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IoT Connected Devices Change Everything

February 1st, 2017 · No Comments

IoT connected devices represent the most important technological wave since the Internet, smartphones, and social media. The value proposition for the Internet of Things (IoT) is compelling because of the economic and financial value created for the built environment. The reason IoT is so important is because it builds and leverages upon the confluence and scale of an array of advanced technologies that continue to push the price-performance horizon including cloud computing, Internet connected mobile phones, semiconductors, distributed computing, machine learning and analytics. Inherent in IoT is that secure context aware connected devices drive improvements in efficiency, productivity, yield, and profitability by reducing costs.

IoT and business intelligence (BI) systems can provide a substantial enhancement to monitoring traditional key performance indicators (KPIs) such as marketing, sales, financial, operational metrics by adding new dimensions of analysis including assets, equipment, environmental conditions, health, safety, and energy. The balanced-scorecard approach to BI provides a more comprehensive understanding of business performance. IoT enables a facet of new metrics and automates the metric recording and analytics process right to your cell phone.

IoT accelerates Big Data as volume, velocity, and variety increase at an exponential rate. While BI approaches are usually pre-defined metrics to measure performance against benchmarks and KPI goals, IoT introduces variables and new dimensions of data that require context and exploration to gain insight. These new variables such as text intensive log data and analog real world events can be extremely valuable. When IoT data is curated with JSON formatted packets, Python scripts together with analytics, can generate logic defined diagnostic feedback loops, which in turn, enable cost effective optimization, innovation and process improvement. Edge analytics is able to detect anomalous events, clusters, patterns, and correlation among variables and deliver visual analysis, threshold alerts and notifications to your cell phone. In addition, actuators provide device control from your phone for turning on lights and equipment.
Figure 1 IoT and Analytics Process

Moore’s Law has dramatically increased chip performance and lowered costs thus helping analog semiconductors measure real world conditions with greater accuracy and lower cost. Unlike the digital world, where binary outcomes of zero and one are easily determined, in the real world variations are discerned in gradations like shades of gray not black and white. The framework of Moore’s Law can be found in other technologies including mobile subscriber, Internet users, and broadband bandwidth, among others that push the price-performance boundaries. Thomas Friedman uniquely covers the importance these technological changes in an exceptional book ‘Thank You For Being Late’.

Crucial to IoT data is accurate measurement. The ability to translate data into insight is predicated upon clean data and analytics with granularity into business model processes and day-to-day activities. The ability to generate with greater confidence means less uncertainty in the analysis.

Two errors often arise in measurement: systemic error, a bias which is somewhat consistent and random error, which can’t be predicted but its probability can be quantified with a level of confidence. Advances in analog-to-digital chips improve sensor measurement accuracy. Automated analytics and cloud services help to mitigate random errors and improve precision.

Let’s examine how IoT and analytics provide insight and value when applied to specific market applications.

Energy Management
Knowing where and when energy is being consumed can be applied to reduce energy demand at peak hours, thereby reducing excess costs. Sensors can provide automated measurement and verification (M&V) services to gain an understanding of energy consumption by rendering the building’s loan signature that in turn, can be used to reduce charges and improve energy efficiency with data that is measured and verified. IoT devices such as current transducers and wireless networks can provide analysis to your cell phone. Environmental sensors can overlay weather readings, volume production, and occupancy levels, to assess their impact on energy consumption at a small cost in relationship to energy savings.

IoT sensors can automate the process of logging data and assure readings are within tolerable ranges. IoT sensors can automate data logging of temperature readings to assure that vaccines and pharmaceuticals have not been comprised. Threshold alerts on refrigerated products can be sent to cell phones for faster response to avert loss. Air quality and ER environmental monitoring can also provide safe and secure procedures to help ameliorate readmission rates.

