perform, achieve and trade
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PERFORM, ACHIEVE AND TRADEAsst Energy Economist Bureau of Energy EfficiencyMinistry of Power , Government of India
Background The National Mission for Enhanced Energy Efficiency
(NMEEE) is one of the eight national missions of the NAPCC launched by Hon’ble Prime –Minister on 30th June ,2008 with the objective of
1. Promoting innovative policy and regulatory regimes.
2. Creating Financing mechanisms, and business models markets for energy efficiency in a transparent manner with clear deliverables to be achieved in a time bound manner.
NMEEE – FOUR NEW INITIATIVES
Fiscal Instrument for EE
PRGFVCF
Public Procurement
Stimulate Funding for ESCOs
Energy Efficient AppliancesBLYSEEPDSM
Energy Intensive Industries
Targets for Mandatory Energy Saving
PAT EEFP
FEEEDMTEE
NMEEE
PAT Scheme : Scope• Covers 478 designated consumers in 8 sectors
• All DCs consume about 165 mtoe energy
• Targets would be given to all DCs to achieve the same within a time frame • Achievement > Target ECScerts• Achievement < Target Purchase ECScerts / Penalty
• National Target = 6.6 mtoe at the end of 1st PAT Cycle (by 2014-15)
Perform, Achieve & Trade (PAT) Mechanism • The market based mechanism to enhance the cost effectiveness in improving the Energy Efficiency
in Energy Intensive industries through certification of energy saving which can be traded
Administrator
•Set target and compliance period
Designated Consumers
•8 sectors Thermal Power Plant, Steel, Cement, Fertilizer, Pulp & Paper, Textile, Aluminium, Chlor-alkali
Auditing Agencies
•Independent•Monitor, verify and certify
Market Place
•Transaction of energy efficiency instrument
Reward over achiever
Penalize under performer
Sta
keho
lder
s
Set Targets
•Setting targets on the basis of current specific energy consumption
•Set compliance period•May take into account Location, Vintage, Technology, raw materials, product mix etc.
Monitoring & verification of targets by Designated Energy
Auditors (DENA)•Check if designated consumer has achieved targets
•Underachievement: Obligations to buy ESCerts or pay penalty
•Overachievement: Issuance of ESCerts for banking for later use or trade
Trading of ESCerts
•Participation by Designated consumers on platform provided by Power Exchanges
•Symmetrical flow of information Pro
cess
es
Invo
lved
Market Based Mechanism
PAT steps
Constituted PAT Steering committee
Draft Mechanism for overall structure for
PAT
Approval of NMEEE including PAT
scheme by Cabinet
Constituted Sector Technical
Committees for the formulation target
setting methodology
Collected Baseline Data
Prepared PAT Consultation
document
Conducted stakeholder consultation workshop
Developed rules for implementation of
PAT based on consultation workshops
Notified rules and targets for
Designated Consumers
Getting Information Through Base Line
Format Data Compilation/
Evaluation
Target Setting [Declaration of Base
Year, Target Year ]
Communication to Designated Consumer
Preparation Performance
Assessment Document (PAD or Form A)
Communication to BEE and SDA
Verification of PAD through DENA
(Form B)
Check Verification of PAD (Form C) through DENA & submission of compliance
doc (Form D).
PAT Activity Flow Sheet
Issuance of ESCerts after successful M&V
Baseline & Target Setting (based on last three years)
Market for Trade
(Annual submission but the target compliance for three years)
Time linesMandatory Voluntary
Submission of Form 1 Once in a year
30th June NA NA
Submission of Form A(Performance Assessment Document)
Once in 3 years
30th June 2015
Before Compliance year
30th June
Submission of Form B(Verification by AEA)
Once in 3 years
30th June 2015
Before Compliance year
30th June
Issuance of ESCerts Once in a year
Aug 2015 Before Compliance year
Aug
Submission of Form D(Performance Compliance Document)
Once in 3 years
30th Nov 2015
NA NA
Specific Energy Consumption• As the SEC is calculated on a Gate-to-Gate concept, the definition of plant
boundary plays an important role.
