An analysis of data from the Enterprise

Energy Audit Program

An analysis of data from the Enterprise

Energy Audit Program

Fourth report for the Energy Efficiency

Branch, Commonwealth Department

of Primary Industries and Energy

Jane Harris, Leeann Weston,

Suthida Warr and Alistair Peat

November 1 996

AB ARE

Harris, J., Weston, L., Wan; S. and Peat, A. 1996, An Analysis of Data from the Enterprise Energy Audit Program, ABARE repoa to the Energy Efficiency Branch, Commonwealth Department of Primary Industries and Energy, Canberra, November.

Australian Bureau of Agricultural and Resource Economics GPO Box 1563 Canberra 2601

Telephone (06) 272 2000 Facsimile (06) 272 2001 Internet http://www.abare.gov.au

ABARE is a professionally independent government economic research agency.

ABARE project 1435

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Contents

Summary

I . Introduction The Enterprise Energy Audit Program ABARE's role

2. Method

Classification of recommendations Calculating representative values Measuring potential returns to energy efficiency investments Carbon dioxide emission reductions Clarifying the data set

3. Main findings Potential energy savings and carbon dioxide reductions Results, by industry Results, by state and territory Results, by savings measure Results, by savings area Potential returns on energy efficiency investments Additional findings Analysis of follow-up questionnaires

4. Issues and recommendations Design of application forms Design of follow-up questionnaires EEAP data Further research needed

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Appendixes A Description of energy savings measures B Interquartile ranges across industries and areas C Sensitivity analysis D Carbon dioxide coefficients E Internal rates of return and discounted payback periods F Annual values of savings measures G Internal rates of return and payback periods for savings areas H Median net present value, by savings measure

References

Attachments 1 Follow-up questionnaire 2 Enterprise Energy Audit application form

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Figures A Cumulative total energy audit reports completed B Energy audits, by state C Potential energy savings, by state, 1995-96 D Distribution of potential energy savings

Tables 1 Classifications used for savings areas 8 2 Classifications used for savings measures 9 3 ASIC industry groupings 13 4 State groups 13 5 Median per firm results 14 6 Average per firm results 15 7 Total potential annual savings 15 8 Median annual per measure values, by industry 16 9 Median annual per measure values across the

manufacturing industry 16 10 Median annual per measure values across the community

services sector 17 11 Median annual per measure values, by state and territory 17 12 Median annual values across savings areas 18 13 Median net present value, by industry 19 14 Median net present value, by state and territory 20 15 Median net present value, by savings areas 2 1 16 Median energy savings and net present value, by areas which

cost $100 or less 22 17 Median energy savings and net present value, by measures which

cost $100 or less 22 18 Reasons for firms not implementing recommendations 23

B1 Interquartile ranges across industries B2 Interquartile ranges across areas

C1 Median net present values, by industry, for different discount rates 35

C2 Median net present values, by industry, for different economic lives 35

Dl Carbon dioxide coefficients for each major fuel type used to derive the level of potential C02 savings 36

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El Median internal rates of return and discounted payback periods, by industry 37

F1 Median annual values, by savings measure 38

G1 Median internal rates of return and discounted payback periods, by savings area 39

H1 Median net present value of savings areas and measures 40

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Summary

ABARE analysis of EEAP The Enterprise Energy Audit Program (EEAP) is a Commonwealth gov- ernment program, administered by the Department of Primary Industries and Energy (DPIE), that is designed to improve energy efficiency and reduce greenhouse gas emissions in the industrial and commercial sec- tors. The program reimburses some of the costs of undertaking an ener- gy audit.

The program also generates important information on the potential ben- efits available in different energy uses, industries and sectors. Audit reports for a thousand (1032) firms have been completed since the begin- ning of EEAP in July 1991. This is the fourth summary review report ABARE has prepared on the extensive EEAP data. The purpose in this report is to synthesise the data into useful measures of potential energy savings, potential reductions in carbon dioxide emissions and the attrac- tiveness of investments in energy efficiency.

ABARE's package of information can be used to evaluate the progress of EEAP in meeting its objectives, and to identify trends in the data which may have broader policy implications.

Analysis is conducted at the industry level, industry subgroup level (where possible), state level and for various areas and measures of poten- tial energy efficiency improvements.

As the database grows it is becoming possible to identify trends by com- paring results with those of previous years. Figure A shows the number of audit reports analysed against the number collected for the period 1992- 93 to 1995-96. The proportion of reports which contain appropriately specified data for analysis continues to increase as the program is improved.

Manufacturing and community services sector firms account for close to 30 per cent and 20 per cent of the total number of audit reports respec- tively.

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A Cumulative total energy audit reports completed

I Survey reports analysed

Survey report numbers

800 -

600 -

400 -

200 -

no.

As was also reported in the 1995 ABARE study, the largest number of audit report recommendations relate to lighting, and the most common energy savings measure is to install automatic timers or sensors. These are relatively low cost measures which yield significant energy savings and their identification is therefore important.

As shown in figure B, New South Wales and the ACT, and Victoria joint- ly account for almost 60 per cent of participants in the energy efficiency audit program.

- B Energy audits, by state

I Victoria 25% I

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Main findings

The median annual potential energy saving across all the audited f irms is 1001 gigajoules, valued at $30 500. This is similar to last year's finding.

These potential savings correspond to a potential annual reduction in car- bon dioxide emissions o f 223 tonnes per firm, again similar to last year. These results are detailed in table 5 of this study.

The total value o f potential savings represents close to 12 per cent o f the total energy costs o f firms in the sample.

The highest potential energy savings, which also offer the largest poten- tial reduction in carbon dioxide emissions, are found in the manufactur- ing sector. In previous years the 'electricity, gas and water' sector has offered the largest potential for reductions in carbon dioxide emissions. Results are shown in table 8.

Within the manufacturing sector, the highest potential energy savings are in the textiles industry, while the highest potential value of savings and potential carbon dioxide reductions are found in the wood, wood prod- ucts and furniture industry.

Within the community services sector, the highest potential energy sav- ings in gigajoules and in carbon dioxide emissions are still estimated to be in the health services sector.

At the state level, the highest median potential savings are found in Queensland followed by New South Wales and the ACT. Median savings, by state, for 1995-96 are shown in figure C.

Theareas which offer the highest potential energy savings are those where energy is used for steam production and process heating. Steam production is also the area where carbon dioxide emissions are potentially highest.

The savings measures which are estimated to generate the highest poten- tial savings are the use o f cogeneration and the installation o f high effi- ciency motors.