Noninvasive approaches to collecting shopper data work best when the data is anonymized to protect consumer privacy in retail operations. Occupancy sensors within light fixtures can map traffic flow and calculate dwell time. Outside weather monitoring can be grouped with point of sale and transactional data to efficiently manage the facility operations and marketing promotions. Log files in conjunction with analytics helps to define routing and approaches to expedite service.

Yield Improvement
One of the most interesting applications of IoT is farming. Maximizing yield is paramount and with resource constrained systems. IoT sensors and analytics help to drive productivity, efficiency and profits by analyzing what inputs resulted in the highest output. Soil sensors can measure and track moisture and composition. Indoor systems can track temperature, humidity, CO2 levels, light levels as well as particulates in the air. Sensor data and analytics can then determine what variables contributed most to yield improvement. In this fashion analytics generates the recipe for yield optimization.

Secure IoT connected devices provide economic and financial value given their ability to enhance efficiency, productivity, yield, and profitability by reducing costs. IoT is able to leverage multiple advanced technologies that enhance price-performance. IoT and analytics gain from advances in cloud computing, Internet connected mobile phones, chips, and machine learning. IoT and analytics bring a new dimension to BI and provide a framework to identify trends, detect anomalies, recognize patterns, and understand relationships among variables. In addition, secure intelligent connected IoT devices can lower operating and transaction costs by automating monitoring, measuring, and managing equipment, assets, and environmental conditions.

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The Internet of Things (IoT) How Big Data and Analytics Translate into Lower Costs and Higher Productivity

July 19th, 2015 · Comments Off on The Internet of Things (IoT) How Big Data and Analytics Translate into Lower Costs and Higher Productivity

The value of IoT is its ability to monitor, control, and compile data. Data derived from IoT sensors when combined with analytics can lower operating costs, enable new business models, and improve productivity. Embedded sensors monitor, measure, and manage connected devices with limited human interaction. Less human interaction translates into higher productivity. Sensors that can monitor and control devices can also minimize maintenance costs, reduce energy costs, optimize resources allocation and process flow.

For instance, photo and occupancy sensors that can control lighting typically save 20% of a building’s lighting cost. On average, lighting accounts for 25% of the buildings energy costs or approximately $0.70 per square foot according to the DOE. When lighting controls sensors are connected to the Internet, they enable remote diagnostics, device control, and collect data.

By analyzing data from IoT devices, new business models can be created. Analytics play a crucial role developing these new business models. Uber uses analytics to know user demand by the minute. Palantir Technologies provides visual analysis using disparate transactional activities to detect fraud. IoT devices allow greater detail in data capture and faster timing responses. IoT sensors that enable device control and data capture will engender new business models.

The IoT will also contribute to improving productivity. Productivity gains are often associated with reducing costs. One factor that helps improve productivity is associated with lowering transaction costs. Transaction costs involve monitoring, measuring, and managing business activities. Transaction costs were defined by Ronald Coase, the 1991 Nobel Prize laureate in Economics with “The Nature of the Firm,” published in 1937. IoT sensors with remote monitoring capabilities provide a new framework in managing, monitoring, measuring, and managing business processes with less human interaction. In addition, the IoT, Big Data and analytics create insight that often leads to innovation.

By reducing transaction costs, advances in technology and innovation can translate into higher productivity. For instance, to facilitate exchange of goods and services, agreements and specifications as to weight, size, volume, ingredients, and performance need to be established. The verification and monitoring of these values involve transaction costs. Minimizing activities associated with managing, monitoring, and measuring reduce transaction costs.

