july-september | 2020 vol :: 13 no 03 issn 0974 - 0996 · 2020. 10. 13. · case study, energy...
TRANSCRIPT
ISSN 0974 - 0996July-September | 2020 | Vol :: 13 | No :: 03
functionaleconomy
achieving triple bottomline with servitisation
‘cooling as a service’for farmers
servitisation benefits for energy sector
the functional economy
con
ten
ts
Registered Office :Energy Press | SEEM Bhavan | KRA-A79Kannammoola | Thiruvananthapuram | Kerala | IndiaTel : +91 - 471 - 2557607E : [email protected]: www.seemindia.org
Cover feature
achieving triple bottomline with servitisation 06Brahmanand Mohanty
‘cooling as a service’ for farmers 12
Huda Jaffer
servitisation benefits for energy sector 18
Mohita G Sharma
the functional economy 22
ADEME
Energy management
energy audit of a solar PV plant 29
Sasi K Kottayil & K K Rajan
Best practices
best practises in compressed air system - 37
an energy conservation approach
Santhosh A
Trend setters
internet of things to the aid of energy management 44
Nilesh N. Shedge
sunny days ahead for solar PV system 48
C. Jayaraman
dramatic fall in renewables' cost in UK 53
Case Study
make vacuum systems energy-efficient 56
A Santhosh
Global focus
melting glaciers, swelling lakes 60
em team
Guest editorial 04
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Advisory Board
Dr Brahmanand Mohanty | Advisor, ADEME
G M Pillai | WISE, India
Binu Parthan | Principal, Sustainable Energy Associates, India
UVK Rao | President SEEM
Dr R Harikumar | Founder General Secretary, SEEM, India
Dr P S Chandramohanan Nair | Founder President, SEEM, India
R Sudhir Kumar | CPRI Bengaluru
K Madhusoodhanan | Founder Member, SEEM, India
G Krishnakumar | General Secretary, SEEM
Ramesh Babu Gupta | Co-Founder, Energy Press
Editorial Advisor
Sasi K Kottayil | Tezpur University, Assam, India
Guest Editor
Brahmanand Mohanty
Chief Editor and Publisher:
C Jayaraman | General Secretary, Energy Press
Executive Editors
K.P.M Basheer
C Surendranath
Editorial Board
Jacob Kurian | Senior Technical Advisor, UNDP, Vietnam
Dr Koshy Cherayil | Director
Alliance for an Energy Efficient Economy, New Delhi
Dr Pradeep Gupta | Additional General Manager,
Pragati Power Corporation Ltd., New Delhi
Dr Rajan Rawal | CEPT University, India
Dr C S Azad | Asst. Director (Elec.) Bharat Sanchar Nigam Limited, India
Dr Hariharan Chandrashekar | Chairman, Alt. Tech Foundation
Book Design
BC Branding Solutions
Translation Coordinator
R Sudhir Kumar | CPRI, Bangalore
Financial Controller
Rajan Menon | Energy Press, India
Printed and Published by C Jayaraman, Energy Press for the Society of Energy Engineers and Managers and printed at St Francis Press, Ernakulam, India
Disclaimer : The views expressed in the magazine are those of the authors and the Editorial team
η|SEEM | energy press | energy manager does not take responsibility for the contents and opinions.
ηenergy manager will not be responsible for errors, omissions or comments made by writers, interviewers or advertisers. Any part of this publication may be reproduced with acknowledgement to the author and magazine.
July-September | 2020 | Vol :: 13 | Number: 03
ISSN 0974 - 0996
Supported by::
ervitisation promotes an organization's Scapabilities to innovatively change the
processes to create better mutual value through a
shift from selling a product to selling Product-Service
Systems. There are quite a few examples familiar to
us now where services are sold--like installing solar
PV systems by utilities under a power purchase
agreement or the services offered by taxi companies
like Uber and Ola Cabs. However, adoption of
seemingly straightforward, technically sound and
economically viable energy-efficient measures faces
many barriers. Studies on energy efficiency bring out
many empirical evidences from Psychology and
Behavioural Economics that shows that consumers
do not always make rational choices, and there are
many persistent biases.
To address the barriers and biases leading to sub-
optimal choices that hamper the adoption of energy-
efficient equipment, many innovative methods are
developed. Servitisation is one of them. A
conceptual model called `Lumens as a Service'
promoted by Rocky Mountain Institute (RMI) is one
of them. The RMI, under this model, foresees both
service providers and customers will be aligned and
incentivised to deploy the most energy-efficient
lighting system like LEDs with smart controls.
Phillips, one of the leading players in the `light
market' recently came out with new business models
called `Philips Circular Lighting' that take care of
installation, performance, and servicing of
customer's lighting.
Servitisation can address many barriers such as
bounded rationality, imperfect information, ambiguity
aversion, high initial cost, choice overload, disposal
issues etc. Servitisation that promotes reduce,
reuse, recycle, is gaining ground. Industries need to
thoroughly know the targeted market segment and
individual customer needs. This will help to increase
the bonding between the manufacturer and the
customer. This may lead to distinct price schedules
according to the perceived customer value, the cost
to serve, and the risks involved. As markets mature,
outcome-based models will evolve and will become
the norm, pushing for service quality beyond basic
needs.
This issue of Energy Efficiency Manager carries,
under the cover theme, articles by Dr Brahmanand
Mohanty, the guest editor, that speaks of achieving
triple bottom-line with servitisation; solar cooling as
a service from SELCO; servitisation benefits for
energy sector by Dr Mohita Sharma; and, on the
economy of functionality which is an essential
element of the vision of the French Agency for
ecological Transformation (ADEME) on ecological,
energy and social transition. As usual, we have
included articles under different categories such as
case study, energy management, global focus, best
practices and trendsetters.
Gu
est
Ed
ito
ria
l
edit
or'
s n
ote
severe traffic gridlocks, increasing road accidents, deteriorated air
quality, and rising greenhouse gas emissions and other pollutants. And,
the current trend is to replace the broken parts of vehicles instead of
developing the local skill to get them fixed, thus encouraging a wasteful
society.
The automobile sector, one of the most important drivers of industrial
growth of India with a high participation in global value chains, has
received strong government support. But what about the natural
resources that are mobilised, the waste generated during the
manufacture of the vehicles, the fossil fuels consumed, and the air
pollution caused during their operating lives? And, what would be the
urban future like if the car ownership grows by 775% over the next two
decades to reach 175 cars per 1,000 people in 2040, as estimated by
the International Energy Agency (IEA)?
What we are witnessing in the automobile sector can be extrapolated to
all other sectors such as the construction of buildings to accommodate
the growing population, factories to produce goods needed by them,
and agriculture to feed them.
The question that we need to ask ourselves is whether we are actually
creating a functional economy while pursuing our goal of rapid
economic growth, which is focused on production and related material
flows as its principal means of wealth creation. Walter Stahel, often
referred to as the father of circular economy, challenged businesses to
switch over from traditional manufacturing to what he calls the
Functional Service Economy. In a functional economy, object of the sale
hose of us who grew up Tbefore the 1990s feel
nostalgic about those ubiquitous
Ambassador cars on India roads.
Despite its British origin,
Ambassador was considered as a
definitive Indian car, and was the
`king of Indian roads.' It was the
essential mode of transportation
for politicians and senior
government officials, and a great
family car for those who could
afford it. Though not easy to
manoeuvre, the car was solid,
rugged and well-suited to the
potholed Indian roads. If it broke
down, someone nearby knew how
to fix it.
However, everything changed with
the economic liberalisation that
began in 1992. Gradually, we had
a plethora of choices--cars that
offered smoother rides, improved
comfort, better mileage., etc. They
were made by both Indian
competitors and multinational
companies investing in India
because of cheaper production
costs. With the economic boom
that followed liberalisation, the
rising demand and growing
purchasing power meant greater
competition among the
producers. Though car ownership
was only 1 for every thousand
citizens back in 1980, it grew to
22 by 2018. We are all too familiar
with the upshot of the growing
vehicle population in urban India--
Brahmanand Mohanty C Jayaraman
‘
Needed: A ‘functional economy’
...continued on page 17
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
05
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
04
July
- S
ep
tem
ber
2020
Dr. Brahmanand Mohanty, is the Regional Adviser in Asia
for the French Agency for Ecological Transition (ADEME)
and a Faculty in the School of Environment, Resources
and Development at the Asian Institute of Technology. He
has a PhD in energy from the Institute National
Polytechnique of Toulouse, France
A rational choice
ervitisation promotes an organization's Scapabilities to innovatively change the
processes to create better mutual value through a
shift from selling a product to selling Product-Service
Systems. There are quite a few examples familiar to
us now where services are sold--like installing solar
PV systems by utilities under a power purchase
agreement or the services offered by taxi companies
like Uber and Ola Cabs. However, adoption of
seemingly straightforward, technically sound and
economically viable energy-efficient measures faces
many barriers. Studies on energy efficiency bring out
many empirical evidences from Psychology and
Behavioural Economics that shows that consumers
do not always make rational choices, and there are
many persistent biases.
To address the barriers and biases leading to sub-
optimal choices that hamper the adoption of energy-
efficient equipment, many innovative methods are
developed. Servitisation is one of them. A
conceptual model called `Lumens as a Service'
promoted by Rocky Mountain Institute (RMI) is one
of them. The RMI, under this model, foresees both
service providers and customers will be aligned and
incentivised to deploy the most energy-efficient
lighting system like LEDs with smart controls.
Phillips, one of the leading players in the `light
market' recently came out with new business models
called `Philips Circular Lighting' that take care of
installation, performance, and servicing of
customer's lighting.
Servitisation can address many barriers such as
bounded rationality, imperfect information, ambiguity
aversion, high initial cost, choice overload, disposal
issues etc. Servitisation that promotes reduce,
reuse, recycle, is gaining ground. Industries need to
thoroughly know the targeted market segment and
individual customer needs. This will help to increase
the bonding between the manufacturer and the
customer. This may lead to distinct price schedules
according to the perceived customer value, the cost
to serve, and the risks involved. As markets mature,
outcome-based models will evolve and will become
the norm, pushing for service quality beyond basic
needs.
This issue of Energy Efficiency Manager carries,
under the cover theme, articles by Dr Brahmanand
Mohanty, the guest editor, that speaks of achieving
triple bottom-line with servitisation; solar cooling as
a service from SELCO; servitisation benefits for
energy sector by Dr Mohita Sharma; and, on the
economy of functionality which is an essential
element of the vision of the French Agency for
ecological Transformation (ADEME) on ecological,
energy and social transition. As usual, we have
included articles under different categories such as
case study, energy management, global focus, best
practices and trendsetters.
Gu
est
Ed
ito
ria
l
edit
or'
s n
ote
severe traffic gridlocks, increasing road accidents, deteriorated air
quality, and rising greenhouse gas emissions and other pollutants. And,
the current trend is to replace the broken parts of vehicles instead of
developing the local skill to get them fixed, thus encouraging a wasteful
society.
The automobile sector, one of the most important drivers of industrial
growth of India with a high participation in global value chains, has
received strong government support. But what about the natural
resources that are mobilised, the waste generated during the
manufacture of the vehicles, the fossil fuels consumed, and the air
pollution caused during their operating lives? And, what would be the
urban future like if the car ownership grows by 775% over the next two
decades to reach 175 cars per 1,000 people in 2040, as estimated by
the International Energy Agency (IEA)?
What we are witnessing in the automobile sector can be extrapolated to
all other sectors such as the construction of buildings to accommodate
the growing population, factories to produce goods needed by them,
and agriculture to feed them.
The question that we need to ask ourselves is whether we are actually
creating a functional economy while pursuing our goal of rapid
economic growth, which is focused on production and related material
flows as its principal means of wealth creation. Walter Stahel, often
referred to as the father of circular economy, challenged businesses to
switch over from traditional manufacturing to what he calls the
Functional Service Economy. In a functional economy, object of the sale
hose of us who grew up Tbefore the 1990s feel
nostalgic about those ubiquitous
Ambassador cars on India roads.
Despite its British origin,
Ambassador was considered as a
definitive Indian car, and was the
`king of Indian roads.' It was the
essential mode of transportation
for politicians and senior
government officials, and a great
family car for those who could
afford it. Though not easy to
manoeuvre, the car was solid,
rugged and well-suited to the
potholed Indian roads. If it broke
down, someone nearby knew how
to fix it.
However, everything changed with
the economic liberalisation that
began in 1992. Gradually, we had
a plethora of choices--cars that
offered smoother rides, improved
comfort, better mileage., etc. They
were made by both Indian
competitors and multinational
companies investing in India
because of cheaper production
costs. With the economic boom
that followed liberalisation, the
rising demand and growing
purchasing power meant greater
competition among the
producers. Though car ownership
was only 1 for every thousand
citizens back in 1980, it grew to
22 by 2018. We are all too familiar
with the upshot of the growing
vehicle population in urban India--
Brahmanand Mohanty C Jayaraman
‘
Needed: A ‘functional economy’
...continued on page 17
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
05
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
04
July
- S
ep
tem
ber
2020
Dr. Brahmanand Mohanty, is the Regional Adviser in Asia
for the French Agency for Ecological Transition (ADEME)
and a Faculty in the School of Environment, Resources
and Development at the Asian Institute of Technology. He
has a PhD in energy from the Institute National
Polytechnique of Toulouse, France
A rational choice
he world population is expected to reach 8.6 billion Tby 2030. Cities are known as drivers of economic
growth. With the increasing migration from rural to
urban areas, more people will be living in megacities
than in the rural areas. We will also witness significant
demographic changes--by the year 2030, over 30 per
cent of the workforce will be above 55 years and 1.4
billion people will be above 60 years. More people will
have power to spend more and seek a better life. We achieving triple bottomline with servitisation
Brahmanand Mohanty
Ola, Uber and other taxi aggregators are icons of
servitisation in India. They provide customisable,
comfortable and flexible transportation without their
having to own the cars that facilitate this service.
are already seeing the impact of globalisation with
many Fortune 500 companies shifting their
headquarters to and, greater number of internet
businesses being launched in the emerging markets.
All this is going to result in incessant growth in
production and consumption patterns, leading to more
rapid depletion of finite natural resources and hence
irreparable environmental damage (see Figure 1).
How do we stand up to this? First of all, we need to
realise that in order to enjoy a better quality of life,
people do not need to possess more things. In other
words, what do people actually want? As famously
stated by Professor Theodore Levitt of Harvard
Business School, "People don't want to buy a quarter-
inch drill; they want a quarter-inch hole". In other
words, why sell products to people who just want a
service? A manufacturing company should not focus
on the product or the customer. Its focus should be
on fulfilling the customer's needs and wants. A win-
win situation will be created: the customer profits
from not having to buy the expensive product but only
pay for its service; the company profits because if the
customer is satisfied with the service instead of
making capital investment to purchase the product,
he/she is likely to continue getting the service in
future or recommend others to benefit from similar
services. Lastly, society as a whole, gains because
less products in circulation means natural resources
will be conserved and the damage on the
environment will decline.
Product as a Service
This notion of `Product as a Service' or PaaS is
commonly known as `servitisation.' Servitisation is
Figure 1: Impacts of increasing production and consumption on the environment
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
07
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
06
July
- S
ep
tem
ber
2020
achi
evin
g tr
iple
bo
ttom
line
with
ser
vitis
atio
n
he world population is expected to reach 8.6 billion Tby 2030. Cities are known as drivers of economic
growth. With the increasing migration from rural to
urban areas, more people will be living in megacities
than in the rural areas. We will also witness significant
demographic changes--by the year 2030, over 30 per
cent of the workforce will be above 55 years and 1.4
billion people will be above 60 years. More people will
have power to spend more and seek a better life. We achieving triple bottomline with servitisation
Brahmanand Mohanty
Ola, Uber and other taxi aggregators are icons of
servitisation in India. They provide customisable,
comfortable and flexible transportation without their
having to own the cars that facilitate this service.
are already seeing the impact of globalisation with
many Fortune 500 companies shifting their
headquarters to and, greater number of internet
businesses being launched in the emerging markets.
All this is going to result in incessant growth in
production and consumption patterns, leading to more
rapid depletion of finite natural resources and hence
irreparable environmental damage (see Figure 1).
How do we stand up to this? First of all, we need to
realise that in order to enjoy a better quality of life,
people do not need to possess more things. In other
words, what do people actually want? As famously
stated by Professor Theodore Levitt of Harvard
Business School, "People don't want to buy a quarter-
inch drill; they want a quarter-inch hole". In other
words, why sell products to people who just want a
service? A manufacturing company should not focus
on the product or the customer. Its focus should be
on fulfilling the customer's needs and wants. A win-
win situation will be created: the customer profits
from not having to buy the expensive product but only
pay for its service; the company profits because if the
customer is satisfied with the service instead of
making capital investment to purchase the product,
he/she is likely to continue getting the service in
future or recommend others to benefit from similar
services. Lastly, society as a whole, gains because
less products in circulation means natural resources
will be conserved and the damage on the
environment will decline.
Product as a Service
This notion of `Product as a Service' or PaaS is
commonly known as `servitisation.' Servitisation is
Figure 1: Impacts of increasing production and consumption on the environment
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
07
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
06
July
- S
ep
tem
ber
2020
achi
evin
g tr
iple
bo
ttom
line
with
ser
vitis
atio
n
defined by Cranfield University as "the innovation of
organisation's capabilities and processes to better
create mutual value through a shift from selling
products to selling Product-Service System.' This
paradigm shift can be achieved through a gradual
transition as shown in Figure 2:
1. Product-oriented market: The business is based on
a specific product being sold to the customer.
2. Product-oriented services: Moving away from the
business-as-usual scenario, this step involves
provision of additional services, such as delivery,
installation, spare parts and upgrades, warranty
and maintenance, etc.
3. User-oriented services: The next step consists of
changing the business model by levying a fee for
using the product (product leasing, sharing,
renting and pooling services).
4. Result-oriented services: The final step is the
consideration of the service provider being directly
linked to the output generated by the client.
Servitisation can be a source of profitable growth. As
pointed out by Roland Berger, an analysis of 200
companies in 2009 showed that the average earnings
before interest and taxes (EBIT) margin on product
sales is relatively low (only 2.3 per cent). The margins
on spare parts, maintenance, training and
consultancy are substantially higher (average of 11
per cent ). Smaller equipment manufacturers often do
not yet offer all or part of these services, so they may
be missing out on up to 55 per cent of the revenue
and profit potential from services. The potential
improvement in revenue and profit margins is
therefore impressive.
Challenges and opportunities
Several manufacturing firms entering the servitisation
market have experienced that their substantial
investment in adding services to the existing product
portfolio does not bring expected higher returns. This
has been referred to as the `servitisation paradox.' It
is generally believed that the strategy of servitisation
is more suitable for larger firms who have deep
pockets because the effect of servitisation on
business performance can only be seen once
servitisation has grown beyond a certain threshold.
Moreover, many firms perceive addition of services as
new risks which they have to mitigate to ensure
successful introduction of services.
Service strategies can have impacts on both the
service providers (original equipment manufacturers)
and service beneficiaries (customers). In general,
companies that have striven to achieve a 50-50 split
in product/service revenue perceive it as a way to
improve their commercial viability. Similarly, the
leading adopters of services have experienced 20-25
per cent cost reductions. When servitisation is
pursued aggressively, service providers believe they
can achieve a 5-10 per cent growth per year in
service revenues. From the customers' perspectives,
improved focus, investment and performance can
lead to improvements in the customer's
competitiveness.
There are several exciting opportunities with
advanced services. Outcomes can be guaranteed
with additional contractual features to make them
more appealing to the customer. These may include:
1. `Pay per use' rather than a `lump-sum' sales
transaction and product ownership
2. Assured product performance
Figure 2. Gradual transition from products to product-services
Figure 3. Market volume and EBIT-margin of services (Source: ABN AMRO)
3. Commitments to innovate products and reduce
costs over time.
In return, the customer agrees to longer-term
contracts lasting five years or longer.
When products and services are delivered as a
partnership, several benefits can be accrued:
--Manufacturer benefits from improved commercial
resilience
--Long-term contracts prevent competitors from
gaining a foothold with customers by providing long-
term cash flows and buffering against downturns in
economies
--Further business opportunities and revenue growth
can be expected thanks to the intimate relationship
with the customer.
Examples of PaaS
PaaS typically involves delivery of products, spare
parts, consumables, helpline, support desk, etc.
Some of the well-known companies that have opted
for PaaS are:
1. Xerox: introduced the cost-per-print model for
photocopying machines
2. Electrolux: charges for the use of washing
machines
3. Volvo: provides roadside support to a vehicle
connected to a mobile fuel supplier
4. Amazon: introduced 3D printing trucks that start
printing while the trucks are on the move and
deliver the products upon arrival at the customer's
doorstep.
Some of the early examples of PaaS are briefly
presented below:
Rolls-Royce: The TotalCare ® circular business
model of Rolls-Royce, an aircraft engine
manufacturer, helps the company to reduce waste
and optimise resource efficiency, while enabling the
customers to maximise the flying potential of their
engines. Its operating principles are quite
straightforward. Customers do not have to buy the
engine along with the plane. They pay to use the
engine based on the number of hours the engine is
actually powering a plane. Rolls-Royce monitors the
engine remotely and maintains it, modifies it and
replaces parts as and when needed. As a result, there
is a dramatic increase in the lifetime value of the
original product.
Renault's electric cars: Instead of including the
battery in the purchase of the car, the company
leases it to customers. The battery is replaced as
needed without any service delay. The used battery
pack is re-engineered or recycled to extract more
values.
Interface: The company, which supplies carpets to
businesses and households, decided to have
contracts with clients for replacing and recycling worn
carpets over time instead of simply selling floor
covering as a one-time disposable product.
Interestingly, the company uses this shift to its own
advantage and has coined the slogan `only one thing
can end climate change: human change.'
Phillips: The lighting company has initiated a
separate entity called `Signify' for selling Lighting as
a Service. Phillips retains ownership of the lighting
system while the customers pay a service fee for the
lighting service. Phillips installs, maintains and
upgrades the system as and when needed. At the
end of the agreement, Phillips recycles the
equipment, thus sparing customers the headache of
ownership.
The role of ICT
Information and communication technology (ICT)
plays a vital role in the effectiveness of servitisation.
ICT allows the manufacturer to monitor products, thus
enabling advanced warning of faults or breakdown,
and faster maintenance and repair. ICT enables
design improvements to both the product and service
Battery as a Service
The Indian Ministry of Road Transport and
Highways issued a notification in August 2020,
allowing the sale of electric two- and three-
wheelers without a pre-fitted battery in a bid to
bring down the upfront cost of the cleaner
vehicles, and making them more affordable.
Batteries account for almost half the cost of an
electric vehicle, making it vastly more expensive
than a combustion engine vehicle of similar
performance. The initiative is meant to reduce
the financial burden on the customer. An energy
service provider can rent charged batteries to
electric vehicle owner in a similar manner as the
customer is charged for refuelling a
conventional vehicle.
achi
evin
g tr
iple
bo
ttom
line
with
ser
vitis
atio
n
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
09
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
08
July
- S
ep
tem
ber
2020
achi
evin
g tr
iple
bo
ttom
line
with
ser
vitis
atio
n
defined by Cranfield University as "the innovation of
organisation's capabilities and processes to better
create mutual value through a shift from selling
products to selling Product-Service System.' This
paradigm shift can be achieved through a gradual
transition as shown in Figure 2:
1. Product-oriented market: The business is based on
a specific product being sold to the customer.
2. Product-oriented services: Moving away from the
business-as-usual scenario, this step involves
provision of additional services, such as delivery,
installation, spare parts and upgrades, warranty
and maintenance, etc.
3. User-oriented services: The next step consists of
changing the business model by levying a fee for
using the product (product leasing, sharing,
renting and pooling services).
4. Result-oriented services: The final step is the
consideration of the service provider being directly
linked to the output generated by the client.
Servitisation can be a source of profitable growth. As
pointed out by Roland Berger, an analysis of 200
companies in 2009 showed that the average earnings
before interest and taxes (EBIT) margin on product
sales is relatively low (only 2.3 per cent). The margins
on spare parts, maintenance, training and
consultancy are substantially higher (average of 11
per cent ). Smaller equipment manufacturers often do
not yet offer all or part of these services, so they may
be missing out on up to 55 per cent of the revenue
and profit potential from services. The potential
improvement in revenue and profit margins is
therefore impressive.
Challenges and opportunities
Several manufacturing firms entering the servitisation
market have experienced that their substantial
investment in adding services to the existing product
portfolio does not bring expected higher returns. This
has been referred to as the `servitisation paradox.' It
is generally believed that the strategy of servitisation
is more suitable for larger firms who have deep
pockets because the effect of servitisation on
business performance can only be seen once
servitisation has grown beyond a certain threshold.
Moreover, many firms perceive addition of services as
new risks which they have to mitigate to ensure
successful introduction of services.
Service strategies can have impacts on both the
service providers (original equipment manufacturers)
and service beneficiaries (customers). In general,
companies that have striven to achieve a 50-50 split
in product/service revenue perceive it as a way to
improve their commercial viability. Similarly, the
leading adopters of services have experienced 20-25
per cent cost reductions. When servitisation is
pursued aggressively, service providers believe they
can achieve a 5-10 per cent growth per year in
service revenues. From the customers' perspectives,
improved focus, investment and performance can
lead to improvements in the customer's
competitiveness.
There are several exciting opportunities with
advanced services. Outcomes can be guaranteed
with additional contractual features to make them
more appealing to the customer. These may include:
1. `Pay per use' rather than a `lump-sum' sales
transaction and product ownership
2. Assured product performance
Figure 2. Gradual transition from products to product-services
Figure 3. Market volume and EBIT-margin of services (Source: ABN AMRO)
3. Commitments to innovate products and reduce
costs over time.
In return, the customer agrees to longer-term
contracts lasting five years or longer.
When products and services are delivered as a
partnership, several benefits can be accrued:
--Manufacturer benefits from improved commercial
resilience
--Long-term contracts prevent competitors from
gaining a foothold with customers by providing long-
term cash flows and buffering against downturns in
economies
--Further business opportunities and revenue growth
can be expected thanks to the intimate relationship
with the customer.
Examples of PaaS
PaaS typically involves delivery of products, spare
parts, consumables, helpline, support desk, etc.
Some of the well-known companies that have opted
for PaaS are:
1. Xerox: introduced the cost-per-print model for
photocopying machines
2. Electrolux: charges for the use of washing
machines
3. Volvo: provides roadside support to a vehicle
connected to a mobile fuel supplier
4. Amazon: introduced 3D printing trucks that start
printing while the trucks are on the move and
deliver the products upon arrival at the customer's
doorstep.
Some of the early examples of PaaS are briefly
presented below:
Rolls-Royce: The TotalCare ® circular business
model of Rolls-Royce, an aircraft engine
manufacturer, helps the company to reduce waste
and optimise resource efficiency, while enabling the
customers to maximise the flying potential of their
engines. Its operating principles are quite
straightforward. Customers do not have to buy the
engine along with the plane. They pay to use the
engine based on the number of hours the engine is
actually powering a plane. Rolls-Royce monitors the
engine remotely and maintains it, modifies it and
replaces parts as and when needed. As a result, there
is a dramatic increase in the lifetime value of the
original product.