As in other years the most attractive investments, or those with the high- est potential returns (taking account o f the costs o f implementation as well as the savings generated) are in the 'electricity, gas and water' industry, followed by the transport and then the manufacturing industry. The extent

ENERGY A UDZT

C Potential energy savings, by state, 1995-96

I New Soutlt Waler Victo"a Queenslond South Western Tnsmania Northern and ACT Australia Australia Territory

of the difference in the economics of energy efficiency options between the electricity, gas and water and other sectors has narrowed significanl- ly since last year.

The highest potential returns to energy saving investments on a state basis are found to be in South Australia.

Energy saving investments which can be undertaken at relatively low cost but still generate large potential returns relate to the use of energy in light- ing, industrial equipment and air conditioning.

About 96 of the firms which participated in the audit program reported potential energy savings of more than 10 000 GJ a year. These firms rep- resent only 11 per cent of all firms in the analysis but account for 71 per cent of potential energy savings. The majority of these firms (68) are in the manufacturing sector. The measures for which potential energy sav- ings exceed 10 000 GJ a year are the use of high efficiency motors and alternative energy sources as defined in appendix A.

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Important issues

In 1995-96, 44 per cent of audit report participants returned the follow- up questionnaire, compared with 37 per cent in 1994-95.

Of firms responding to the follow-up questionnaire in 1996, the majority (60 per cent) reported that they had implemented some but not all of the recommendations. Seventeen per cent reported that they had implement- ed all the recommendations, while 8 per cent had implemented none. The remaining respondents did not provide enough information to be includ- ed in the analysis.

The poor response rate by firms to the follow-up questionnaires is of con- cern because the data are necessary to enable an accurate assessment of the extent to which the program is fulfilling its objective of initiating increased investment in energy efficiency. Firms commit themselves to taking part in the follow-up questionnaire as a condition of receiving audit funding support so it appears that more could be done to ensure that this commitment is met.

Despite the poor follow-up questionnaire response rate, it is safe to say that the limited implementation of recommendations by respondents is an area requiring further investigation. A principal area of research should be whether the full costs of implementing recommendations are captured by current EEAP audit evaluation methods and procedures.

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1. Introduction

The Enterprise Energy Audit Program The Enterprise Energy Audit Program (EEAP) commenced in 1991 and is run by the Energy Efficiency Branch of the Commonwealth Department of Primary Industries and Energy (DPIE). It is designed to address a perceived problem (or possible failure) in the energy market - that firms have imper- fect information on the potential benefits of higher energy efficiency and are therefore underinvesting in measures which could generate improvement.

To cite the EEAP information brochure, 'All Australian businesses and organ- isations can improve productivity, achieve energy and cost savings and at the same time help prevent damage to our environment. An energy audit can iden- tify where energy and cost savings can be made without reducing output or quality of the product or service.'

Because improvements in energy efficiency by individual firms can have wider benefits for the economy and the environment, the cornerstone of EEAP is that funding is provided for energy audits to be undertaken by individual firms. The funding provided is 50 per cent of the cost of the audit, up to a maximum of $5000. Firms are required to seek and receive funding themselves. That is, the audits are not imposed on firms.

Energy audits identify the types and quantities of energy used by firms and the scope for more efficient energy use by the firms. The reports usually include recommendations on potential savings available through various measures (such as upgrading, maintenance and repair) in various areas (such as lighting and air conditioning).

The EEAP audits must be conducted by an energy auditing organisation which has been accredited by the Institution of Engineers, Australia. Participants in the program are required, as a condition of receiving funding, to complete a follow-up questionnaire within twelve months of the audit. This questionnaire indicates which of the recommendations have been implemented and the actu- al savings achieved. If recommendations have not been implemented, partic- ipants are requested to give the reasons why.

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ABARE's role

This is the fourth in a series of ABARE summary reports, commissioned by DPIE, on the information contained in the audit reports (Mander and Wilson 1993; Warr, Wilson and Holmes 1994; Melanie, Chang and Shan 1995). The purpose of the ABARE analysis is to synthesise the vast quantity of EEAP data into a succinct package of information. This package can be used to evaluate the progress of EEAP in meeting its objectives, and to identify trends in the data which may have broader policy implications.

ABARE provides estimates of potential energy savings and associated reduc- tions in carbon dioxide emissions. This information is broken down to an industry level and to the level of savings area (such as lighting and air condi- tioning) and the level of savings measure (such as upgrading maintenance and repair). Similarly, the attractiveness of investments, or the potential returns from undertaking the recommended energy saving measures, are shown. The data set has grown over the years since EEAP commenced and this has allowed more disaggregated results on an industry subgroup basis, giving a more accu- rate picture of trends in energy efficiency within firms.

Potential returns are reported in various forms. The net present value (NPV) of an investment (the future stream of costs and benefits discounted to current dollar terms) is generally regarded as the best criterion for ranking investments. This is because it can be used to compare projects with different flows of costs and benefits over time. A positive NPV indicates a net benefit to the investor (at the specified discount rate) so that the investor would be 'rational' in under- taking the investment - that is, the investor could not obtain a better return by investing in the money market at the specified discount rate. However, because firms often implicitly apply some maximum payback period, ABARE calculates NPV for a number of subgroups: those with payback periods of less than two years, payback periods of less than four years, and unlimited pay- back periods.

In many ways the method and format of the 1996 report parallel those of pre- vious years' reports. However, EEAP has now been running for sufficient time for it to be possible to identify some interesting trends in the data, particular- ly with respect to carbon dioxide emissions at the industry level. There were 1032 audit reports available for analysis by ABARE this year; an additional 233 on last year's total. These additional reports were collected between 1 July 1995 and 30 June 1996. Follow-up implementation questionnaires are also analysed in the 1996 study. Finally, ABARE is asked to comment on EEAP, in terms of operational aspects (such as design of the survey forms) and any other ways the program might be improved.

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2. Method

Class$ication of recommendations Each firm participating in EEAP receives a sizable audit document containing detailed and specific recommendations. However, ABARE's analysis is based on summary cards of these recommendations, which vary widely in the infor- mation they contain. So for ease of computer analysis, the recommendations need to be classified into a savings area and then a savings measure. For exam- ple, the recommendation could refer to the savings area of lighting, with the specific measure being to switch to more efficient light globes.

For this study, fifteen savings areas (table 1) and nineteen savings measures (table 2) are used. The number of recommendations associated with each savings area and measure are also listed in the tables. Note that of the 285 possible categories, many are not used as some savings measures do not apply to certain savings arcas. Descriptions of the energy savings measures are provided in appendix A.