In general, the more goods and services are standardized, the lower the transaction costs. For example, world trade accelerated after the advent of containerized shipping. with the introduction of containerized shipping by Malcom McLean in Port Newark, NJ in 1956, Standardization and uniformity streamline processes in packaging, logistics, and operations. With less time, labor, and resources being applied to measuring and monitoring, transaction costs are lower, which in turn, translate into productivity gains and economic growth. With containerized shipping, shipment volume in the Port of New York and New Jersey increased nine-fold since the 1950’s while dock employment declined 93%. According to the Port Authority of NY & NJ, dock worker employment declined from over 50,000 in in 1951 to 3,500 in 2012. (See Figures 1 and 2)

Figure 1

Figure 2

Productivity gains are usually accomplished by increasing outputs greater than inputs or reducing inputs at same level of outputs. Factors contributing to economic growth include technology, risk capital, available skilled labor, and energy. Often overlooked in economic growth and productivity are transaction costs. Transaction costs such as searching, monitoring, measuring, and managing can be reduced or eliminated with IoT connected sensors. The IoT provides a new paradigm in managing, monitoring, measuring, and controlling inputs and outputs.

The catalyst for economic growth and productivity gains are often associated with reducing transaction costs in the process of exchanging goods and services. Shipping costs as a percent of trade value has declined since the introduction of containerized shipping. Just as containerized shipping reduced transaction costs for world trade, the IoT with connected sensors can reduce transaction costs.

Containerized shipping improved productivity and economic growth by lowering transaction costs; the Internet provides a similar approach. The IoT provides a new framework in managing, monitoring, measuring, and controlling inputs and outputs. Remotely connected sensors can facilitate the exchange of goods and services by reducing transaction costs by automating verification of weight, size, volume, tracking, and performance.

In retrospect, the Internet has removed geography as a limitation for commerce. The Internet enables the ability to direct the messages and conduct the sales in the same transaction. The Internet was built on packetizing data similar to containerized shipping. A standardized approach to transporting data reduced transaction costs associated with monitoring and managing data traffic. Internet search volume is up 400-fold since 1999. Data transport over the Internet virtually eliminates transaction costs associated with search. The ability to deliver content and conduct the transactions over the Internet substantially improves productivity. (See Figure 3)

Figure 3

Analytics linked to measuring performance along the value chain can serve to optimize productivity and business value creation by focusing on business activities that contribute most to profitability. Therefore, steps to reduce transaction costs and tools that integrate business processes with analytics, act to drive performance by concentrating attention towards business activities that matter most to profits and productivity.

The IoT, Big Data and analytics will profoundly change all facets of our lives. Just as the Internet was responsible for launching new businesses based on innovative models and processes, the IoT will drive economic activity and productivity by lower transaction costs and generating innovation, and new business models.

Comments Off on The Internet of Things (IoT) How Big Data and Analytics Translate into Lower Costs and Higher ProductivityTags: Analytics · Carbon and Climate · Energy Costs · Energy Economics

Economics of Oil

December 7th, 2014 · Comments Off on Economics of Oil

Advances in technology such as seismic imaging with Dawson Geophysical and horizontal drilling with Schlumberger have dramatically changed the economics of oil and gas extraction. The change in oil economics is so profound that the cost structure of hydrocarbon fuels will reverberate through the global energy market and impact pricing of renewables energies and investment decisions. So profound are these changes that the US has surpassed Saudi Arabia and emerged as the world’s largest oil producer.

With the price of oil falling as a result of large production gains in US oil production. The price of oil is may fall below $40 per barrel according to an article in Barron’s The Case for $35 a barrel Oil suggesting further oil price declines are possible.

Latest data from the Energy Information Administration (EIA), EIA indicate global oil demand has slowed in 2013 with global oil consumption at 0.7% is half the 1.4% annual ten-year average growth. China oil demand declined by 1.1% while the US increased by 2.2% in 2013.

Figure 1 Global Oil Consumption Slide1

The data from Baker Hughes indicates that horizontal and directional drilling now accounts for over 80% of the drilling activity from 10% in the 1990’s.

Figure 2 US Rig Count by Drilling Technology Slide2

The result of better performing and higher yielding oil wells is stronger production. US field oil production is up 36% in the last four years. The number of drilling rigs in the US has increased 14% from 2010 to 2013. Extraction technologies coupled with imaging technology to better source hydrocarbon deposits have all played a role in disrupting the global oil industry.