Renault's electric cars: Instead of including the
battery in the purchase of the car, the company
leases it to customers. The battery is replaced as
needed without any service delay. The used battery
pack is re-engineered or recycled to extract more
values.
Interface: The company, which supplies carpets to
businesses and households, decided to have
contracts with clients for replacing and recycling worn
carpets over time instead of simply selling floor
covering as a one-time disposable product.
Interestingly, the company uses this shift to its own
advantage and has coined the slogan `only one thing
can end climate change: human change.'
Phillips: The lighting company has initiated a
separate entity called `Signify' for selling Lighting as
a Service. Phillips retains ownership of the lighting
system while the customers pay a service fee for the
lighting service. Phillips installs, maintains and
upgrades the system as and when needed. At the
end of the agreement, Phillips recycles the
equipment, thus sparing customers the headache of
ownership.
The role of ICT
Information and communication technology (ICT)
plays a vital role in the effectiveness of servitisation.
ICT allows the manufacturer to monitor products, thus
enabling advanced warning of faults or breakdown,
and faster maintenance and repair. ICT enables
design improvements to both the product and service
Battery as a Service
The Indian Ministry of Road Transport and
Highways issued a notification in August 2020,
allowing the sale of electric two- and three-
wheelers without a pre-fitted battery in a bid to
bring down the upfront cost of the cleaner
vehicles, and making them more affordable.
Batteries account for almost half the cost of an
electric vehicle, making it vastly more expensive
than a combustion engine vehicle of similar
performance. The initiative is meant to reduce
the financial burden on the customer. An energy
service provider can rent charged batteries to
electric vehicle owner in a similar manner as the
customer is charged for refuelling a
conventional vehicle.
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s / I
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ndia
08
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2020
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Servitisation in farming
Servitisation can benefit Indian farmers by
allowing them to focus on their main line of
competence and creating an eco-system to
help them come out of perpetual poverty.
Instead of selling technologies, manufacturers
can create infrastructure and provide fee-based
services (e.g. Pumping as a Service, Drying as
a Service, Cooling as a Service, etc.); facilitate
market linkage by purchasing farm outputs at
fair prices and recover the capital through value
additions; and eliminate wastage in the supply
chain, differ the sale to ensure a higher market
price, assist farmers to produce in line with
demand and preference of the market.
through improved performance and reduced cost.
There are a large number of IoT (internet of things)
tools to facilitate servitisation, be it simple IoT devices
and sensors, or IoT Gateways using standard
protocols, domain specific applications that include
intelligent services as well as intelligent automation.
With the progress of ICT, data has become key to
efficient servitisation. Data sources can help in
remaining connected to the products by sharing
location, condition, use, etc. At the enterprise level,
they can update the history of the services rendered,
and warranty status. They can gather information from
external sources, such as the list of suppliers, prices,
inventory, etc. All these raw data can be aggregated
into multiple formats through analytics that help in the
decision-making process. These analytics can be of
different types, as follows:
--Descriptive: Capturing condition, environment and
operation of products
--Diagnostic: Examining the causes of product
performance or failure
--Predictive: Detecting patterns that signal impending
events
--Prescriptive: Identifying measures to improve
outcomes or fixing problems
Thanks to ICT application, business processes are
becoming more proactive and integrated with
customer's and design processes are better informed
about the performance. These improvements extend
to the entire supply chain:
--Suppliers are changing their business models to
support advanced services;
--Partnerships are forged with ICT providers;
--Finance is provided so that customers do not have
to own the products, and
--Performance metrics focus on the outcome of
customers, rather than simply product sale and
delivery (for example, performance measurement can
be in terms of passengers transported for trains, km
travelled for trucks, and documents produced for
printing).
Some of the main factors driving servitisation include
technology, globalisation, fierce competitive pressure,
profitability, differentiation in market, etc.
Resource efficiency
According to the United Nations Environment
Programme (UNEP), servitisation has "the potential to
re-orient the current standards of consumption and
production, thus enabling a move towards a more
sustainable society." These include:
--Access-based consumption: for example, bike
sharing and car sharing
--Smart public lighting
--Smart irrigation
--Smart homes with energy-efficient ovens,
thermostats and refrigerators
--Principle of Extended Producer Responsibility (EPR)
and evolving waste management legislation.
New business models
Faced with the challenges of resource depletion,
unemployment and environmental hazards, new
businesses are being explored to: (1) develop
mechanisms for bringing together different types of
values presented in the triple bottom line approach
(people, planet and profit); (2) enable companies to
consider and integrate a wide range of stakeholder
interests; and (3) serve as key drivers of innovation
and competitive advantages.
Triple bottom line can be targeted by combining three
models forming the three pillars, as shown in Figure 4.
revenue from services and increased product sales;
higher profit since margins on services are higher
than on products; higher growth because sales of
services grow on average faster than those of
products; and stable revenues since services are less
sensitive to economic fluctuations.
Servitisation brings societal benefits through more
localised economic activities, leading to increased
employment and skills development. As for
environmental benefits, manufacturers are
incentivised to make products and parts that last
longer and deliver the desired outcome with minimum
materials and energy.
References
ABN-AMRO (2016). Servitization: service is the future of
manufacturing, from maintenance contract to Product-as-a-Service,
October 2016
Andrea Bureca (2017). The role of the internet of things from a
servitization perspective: Opportunities and challenges for the
implementation of product-service systems: a multiple case study,
Master Thesis, School of Business, Economics and Law
(Gothenburg, Sweden) and LUISS Guido Carli (Italy, Rome),
Bringezu, S., Potočnik, J., Schandl, H., Lu, Y., Ramaswami, A.,
Swilling, M., and Suh, S. (2016). Multi-Scale Governance of
Sustainable Natural Resource Use—Challenges and Opportunities for
Monitoring and Institutional Development at the National and Global
Level. Sustainability 8 (778): doi:10.3390/su8080778.
Circle Economy (2015). Service-based business models & circular
strategies for textiles, SITRA, August 2015
Figure 4. The three pillars to achieve the triple bottom line
Servitisation Model
Circular Model
Sufficiency Model
Each of these pillars is detailed further, as follows:
Dr. Brahmanand Mohanty is the
regional adviser (Asia) to the French
Agency for Energy Transition.
Most of the new concepts require a broader
consumer mind-shift and changes in industrial
practices.
These models will prove essential for businesses that
want to be future-proof in a society where resource
constraints are an ever-growing issue, and consumer
attitudes are shifting towards alternatives to
ownership and consumption.
Conclusions
Servitisation, if adopted in the right spirit, is
guaranteed to deliver economic, social and
environmental dividends.
From an economic perspective, it provides a big
opportunity for extra profit in the form of additional
achi
evin
g tr
iple
bo
ttom
line
with
ser
vitis
atio
n
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
11
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
10
July
- S
ep
tem
ber
2020
achi
evin
g tr
iple
bo
ttom
line
with
ser
vitis
atio
n
Servitisation in farming
Servitisation can benefit Indian farmers by
allowing them to focus on their main line of
competence and creating an eco-system to
help them come out of perpetual poverty.
Instead of selling technologies, manufacturers
can create infrastructure and provide fee-based
services (e.g. Pumping as a Service, Drying as
a Service, Cooling as a Service, etc.); facilitate
market linkage by purchasing farm outputs at
fair prices and recover the capital through value
additions; and eliminate wastage in the supply
chain, differ the sale to ensure a higher market
price, assist farmers to produce in line with
demand and preference of the market.
through improved performance and reduced cost.
There are a large number of IoT (internet of things)
tools to facilitate servitisation, be it simple IoT devices
and sensors, or IoT Gateways using standard
protocols, domain specific applications that include
intelligent services as well as intelligent automation.
With the progress of ICT, data has become key to
efficient servitisation. Data sources can help in
remaining connected to the products by sharing
location, condition, use, etc. At the enterprise level,
they can update the history of the services rendered,
and warranty status. They can gather information from
external sources, such as the list of suppliers, prices,
inventory, etc. All these raw data can be aggregated
into multiple formats through analytics that help in the
decision-making process. These analytics can be of
different types, as follows:
--Descriptive: Capturing condition, environment and
operation of products
--Diagnostic: Examining the causes of product
performance or failure
--Predictive: Detecting patterns that signal impending
events
--Prescriptive: Identifying measures to improve
outcomes or fixing problems
Thanks to ICT application, business processes are
becoming more proactive and integrated with
customer's and design processes are better informed
about the performance. These improvements extend
to the entire supply chain:
--Suppliers are changing their business models to
support advanced services;
--Partnerships are forged with ICT providers;
--Finance is provided so that customers do not have
to own the products, and
--Performance metrics focus on the outcome of
customers, rather than simply product sale and
delivery (for example, performance measurement can
be in terms of passengers transported for trains, km
travelled for trucks, and documents produced for
printing).
Some of the main factors driving servitisation include
technology, globalisation, fierce competitive pressure,
profitability, differentiation in market, etc.
Resource efficiency
According to the United Nations Environment
Programme (UNEP), servitisation has "the potential to
re-orient the current standards of consumption and
production, thus enabling a move towards a more
sustainable society." These include:
--Access-based consumption: for example, bike
sharing and car sharing
--Smart public lighting
--Smart irrigation
--Smart homes with energy-efficient ovens,
thermostats and refrigerators
--Principle of Extended Producer Responsibility (EPR)
and evolving waste management legislation.
New business models
Faced with the challenges of resource depletion,
unemployment and environmental hazards, new
businesses are being explored to: (1) develop
mechanisms for bringing together different types of
values presented in the triple bottom line approach
(people, planet and profit); (2) enable companies to
consider and integrate a wide range of stakeholder
interests; and (3) serve as key drivers of innovation
and competitive advantages.
Triple bottom line can be targeted by combining three
models forming the three pillars, as shown in Figure 4.
revenue from services and increased product sales;
higher profit since margins on services are higher
than on products; higher growth because sales of
services grow on average faster than those of
products; and stable revenues since services are less
sensitive to economic fluctuations.
Servitisation brings societal benefits through more
localised economic activities, leading to increased
employment and skills development. As for
environmental benefits, manufacturers are
incentivised to make products and parts that last
longer and deliver the desired outcome with minimum
materials and energy.
References
ABN-AMRO (2016). Servitization: service is the future of
manufacturing, from maintenance contract to Product-as-a-Service,
October 2016
Andrea Bureca (2017). The role of the internet of things from a
servitization perspective: Opportunities and challenges for the
implementation of product-service systems: a multiple case study,
Master Thesis, School of Business, Economics and Law
(Gothenburg, Sweden) and LUISS Guido Carli (Italy, Rome),
Bringezu, S., Potočnik, J., Schandl, H., Lu, Y., Ramaswami, A.,
Swilling, M., and Suh, S. (2016). Multi-Scale Governance of
Sustainable Natural Resource Use—Challenges and Opportunities for
Monitoring and Institutional Development at the National and Global
Level. Sustainability 8 (778): doi:10.3390/su8080778.
Circle Economy (2015). Service-based business models & circular
strategies for textiles, SITRA, August 2015
Figure 4. The three pillars to achieve the triple bottom line
Servitisation Model
Circular Model
Sufficiency Model
Each of these pillars is detailed further, as follows:
Dr. Brahmanand Mohanty is the
regional adviser (Asia) to the French
Agency for Energy Transition.
Most of the new concepts require a broader
consumer mind-shift and changes in industrial
practices.
These models will prove essential for businesses that
want to be future-proof in a society where resource
constraints are an ever-growing issue, and consumer
attitudes are shifting towards alternatives to
ownership and consumption.
Conclusions
Servitisation, if adopted in the right spirit, is
guaranteed to deliver economic, social and
environmental dividends.
From an economic perspective, it provides a big
opportunity for extra profit in the form of additional
achi
evin
g tr
iple
bo
ttom
line
with
ser
vitis
atio
n
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
11
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
10
July
- S
ep
tem
ber
2020
achi
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g tr
iple
bo
ttom
line
with
ser
vitis
atio
n
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
13
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
12
July
- S
ep
tem
ber
2020
‘co
olin
g a
s a
serv
ice’
for
farm
ers
ndian farmers incur Rs. 92, 651 crores a year in Ipost-harvest losses, the primary causes of which
are poor storage and transportation facilities, as
estimated by a 2018 report in the Down to Earth
magazine.
Up to one fifth of perishable products such as fruits
and vegetables are lost in the post-harvest stage.
While processors, retailers, and exporters own and
‘cooling as a service’for farmersHuda Jaffer
utilise the majority of India's storage capacity, there is
practically no capital investment allocated for cold
storage at farmgate of smallholder farmers.
Several intermediate steps are involved in the value
chain between the farm where vegetables and fruits
are grown and the point of their final sale to the
consumer. Table 1 summarises the post-harvest
solutions available to enhance the value chain.
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
13
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
12
July
- S
ep
tem
ber
2020
‘co
olin
g a
s a
serv
ice’
for
farm
ers
ndian farmers incur Rs. 92, 651 crores a year in Ipost-harvest losses, the primary causes of which
are poor storage and transportation facilities, as
estimated by a 2018 report in the Down to Earth
magazine.
Up to one fifth of perishable products such as fruits
and vegetables are lost in the post-harvest stage.
While processors, retailers, and exporters own and
‘cooling as a service’for farmersHuda Jaffer
utilise the majority of India's storage capacity, there is
practically no capital investment allocated for cold
storage at farmgate of smallholder farmers.
Several intermediate steps are involved in the value
chain between the farm where vegetables and fruits
are grown and the point of their final sale to the
consumer. Table 1 summarises the post-harvest
solutions available to enhance the value chain.
2. Meat: Meat storage at the post-processing stage
to cater to urban market
3. Flowers: During festival season as well as in
winters, when vegetables do not need much cold
storage; to fetch higher income for farmers
As shown in Figure 3, FPOs/FPCs and farmer groups
have the highest share, followed by individual farmers
and entrepreneurs.
Around three-quarters of the installations are based
on direct-sales model; the rest are a combination of
lease/rent, lease to own, and pay-as-you-store
models.
‘co
olin
g a
s a
serv
ice’
for
farm
ers
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
15
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
14
July
- S
ep
tem
ber
2020
‘co
olin
g a
s a
serv
ice’
for
farm
ers
Warming temperatures, dwindling monsoons and
other vagaries of weather have heaped enormous
financial and social pressures on smallholding
farmers. The risks of a stable output from their
meagre land holdings have increased exponentially in
the last couple of decades. Increased number of
unknown variables have forced them to become risk-
averse. Many of them are desperate to sell their
produce to whoever is willing to pay them at the
earliest. For the small farmer, the scale is always
tipped in the favour of the buyer.
The problems facing the farmers are worse if they are
growing fruits and vegetables. Often, the prices do
not cover the production costs. Reliable cold storage
facility is critical for perishable goods as it could help
farmers avoid selling their produce in distress. Solar-
powered cold storage system could be a reliable
option as it is both decentralised and customised.
However, the cold storage system is an infrastructure
that requires long-term financial recovery. The burden
of immediate financial recovery cannot be put on the
shoulders of the poor. Similar to large infrastructures
like roads and airports, solar-powered cold storage
systems have to be either financed for very long
periods of time or underwritten by infrastructure
subsidies as they are much-needed assets for
common good.
There are several technology providers for the cold
storage segment in India. Since most of the potential
beneficiaries are small-scale farmers, economy of
scale and viable institutional and administration
Processing phases Harvest and Storage and Processing Market linkage
primary processing crop protection
Key activities Harvesting Pre-cooling Grading Packaging,
Drying Packaging Sorting Branding,
Grading Ripening Secondary Transporting,
Sorting Cold-Storage processing Wholesale/Retail
Loading/ Warehousing markets
Transportation
Table 1. Post-harvest value chain
Figure 1. Nodal points of decentralised agricultural cold storage
Cold chain assists in enhancing farmer's
livelihood and lowering farm produce
waste
The Kunabi community in North Karnataka
grows about 40 varieties of tubers. There is an
increased demand for tubers which remains
unfulfilled due to the non-availability of produce
throughout the year.
A cold storage was set up for 20 marginal
farmers, each of them having roughly 2 acres
of cultivable land. The cold storage unit was
designed to store tubers for 3-4 months at a
temperature of 14-16°C. After 2-3 months of
storing, farmers were able to sell the tubers
during the off-season at 3-5 times the usual
price. As a result, their income increased by
Rs. 100,000 a year. Also, the wastage of tubers
reduced drastically from 35% to 5%.
structure are essential. Self-help groups (SHGs) of
farmers with common objectives, tasks, group
identities and neighbourhood are important. Farmer
Producer Organisations (FPO), including Farmer
Producer Companies (FPC), have emerged as
aggregators of farm produce and they link farmers
directly to markets. Other players can be the local
government, local retail businesses, non-
governmental organisations (NGOs) or even private
companies.
Various financing models are proposed to suit the
local conditions. The financing model depends on the
financial strength of the entities backing the farmers.
For example, the financing may come from the local
government, NGO, private company, FPO/FPC, etc. If
the entity is considered bankable, there can also be
long-term bank financing. In some cases, there can
be lease-purchase agreements. What is more
innovative is the service model, such as `pay as you
store' or `Cooling as a Service.' Figure 2 depicts the
existing ownership, financing and service models for
the farmgate cold storage solutions.
The poor avail the cold storage facilities for nominal
fees and thus are responsible for covering the
operational expenses. Such hybrid models help
stakeholders like the government and other NGOs
create sustainable models of poverty reduction.
Infrastructure subsidies are financially viable over the
long run but cannot be expected to be covered with
the cycles of typical consumptive loans.
Data collected from some 340 cold storage
installations provide an insight into the current end-
user segmentation and financial models. The farm
products can be categorised into 3 broad groups:
1. Vegetables and fruits: Seasonal vegetables and
fruits, geographically unique fruits, premium-
quality vegetables, value-added products
Figure 2. Ownership, financing and service models for farmgate cold storage
Figure 3. End-user segmentation
Figure 4. Financing of cold storage installations
2. Meat: Meat storage at the post-processing stage
to cater to urban market
3. Flowers: During festival season as well as in
winters, when vegetables do not need much cold
storage; to fetch higher income for farmers
As shown in Figure 3, FPOs/FPCs and farmer groups
have the highest share, followed by individual farmers
and entrepreneurs.
Around three-quarters of the installations are based
on direct-sales model; the rest are a combination of
lease/rent, lease to own, and pay-as-you-store
models.
‘co
olin
g a
s a
serv
ice’
for
farm
ers
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
15
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
14
July
- S
ep
tem
ber
2020
‘co
olin
g a
s a
serv
ice’
for
farm
ers
Warming temperatures, dwindling monsoons and
other vagaries of weather have heaped enormous
financial and social pressures on smallholding
farmers. The risks of a stable output from their
meagre land holdings have increased exponentially in
the last couple of decades. Increased number of
unknown variables have forced them to become risk-
averse. Many of them are desperate to sell their
produce to whoever is willing to pay them at the
earliest. For the small farmer, the scale is always
tipped in the favour of the buyer.
The problems facing the farmers are worse if they are
growing fruits and vegetables. Often, the prices do
not cover the production costs. Reliable cold storage
facility is critical for perishable goods as it could help
farmers avoid selling their produce in distress. Solar-
powered cold storage system could be a reliable
option as it is both decentralised and customised.
However, the cold storage system is an infrastructure
that requires long-term financial recovery. The burden
of immediate financial recovery cannot be put on the
shoulders of the poor. Similar to large infrastructures
like roads and airports, solar-powered cold storage
systems have to be either financed for very long
periods of time or underwritten by infrastructure
subsidies as they are much-needed assets for
common good.
There are several technology providers for the cold
storage segment in India. Since most of the potential
beneficiaries are small-scale farmers, economy of
scale and viable institutional and administration
Processing phases Harvest and Storage and Processing Market linkage
primary processing crop protection
Key activities Harvesting Pre-cooling Grading Packaging,
Drying Packaging Sorting Branding,
Grading Ripening Secondary Transporting,
Sorting Cold-Storage processing Wholesale/Retail
Loading/ Warehousing markets
Transportation
Table 1. Post-harvest value chain
Figure 1. Nodal points of decentralised agricultural cold storage
Cold chain assists in enhancing farmer's
livelihood and lowering farm produce
waste
The Kunabi community in North Karnataka
grows about 40 varieties of tubers. There is an
increased demand for tubers which remains
unfulfilled due to the non-availability of produce
throughout the year.
A cold storage was set up for 20 marginal
farmers, each of them having roughly 2 acres
of cultivable land. The cold storage unit was
designed to store tubers for 3-4 months at a
temperature of 14-16°C. After 2-3 months of
storing, farmers were able to sell the tubers
during the off-season at 3-5 times the usual
price. As a result, their income increased by
Rs. 100,000 a year. Also, the wastage of tubers
reduced drastically from 35% to 5%.
structure are essential. Self-help groups (SHGs) of
farmers with common objectives, tasks, group
identities and neighbourhood are important. Farmer
Producer Organisations (FPO), including Farmer
Producer Companies (FPC), have emerged as
aggregators of farm produce and they link farmers
directly to markets. Other players can be the local
government, local retail businesses, non-
governmental organisations (NGOs) or even private
companies.
Various financing models are proposed to suit the
local conditions. The financing model depends on the
financial strength of the entities backing the farmers.
For example, the financing may come from the local
government, NGO, private company, FPO/FPC, etc. If
the entity is considered bankable, there can also be
long-term bank financing. In some cases, there can
be lease-purchase agreements. What is more
innovative is the service model, such as `pay as you
store' or `Cooling as a Service.' Figure 2 depicts the
existing ownership, financing and service models for
the farmgate cold storage solutions.
The poor avail the cold storage facilities for nominal
fees and thus are responsible for covering the
operational expenses. Such hybrid models help
stakeholders like the government and other NGOs
create sustainable models of poverty reduction.
Infrastructure subsidies are financially viable over the
long run but cannot be expected to be covered with
the cycles of typical consumptive loans.
Data collected from some 340 cold storage
installations provide an insight into the current end-
user segmentation and financial models. The farm
products can be categorised into 3 broad groups:
1. Vegetables and fruits: Seasonal vegetables and
fruits, geographically unique fruits, premium-
quality vegetables, value-added products
Figure 2. Ownership, financing and service models for farmgate cold storage
Figure 3. End-user segmentation
Figure 4. Financing of cold storage installations
‘co
olin
g a
s a
serv
ice’
for
farm
ers
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
17
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
16
July
- S
ep
tem
ber
2020
‘co
olin
g a
s a
serv
ice’
for
farm
ers
The upfront capital investment for cold-room solution
would require a sustainable Return on Investment
(RoI) for farmers--in terms of reduction in food
wastage, premium prices for the quality of stored
products. Capital subsidies (up to 90% in some
cases) has resulted in FPOs not opting for bank
financing. In the successful cases of bank financed
cold-rooms, payment terms such as half-yearly
payments (Rs.100,000/ 6 months)-- within 5-year or 7-
year loan periods-- have been successfully
implemented. With the leasing models, the average
monthly payment is Rs. 20,000 to Rs. 30,000, with
multiple models. One of the technology providers has
designed lease rate with 1:3 ratio (3 times revenue
generated from the cold-room).
Case Study 1: Preserving fruits for faraway markets
Context /need: Cherry is a highly perishable fruit
which should be pre-cooled and stored in cold room
immediately after harvesting. Usually without access
to the last-mile cold-room, cherries get sold for lower
price by farmers or get wasted at the farmgate or
during the transit/retail space.
Business model: Retail company financed /owned
End-use segment: Pre-cooling after harvesting for
farmer groups
Product /geography: Cherry fruit (Himachal Pradesh)
Impact: Around 5 tonnes of cherries got to customers
and the business model worked for the retailer/
farmers due to the recognition of premium price for
the product for its quality and geographical
uniqueness. Farmers got access to constant market
access with reduced wastage and price of around Rs.
250/kg at farmgate. (Image courtesy: Ecozen)
Case Study 2: Extending shelf-life of fruits grown
in remote region
Context / need: Nepal is a small, mountainous,
landlocked country. The horticultural crops like
mango, banana, papaya, litchi, guava, pineapple,
tomato, potato, radish, brinjal, okra, chilli, cauliflower,
cabbage, cucurbits, taro, coconut, and areca nut are
grown successfully in a hilly area. Post-harvest losses
range from 20% to 30% for fresh fruits and vegetables
and could exceed 50% under adverse conditions.
Business model: Farmer Producer Organisation owned
End-use segment: Horticulture farmer in remote region
Product /geography: Green vegetables /fruits (Nepal)
Impact: Improved quality of perishables due to
constant temperature storage, higher market value,
and reduced wastage of produce; better bargaining
power for farmers and prevention of distress selling.
(Images courtesy: Pluss Advanced Technology)
Building a supportive eco-system
For the farmgate agriculture cold-storage solutions to
be sustainable and scalable, the supporting
environment needs to look beyond technology. From
awareness about product storage to the right market
access, different aspects would have to be
strengthened for cold storage solutions to create the
right impact.
Various financing and business models are available.
But there are some hurdles such as requirement of
collaterals for bank financing and the long processing
time. There is a need to channelise subsidies in the
right direction, too.
For technology providers to reach last-mile farmers,
service models seem to be an effective one - where
entrepreneurs develop 'cooling as a service'
businesses at farmgate. Integrating decentralised
cold storage service as a curriculum in local language
would provide a strong grassroot technology/
entrepreneurship ecosystem.
Huda Jaffer is lead designer at
SELCO Foundation
is not the product as such but the performance it
provides and the benefits it offers to the user.
Product life extension implies a fundamental shift from
selling products to selling the customer value they
yield. This change in the source of economic value to
firms depends upon extending product life through
several key design strategies. Stahel argues that if a
firm is compensated for on the basis of service
provided, its employees will have strong incentives to
reduce materials and energy used in the systems that
render the service to the customer. Economic value
would be driven by customer satisfaction in the
delivered service. Labour-intensive local service
centres would create many skilled jobs for workforce
no longer needed in centralised, automated production
units. Resource use would be minimised as products
would no longer move rapidly from the manufacturing
plant to the customer to the landfill. In sum, the
functional economy model will help to achieve the
`triple bottom line' (economic, social and
environmental benefits).
Now, let us get back to our concern about the growing
number of vehicles in our cities. If we want to avoid the
estimated 775% growth in car ownership by 2040, we
need to shift away from personally owned transport
towards mobility solutions, delivered as a service.
Mobility as a Service (MaaS) integrates different forms
of transport services, making them accessible on
demand and offering payment convenience.
Most households in India--especially in middle-class and
sub-urban areas--associate car ownership with `prestige'
and `success.' Considering the fact that most cars
remain parked 90-95% of the time and the fixed cost of
owning a vehicle is very high, MaaS provides a great
opportunity to move away from personal vehicle
ownership to user-focussed, efficient, economical and
environmentally conscious mobility choices.
With increased uptake of alternative mobility modes,
e.g. non-motorized transport, bicycles and pedestrian-
friendly pathways, and investment in public transport
infrastructure, the expectation is a marked reduction in
personal cars ownership, resulting in traffic
decongestion and improved productivity.