1 Classifications used for savings areas

Number of Code savings area rrcommendations

A Lighting 1135 B Air conditioning 628 C Generators 10 D Compressors 238 E Water heating 357 F Steam production 46 G Space heating 166 H Chiller plant 116 I Boilers 194 J Refrigeration 129 K Process heating 84 L Conveyors 20 M Mechanical services 342 N Industrial equipment 24 1 0 General 769

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2 Classifications used for savings measures

Code Savings measure

Maintenancelrepair Reduce number Upgrade Automatic sensinglswitching Load management or shifting Change tariff Alternative energy source Improved insulation: building or equipment High efficiency motors, incl. variable speed drives Temperature control Waste heat recovery Power factor correction Staff training Energy management systems Housekeeping Use cogeneration Improved building ventilation Adjust settings Economv cvcle

Number of

Calculating representative values Representative, or summary values, are useful in giving a broad overview of a large data collection. In this report the recommended savings are summarised by area and measure, for each industry and state.

Several approaches are available for summarising the potential savings asso- ciated with the recommendations:

An average of all potential savings in the various categories can be cal- culated. For example, the average potential energy saving from all the reports for Queensland could be used to provide a representative value for this state. Averages are useful summary statistics for data with symmet- ric distribution but can provide a misleading summary of data if the dis- tribution is skewed (figure D).

The median of the data can usefully be identified where the data have a skewed distribution. The median is the point that divides the distribution of results in two, so that 50 per cent of the observations lie below and 50 per cent lie above. It is the main summary statistic used in the 1996 data

ENERGY AUDIT

1 D Distribution of po~ential energY~v ings

80 I Median = 987 Avenge = 12 332

70

analysis. Median values for potential energy savings (figure D), carbon dioxide emission reductions, and potential returns are provided.

The interquartile range can also be used when the distribution of data is skewed. To calculate this, the distribution is divided into quarters and the observations which bound the middle two quarters comprise the interquartile range. Twenty-five per cent of observations lie below the first quartile and 25 per cent above the third quartile. Interquartile ranges are presented in appendix B.

Measuring potential returns to energy eficiency investments

The audit reports provide estimates of the potential energy savings and the costs of implementing the recommended measures. In assessing whether to implement the recommended measures an enterprise will consider not only the magnitude of the potential saving, but also the return on the initial invest- ment. There are a number of possible approaches to measuring the attractive- ness of investments.

As previously mentioned, the net present value (NPV) of an investment is the sum of all discounted costs and benefits (or savings) from the investment. The future streams of costs and benefits are discounted to current dollar terms. To calculate the net present value it is necessary to specify the discount rate, the life of the investment (or for how many years the benefits will flow), the

ENERGY AUDIT

initial outlay and the size of the benefits each period. A positive net present value indicates a net benefit to the investor while a negative result indicates a net loss.

The internal rate of return (IRR) is the rate of interest that equates the present value of benefits with the cost of the project. It is found by setting the net pre- sent value equal to zero, for a given economic life of the investment, and solv- ing for the discount rate. The internal rate of return can be compared with the market rate of return to assess the attractiveness of the investment.

The discounted payback period is the number of years before the investment breaks even - that is, where the net present value equals zero. It is found by setting the net present value equal to zero, for a given discount rate, and solv- ing for the number of years.

Theoretically, the best criterion for ranking investments is the net present value. It can be used to compare projects with different flows of costs and ben- efits over time. For projects with different flows of costs and benefits over time, the other two criteria can lead to rankings which do not necessarily reflect the most attractive investment option. That is, the project with the highest net pre- sent value, which is therefore the most attractive option, will not necessarily have the highest internal rate of return and shortest payback period.

However, the payback period is often used by firms as a guiding principle. For example, unless the returns will cover the initial outlay within a few years, many firms may not be interested, even if the net present value over the full life of the investment is high. Firms often implicitly apply some maximum payback period. To take account of this sort of behaviour, in this study net pre- sent values are calculated for a number of investment subgroups: those with payback periods less than two years, those with payback periods less than four years, and those with an unlimited payback period.

A number of assumptions must be made when calculating net present value, internal rate of return and payback periods. The following assumptions are made in this study:

The economic life of an investment is ten years. Sensitivity analysis is also undertaken for an economic life of five years. This assumption is nec- essary because the audit reports often do not provide information about the expected economic life of investments.

The real discount rate is 8 per cent. Sensitivity analysis is also undertak- en with a discount rate of 6 per cent.

11

ENERGY AUDIT

The full cost of investments is incurred at the start of the first year. Benefits, in the form of energy savings, flow uniformly over the life of the investment. The cost of the audit is not included in the analysis as the aim is to assess the attractiveness of recommended investments not the economic viability of the audit.

All values are in constant 1991-92 dollars, allowing comparisons with the results of the studies undertaken between 1993 and 1995.

Sensitivity analyses of the discount rate and the economic life of the invest- ment are reported in appendix C. As would be expected, the net present val- ues decrease as the discount rate increases, and increase as the economic life of the investment is increased.

Carbon dioxide emission reductions To calculate the carbon dioxide (CO,) emission reductions associated with each recommendation, assumptions must be made about the emissions asso- ciated with different fuels based on the average carbon content of each fuel. The emission coefficient assumptions are presented in appendix D, with esti- mated C02 savings reported in tonnes.

Clarifying the data set Since EEAP began in 1991, 1032 reports have been returned and provided to ABARE for analysis. Of these reports, however, 168 could not be included in the analysis because of incomplete or unclear information (discussed further in section 4). For examvle. in manv cases insufficient information was pro- . . vided on energy saved in gigajoules-(~~), the dollar amount saved and thecost of imvlementation. Therefore. the final data set analvsed in this report involves

The number of firms in the final data set, by industry and state, are shown in tables 3 and 4 respectively. Compared with the 1995 study, there are more firms in most of the industry groupings. In particular there are significantly more firms in the manufacturing sector, with an increase from 191 in 1995 to 255 in 1996, and in the 'recreation, personal and other' sector (99 to 136).

At the state level, more than half of the firms in the database are from New South Wales and the ACT or Victoria. The data analysed in this report display a comparable state level distribution of firms to the data analysed in the 1995 report.

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3 ASIC industry groupings

Industry Agriculture, forestry, fishing and hunting n

Mining Manufacturing Electricity, gas and water Construction a Wholesale and retail trade Transport and storage Communication a Finance, property and business services Public administration and defence Community services Recreation, personal and other

Tota l h

ASIC number

0 1 4 5

Number of firms

.

a These groups were excluded from the overall industry analysis because of the small size of the sample (that is, less than ten observations). b This total differs from that reported elsewhere because some finns were reported a5 undertaking activities under two or more different ASIC groups.

Data from the follow-up implementation questionnaires were also provided for analysis. In 1996 149 follow-up questionnaires were completed, taking the total number completed since 1991 to 450. However, in many cases the information provided was not sufficiently detailed and clear to be used in the analysis.

