UNIDO-GEF Industrial Energy Efficiency Project in Macedonia

UNIDO-GEF Industrial Energy Efficiency Project in Macedonia Marco Matteini Industrial Development Officer UNIDO Energy Branch Holiday Inn, 28 May 2015 Skopje, Macedonia 2

UNIDO & Executing Partners Project at a Glance Title: Catalyzing market transformation for industrial energy efficiency and accelerate investments in best available practices and technologies in the FYR of Macedonia Objective: Reduce greenhouse gases emissions of Macedonian industry through improved energy efficiency Implementing Agency: UNIDO Executing Partners: Min. of Environment & PP, Min. of Economy, Energy Agency, Macedonia Bank for Development and Promotion, REC Country Office Macedonia, Macedonian industries, Faculty of Technology and Metallurgy, USAID/Timel Proekt Budget: USD 1,400,000 plus USD 5,900,000 co-financing Duration: 2015-2018 UNDP will work together with EIE to serve the large industries and UNIDO wilt KOSGED to serve the SMEs. UNIDO & Executing Partners 3 3

Project Context Industry is the single largest source of GHG emissions, accounting for about 32% of global emissions Industry accounts for ~ 1/3 of global energy use Industrial energy use is projected to increase by 37% by 2035 (2013 base) in the New Policies Scenario Growth arises especially in non- energy intensive sectors and in non- OECD countries Greenhouse Gas Emissions by Economic Sectors Industrial energy use over 1987-2011 expanded by almost 55%, and it is projected to increase a further 37% by 2035 in the New Policies Scenario. (IEA WEO 2013, page 287) Over the projection period (2013-2035), industrial energy consumption grows to some 3,530 Mtoe from today’s level of 2,550 Mtoe (Table7.3). Most of this growth arises in non-energy intensive sectors, such as food, textiles, machinery and transport equipment, whose energy consumption increases by 60%, while energy consumption in iron and steel grows by only 16% and is almost flat in cement. Source: IPPC Working Group III – Mitigation of Climate Change, 2014 Estimated economic EE potential in industry is 25-30%, with existing best-available practices and technologies 4 4

Project Context – 2 (National) UNDP will work together with EIE to serve the large industries and UNIDO wilt KOSGED to serve the SMEs. 5 5

Policies & Institutions Market Services & Skills Project Intervention Logic IEE Barriers at various levels Project response Technical Assistance for IEE Policies and Programs development and institutional strengthening IEE market development support through skills and services upgrade, pilot implementation and demand creation Partnerships for scaling-up IEE investments through enhancement of existing financing mechanisms Policies & Institutions Implement. and Invest. Market Services & Skills Strengthen policy and regulatory frameworks for better and sustainable energy efficient performance in industry Accelerate adoption and wide dissemination of IEE best-available practices and technologies Save energy and reduce GHG emission of the industrial sector Integrate EE in industry daily business practices 6 6

Market Services, Skills & Implem. Project Structure Component 1 Policy & Institutions Energy Management Policy Programme Certification of personnel Incentives for EnMS/ISO 50001 implementation IEE best-practice information dissemination programme Industrial energy data management tool Assessment of climate technologies for industry Strengthening of IEE institutional expertise Component 2 Market Services, Skills & Implem. Training for local IEE consultants Energy Management Systems (EnMS) in line with ISO50001 Steam System Optimization (SSO) Compressed-air System Optimization (CASO) Training for enterprises Implementation of EnMS, SSO and CASO Integration of ISO50001 and ISO14001 Component 3 Investments Technical assistance facility for IEE investment proposals preparation and appraisal Performance-based cash-premium for IEE investments Training of local IEE consultants Training of lending officers of Macedonian banks 7 7

