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This section of the Project Financing web page describes the main issues behind technical appraisal of energy efficiency projects. Once technical appraisal has been carried out, and options chosen and prioritised, a financial appraisal must be carried out.
The objective of a technical feasibility analysis is to assess the potential energy savings from a capital investment in plant or machinery or in operating or working practices. Each will have benefits in terms of energy and/or other cost savings. Usually more than one project is being considered and they should be ranked in order of priority, usually starting with the no or lowest cost projects
The first stage in any improvement in energy efficiency is to carry out a thorough survey of a building, or complete industrial plant, including its associated buildings to understand thoroughly how energy is being used, and wasted. The aim is to identify all suitable measures. Before considering any capital investment project of significant cost to improve energy efficiency managers should always address first possible low/no cost measures such as:
- improving control systems;
- lagging boilers and pipes;finding and repairing compressed air and steam leaks (major sources of energy loss);
- switching off pumps and compressors when not needed;
- switching off lights, air conditioning, computers etc when not in use;
- identifying sources of waste heat which can be reused within buildings or plant
Lenders will require assurance that such possibilities will have been considered and carried out if possible. It is particularly important to identify and carry out simple measures to reduce electricity and heat wastage before assessing investment in CHP (cogeneration).
Another important early step is to install Monitoring and Targeting (M&T) ie systems to measure the energy use and performance of plant as a whole and also of specific major energy using components. Further information and guidance is available from a number of sites.
Continuous monitoring of energy use in terms of energy use per unit output or throughput and comparison with previous performance and/or other similar plant, can indicate when simple changes in set point need to be made, equipment needs to be serviced etc. Not only should M&T be applied to new plant, to ensure that the best use is being made of the scarce financial resources invested but it is a vital early measure to highlight key parts of the plant for further examination; it often brings surprising but very beneficial results.
If plant is not yet at the end of its design life it may be more cost-effective to continue using it; however if new plant is being considered it may well be cost effective to plan other changes at the same time.
The steps in a typical feasibility study are as follows:
1 Define each technical option, including the system as it now is. For an industrial plant, prepare simple energy and material flow diagrams for each component where appropriate.
2 For each option, define the specific data that describe conditions or plant operations before project implementation. These data will typically include:
- existing production levels (relevant to the plant operation under investigation, eg steam production)
- daily/weekly/seasonal variations in production levels or building occupancy
- current operating schedules (eg hours worked per day/month, time of operation, number of shifts etc)
- current energy use, by fuel type, for the relevant plant operation or building type, including peak demands if appropriate
- current process related parameters such as temperature and pressure of plant or light and temperature levels for buildings
- current operating efficiency of relevant equipment, including energy usage per unit of final saleable product or energy usage per unit of comfort level eg per lumen per square foot or per square metre of building cooled/heated to a given temperature
3 For each option, define the specific data that will describe operation after implementation, such as:
- anticipated production levels or temperature level in a building
- anticipated operating or building use schedules
- future energy requirements by fuel type
- anticipated operating parameters
- operating and maintenance needs, including training
- estimated useful life of any equipment
4 Prepare the financial appraisal.
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