Number of firms

New South Wales and ACT 297 Victoria 214 Queensland 112 South Australia 83 Western Australia 1 09 Tasmania 36 Northern Territory 13

Total 864

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3. Main findings

Potential energy savings and carbon dioxide reductions Median annual potential energy savings per firm, and the associated carbon dioxide reductions, are reported in table 5. The final row shows the median across all recommended savings measures. The first two rows show the poten- tial savings from those measures with a restricted payback period. Firms may disregard many investments with a relatively long payback period.

In simple terms, the table shows that a 'typical' firm has potential energy sav- ings of about 1000 GJ a year, valued at $30 500 a year, and representing car- bon dioxide reductions of 223 tonnes a year. This firm could save more than half of this by only adopting recommended investments with a payback peri- od of less than two years.

Average per firm results, reported in table 6, are higher than the median results of table 5. This is because there are a few extreme values in the data set (the data set has a skewed distribution) and so, as explained before, the average is not such a statistically sound measure in this case.

Total potential savings across the whole sample, again with results for various payback periods, are reported in table 7. The total energy used by firms in the study is 13.24 million GJ a year, and the total annual cost is $690 million. The potential savings associated with the recommendations represent significant proportions of total energy consumption and total energy cost. If all the rec- ommended measures were undertaken, an estimated 10.5 per cent of current energy consumption by the audited firms would be saved, and a correspond- ing 15.2 per cent of total energy costs saved. If only those recommended

5 Median per firm results

Energy co2 Energy Net present savings reductions savings value

GJIyr UY r $/yr $

Discounted payback period 2 years or less 48 1 110 176 56 59 967 4 years or less 843 179 26 200 76 218

All measures 1 001 223 30 500 66 281

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6 Average per firm results

Energy coz Energy Net present savings reductions savings value

GJIyr ~ I Y I. $lyr $

Discounted payback period 2 years or less 6 092 788 59 548 189 313 4 years or less 9 672 1 339 83 460 220 856

All measures 12 489 1 687 96 009 190 804

7 Total potential annual savings

Total potential Share of total Total potential Share of the energy savings firm energy use energy savings total cost of energy

Discounted payback period 2 years or less 4 995 243 5.3 48 829 481 4 years or less 8 327 737 8.4 71 859 279

All measures 10 753 306 10.5 82 664 027 15.2

measures with short payback periods - less than two years - were imple- mented, the estimated energy and cost savings would be 5.3 per cent and 9.3 per cent respectively.

Results, by industry The median annual potential energy savings in each industry are shown in table 8. The highest potential savings in gigajoules are estimated to be in the man- ufacturing sector, as has been the case in previous years. In dollar terms the biggest potential savings are to be found in the 'electricity, gas and water' sec- tor. In 1994 and 1995 this sector also accounted for the greatest potential reduc- tions in carbon dioxide emissions. The full set of available data now suggests that it is the manufacturing sector where investments in energy efficiency afford the highest potential carbon dioxide reductions.

Firms take into account not only the benefits of investments in energy effi- ciency but also the costs of such measures. This means that the industries with the highest potential savings are not necessarily the ones where the energy effi- ciency investments are the most attractive. The appropriate indicators of the economic viability of the investment, net present values, are reported in the

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8 Median annual per measure values, by industty

Energy Energy co2 savings savings reductions

GI $ t Industry Agriculture, forestry, fishing and hunting a 200 10 500 37.62 Mining 135 6 290 36.05 Manufacturing 260 7 293 53.30 Electricity, gas and water 77 15 000 20.56 Construction a 130 2 262 34.79 Wholesale and retail trade 77 3 480 19.22 Transport and storage 169 7 000 40.05 Communication a 189 7 204 50.33 Finance, property and business services 58 2 200 13.35 Public administration and defence 46 1 740 11.75 Community services 44 1 490 8.59 Recreation, personal and other 66 2417 13.88

a The samples for these industries contains less than ten firms.

following section. Payback periods and internal rates of return are reported in appendix E.

The results were also disaggregated into industry subgroups for industries with a large enough sample - the community services sector and the manufactur- ing sector. Median values for industries within the manufacturing sector and the community services sector are reported in tables 9 and 10 respectively.

--

9 Median annual per measure values across the manufacturing indushy

Subindustry Food, beverages and tobacco Textiles Wood, wood products and furniture Paper, paper products, printing and publishing Chemical, petroleum and coal products Non-metallic mineral products Basic metal products Fabricated metal products Transport equipment Other machinery and equipment Miscellaneous manufacturing

Enersy savings

Energy savings

$

co2 reductions

ENERGY A UDZT

10 Median annual per measure values across the community services sector

Energy Energy co2 savings savings reductions

GJ $ t

Subindustry Health 75 2 039 12.38 Education, museum and library services 35 1 078 6.68 Welfare and religious institutions 10 387 2.67 Other community services 50 2 479 11.84

Within the manufacturing sector, the highest potential energy savings in giga- joules are in the textiles industry; in last years' report they werein 'wood, wood products and furniture'. This latter industry still has the highest potential sav- ings in dollars and in potential carbon dioxide reductions. As expected, the potential energy savings within subgroups of the community services sector are significantly lower than for the subgroups within the manufacturing sec- tor. However, within the community services sector, health services are esti- mated to have the highest potential for energy savings in gigajoules.

Results, by state and territory The median potential savings and carbon dioxide reductions, by state, are shown in table 11. The highest median savings are found in Queensland fol- lowed by New South Wales and the ACT (combined), and South Australia. Queensland is also estimated to have the highest potential for carbon dioxide reductions. This may be because the fuels saved in Queensland, such as black coal for electricity generation, have larger carbon contents than fuels used for these processes in other states.

11 Median annual per measure values, by state and territory

Energy savings

GJ

New South Wales and ACT 107 Victoria 101 Queensland 127 South Australia 106 Western Australia 45 Tasmania 52 Northern Territory 74

Energy savings

$

co2 reductions

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Although the orderings of the states are the same as they were last year, the gaps have narrowed significantly, mainly because potential savings in Queensland have come down.

Results, by savings measure Using cogeneration is the savings measure which has by far the greatest poten- tial to generate savings and is associated with the largest potential reduction in carbon dioxide emissions (3.5 million tonnes a year compared with 0.5 for the measure with the next highest potential, maintenance of process heating). More detailed statistics on the energy savings and carbon dioxide reductions from each saving measure are provided in appendix F.

Results, by savings area The savings areas with the highest potential energy savings are those where energy is used for steam production and process heating (table 12). Steam pro- duction is the area with the highest potential by far for savings to be made in terms of gigajoules, dollars and carbon dioxide reductions. Energy efficiency

12 Median annual values across saving areas

Savings area Lighting Air conditioning Generators Compressors Water heating Steam production Space heating Chiller plant Boilers Refrigeration Process heating Conveyors Mechanical services Industrial equipment General a

Energy savings

GJ

Energy savings

$

co2 reductions

t

. -

a Mwt of the recommendations in this area involve dollar savings, but not necessarily energy savings - for example, swttching to off peak tariffs

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gains in this area arise mainly from improved energy management systems and waste heat recovery.