Ola Cabs, founded in December 2010, offers mobility
solutions by connecting customers to drivers and to a
wide range of vehicle options across bikes, auto-
rickshaws, city taxis, and inter-city cabs, enabling
convenience and transparency for millions of
consumers and over 1.5 million driver-partners. By
providing a range of choices in mobility solutions to
suit every pocket, it has built an inclusive mobility
ecosystem and democratised access to mobility. Ola
and other shared mobility providers like Uber, Rapido,
BluSmart and others have all started investing in e-
mobility leading to more affordable, reliable, cleaner,
and efficient transportation systems, enabling India to
become an example for other developing nations.
MaaS fits into the vision of making India `a bigger and
more important part of the global economy', pursuing
policies that are efficient, competitive and resilient, and
being self-sustaining and self-generating. India has little
chance, however, to compete with countries that have
made a huge headway in manufacturing products that
are cheaper but have planned obsolescence. Instead,
the so-called `self-reliant India' or `self-sufficient India'
should seek to entice innovating enterprises in
projecting India as a `functional economy.'
For the specific case of MaaS, initiatives are needed in
the form of improved public transport accessibility,
higher cost of personal vehicle ownership, tiered class
of services and enhanced efficiencies, improved
connectivity and data sharing, policy collaborations
among others.
This particular issue of the magazine carries three
articles that discuss, in depth, the concept of
`functional economy,' which is also referred to as
`servitisation.' There is also an article that highlights the
initiative of the French Agency for Ecological Transition
(ADEME) to make France a functional economy by
2050. I hope these articles on the `functional economy'
will provide you food for thought.
...continued from page 04
‘co
olin
g a
s a
serv
ice’
for
farm
ers
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
17
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
16
July
- S
ep
tem
ber
2020
‘co
olin
g a
s a
serv
ice’
for
farm
ers
The upfront capital investment for cold-room solution
would require a sustainable Return on Investment
(RoI) for farmers--in terms of reduction in food
wastage, premium prices for the quality of stored
products. Capital subsidies (up to 90% in some
cases) has resulted in FPOs not opting for bank
financing. In the successful cases of bank financed
cold-rooms, payment terms such as half-yearly
payments (Rs.100,000/ 6 months)-- within 5-year or 7-
year loan periods-- have been successfully
implemented. With the leasing models, the average
monthly payment is Rs. 20,000 to Rs. 30,000, with
multiple models. One of the technology providers has
designed lease rate with 1:3 ratio (3 times revenue
generated from the cold-room).
Case Study 1: Preserving fruits for faraway markets
Context /need: Cherry is a highly perishable fruit
which should be pre-cooled and stored in cold room
immediately after harvesting. Usually without access
to the last-mile cold-room, cherries get sold for lower
price by farmers or get wasted at the farmgate or
during the transit/retail space.
Business model: Retail company financed /owned
End-use segment: Pre-cooling after harvesting for
farmer groups
Product /geography: Cherry fruit (Himachal Pradesh)
Impact: Around 5 tonnes of cherries got to customers
and the business model worked for the retailer/
farmers due to the recognition of premium price for
the product for its quality and geographical
uniqueness. Farmers got access to constant market
access with reduced wastage and price of around Rs.
250/kg at farmgate. (Image courtesy: Ecozen)
Case Study 2: Extending shelf-life of fruits grown
in remote region
Context / need: Nepal is a small, mountainous,
landlocked country. The horticultural crops like
mango, banana, papaya, litchi, guava, pineapple,
tomato, potato, radish, brinjal, okra, chilli, cauliflower,
cabbage, cucurbits, taro, coconut, and areca nut are
grown successfully in a hilly area. Post-harvest losses
range from 20% to 30% for fresh fruits and vegetables
and could exceed 50% under adverse conditions.
Business model: Farmer Producer Organisation owned
End-use segment: Horticulture farmer in remote region
Product /geography: Green vegetables /fruits (Nepal)
Impact: Improved quality of perishables due to
constant temperature storage, higher market value,
and reduced wastage of produce; better bargaining
power for farmers and prevention of distress selling.
(Images courtesy: Pluss Advanced Technology)
Building a supportive eco-system
For the farmgate agriculture cold-storage solutions to
be sustainable and scalable, the supporting
environment needs to look beyond technology. From
awareness about product storage to the right market
access, different aspects would have to be
strengthened for cold storage solutions to create the
right impact.
Various financing and business models are available.
But there are some hurdles such as requirement of
collaterals for bank financing and the long processing
time. There is a need to channelise subsidies in the
right direction, too.
For technology providers to reach last-mile farmers,
service models seem to be an effective one - where
entrepreneurs develop 'cooling as a service'
businesses at farmgate. Integrating decentralised
cold storage service as a curriculum in local language
would provide a strong grassroot technology/
entrepreneurship ecosystem.
Huda Jaffer is lead designer at
SELCO Foundation
is not the product as such but the performance it
provides and the benefits it offers to the user.
Product life extension implies a fundamental shift from
selling products to selling the customer value they
yield. This change in the source of economic value to
firms depends upon extending product life through
several key design strategies. Stahel argues that if a
firm is compensated for on the basis of service
provided, its employees will have strong incentives to
reduce materials and energy used in the systems that
render the service to the customer. Economic value
would be driven by customer satisfaction in the
delivered service. Labour-intensive local service
centres would create many skilled jobs for workforce
no longer needed in centralised, automated production
units. Resource use would be minimised as products
would no longer move rapidly from the manufacturing
plant to the customer to the landfill. In sum, the
functional economy model will help to achieve the
`triple bottom line' (economic, social and
environmental benefits).
Now, let us get back to our concern about the growing
number of vehicles in our cities. If we want to avoid the
estimated 775% growth in car ownership by 2040, we
need to shift away from personally owned transport
towards mobility solutions, delivered as a service.
Mobility as a Service (MaaS) integrates different forms
of transport services, making them accessible on
demand and offering payment convenience.
Most households in India--especially in middle-class and
sub-urban areas--associate car ownership with `prestige'
and `success.' Considering the fact that most cars
remain parked 90-95% of the time and the fixed cost of
owning a vehicle is very high, MaaS provides a great
opportunity to move away from personal vehicle
ownership to user-focussed, efficient, economical and
environmentally conscious mobility choices.
With increased uptake of alternative mobility modes,
e.g. non-motorized transport, bicycles and pedestrian-
friendly pathways, and investment in public transport
infrastructure, the expectation is a marked reduction in
personal cars ownership, resulting in traffic
decongestion and improved productivity.
Ola Cabs, founded in December 2010, offers mobility
solutions by connecting customers to drivers and to a
wide range of vehicle options across bikes, auto-
rickshaws, city taxis, and inter-city cabs, enabling
convenience and transparency for millions of
consumers and over 1.5 million driver-partners. By
providing a range of choices in mobility solutions to
suit every pocket, it has built an inclusive mobility
ecosystem and democratised access to mobility. Ola
and other shared mobility providers like Uber, Rapido,
BluSmart and others have all started investing in e-
mobility leading to more affordable, reliable, cleaner,
and efficient transportation systems, enabling India to
become an example for other developing nations.
MaaS fits into the vision of making India `a bigger and
more important part of the global economy', pursuing
policies that are efficient, competitive and resilient, and
being self-sustaining and self-generating. India has little
chance, however, to compete with countries that have
made a huge headway in manufacturing products that
are cheaper but have planned obsolescence. Instead,
the so-called `self-reliant India' or `self-sufficient India'
should seek to entice innovating enterprises in
projecting India as a `functional economy.'
For the specific case of MaaS, initiatives are needed in
the form of improved public transport accessibility,
higher cost of personal vehicle ownership, tiered class
of services and enhanced efficiencies, improved
connectivity and data sharing, policy collaborations
among others.
This particular issue of the magazine carries three
articles that discuss, in depth, the concept of
`functional economy,' which is also referred to as
`servitisation.' There is also an article that highlights the
initiative of the French Agency for Ecological Transition
(ADEME) to make France a functional economy by
2050. I hope these articles on the `functional economy'
will provide you food for thought.
...continued from page 04
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
19
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
18
July
- S
ep
tem
ber
2020
serv
itisa
tion
ben
efits
: e
nerg
y se
cto
r
s industries globally are striving to adopt new Abusiness models, there has been a shift towards
services. The servitisation model is one such.
Originated from Rolls-Royce's 'power by the hour'
concept, servitization (also called the Product-Service
Systems-PSS) has been driven by shrinking markets,
product variety and the need to build long-term
relationships with the customer. The shift is from a
pure product-centred to a service-centred strategy to
gain leverage. Fig.1 shows that this transition is a
continuum and not a black-and-white affair.
Organisations can choose a strategy in between.
Fig 1: product-centred to a service-centred transition
This business model is suitable for a long-lifecycle
product. As was the case with Rolls-Royce, instead of
selling aircraft engines, a solution-based service was
offered. What this also meant was a shift from after-
sales maintenance and services to the provider's
domain.
Consider an energy utility providing energy to an
industrial unit. The traditional model is the `product
model' of purchasing the equipment and running the
utility on its own; the next alternative could be the 'use
model'; and, the third could be the `result model'
whereby the servitised utility shall offer the service on
a pay-for-use basis (Fig.1).
It is said that the pay-for-use model is more
sustainable. Sustainability is determined by the triple
bottom line of economic, social and environmental
factors. The sustainable benefits of servitization come
from lower material and energy consumption.
Armstrong and Lang in their research paper note that
although PSS is still a novelty in the sustainability
movement, it has potential avenues as it separates
value and material consumption. This follows because
it enhances the ratio between services to the material
consumption and reduces the total waste in the
system. As the manufacturers servitise, the industry
becomes more efficient and the service asset's
availability for intended use is maximized.
This change can be seen in various Indian situations.
Moving towards procurement of solutions for
industrial products, instead of outright purchase of
servitisation benefits : energy sectorMohita G Sharma
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
19
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
18
July
- S
ep
tem
ber
2020
serv
itisa
tion
ben
efits
: e
nerg
y se
cto
r
s industries globally are striving to adopt new Abusiness models, there has been a shift towards
services. The servitisation model is one such.
Originated from Rolls-Royce's 'power by the hour'
concept, servitization (also called the Product-Service
Systems-PSS) has been driven by shrinking markets,
product variety and the need to build long-term
relationships with the customer. The shift is from a
pure product-centred to a service-centred strategy to
gain leverage. Fig.1 shows that this transition is a
continuum and not a black-and-white affair.
Organisations can choose a strategy in between.
Fig 1: product-centred to a service-centred transition
This business model is suitable for a long-lifecycle
product. As was the case with Rolls-Royce, instead of
selling aircraft engines, a solution-based service was
offered. What this also meant was a shift from after-
sales maintenance and services to the provider's
domain.
Consider an energy utility providing energy to an
industrial unit. The traditional model is the `product
model' of purchasing the equipment and running the
utility on its own; the next alternative could be the 'use
model'; and, the third could be the `result model'
whereby the servitised utility shall offer the service on
a pay-for-use basis (Fig.1).
It is said that the pay-for-use model is more
sustainable. Sustainability is determined by the triple
bottom line of economic, social and environmental
factors. The sustainable benefits of servitization come
from lower material and energy consumption.
Armstrong and Lang in their research paper note that
although PSS is still a novelty in the sustainability
movement, it has potential avenues as it separates
value and material consumption. This follows because
it enhances the ratio between services to the material
consumption and reduces the total waste in the
system. As the manufacturers servitise, the industry
becomes more efficient and the service asset's
availability for intended use is maximized.
This change can be seen in various Indian situations.
Moving towards procurement of solutions for
industrial products, instead of outright purchase of
servitisation benefits : energy sectorMohita G Sharma
serv
itisa
tion
ben
efits
: e
nerg
y se
cto
r
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
21
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
20
July
- S
ep
tem
ber
2020
serv
itisa
tion
ben
efits
: e
nerg
y se
cto
r
equipment, is just one example. The contract is for
the solution and so it includes the cost of the
equipment as well as the cost of annual maintenance
contract. This is a win-win for both. This support helps
in tackling obsolescence and working towards
upgrades holistically. So on one side, there is an
assured revenue stream over the lifecycle of the
product. The long term contracts can be entered at
the backend with the suppliers.
There is competition and long-term relationship at all
levels in the supply chain and the market ensures that
the user gets value for money. There is not much
pressure for providing product upgrades with the sole
objective of selling a new product. Further, only
required sub-system upgrades which are 'value for
money' are done. The issues of lifetime accountability
also get incorporated along with lifetime costing.
Enhancing the utilisation of equipment will be the
objective and not the number of equipment. This also
leads to the dematerialisation in the industry and
subsequent benefits in terms of energy and waste
reduction thereby leading to sustainability.
The sale of equipment also entails the sale of spare
parts. The critical spare parts are stored at key
locations. In the servitised system, since maintenance
is the responsibility of the manufacturer and since the
manufacturer has supplied similar units to others too,
it is in a better position to create a 'spares pool.' This
pool can be used for maintaining many units. In this
process, the total number of spare parts in the
system comes down significantly; this can be viewed
as 'dematerialisation'.
The energy consumed in making spare parts will also
be reduced. Instead of the spare-parts revenue
stream, it is the service revenue stream. Service is
rendered by a single agency which leads to better
control and performance of the equipment. This
would call for a focus on product design--design for
durability. This would also call for design for upgrades
with modular structures because of intense use.
Another important implication is for the product's end
of life. Salvaging, cannibalising and extension of life
for utilisation will require a higher level of informed
decision-making. In the traditional model, because of
the skewed incentives of the manufacturer, the
customer is forced to terminate the life of the
equipment early. With the incentives gone, the
manufacturer can resort to retrofitting and
remanufacturing and enhancing the life of the
equipment thereby contributing to sustainability.
For servitisation to happen, usually an incremental
approach is adopted and the continuum is traversed
gradually. Radical servitisation, with digitisation as an
enabler, is also possible. The tangibility of an offering
can be reduced by digitising some of its features.
It is said that servitisation as a model reduces risk
and uncertainty. Rather, in my view, it shifts the risk in
the direction where it can be better handled.
Determining the expected specifications, service level
and quality and contracting for the expected
outcomes is not simple--the risks and profits may not
be shared fairly between the two actors with each
trying to minimize his risk and maximize the profit.
Although the provider gets an assured revenue
stream he is also exposed to more operational risks
and uncertainty. There is a need for detailed analysis
at the planning stage itself; and, design (`design for
services') would be different from the traditional
design (outright purchase design.)
The challenges faced by the manufacturing firms
when shifting from being a product provider to a
product-service provider are multipronged but this
system can add economic, environmental and social
values for diverse stakeholders in the system.
Dematerialisation is an important element of making
the industry sustainable. In addition, the transition
from the product-centric strategy to a PSS is intricate.
There are no readymade solutions for such a
transformation as one size does not fit all. Thus the
industry has to develop a suitable business model
clearly bringing out how it hopes to create, deliver
and capture the economic and social value.
References:
Armstrong, C.A., and Lang, C. (2013), "Sustainable Product Service
System: The New Frontier in Apparel Retailing," Research Journal of
Textile and Apparel, 17(1):1-12
Tukker, A. (2003). "The potential of CO2-reduction from household
consumption by product-service systems - a reflection from SusProNet",
The Journal of Sustainable Product Design, 3(3-4): 109-118.
Tukker, A. (2004), "Eight types of product-service systems: Eight ways
to sustainability? Experiences from SUSPRONET", Business Strategy
and the Environment, 13: 246-260.
Gangwar, Mohita and Kumar, G., (2016) "Prioritizing Quality of
Product and Service Dimensions with respect to Product Service
System in Public Transport Sector," Quality Management Journal, Vol.
23 (4) pp 23-36;
Sharma, Mohita G. and Singh, Kashi N. (2017), "Servitization,
Coopetition and Sustainability," Vikalpa, Vol. 42, No. 3, pp. 145-152.
The advantage for Rolls-Royce was economies of
scale. Since they were now managing the lifecycle of
hundreds or thousands of aircraft engines, they could
invest heavily into studying how engines performed,
how to detect potential failure points, what types of
preventative maintenance was most effective, etc.
Rolls-Royce became the experts in not only designing
and building jet engines, but also operating and
repairing engines.
For the airlines, EaaS transfers the responsibility to a
vendor that treats engine efficiency and safety as its
core competency. They can now focus on their core
competencies which are customer service, route
optimization, pricing, marketing, etc.
But that is still not the best part of this new
subscription economy. Think about what most of us
do with our cars. We try to take the car in at the
recommended 7,500 mile service interval, get the oil
changed, get tires rotated, etc. However, does the car
dealership make more revenue from me if I religiously
take my car in for regular maintenance or if I neglect
maintenance and have to bring the car in for major
repairs? That's a tricky question. The answer is both.
But let's pretend my car was on the `power-by-the-
hour' model like the jet engine. Now the car
dealership is incentivised to keep the car running as
long as possible. It's not advantageous to the dealer
if my car breaks down and sits on the side of the
road since I only pay for each hour that the car is
operational.
This is the key element of the subscription economy.
It's now in the common interest of the customer and
the dealer to make sure the car runs as
well/much/efficiently as possible. When you are a
customer and you realise that your vendor has the
same interests as you and it is truly a win-win, that
changes the very fabric of the relationship. When that
happens, I am rooting for my dealership to succeed. I
want to provide them data on how my car is
performing. I want to tell them that I plan on taking a
road trip to Alaska and ask them for advice on how to
prepare my car. We're on the same team and I want
to help them help me.
(Courtesy: Gene Likins, global vice-president for Value Advisory
Services at MuleSoft/Workforce, USA.)
here is a lot of buzz around the `subscription Teconomy.' One definition stated it as "when
customers pay for a service monthly that was once
purchased in a single payment."
Modern-day examples include Netflix and Spotify for
consumers and Salesforce and Workday for
businesses. Even `traditional' industries are giving it a
try. Cadillac in 2017 launched the BOOK subscription
service. For a flat $1,500 monthly fee, a customer can
swap out their car up to 18 times a year. The fee
covers all maintenance, check-ups and scheduled
repairs. It is no surprise that the subscription
economy has been growing double digit annually
since 2015.
The first instance of the `subscription economy'
perhaps was of jet engines back in the late 1990s.
Back then, when an airliner's engine approached end-
of-life (based on flight hours) or failed abruptly, the
airline would purchase a replacement engine from
vendors like Rolls-Royce, install them and maintain
them. An unexpected engine failure could cost the
airline millions of dollars in engine replacement costs,
lost flight revenue, need to reschedule stranded
passengers, need for back-up aircraft, buffer engine
inventory, crew over-time, etc.
But given the multiple models of planes in a typical
fleet, there were often multiple engine models to keep
track of and monitor. It became apparent that airline
service departments were not qualified or equipped to
maximise the life of its jet engines, often replacing
them prematurely or letting them run until they failed
unexpectedly. Rolls Royce realised that the airlines
didn't want to be in the `jet engine business', the
airlines wanted to focus on flying passengers from
point A to B. So Rolls Royce developed a new
`subscription' model called `power-by-the-hour.'
Basically, it was Engine-as-a-Service (EaaS). For a flat
hourly rate per engine, Rolls Royce would handle
installations, check-ups, maintenance and
decommissioning.
From the standpoint of the airlines, this was perfect.
They loved the predictability of the subscription
payments, as opposed to the `lumpiness' of engine
purchases and overhauls. The airlines loved not
having to spend resources on engine inventory, repair
facilities, technicians and engine liability insurance.
The Rolls-Royce model
Prof. MohitaGangwar Sharma is a
Professor at FORE School of
Management and she has more
than 23 years of experience in the
Industry and Academics.
serv
itisa
tion
ben
efits
: e
nerg
y se
cto
r
July
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2020
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soci
ety
of e
nerg
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s / I
ndia
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ety
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serv
itisa
tion
ben
efits
: e
nerg
y se
cto
r
equipment, is just one example. The contract is for
the solution and so it includes the cost of the
equipment as well as the cost of annual maintenance
contract. This is a win-win for both. This support helps
in tackling obsolescence and working towards
upgrades holistically. So on one side, there is an
assured revenue stream over the lifecycle of the
product. The long term contracts can be entered at
the backend with the suppliers.
There is competition and long-term relationship at all
levels in the supply chain and the market ensures that
the user gets value for money. There is not much
pressure for providing product upgrades with the sole
objective of selling a new product. Further, only
required sub-system upgrades which are 'value for
money' are done. The issues of lifetime accountability
also get incorporated along with lifetime costing.
Enhancing the utilisation of equipment will be the
objective and not the number of equipment. This also
leads to the dematerialisation in the industry and
subsequent benefits in terms of energy and waste
reduction thereby leading to sustainability.
The sale of equipment also entails the sale of spare
parts. The critical spare parts are stored at key
locations. In the servitised system, since maintenance
is the responsibility of the manufacturer and since the
manufacturer has supplied similar units to others too,
it is in a better position to create a 'spares pool.' This
pool can be used for maintaining many units. In this
process, the total number of spare parts in the
system comes down significantly; this can be viewed
as 'dematerialisation'.
The energy consumed in making spare parts will also
be reduced. Instead of the spare-parts revenue
stream, it is the service revenue stream. Service is
rendered by a single agency which leads to better
control and performance of the equipment. This
would call for a focus on product design--design for
durability. This would also call for design for upgrades
with modular structures because of intense use.
Another important implication is for the product's end
of life. Salvaging, cannibalising and extension of life
for utilisation will require a higher level of informed
decision-making. In the traditional model, because of
the skewed incentives of the manufacturer, the
customer is forced to terminate the life of the
equipment early. With the incentives gone, the
manufacturer can resort to retrofitting and
remanufacturing and enhancing the life of the
equipment thereby contributing to sustainability.
For servitisation to happen, usually an incremental
approach is adopted and the continuum is traversed
gradually. Radical servitisation, with digitisation as an
enabler, is also possible. The tangibility of an offering
can be reduced by digitising some of its features.
It is said that servitisation as a model reduces risk
and uncertainty. Rather, in my view, it shifts the risk in
the direction where it can be better handled.
Determining the expected specifications, service level
and quality and contracting for the expected
outcomes is not simple--the risks and profits may not
be shared fairly between the two actors with each
trying to minimize his risk and maximize the profit.
Although the provider gets an assured revenue
stream he is also exposed to more operational risks
and uncertainty. There is a need for detailed analysis
at the planning stage itself; and, design (`design for
services') would be different from the traditional
design (outright purchase design.)
The challenges faced by the manufacturing firms
when shifting from being a product provider to a
product-service provider are multipronged but this
system can add economic, environmental and social
values for diverse stakeholders in the system.
Dematerialisation is an important element of making
the industry sustainable. In addition, the transition
from the product-centric strategy to a PSS is intricate.
There are no readymade solutions for such a
transformation as one size does not fit all. Thus the
industry has to develop a suitable business model
clearly bringing out how it hopes to create, deliver
and capture the economic and social value.
References:
Armstrong, C.A., and Lang, C. (2013), "Sustainable Product Service
System: The New Frontier in Apparel Retailing," Research Journal of
Textile and Apparel, 17(1):1-12
Tukker, A. (2003). "The potential of CO2-reduction from household
consumption by product-service systems - a reflection from SusProNet",
The Journal of Sustainable Product Design, 3(3-4): 109-118.
Tukker, A. (2004), "Eight types of product-service systems: Eight ways
to sustainability? Experiences from SUSPRONET", Business Strategy
and the Environment, 13: 246-260.
Gangwar, Mohita and Kumar, G., (2016) "Prioritizing Quality of
Product and Service Dimensions with respect to Product Service
System in Public Transport Sector," Quality Management Journal, Vol.
23 (4) pp 23-36;
Sharma, Mohita G. and Singh, Kashi N. (2017), "Servitization,
Coopetition and Sustainability," Vikalpa, Vol. 42, No. 3, pp. 145-152.
The advantage for Rolls-Royce was economies of
scale. Since they were now managing the lifecycle of
hundreds or thousands of aircraft engines, they could
invest heavily into studying how engines performed,
how to detect potential failure points, what types of
preventative maintenance was most effective, etc.
Rolls-Royce became the experts in not only designing
and building jet engines, but also operating and
repairing engines.
For the airlines, EaaS transfers the responsibility to a
vendor that treats engine efficiency and safety as its
core competency. They can now focus on their core
competencies which are customer service, route
optimization, pricing, marketing, etc.
But that is still not the best part of this new
subscription economy. Think about what most of us
do with our cars. We try to take the car in at the
recommended 7,500 mile service interval, get the oil
changed, get tires rotated, etc. However, does the car
dealership make more revenue from me if I religiously
take my car in for regular maintenance or if I neglect
maintenance and have to bring the car in for major
repairs? That's a tricky question. The answer is both.
But let's pretend my car was on the `power-by-the-
hour' model like the jet engine. Now the car
dealership is incentivised to keep the car running as
long as possible. It's not advantageous to the dealer
if my car breaks down and sits on the side of the
road since I only pay for each hour that the car is
operational.
This is the key element of the subscription economy.
It's now in the common interest of the customer and
the dealer to make sure the car runs as
well/much/efficiently as possible. When you are a
customer and you realise that your vendor has the
same interests as you and it is truly a win-win, that
changes the very fabric of the relationship. When that
happens, I am rooting for my dealership to succeed. I
want to provide them data on how my car is
performing. I want to tell them that I plan on taking a
road trip to Alaska and ask them for advice on how to
prepare my car. We're on the same team and I want
to help them help me.
(Courtesy: Gene Likins, global vice-president for Value Advisory
Services at MuleSoft/Workforce, USA.)
here is a lot of buzz around the `subscription Teconomy.' One definition stated it as "when
customers pay for a service monthly that was once
purchased in a single payment."
Modern-day examples include Netflix and Spotify for
consumers and Salesforce and Workday for
businesses. Even `traditional' industries are giving it a
try. Cadillac in 2017 launched the BOOK subscription
service. For a flat $1,500 monthly fee, a customer can
swap out their car up to 18 times a year. The fee
covers all maintenance, check-ups and scheduled
repairs. It is no surprise that the subscription
economy has been growing double digit annually
since 2015.
The first instance of the `subscription economy'
perhaps was of jet engines back in the late 1990s.
Back then, when an airliner's engine approached end-
of-life (based on flight hours) or failed abruptly, the
airline would purchase a replacement engine from
vendors like Rolls-Royce, install them and maintain
them. An unexpected engine failure could cost the
airline millions of dollars in engine replacement costs,
lost flight revenue, need to reschedule stranded
passengers, need for back-up aircraft, buffer engine
inventory, crew over-time, etc.
But given the multiple models of planes in a typical
fleet, there were often multiple engine models to keep
track of and monitor. It became apparent that airline
service departments were not qualified or equipped to
maximise the life of its jet engines, often replacing
them prematurely or letting them run until they failed
unexpectedly. Rolls Royce realised that the airlines
didn't want to be in the `jet engine business', the
airlines wanted to focus on flying passengers from
point A to B. So Rolls Royce developed a new
`subscription' model called `power-by-the-hour.'
Basically, it was Engine-as-a-Service (EaaS). For a flat
hourly rate per engine, Rolls Royce would handle
installations, check-ups, maintenance and
decommissioning.
From the standpoint of the airlines, this was perfect.
