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ISSN 0974 - 0996 July-September | 2020 | Vol :: 13 | No :: 03 functional economy achieving triple bottomline with servitisation ‘cooling as a service’ for farmers servitisation benefits for energy sector the functional economy

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Page 1: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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

Page 2: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's
Page 3: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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

July

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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::

Page 4: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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

Page 5: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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

Page 6: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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

Page 7: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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

Page 8: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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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Page 9: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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

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g tr

iple

bo

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line

with

ser

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July

- S

ep

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2020

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Page 10: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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

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with

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Page 11: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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

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ber

2020

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of e

nerg

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and

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Page 12: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

July

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‘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.

Page 13: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

July

- S

ep

tem

ber

2020

a q

uart

erly

mag

azin

e of

the

soci

ety

of e

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eers

and

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ndia

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a q

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azin

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of e

nerg

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gin

eers

and

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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.

Page 14: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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

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ep

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ber

2020

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‘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

Page 15: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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

Page 16: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

‘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

Page 17: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

‘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

Page 18: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor'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

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

Page 19: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor'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

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

Page 20: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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.

Page 21: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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.

Page 22: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

July

- S

ep

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ber

2020

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

23

a q

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mag

azin

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of e

nerg

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gin

eers

and

man

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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.

Page 23: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor'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

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.

Page 24: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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

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and

man

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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.

Page 25: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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the

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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.

Page 26: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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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.

Page 27: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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26

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tem

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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.

Page 28: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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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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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.

Page 32: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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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%

Page 34: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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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.

Page 35: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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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.

Page 36: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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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:

[email protected]

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.

Page 37: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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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.

Page 38: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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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

Page 39: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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n en

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n ap

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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

Page 40: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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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.

Page 41: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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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.

Page 42: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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.

Page 43: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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.

Page 44: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor'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

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

Page 45: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor'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

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

Page 46: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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:

[email protected]

Fig 1 IoT based energy management and analytics tool

Fig. 2 IoT based EMAS setup

Page 47: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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:

[email protected]

Fig 1 IoT based energy management and analytics tool

Fig. 2 IoT based EMAS setup

Page 48: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor'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

49

a q

uart

erly

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,

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a q

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azin

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and

man

ager

s / I

ndia

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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,

Page 50: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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

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tem

ber

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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

Page 51: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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

Page 52: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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

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mat

ic fa

ll in

ren

ewab

les'

co

st in

UK

July

- S

ep

tem

ber

2020

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

55

a q

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azin

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the

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nerg

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and

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ager

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July

- S

ep

tem

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dra

mat

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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)

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2020

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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)

Page 56: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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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

Page 57: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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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

Page 58: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

mak

e va

cuum

sys

tem

s en

erg

y-ef

ficie

nt

July

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ber

2020

a q

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mak

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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.

Page 59: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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

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azin

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ety

of e

nerg

y en

gin

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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.

Page 60: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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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

Page 61: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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July

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tem

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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

Page 62: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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

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July

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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

Page 63: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's
Page 64: July-September | 2020 Vol :: 13 No 03 ISSN 0974 - 0996 · 2020. 10. 13. · case study, energy management, global focus, best practices and trendsetters. Guest Editorial editor's

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