You don’t have to spend much time looking into the energy scene, particularly around renewables, to find a statement to the effect that “energy storage is the key”.   Of course, what is actually meant is that the increasing use of renewables such as wind power, will make storage of electricity more important as a way of counteracting the fact that renewables are intermittent in output and may not produce electricity when it is needed.  This has become one of those energy truisms that gets trotted out regularly along with “you can’t store electricity”, which is rather odd when we all use a plethora of electricity storage devices (batteries) everyday.  What we really mean is that you can’t store electricity as electricity, it has to be stored in some other way – in the chemistry of a battery, the potential energy of a pumped hydro power station, the kinetic energy of a fly wheel, compressed air in a tank, or some other medium.  In fact even that statement isn’t correct as we can store electricity directly in a super-conducting coil which has no electrical resistance, commercial superconducting machines are available and find niche applications.

The electricity storage options most talked about are; pumped hydro power stations, (I remember visiting Ffestiniog pumped hydro scheme aged 10 or 11 – perhaps one of the sources of my interest in energy), flywheels, batteries of all types of course, compressed air, capacitors and super-capacitors, flow batteries and superconducting devices.   Each has a range of power rating – varying from kW to GW – discharge times (seconds to hours), efficiencies, capital costs, stage of technology development and ease of deployment.  But one of the most interesting energy storage technologies that until recently got very little attention is liquid air.  Highview Power (http://highview-power.com/wordpress/) have been running a grid-connected unit next to the SSE power station in Slough for more than 18 months.  As well as storage applications the technology can be used for waste heat to power (what I call WHP) applications and combined cold and power (CCP as opposed to CHP?).   WHP using various technologies is a major opportunity and a large resource that is currently largely being ignored.

As well as energy storage, liquid air technologies can also address two other important and valuable applications:

–       providing a fast-refueling and low-carbon transport fuel that is zero-emission at the point of use

–       harvesting low-grade waste heat.

In fact, just as people used to talk a lot about the “hydrogen economy”, it is possible to think about a liquid air economy.  Environmental and economic benefits can be increased by integrating liquid air technologies across the electricity, gas, transport and industrial sectors.  Unlike the hydrogen economy, which has been a dream since Jules Verne wrote about it in the 1870s – and in my opinion is likely to remain a dream, the technology required for a liquid air economy is a lot closer to existing (indeed much of it exists already), the engineering problems are easier to solve, and the new infrastructure deployment required is much less daunting.

Dearman Engines (http://www.dearmanengine.com), which is out of the same stable as Highview, is developing a liquid air engine and with partners including MIRA, Air Products and Loughborough University and has won a grant from the Technology Strategy Board to build and test an engine fitted into a commercial vehicle.  This will be a refrigerated truck with the Dearman engine providing cooling and power, it will be the world’s first liquid air commercial vehicle.

Although, as has been acknowledged by the Centre for Low Carbon Futures in an October 2013 report, “Liquid air technologies – a guide to the potential”, liquid air technologies are not a “silver bullet” they do have a number of advantages including utilizing existing components and supply chains.  This alone makes them worthy of further research – and it now seems as if that research is gearing up.  The University of Birmingham has won a £6m grant to create the Birmingham Centre for Cryogenic Energy Storage.  (Always good to see my Alma Mater doing pioneering work!).

Liquid air is one of those technologies that has long been neglected but thanks to the pioneering and world leading work of Dearman, Highview and their partners, is now starting to make real advances towards commerciality.  As well as the clear technical advantages it has a real appeal in its circularity and conceptual simplicity (although of course turning concepts into real engineering and economically viable products is never simple).  Although there can never be a single silver bullet solution to our energy problems it looks like liquid air has an important role to play.