They loved the predictability of the subscription
payments, as opposed to the `lumpiness' of engine
purchases and overhauls. The airlines loved not
having to spend resources on engine inventory, repair
facilities, technicians and engine liability insurance.
The Rolls-Royce model
Prof. MohitaGangwar Sharma is a
Professor at FORE School of
Management and she has more
than 23 years of experience in the
Industry and Academics.
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
23
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
22
July
- S
ep
tem
ber
2020
the
func
tiona
l eco
nom
y
he economy of functionality is an essential Telement of the vision of the French Agency for
Ecological Transition (ADEME) on ecological, energy
and social transition. It supports the economic
mutation of the circular economy.
The French agency for ecological
transition (ADEME) is working towards
realisation of this new economic model
by 2050.
the functionaleconomy
The functional economy establishes a new
relationship between supply and demand that is no
longer based solely on the simple sale of goods or
services. Contracting is based on useful effects
(benefits) and the offer adapts to the real needs of
people, companies, and communities as well as to
issues related to sustainable development.
This new business model differs from the classic
industrial model, which is based primarily on the
volumes of products sold and consumed. It is a
different logic that leads to real environmental
potential. Let's consider the potential environmental
benefits.
An eco-efficient offer:
- Revenues are dissociated, at least partially, from
the consumption of materials. They rely mainly on
the mobilisation of non-material resources and the
production of useful effects; but, also on the
efficient use of material resources.
Competitiveness favours the quality of the offer
rather than the simple notion of cost.
- No longer selling material goods is a paradigm
shift for the service provider. This economic shift
encourages the service provider to move to a more
sustainable management of the goods as well as
to responsible practices: eco-design, robust
goods, reuse and recycling (to take just a few
examples) thus come within his field of reflection.
Consumption to meet real needs:
- Since attention is given to the `real need,' there is
incentive for beneficiaries to change their lifestyles;
and, their production and purchasing methods
move towards more sobriety.
- In some cases, the useful effects lead to energy
and material savings for the beneficiary. The
earnings are shared with the provider. Both parties
would therefore have every interest in combining
their efforts to maximise them.
Effects are better valued:
- In the case of cooperation between the supplier and
public actors, the revenues could come directly from
the valuation of the beneficial effects on the
environment and more generally on society, thus
becoming a real economic driver of the ecological
transition.
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
23
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
22
July
- S
ep
tem
ber
2020
the
func
tiona
l eco
nom
y
he economy of functionality is an essential Telement of the vision of the French Agency for
Ecological Transition (ADEME) on ecological, energy
and social transition. It supports the economic
mutation of the circular economy.
The French agency for ecological
transition (ADEME) is working towards
realisation of this new economic model
by 2050.
the functionaleconomy
The functional economy establishes a new
relationship between supply and demand that is no
longer based solely on the simple sale of goods or
services. Contracting is based on useful effects
(benefits) and the offer adapts to the real needs of
people, companies, and communities as well as to
issues related to sustainable development.
This new business model differs from the classic
industrial model, which is based primarily on the
volumes of products sold and consumed. It is a
different logic that leads to real environmental
potential. Let's consider the potential environmental
benefits.
An eco-efficient offer:
- Revenues are dissociated, at least partially, from
the consumption of materials. They rely mainly on
the mobilisation of non-material resources and the
production of useful effects; but, also on the
efficient use of material resources.
Competitiveness favours the quality of the offer
rather than the simple notion of cost.
- No longer selling material goods is a paradigm
shift for the service provider. This economic shift
encourages the service provider to move to a more
sustainable management of the goods as well as
to responsible practices: eco-design, robust
goods, reuse and recycling (to take just a few
examples) thus come within his field of reflection.
Consumption to meet real needs:
- Since attention is given to the `real need,' there is
incentive for beneficiaries to change their lifestyles;
and, their production and purchasing methods
move towards more sobriety.
- In some cases, the useful effects lead to energy
and material savings for the beneficiary. The
earnings are shared with the provider. Both parties
would therefore have every interest in combining
their efforts to maximise them.
Effects are better valued:
- In the case of cooperation between the supplier and
public actors, the revenues could come directly from
the valuation of the beneficial effects on the
environment and more generally on society, thus
becoming a real economic driver of the ecological
transition.
the
func
tiona
l eco
nom
y
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
25
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
24
July
- S
ep
tem
ber
2020
the
func
tiona
l eco
nom
y
The functional economy is, from a forward-looking
perspective, a key factor of economic, environmental
and social resilience. It helps to breathe new life to
these areas.
While some actions have been already taken, the
development of this economy faces several
obstacles. The joint mobilisation of businesses,
communities and civil society, with the support of
organisations promoting innovation, will certainly help
overcome them and promote a real shift, beneficial to
all our societies.
A new business model
Globally, societies are becoming increasingly aware
of the limits of production and consumption methods,
which have been inherited from the post-Second
World War boom--not very sustainable and operating
in saturated and highly competitive markets.
The legislation, for its part, intensifies the supervision
of production, by prohibiting planned obsolescence,
by expanding responsibilities in handling waste or by
imposing energy labelling.
It is now accepted that technological leaps, however
successful they may be, do not in themselves
constitute a response commensurate with vital
environmental, social and economic challenges.
Such a context favours the emergence of new
economic models. The functional economy is one of
them.
The functional economy consists of valuing the useful
effects of an offer--that is, the benefits provided to
users and to society more generally (for example:
thermal comfort of inhabitants, improved industrial
process, reduction of food waste in canteens or
improvement of employee well-being). It reconciles
development, employment, human well-being and
respect for the environment.
It requires close cooperation between all the
economic and territorial actors involved. It is only on
this condition that it will be possible to identify the
demand, to adapt the offer as best as possible to the
real needs and to verify that it conforms to the
expected results.
This new relationship between supply and demand
obviously involves profound changes in our modes of
production and consumption: management
stimulating cooperation, income linked to useful
effects, and equitable distribution of wealth among all
stakeholders.
Supported at the national level in France by ADEME
and new actors such as the European Institute for the
Economy of Functionality and Cooperation, the
Institute for Circular Economy, etc., it takes concrete
form through initiatives from companies, communities
or associations looking for a new lease of life in the
regions. It is the organisations in charge of innovation
and sustainable development that drive these new
dynamics locally.
A new supply-demand relationship
What is the purpose of a classic transaction? The sale
or provision of goods or services. In this system,
contracting relates only to the means used.
The functional economy goes further, by enhancing
the useful effects produced by the offer and by
establishing long-term contracts.
The objective: to align the needs of the beneficiary
and the service provider's offer, in order to provide a
specific response to the needs of individuals (or
businesses or communities) while also addressing the
issues related to the conservation of natural
resources and the ecological, energy and social
transition of the territories.
Analysing needs
The functional economy gives importance to the
detailed understanding of needs. In principle, the
beneficiary and the service provider work together to
build a solution of appropriate services and goods as
well as the tools for its effective assessment. It is then
a relationship of exchange, closeness and trust that
develops between them.
A cooperative ecosystem
All sectors of economic activity (industry, agriculture,
services, etc.) can open up to the functional
economy. Focused on the needs of users, the new
model sooner or later gives rise to inter-sector and
territory-wide cooperation between a set of economic
players.
New modes of production and consumption
This new relationship between supply and demand
induces transformations in production and
consumption patterns.
On the beneficiary side, it is the guarantee of
consumption more in harmony with its real needs and
without ownership; on the service-provider side, there
are income prospects linked to useful effects
(benefits such as energy savings for customers).
It is also a strategic investment in the non-material
resources of the enterprise (employee skills,
confidence, bottom-up innovation, etc.) and the
opportunity to optimise the means and material costs
(pooling and extension of the service life of the
equipment, reuse, etc.)
Finally, the governance of the offer is shifting towards
a more cooperative mode, with a better distribution of
income between the actors involved.
French companies' examples
In fact, many French companies are already investing
more or less in these different fields of transformation.
Here are a few examples:
w AMV Méca, manufacturer of industrial knives:
AMV Méca found poor maintenance of its products
by its customers, which leads to rapid breakage of
the equipment sold. The company thus proposed
Here is an example
In the current economic model, for air-
conditioning an office building, an individual buys
a standardised central air-conditioning system
(sometimes accompanied by after-sales
maintenance) and pays for its energy. The seller's
profit is linked to the volume sold.
But, the economy of functionality considers many
more criteria--such as thermal comfort or energy
efficiency--and bases the contracting precisely on
these useful effects.
In this system, the provider will retain ownership
of the air-conditioning equipment, and also supply
the energy. It will therefore be in his interest to
ensure efficient maintenance of the air
conditioning equipment and to guarantee sober
and economical consumption of energy. These
guarantees will be obtained by learning about the
specific needs of the users and their usage
practices, while also trying to understand the
reasons for a possible feeling of thermal
discomfort. In short, it will be up to him to find
solutions to improve efficiency (for example,
better insulation of the home).
Engaged in a co-construction approach, the
service provider and the beneficiary will jointly
find a suitable solution (provision and
maintenance of the air conditioner, building
insulation, ventilation, changes in practices, etc.),
which will bring the service provider to collaborate
with building craftsmen, architects, producers of
household equipment, thermal engineering
offices, energy suppliers or even communities
concerned with the enhancement of built heritage
and public funders for assistance for renovation.
the
func
tiona
l eco
nom
y
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
25
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
24
July
- S
ep
tem
ber
2020
the
func
tiona
l eco
nom
y
The functional economy is, from a forward-looking
perspective, a key factor of economic, environmental
and social resilience. It helps to breathe new life to
these areas.
While some actions have been already taken, the
development of this economy faces several
obstacles. The joint mobilisation of businesses,
communities and civil society, with the support of
organisations promoting innovation, will certainly help
overcome them and promote a real shift, beneficial to
all our societies.
A new business model
Globally, societies are becoming increasingly aware
of the limits of production and consumption methods,
which have been inherited from the post-Second
World War boom--not very sustainable and operating
in saturated and highly competitive markets.
The legislation, for its part, intensifies the supervision
of production, by prohibiting planned obsolescence,
by expanding responsibilities in handling waste or by
imposing energy labelling.
It is now accepted that technological leaps, however
successful they may be, do not in themselves
constitute a response commensurate with vital
environmental, social and economic challenges.
Such a context favours the emergence of new
economic models. The functional economy is one of
them.
The functional economy consists of valuing the useful
effects of an offer--that is, the benefits provided to
users and to society more generally (for example:
thermal comfort of inhabitants, improved industrial
process, reduction of food waste in canteens or
improvement of employee well-being). It reconciles
development, employment, human well-being and
respect for the environment.
It requires close cooperation between all the
economic and territorial actors involved. It is only on
this condition that it will be possible to identify the
demand, to adapt the offer as best as possible to the
real needs and to verify that it conforms to the
expected results.
This new relationship between supply and demand
obviously involves profound changes in our modes of
production and consumption: management
stimulating cooperation, income linked to useful
effects, and equitable distribution of wealth among all
stakeholders.
Supported at the national level in France by ADEME
and new actors such as the European Institute for the
Economy of Functionality and Cooperation, the
Institute for Circular Economy, etc., it takes concrete
form through initiatives from companies, communities
or associations looking for a new lease of life in the
regions. It is the organisations in charge of innovation
and sustainable development that drive these new
dynamics locally.
A new supply-demand relationship
What is the purpose of a classic transaction? The sale
or provision of goods or services. In this system,
contracting relates only to the means used.
The functional economy goes further, by enhancing
the useful effects produced by the offer and by
establishing long-term contracts.
The objective: to align the needs of the beneficiary
and the service provider's offer, in order to provide a
specific response to the needs of individuals (or
businesses or communities) while also addressing the
issues related to the conservation of natural
resources and the ecological, energy and social
transition of the territories.
Analysing needs
The functional economy gives importance to the
detailed understanding of needs. In principle, the
beneficiary and the service provider work together to
build a solution of appropriate services and goods as
well as the tools for its effective assessment. It is then
a relationship of exchange, closeness and trust that
develops between them.
A cooperative ecosystem
All sectors of economic activity (industry, agriculture,
services, etc.) can open up to the functional
economy. Focused on the needs of users, the new
model sooner or later gives rise to inter-sector and
territory-wide cooperation between a set of economic
players.
New modes of production and consumption
This new relationship between supply and demand
induces transformations in production and
consumption patterns.
On the beneficiary side, it is the guarantee of
consumption more in harmony with its real needs and
without ownership; on the service-provider side, there
are income prospects linked to useful effects
(benefits such as energy savings for customers).
It is also a strategic investment in the non-material
resources of the enterprise (employee skills,
confidence, bottom-up innovation, etc.) and the
opportunity to optimise the means and material costs
(pooling and extension of the service life of the
equipment, reuse, etc.)
Finally, the governance of the offer is shifting towards
a more cooperative mode, with a better distribution of
income between the actors involved.
French companies' examples
In fact, many French companies are already investing
more or less in these different fields of transformation.
Here are a few examples:
w AMV Méca, manufacturer of industrial knives:
AMV Méca found poor maintenance of its products
by its customers, which leads to rapid breakage of
the equipment sold. The company thus proposed
Here is an example
In the current economic model, for air-
conditioning an office building, an individual buys
a standardised central air-conditioning system
(sometimes accompanied by after-sales
maintenance) and pays for its energy. The seller's
profit is linked to the volume sold.
But, the economy of functionality considers many
more criteria--such as thermal comfort or energy
efficiency--and bases the contracting precisely on
these useful effects.
In this system, the provider will retain ownership
of the air-conditioning equipment, and also supply
the energy. It will therefore be in his interest to
ensure efficient maintenance of the air
conditioning equipment and to guarantee sober
and economical consumption of energy. These
guarantees will be obtained by learning about the
specific needs of the users and their usage
practices, while also trying to understand the
reasons for a possible feeling of thermal
discomfort. In short, it will be up to him to find
solutions to improve efficiency (for example,
better insulation of the home).
Engaged in a co-construction approach, the
service provider and the beneficiary will jointly
find a suitable solution (provision and
maintenance of the air conditioner, building
insulation, ventilation, changes in practices, etc.),
which will bring the service provider to collaborate
with building craftsmen, architects, producers of
household equipment, thermal engineering
offices, energy suppliers or even communities
concerned with the enhancement of built heritage
and public funders for assistance for renovation.
the
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the
func
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y
to replace the outright sale by a royalty in the
number of thousands of cuts. The offer included
the supply, sharpening and lubrication of the
blades, as well as training in the proper use of the
equipment. The advantages were shared. For the
customer, constant cut quality, better availability of
machine time, and reduced scrap. For the supplier,
longer blade life, fewer resources consumed, a
positive image of its equipment.
w Areco, manufacturer of nebulisation systems
(spraying a liquid in fine droplets) for the
preservation of fresh produce, a solution with
useful effects for several beneficiaries.
Misuse of the equipment generated food waste,
after-sales service costs increased and customer
dissatisfaction rose: These are major risks in the
face of intense competition. A global solution was
proposed based on the achievement of results. In
addition to the provision of nebulisation systems,
support was given for better management of the
shop's fresh produce and increased attractiveness
of the shelves, information for clients, etc. As a
result, useful effects for all were achieved--such as
a reduction in losses of fresh produce and
increased attractiveness of the shelves for the
shops, in addition to a quality offer for the shop's
customers. Areco optimised its costs through the
eco-design of the material. The supplier's
remuneration was indexed to the attractiveness of
the shop and the reduction of food losses, thus
resulting in an increase in turnover for the shops.
w Totem Mobi, a mobility service provider:
To develop its subscription offer to the network of
self-service electric Twizy vehicles, the start-up
Totem Mobi created a cooperative ecosystem of
local players (Métropole Aix Marseille Provence,
SCNF, Renault, merchants, institutional and
financial partners, departmental employment, etc.).
The useful effects generated include: better
mobility in town centres and suburban areas by
supplementing public transport; possible usage by
vulnerable residents; reduction in congestion, and
improvement in the quality of air in the city.
POSSIBLE BENEFITS
For the enterprises
A competitive advantage: by refocusing the added
value of a transaction on non-material contributions--
understanding of the need, close relationship,
durability and reliability of the relationship--and on a
long-term commitment, the economy of functionality
allows the local offer to stand out.
A boosted activity: the development of the offer of a
functional economy opens up new perspectives in
terms of partnerships and markets.
Optimised management: Functional economy projects
are accompanied by an increase in staff skills and an
increase in the non-material wealth of the enterprise.
It mobilises all the teams, allowing them to be
brought together, motivated and valued.
For the civil society
An eco-citizen approach: the functional economy
helps reduce mass consumption; pushes the move
towards `fair consumption'; supports the
environment; increases local employment and
shortens distances.
Financial savings: the offer of the functional economy
may be more expensive at the start but it is more
economical in the medium- and long-term.
For the communities
A more rational management of public expenditure:
cheaper prices of goods and services which are
adapted to the real needs; and, optimisation of the
costs of operation and maintenance of the assets.
A lever for sustainable local development: public
procurement contributes to the emergence of
innovative and exemplary solutions.
A cooperative, resilient, attractive economy that creates
jobs, innovation, competences and added value.
For the public authorities
More social innovation: by encouraging disruptive
economic models to achieve the ambitious objectives
Right solution to real need
The rental or the subscription can represent a first
commitment in the functional economy only if the
service provider aims for the right answer to the
real need, commits to the production of useful
effects and adheres to a social and / or
environmental approach (examples: more
intensive use of the leased asset, extension of the
asset's lifespan, global eco-design approach,
etc.).
The subscription to an internet pack does not fall
under the functional economy because the offer is
standardised, it is not built on the basis of the
customer's needs and the useful effects expected
(in terms of access to information, culture,
entertainment, etc.)
On the other hand, an offer of clothing rental for
pregnant women, associated with services
producing useful effects for clients is a first step
in the economy of functionality.
the
func
tiona
l eco
nom
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July
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2020
a q
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mag
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27
a q
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mag
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the
soci
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of e
nerg
y en
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and
man
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s / I
ndia
26
July
- S
ep
tem
ber
2020
the
func
tiona
l eco
nom
y
to replace the outright sale by a royalty in the
number of thousands of cuts. The offer included
the supply, sharpening and lubrication of the
blades, as well as training in the proper use of the
equipment. The advantages were shared. For the
customer, constant cut quality, better availability of
machine time, and reduced scrap. For the supplier,
longer blade life, fewer resources consumed, a
positive image of its equipment.
w Areco, manufacturer of nebulisation systems
(spraying a liquid in fine droplets) for the
preservation of fresh produce, a solution with
useful effects for several beneficiaries.
Misuse of the equipment generated food waste,
after-sales service costs increased and customer
dissatisfaction rose: These are major risks in the
face of intense competition. A global solution was
proposed based on the achievement of results. In
addition to the provision of nebulisation systems,
support was given for better management of the
shop's fresh produce and increased attractiveness
of the shelves, information for clients, etc. As a
result, useful effects for all were achieved--such as
a reduction in losses of fresh produce and
increased attractiveness of the shelves for the
shops, in addition to a quality offer for the shop's
customers. Areco optimised its costs through the
eco-design of the material. The supplier's
remuneration was indexed to the attractiveness of
the shop and the reduction of food losses, thus
resulting in an increase in turnover for the shops.
w Totem Mobi, a mobility service provider:
To develop its subscription offer to the network of
self-service electric Twizy vehicles, the start-up
Totem Mobi created a cooperative ecosystem of
local players (Métropole Aix Marseille Provence,
SCNF, Renault, merchants, institutional and
financial partners, departmental employment, etc.).
The useful effects generated include: better
mobility in town centres and suburban areas by
supplementing public transport; possible usage by
vulnerable residents; reduction in congestion, and
improvement in the quality of air in the city.
POSSIBLE BENEFITS
For the enterprises
A competitive advantage: by refocusing the added
value of a transaction on non-material contributions--
understanding of the need, close relationship,
durability and reliability of the relationship--and on a
long-term commitment, the economy of functionality
allows the local offer to stand out.
A boosted activity: the development of the offer of a
functional economy opens up new perspectives in
terms of partnerships and markets.
Optimised management: Functional economy projects
are accompanied by an increase in staff skills and an
increase in the non-material wealth of the enterprise.
It mobilises all the teams, allowing them to be
brought together, motivated and valued.
For the civil society
An eco-citizen approach: the functional economy
helps reduce mass consumption; pushes the move
towards `fair consumption'; supports the
environment; increases local employment and
shortens distances.
Financial savings: the offer of the functional economy
may be more expensive at the start but it is more
economical in the medium- and long-term.
For the communities
A more rational management of public expenditure:
cheaper prices of goods and services which are
adapted to the real needs; and, optimisation of the
costs of operation and maintenance of the assets.
A lever for sustainable local development: public
procurement contributes to the emergence of
innovative and exemplary solutions.
A cooperative, resilient, attractive economy that creates
jobs, innovation, competences and added value.
For the public authorities
More social innovation: by encouraging disruptive
economic models to achieve the ambitious objectives
Right solution to real need
The rental or the subscription can represent a first
commitment in the functional economy only if the
service provider aims for the right answer to the
real need, commits to the production of useful
effects and adheres to a social and / or
environmental approach (examples: more
intensive use of the leased asset, extension of the
asset's lifespan, global eco-design approach,
etc.).
The subscription to an internet pack does not fall
under the functional economy because the offer is
standardised, it is not built on the basis of the
customer's needs and the useful effects expected
(in terms of access to information, culture,
entertainment, etc.)
On the other hand, an offer of clothing rental for
pregnant women, associated with services
producing useful effects for clients is a first step
in the economy of functionality.
the
func
tiona
l eco
nom
ya
qua
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ly m
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ine
of th
e so
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y of
ene
rgy
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rs a
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/ Ind
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of ecological and energy transition; by supporting
sustainable entrepreneurial initiatives.
Environmental opportunities
The functional economy differs from the classic
industrial model, which is based primarily on the
volumes of products sold and consumed. It is a
different logic that leads to real environmental potential:
An eco-efficient offer
w Incomes are dissociated, at least partially, from the
consumption of materials. They rely mainly on the
mobilisation of non-material resources and the
production of useful effects, but also on the
efficient use of material resources.
Competitiveness favors the quality of the offer
rather than the simple notion of cost.
w A paradigm shift for the provider. This economic
shift encourages to undertake a more sustainable
management of material goods. Responsible
practices such as eco-design, robust goods, reuse
and recycling come within the field of reflection.
Consumption that corresponds to the real needs
w Attention given to the "real need" is an incentive for
beneficiaries to change their lifestyles, their
production and purchasing methods to move
towards more sobriety.
w In some cases, the useful effects lead to energy
and material savings for the beneficiary. The
earnings are shared with the provider. Both parties
would therefore have every interest in combining
their efforts to maximize them.
Effects of the environment are better valued
w On a more prospective level, in the case of
cooperation between the supplier and public actors,
the income could come directly from the valuation
of the beneficial effects on the environment and
more generally on society, thus becoming a real
economic driver of the ecological transition.
Case-by-case assessment
The new economic model is environmentally promising.
However, it is necessary to carry out environmental
assessments on concrete cases of business projects.
Trade-offs are necessary for the evaluation of these
projects: short and long-term issues, local and global
effects, environmental impacts and amenities, etc. This
work should make it possible to assess the magnitude
and nature of the societal benefits of approaches to the
economy of functionality and directing them towards
the most relevant scenarios to meet the challenges of
sustainable development.
ADEME's vision
Since 2015, ADEME has worked on the creation of a
forward-looking vision for the realisation of this new
economic model by 2050. This vision shows that a
change in the economic model would bring in new
dynamics in industrial production, housing, food, etc.
Several levers must be operated for effective
deployment:
w development of synergies between the areas of
action of organisations (environment, social,
education, planning, mobility, etc.) to better
support projects,
w support for social innovation,
w development of cooperation,
w transformation of the working practices in
enterprises,
w financing of tangible investments in goods and
intangible investments that become strategic for
the enterprise.
w evolution of consumption towards the `non-
ownership' of goods,
w evaluation of the useful effects, including the social
and environmental value of the projects,
w evolution of the contracting between the service
provider and the customer to base it on the useful
effects produced.
This engaging vision is strategic to meet the environmental
and social challenges of today and tomorrow.
ADEME and other French organisations have already
supported and led several initiatives: awareness-raising
actions, collective support systems for business
leaders, support for individual business projects, action
research workshops, etc. These dynamics are
promising and prepare the economic changes essential
for ecological and social transition.
(Courtesy: ADEME. ADEME is active in the implementation of public
policy in the areas of the environment, energy and sustainable
development. ADEME provides expertise and advisory services to
businesses, local authorities and communities, government bodies and
the public at large, to enable them to establish and consolidate their
environmental action. As part of this work the agency helps finance
projects, from research to implementation, in its areas of action."
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nergy audit of a solar photovoltaic (PV) system Eimplies testing of an installed PV system and
assessment of its performance. A 200 kWp grid-tied
PV plant installed on the rooftop of an educational
institution intended for operation under the net
metering scheme is tested using direct field
measurements. The performance metrics are then
computed and compared with the values in the
manufacturer's data sheet.
System components & specifications
The PV plant has major components as arrays of PV
cells, inverters and underground (UG) cables to
connect to the prosumer's 11 kV/400 V substation. The
200 kWp plant is split into 2 strings, each with 6 PV
arrays connected to a 100 kVA grid tied inverter. Each
array in each string has 48 PV modules in it. The two
inverters are connected to the low tension (LT)
distribution bus in the substation using two parallel
UG cables.
energyauditof a solar PV plant
Sasi K Kottayil & K K Rajan
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measurement of power loss in the interconnecting
cables (iii) measurement of harmonics. Array
efficiency, inverter efficiency and overall system
efficiency are then computed and compared with the
values in the datasheet.
The measured data and computation of efficiency are
presented below.
Instruments used for measurement
Power Quality Analyzer : Fluke 438-II
Solar Irradiance Meter : solar-100
IR Thermometer : Fluke 62 MAX
On-site measurement
1. Measurement on PV array & power
conditioning unit (PCU)
Measurements of irradiance, temperature and electrical
parameters have been carried out on one of the PV
arrays comprising 48 PV modules at two different time
instants and the data are tabulated below. Table 3.1
data is recorded at 11.11 AM under diffused radiation.
It represents a morning or evening scenario. Table 3.2
data is recorded under clear sun. The maximum 2irradiance in a sunny day can be around 1100 W/m .
The product of Vdc and Idc gives the power output of
the PV array.
2. Measurement on AC cable between PCU &
substation
These measurements are meant to assess the power
loss in the two parallel cables between the PV plant
and the substation. Tables of 4.1 and 4.2 have data
on low load (due to low irradiance) and Tables of 4.3
and 4.4 have data on high loading (at an irradiance of 2about 950 W/m .)
The PV module specifications found in the datasheet
are given in Table 1. The PV cells have a generic
characteristic of diminishing efficiency with increasing
temperature. The nominal cell temperature and the
temperature coefficient of rated power specified in the
datasheet are reproduced in Table 2.
