-existence amongst members through ethical professional practices
Ensure quality of services by members
Key Activities & Involvement In Industry Development
Energy Management Training Courses for Energy Managers
Producing guidelines & provide advisory in services delivery
Awareness & promotional programs
Provide inputs on EE industry to the Government with other Stakeholders
Rental of Equipment for energy audit and M&V
Elected Committee Members(2014 /2016)
President Ar. Zulkifli b. Zahari
Vice President, Policies & Int. Liaison
Ir. Ong Ching Loon
Honorary Secretary & Historian
VTR Dharamarajah
Honorary Advisor / Internal Auditor
Ir. Dr. KS Kannan
Business Development Ir. Phang Chen
Faut
Training Mohd
Iskandar b. Majidi
Green TechnologyKevin Yap
Publicity & Promotions
Ir. Kumarason S Kandiah
Government Liaison
Ahmad Zaky b. Mohd Amin
Internal Auditor
Khairol Nizam b. Abd Muen
Treasurer & Finance/Strategic
Initiatives Zaini b. Abdul WahabAsst. Honorary Secretary &
Membership and Practice Koay Keong Tay
Program Coordinator
Anuar b. Mat Saad
Admin / SecretariatAfiza bt. Mohd
Sa’ad
Accountant Mohd Izzuddin
b. Salahudin
ESCO industry size estimates by selected country
Source: Lawrence Berkeley National Laboratory , National Association of Energy Service Companies, USA September 2013
ESCO Industry in the US…
Source: Lawrence Berkeley National Laboratory , National Association of Energy Service Companies, USA September 2013
Comparison of Energy efficiency potentials in ASEAN
Ranked #1 in investment potential  in payback period due to Malaysia’s lower electricity tariff
Lagged behind Singapore &Thailand to unavailability of comprehensive regulatory support
SEA: INVESTMENT POTENTIALS (US$MIL.)
The total market size = US$6.7 billion;Industrial = US$2.9 billion(44%)Commercial = US$3.7 billion(56%)
source: www.reexasia.com
Biggest potentials in the industrial sector
BUSINESS POTENTIALS IN ENERGY EFFICIENCY
IMPLEMENTATION
Building owners can see reduced operating costs, increased building values, greater return on investment, and higher occupancy from new and retrofitted green buildings
UNEP - GEO-5 for BusinessImpacts of a Changing Environment on the Corporate Sector
Companies may receive reputational benefits from achieving green building certifications . A 2011 survey of U.S. adults- 64% would prefer to patronize a business whose facility is certified as green, while 48% indicated that green certification of a facility improves their image of a company.
University of Missouri researchers - consumers would be more willing to pay between 15 & 20% more for retail products from companies that support sustainable practices
UN Global Compact of 766 CEOs worldwide-93 % of CEOs said sustainability issues will be a critical factor to the future success of their business
2012 Ernst & Young Survey – 66% of executives saw an increased amount of sustainability-related inquiries from investors in the past year. 70% inquiries focused on energy management and greenhouse gas emissions & more than ½ questions about sustainability reporting
The Corporate Trends…Survey on 250 CFOs in 14 countries by Deloitte - CFOs are increasingly aware the benefits sustainability can bring to the business. 2/3 respondents said they are involved in driving sustainability strategies .More than 50 % said their involvement in pushing sustainable practices has increased in the past year.
IS ENERGY EFFICIENCY AN OPTION OR A MUST
DO NOW?
Energy Management System Implementation By Companies In Ireland
160 companies - 60% of Ireland’s industrial energy use
2% improvement in energy performance per year
Long-term members - have improved energy performance by 33% (1995 and 2010)
Energy Management Standard helps up to €150m in avoided energy costs (2005-10)
44
ENERGY EFFICIENCY
IMPROVEMENT PROGRAM
Sustainable Energy Management
Awareness Program
Capacity Building – Training &
Development
HRDF refundable programs
Measurement & Verification (M&V) Internal/3rd Parties
Adoption of Energy Management System
(ISO50001)
Internal/Consultant
Energy Saving Project
Energy Auditing
Internal Budget
EPC Model
Full/matching grant – with
commitment to implement
Energy Saving Projects
Implementation
EPC model
Standard Procurement
SUPPORT MEASURES NEEDED
TA
RG
ET
GR
IOU
P
S
OPTIONS TO SAVE ENERGY COSTS
INTRODUCTION TO ENERGY MANAGEMENT
ProfitabilitySustainabilityCompetivenessCompetencyWorking environment quality
Corporate Image
Operating Costs - EnergyRisks – price fluctuation & supply shortagesPollutionCarbon emissionDepletion of fossil fuel
Why Energy Management?