Potential returns on energy eficiency investments So far only the savings associated with energy efficiency investments have been discussed but, as previously mentioned, a number of factors influence the attractiveness such investments. These factors -the size of the potential sav- ings, the cost of implementing arecornrnendedmeasure, the timing of the costs and benefits associated with energy efficiency investment, and the value the investor places on funds - are encapsulated in the measure known as net pre- sent value. Given the number of other factors involved, it is not surprising that the industries, states, measures or areas with the largest potential savings do not necessarily offer the most attractive investments.

In this section, a ranking of the recommendations from the audit reports by their net present value is provided. Median net present values are shown for those rec- ommendations with a payback period of four years or less. This removes the effect of some extreme values, and also more closely replicates real world behav- iour. Ovcr 85 per cent of the recommended savings measures fall into this category. Other indicators of the attractiveness of investments - the internal rate of return and discounted payback period - are presented in the appendixes.

Median net present values, by industry, are shown in table 13. As in previous years, the most attractive energy efficiency investments are in the electricity,

13 Median net present values, by industry

Net present value

$

Electricity, gas and water 50 651 Transport and storage 40 274 Manufacturing 33 897 Communication a 33 613 Agriculture, forestry, fishing and hunting a 28 020 Mining 26 255 Wholesale and retail trade 14 827 Construction a 12 169 Recreation, personal and other 11 332 Finance, property and business services 9 420 Public administration and defence 7 630 Community services 7 017 a The samples for these industries contain less than 10 firms.

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14 Median net present values, by state and territory

South Australia New South Wales and ACT Queensland Tasmania Northern Territory Victoria Western Australia

Net present value

$

18 224 18 169 18 107 14 015 13 981 12 801 11 689

gas and water industry, followed by the transport and manufacturing sectors. The extent of the difference between electricitv, gas and water and other sec- .. - tors has narrowed significantly since last year. The lowest net present values are in the public administration and defence, and community services sectors.

Median net present values, by state, are shown in table 14. The most attractive energy efficiency investments are in South Australia; last year Queensland headed the list. Western Australia and Victoria are estimated to have the low- est net present values for energy saving investments.

Median net present values, by savings area, are shown in table 15. The largest potential net returns by far are in the area of steam production. After this, the area of process heating is important, with recommendations involving changes to energy management systems and load management. Also important are energy efficiency investments in the 'general' category, again through changes to energy management systems, and also through tariff changes. Relatively small returns are estimated for the areas of lighting and water heating. Note, however, that for the area of lighting in particular, relatively small returns per firm are offset by the fact that a large number of firms could potentially make improvements in this area. This is discussed in more detail later.

Median net present values, by savings measure, are reported in appendix H. Waste heat recovery is estimated to generate the highest net present value. Load management through the synchronising of production times of industrial equipment, and the upgrading of machinery and equipment also provide rela- tively high potential returns. Some measures which have higher net present values, such as the installation of high efficiency motors for conveyors, have not been included here because of the small sample sizes.

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7 C Median netpresent values, by savings areas

Steam production General Process heating Generators Boiler Chiller plant Conveyors Industrial equipment Compressors Mechanical services Air conditioning Refrigeration Space heating Lighting Water heating

Net present value

$

75 229 48 169 48 614 37 786 31 488 30431 30 361 27 941 27 255 23 116 17 066 15 391 12 746 8 066 7 817

Additional findings As reported in the 1995 study, it is important to identify measures which can be undertaken at a relatively low cost but which still generate large positive net present values. The identification of such options can be very useful for enterprises willing to undertake relatively small investment projects because of problems in securing funds or the higher risks involved in large investments.

Results for recommended measures which cost less than $100 are shown in tables 16 and 17. As in the 1995 report, this analysis tends to confirm that most of the recommendations in this category relate to the use of energy in the areas of lighting, industrial equipment and air conditioning, and involve measures such as housekeeping and adjusting settings.

At the other extreme there appear to be about 96 firms with potential energy savings of more than 10 000 GJ a year. These firms represent around 11 per cent of all firms in the analysis and account for 71 per cent of the potential energy savings. Again, the majority of these firms (68) were from the manu- facturing industry. The measures for which potential energy savings exceed 10 000 GJ a year are the use of high efficiency motors and alternative energy sources.

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16 Median energy savings and netpresent values, by areas which cost $100 or less

Savings area Lighting Air conditioning Generators Compressors Water heating Steam production Space heating Chiller plant Boilers Refrigeration Process heating Conveyors Mechanical services Industrial equipment

Number of recommendations

no.

Energy savings

Net present value

17 Median energy savings and net present values, by measures which cost $100 or less

Savings measure Maintenancelrepair Reduce number Upgrade Automatic sensinglswitching Load management or shifting Change tariff a Alternative energy source Improved insulation High efticiency motors Temperature control Waste heat recovery Power factor correction a Staff training Energy management systems Housekeeping Improved building ventilation Adiust settines

Number of recommendations

no.

Energy savings

GI

Net present value

$

- a These memures do not result in energy savings in gigajoules, but they do result in dollar savings (a- unit energy costs are lower).

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Analysis of follow-up questionnaires

Recipients of the EEAP subsidy are required to complete a follow-up ques- tionnaire within twelve months of the completion of the audit report. The ques- tionnaires are designed to identify whether the recommended savings measures have been implemented, and if so what the actual savings achieved were. If the recommended measures have not been implemented, the respon- dents are asked to report on the reasons underlying their decisions.

Since the start of the EEAP, 450 questionnaires have been returned. This com- pares with only 300 or so questionnaires that had been returned when ABARE analysed the program in 1995. The poor response reflects the delay in the return of follow-up questionnaires of up to a year after the audit reports are com- pleted. However, it appears that there is little incentive for firms to make the effort to complete their undertakings as specified in the audit subsidy agree- ments.

From the 450 completed questionnaires supplied to ABARE for analysis, over 50 per cent of firms responded that they did not implement some or all of the recommendations, and gave reasons for not implementing. The reasons for not implementing are summarised in table 18. Note that a new follow-up ques- tionnaire (attachment 1) allows more reasons than these to be provided; how- ever, this new form does not yet account for a significant part of the ABARE analysis.

The most commonly reported reason for not implementing the recommended measures was that these measures were perceived to be uneconomic. Lack of funding was also reported as imposing a constraint on the implementation of energy saving measures. Other reasons for not implementing measures include insufficient information supplied by the auditor and organisational changes which made some of the recommended measures inappropriate.