ENERGY SAVINGS & INVESTMENTS! Focus on Energy Management Systems (EnMS) in line with ISO 50001 Enact CHANGE! ENACT CHANGE! Top management engage in EE Challenge operations and established practices Build internal technical skills Data and analysis discipline Focus on no-/low-cost measures Continual improvement EE INTEGRATED Commit Check kWh Plan The logic and line of thinking is the following: The way things work with respect to EE do not work, therefore WE NEED TO CHANGE Change is not about technologies but it is first about people and management practices top management involvement energy performance and impact knowledge and skills building staff and middle management behaviour change change in management and operation practices show results at basically no cost, especially capital cost The results of these changes is the integration of EE in daily business and production practices At that point EE investments that make economic sense will come „automatically“ Do ENERGY SAVINGS & INVESTMENTS! 8 8

Combined with Energy Systems Optimization (ESO) Industrial energy systems Energy systems (steam, pumps, etc.) account for over 50% of industrial energy consumption Average efficiency gains from system optimization range between 15-30% against 4-5 % of individual components Macedonia IEE Project focus Steam systems Compressed-air systems Industrial operations more variable than commercial or residential Production schedules change Utilities need to follow production and still remain optimized Steam systems and motor driven systems (pumps, fans, etc.) account for 50 to 60% of final manufacturing energy use The energy savings opportunities from systems are far greater than from individual components 15-30% average efficiency gains through system optimization against 4-5 % efficiency gains for individual components Capital requirement and implementation costs are often limited and with fast payback, often measured in months 9

Market Services, Skills & Implem. Project Approach Work together with counterparts, partners & stakeholders Component 2 Market Services, Skills & Implem. Awareness Seminars UNIDO International EnMS/ ESO Trainers National EE-EnMS/ESO Consultants USER Trainings EXPERT Trainings Partner Enterprise Partner Enterprise Partner Enterprise 10 10

Project Key Performance Indicators KPI Target Project Objective 1. GHG emission reductions 133,000 ton CO2eq 2. Involvement of women in trainings ≥ 20% Component 1 Policy & Institutions 3. Certification program for EnMS Practitioner Established 4. Incentive for EnMS/ISO 50001 implementation Pilot operational 5. IEE Best-Practice Dissemination Programme Web-platform 6. Industrial Climate Technologies assessment Report Component 2 Services, Skills & Implem. 7. Number of EnMS implemented in enterprises 15 8. Number of EnMS Experts Qualified 20 9. Number of ESO Experts Qualified 30 10. Number of enterprises trained in EnMS & ESO 50 Component 3 Investments 11. IEE investments mobilized 4,000, 000 USD 11 11

Services, Skills & Implem. Project Timelines Component 1 Policy & Institutions Component 2 Services, Skills & Implem. Component 3 Investments Jun Sep Dec Apr Jul Sep Dec Apr Jul Sep Dec Time 2015 2016 2017 2018 12 12

Thank you for your attention For more information: Marco Matteini Industrial Energy Efficiency Unit Energy Branch UNIDO Vienna International Centre P.O. Box 300 A-1400 Vienna, Austria E-mail: M.Matteini@unido.org

Content Context for Industrial Energy Efficiency (IEE) Problem outline Available solutions Best available technologies Policies best practices Energy management systems and energy system optimization Energy Efficiency Obligation Schemes Target Setting Voluntary Agreements IEE Project Concept for Belarus 14

Energy Management Systems – Iron and Steel COREX DR-Plant Steel shop Mills RHF Arcelormittal Saldanha Works Electricity demand : 160 MW Manpower: 548 permanent employees Sales output: 1,2 million ton HRC/annum Energy Efficiency Achievements 2011 Energy Management System Implemented No. of Projects/Measures 11 Total Capital Investment (USD) 2011 Gross Financial Savings (USD) 9,076,000 Overall Payback Period (in years) 2011 Energy Savings (GWh) 79.95 2011 GHG Reductions (tons CO2) 77,000 Adjustments/optimization of production operation, energy systems optimization, fuels switching, etc..... driven by EnMS! UNIDO IEE-EnMS-ESO PROJECT in SOUTH AFRICA Saldanha Works is 1 of 4 Steel plants in ArcelroMittal South Africa. The plant is a flat rolling facility producing 1.2m tons of Hot Rolled coil pa and is primarily focussed on the export market. The Process : Integrated Steel Mill producing HRC from Iron Ore 3 Main Production Sections : Iron, Steel and Rolling Plant was bound to be shut down in 2011 because of financial losses Plant “survived” thanks to EnMS program 2012 Energy Savings > 100 GWh 15