INCREASE USERS’ COMFORT
SALES & ENERGY COST SAVINGS
BOOST IMAGE & VALUES
Energy Management
One of management resources of an organization
Required due to its influence to operation and activities
All activities to ensure efficient use of energy
in the organization
Sustainable Energy Management
The process of managing the energy use in the organization to ensure that energy
has been efficiently use
adopting energy management system
to achieve desired results and for continual improvement
Covers all aspects of energy the people
the equipment
in the daily operation of the facilities
Sustainable Approach To Reduce Energy Costs – Energy Management System(EnMS) for organizations
MANAGEMENT COMMITMENT
ENERGY POLICY
PLANNING
IMPLEMENTATION &
OPERATION
SYSTEM & PERFORMANCE CHECKING
MANAGEMENT REVIEW
Energy saving measures – to
bring results in improving energy
performance & cost reduction!
The Ideal Approach To embrace EnMS among all employees at all
levels from the beginning› Inclusiveness through capacity building & awareness
Integrating existing good practices & other Management Systems
The use of a single updating point & reference for EnMS implementation in long term› Defined responsibilities in the system› Continuous energy review, planning & performance monitoring› Updated document controls & reviews
User friendly & replicable system for all facilities› Concurrently & future
INTRODUCTION TO ISO50001:2011
STANDARD – Energy Management
System(EnMS)
ISO 50001: 2011 - Scopes Standardization in the field of energy management,
including: • energy supply• procurement practices for energy using equipment
and systems• energy use, and any use-related disposal issues
Also address
measurement of current energy usage
implementation of a measurement system to document, report
validate continual improvement in the area of energy management
How ISO 50001 Standard will help?
Will provide organizations with technical and management strategies to increase energy
efficiency, reduce costs, & improve environmental performance
a recognized framework for integrating energy efficiency into their management practices.
An access to a single, harmonized standard for implementation across the organization
…..with a logical and consistent methodology for identifying & implementing improvements
The Basic Approach of ISO50001 Standard
WHERE & HOW TO SAVE ENERGY?
ASSET RESPONSIBILITY PERIOD
Energy Supply & Utilization
Source: Institute of Asset Management, UK
Building life cycle
Source:The American Institute of Architects,2010
WHERE TO SAVE?...MANUFACTURING FACILITIES
Source: Energy Conservation Centre of Japan, 2011
Pumps (25% - 35%) Chiller (20% - 25%) AHU/FCU (25% - 35%) Cooling Tower(15% -
20%
WHERE TO SAVE?... AIR CONDITIONING SYSTEMS
Energy Efficient Lighting Technologies
Savings at 40-60% from lighting systems
Energy Saving Micro Ballast
and HP Fluorescent T8-28 watts
LED Fluorescent Tubes
LED Down Light
LED Ceiling Light High Performance LED Street Light
LED Spot/Flood Light
Example of Findings from Energy Audits
No. Building Year Potential Savings
(RM)
Implementation Costs(RM)
ROI(Year)
1 Ministry Of Health 2010 740,652 1,546,545 2.0
2 MAMPU 2010 254,500 964,737 3.8
3 Ministry Of Human Resource
2010 195,146 405,180 2.1
4 Public Service Department 2010 174,480 897,000 5.1
5 Ministry of Natural Resources &Environment 2010 316,440 963,500 3.0
6 Ministry of Finance 2008 355,892 2,326,259 6.5
7Selayang Hospital, Selangor 2008 1,612,800 3,294,350 2.0
8Kuala Lumpur General Hospital, Kuala Lumpur
2008 2,538,705 8,423,740 3.32
9University Malaya Medical Center, Kuala Lumpur 2008
4,477,067 622,500 0.1
(Source: KeTTHA,2011)
CAREER POTENTIALS IN ENERGY EFFICIENCY
INDUSTRY
The Career Pyramid
Career :Life long learning
Tertiary Education:
College/University
PRIMARY & SECONDARY EDUCATION:
SCHOOL
Lesser
tim
e t
o p
rep
are
& f
reed
om
to
ch
oose
Building Foundation
Building & confirming targets
Leading & exploring the fullest potentials
Good Study Habits
Good Results
Good & More
CAREER Options
GOOD LIFE!