18 Reasonsforfirms not implementing recommendations

Reason Number

Too costlylnot economic Lack of funding Other

Total

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A further 102 firms indicated that they had implemented the recommenda- tions, were in the process of implementing them, or were still considering the recommendations.

A total of 88 firms did not provide adequate information to be included in either of the above two groups (that is, not implementing or implementinglplanning to implement/considering implementation). As a result these firms were not included in the analysis.

There were several problems with responses of firms within the group whose follow-up questionnaires were not included in the analysis. Some firms report- ed having implemented or not implemented some of the recommendations, but a number of measures recommended in the audit reports were missing or detailed information on which measures in which areas were implemented was missing. In addition, a number of firms did not report whether they imple- mented recommended measures or not. Another group of respondents said that the recommendations were not implemented but gave no reason or unclear rea- sons. Some firms implemented recommendations but failed to report any actu- al savings as a result of undertaking the recommendations. This may reflect the short period between their implementation and the completion of the ques- tionnaire. A further problem identified in the follow-up questionnaires was that the implemented measures did not correspond with the measures recom- mended in the original audit report. Lastly, in some cases, firms reported that the accuracy of energy savings and the costs of implementation supplied by auditors was questionable.

A total of 198 firms provided adequate information on actual energy savings achieved from implementing the recommended saving measures. Based on this information, the implementation of the recommended measures saved a total of $12.59 million. Based on estimated total energy used, the actual energy sav- ings of the 198 firms accounted for close to 11 per cent of their total annual expenditure on energy. The amount of energy saved in terms of gigajoules can- not be estimated because many firms did not report them in the follow-up ques- tionnaires.

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4. Issues and recommendations

ABARE has been asked to comment on the design of the application forms and of the follow-up questionnaires, and also to consider whether better use could be made of the available data from the EEAP reports. Finally, ABARE is asked to canvass any other issues relevant to the future of EEAP

Design of application forms Once firms have had their audit undertaken they submit an application form to DPIE for funding of this audit. The application includes an overview of the enterprise, a summary of its annual energy use, a financial summary and an energy summary of the audit report recommendations. Applicants agree to 'pro- vide full information to arepresentative of the Department of Primary Industries who may write to me, or visit the site surveyed, in the future to discuss what recommendations in the energy audit report have been implemented'.

Only the summaries of audit report recommendations are provided to ABARE for analysis. In this section, comments related to the design of the application forms are thus focused primarily on section D of the form which provides a summary of the energy saving measures in the audit reports (see attachment 2) .

The problems encountered in undertaking analysis on the basis of the sum- mary of report recommendations relate essentially to the wide variability in the quality of information supplied by the energy auditors. Several of the specific problems identified in ABARE's 1993,1994 and 1995 reports are still relevant to this report. These include:

Unclear information on the recommended savings measures and areas.

Auditors recommendations can fall into several of the categories classi- fied by ABARE. For example, a recommendation related to the process of boiling water could involve either water heating or boilers. In some cases auditors recommended savings through 'proper management' but did not give enough information on what this meant.

Incomplete information on the amount of energy savings and costs of implementation.

In many cases, the dollar or gigajoule figure was not reported or 'not assessed' and therefore precluded the recommendation from being

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included in the analysis. In some reports words such as 'minimum', 'low' or 'unknown' were used instead of actual dollar or gigajoule amounts.

The grouping of several recommendations with different energy savings potential and implementation costs.

For example, auditors recommended that firms could save energy in the area of air conditioning by improving insulation and upgrading and turn- ing off the appliance where appropriate. As each measure would save dif- ferent amounts of energy and has different implementation costs they should be reported separately.

Some of the problems outlined above could be overcome by redesigning sec- tion D of the application form to provide more useful and accurate information.

More uniformity in the quality of the data could be achieved by requesting that auditors adopt the standard categories used in this and the previous reports (or other categories that the Energy Programs Branch may wish to provide) and classify their recommendations within these categories.

- If this approach is to be used, the recommendations column in section D could be divided into two columns to allow for the entry of savings areas and savings measures respectively.

- Listings of the standard categories used in the analysis should also be attached to the application form.

In order to have greater consistency in the reporting of estimated savings and cost of implementation, it is recommended that a standard format for reporting 'zero' as opposed to 'not assessed' savings or costs be speci- fied in section D. The use of blank spaces or '-' by some auditors can otherwise lead to different interpretations.

Design offollow-up questionnaires Responses to the follow-up questionnaires are a critical element in assessing the effectiveness of the EEAP. The aim of the audit subsidy is to help over- come apparent information barriers to the adoption of measures for improv- ing energy efficiency. It is therefore essential to assess whether and how firms do respond when the information about potential gains is provided by the audit.

The problem of non-response remains very important despite a slow rise in the number and proportion of follow-up questionnaires returned (from 30 per cent

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of the total number of audit reports in 1994 to 38 per cent in 1995 and 44 per cent in 1996).

In last year's report the following problems related to the quality of the respons- es to the questionnaires were identified:

Insufficient information on the actual amount of energy savings and implementation costs.

Inconsistencies between the measures listed in the questionnaires and the recommended measures in the audit reports both in terms of the number of recommendations and their content.

Unclear reasons given by some firms for not implementing the recom- mended measures.

It was suggested that some of the problems associated with inadequate responses could be addressed by the design of a more comprehensive ques- tionnaire aimed to elicit more complete replies from the respondents.

To ensure consistency between the implemented and recommended mea- sures, it would be useful to tailor the questionnaire to individual firms. In particular, the summary of recommendations made in the firm's original application form could be transcribed to that firm's follow-up question- naire, thereby facilitating the task of the respondent.

For each recommendation, the questionnaire could be altered to provide the option to the respondent to choose either 'implemented / in the process of implementing' or 'not implemented' simply by ticking the appropri- ate box.

For those measures which have not been implemented, it would be use- ful to provide a standard list of reasons for not implementing the recom- mendations. Again the task of the respondent could be made easier if the appropriate response could simply be circled or ticked. Because it may be difficult to categorise all possible reasons, there should also be scope for further comments by the responding firms, although general written responses should not substitute for the clearly categorised responses.

DPIE has designed a new follow-up questionnaire (attachment 1). It was not considered feasible to address all of ABARE's concerns. For the 1996 ABARE analysis the old questionnaire still comprised a large proportion of the farms analysed. Although preliminary processing of new questionnaires by ABARE

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indicates that the task is being made easier, it is too early to judge whether additional improvements are still a priority.

Given the importance of responses to the follow-up questionnaires, it is criti- cal that any inadequate responses and non-responses be followed up. Providing audited firms with incentives to return their follow-up questionnaires could be one way to ensure the questionnaires are returned. Two examples of how this might be achieved are:

Retaining a percentage of the subsidy until the follow-up questionnaire is received.