For more on liquid air see the following:

http://liquidair.org.uk/about-liquid-air

http://liquidair.org.uk/full-report

http://liquidair.org.uk/raeng-clcf-conference/raeng-clcf-presentations

http://liquidair.org.uk/flipbook/files/inc/67c183d322.pdf

I have written before about the multiple benefits of energy efficiency beyond purely cost saving.  These can include:

• Reduced exposure to energy price volatility

• Reduced emissions of carbon dioxide

• Reduced emissions of pollutants resulting from combustion of fossil fuels such as mercury, other metals, nitrogen oxides and sulphur oxides

• Reduced need to invest in energy supply infrastructure e.g. electrical grid connections at the host level

• Reduced need to invest in energy supply infrastructure in the wider electricity generation, transmission and distribution system

• Reduced

• Improved quality of production in industrial processes

• Higher productivity, health and well-being of employees

• Improved comfort

• Improved health and reduced expenditure on health

• Increased property values

• Reduced local pollution

• Job creation

Now RAP – the Regulatory Assistance Project in the US, has coined a great phrase to cover this point about multiple benefits – “the layer cake of energy efficiency”.  The article can be found here: http://goo.gl/bV1bUv

We need to make sure decision makers in companies, the public sector and government appreciate and value all the layers of the energy efficiency cake.  Government and regulators need to put in place appropriate mechanisms to ensure that the value of the whole cake is counted in any assessment of demand side versus supply side decisions.  At the risk of taking baking analogies too far – we are currently only eating the icing but we need an energy efficiency version of the great British Bake Off in which we enjoy every layer of the cake!

Most corporate energy management programmes operate on an investment criteria of two to three years.  Yet energy supply investments typically are made on much longer payback periods, typically seven to ten years.  This fundamental mis-match is one of the reasons we have over investment in energy supply and under-investment in energy demand reduction.  If we could move towards rebalancing this differential we would reap huge benefits in terms of energy cost savings, emissions reduction, improved energy security, economic development and job creation.  So how do we get to exploit “the power of seven”?

First of all we do need to include all the benefits of energy efficiency in our analysis.  All too often we just look at energy savings, even the famous Marginal Abatement Cost curve analysis just looks at energy saved or carbon abated – not at all the benefits.  By using this analysis tool we are doing down the benefits of energy efficiency.  As well as pure energy and hence cost savings, energy efficiency projects can bring many different types of benefits, all of which can have monetary value.  These include:

Reduced exposure to energy price volatility

By reducing energy spend through energy efficiency, organisations and individuals reduce their exposure to the effects of energy price volatility on profits or budgets.

Reduced emissions of carbon dioxide

Reducing energy use reduces carbon emissions. The value of this benefit depends on the local regulatory regime, for example the applicability of schemes such as the EU Emissions Trading Scheme, but even in jurisdictions where reducing carbon emissions carries no direct financial benefit some organizations will still value this benefit because of perceived reputational benefit.

Reduced need to invest in energy supply infrastructure e.g. electrical grid connections  

An example would be a situation where increasing production in a factory requires investing in a larger grid connection due to increased peak electricity demand.  Implementing energy efficiency measures can reduce, or even totally remove the need for this investment.

Improved quality of production

Improving energy efficiency can also bring with it improved quality control.  Examples include:

• better temperature control of furnaces and ovens

• better temperature controls in refrigeration in brewing and other processes

• better control of compressed air pressure leading to less down-time and the associated loss of quality due to plant stoppages as well as reduced equipment lifetime

• new welding techniques that reduce sputter and improve weld quality

• air drying of paper compared to infra-red drying.

Higher productivity, health and well-being of employees

Many studies have shown that lighting upgrades, which bring with them an improvement in energy efficiency, also result in higher employee productivity. Improved control of space temperatures have also been shown to bring higher productivity.  A number of studies have shown that energy efficient offices are more productive, perhaps by as much as 15 to 25 per cent, and that they can also improve worker morale, reduce sickness, reduce employee turn-over and ease recruitment.   Other studies have shown that green, energy efficient schools can reduce levels of asthma, colds, flu and absenteeism.

Improved comfort and associated health effects

Improving energy efficiency, notably through the application of additional insulation to buildings in cold climates, brings with it improved comfort for the occupants. Improved comfort conditions can bring with it improved health, particularly in the case of the very young and the elderly.

Increased property values  

There is evidence that in some markets at least, energy efficient offices and homes can command a higher value and sell faster than equivalent, less efficient properties, although this has not yet been widely accepted – particularly in the UK. Building occupiers assign value to many different characteristics of buildings including location, a sense of well-being, health, and employee productivity.  Energy is very low on the priority list when organizations are looking to move to a new building, and in many cases is not on the list at all but it should be.