Energy Management Systems – Brewery Source: Leonid Kolchin 16

Экономия в млн руб - сентябрь 2014 – февраль 2015 Energy Management Systems – Brewery Экономия в млн руб - сентябрь 2014 – февраль 2015   Завод_1 Завод_2 Завод_3 Завод_4 Завод_5 Завод_6 Завод_7 Завод_8 Итого Вода -1,7 -0,8 -0,4 -1,1 -1,2 -0,1 -6,2 Элект. -2,2 -4,7 -3,2 0,4 0,7 -13,6 Тепло 0,0 -0,2 -2,0 3,0 -5,3 -1,4 1,7 -4,3 -2,6 -3,1 -5,2 -6,3 2,3 -7,2 -4,4 -24,1 Данные экономии достигнуты без привлечения инвестиций Source: Leonid Kolchin 17

Johnson Matthey South Africa Energy Management Systems – Automotive Johnson Matthey South Africa Manufacturing plant in the automotive sector (part of multinational) Started implementation of EnMS in 2012 Target ISO 50001 certification Completed implementation in 9 months 4 large projects implemented Compressors optimisation; optimising chillers; production related projects Johnson Matthey 2012-2013 Annual Electricity Savings (GWh) 9.4 Annual money savings (USD) - Cost savings from projects - Cost savings from behavior changes & operational efficiency 725,000 425,000 300,000 Total annual investments (USD) 580,000 Payback Period (years) 0.8 Completed Stage 1 of ISO 50001 Certification 18

Johnson Matthey South Africa Energy Management Systems – Automotive Johnson Matthey South Africa Specific Energy Consumption against Production Specific energy per month (MJ/ units of production) Production per month (units of production) 19

Scope of energy management Energy Management Systems Shifts the energy efficiency focus to a systematic, data-driven approach. Requires top management to be engaged on an ongoing basis. Provides a context for informed decisions concerning proposed energy efficiency projects, including new technologies. Involves energy users and decision makers, not just facility personnel and physical systems, to sustain the change. systems processes facilities equipment personnel Scope of energy management Energy management requires an organization to shift from a project-by-project approach to one of continual improvement in energy performance 20

Operational in 17 countries UNIDO Global EnMS-ESO Programme As of December 2014 Operational in 17 countries Planned activities in 10 countries Operational South Africa Moldova Russia Turkey Ecuador Malaysia Thailand Viet Nam India Iran Egypt Indonesia Philippines Ukraine Colombia Macedonia Myanmar Energy Management Systems, together with energy system optimization, is the current main thematic area on UNIDO‘s interventions. Planned activities Other donors Swiss State Secretariat for Economic Affairs UK Department for International Development Government of South Africa Government of Italy 21

International and National Experts support EnMS Capacity Building & Implementation Training Overview of EnMS/ ISO 50001 Training ESO1 Training ESO2 Training EnMS Planning and EnPIs Training EnMS Implem. & Operat. Training EnMS Checking & Review EnMS Internal Audits Energy Assess.ESO1 Energy Assess.ESO2 FINAL EXAM Implementation 1 2 3 4 5 6 7 8 9 10 11 12 13 14 month International and National Experts support Periodic webinars Plant visits by Experts 22

IEA Policy Recommendations for EE in Industry Available Solutions for IEE and GHG reduction IEA Policy Recommendations for EE in Industry IEA Energy Efficiency Policy Recommendations Source: IEA 2011 23