- The benefit-cost evaluation of EEAP requires that participants provide the necessiuy information.

Require that follow-up questionnaire be returned between six months and one year after the audit is completed instead of from any time up to a year after the audit is complete.

- There is a greater chance that firms will have fully considered the options recommended in the audit reports. They may also be in a bet- ter position to report on the implementation of recommended invest- ments and the corresponding changes in energy costs and consumption. This may account for a number of firms who apparently fail to imple- ment recommendations.

- The distribution of receipt dates on questionnaires could usefully be checked.

EEAP data The EEAP is designed primarily to overcome the perceived information bar- rier to the adoption of more energy efficient equipment and processes by sub- sidising the process of identifying the areas where energy and cost savings can be made within individual enterprises. Therefore, the audit report is most use- ful to the individual firms if the information is presented at a high level of dis- aggregation and tailored to the firms' individual circumstances.

While the data in the audit reports can be aggregated to provide broad trends across industries or states, the program is not designed to provide a basis for drawing general conclusions on, or indicators of, energy efficiency. The qualifications noted in the 1995 report are still relevant and need to be taken into account.

ENERGY AUDIT - - - - - - -- - - -

First, the sample is small and likely to be unrepresentative of overall industry trends, particularly in some sectors.

Second, the sample is not random as it includes only firms which sought and received funding through the EEAP to undertake an energy eficien- cy audit. Arguably, firms with management who think there is scope for energy efficiency improvements may be most strongly represented in the sample. This would effectively lead to an upward bias in the estimated potential energy savings for industries or sectors.

- This concern about the possible non-random nature of the sample is substantially aggravated by the possibly non-random return of follow- up questionnaires which provide the basis of the ABARE analysis.

In addition to the above general limitations, there are further reasons out- lined in ABARE's 1994 report for why the information collected in the EEAP to date does not provide an adequate foundation for particular purposes such as energy benchmarking or the targeting of industries or energy saving measures with high potential returns.

Finally, while the analysis of the audit report provides some indication of the potential carbon dioxide emissions reductions from measures which also generate net energy and/or dollar savings, care should be taken in generalising from the results for the reasons outlined above.

In addition to the above general qualifications the major additional shortcom- ing is that the costs of implementing recommendations are not being ade- quately measured at present. This is an important issue discussed in more detail below.

Further research needed As the EEAP program progresses, a number of important issues are being raised. Many firms report in follow-up questionnaires that they do not imple- ment recommended measures, with the most commonly cited reason being that they are uneconomic. But according to well accepted evaluation techniques, particularly met present value, the recommendations should make economic sense.

It is also now difficult to state market failure or lack of information as the rea- son for non-adoption. A report by the Productivity Commission (1996) cites many practical details of the costs that firms encounter in their decision

ENERGY AUDIT

making processes. And there are bodies of economic literature on topics such as vintage capital theory and costs associated with transactions and risks.

At present the analysis does not take into account the cost of uncertainty involved in investments in energy efficiency. Even though the estimated net present values of the recommended measures are positive, enterprises may rationally decide not to implement the recommendations if the rates of return are perceived not to be high enough to compensate for the risks involved with new technologies, continuing technological change etc. Additionally, there is the hurdle rate question - when future technologies and energy prices are uncertain, what rate of return is needed to induce a firm to invest now, rather than waiting. Another factor to note is that the data in the EEAP reports do not provide any indication of possible second order effects flowing from improve- ments in energy efficiency at the enterprise level.

EEAP is now an extensive and valuable database containing unique informa- tion which could potentially be used to refocus policy in this important area. ABARE believes that it is now timely and possible to take the next logical step with EEAP. That is, to revisit a sample of firms in order to investigate whether a wider range of costs are a barrier to firms implementing energy efficiency improvements -costs that are not currently being picked up in the analysis. If this is the case, it needs to be determined whether these additional costs can be measured or reduced, in order to improve our knowledge of the behaviour of firms in relation to optimising energy consumption.

ENERGY A UDZT

Appendix A: Description of energy saving measures

Code Description

1. Maintenancehepair on existing equipment.

2. Reducing the number includes such things as removing one of the fluo- rescent tubes in a light fitting or reducing the number of items in a par- ticular area.

3. Upgrading involves the upgrading of machinery or equipment or chang- ing to more efficient light globes.

4. Automatic sensing/switching includes installing timers, dimmers, movement detectors, or individual switches where before one switch may have operated a whole group.

5. Load management or load shifting involves changing andlor synchro- nising the production times of machinery and equipment in order to opti- mise the use of energy and reduce operating costs.

6. Changing tariffs involves switching power tariffs or renegotiating the price paid for energy.

7. Alternative energy sources includes switching from one fuel to another or, for example, installing solar panels.

8. Improved insulation, building or equipment involves the reduction of energy use for heating and cooling through improved insulation.

9. High efficiency motors including variable speed drives covers those areas where the use of such a motor is suggested.

10. Temperature control involves more closely monitoring the temperature to avoid unnecessary use of energy.

11. Waste heat recovery refers to the saving of heating energy through har- nessing waste heat for use in other areas.

ENERGY AUDIT

Power factor correction refers to adjustments to the base load of energy supplied.

Staff training includes any staff awareness program. In cases where no costs for training were reported an estimated cost supplied by the Industry and Government Section was used as a proxy value. This value was that estimated for energy management programs available to staff under the Commonwealth Energy ~ a n a ~ e m e n c ~ r a i n i n ~ program. The cost of this training is about $470 per person. (This cost does not include . -

salary costs or airfares and travel allowance.)

- In some cases where an auditor has suggested staff training and given no cost, we have multiplied the number of employees by the above cost. In other cases where the auditors have given no cost for training and no figures for the number of employees, the savings measures were delet- ed from the database.

Energy management systems.

Housekeeping relates to turning off lights or other equipment that does not need to be left on.

Use of cogeneration, which involves the production of both heat and power from the same source.

Improved building ventilation involves installing exhaust fans or open- ing windows to improve the air quality and reducing the amount of air conditioning necessary to an area.

Adjusting settings to limit the amount of excess heat or cooling when a lesser amount will suffice.

Economy cycle involves using outside air to provide free cooling under certain ambient temperature conditions.