Regulations around building energy performance can clearly drive value that needs to be accounted for in investment decisions.  In the UK, the Energy Act of 2011 prohibits selling or leasing a residential or commercial building with an energy rating of less than ‘F’ after 2018.  This kind of regulation will clearly affect property values directly if fully implemented and enforced.

Reduced local pollution

An improvement in energy efficiency can reduce local air pollution, both indoors and outdoors.   Although the value of this effect is hard to quantify there is a benefit which may come through improved local perceptions, improved health and well-being and being a “good neighbour”.

Benefits outside the system boundary of the host

Energy efficiency investments also bring benefits to the energy supply system such as the electricity distribution and transmission infrastructure.  Experience in the USA has demonstrated that investment in energy efficiency measures can result in avoiding the need to invest in the distribution system.  Regulators need to design systems that ensure these choices are examined and where viable the investment is made in efficiency rather than supply upgrades.  This also requires the sharing of some of the benefits with the host.

At the wider level, outside the domain of individual energy users, improving energy efficiency helps us address the stresses and strains on the global energy system.  The International Energy Agency’s World Energy Outlook 2012 feature on energy efficiency highlighted the huge macro benefits that could result from improved efficiency.  It’s Efficient World Scenario, in which all economic efficiency measures are realised would, when compared to its central New Policies Scenario:

• reduce world primary energy demand in 2035 by 14 per cent

• reduce the rate of demand growth from 1.2 per cent to 0.6 per cent per annum

• increase the rate of reduction of energy intensity from 0.8 percent per annum to 2.4 per cent per annum

• boost global GDP by $18 trillion in the period up to 2035

• result in global carbon dioxide emissions peaking in 2020 at 32.4 gigatonnes with a reduction to 30.5 gigatonnes by 2035

• this reduction in carbon dioxide emissions is consistent with stabilising atmospheric carbon dioxide at 550 ppm, which is consistent with a fifty per cent probability of staying below a temperature increase of 3oC.

Job creation

An additional benefit to the economy of improving energy efficiency is job creation.  Some controversy about the impact of energy efficiency programmes on job creation still lingers on but on the whole the case seems to have been proven. Given the urgent need to create growth and jobs, particularly in developed countries affected by the global financial crisis, this aspect of energy efficiency policy still has not received the attention it deserves in most countries.

So, In any decision on investments affecting energy use, it is critical that all of the system benefits, (and of course costs), need to be identified, valued and included in the investment case.

Having ensured we value all the benefits of energy efficiency what else do we need to do?

Most importantly we need to develop new structures of energy services supply that make it viable for third parties, who can accept a longer payback period than the hosts, participate in the benefits.  Here the model for exploiting shale gas, or indeed any other physical energy resource, contains an important lesson.

In the case of shale gas (at least in the US regulatory regime), a land owner who may have shale gas deposits under their land does not have the technical knowledge or the capital needed to access the resource.  A third party, typically a specialized exploration and production company, pays an access fee to the land owner for the right to tap the asset.  The third party uses its capital and technical resources to develop the project and unlock the value of the resource.  Typically the third party pays a royalty payment or profit share over an extended period of time.

Businesses need to think of energy efficiency in these terms.  In all of their buildings and facilities there is a level of available energy efficiency which is largely untapped but which has potential value – this is the energy efficiency resource.  The building owner or host typically does not have the capital or the technical skills needed to exploit this resource.  They would rather, and should of course, allocate their capital to their core business whether it is selling groceries or making widgets.  Building owners need to license their energy efficiency resource to third parties for mutual benefits.  Large and high profile hosts could auction their efficiency resource to the highest bidder.

Taking this approach, coupled with emerging energy services models, would increase the investment in energy efficiency – help bring the benefit of scale to specialist third party investors, and benefit the hosts and society at large.

This week, subject to court approval, Enron Europe moves out of administration – and presumably into history – twelve years after its collapse.  Even after this length of time Enron is still a by-word for corporate malfeasance but its legacy – both good and bad – is extensive.  Enron was nothing if not innovative.  Amongst other achievements Enron:

• drove deregulation of energy markets

• drove standardization of commodity contracts

• combined energy supply and energy efficiency deals

• pioneered online trading of energy

• introduced weather trading.