PROCESS
Electricity (KWH)
FO (Ltr)
NG (SCM)
Coal (KG)
Others (KG or Ltr)
Product (Kg)
All forms of Energy
E P
SEC = E / P
Plant Boundary
Baseline SEC
Target SEC
Reduction in SEC
Year 1 Year 2 Year 3
SE
C
General Rules for Establishing Baseline
• Definitions:• Baseline Year : 2009-10• Baseline Production (Pbase) : Avg. of 2007-8, 2008-9 & 2009-10• Baseline SEC (SECbase) : Avg. of 2007-8, 2008-9 & 2009-10• Baseline CU% (CUbase) : Avg. of 2007-8, 2008-9 & 2009-10• Target SEC (SECtarget) : SEC as estimated in 2014-15• Target : % reduction from SECbase
• Estimation of Energy Saving (mTOE) :P base ( SEC base – SEC target )
• Covers units using about 165 million toe/year• Gate-to-gate specific energy
consumption, collectively, to be about 5.5% less in 2013-14 than it was in 2008-09
• Less efficient units have larger SEC %-reduction targets – so that the collective SEC reduction is 5.5%
• Energy Savings Certificates (and penalties) would be based on difference between the achieved SEC & the target SEC and the base year Production
Target is Plant Specific …… Less for Energy Efficient & High for Energy Inefficient Plant
Market Design• Designated Consumers are obligated to improve energy
efficiency • Energy Efficiency Targets are %-age reduction in SEC
expressed in Absolute Savings terms• Various plants in an industry clustered on the basis of different parameters
like technology etc• Each DC will get an energy efficiency improvement percentage target• The target would be converted into absolute energy saving target (in mToE
terms) on the basis of plant capacity• The absolute energy saving target (obligations) would be applicable for a
compliance period of three years
• Designated consumer can meet target by• Undertaking energy efficiency measures themselves• Buy ESCerts from someone else to comply with the targets
Target
Baseline SEC
Target SEC
Achieved SEC
Scenario 1 Scenario 2
Compliance
Issued Escerts
Purchase Escerts
Penalty
Concept of Target, Compliance, ESCerts & Penalty
Market Design• Compliance and Reporting
• Total compliance period of 3 years (march 2015)• Designated Consumers would undertake energy efficiency measures and
submit annual reports• If submitted annual reports show over-achievement, ESCerts to be issued
for level of over-achievement• Provision of annual reporting along with penalties in case of non- compliance• After period of 3 years, a complete gate-to-gate measurement to be
undertaken for verifying SEC and plant capacity for each DC• BEE would appoint Designated Energy Auditors (DENAs) for M&V
• DENAs would be organizations, which meet minimum capability norms• DENAs would be accredited and empanelled by BEE
• BEE will initiate compliance checks on dip-check basis on both DC and Accredited Energy Auditor
• In case of non-compliance State Designated Agencies to levy penalties on DC
Proposed Institutional DesignSchematic
BEEMarket Regulator & Administrator
SDA DENADesignated Consumers
(DCs)
Central Registry Trading Exchange
Updated list of DCs and DENA
Any Baselines Improvement
Audited Result of DCs
Any Baselines Improvement
Audit
Apply for ESCerts through PAT Assessment Document (PAD)
Issuance of EScerts
Updated Obligation of DCs: Deficit or
Surplus
Updated ESCerts Account
Info
Settlement Details
ESCerts Trading
Regular updates
Regular Checks & Levy Penalties in case of defaults
E-filingApply for Empanelment
PAD Information
Mop
Vast diversity in design and operating conditions of the Plants • Vintage of these plants varies widely i.e. From yr.1967 to 1999 ( 12-32 Years).
• Size of single stream also varies widely i.e. From ammonia / urea from 600 /1000 MTPD to more than 1500 / 2600 MTPD.
• Different feed stock is used i.e NG, naphtha, fuel oil.
• Wide range of technologies are employedContd …….