Figure 3 US Rig Count and Oil Production Slide3

The US now leads Saudi Arabia in oil production. The following charts illustrates the oil production for the US and Saudi Arabia from 2005 through August 2014. The US is now producing more oil then Saudi Arabia and Russia.

Figure 4 Oil Production Slide4

The good news is that consumers benefit in the short run. If oil prices fall below the production cost of drilling for oil, oil production could fall, thereby, leading to perhaps higher oil prices.

The bottom line is technology and innovations have dramatically altered the landscape in the global oil industry. As technology and innovation impact the economics of oil the realization of Peak Oil may extend much further into the future and could even limit gains in renewable energy while lower oil prices continue.

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How Analytics can Improve Productivity

August 2nd, 2014 · Comments Off on How Analytics can Improve Productivity

Technology and innovation drive productivity, but transaction costs arising from technology implementation limit gains. Analytics and decision science could provide the means to tame transaction costs and improve productivity. Transaction costs were defined by Ronald Coase in “The Nature of the Firm,” published in 1937 and who earned a Nobel Memorial Prize in Economics in 1991.

Access to and sharing of information drives competitive advantage. Businesses often require global sourcing of physical and digital resources and collaborative workgroups often span several nations across the globe. Information flow is an integral aspect of collaborative workflows and global supply chains. Data serves as the foundation for business models where competencies are achieved through analytics. To achieve visibility and granularity into business processes, greater amounts of data are generated.

By reducing transaction costs, advances in technology and innovation can translate into higher productivity; lower operating costs, and a greater supply curve shift. At the same time, the network effect, enhanced consumer utility found with increasing number of users, may push demand.

The takeaways are: 1) analytics provide a process to reduce costs and improve productivity; 2) a process to monitor, measure, and benchmark performance; and 3) enable a firm to assimilate new technologies and manage uncertanties.
How Analytics can Improve Productivity

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US Oil and Gas Production be a Catalyst for Economic Growth

March 3rd, 2014 · Comments Off on US Oil and Gas Production be a Catalyst for Economic Growth

The turnaround in oil and gas production appears to create a tailwind to drive further economic growth as seen in vehicle and housing sales. Recent advances in technology such as Seismic imaging with companies such as Dawson Geophysical (DWSN) and horizontal drilling with industry leaders like Schlumberger Limited (SLB) (through its acquisitions of Smith International and SII’s acquisition of W-H Energy Services) have dramatically change the economics of oil and gas extraction and subsequently, the energy picture in the US.

Recent data from the Energy Information Administration (EIA), EIA the improving production levels for oil and natural gas suggest the energy headwind driven by high oil prices may lead to a tailwind. Advances in technology Seismic imaging, hydraulic fracturing, and horizontal drilling have enabled production of shale oil to be more economically attractive.

Figure 1 US Oil Production Oil

High-energy prices have had a negative impact on the US economy. With improvements in oil and natural gas production, the economy should experience a more favorable outlook. Recent data from the housing sector and vehicle sales suggests the level of activity is improving.

Figure 2 US Vehicle Sales Vehicles

Since the Great Recession starting in 2008, vehicle sales in the US have remained substantially below 15 million units on a seasonally adjusted annual rate until 2012. According to data from Motor Intelligence Autodata the level of vehicle sales has maintained sales above the 15 million units through January 2014 indicating positive economic improvement in the car and truck industries.

Figure 3 US Housing Inventory Housing class=

The US housing market has been a drag on the economy since the financial crisis and now housing is beginning to show signs of improvement. Latest information from Association of Realtors shows the existing inventory of houses on the market remains at an acceptable level consistent with the inventory levels before the financial crisis began.

While efforts to expand renewable energy require further support, the positive effects of less reliance on foreign oil are deemed positive.