The Enron organizational culture was one of hard work and high energy as well as open-ness (at least at the operational level), with a big focus on creativity, education and training.  The Enron diaspora has gone on to inhabit significant positions in the energy markets in many energy companies and banks but most of us who worked there would agree that there was nowhere quite like Enron as a place to work.

Enron Energy Services used tools and worked on ideas that were ahead of the their time – many of which are only now starting to become better known – including:

• data driven design to right size plant and equipment, reducing both energy use and capex spend

• risk assessment of energy efficiency projects using statistical analysis and portfolio management tools

• big data (albeit small by today’s standards)

• measurement and verification of savings

• automated distributed demand response across large portfolios of properties

• conversion of traffic and street lights to LEDs.

The two deals I was involved in at Enron and then RWE – Diageo and Sainbury’s -were both very different but truly ground breaking.  The multi-utility outsourcing deal that Enron pioneered with Diageo led to very large energy savings (40% in the case of the Park Royal brewery) and was taken over and then replicated by the team at RWE Solutions (later part of RWE npower) in Diageo’s Dundalk and Dublin breweries.  The RWE – Diageo deal at St. James Gate in Dublin, (the home of Guinness), is still in place ten years after it started so it must have worked for both parties.   The Sainsbury’s deal which combined energy supply and energy efficiency (also originally sold by Enron but implemented by RWE Solutions), installed many hundreds (even thousands) of efficiency projects across the Sainsbury’s portfolio over five or more years, helping them to significantly reduce energy use and carbon emissions.

Right now in the UK (and Europe) we need a lot more innovation in the energy markets to disrupt the Big 6 – particularly around:

• transparency

• combining energy supply, energy efficiency, demand response, data and finance

• real customer focus.

We need an organization as innovative and as bold as Enron to disrupt the energy markets and to take market share from the Big 6  – but definitely one without the dodgy accounting!

EDF group has launched a global innovation awards programme called EDF Pulse and I am the UK “sensor” – which is the person who identifies suitable entrants and encourages them to enter – a sort of “hunter gatherer”. The purpose is to highlight the importance of innovation and help move EDF towards a more open innovation model.

The awards are for early stage businesses in the three areas of: home, mobility and health – each with a €35,000 prize.

Home – This category is for projects that contribute to making homes more intelligent, more communicative, more energy efficient, and more eco-friendly, whilst increasing everyday comfort and wellbeing.

Mobility – This category is for the most innovative solutions and services that meet our growing transportation needs: chiefly, projects based on sustainable development, communications, sharing, and multimodal transport, with the aim of easing travel, and better including people who are isolated and/or who have reduced mobility.
Health – This category is aimed at the most promising innovations to improve our health and quality of life. Issues include new “intelligent medicine” technology to discover more about the body and its environment, and connected health services.

The criteria are:

• companies with less than 50 employees
• innovations that are close to launch or have recently launched
• use some aspect of electricity – this is widely interpreted, particularly in the health category.

There are two additional awards:

• research on electricity storage from a University or research team (€150,000 prize)
• Access to electricity projects in developing countries (€50,000 prize for NGOs)

As well as prizes the programme offers the potential of global publicity, access to EDF’s R&D team and access to EDF’s venture funds (both only if the entrant wants it).

Entry is relatively pain free and part of my job is to help companies enter.

Entries have to be in by 31st December. Then there will be a period of selection leading to a short-listing by an international panel chaired by Henri Proglio, Chairman and CEO of EDF, followed by a public vote. The winners will be announced in Paris on 25 March 2014.

So, if you are a company, research group or project that might fit the criteria, or know of suitable companies, please put them in touch with me or let me know who they are ASAP. Although I am the UK sensor I can enter companies from any country.

The Pulse programme also has a website that features innovations of all kinds. I can also pass on suggestions for content for the web site.

steve@onlyelevenpercent.com
+44 (0) 7702 231995

http://pulse.edf.com/en/invent/
http://pulse.edf.com/en/edf-pulse-award/
#EDFPulse