Table 1: PV Module Specifications @ STC
Specified Parameters Values
Maximum Power Output (Pmax) 350 W
Voltage at Maximum Power (Vmpp) 38.1 V
Current at Maximum Power (Impp) 9.21 A
Open Circuit Voltage (Voc) 46.39 V
Short Circuit Current (Isc) 9.79 A
Module Efficiency 18%
Table 2. Temperature Coefficients
Nominal Operating Cell
Temperature (NOCT) 47±2 °C
Temperature Coefficient of Voc - 0.35 %/°C
Temperature Coefficient of Isc + 0.05 %/°C
Temperature Coefficient of Pmax - 0.45 %/°C
240 mm2 UG cable has been used for interfacing the
PV system with the substation. Each inverter is of 100
kVA with AC output at 3 phase, 50 Hz, 400 V and
rated DC input of 620 V. One cable is used to connect
each inverter with the substation.
The audit process
The process involves (i) measurement of solar
irradiance and power output of PV array (ii)
2Table 3.1 Array 1@ 578 W/m - Time: 11.10 AM
Solar Module Idc Vdc VRN VYN VBN IR IY IB
Irradiance Temp (A) (V) (V) (V) (V) (A) (A) (A)2 0(W/m ) ( C)
578 62.2 17.5 520 241.02 239.02 240.26 66.5 66.8 67
2Table 3.2 Array 1@1088 W/m - time: 11.36 AM
Solar Module Idc Vdc VRN VYN VBN IR IY IB
Irradiance Temp (A) (V) (V) (V) (V) (A) (A) (A)2 0(W/m ) ( C)
1088 71.2 24.33 482 245.92 243.68 243.26 93.8 93.9 94.3
In all the 4 sets of readings, the currents measured at
the two ends of the same cable differed in the value;
this happened because of the use of two different
meters at the two ends simultaneously. However, the
power meter in the substation and Fluke meter at the
inverter end were checked together before taking the
readings and the values were found matching. The
current values are hence not used in further
computations.
Table 4.1.(A) measurement @ PCU 1-time: 14.40
ID VRN ( V) IR (A) P Total (W) Power Factor Frequency (Hz) PCU 1 Output
Power (W)
INV 1 243.76 22.3 17250 0.97 50.014 17250
Table 4.1(B) measurement @ SS for PCU 1 alone -Time: 14.40
ID VRN ( V) IR (A) P Total (W) Power Factor
INV 1 240.8 24 16800 0.99
Table 4.2 (A) measurement @ PCU 2--time: 14.37
ID VRN ( V) IR (A) P Total (W) Power Factor Frequency (Hz) PCU 2 Output
Power (W)
INV 2 242.9 25.6 18660 0.98 50.011 18660
Table 4.2 (B) measurement @ SS for PCU 2 alone--time: 14.37
ID VRN ( V) IR (A) P Total (W) Power Factor
INV 2 240.9 23.2 17600 0.99
Table 4.3.(A). Measurement @ PCU 1 -Time: 12.04 PM
ID VRN ( V) IR (A) P Total (W) Power Factor Frequency (Hz) PCU 1 Output
Power (W)
INV 1 237.04 46.6 32880 0.99 49.977 32880
Table 4.3 (B) measurement @ SS for PCU 1 alone--time: 12.04 PM
ID VRN ( V) IR (A) P Total (W) Power Factor
INV 1 234 45.6 32000 0.99
Table 4.4 (A) measurement @ PCU 2 --time: 11.45 AM
ID VRN ( V) IR (A) P Total (W) Power Factor Frequency (Hz) PCU 2 Output
Power (W)
INV 2 239.16 54.6 39120 0.99 49.98 39120
Table 4.4 (B) measurement @ SS for PCU 2 alone--time: 11.45 AM
ID VRN ( V) IR (A) P Total (W) Power Factor
INV 2 235 56.8 37600 0.99
3. Harmonics measurements at substation
The solar inverter should be harmonics-free.
Measurements made here are to assess the volume
of harmonic injection by the inverter. Such
measurements and assessment are complex in grid-
tied systems as a snapshot measurement at the point
of common coupling (PCC) will not reveal if the
harmonics injection is from the inverter or from the
local load; it can even be the harmonics-present in
the main grid.
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July
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ener
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aud
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lant
measurement of power loss in the interconnecting
cables (iii) measurement of harmonics. Array
efficiency, inverter efficiency and overall system
efficiency are then computed and compared with the
values in the datasheet.
The measured data and computation of efficiency are
presented below.
Instruments used for measurement
Power Quality Analyzer : Fluke 438-II
Solar Irradiance Meter : solar-100
IR Thermometer : Fluke 62 MAX
On-site measurement
1. Measurement on PV array & power
conditioning unit (PCU)
Measurements of irradiance, temperature and electrical
parameters have been carried out on one of the PV
arrays comprising 48 PV modules at two different time
instants and the data are tabulated below. Table 3.1
data is recorded at 11.11 AM under diffused radiation.
It represents a morning or evening scenario. Table 3.2
data is recorded under clear sun. The maximum 2irradiance in a sunny day can be around 1100 W/m .
The product of Vdc and Idc gives the power output of
the PV array.
2. Measurement on AC cable between PCU &
substation
These measurements are meant to assess the power
loss in the two parallel cables between the PV plant
and the substation. Tables of 4.1 and 4.2 have data
on low load (due to low irradiance) and Tables of 4.3
and 4.4 have data on high loading (at an irradiance of 2about 950 W/m .)
The PV module specifications found in the datasheet
are given in Table 1. The PV cells have a generic
characteristic of diminishing efficiency with increasing
temperature. The nominal cell temperature and the
temperature coefficient of rated power specified in the
datasheet are reproduced in Table 2.
Table 1: PV Module Specifications @ STC
Specified Parameters Values
Maximum Power Output (Pmax) 350 W
Voltage at Maximum Power (Vmpp) 38.1 V
Current at Maximum Power (Impp) 9.21 A
Open Circuit Voltage (Voc) 46.39 V
Short Circuit Current (Isc) 9.79 A
Module Efficiency 18%
Table 2. Temperature Coefficients
Nominal Operating Cell
Temperature (NOCT) 47±2 °C
Temperature Coefficient of Voc - 0.35 %/°C
Temperature Coefficient of Isc + 0.05 %/°C
Temperature Coefficient of Pmax - 0.45 %/°C
240 mm2 UG cable has been used for interfacing the
PV system with the substation. Each inverter is of 100
kVA with AC output at 3 phase, 50 Hz, 400 V and
rated DC input of 620 V. One cable is used to connect
each inverter with the substation.
The audit process
The process involves (i) measurement of solar
irradiance and power output of PV array (ii)
2Table 3.1 Array 1@ 578 W/m - Time: 11.10 AM
Solar Module Idc Vdc VRN VYN VBN IR IY IB
Irradiance Temp (A) (V) (V) (V) (V) (A) (A) (A)2 0(W/m ) ( C)
578 62.2 17.5 520 241.02 239.02 240.26 66.5 66.8 67
2Table 3.2 Array 1@1088 W/m - time: 11.36 AM
Solar Module Idc Vdc VRN VYN VBN IR IY IB
Irradiance Temp (A) (V) (V) (V) (V) (A) (A) (A)2 0(W/m ) ( C)
1088 71.2 24.33 482 245.92 243.68 243.26 93.8 93.9 94.3
In all the 4 sets of readings, the currents measured at
the two ends of the same cable differed in the value;
this happened because of the use of two different
meters at the two ends simultaneously. However, the
power meter in the substation and Fluke meter at the
inverter end were checked together before taking the
readings and the values were found matching. The
current values are hence not used in further
computations.
Table 4.1.(A) measurement @ PCU 1-time: 14.40
ID VRN ( V) IR (A) P Total (W) Power Factor Frequency (Hz) PCU 1 Output
Power (W)
INV 1 243.76 22.3 17250 0.97 50.014 17250
Table 4.1(B) measurement @ SS for PCU 1 alone -Time: 14.40
ID VRN ( V) IR (A) P Total (W) Power Factor
INV 1 240.8 24 16800 0.99
Table 4.2 (A) measurement @ PCU 2--time: 14.37
ID VRN ( V) IR (A) P Total (W) Power Factor Frequency (Hz) PCU 2 Output
Power (W)
INV 2 242.9 25.6 18660 0.98 50.011 18660
Table 4.2 (B) measurement @ SS for PCU 2 alone--time: 14.37
ID VRN ( V) IR (A) P Total (W) Power Factor
INV 2 240.9 23.2 17600 0.99
Table 4.3.(A). Measurement @ PCU 1 -Time: 12.04 PM
ID VRN ( V) IR (A) P Total (W) Power Factor Frequency (Hz) PCU 1 Output
Power (W)
INV 1 237.04 46.6 32880 0.99 49.977 32880
Table 4.3 (B) measurement @ SS for PCU 1 alone--time: 12.04 PM
ID VRN ( V) IR (A) P Total (W) Power Factor
INV 1 234 45.6 32000 0.99
Table 4.4 (A) measurement @ PCU 2 --time: 11.45 AM
ID VRN ( V) IR (A) P Total (W) Power Factor Frequency (Hz) PCU 2 Output
Power (W)
INV 2 239.16 54.6 39120 0.99 49.98 39120
Table 4.4 (B) measurement @ SS for PCU 2 alone--time: 11.45 AM
ID VRN ( V) IR (A) P Total (W) Power Factor
INV 2 235 56.8 37600 0.99
3. Harmonics measurements at substation
The solar inverter should be harmonics-free.
Measurements made here are to assess the volume
of harmonic injection by the inverter. Such
measurements and assessment are complex in grid-
tied systems as a snapshot measurement at the point
of common coupling (PCC) will not reveal if the
harmonics injection is from the inverter or from the
local load; it can even be the harmonics-present in
the main grid.
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Table 5.1 shows data measured at PCC with all
entities connected there. Tables 5.2 and 5.3 show
data measured at PCC without the inverter (one
includes APFC used for power factor improvement
and the other excludes it). Table 5.4 shows data
measured on grid alone.
Table 5.1 grid-tied PV together with APFC and local load (all components connected at PCC)--time: 12.45 PM
VRN (V) IR (A) P Total (W) VA Total (VA) Power Factor Frequency (Hz) THD (%) THD (%)V I
237.72 188.2 133440 133800 1 49.952 3.79 4.64
Table 5.2 grid with Local Load & APFC (PV disconnected)--time: 12.47.15 PM
VRN (V) IR (A) P Total (W) VA Total (VA) Power Factor Frequency (Hz) THD (%) THD (%)V I
230.06 174.5 110160 115860 0.94 49.99 3.16 10.86
Table 5.3 grid with Local Load (APFC & PV disconnected)--time: 12.51.53 PM
VRN (V) IR (A) P Total (W) VA Total (VA) Power Factor Frequency (Hz) THD (%) THD (%)V I
230.76 170.2 105420 117480 0.87 50.035 2.7 8.6
Table 5.4 grid only (local load, APFC & PV disconnected)--time: 12.51.53 PM
VRN (V) IR (A) P Total (W) VA Total (VA) Power Factor Frequency (Hz) THD (%) THD (%)V I
237.87 0.2 0.03 0.13 - 50.111 2.3 -
Calculation of losses & efficiency
This section presents the computation of losses in the
cables as well as efficiencies of all components and
the overall system.
1. AC cable power loss between PV plant & SS
Table 6.1 presents power loss in cable 2 connected
between PCU 2 and substation and Table 6.2. gives
loss in cable 1. The measurements are taken when
Table 6.1 power loss in cable 2 between PCU 2 and substation
INV ID VRN (V) IR (A) Power @ % loading Power @ Power % loss
PCU 2 (W) Substation (W) Loss (W)
2 239.16 54.6 39120 39.1 37600 1520 3.9
Table 6.2 power loss in cable 1 between PCU 1 and substation
INV ID VRN (V) IR (A) Power @ % loading Power @ Power % loss
PCU 1 (W) Substation (W) Loss (W)
1 237.04 46.6 32880 32.9 32000 880 2.6
the irradiance was about 950 W/m2. Percentage
loading of the inverters are also calculated and
presented.
2. Solar PV single array efficiency
Efficiency of one PV array of 48 modules is computed
at the actual irradiance in the field and at the actual
cell temperature. Efficiency values at the two different
irradiance conditions have been computed.
2Table 7.1 solar PV single array efficiency @ 578 W/m (array 1)--time: 11.10 AM
Solar Module PV Total No Total PV I DC V DC PV PV Effici-
Irradiance Temp Module of PV Array (A) (V) Input Output ency 2 0(W/m ) ( C) Area Modules Area Power Power (%)
2 2 (m ) (m ) (W) (W)
578 62.2 1.9404 48 93.1392 17.5 520 53834.458 9100 16.9
Power output of 1 module = 9100/48 = 189 W
2Table 7.2 solar PV single array efficiency @ 1088 W/m (Array 1)--date: 23.11.2019; time: 11.36 AM
Solar Module PV Total No Total PV I DC V DC Input Output Effici-
Irradiance Temp Module of PV Array (A) (V) Power Power ency 2 0(W/m ) ( C) Area Modules Area (W) (W) (%)
2 2 (m ) (m )
1088 71.2 1.9404 48 93.1392 24.33 482 101335.45 11727.06 11.57
Efficiency @ STC (Datasheet) = 18 %
Cell temperature @ STC (Datasheet) = 25 °C
Pmax @ STC (Datasheet) = 350 W
Temperature Coefficient of Pmax (Datasheet) = - 0.45%/°C
Power output of 1 module (measured) = 11727/48 = 244 W
Cell temperature (measured) = 71.2°C
Reduction in Pmax (as per Spec) @71.2°C = 0.45× (71.2 - 25) ×350/100 = 72.76 W
Pmax expected (as per Spec) @71.2°C = 350 - 72.76 = 277 W
Operating efficiency expected (as per Spec) @71.2°C = 277×48/101335 = 13.12%
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Table 5.1 shows data measured at PCC with all
entities connected there. Tables 5.2 and 5.3 show
data measured at PCC without the inverter (one
includes APFC used for power factor improvement
and the other excludes it). Table 5.4 shows data
measured on grid alone.
Table 5.1 grid-tied PV together with APFC and local load (all components connected at PCC)--time: 12.45 PM
VRN (V) IR (A) P Total (W) VA Total (VA) Power Factor Frequency (Hz) THD (%) THD (%)V I
237.72 188.2 133440 133800 1 49.952 3.79 4.64
Table 5.2 grid with Local Load & APFC (PV disconnected)--time: 12.47.15 PM
VRN (V) IR (A) P Total (W) VA Total (VA) Power Factor Frequency (Hz) THD (%) THD (%)V I
230.06 174.5 110160 115860 0.94 49.99 3.16 10.86
Table 5.3 grid with Local Load (APFC & PV disconnected)--time: 12.51.53 PM
VRN (V) IR (A) P Total (W) VA Total (VA) Power Factor Frequency (Hz) THD (%) THD (%)V I
230.76 170.2 105420 117480 0.87 50.035 2.7 8.6
Table 5.4 grid only (local load, APFC & PV disconnected)--time: 12.51.53 PM
VRN (V) IR (A) P Total (W) VA Total (VA) Power Factor Frequency (Hz) THD (%) THD (%)V I
237.87 0.2 0.03 0.13 - 50.111 2.3 -
Calculation of losses & efficiency
This section presents the computation of losses in the
cables as well as efficiencies of all components and
the overall system.
1. AC cable power loss between PV plant & SS
Table 6.1 presents power loss in cable 2 connected
between PCU 2 and substation and Table 6.2. gives
loss in cable 1. The measurements are taken when
Table 6.1 power loss in cable 2 between PCU 2 and substation
INV ID VRN (V) IR (A) Power @ % loading Power @ Power % loss
PCU 2 (W) Substation (W) Loss (W)
2 239.16 54.6 39120 39.1 37600 1520 3.9
Table 6.2 power loss in cable 1 between PCU 1 and substation
INV ID VRN (V) IR (A) Power @ % loading Power @ Power % loss
PCU 1 (W) Substation (W) Loss (W)
1 237.04 46.6 32880 32.9 32000 880 2.6
the irradiance was about 950 W/m2. Percentage
loading of the inverters are also calculated and
presented.
2. Solar PV single array efficiency
Efficiency of one PV array of 48 modules is computed
at the actual irradiance in the field and at the actual
cell temperature. Efficiency values at the two different
irradiance conditions have been computed.
2Table 7.1 solar PV single array efficiency @ 578 W/m (array 1)--time: 11.10 AM
Solar Module PV Total No Total PV I DC V DC PV PV Effici-
Irradiance Temp Module of PV Array (A) (V) Input Output ency 2 0(W/m ) ( C) Area Modules Area Power Power (%)
2 2 (m ) (m ) (W) (W)
578 62.2 1.9404 48 93.1392 17.5 520 53834.458 9100 16.9
Power output of 1 module = 9100/48 = 189 W
2Table 7.2 solar PV single array efficiency @ 1088 W/m (Array 1)--date: 23.11.2019; time: 11.36 AM
Solar Module PV Total No Total PV I DC V DC Input Output Effici-
Irradiance Temp Module of PV Array (A) (V) Power Power ency 2 0(W/m ) ( C) Area Modules Area (W) (W) (%)
2 2 (m ) (m )
1088 71.2 1.9404 48 93.1392 24.33 482 101335.45 11727.06 11.57
Efficiency @ STC (Datasheet) = 18 %
Cell temperature @ STC (Datasheet) = 25 °C
Pmax @ STC (Datasheet) = 350 W
Temperature Coefficient of Pmax (Datasheet) = - 0.45%/°C
Power output of 1 module (measured) = 11727/48 = 244 W
Cell temperature (measured) = 71.2°C
Reduction in Pmax (as per Spec) @71.2°C = 0.45× (71.2 - 25) ×350/100 = 72.76 W
Pmax expected (as per Spec) @71.2°C = 350 - 72.76 = 277 W
Operating efficiency expected (as per Spec) @71.2°C = 277×48/101335 = 13.12%
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3. PCU efficiency
Efficiency of the inverter 1 (PCU 1) is computed here
for two different loading levels. PCU 2 being an
identical model of PCU 1 separate calculation is not
presented.
2Table 8.1 PCU efficiency @ 578 W/m (Inverter 1)--time: 11.10 AM
Solar I DC VDC Input VRN VYN VBN IR IY IB
Irradiance (A) (V) Power (V) (V) (V) (A) (A) (A)2(W/m ) To PCU (W)
578 17.5 520 54506.25 241.02 239.02 240.26 66.5 66.8 67
PR (W) PY (W) PB (W) P Total (W) Power Factor Efficiency (%)
15900 15880 15960 47940 0.99 87.95
2Table 8.2 PCU efficiency @ 1088 W/m (Inverter 1) time: 11.36 AM
Solar I DC VDC Input VRN VYN VBN IR IY IB
Irradiance (A) (V) Power (V) (V) (V) (A) (A) (A)2(W/m ) To PCU (W)
1088 24.33 482 69629.41 245.92 243.68 243.26 93.8 93.9 94.3
PR (W) PY (W) PB (W) P Total (W) Power Factor Efficiency (%)
23020 22820 22880 68940 1 99
4. Overall efficiency
Overall efficiency of one string has been computed
and presented here. Performance of the other string
is identical.
2 Table 9.1 overall efficiency @ 578 W/m
Solar Module PV Input Active Active Active Active Efficiency
Irradiance Temp Power Power Power Power Power (%)2 0(W/m ) ( C) (W) L (W) L (W) L (W) Total (W)1n 2n 3n
578 62.2 319642.092 15900 15880 15960 47740 14.93
2 Table 9.2 overall efficiency @1088 W/m
Solar Module PV Input Active Active Active Active Efficiency
Irradiance Temp Power Power Power Power Power (%)2 0(W/m ) ( C) (W) L (W) L (W) L (W) Total (W)1n 2n 3n
1088 71.2 601679.232 23020 22820 22880 68720 11.42
Test Results
Table 10 summary of test results
S. Parameters Measured Expected Remarks
No. Value value as per
Datasheet
1 PV array efficiency
I Efficiency @ irradiance 16.9% -- Value is not available2 of 578 W/m in datasheet
Ii Efficiency @ irradiance of 11.57% 13.12% 12% deviation from2 1088 W/m datasheet value
2 Inverter efficiency
I Inverter 1 @69% load 99% 98.2% Better than datasheet value
Ii Inverter 1 @48% load 88% -- --
3 Power Transfer Loss
I Cable 1 power loss @ 39% loading 1520 W (3.9%) 1547 W At par with datasheet value
Ii Cable 2 power loss @ 33% loading 880 W (2.6%) 1127 W Better than datasheet value
4 Harmonics during the test period
I Grid voltage harmonics (THD ) 2.3% Shows harmonics present V
@PCC without load and PV in the grid
Ii Harmonics @PCC with load and THD = 2.7% Local load has someV
without PV & APFC THD = 8.6% harmonicsI
Iii Harmonics @PCC with load & THD = 3.16% APFC increases harmonicsV
APFC and without PV THD = 10.86%I
iv Harmonics @PCC with load, THD = 3.79% THD < 5% PV contributes littleV V
APFC and PV THD = 4.64% THD < 8% harmonics, but within I I
permissible limits
5 Overall efficiency
2 I Overall system efficiency @578 W/m 14.9%
2ii Overall system efficiency @1088 W/m 11.42%
Observations and recommendations
1. PV array efficiency is good as per generally
expected commercial standards, but is lower than
the value in datasheet.
2. Inverter efficiency is excellent.
3. Cable power loss can be ignored at higher
generation.
4. Though the installed PV injects little harmonics, it
is negligibly small.
5. The power factor at substation oscillates with
change in inverter output (caused by change in
irradiance like cloud passing) owing to delayed
APFC correction. It is caused by the present
interconnection scheme of PV inverter, transformer
and distribution feeders in substation, as
explained by the electrical phasor diagram in Fig
1. This may influence the average power factor
measured in utility meter and it may invite small
penalty. The problem can be avoided if the inverter
is connected at the transformer end of the main
distribution bus in the substation and the CT of
APFC is connected on the same bus between the
inverter node and the first load feeder node, as
shown in Fig 2.
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3. PCU efficiency
Efficiency of the inverter 1 (PCU 1) is computed here
for two different loading levels. PCU 2 being an
identical model of PCU 1 separate calculation is not
presented.
2Table 8.1 PCU efficiency @ 578 W/m (Inverter 1)--time: 11.10 AM
Solar I DC VDC Input VRN VYN VBN IR IY IB
Irradiance (A) (V) Power (V) (V) (V) (A) (A) (A)2(W/m ) To PCU (W)
578 17.5 520 54506.25 241.02 239.02 240.26 66.5 66.8 67
PR (W) PY (W) PB (W) P Total (W) Power Factor Efficiency (%)
15900 15880 15960 47940 0.99 87.95
2Table 8.2 PCU efficiency @ 1088 W/m (Inverter 1) time: 11.36 AM
Solar I DC VDC Input VRN VYN VBN IR IY IB
Irradiance (A) (V) Power (V) (V) (V) (A) (A) (A)2(W/m ) To PCU (W)
1088 24.33 482 69629.41 245.92 243.68 243.26 93.8 93.9 94.3
PR (W) PY (W) PB (W) P Total (W) Power Factor Efficiency (%)
23020 22820 22880 68940 1 99
4. Overall efficiency
Overall efficiency of one string has been computed
and presented here. Performance of the other string
is identical.
2 Table 9.1 overall efficiency @ 578 W/m
Solar Module PV Input Active Active Active Active Efficiency
Irradiance Temp Power Power Power Power Power (%)2 0(W/m ) ( C) (W) L (W) L (W) L (W) Total (W)1n 2n 3n
578 62.2 319642.092 15900 15880 15960 47740 14.93
2 Table 9.2 overall efficiency @1088 W/m
Solar Module PV Input Active Active Active Active Efficiency
Irradiance Temp Power Power Power Power Power (%)2 0(W/m ) ( C) (W) L (W) L (W) L (W) Total (W)1n 2n 3n
1088 71.2 601679.232 23020 22820 22880 68720 11.42
Test Results
Table 10 summary of test results
S. Parameters Measured Expected Remarks
No. Value value as per
Datasheet
1 PV array efficiency
I Efficiency @ irradiance 16.9% -- Value is not available2 of 578 W/m in datasheet
Ii Efficiency @ irradiance of 11.57% 13.12% 12% deviation from2 1088 W/m datasheet value
2 Inverter efficiency
I Inverter 1 @69% load 99% 98.2% Better than datasheet value
Ii Inverter 1 @48% load 88% -- --
3 Power Transfer Loss
I Cable 1 power loss @ 39% loading 1520 W (3.9%) 1547 W At par with datasheet value
Ii Cable 2 power loss @ 33% loading 880 W (2.6%) 1127 W Better than datasheet value
4 Harmonics during the test period
I Grid voltage harmonics (THD ) 2.3% Shows harmonics present V
@PCC without load and PV in the grid
Ii Harmonics @PCC with load and THD = 2.7% Local load has someV
without PV & APFC THD = 8.6% harmonicsI
Iii Harmonics @PCC with load & THD = 3.16% APFC increases harmonicsV
APFC and without PV THD = 10.86%I
iv Harmonics @PCC with load, THD = 3.79% THD < 5% PV contributes littleV V
APFC and PV THD = 4.64% THD < 8% harmonics, but within I I
permissible limits
5 Overall efficiency
2 I Overall system efficiency @578 W/m 14.9%
2ii Overall system efficiency @1088 W/m 11.42%
Observations and recommendations
1. PV array efficiency is good as per generally
expected commercial standards, but is lower than
the value in datasheet.
2. Inverter efficiency is excellent.
3. Cable power loss can be ignored at higher
generation.
4. Though the installed PV injects little harmonics, it
is negligibly small.
5. The power factor at substation oscillates with
change in inverter output (caused by change in
irradiance like cloud passing) owing to delayed
APFC correction. It is caused by the present
interconnection scheme of PV inverter, transformer
and distribution feeders in substation, as
explained by the electrical phasor diagram in Fig
1. This may influence the average power factor
measured in utility meter and it may invite small
penalty. The problem can be avoided if the inverter
is connected at the transformer end of the main
distribution bus in the substation and the CT of
APFC is connected on the same bus between the
inverter node and the first load feeder node, as
shown in Fig 2.
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V: grid voltage; I : load current; I : active component L d
of I ; I : reactive component of I ; I & I : current L q L dT qT
components drawn from grid in the presence of PV
generation; IT: Line current drawn from grid in the
presence of PV generation (it has a high power factor
angle).
Fig. 2: Required connection at substation
6. Present loading of inverters is only up to 70% as
the rated capacities of PV array and inverter are
equal. The actual required inverter capacity is less
than kWp rating of the PV array. The developer
could have chosen a lower-size inverter. Else,
extra PV array of about 50 kWp can be added
without overloading the present inverters and
Fig. 1: Phasor diagram of voltage and currents in the present scenario
cable as the substation transformer capacity is
315 kVA.
Conclusion
The energy audit shall consider the financial aspects
too - like capital investment, maintenance cost,
saving in utility electricity bill, etc. However, it is kept
out of the scope of this article as the purpose of this
article is only to present the technical aspects.
Optimum sizing of the plant based on the energy
demand profile of the prosumer is yet another aspect
not discussed here.
