1. Prioritizing Utility Efficiency Projects for Manufacturing Presenter: Phil Dick phil.dick@ontario.ca

2. Prioritizing Projects - Overview 1.Understanding Invisible Costs 2.The Order of Projects Matters 3.Eight Systems; Three Steps 4.Understand and Eliminate Invisible Costs 5.Grouping Actions for Maximum Benefit (A system-based strategy) 2

3. The Order of Projects Matters Utility use has two dimensions: Volume (1) and Time (2) Processing systems are capacity-based Capacity affects volume and time Efficiency of use affects labour, safety, maintenance, finance and waste 3

4. Eight Systems 4 SystemProportion of Use Usual Efficiency Optimal Efficiency Lighting2%3%5% Compressed Air2%5% to 10%20% HVAC5%15% to 50%75% Water and Sewer23%10% to 50%80% Cooling/Refrigeration7%35%70% Motors and Drives5%75%80% Direct Heating20%30% to 80%90% Indirect Heating36%45% to 80%90% Source: CEM, 2014

5. Three Steps (ROI) Readying Integrated metering to change behaviour Occupancy sensors, air curtains Fixing leaks for the low hanging fruit Optimization Upgrading Equipment (soft start motors, variable speed drives) Integration Re-using waste heat and installing co-gen 5

6. Understand and Eliminate Invisible Costs 6 Source: Leaner and Cleaner is Greener, page 70 It costs typical food processor uses $1.05M to make $1M worth of goods. But a highly efficient processor can do better.

7. Understand and Eliminate Invisible Costs How we use utilities costs (15%+ of COP) Does wastewater cost only $1.25/m 3 ? What is the connection between Power Factor, Power Quality and downtime? How much heat comes from lighting? Does rooftop temperature really matter? What’s in a leak? 7

8. Grouping for Maximum Benefit Priority #1: The First 25% of Savings Management to change behaviour (integrated metering) Systems that do not directly contribute to making a product (lighting and HVAC) Systems with extremely low efficiency (compressed air and refrigeration) Issues that contribute to unproductive cost (Power Factor and leaks) Outcome: 25% less variable cost and 25% less carbon 8

9. Grouping for Maximum Benefit Optimization, Priority #2: Saving the Next 25% Upgrade equipment (Higher efficiency equipment, variable speed drives, standardize air compression) Balance air exchange (zonal efficiency) Remove equipment from the roof Change the colour of the roof Outcome: 50% less cost and 50% less carbon 9

10. Grouping for Maximum Benefit Integration, Priority #3: The final 25% of Savings Recover Waste Heat Recycle water Zero discharge cuts use 75% (Source: Bloom 2013) Install co-generation or green energy generation Purchase green energy 35% of the footprint of fossil energy use is created in the energy supply chain (Source: USDA, 2012) Outcome: 75% less cost and 75% to 150% less carbon 10

11. Hypothetical Example 11 A. Unimproved FacilityB. Integrated Facility 1M therms cost $1/therm250,000 therms cost $1.50/therm Cost: $1MCost: $375K Embedded waste: 50%+Embedded waste: 10% to 25% Footprint over 10,000 tonnesCarbon neutral or negative $950K of goods cost $1M$1.2M of goods cost $1M Green energy cost x2?Green Energy Costs1/3 rd of A Labour costs escalateUnit labour costs down 20% Maintenance costs escalateMaintenance costs down 30% Waste costs escalateWaste costs down 90% Assumptions: 1.1 Green energy unit costs $2 2.100 therms = 1 tonne CO 2

12. Rules of Thumb Energy efficiency is linked to labour waste, accidents and maintenance costs. It improves Gross Margins 15% to 40% 50% of energy used in a food plant is wasted (USDA, 2012) Minimizing the load minimizes capital project costs $1 spent on Readying and Optimization saves $3 to $5 on Integration. The relationship between Simple Payback and Net Present Value is the Fibonacci Sequence ( O, 1, 1, 2, 3, 5, 8, 13…) A list of prioritized projects is in “Leaner and Cleaner is Greener”. 12

13. Cap and Trade, Ontario Overview What is the difference between regulated and unregulated sectors? Strategies and solutions for stakeholders 13

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15. Source: ECO, 2015 How do Manufacturers Emit CO 2 ? 2050

16. Regulated versus Unregulated Sectors Regulated Sectors (Over 10,000 tonnes CO 2 ) Are being consulted. Will be required to report May be eligible for “allowances” Unregulated Sectors (Facilities) Might be able to create offsets Do not report emissions 16

17. Waste, Energy and Building Strategies Utility Efficiency (Less use = Less CO 2 ) GF2 (for food companies) and SaveOnEnergy to reduce costs (hydro, water, sewer, gas and solid waste) that affect CO 2 emissions Install integrated metering systems to track cost, use and carbon Food companies can use the Provision Portal for baseline and benchmark measurement Use bio-digesters for organic wastes and/or buy/use renewable energy 17

18. Transportation Strategies Supply Chain Solutions Local supply chains reduce fuel impacts Lower Emission Transport Solutions Biodiesel and Natural Gas cut emissions by 1/2 Renewable Natural Gas is a negative emission Rail for medium and long haul reduces emissions 75% Source: Canadian Biogas Association, 2015 and USDE, 2002 18