...and UNFORTUNATELY there is no single formula for a SUCCESSFUL CAREER but still the best thing to do is PLAN and WORK HARD that will keep us ON TRACK. GIVE YOUR BEST SHOT!
CAREER
EmployeeEmployer/
Entrepreneur
What do you love or what do you have to?
ENERGY EFFICIENCY
Energy Management
Energy Management
System
Consultancy/Advisory
Standard &Certification
Performance Measurement &
Verification
EnMS Tools
Hardware(meters , sensors & etc)
Software (Computerized EnMS)
Energy Engineering
Energy Efficient
technologies
Testing, Rating & Labeling
R&D, TQM
Manufacturing
Energy Auditing
Capacity Building
Education & Awareness
Training & Development
Policy
Policy research & development
Regulatory
Fiscal & FinancialInvestments &
FundingAnalysis & Evaluation
Potential Areas to Explore In EE Industry
Options For Careers In Energy Efficiency
Energy Auditors
Energy Efficient Technology
Application Experts
Measurement &Verification Specialists
Energy Efficient Equipment Inventors
Energy Efficient Facilities Designers
Energy Economists & Data Analysts
Policy & Regulatory Experts
Demand Side Management Specialists
Energy Managers
Energy Management Consultants
Documentation & Certification Specialists
ISO50001 EnMS(System/
Technical Auditors)
Expert Trainers
WHAT STOPPING US?
Challenges in Energy Efficiency industry in Malaysia & the way forward
ENERGY EFFICIENCY FEARS
Some issues that provoke this fear include Investment insecurity Fear of policy changes No experience in similar projects Lack of management involvement Unclear ROI Unclear steps to achieving results Unclear results Huge commitment Lack of urgency Lack of competitive pressure Too many things to do Too many things to know Too many people to involve Too many decisions to make Lack of clarity about who and what to believe
The solution: Provide action plans, not raw information.
Common BARRIERS of EE in Malaysia…lack of…
• Clear policy & targets• Comprehensive regulatory & implementation framework
• Competencies in institutional set up
Strong governance in policies implementation
• Competency programs• Career opportunities
Technical competencies & human resource capacity
• Sources of funds• Understanding risks & mitigating factors in green investments
Sustainable financing & business friendly
mechanisms
• On green practices• Business opportunities • Impacts to climate change mitigation
Information ,education &awareness
• Funding• Academic vs. Commercial values
R&D & commercialization
Our WAY forward… Solution or
technology based approaches?
or
Project based or sustainable implementation plans & strategies?
For the industry development…
Strong Governance
Financing & business
friendly mechanism
s
Accountable & competent implementing
agency
Information,
Education &
Awareness
R&D & Commercializati
on
ENERGY EFFICIENCY Industry Growth
Policy Targets
Policy Introduction
Focused Sectors +Industry Players + Consumers
Industry players just need the basic & right “infrastructure” & supports .We can take it from there!
Expected Impacts From Holistic Energy Efficiency Implementation
INTRODUCTION &
AWARENESS
IMPLEMENTATION & SUPPORT
MEASURES
PERFORMANCE
MONITORING&
MEASUREMENT
IMPROVED• Energy
Performance• Competitiven
ess/• profits
• Environmental quality
REDUCED• Energy
consumption & costs
• Pollution• CO2
emissionsCREATED
• Business & job opportunities• More experts/workers from energy efficiency
industry• New source of economic growth
• More Direct Domestic Investments
EXPECTATIONS FROM THE GOVERNMENT
Look and act on EE holistically & urgently! …not with ad-hoc approaches
Clear policy goals & targets
Strong governance & comprehensive framework
Consistency, accountability & competency
Inclusiveness in policies development & reviews
A HOLISTIC ENERGY EFFICIENCY IMPLEMENTATION AT NATIONAL LEVEL WILL DELAY THE NEEDS TO HAVE NEW POWER PLANTS FOR LONGER PERIOD
FINAL MESSAGE
WHAT ROLES YOU WOULD LIKE TO PLAY FOR ENERGY EFFICIENCY FOR
YOUR OWN FUTURE?
The journey continues…and follow me to pursueEE agenda in Malaysia at…
www.energy-saving-malaysia.blogspot.com.my
www.facebook/zaini.abdulwahab1
www.slideshare.net/ZAINIABDULWAHAB
www.linkedin.com/pub/zaini-abdul-wahab/31/239/882
THANK YOU & GOOD LUCK!