Categorisation of operating urea plants
Vintage No. of Plants
1960’s1970’s1980’s1990’s
Total
2 910 9
30
Feedstock No. of Plants
GasNaphthaFuel Oil
Total
22 4 4
30
Size of Plants UREA (MTPD)
No. of Plants
≤1000>1000 but ≤ 1500>1500 but <2620≥ 2620Total2 Plants not producing urea
5 3 101028
Methodology of target setting for the Fertilizer Sector
• A portion of feed energy which is fed at Plant battery limit is contained in urea product and goes out along with it. So, it is not considered as energy consumption in the Plant. The stoichiometric value of such energy works out to be 2.53 Gcal / MT Urea. This much energy has been reduced from the reported SEC (Gcal/ MT Urea) and then weighted average for the last 3 years has been worked out.
Major Points• Target: In % of Specific Energy Consumption• ESCerts: in toe with 1 metric toe = 1 ESCert• For ESCerts or Penalty:• (Baseline Production) x (% change in SEC)
Example • SEC in baseline: 10 toe/unit of production• Baseline Production: 10000 units• Target: 4% reduction in SEC• SEC at the end of 2014-15: 9.6 toe/unit prod• For ESCerts or Penalty:
• Reduction requirement: 4000 toe• Case1 (Achieved SEC = 9.8): -2000 toe (Penalty)• Case2 (Achieved SEC = 9.4): +2000 toe (ESCerts)
Market Design• ESCerts are issued
• When energy efficiency improvements surpass targets • With 1 mToE = 1 ESCert• Banking of ESCerts allowed during each cycle
• 1st cycle ESCerts to 2nd cycle• 2nd cycle ESCerts to 3rd cycle
Advanced ESCerts• Baseline, SEC(b) = 10 toe/t • Target, SEC (t) = 7 toe/t• Achieved after year 1, SEC (a) = 8.5 toe/t• Production = 10000t
• AFTER YEAR 1• ESCerts =[SEC(b) – (SEC (b)– SEC (t))/3) – SEC(a)] x 80% x prod = ((10 – (10-7)/3) – 8.5)) x 0.8 x 10000 = (9-8.5) x 8000 = 4000 ESCerts
Revised Target = SEC(t) – (ESCerts/Prod) = 7 – (4000/10000) = 6.6 toe/t
Penalty CalculationP = Wc x Pc + Wo x Po + Wg x Pg + We x Pe
Where-P =Price of one metric ton of oil equivalent(1mtoe);Pc=Price of F-grade coal declared by Ministry of Coal;Po=Price of fuel oil as declared by Ministry of Petroleum & Natural Gas;Pg=Price of gas as declared by Ministry of Petroleum & Natural Gas;Pe=Price of electricity;Wc= Weightage of coal;Wo= Weightage of oil;Wg= Weightage of gas;We=Weightage of grid electricity
The value of per metric ton of oil equivalent of energy consumed is Rupees 10154 for the year 2011-12
NORMALIZATION FACTORS
Input Primary Energy [Fuel]
Input Secondary Energy [Electricity]
Capacity Utilization or PLF
Technology & Environment Standard
Raw Material and Product
Natural Disaster
PAT Normalization
Normalization Area
Plant has to maintain the relevant documents to justify their cause
Input Primary Energy[Fossil Fuel]
• Fuel Linkage and Quality of Fuel• Use of Biomass• Non Availability of Fuel• Re-Cycling• By Product used as Fuel
Input Secondary Energy[Ex: Electricity, Steam]
• Purchased from Grid• Through Captive Power Generation• Through Waste Heat Recovery• Export to Grid• Renewable Energy
Capacity Utilization and PLF[Poor Performance]
• Fluctuation due to Scheduling• Effect due to Market Demand• Non-availability of fuel or Raw Material
Raw Material & Product[Quality, Output Type]
• Quality of Raw Material• Output Product Change• Production Semi-finished Product• Input Semi-finished Product
Environmental Standards and Natural Disaster[Gov policy]
• Change in Standards• Change in Government policy
• Natural disaster• Rioting or social unrest
THANK YOU
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