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Appendix B: Interquartile ranges across industries and areas

B1 Interquartile ranges across industries

Industry Agriculture, forestry, fishing and hunting a

Mining Manufacturing Electricity, gas and water Construction a Wholesale and retail trade Transport and storage Communication a Finance, property business services

Public administration and defence Community services Recreation and other services

Energy Energy co2 savings savings reductions

1st 3rd 1st 3rd 1st 3rd quartile quartile quartile quartile quartile quartile

GJ GJ $ $ t t

a The sample for these industries contains less than ten firms

ENERGY AUDIT

B2 Interquartire ranges across areas

Energy Energy savings savings

1st 3rd 1st 3rd quartile quartile quartile quartile

GJ GJ $ $

Area Lighting 11 176 390 4 800 Air conditioning 34 350 1070 7916 Generators 35 821 2000 14 575 Compressors 74 615 1982 12 000 Water heating 16 379 465 4400 Steam production 400 3812 5100 37500 Space heating 26 328 600 6 150 Chiller plant 46 575 2 300 15 000 Boilers 47 3 367 990 16 000 Refrigeration 14 358 566 8 296 Process heating 194 2 339 2 834 22 300 Conveyors 50 3 200 1 000 38 00D Mechanical services 50 582 1700 12310 Industrial equipment 19 768 1690 20000 General 0 391 2 506 24020

coz reductions

1st 3rd quartile quartile

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Appendix C: Sensitivity analysis

C l Median net present values, by industry, for different discount rates

Discount rate

6 per cent 8 per cent

$ $

Industry Electricity, gas and water 60 401 50 651 Transport and storage 44 369 40 273 Manufacturing 38 881 33 897 Communication a 37 345 33 613 Agriculture, forestry, fishing and hunting a 32 710 28 020 Mining 32 464 26 255 Wholesale and retail trade 17 151 14 827 Construction a 13 503 12 169 Recreation, personal and other 12 752 11 332 Finance, property and business services 10 720 9 420 Public administration and defence 9 485 7 630 Community services 7 968 7 017

a These industries have a small sample size (less than ten firms).

C2 Median net present values, by industry, for different economic lives

Economic life

5 years 10 years

$ $

Industry Electricity, gas and water 60 401 50 651 Transport and storage 4 4 369 40 273 Manufacturing 38 880 33 897 Communication a 37 345 33 613 Agriculture, forestry, fishing and hunting a 32 710 28 020 Mining 32 464 26 255 Wholesale and retail trade 17 151 14 827 Construction a 13 503 12 169 Recreation, personal &d other 12 752 11 332 Finance, property and business services 10 720 9 420 Public administration and defence 9 485 7 630 Community services 7 968 7 017

a These industries have a small sample size (less than ten firms).

35

ENERGY AUDIT

Appendix D: Carbon dioxide coeficients

Carbon dioxidecoefficients foreach major fuel type used to Dl derive the level of potential C02 savings

Fuel type coz kgIGJ

Natural gas 58 Electricity 267 Petroleum products a 76 Black coal 90 Brown coal 95 Wood 94 Bagasse 97 Briquettes 95 a Includes LPG, diesel ail, Fuel oil, heating oil (high and low sulphur), petrol (leaded and unlead- ed) and butane.

ENERGY A UDZT

Appendix E: Internal rates of return and discounted payback periods

Medran internal rates of return and discounted payback periods, by E l indu&

Internal rate Discounted of return payback period

% years

Agriculture, forestry, fishing and hunting a 30 2.6 Mining 122 0.8 Manufacturing 7 1 1.4 Electricity, gas and water 276 0.4 Construction a 35 2.3 Wholesale and retail trade 79 1.2 Transport and storage 92 1.1 Communication a 40 2.1 Finance, property and business services 64 1.5 Public administration and defence 74 1.3 Community services 7 1 1.4 Recreation and other services 74 1.3

s These industries have a small sample size.

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Appendix F: Annual values of savings measures

F l Median annual values, by savings measure

Energy savings

Enelgy savings

coz savings

t

Lighting Energy management systems Upgrade Air conditioning Energy management systems High efficiency motors Compressors Upgrade High efficiency motors Water heating Waste heat recovery Energy management systems Alternate energy sources Steam production Waste heat recovery Space heating .High efficiency motors Maintenance Chiller plant Energy management systems Upgrade Temperature control Boilers High efficiency motors Upgrade Process heating Maintenance Waste heat recovery Mechanical services Improved insulation Housekeeping Industrial equipment Waste heat recovery Improved insulation General Use of cogeneration Waste heat recovery

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Appendix G: Internal rates of return and payback periods for savings areas

GI Median internal rates of return and discounted payback periods, by savings area

Internal rate Discounted of return payback period

% years

Area Lighting 76 1.3 Air conditioning 76 1.3 Generators 81 1.2 Compressors 175 0.6 Water heating 93 1.1 Steam production 81 1.2 Space heating 62 1.5 Chiller plant 101 1 .O Boilers 73 1.3 Refrigeration 127 0.8 Process heating 101 1 .O Conveyors 56 1.7 Mechanical services 73 1.3 Industrial equipment 439 0.2 General 177 0.6

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Appendix H: Net present values of savings areas and measures

HI Median net present value of savings areas and measures

Savings area

A B C D E F G H

Savings measure $ $ $ $ $ $ $ $

ENERGY AUDIT

Savings area

I J K L M N 0

Savings measure $

0 3 843 1 33 689 2 19954 3 44 470 4 1 177 5 12 879 6 21 751 7 38 403 8 9 576 7090 14219 7 235 20942 19938 2 989 9 38 092 1 352 0 I 048 078 10590 34682 14 147 10 2083 13509 44891 0 2497 25144 15464 I I 208 98 187 004 29 735 0 18 147 33061 21 832 12 0 0 0 0 11 229 67 866 26 863 13 0 6 880 0 0 0 6 778 10 770 14 188 207 984 103 429 179 344 5 580 214526 41 945 15 5 292 2 174 4897 164649 16560 6 698 7 776 16 637 594 0 0 0 0 471577 372947 17 0 5 816 0 0 13777 7409 9210 18 12 721 6987 36 348 0 3 983 12 168 14363 19 0 0 0 0 13774 0 0 Note: The zero category was not listed in table 2: it covers those recommended rneaqures which do not fall into one of the other 19 categories.

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References

Mander, S. and Wilson, B. 1993, An Analysis of Data from the Enterprise Energy Audit Program, ABARE consultancy report prepared for Energy Programs Branch, Department of Primary Industries and Energy, Canberra.

Melanie, J., Chang, C. and Shan, H. 1995, An Analysis of Data from the Enterprise Energy Audit Program, ABARE consultancy report prepared for Energy Programs Branch, Department of Primary Industries and Energy, Canberra.

Productivity Commission 1996, Energy ESficiency for SMEs, Report 96/14, AGPS, Canberra.

Warr, S., Wilson, B. and Holmes, L. 1994, An Analysis of Data from the Enterprise Energ)) Audit Program, ABARE consultancy report prepared for Energy Programs Branch, Department of Primary Industries and Energy, Canberra.