Dr. Sasi K Kottayil is editorial
adviser to Energyh Manager. He is
currently adjunct professor in the
Department of Energy at Tezpur
University, Tezpur, Assam. Contact:
Dr. K. K. Rajan is principal,
Viswajyothi College of Engineering
and Technology, Muvattupuzha,
Kerala. He also serves as
independent director and member,
board of directors, Nuclear Power
Corporation of India Ltd.
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best practices in compressed air system –an energy conservation approach
A Santhosh Compressed air is referred to
as the fourth fuel in many
industries, but a low system
efficiency often causes high
operational cost. Improving
pneumatic system efficiency
will yield significant energy and
cost savings, the article argues.
bes
t pra
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es in
co
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ress
ed a
ir sy
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– a
n en
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y co
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vatio
n ap
pro
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bes
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co
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ir sy
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– a
n en
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vatio
n ap
pro
ach
Compressed air is one of the most expensive utilities
in an industrial unit; and, also the least energy-
efficient system
Compressed air systems vary in applications, which
range from pneumatic operations to cleaning,
process and process instrumentation controls. A
professional energy auditor needs to analyse the
performance of the compressed air system--in its
generation, distribution and application in industrial
utilities. The auditor has to take a holistic view of the
industry, its engineering practices and its processes.
The engineering practices and the process air
requirement of the industrial unit are identified during
a walk-through audit in the plant. In the audit process,
which includes interviews with the personnel in the
maintenance and process sections, the auditor gets
an idea of the current operation of the compressed air
system as well as the possible energy-saving
measures. This can be substantiated by taking
suitable measurements in the compressor system.
The measurements start from the location of the
compressor house (as the compressors are generally
installed in the compressor house), air dryers,
receivers, distribution system and the process usage
areas.
The common faults in a compressor system are:
leakage, improper distribution, inappropriate location
of compressor, wrong selection of compressor type,
etc. Interventions and remedial measures in these
and more cases have been presented below.
1. Leakage
Caution against leakage of compressed air is
important in an industrial compressed air system.
Leaks will cause many disturbances in the system
such as demand for additional generation capacity for
maintaining leak, pressure drop in the piping, and
time lag in the process that uses the compressed air.
All these contribute to wastage of energy and
increase in maintenance cost. Often 30% to 40% of
the compressed air goes as waste (the allowable limit
is 10%)
The following measures can help:
a) conduct leakage tests in the compressor piping
periodically and identify leakage points,
b) identify the operation hours of the air compressor
on a daily basis and correlate these schedules of
production or use. This will help understanding of
leakage profile in the system.
c) use welded joints (instead of screw or flange
joints), proper valves and couplings.
Case study - Leakage reduction
In the energy audit conducted in an electronics
hardware manufacturing company, we found many
assembly lines with such equipment as stamping
machines and CNC machines operating in an air-
conditioned environment. All these had actuators and
cylinders that work with pneumatic system. Since
there was no separate isolation valves in the
assembly lines, we had to conduct the leakage test
during shutdown. We found that the compressor air
flow was 400 cfm and the system was running only for
catering to the leaks. The result: energy wastage
through the compressor; and, an increase in the air-
conditioning load on the assembly line.
We recommended to the management: (i) carry out
leakage test at least once a month (ii) set up isolation
valve in each assembly line (iii) set up visible
pressure gauge in each line at its user end.
More than 2 lakh kWh of energy has been saved by
attending to the leakages and also through the
modifications we recommended. The air-conditioning
load came down drastically which is reflected in the
reduction in generated pressure in the plant room; the
corresponding energy saving is around 1.5 lakh kWh
annually.
2. Improper distribution piping
The compressed air piping starts from the
compressor and runs through the receiver and air
dryer up to the points of use. The compressed air is
to be delivered at the points of use with sufficient
volume, pressure and quality. It is important from the
energy conservation point of view that good
engineering practices are to be adopted for the
piping. There have been several cases of industries
which had initially designed the compressed air
system very well, but failed to comply with the
compressed fluid piping standards when they later
expanded or increased the usage of compressed air.
Improper piping leads to pressure drop, insufficient
flow and other process-related problems.
Here are a few observations about the compressed
air distribution.
w In certain industrial units the process air and
instrument air are taken from a common header;
open and closed circuits of air are taken from the
same header. Purging air bag filters is an example
where the process air and purging air are taken
from a common header. As a result, there is
fluctuation or pressure drop in the system at the
time of purging.
w Sizing of pipelines connecting the compressor to
the receiver, then to the air dryer and up to the
common header is underdone in many areas. This
leads to pressure drop in the system.
w Correct engineering practices are not followed
while fixing fittings, valves, pipe flanges, gaskets,
etc.
The Interventions required for energy saving in piping
are listed below.
1. Design oversize compressed air piping; this will
reduce the pressure. Provide buffer receiver for
closed loop circuit with non-return valve towards the
receiver for catering to the air pressure disturbances.
2. Adopt corrosion-resistant piping to avoid corrosion
as well as pressure drop due to corrosion.
3. The maximum velocity of compressed air is
normally designed as 6 m/s for long lines; but 20 m/s
is acceptable if the maximum length of distribution
piping is 8m.
4. Provide direct lines to large end-users in the
compressed air system.
3. Poor location of compressor
The location of a utility is normally determined by the
shortest distance to the major end consumers such
as a process or the usage areas. Alternatively, utilities
like boiler, compressor house, and chiller cooling
tower are located in the same place and the
distribution to the usage areas is done through a
piping network--this facilitates easy maintenance.
Each of these has advantages and disadvantages.
The auditors and the utility personnel should take a
holistic view of the plant and the usage pattern of the
utilities. From the perspective of energy conservation,
the compressor house has to be located close to the
usage areas.
Here are some of the common issues associated with
compressor location.
1. The compressor house is a closed room and
hence the inside temperature is much higher than the
outside temperature.
Remedy: Make sure that the compressor has ample
ventilation so that the inside temperature as well as
the suction temperature of the air intake stays normal.
2. The compressor is located on rooftop with all its
bes
t pra
ctic
es in
co
mp
ress
ed a
ir sy
stem
– a
n en
erg
y co
nser
vatio
n ap
pro
ach
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
39
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
38
July
- S
ep
tem
ber
2020
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ach
Compressed air is one of the most expensive utilities
in an industrial unit; and, also the least energy-
efficient system
Compressed air systems vary in applications, which
range from pneumatic operations to cleaning,
process and process instrumentation controls. A
professional energy auditor needs to analyse the
performance of the compressed air system--in its
generation, distribution and application in industrial
utilities. The auditor has to take a holistic view of the
industry, its engineering practices and its processes.
The engineering practices and the process air
requirement of the industrial unit are identified during
a walk-through audit in the plant. In the audit process,
which includes interviews with the personnel in the
maintenance and process sections, the auditor gets
an idea of the current operation of the compressed air
system as well as the possible energy-saving
measures. This can be substantiated by taking
suitable measurements in the compressor system.
The measurements start from the location of the
compressor house (as the compressors are generally
installed in the compressor house), air dryers,
receivers, distribution system and the process usage
areas.
The common faults in a compressor system are:
leakage, improper distribution, inappropriate location
of compressor, wrong selection of compressor type,
etc. Interventions and remedial measures in these
and more cases have been presented below.
1. Leakage
Caution against leakage of compressed air is
important in an industrial compressed air system.
Leaks will cause many disturbances in the system
such as demand for additional generation capacity for
maintaining leak, pressure drop in the piping, and
time lag in the process that uses the compressed air.
All these contribute to wastage of energy and
increase in maintenance cost. Often 30% to 40% of
the compressed air goes as waste (the allowable limit
is 10%)
The following measures can help:
a) conduct leakage tests in the compressor piping
periodically and identify leakage points,
b) identify the operation hours of the air compressor
on a daily basis and correlate these schedules of
production or use. This will help understanding of
leakage profile in the system.
c) use welded joints (instead of screw or flange
joints), proper valves and couplings.
Case study - Leakage reduction
In the energy audit conducted in an electronics
hardware manufacturing company, we found many
assembly lines with such equipment as stamping
machines and CNC machines operating in an air-
conditioned environment. All these had actuators and
cylinders that work with pneumatic system. Since
there was no separate isolation valves in the
assembly lines, we had to conduct the leakage test
during shutdown. We found that the compressor air
flow was 400 cfm and the system was running only for
catering to the leaks. The result: energy wastage
through the compressor; and, an increase in the air-
conditioning load on the assembly line.
We recommended to the management: (i) carry out
leakage test at least once a month (ii) set up isolation
valve in each assembly line (iii) set up visible
pressure gauge in each line at its user end.
More than 2 lakh kWh of energy has been saved by
attending to the leakages and also through the
modifications we recommended. The air-conditioning
load came down drastically which is reflected in the
reduction in generated pressure in the plant room; the
corresponding energy saving is around 1.5 lakh kWh
annually.
2. Improper distribution piping
The compressed air piping starts from the
compressor and runs through the receiver and air
dryer up to the points of use. The compressed air is
to be delivered at the points of use with sufficient
volume, pressure and quality. It is important from the
energy conservation point of view that good
engineering practices are to be adopted for the
piping. There have been several cases of industries
which had initially designed the compressed air
system very well, but failed to comply with the
compressed fluid piping standards when they later
expanded or increased the usage of compressed air.
Improper piping leads to pressure drop, insufficient
flow and other process-related problems.
Here are a few observations about the compressed
air distribution.
w In certain industrial units the process air and
instrument air are taken from a common header;
open and closed circuits of air are taken from the
same header. Purging air bag filters is an example
where the process air and purging air are taken
from a common header. As a result, there is
fluctuation or pressure drop in the system at the
time of purging.
w Sizing of pipelines connecting the compressor to
the receiver, then to the air dryer and up to the
common header is underdone in many areas. This
leads to pressure drop in the system.
w Correct engineering practices are not followed
while fixing fittings, valves, pipe flanges, gaskets,
etc.
The Interventions required for energy saving in piping
are listed below.
1. Design oversize compressed air piping; this will
reduce the pressure. Provide buffer receiver for
closed loop circuit with non-return valve towards the
receiver for catering to the air pressure disturbances.
2. Adopt corrosion-resistant piping to avoid corrosion
as well as pressure drop due to corrosion.
3. The maximum velocity of compressed air is
normally designed as 6 m/s for long lines; but 20 m/s
is acceptable if the maximum length of distribution
piping is 8m.
4. Provide direct lines to large end-users in the
compressed air system.
3. Poor location of compressor
The location of a utility is normally determined by the
shortest distance to the major end consumers such
as a process or the usage areas. Alternatively, utilities
like boiler, compressor house, and chiller cooling
tower are located in the same place and the
distribution to the usage areas is done through a
piping network--this facilitates easy maintenance.
Each of these has advantages and disadvantages.
The auditors and the utility personnel should take a
holistic view of the plant and the usage pattern of the
utilities. From the perspective of energy conservation,
the compressor house has to be located close to the
usage areas.
Here are some of the common issues associated with
compressor location.
1. The compressor house is a closed room and
hence the inside temperature is much higher than the
outside temperature.
Remedy: Make sure that the compressor has ample
ventilation so that the inside temperature as well as
the suction temperature of the air intake stays normal.
2. The compressor is located on rooftop with all its
bes
t pra
ctic
es in
co
mp
ress
ed a
ir sy
stem
– a
n en
erg
y co
nser
vatio
n ap
pro
ach
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
41
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
40
July
- S
ep
tem
ber
2020
bes
t pra
ctic
es in
co
mp
ress
ed a
ir sy
stem
– a
n en
erg
y co
nser
vatio
n ap
pro
ach
sides open; hence, rain and wind impact the suction
intake of the compressor.
Remedy: Leave sufficient space around the
compressor and put up plastic protection sheets
that cover at least 30% of the compressor house's top
so that direct raining on the compressor house can
be avoided. Rainwater harvesting using PVC piping
on the roof is good idea. Further, a canopy can take
care of the suction filter.
3. The compressor house is located close to the
cooling tower and hence humidity in the ambience is
high. High humidity leads to high moisture in the air
intake which then lowers the effectiveness of the air
dryer and causes corrosion in the connected
pneumatic systems.
Remedy: Either locate the cooling tower away from
the compressor house or fully cover the compressor
house on the side that faces the cooling tower.
4. The compressor house is exposed to vehicular
traffic, dust, acid/ corrosive fumes or vent areas. For
every increase of 250 mmWC pressure drop, the
power consumption increases by 2%.
Remedy: Curtail entry to the compressor house from
the main road or from the vent area or from the
process plant. This will avoid direct entry of dust or
fumes into the compressor house.
5. Hot air from the air dryer or from the screw/scroll
compressor percolates to the air compressor suction.
There is no proper ventilation in the compressor
house to remove the hot air from the dryer or from the
compressor. Every 4C rise in suction air temperature
increases the power consumption by 1%.
Remedy: Set up a duct to siphon off the hot air.
6. Insufficient space for cleaning the heat exchangers
or for routine maintenance of the compressor
systems.
Remedy: Provide sufficient space around the
compressor.
Case study: Modification in location of air dryer
We found in a plant that the hot air from the screw
compressor passed through the air dryer (air dryer is
to remove moisture content of the air), then through
the receiver and then to the plant. This caused: (i)
moisture deposits in the actuator and the control
diaphragms (ii) corrosion in piping and instruments.
We changed the air dryer connection as shown in Fig
1, following which the air dryer performed effectively
with no moisture carryover to the system. This
resulted in huge savings in the maintenance cost of
the instruments.
Fig 1. Wrong connection of air dryer in compressor system and the
proposed modification
4. Selection of compressors
Selection of the right type of compressor for a project
depends on how the project intends to replace old
compressors, as expansion or increase in air
requirement in the process depends on many factors.
Three main factors determine the selection: the
capacity or volume required, the pressure required for
different streams and the air quality requirement of
the different streams.
Here are some tips:
w If the volume requirement of the system is very
low, then it is better to select reciprocating
compressor; but if there is problem with noise, go
for screw compressors.
w For volumes up to 4000 cfm, it is economical to
select screw or scroll compressors with VFD drive
if the atmosphere is less corrosive or dust and
moisture levels are low and there is sufficient
space for ventilation.
w Above 4000 cfm, centrifugal compressor is
effective and energy-efficient.
In case of replacement, the following tasks need to
be carried out before taking a decision:
1. Conduct a compressed air audit in the plant to
find out the losses in the pneumatic systems and
to assess the performance of the existing
compressor as well as the possibilities of
improvement.
2. Identify the air streams in the plant in terms of
volume, pressure and air quality. Air quality
depends on the purpose at the user end--whether
it is used as breathing air in hospitals, for
ventilation in certain buildings or plants, directly in
process like sand blasting, spray painting,
assembly lines of electronics, cleaning, etc., as
instrument air for laboratories, in powder coating,
as actuators in pneumatic control instruments,
control valves, cylinders, etc. or for plant air for
multiple requirements.
3. An air generation and distribution diagram has to
be drawn up with all details such as piping size,
fitting and mounting details, air requirement and
pressure.
Case study: Compressor replacement
While auditing the pneumatic system in a company
that used two streams of compressed air in a
common compressor, We noticed that 60% of the air
at 11 bar was used in a nitrogen production plant
while 40% was used in other utilities at 8.5 bar
pressure, whereas the compressors were running at
11.5 bar. We proposed to run the compressor at a
base value of 8.5 bar and suggested an additional
booster compressor for increasing the pressure to 11
bar for the nitrogen plant. This operated as two
streams of compressed air and saved energy to the
tune of 3 lakhs units per annum.
bes
t pra
ctic
es in
co
mp
ress
ed a
ir sy
stem
– a
n en
erg
y co
nser
vatio
n ap
pro
ach
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
41
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
40
July
- S
ep
tem
ber
2020
bes
t pra
ctic
es in
co
mp
ress
ed a
ir sy
stem
– a
n en
erg
y co
nser
vatio
n ap
pro
ach
sides open; hence, rain and wind impact the suction
intake of the compressor.
Remedy: Leave sufficient space around the
compressor and put up plastic protection sheets
that cover at least 30% of the compressor house's top
so that direct raining on the compressor house can
be avoided. Rainwater harvesting using PVC piping
on the roof is good idea. Further, a canopy can take
care of the suction filter.
3. The compressor house is located close to the
cooling tower and hence humidity in the ambience is
high. High humidity leads to high moisture in the air
intake which then lowers the effectiveness of the air
dryer and causes corrosion in the connected
pneumatic systems.
Remedy: Either locate the cooling tower away from
the compressor house or fully cover the compressor
house on the side that faces the cooling tower.
4. The compressor house is exposed to vehicular
traffic, dust, acid/ corrosive fumes or vent areas. For
every increase of 250 mmWC pressure drop, the
power consumption increases by 2%.
Remedy: Curtail entry to the compressor house from
the main road or from the vent area or from the
process plant. This will avoid direct entry of dust or
fumes into the compressor house.
5. Hot air from the air dryer or from the screw/scroll
compressor percolates to the air compressor suction.
There is no proper ventilation in the compressor
house to remove the hot air from the dryer or from the
compressor. Every 4C rise in suction air temperature
increases the power consumption by 1%.
Remedy: Set up a duct to siphon off the hot air.
6. Insufficient space for cleaning the heat exchangers
or for routine maintenance of the compressor
systems.
Remedy: Provide sufficient space around the
compressor.
Case study: Modification in location of air dryer
We found in a plant that the hot air from the screw
compressor passed through the air dryer (air dryer is
to remove moisture content of the air), then through
the receiver and then to the plant. This caused: (i)
moisture deposits in the actuator and the control
diaphragms (ii) corrosion in piping and instruments.
We changed the air dryer connection as shown in Fig
1, following which the air dryer performed effectively
with no moisture carryover to the system. This
resulted in huge savings in the maintenance cost of
the instruments.
Fig 1. Wrong connection of air dryer in compressor system and the
proposed modification
4. Selection of compressors
Selection of the right type of compressor for a project
depends on how the project intends to replace old
compressors, as expansion or increase in air
requirement in the process depends on many factors.
Three main factors determine the selection: the
capacity or volume required, the pressure required for
different streams and the air quality requirement of
the different streams.
Here are some tips:
w If the volume requirement of the system is very
low, then it is better to select reciprocating
compressor; but if there is problem with noise, go
for screw compressors.
w For volumes up to 4000 cfm, it is economical to
select screw or scroll compressors with VFD drive
if the atmosphere is less corrosive or dust and
moisture levels are low and there is sufficient
space for ventilation.
w Above 4000 cfm, centrifugal compressor is
effective and energy-efficient.
In case of replacement, the following tasks need to
be carried out before taking a decision:
1. Conduct a compressed air audit in the plant to
find out the losses in the pneumatic systems and
to assess the performance of the existing
compressor as well as the possibilities of
improvement.
2. Identify the air streams in the plant in terms of
volume, pressure and air quality. Air quality
depends on the purpose at the user end--whether
it is used as breathing air in hospitals, for
ventilation in certain buildings or plants, directly in
process like sand blasting, spray painting,
assembly lines of electronics, cleaning, etc., as
instrument air for laboratories, in powder coating,
as actuators in pneumatic control instruments,
control valves, cylinders, etc. or for plant air for
multiple requirements.
3. An air generation and distribution diagram has to
be drawn up with all details such as piping size,
fitting and mounting details, air requirement and
pressure.
Case study: Compressor replacement
While auditing the pneumatic system in a company
that used two streams of compressed air in a
common compressor, We noticed that 60% of the air
at 11 bar was used in a nitrogen production plant
while 40% was used in other utilities at 8.5 bar
pressure, whereas the compressors were running at
11.5 bar. We proposed to run the compressor at a
base value of 8.5 bar and suggested an additional
booster compressor for increasing the pressure to 11
bar for the nitrogen plant. This operated as two
streams of compressed air and saved energy to the
tune of 3 lakhs units per annum.
bes
t pra
ctic
es in
co
mp
ress
ed a
ir sy
stem
– a
n en
erg
y co
nser
vatio
n ap
pro
ach
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
43
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
42
July
- S
ep
tem
ber
2020
bes
t pra
ctic
es in
co
mp
ress
ed a
ir sy
stem
– a
n en
erg
y co
nser
vatio
n ap
pro
ach
5. Lack of monitoring operational parameters
In most industrial units, there is no proper monitoring
of the parameters, which decide the performance of
the compressor systems. Only the oil pressure and
the receiver pressure are recorded in the log sheet
whereas other parameters (like atmospheric
Fig 2. The air compressor scheme before modification
Fig 3. The modification proposed for air compressor scheme
temperature, inlet cooling temperature, outlet cooling
temperature at intercooler and after the cooler,
cooling water pressures at the inlet and the outlet
after the coolers, inlet and outlet air temperatures at
inlet and outlet of the inter cooler and after the
coolers, running time of each compressor, etc.) are
usually ignored. The temperatures and pressures of
cooling water and air give indications of performance
of heat exchangers, scaling, variation in water flows
and performance deterioration of compressors. Often,
the log sheet entry in the compressor house is treated
casually by operators and supervisors or engineers
who sign the log sheet. Most of the measuring
instruments in compressor house are dysfunctional.
This negligence shows the lack of awareness about
importance of log sheet data. Operators and
supervisors should know how to analyse the log sheet
data in order to help maintenance and to detect
performance deterioration of compressors.
6. Proper use of controls
The controls provided in a compressor system fall
into two groups: those for system safety and those
for operation. The flow switch or cooling water
pressure switch and oil pressure switches are in the
safety group whereas pressure switches for unloading
(which can also be considered for safety), pressure
sensors for compressor speed variation by VFD, auto
drain taps for removing moisture from receivers,
moisture separators, etc. are in the operational group.
Controls can be incorporated with PLC if multiple
compressors are connected with the same header,
but having different loads at the user side. PLC can
be programmed to decide which compressor has to
run and connect as per the demand based on inputs
from the flow sensors in the main header.
7. Optimal use of compressed air
There is excess supply of air in most cases owing to
the extra size of outlets such as nozzles, or due to
pressure range settings that are higher than required.
Wherever there is a possibility of direct use of open
air (like open process air for vessel, mixing or
reduction by air, cleaning or ventilation for safe entry
to vessel, etc.), compressed air should be avoided.
The following are recommendations for reduced use
of compressed air:
w Understand the purpose of air in the process or in
the plant; also, its requirements like pressure,
flow and time intervals.
w Find alternatives to compressed air--such as
electric tools instead of pneumatic tools--blowers
for agitation, mixing, cleaning of materials, etc.
w Find out the major usage areas and minor usage
areas and put controls in place accordingly.
w Look for air pressure reduction possibilities in
areas of process and end use.
w Ring main distribution will provide continuous flow
and pressure in all areas; provide buffer storage
tanks to facilitate continuous supply of air without
any variation in air pressure.
8. Segregation of air streams
Segregation of air streams should be based on
requirements of air volume, pressure and quality.
Separate piping is required for different requirements
of pressure and quality normally - e.g. high pressure,
low pressure and instrument air. Use of baseline
compressor in the main system and use of booster
compressor for meeting high pressure requirement in
specific end use will save energy. Segregation
facilitates extra operational controls and thus
optimisation of air usage in the process.
A Santhosh, a BEE-accredited
energy auditor, is the managing
director of Athul Energy Consultants
Private Limited, Thrissur, Kerala.
bes
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ctic
es in
co
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ress
ed a
ir sy
stem
– a
n en
erg
y co
nser
vatio
n ap
pro
ach
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
43
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
42
July
- S
ep
tem
ber
2020
bes
t pra
ctic
es in
co
mp
ress
ed a
ir sy
stem
– a
n en
erg
y co
nser
vatio
n ap
pro
ach
5. Lack of monitoring operational parameters
In most industrial units, there is no proper monitoring
of the parameters, which decide the performance of
the compressor systems. Only the oil pressure and
the receiver pressure are recorded in the log sheet
whereas other parameters (like atmospheric
Fig 2. The air compressor scheme before modification
Fig 3. The modification proposed for air compressor scheme
temperature, inlet cooling temperature, outlet cooling
temperature at intercooler and after the cooler,
cooling water pressures at the inlet and the outlet
after the coolers, inlet and outlet air temperatures at
inlet and outlet of the inter cooler and after the
coolers, running time of each compressor, etc.) are
usually ignored. The temperatures and pressures of
cooling water and air give indications of performance
of heat exchangers, scaling, variation in water flows
and performance deterioration of compressors. Often,
the log sheet entry in the compressor house is treated
casually by operators and supervisors or engineers
who sign the log sheet. Most of the measuring
instruments in compressor house are dysfunctional.
This negligence shows the lack of awareness about
importance of log sheet data. Operators and
supervisors should know how to analyse the log sheet
data in order to help maintenance and to detect
performance deterioration of compressors.
6. Proper use of controls
The controls provided in a compressor system fall
into two groups: those for system safety and those
for operation. The flow switch or cooling water
pressure switch and oil pressure switches are in the
safety group whereas pressure switches for unloading
(which can also be considered for safety), pressure
sensors for compressor speed variation by VFD, auto
drain taps for removing moisture from receivers,
moisture separators, etc. are in the operational group.
Controls can be incorporated with PLC if multiple
compressors are connected with the same header,
but having different loads at the user side. PLC can
be programmed to decide which compressor has to
run and connect as per the demand based on inputs
from the flow sensors in the main header.
7. Optimal use of compressed air
There is excess supply of air in most cases owing to
the extra size of outlets such as nozzles, or due to
pressure range settings that are higher than required.
Wherever there is a possibility of direct use of open
air (like open process air for vessel, mixing or
reduction by air, cleaning or ventilation for safe entry
to vessel, etc.), compressed air should be avoided.
The following are recommendations for reduced use
of compressed air:
w Understand the purpose of air in the process or in
the plant; also, its requirements like pressure,
flow and time intervals.
w Find alternatives to compressed air--such as
electric tools instead of pneumatic tools--blowers
for agitation, mixing, cleaning of materials, etc.
w Find out the major usage areas and minor usage
areas and put controls in place accordingly.
w Look for air pressure reduction possibilities in
areas of process and end use.
w Ring main distribution will provide continuous flow
and pressure in all areas; provide buffer storage
tanks to facilitate continuous supply of air without
any variation in air pressure.
8. Segregation of air streams
Segregation of air streams should be based on
requirements of air volume, pressure and quality.
Separate piping is required for different requirements
of pressure and quality normally - e.g. high pressure,
low pressure and instrument air. Use of baseline
compressor in the main system and use of booster
compressor for meeting high pressure requirement in
specific end use will save energy. Segregation
facilitates extra operational controls and thus
optimisation of air usage in the process.
A Santhosh, a BEE-accredited
energy auditor, is the managing
director of Athul Energy Consultants
Private Limited, Thrissur, Kerala.
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
45
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
44
July
- S
ep
tem
ber
2020
inte
rnet
of t
hing
s to
the
aid
of e
nerg
y m
anag
emen
t
lobalisation has made all the markets fiercely Gcompetitive and cost-conscious. In addition,
there is increasing awareness of the environmental
impact of industrial activities and customers are
demanding environment-friendly production. Post-
Covid-19, industrial and commercial sector is now
looking for ways to reduce cost. Energy cost is a
major contributor to overall product cost in most
industries..
