practical problems experienced with industrial dsm projects marius kleingeld 15 august 2012
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Practical Problems Experienced with Industrial DSM Projects Marius Kleingeld 15 August 2012. Introduction. Industrial Demand Side Management (DSM) projects reduced demand by 576 MW from 2003 to 2012 - PowerPoint PPT PresentationTRANSCRIPT
Introduction Industrial Demand Side Management (DSM) projects
reduced demand by 576 MW from 2003 to 2012 32% of Eskom Integrated Demand Management (IDM)
expenditure in 2011 incurred in industrial sector Industrial DSM projects present unique challenges Specific problems of industrial
ESCOs not widely known Hamper new entrants,
inexperienced ESCOs, reduce savings
South Africa Egypt Thailand Ukraine0
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% DSM Activities Focused on Industrial Sector
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Phases: Industrial DSM Project
Phase 1: DSM Investigation ESCO markets DSM, obtains letter of intent Detail investigation, measurements, designs, costing ESCO drafts proposal, submits to client & Eskom
Phase 2: Proposal Approval Internal client funding application Process proposal through Eskom-IDM PEC, CIC and Procurement Sign Eskom and client contracts, baseline reports
Phase 3: Implementation ESCO & client scope, tenders, orders, manage installations Various milestones such as equipment delivery, factory acceptance testing (FAT),
cold/hot commissioning Phase 4: Performance Assessment
Performance of project is assessed over three months Measurement and Verification (M&V) issues savings reports
Phase 5: Maintenance Project handed over to client Client maintains project to continue savings
Client
PEC
CIC
Procurement
ESCO
M&V
Client + ESCO Implementation
Project Approval Process
Can it work? Will it be sustainable? Costs? MW reduction targets
Capital Payback
Risk Profit
Safety & health Production Maintenance
Independent measurements
Savings reporting
Costs & commercial issues Discounts SD&L
Risk Capital Investment
required
DSM Investigation Establish correct baseline
Use metering or portable power loggers Verify measured energy readings: simulated results /
alternatives e.g. log sheets Always use safety margins
Confirm that planned results are viable Not submit new technologies – experiment first ESCO must familiarise itself with client operations and requirements Verify: simulations, calculations and tests Client cooperation essential
Other risks DSM interventions often seen as threat to job security e.g. pump attendants Highlight additional benefits to counter resistance e.g. increased safety
Secure Financing Funding approvals
Timing of client & Eskom funds Delay - client budget problems Delay - Eskom contract variances Stacks of paperwork - assist client Additional requirements e.g. SD&L Process: up to 24+ months
Funding availability Present scenario (MYPD2) ends March 2013 Previously (MYPD1) Eskom-money ran out – ESCOs without new
projects for more than 12 months Clients also experience reductions in capital spend Difficult to plan ESCO business with such interruptions and uncertainty
Be prepared for “hit rate” <100%
MeasureAnalysis
Cost
Proposal Risk
R&D technology
Client (e.g. safety)
DSM proposals do not allow for red “investments”
ESCO Process
ESCO skills requirements Multi-disciplinary skills needed May be problematic for small ESCOs – contract experts
Implementation: Client Document trail
Client signs scope document, specifying preferred suppliers, equipment, procedures, etc.
Ensure site personnel and head-office personnel communicate with each other, and agree with all aspects of project
Ensures continuity with personnel changes Prevent scope creep and cost escalations Allow for scope changes e.g. new head office standard etc.
Implement: Safety & Access Safety and health not negotiable
Client induction requirements may change Unforeseen incidents e.g. accidents and site closures Additional costing must be absorbed
Limited access Project work areas may be restricted Some work e.g. mine shaft work limited to client personnel Limitations due to operation, maintenance schedules
Solution Resource planning Risk assessments
Implement: Subcontractors
Sub-contractor issues Aim for contract extensions e.g. delay tactics Limited communication and feedback, not attending meetings Failure to adhere to safety measures
Client issues Unnecessary holdups Placing additional orders on same sub-contractor
Solution: performance-based contracts with penalties
Performance Assessment #1/2
Savings targets: Performance Assessment (PA) Test evaluation conditions before official start of PA ESCO representatives to be present semi-permanently on-site
during PA
Manage PA process Feedback and corrective actions Beware of sabotage
(Client held to minimum ofPA performance or proposal)
Performance Assessment #2/2
System changes between proposal submission and implementation e.g. production increases
Duplicate measurements – do not rely exclusively on Eskom M&V
Maintaining Savings Projects often underperform quickly after ESCO hands-over
to client Client personnel have other focus e.g. safety, production Savings not linked to personnel performance indicators Personnel have limited knowledge of savings technologies Shortage of skilled maintenance personnel
Solution: Maintenance ESCO contract Performance-based Continuous training
Conclusion Cost comparison
Modern power plant: ± R26 million/MW Industrial DSM projects: ± R5 million/MW => 5 times less
Increase industrial DSM activities More ESCOs involved Additional MW-savings Save Eskom and client costs
South Africa Egypt Thailand Ukraine0
102030405060708090
% DSM Activities Focused on Industrial Sector
%