The rationale behind energy efficiency (EE) in India
currently is three-fold. Firstly, energy technology is
changing so rapidly that old state-of-the-art
technologies have a shelf life of ten years, at the
most. Secondly, the economy is on a fluctuating track
internet of things to the aid of energy management IoT-based tools have shown energy savings of upto 10 per cent and hence can cut production cost
Nilesh N. Shedge
with unpredictable demand, which implies the
capacity utilisation of the industries are also
fluctuating. This means moving for energy efficient
options can help improve the product yield. Thirdly, a
reduction in energy cost's share in the product cost
can be immediate and permanent, thus enhancing
profit margins of the cash-strapped industries.
The quantum of energy savings and the level of
energy efficiency can be determined only if you know
how much energy is being consumed and where, in
the production processes, does the energy loss take
place. An accurate and real-time monitoring is thus
essential for reducing energy costs.
Industries usually rely on the monthly electricity bill to
judge energy performance. But this can only provide
a broad picture, which is not enough to analyse the
energy distribution and which does not provide
actionable information. For a proper understanding,
real-time energy data is of utmost importance.
A typical energy management system uses energy
meters and gas/water/steam flow meters to measure
the data. Recorded data is transferred to a system
and engineers spend days analysing the data to draw
patterns and capture meaningful trends (which is a
tedious process and is not religiously followed by
most industries). Based on these trends, energy
losses are quantified. A plan of action is drafted to
reduce, reuse or optimise energy consumption.
Verification is done by recording the data post-
implementation of the EE step. The process is prone
to human error; since the manual activities are not
real-time, many opportunities to take immediate
action are lost. As a result, the inefficiencies get
aggravated over a period of time leading to extra
production costs.
Some typical problems
w Wastage: Industries face average energy wastage
of 1-3 per cent due to various reasons.
w Failure to quantify or spot daily energy losses due
to lack of energy monitoring.
w Human errors in manual energy monitoring.
w Non-prioritising of energy efficiency due to a lack
of data and ignorance of the benefits of
international standards such as: ISO50001 (energy
management system);IEEE standards in power
quality; and, governmental initiatives such as
Industry 4.0
w Inability of the maintenance team to demonstrate
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
45
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
44
July
- S
ep
tem
ber
2020
inte
rnet
of t
hing
s to
the
aid
of e
nerg
y m
anag
emen
t
lobalisation has made all the markets fiercely Gcompetitive and cost-conscious. In addition,
there is increasing awareness of the environmental
impact of industrial activities and customers are
demanding environment-friendly production. Post-
Covid-19, industrial and commercial sector is now
looking for ways to reduce cost. Energy cost is a
major contributor to overall product cost in most
industries..
The rationale behind energy efficiency (EE) in India
currently is three-fold. Firstly, energy technology is
changing so rapidly that old state-of-the-art
technologies have a shelf life of ten years, at the
most. Secondly, the economy is on a fluctuating track
internet of things to the aid of energy management IoT-based tools have shown energy savings of upto 10 per cent and hence can cut production cost
Nilesh N. Shedge
with unpredictable demand, which implies the
capacity utilisation of the industries are also
fluctuating. This means moving for energy efficient
options can help improve the product yield. Thirdly, a
reduction in energy cost's share in the product cost
can be immediate and permanent, thus enhancing
profit margins of the cash-strapped industries.
The quantum of energy savings and the level of
energy efficiency can be determined only if you know
how much energy is being consumed and where, in
the production processes, does the energy loss take
place. An accurate and real-time monitoring is thus
essential for reducing energy costs.
Industries usually rely on the monthly electricity bill to
judge energy performance. But this can only provide
a broad picture, which is not enough to analyse the
energy distribution and which does not provide
actionable information. For a proper understanding,
real-time energy data is of utmost importance.
A typical energy management system uses energy
meters and gas/water/steam flow meters to measure
the data. Recorded data is transferred to a system
and engineers spend days analysing the data to draw
patterns and capture meaningful trends (which is a
tedious process and is not religiously followed by
most industries). Based on these trends, energy
losses are quantified. A plan of action is drafted to
reduce, reuse or optimise energy consumption.
Verification is done by recording the data post-
implementation of the EE step. The process is prone
to human error; since the manual activities are not
real-time, many opportunities to take immediate
action are lost. As a result, the inefficiencies get
aggravated over a period of time leading to extra
production costs.
Some typical problems
w Wastage: Industries face average energy wastage
of 1-3 per cent due to various reasons.
w Failure to quantify or spot daily energy losses due
to lack of energy monitoring.
w Human errors in manual energy monitoring.
w Non-prioritising of energy efficiency due to a lack
of data and ignorance of the benefits of
international standards such as: ISO50001 (energy
management system);IEEE standards in power
quality; and, governmental initiatives such as
Industry 4.0
w Inability of the maintenance team to demonstrate
The IoT software offers flexibility to accommodate
user inputs and make it more useful. In the later
stages of the software, Artificial Intelligence (AI) can
further provide advanced data analytics with
prediction on energy, power and power quality, thus
helping to avoid any machine breakdown due to
power issues.
The tool can assist industry build a roadmap to
energy efficiency based on the feedback from
analytics software and SaaS system. Case studies
have shown energy savings of up to 10per cent by
using IoT-based energy monitoring and analytics. The
IoT tools facilitate sustainable development and also
improve manpower skills.
inte
rnet
of t
hing
s to
the
aid
of e
nerg
y m
anag
emen
t
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
47
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
46
July
- S
ep
tem
ber
2020
inte
rnet
of t
hing
s to
the
aid
of e
nerg
y m
anag
emen
t
energy savings and eco-consciousness to the
higher management.
w Unpredictable increase in energy tariffs: The MSEB
tariff, for instance, was recently increased by 15per
cent)
w Non-compliances: Penalties on low or leading
power factor (up to 5per cent of energy cost), and
unmet contract demands.
w Loss of business: Inability to prove eco-
consciousness to customers.
Enter IoT-based tools
In an IoT-based energy management system, all the
tasks in the cycle of energy efficiency--except
`optimisation' i.e., taking action to reduce the losses--
are automated and done by an IoT tool, thus
minimising human errors. The IoT tool assists in
making an informed decision by providing insights
into energy performance indicators of total plant &
sub-process/machine level and to identify losses in
systems. The IoT system then uses data-analytics-
based machine learning to predict and capture the
losses in the system such as over- or under- loading,
idle running, leakages etc. The IoT system can be
tailored to the needs of the industry. It can provide
hourly/daily/weekly energy performance reports and
send alerts through WhatsApp/email or sound an
alarm when energy performance indicators go below
pre-set thresholds. A systematic view of an IoT-based
energy management and analytics tool is presented
in Fig.1
An Internet of Things (IoT)-based energy analytics
and monitoring system comes with a hardware
controller and Software-as-a-Service (SaaS) online
platform that assists industries to gain competitive
advantage by gaining energy efficiency and
compliance. The IoT controller collects the data in
real-time through RS485-based energy meters and
transmits it to cloud platform, where it is analysed
and displayed on the online secured portal (see Fig.2
for IoT EMAS setup).
A typical energy audit consists of historical data
gathering, followed by onsite data collection using
different pieces of field equipment. Depending on the
size of the industry, it takes days to do onsite data
collection; to analyse the data; and, prepare a report
containing energy efficiency recommendations. All
these processes of energy audit can be carried out
using progressive IoT software. This will become a
Measure
Reduce / Reuse / Optimize
Verify
Monitor and
Analyze
Quantify
Energy Efficiency
Cycle
`24 X 7 energy analysis' of every piece of equipment
as well as of total plant level consumption. IoT will
enable more insights into machine-level as well as
transformer-level power, power quality and energy
behavior patterns. Limited-day energy audit may or
may not be able to establish actual Key Performance
Indicators (KPIs) which can capture variability of
process, production demand and other factors, but
IoT data can establish KPIs more accurately covering
all the anomalies in the operating behavior. Futuristic
analytics will help management to take decisions on
new energy consumption options like `open access'
or `power trading' based on data patterns from
monitoring and analytics software.
In this technological age, data has become the most
important commodity and decision-making is done on
the basis of authentic and extensive data. This can be
made use of in the energy efficiency domain too. To
make informed decisions on adoption of energy
efficient (EE) technologies or to carry out verification
after employing EE technologies, data will help to
quantify the savings accrued. Data-based decisions
will be more accurate; they will enhance an industry's
performance and improve the skills of its manpower.
Nilesh N. Shedge (M.Tech Energy,
B.E. Mech.), a chartered engineer
and certified energy auditor, is
director of Inizent Internet Solutions
Private Limited, Pune. Email:
Fig 1 IoT based energy management and analytics tool
Fig. 2 IoT based EMAS setup
The IoT software offers flexibility to accommodate
user inputs and make it more useful. In the later
stages of the software, Artificial Intelligence (AI) can
further provide advanced data analytics with
prediction on energy, power and power quality, thus
helping to avoid any machine breakdown due to
power issues.
The tool can assist industry build a roadmap to
energy efficiency based on the feedback from
analytics software and SaaS system. Case studies
have shown energy savings of up to 10per cent by
using IoT-based energy monitoring and analytics. The
IoT tools facilitate sustainable development and also
improve manpower skills.
inte
rnet
of t
hing
s to
the
aid
of e
nerg
y m
anag
emen
t
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
47
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
46
July
- S
ep
tem
ber
2020
inte
rnet
of t
hing
s to
the
aid
of e
nerg
y m
anag
emen
t
energy savings and eco-consciousness to the
higher management.
w Unpredictable increase in energy tariffs: The MSEB
tariff, for instance, was recently increased by 15per
cent)
w Non-compliances: Penalties on low or leading
power factor (up to 5per cent of energy cost), and
unmet contract demands.
w Loss of business: Inability to prove eco-
consciousness to customers.
Enter IoT-based tools
In an IoT-based energy management system, all the
tasks in the cycle of energy efficiency--except
`optimisation' i.e., taking action to reduce the losses--
are automated and done by an IoT tool, thus
minimising human errors. The IoT tool assists in
making an informed decision by providing insights
into energy performance indicators of total plant &
sub-process/machine level and to identify losses in
systems. The IoT system then uses data-analytics-
based machine learning to predict and capture the
losses in the system such as over- or under- loading,
idle running, leakages etc. The IoT system can be
tailored to the needs of the industry. It can provide
hourly/daily/weekly energy performance reports and
send alerts through WhatsApp/email or sound an
alarm when energy performance indicators go below
pre-set thresholds. A systematic view of an IoT-based
energy management and analytics tool is presented
in Fig.1
An Internet of Things (IoT)-based energy analytics
and monitoring system comes with a hardware
controller and Software-as-a-Service (SaaS) online
platform that assists industries to gain competitive
advantage by gaining energy efficiency and
compliance. The IoT controller collects the data in
real-time through RS485-based energy meters and
transmits it to cloud platform, where it is analysed
and displayed on the online secured portal (see Fig.2
for IoT EMAS setup).
A typical energy audit consists of historical data
gathering, followed by onsite data collection using
different pieces of field equipment. Depending on the
size of the industry, it takes days to do onsite data
collection; to analyse the data; and, prepare a report
containing energy efficiency recommendations. All
these processes of energy audit can be carried out
using progressive IoT software. This will become a
Measure
Reduce / Reuse / Optimize
Verify
Monitor and
Analyze
Quantify
Energy Efficiency
Cycle
`24 X 7 energy analysis' of every piece of equipment
as well as of total plant level consumption. IoT will
enable more insights into machine-level as well as
transformer-level power, power quality and energy
behavior patterns. Limited-day energy audit may or
may not be able to establish actual Key Performance
Indicators (KPIs) which can capture variability of
process, production demand and other factors, but
IoT data can establish KPIs more accurately covering
all the anomalies in the operating behavior. Futuristic
analytics will help management to take decisions on
new energy consumption options like `open access'
or `power trading' based on data patterns from
monitoring and analytics software.
In this technological age, data has become the most
important commodity and decision-making is done on
the basis of authentic and extensive data. This can be
made use of in the energy efficiency domain too. To
make informed decisions on adoption of energy
efficient (EE) technologies or to carry out verification
after employing EE technologies, data will help to
quantify the savings accrued. Data-based decisions
will be more accurate; they will enhance an industry's
performance and improve the skills of its manpower.
Nilesh N. Shedge (M.Tech Energy,
B.E. Mech.), a chartered engineer
and certified energy auditor, is
director of Inizent Internet Solutions
Private Limited, Pune. Email:
Fig 1 IoT based energy management and analytics tool
Fig. 2 IoT based EMAS setup
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
49
a q
uart
erly
mag
azin
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soci
ety
of e
nerg
y en
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and
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s / I
ndia
48
July
- S
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2020
sunn
y d
ays
ahea
d fo
r so
lar
PV
sys
tem
s
One major reason for SPV's bright
future is the drastic fall in its prices;
global average capital cost has fallen
by nearly 75% since 2010.
sunny days ahead forsolar PV systems
C. Jayaraman
he World Energy Outlook-2018 report, published Tby the International Energy Agency, has observed
a gradual, but clearly discernible building up of an
energy system with affordability, reliability and
sustainability as its key pillars. It shows that Solar PV
(SPV) capacity will overtake all other energies,
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
49
a q
uart
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mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
48
July
- S
ep
tem
ber
2020
sunn
y d
ays
ahea
d fo
r so
lar
PV
sys
tem
s
One major reason for SPV's bright
future is the drastic fall in its prices;
global average capital cost has fallen
by nearly 75% since 2010.
sunny days ahead forsolar PV systems
C. Jayaraman
he World Energy Outlook-2018 report, published Tby the International Energy Agency, has observed
a gradual, but clearly discernible building up of an
energy system with affordability, reliability and
sustainability as its key pillars. It shows that Solar PV
(SPV) capacity will overtake all other energies,
sunn
y d
ays
ahea
d fo
r so
lar
PV
sys
tem
s
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
51
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
50
July
- S
ep
tem
ber
2020
sunn
y d
ays
ahea
d fo
r so
lar
PV
sys
tem
s
excepting gas, by 2040 even when forecasting a 30%
increase in world energy demand. This is in line with
the changes in the energy sector in many countries,
including India, in the past one decade. One of the
major reasons for this transition is the drastic fall in
prices of SPV where the global average capital cost
has fallen by 60-75 % since 2010.
A study done by the US National Renewable Energy
Laboratory (NREL) on American SPV system reports
that the inflation-adjusted system cost of residential,
commercial and utility-scale SPV has recorded a
drastic reduction in the benchmark values from $ 7.28
to $ 2.4, $5.36 to $1.85 and $4.57 to $1.03 per Wdc
respectively, in the last decade.
Rooftop on top
Worldwide, adoption of rooftop panels is on the rise
as advances in panel technology, economies of scale
in manufacturing and various incentives have caused
a substantial reduction in the overall cost of
installation. As a result, many models have emerged
for the installation and operation of solar rooftops
(SRT). The first-generation model of SRT is the
`prosumer' (producer-cum-consumer) model that
focuses on net zero consumption in which the
consumer finances, owns and manages the system.
In the second generation, third parties known as
Renewable Energy Service Companies (RESCO)
developed, owned and operated the SRT systems on
behalf of the consumer. The roles of the utility in
these two models were passive and facilitative. In the
third generation, there are many variations in terms
of ownership, operation and control of the SRT, as
the utilities became active players in the market.
Under such a third-party ownership contract, the
contract type and payment structure between the
solar customer (homeowner) and the system owner
(solar integrator or third-party financer) can take the
form of a solar lease or a solar power-purchase
agreement (PPA). In addition to solar leasing and
solar PPA, another model that has emerged in the
United States recently is the community solar, where
the business model with multiple users can purchase
a portion of their electricity from a solar facility
located off-site.
Tumbling prices
Decreasing costs are just one of the many benefits of
SPVs. They have a major impact on reducing CO 2
emissions and it is projected that if the present trend
continues, SRTs alone can reduce global carbon
emissions by 24.6 giga tonnes by 2050. In addition,
they can avoid losses inevitable in the transmission of
power from a centralised grid to the consumer.
Production of energy at the site of consumption can
make the consumer more aware of, and responsible
for, its efficient use. It can also help utilities to meet
the demands of the industrial and commercial sectors
without burdening them with cross-subsidies as
practiced in countries like India, considering as a
social security measure, to support the residential
consumers.
In the United States, the cumulative operating solar
PV capacity at the end of 2018 was 62 GWdc, which
is about 75 times more than what was installed at the
end of 2008 (Solar Energy Industries Association).
This market, driven mainly by various forms of policy
support for solar and renewable energy, has resulted
in the dramatic growth of the SRT industry at a rate
of approximately 50% per year since 2012.
Though many silverlines have been observed in the
SPV market, there have been as many barriers too. In
a recent study on rooftop solar for residential
properties, Russel Heller said, "Despite the success
of the policies and the resulting growth in solar
deployment in the USA, a number of existing barriers
prevent widespread adoption of distributed solar
energy." The split incentive between renters and
landlords hindering the rooftop solar adoption was
one of the major hurdles that could be identified on
the home rental market. From the developer's or
owner's perspective, there are many risks associated
with the use of the building such as the buildings are
taken over, retrofitted for other purposes, or
demolished. Some other risks are the roof area
required in the future for other purposes; risk of roof
damage that may cause roof leaks; building structural
damage that may even lead to roof collapse, etc. One
of the major barriers cited by the owners, utilities and
third-party owners are the legal battles. Solar leasing
giant Sunrun faced a statewide, class-action lawsuit,
alleging that its business practices in marketing
residential solar leases are false and deceptive.
Experience from Long Island in the US, where solar
lease deals showed a fast growth from the first home
solar system sales in 2000, is now on a declining
path. The solar rooftops in Long Island have dropped
by 44 per cent in the last decade.
There are many reports that show that the owners
who were highly enthusiastic in letting their rooftops
for energy generation are paying more in the present
than the past and lost all faith. Many homeowners
with SPVs on their rooftops found it difficult to sell or
refinance their homes as selling a home can be
difficult with a live solar leasing agreement. A leasing
deal is always a complex deal for the average
consumer to understand and get into. US experience
shows that leases and PPAs make sense for large-
scale commercial operations, but these are a poor fit
for residential clients. It is also worth noting the
findings of Sunter et al (2019) that although the SPVs
provide affordable, clean and reliable power, there is
a visible social disparity in its implementation.
The German model
Germany is one of the world leaders in the
development and integration of renewable energies,
especially in the area of SPV systems. Most of these
are in the form of SRT installed on residential or
commercial buildings. A unique characteristic of the
German energy transition is the small scale SPV at
the low-voltage level. However, Germany had a high
retail tariff for the residential sector (approximately
$0.33/kWh ). It is reported that with the increase in the
number of prosumers, concerns are also growing for
the utilities as the decentralised producers of energy
are not contributing to support the legacy grid. The
German Feed-in Tariff (FIT) targeted at fostering the
diffusion and development of renewable energy,
deemed to be highly effective, is a widely copied
policy instrument. The FIT was set above the market
price. The difference was passed on to (almost) all
consumers via the electricity price. In the period
2000-2016, 176 billion euros were paid by the
electricity consumers to RESCO that had a market
sunn
y d
ays
ahea
d fo
r so
lar
PV
sys
tem
s
July
- S
ep
tem
ber
2020
a q
uart
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azin
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ety
of e
nerg
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gin
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ager
s / I
ndia
51
a q
uart
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e of
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ety
of e
nerg
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and
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ndia
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sunn
y d
ays
ahea
d fo
r so
lar
PV
sys
tem
s
excepting gas, by 2040 even when forecasting a 30%
increase in world energy demand. This is in line with
the changes in the energy sector in many countries,
including India, in the past one decade. One of the
major reasons for this transition is the drastic fall in
prices of SPV where the global average capital cost
has fallen by 60-75 % since 2010.
A study done by the US National Renewable Energy
Laboratory (NREL) on American SPV system reports
that the inflation-adjusted system cost of residential,
commercial and utility-scale SPV has recorded a
drastic reduction in the benchmark values from $ 7.28
to $ 2.4, $5.36 to $1.85 and $4.57 to $1.03 per Wdc
respectively, in the last decade.
Rooftop on top
Worldwide, adoption of rooftop panels is on the rise
as advances in panel technology, economies of scale
in manufacturing and various incentives have caused
a substantial reduction in the overall cost of
installation. As a result, many models have emerged
for the installation and operation of solar rooftops
(SRT). The first-generation model of SRT is the
`prosumer' (producer-cum-consumer) model that
focuses on net zero consumption in which the
consumer finances, owns and manages the system.
In the second generation, third parties known as
Renewable Energy Service Companies (RESCO)
developed, owned and operated the SRT systems on
behalf of the consumer. The roles of the utility in
these two models were passive and facilitative. In the
third generation, there are many variations in terms
of ownership, operation and control of the SRT, as
the utilities became active players in the market.
Under such a third-party ownership contract, the
contract type and payment structure between the
solar customer (homeowner) and the system owner
(solar integrator or third-party financer) can take the
form of a solar lease or a solar power-purchase
agreement (PPA). In addition to solar leasing and
solar PPA, another model that has emerged in the
United States recently is the community solar, where
the business model with multiple users can purchase
a portion of their electricity from a solar facility
located off-site.
Tumbling prices
Decreasing costs are just one of the many benefits of
SPVs. They have a major impact on reducing CO 2
emissions and it is projected that if the present trend
continues, SRTs alone can reduce global carbon
emissions by 24.6 giga tonnes by 2050. In addition,
they can avoid losses inevitable in the transmission of
power from a centralised grid to the consumer.
Production of energy at the site of consumption can
make the consumer more aware of, and responsible
for, its efficient use. It can also help utilities to meet
the demands of the industrial and commercial sectors
without burdening them with cross-subsidies as
practiced in countries like India, considering as a
social security measure, to support the residential
consumers.
In the United States, the cumulative operating solar
PV capacity at the end of 2018 was 62 GWdc, which
is about 75 times more than what was installed at the
end of 2008 (Solar Energy Industries Association).
This market, driven mainly by various forms of policy
support for solar and renewable energy, has resulted
in the dramatic growth of the SRT industry at a rate
of approximately 50% per year since 2012.
Though many silverlines have been observed in the
SPV market, there have been as many barriers too. In
a recent study on rooftop solar for residential
properties, Russel Heller said, "Despite the success
of the policies and the resulting growth in solar
deployment in the USA, a number of existing barriers
prevent widespread adoption of distributed solar
energy." The split incentive between renters and
landlords hindering the rooftop solar adoption was
one of the major hurdles that could be identified on
the home rental market. From the developer's or
owner's perspective, there are many risks associated
with the use of the building such as the buildings are
taken over, retrofitted for other purposes, or
demolished. Some other risks are the roof area
required in the future for other purposes; risk of roof
damage that may cause roof leaks; building structural
damage that may even lead to roof collapse, etc. One
of the major barriers cited by the owners, utilities and
third-party owners are the legal battles. Solar leasing
giant Sunrun faced a statewide, class-action lawsuit,
alleging that its business practices in marketing
residential solar leases are false and deceptive.
Experience from Long Island in the US, where solar
lease deals showed a fast growth from the first home
solar system sales in 2000, is now on a declining
path. The solar rooftops in Long Island have dropped
by 44 per cent in the last decade.
There are many reports that show that the owners
who were highly enthusiastic in letting their rooftops
for energy generation are paying more in the present
than the past and lost all faith. Many homeowners
with SPVs on their rooftops found it difficult to sell or
refinance their homes as selling a home can be
difficult with a live solar leasing agreement. A leasing
deal is always a complex deal for the average
consumer to understand and get into. US experience
shows that leases and PPAs make sense for large-
scale commercial operations, but these are a poor fit
for residential clients. It is also worth noting the
findings of Sunter et al (2019) that although the SPVs
provide affordable, clean and reliable power, there is
a visible social disparity in its implementation.
The German model
Germany is one of the world leaders in the
development and integration of renewable energies,
especially in the area of SPV systems. Most of these
are in the form of SRT installed on residential or
commercial buildings. A unique characteristic of the
German energy transition is the small scale SPV at
the low-voltage level. However, Germany had a high
retail tariff for the residential sector (approximately
$0.33/kWh ). It is reported that with the increase in the
number of prosumers, concerns are also growing for
the utilities as the decentralised producers of energy
are not contributing to support the legacy grid. The
German Feed-in Tariff (FIT) targeted at fostering the
diffusion and development of renewable energy,
deemed to be highly effective, is a widely copied
policy instrument. The FIT was set above the market
price. The difference was passed on to (almost) all
consumers via the electricity price. In the period
2000-2016, 176 billion euros were paid by the
electricity consumers to RESCO that had a market
sunn
y d
ays
ahea
d fo
r so
lar
PV
sys
tem
sa
qua
rter
ly m
agaz
ine
of th
e so
ciet
y of
ene
rgy
eng
inee
rs a
nd m
anag
ers
/ Ind
ia
52
July
- S
ep
tem
ber
2020
value of just 5 billion euros . Faster than expected
pace of technological changes, increased demand
and economies of scale in the production led to
windfall profits to some industries, exacerbating
economic problems in Germany. The German
experience shows that there should be an evenly
balanced strategy to deal with the rise of prosumers.
Other country models
The Australian continent, which has the highest solar
radiation per square metre of any continent, also has
one of the best solar energy resources in the world.
The total amount of rooftop area available for solar in
all of Australia is estimated to be worth of 20 GW. At
the current rate of growth, SRT will reach 14 GW by
2030. The success of small-scale PV in Australia is
mainly attributed to FIT and direct subsidies.
However, there are regulatory and market barriers
persisting in Australia that have restricted large scale
investments.
France with different tariffs for fully integrated, simply
integrated, and ground-mounted systems has a
unique policy framework governing solar PV systems.
Installations that meet the fully building-integrated
system criteria, under which the SPV system must
fully replace the roof or wall structure, are offered the
highest tariffs. Slightly lower tariffs are offered to SPV
projects that adopt the simplified building integration
approach, where the SPV modules can be placed on
and above the roof or wall structure. The ground-
mounted or free-standing systems are offered a
significantly lower tariff.
There are many studies on SRT business models
focusing on the experiences in the United States, as
the US has the longest track record. Residential
consumers in the US do not exhibit a strong
preference for SRT leases or PPAs and have very few
concerns about entering into an agreement with third-
party ownership (TPO). For those consumers who
either do not want to shoulder risks associated with
ownership or prefer low initial investment, the TPO
provides an attractive alternative.
However, SPVs has turned out to be one of the most
sensible ways to encourage sustainable development.
Hence, it is essential that every step forward to
promote SPV shall be supported by an all-inclusive
energy policy addressing the possible barriers,
backed up by systematic analysis and well-informed
projections about the future.
References:
i SEIA (2018) 'U. S. Solar Market Insight', (December). Available at:
http://www2.seia.org/l/139231/2019-03-06/2gb5dw
ii Hoppmann, J., Huenteler, J. and Girod, B. (2014) 'Compulsive
policy-making - The evolution of the German feed-in tariff system for
solar photovoltaic power', Research Policy. Elsevier B.V., 43(8), pp.
1422-1441. doi: 10.1016/j.respol.2014.01.014
iii Sunter, D. A., Castellanos, S. and Kammen, D. M. (2019)
'Disparities in rooftop photovoltaics deployment in the United States
by race and ethnicity', Nature Sustainability. Springer US, 2(1), pp.
71-76. doi: 10.1038/s41893-018-0204-z.
C Jayaraman is chief editor of
Energy Manager
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he costs of producing renewable electricity in the TUnited Kingdom from wind and sun have dropped
dramatically in the last four years and will continue to
fall until the year 2040.
A report, Energy Generation Cost Projections 2020 by
the Department for Business, Energy and Industrial
Strategy, shows that wind power, both on and
offshore, and solar energy will produce electricity far
more cheaply than any fossil fuel or nuclear
competitor by 2025.
Costs have fallen so far and so fast that the
department admits it got its 2016 calculations badly
wrong, particularly on offshore wind farms. This was
mainly because the turbines being developed were
much larger than it had bargained for, and the size of
the wind farms being developed was also much
bigger, bringing economies of scale.
The new report avoids any comparison with the costs
of nuclear power, leaving them out altogether and
This is a significant development
for renewable energy worldwide as
Britain is a leader in the field of
offshore wind.
dramatic fall in renewables' cost in UK
dra
mat
ic fa
ll in
ren
ewab
les'
co
st in
UK
July
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2020
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of e
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s / I
ndia
55
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azin
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the
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of e
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and
man
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s / I
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54
July
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ep
tem
ber
2020
dra
mat
ic fa
ll in
ren
ewab
les'
co
st in
UK
merely saying its cost assumptions have not changed
since 2016.
Nuclear costs are a sensitive issue at the department
because the cost estimates its report used for nuclear
power in 2016 were optimistic, and although the
report does not comment there have already been
reports that they are expected to rise by 2025.
This is at a time when the government is yet to decide
whether to continue its policy of encouraging French,
Chinese and Japanese companies to build nuclear
power stations in the UK, with their costs subsidised
by a tax on electricity bills.
Although all the figures for renewable prices quoted are
for British installations, they are internationally important
because the UK is a well-advanced renewable market
and a leader in the field of offshore wind, because of
the large number of wind turbines already in operation.
The fact that large-scale solar power is cost-
competitive with fossil fuels even in a not particularly
sunny country means that the future looks bleak for
both coal and gas generators across the world.
The prices quoted in the report are in pounds sterling
per kilowatt hour (kWh) of electricity produced. For
offshore wind the department now expects the price to
be £57 kWh in 2025, almost half its estimate of £106
for the same year made in 2016. It expects the price to
drop to £47 in 2030, and £40 by 2040. Onshore wind,
estimated to cost £65 kWh in 2016, is now said to be
down to £46 in 2025 and still gradually falling after that.
Large-scale solar, thought to cost £68 in 2016, is now
expected to be £44 kWh in 2025, falling to £33 per
kWh in 2040. The output of the latest H class gas
turbines is estimated by the department to cost £115
a kWh in 2025, although this is a newish technology
and may also come down in price.
The 2016 report says nuclear power will be at £95
kWh in 2025, and although this year's report says the
prices remain the same Hinkley Point C, the only
nuclear power station currently under construction in
the UK, has already reported cost overruns and
delays that put its costs above that estimate.
Across the renewable technologies, increased
deployment has led to decreased costs
The 2020 report says: "Since 2016, renewables' costs
have declined
compared to gas, particularly steeply in the case of
offshore wind. Across the renewable technologies,
increased deployment has led to decreased costs via
learning, which then incentivised further deployment,
and so on.
"For offshore wind, significant technological
improvements (for example, large increases in
individual turbine capacity) have driven down costs
faster than other renewable technologies (and will
continue to do so)."
Since the BEIS published the 2016 report the
arguments about renewables have changed. Although
the report does not say so, the intermittent nature of
renewables is less of an issue because large-scale
batteries and other energy storage options are
becoming more widespread and mainstream.
Also, both the European Union and the British
Government are investing in green hydrogen-
hydrogen from renewable energy via electrolysis--
which could be produced when supplies of green
energy exceed demand, as they did in Britain during
the Covid-19 lockdown earlier this year.
In future, instead of this excess power going to waste,
it will be turned into green hydrogen to feed into the
gas network, to power vehicles or to be held in tanks
and burned to produce electricity at peak times.
According to analysis by the research firm Wood
Mackenzie Ltd., the cost of green hydrogen will drop
by 64% by 2040, making it competitive with fossil fuels
for industry and transport. -Climate News Network
use less single-use plasticAbout a third of the plastic produced worldwide is for
single-use applications (bottles, bags, utensils, food
storage, etc.)-and it is these items that most
commonly end up on the side of the road.
Analysts estimate that of the over six billion tons of
plastic produced worldwide since the 1950s, we have
recycled only nine per cent of it and incinerated another
12 per cent. The remaining, some 4.8 billion tons of
plastic are either still in use, filling up landfills, or littered
into streets, streams and eventually the ocean.
So, what's an environmentally-conscious consumer to
do? For starters, avoid getting plastic bags at the
store. Either bring your own reusable one or if you
need to go disposable, at least opt for a paper that
can be recycled or composted. And if you are food
shopping, gravitate toward the bulk items aisle where
you can buy just the right amount without
unnecessary extra packaging.
Another way to cut down on single-use plastic is
ditching plastic straws. Americans go through about
500 million plastic straws daily. Opting for reusable
straws (metal, silicone, bamboo or glass, anyone?)-or
no straw at all-is one of the simplest ways to cut
down on disposable plastic.
Kitchen is one place where you can make
some easy adjustments to save plastic
According to the Centre for EcoTechnology (CET), the
kitchen is one place where you can definitely make
some easy adjustments to save plastic. For instance,
ditch the plastic wrap; it's difficult to recycle and can
clog recycling processing machines. One great
alternative is beeswax paper, which is reusable,
washable and compostable.
"Another alternative to plastic wrap is storing your
food in glass storage containers or glass jars," adds
CET. "Glass is 100% recyclable and can be recycled
endlessly without loss in quality or purity."
Putting dish cloths to use is another way to eschew
plastic wrap for keeping produce fresh. Simply wrap
up those fruits or veggies in cloth instead of plastic-or
put them in a bowl and cover with a dish cloth and
rubber band for a tight seal-and put them in the fridge.
One often overlooked environmental downside of the
coronavirus situation is that restaurants throw in so
much disposable plasticware for to-go and delivery
orders-whether customers need it or not. That's why a
coalition of 120 environmental groups recently teamed
up to send letters to seven national food delivery
companies asking they change their default ordering
process to one that does not automatically include
utensils, napkins, condiments and straws in order to
reduce the tsunami of single-use plastic pollution
entering our oceans, landfills and incinerators.
(Courtesy: EarthTalk)
dra
mat
ic fa
ll in
ren
ewab
les'
co
st in
UK
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
55
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
54
July
- S
ep
tem
ber
2020
dra
mat
ic fa
ll in
ren
ewab
les'
co
st in
UK
merely saying its cost assumptions have not changed
since 2016.
Nuclear costs are a sensitive issue at the department
because the cost estimates its report used for nuclear
power in 2016 were optimistic, and although the
report does not comment there have already been
reports that they are expected to rise by 2025.
This is at a time when the government is yet to decide
whether to continue its policy of encouraging French,
Chinese and Japanese companies to build nuclear
power stations in the UK, with their costs subsidised
by a tax on electricity bills.
Although all the figures for renewable prices quoted are
for British installations, they are internationally important
because the UK is a well-advanced renewable market
and a leader in the field of offshore wind, because of
the large number of wind turbines already in operation.
The fact that large-scale solar power is cost-
competitive with fossil fuels even in a not particularly
sunny country means that the future looks bleak for
both coal and gas generators across the world.
The prices quoted in the report are in pounds sterling
per kilowatt hour (kWh) of electricity produced. For
offshore wind the department now expects the price to
be £57 kWh in 2025, almost half its estimate of £106
for the same year made in 2016. It expects the price to
drop to £47 in 2030, and £40 by 2040. Onshore wind,
estimated to cost £65 kWh in 2016, is now said to be
down to £46 in 2025 and still gradually falling after that.
Large-scale solar, thought to cost £68 in 2016, is now
expected to be £44 kWh in 2025, falling to £33 per
kWh in 2040. The output of the latest H class gas
turbines is estimated by the department to cost £115
a kWh in 2025, although this is a newish technology
and may also come down in price.
The 2016 report says nuclear power will be at £95
kWh in 2025, and although this year's report says the
prices remain the same Hinkley Point C, the only
nuclear power station currently under construction in
the UK, has already reported cost overruns and
delays that put its costs above that estimate.
Across the renewable technologies, increased
deployment has led to decreased costs
The 2020 report says: "Since 2016, renewables' costs
have declined
compared to gas, particularly steeply in the case of
offshore wind. Across the renewable technologies,
increased deployment has led to decreased costs via
learning, which then incentivised further deployment,
and so on.
"For offshore wind, significant technological
improvements (for example, large increases in
individual turbine capacity) have driven down costs
faster than other renewable technologies (and will
continue to do so)."
Since the BEIS published the 2016 report the
arguments about renewables have changed. Although
the report does not say so, the intermittent nature of
renewables is less of an issue because large-scale
batteries and other energy storage options are
becoming more widespread and mainstream.
Also, both the European Union and the British
Government are investing in green hydrogen-
hydrogen from renewable energy via electrolysis--
which could be produced when supplies of green
energy exceed demand, as they did in Britain during
the Covid-19 lockdown earlier this year.
In future, instead of this excess power going to waste,
it will be turned into green hydrogen to feed into the
gas network, to power vehicles or to be held in tanks
and burned to produce electricity at peak times.
According to analysis by the research firm Wood
Mackenzie Ltd., the cost of green hydrogen will drop
by 64% by 2040, making it competitive with fossil fuels
for industry and transport. -Climate News Network
use less single-use plasticAbout a third of the plastic produced worldwide is for
single-use applications (bottles, bags, utensils, food
storage, etc.)-and it is these items that most
commonly end up on the side of the road.
Analysts estimate that of the over six billion tons of
plastic produced worldwide since the 1950s, we have
recycled only nine per cent of it and incinerated another
12 per cent. The remaining, some 4.8 billion tons of
plastic are either still in use, filling up landfills, or littered
into streets, streams and eventually the ocean.
So, what's an environmentally-conscious consumer to
do? For starters, avoid getting plastic bags at the
store. Either bring your own reusable one or if you
need to go disposable, at least opt for a paper that
can be recycled or composted. And if you are food
shopping, gravitate toward the bulk items aisle where
you can buy just the right amount without
unnecessary extra packaging.
Another way to cut down on single-use plastic is
ditching plastic straws. Americans go through about
500 million plastic straws daily. Opting for reusable
straws (metal, silicone, bamboo or glass, anyone?)-or
no straw at all-is one of the simplest ways to cut
down on disposable plastic.
Kitchen is one place where you can make
some easy adjustments to save plastic
According to the Centre for EcoTechnology (CET), the
kitchen is one place where you can definitely make
some easy adjustments to save plastic. For instance,
ditch the plastic wrap; it's difficult to recycle and can
clog recycling processing machines. One great
alternative is beeswax paper, which is reusable,
washable and compostable.
"Another alternative to plastic wrap is storing your
food in glass storage containers or glass jars," adds
CET. "Glass is 100% recyclable and can be recycled
endlessly without loss in quality or purity."
Putting dish cloths to use is another way to eschew
plastic wrap for keeping produce fresh. Simply wrap
up those fruits or veggies in cloth instead of plastic-or
put them in a bowl and cover with a dish cloth and
rubber band for a tight seal-and put them in the fridge.
One often overlooked environmental downside of the
coronavirus situation is that restaurants throw in so
much disposable plasticware for to-go and delivery
orders-whether customers need it or not. That's why a
coalition of 120 environmental groups recently teamed
up to send letters to seven national food delivery
companies asking they change their default ordering
process to one that does not automatically include
utensils, napkins, condiments and straws in order to
reduce the tsunami of single-use plastic pollution
entering our oceans, landfills and incinerators.
(Courtesy: EarthTalk)
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
57
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
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gin
eers
and
man
ager
s / I
ndia
56
July
- S
ep
tem
ber
2020
he vacuum system is often an energy guzzler. TMost of the vacuum systems are directly
connected with industrial processes. Hence, energy
auditors need to acquire some basics of process
before conducting vacuum system audit. The author
offers useful tips to vacuum system users.
The vacuum system is a major, yet normally
unnoticed, energy guzzler in most of the industries
where there is a need for vacuum. Though a common
utility, it is mostly used in a decentralised fashion. A
major issue with vacuum systems is that we cannot
detect leakages. Most of the vacuum systems are well
connected with industrial processes directly. The need
to possess process knowledge is a challenge faced
by energy auditors while conducting efficiency tests in
vacuum systems.
make vacuum systems energy-efficient
A Santhosh
The vacuum system is
often an energy guzzler.
Most of the vacuum
systems are directly
connected with industrial
processes. Hence, energy
auditors need to acquire
some basics of process
before conducting vacuum
system audit. The author
offers useful tips to
vacuum system users
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
57
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
56
July
- S
ep
tem
ber
2020
he vacuum system is often an energy guzzler. TMost of the vacuum systems are directly
connected with industrial processes. Hence, energy
auditors need to acquire some basics of process
before conducting vacuum system audit. The author
offers useful tips to vacuum system users.
The vacuum system is a major, yet normally
unnoticed, energy guzzler in most of the industries
where there is a need for vacuum. Though a common
utility, it is mostly used in a decentralised fashion. A
major issue with vacuum systems is that we cannot
detect leakages. Most of the vacuum systems are well
connected with industrial processes directly. The need
to possess process knowledge is a challenge faced
by energy auditors while conducting efficiency tests in
vacuum systems.
make vacuum systems energy-efficient
A Santhosh
The vacuum system is
often an energy guzzler.
Most of the vacuum
systems are directly
connected with industrial
processes. Hence, energy
auditors need to acquire
some basics of process
before conducting vacuum
system audit. The author
offers useful tips to
vacuum system users
mak
e va
cuum
sys
tem
s en
erg
y-ef
ficie
nt
July
- S
ep
tem
ber
2020
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uart
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azin
e of
the
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ety
of e
nerg
y en
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and
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ager
s / I
ndia
59
a q
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ety
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2020
mak
e va
cuum
sys
tem
s en
erg
y-ef
ficie
nt
How to choose a vacuum system
Most chemical processing industries use vacuum for
distillation, drying, separation and packaging in
different plants. The choice of a vacuum system
suitable for a process depends on several factors. A
few guidelines on the selection and operation of
vacuum systems are listed below.
If the product vapour is corrosive or poisonous or if it
contains abrasive particle, then water jet is the best
option for producing vacuum. But water jet produces
vacuum at low level. If a high vacuum level is
required, then jet steam ejector is the right option.
Rotary vane vacuum pump is ideal for high vacuum
close to zero Torr.
The water temperature should be as low as possible
in most vacuum ejectors and pumps. Decrease in
temperature of the cooling water increases the
effectiveness of the ejector as well as the efficiency of
the vacuum pump.
A common feature observed in water ring vacuum
pumps used in most of vacuum system applications,
which have wet vapour content, is that the water
required for the vacuum pumps is taken directly from
the header. All water ring vacuum pumps require that
the flow and pressure of water should be maintained
as specified in the manual. But when the water is
directly taken from a common header, the water flow
and pressure suffer fluctuations. This impacts the
vacuum system by increasing the energy
consumption and causing water wastage. With
insufficient water, the water ring does not perform;
with excess water, the vacuum pump acts as a water
pump and throws the excess water outside-these
result in increase in (1) energy consumption, (2)
maintenance and (3) loss of vacuum. A closed-loop
system of cooling water, including the cooling tower,
can maintain the flow, pressure and temperature.
If the moisture contamination of vapour load or the
vapour carry-over is high, then the rotary vane pump
will get damaged frequently. It is better to use steam
ejector or water ring for condensing vapour and then
use rotary vane in the final stage.
In packaging industry
Using vacuum and protective gas in packaging
industry, among other things, reduces the activity of
microorganisms that require oxygen and also protects
aromatic substances from oxidation. Foodstuff will
have a longer shelf life in vacuum or protective gas,
even without preservatives. Oil- lubricated rotary vane
vacuum pumps are commonly used in packaging
industry. The vacuum requirement will vary for
different items (meat, vegetable, etc.). If water content
is high, or with large volume of air, a vacuum booster
can be used for backing the rotary vane pump.
Maintaining the oil temperature and viscosity of the
rotary vane vacuum pump is a critical factor. If the
temperature is higher/lower than required, the
lubricating film will lose its property causing damage
to the rotary vane, and loss of vacuum in the system.
Energy saving in the vacuum furnace operation is
possible by using master--slave pump operation
similar to the practice in the fire and safety sector. We
may use the main vacuum blower for evacuating the
large volume of air, which normally demands higher
power, and then use smaller jockey pump or blower
for attaining further levels of vacuum.
Making energy-efficient vacuum system depends on
the process knowledge and the operating parameters
of the system. Vacuum system applications will
become popular in the coming years, thanks to the
growing demand in preservation of food,
manufacturing of special materials, requirements in
hospitals, etc. This will evolve as the fourth utility
system in most industries.
(A Santhosh, a BEE-accredited energy auditor, is the managing
director of Athul Energy Consultants Private Limited, Thrissur, Kerala.)
Vacuum systems vary depending on the range of
vacuum, equipment used for producing vacuum and
unit operations connected on the process side. It is
therefore necessary to consider the overall process
and coordinate the vacuum technology with the
process technology to facilitate efficient vacuum
generation.
A professional energy auditor should acquire some
basic knowledge of the process before beginning to
assess a vacuum system. A walk-through audit of the
plant following the process flow and involving
interactions with the process engineers will help
identify the energy saving opportunities. Measurement
is not easy in vacuum systems for validating energy
savings. Similar to a compressed air system, the
vacuum system too has a vacuum receiver or catch
pot, separators, piping and valves.
The choice of the vacuum equipment vary with plant
operations such as distillation, drying, leaching and
extraction, and separation. Vacuum plays a vital role
even in power plants and packaging industries.
Various pieces of equipment, such as steam and
water ejectors; and, vacuum pumps, such as oil or
water ring, are used in industries.
Energy auditing often throws up certain common
engineering flaws in vacuum systems in industries in
India. Such engineering flaws cause increase in
energy consumption, reduction in productivity,
deterioration in product quality and increase in
maintenance cost.
mak
e va
cuum
sys
tem
s en
erg
y-ef
ficie
nt
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
59
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
58
July
- S
ep
tem
ber
2020
mak
e va
cuum
sys
tem
s en
erg
y-ef
ficie
nt
How to choose a vacuum system
Most chemical processing industries use vacuum for
distillation, drying, separation and packaging in
different plants. The choice of a vacuum system
suitable for a process depends on several factors. A
few guidelines on the selection and operation of
vacuum systems are listed below.
If the product vapour is corrosive or poisonous or if it
contains abrasive particle, then water jet is the best
option for producing vacuum. But water jet produces
vacuum at low level. If a high vacuum level is
required, then jet steam ejector is the right option.
Rotary vane vacuum pump is ideal for high vacuum
close to zero Torr.
The water temperature should be as low as possible
in most vacuum ejectors and pumps. Decrease in
temperature of the cooling water increases the
effectiveness of the ejector as well as the efficiency of
the vacuum pump.
A common feature observed in water ring vacuum
pumps used in most of vacuum system applications,
which have wet vapour content, is that the water
required for the vacuum pumps is taken directly from
the header. All water ring vacuum pumps require that
the flow and pressure of water should be maintained
as specified in the manual. But when the water is
directly taken from a common header, the water flow
and pressure suffer fluctuations. This impacts the
vacuum system by increasing the energy
consumption and causing water wastage. With
insufficient water, the water ring does not perform;
with excess water, the vacuum pump acts as a water
pump and throws the excess water outside-these
result in increase in (1) energy consumption, (2)
maintenance and (3) loss of vacuum. A closed-loop
system of cooling water, including the cooling tower,
can maintain the flow, pressure and temperature.
If the moisture contamination of vapour load or the
vapour carry-over is high, then the rotary vane pump
will get damaged frequently. It is better to use steam
ejector or water ring for condensing vapour and then
use rotary vane in the final stage.
In packaging industry
Using vacuum and protective gas in packaging
industry, among other things, reduces the activity of
microorganisms that require oxygen and also protects
aromatic substances from oxidation. Foodstuff will
have a longer shelf life in vacuum or protective gas,
even without preservatives. Oil- lubricated rotary vane
vacuum pumps are commonly used in packaging
industry. The vacuum requirement will vary for
different items (meat, vegetable, etc.). If water content
is high, or with large volume of air, a vacuum booster
can be used for backing the rotary vane pump.
Maintaining the oil temperature and viscosity of the
rotary vane vacuum pump is a critical factor. If the
temperature is higher/lower than required, the
lubricating film will lose its property causing damage
to the rotary vane, and loss of vacuum in the system.
Energy saving in the vacuum furnace operation is
possible by using master--slave pump operation
similar to the practice in the fire and safety sector. We
may use the main vacuum blower for evacuating the
large volume of air, which normally demands higher
power, and then use smaller jockey pump or blower
for attaining further levels of vacuum.
Making energy-efficient vacuum system depends on
the process knowledge and the operating parameters
of the system. Vacuum system applications will
become popular in the coming years, thanks to the
growing demand in preservation of food,
manufacturing of special materials, requirements in
hospitals, etc. This will evolve as the fourth utility
system in most industries.
(A Santhosh, a BEE-accredited energy auditor, is the managing
director of Athul Energy Consultants Private Limited, Thrissur, Kerala.)
Vacuum systems vary depending on the range of
vacuum, equipment used for producing vacuum and
unit operations connected on the process side. It is
therefore necessary to consider the overall process
and coordinate the vacuum technology with the
process technology to facilitate efficient vacuum
generation.
A professional energy auditor should acquire some
basic knowledge of the process before beginning to
assess a vacuum system. A walk-through audit of the
plant following the process flow and involving
interactions with the process engineers will help
identify the energy saving opportunities. Measurement
is not easy in vacuum systems for validating energy
savings. Similar to a compressed air system, the
vacuum system too has a vacuum receiver or catch
pot, separators, piping and valves.
The choice of the vacuum equipment vary with plant
operations such as distillation, drying, leaching and
extraction, and separation. Vacuum plays a vital role
even in power plants and packaging industries.
Various pieces of equipment, such as steam and
water ejectors; and, vacuum pumps, such as oil or
water ring, are used in industries.
Energy auditing often throws up certain common
engineering flaws in vacuum systems in industries in
India. Such engineering flaws cause increase in
energy consumption, reduction in productivity,
deterioration in product quality and increase in
maintenance cost.
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
61
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
60
July
- S
ep
tem
ber
2020
mel
ting
gla
cier
s, s
wel
ling
lake
s
lacial lakes have grown rapidly around the world Gin recent decades, according to satellite images
that reveal the impact of increased meltwater draining
off retreating glaciers.
Scientists analysed more than quarter of a million
satellite images to assess how lakes formed by
melting glaciers,swelling lakes
As a direct impact of
global heating, glacial
lakes are fast
expanding world over
July
- S
ep
tem
ber
2020
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
61
a q
uart
erly
mag
azin
e of
the
soci
ety
of e
nerg
y en
gin
eers
and
man
ager
s / I
ndia
60
July
- S
ep
tem
ber
2020
mel
ting
gla
cier
s, s
wel
ling
lake
s
lacial lakes have grown rapidly around the world Gin recent decades, according to satellite images
that reveal the impact of increased meltwater draining
off retreating glaciers.
Scientists analysed more than quarter of a million
satellite images to assess how lakes formed by
melting glaciers,swelling lakes
As a direct impact of
global heating, glacial
lakes are fast
expanding world over
mel
ting
gla
cier
s, s
wel
ling
lake
sa
qua
rter
ly m
agaz
ine
of th
e so
ciet
y of
ene
rgy
eng
inee
rs a
nd m
anag
ers
/ Ind
ia
62
July
- S
ep
tem
ber
2020
melting glaciers have been affected by global heating
and other processes.
The images show the number of glacial lakes rose by
53% between 1990 and 2018, expanding the amount
of the Earth the lakes cover by about 51%. According
to the survey, 14,394 glacial lakes spread over nearly
9,000 square km of the planet's surface.
Based on the figures, the researchers estimate the
volume of the world's glacial lakes grew by 48% over
the same period and now hold 156.5 cubic km of
water.
Glacial lakes are an important source of fresh water
for many of the world's poorest people, particularly in
the mountains of Asia and parts of South America.
But the lakes also present a growing threat from
outburst floods that can tear down villages, wash
away roads and destroy pipelines and other
infrastructure.
The fastest-growing lakes are in Scandinavia, Iceland
and Russia, which more than doubled in area over the
study period. Because many of the lakes are relatively
small, the rise in volume is not substantial on a global
level.
Elsewhere, such as in Patagonia and Alaska, glacial
lakes grew more slowly, at about 80%, but many of
the lakes in these regions are vast, making the
absolute increase in water volume huge.
According to the report, published in Nature Climate
Change, a research journal on climate change, three
of the largest Patagonian lakes grew at a much
slower rate, but still reached 3,582 square km in
2018, up 27 square km since 1990.
In other regions, the picture was more variable. In the
north of Greenland, glacial lakes were growing
rapidly, in line with global heating being more extreme
in the Arctic. In south-west Greenland, some glacial
lakes had shrunk, but often this was because they
had already drained.
Though meltwater is crucial for many communities
living in valleys beneath glaciers, sudden outbursts
from glacial lakes can be devastating. Writing in the
journal, the scientists highlight particular threats to
hydroelectric power plants in the Himalayas; the
Trans-Alaska pipeline, which traverses mountains
hosting glacial lakes; major roadways such as the
Karakoram highway between China and Pakistan, a
corridor that carries billions of dollars of goods
annually.
"As lakes get bigger there is more water in them to
drain quickly and produce glacial lake outburst
floods," Harrison said. "These are a real hazard in
many valleys connected to retreating glaciers in parts
of the Himalayas and Andes, for example.
"Such glacial lake outburst floods (or GLOFs) have
killed tens of thousands of people over the past
century and destroyed valuable infrastructure such as
hydroelectric power schemes. However, this is a
complex issue. Some lakes become less vulnerable to
GLOF triggers as they get bigger, but the more water
that is available will tend to make the GLOF worse if
one occurs.”
Compiled by EM team
In 2015, ADEME and its partners launched an international network called Low Energy in Tropical Climate for Housing Innovation (LETCHI). The LETCHI collaborationis part of the Global Alliance for Buildings and Construction (GABC) and the Programme for Energy Efciency in Buildings (PEEB), in partnership with AFD and GIZ.
LETCHI is conceived with the following objectives: w exchange best practices with professionals, decision
makers, and experts;w showcase tools and initiatives that can drive action
among stakeholders;
w conduct joint actions to demonstrate the technical and economic feasibility of projects and promote their widespread adoption (through workshops, training, international events, etc.).
LETCHI network experts have prepared a Massive Online Open Course (MOOC) entitled "Sustainable Construction in the Tropics".
The elements studied and produced as part of this collaboration are available online at:www.tropicalbuildings.org www.ademe.fr www.globalabc.org www.peeb.build
Sustainable Design of Buildings in Tropical Climates