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Perspective on Global Oil Consumption – Possible Plateau for Oil Consumption?

August 11th, 2013 · 1 Comment

Global oil demand grew 0.6% in 2012 and over the last ten years oil consumption grew at a compounded annual growth rate (CAGR) of 1.3%. With near term oil demand at a lower level then the trend for the past ten years suggests the pace in oil consumption is slowing.

According to the Energy Information Administration (EIA), EIA the trend in oil consumption is pointing towards slower if not anemic growth. In the two largest areas, the US and Europe, demand is for oil is declining. While the increasing demand for oil in China and India is significant, the rate of growth is slower.

Figure 1 Global Oil Demand Oil

In the US, oil demand declined 2.1% in 2012 and over the last ten years oil consumption is down 0.6%. The oil consumption trend in the US suggests the decline maybe more structural, particularly as vehicle fuel efficiency is improving and high oil prices may change consumer-driving habits.

Figure 2 Oil Consumption – Major Countries Oil Demand

While the economic weakness in Europe and moderating growth in China, it is not surprising to see weakness in global oil demand. The trend is lower oil consumption might just be the result of short term economic weakness.

Europe and the US account for over 37% of the global demand for oil and that demand has declined over the last ten years. While the US was down 0.6%, demand for oil in Europe was down 1.1% in the last ten years.

Figure 3 Oil Consumption Perspective Global Oil Demand

There is still strong demand for oil in China and India, but the rate of growth has slowed. China and India represent 15% of the global demand for oil. China and India have one-year oil demand growth rates below their respective ten-year rates.

Figure 4 Oil Consumption Trends Global Oil Demand

The bottom line is that is demand for oil has slowed and it maybe at a point where oil prices may soon reflect slowing demand.

→ 1 CommentTags: Automobile Fuel Efficiency · Energy Costs · Energy Economics · Historic Energy · Oil Energy · Oil Independence · Peak Oil

Update on Oil Consumption

February 6th, 2012 · 1 Comment

The latest data on oil consumption suggest the dip in consumption that appeared in 2008 after the global financial crisis quickly reversed. The contraction in oil has now turned to expansion with consumption up 4% y/y globally.

According to the latest reported information from the Energy Information Administration (EIA), EIA oil consumption is up 4% for 2010 from 2009. The data oil consumption data suggests the global economy has recovered from the financial crisis and is translated into higher oil demand.

Figure 1 Global Oil Demand Oil

WE have seen economic contraction result into declines in oil demand before. Oil demand dropped in the 1979 to 1983 period with of a 10% decline per year. On a global basis, oil demand declined approximately 2% in 2009 from 2008, but is not up nearly 4% in 2010

In the US, oil demand dropped 5.7% in 2008 and 3.7% in 2009 with demand in 2010 increasing 3.8%. The oil consumption trend in the US suggests the decline in oil demand was cyclical as apposed to any structural changes in US consumer demand.

Figure 2 US China & India Oil Consumption US Oil Demand

The real story is the growing demand for oil from China and India. According to data from The Centre for Global Energy Studies (CGES) , the demand for oil from China is up 100% from in the last ten years. China’s oil consumption rate has grown from 4.8 million barrels per day (MBPD) to 9.6 MBPD amounting to half of the total US consumption. In 2010 the growth in oil demand in China is up 17%.

The demand for oil in India is also increasing. Oil consumption in India is up 58% in the last ten years and up 8% in 2010.

Figure 3 China and India Oil Demand Global Oil Demand

The bottom line is that is demand for oil continues to increase and we expect further increase in oil prices.

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Infrastructure Investment: Electric Vehicles and Smart Grid

March 7th, 2011 · 1 Comment

After several months in Silicon Valley three factors resonate clearly in the process of innovation: access to data, applied analytics, and time to insight. Innovative ideas and technology can just as easily be spawned in New Jersey or Milan as in Silicon Valley. Our focus is why investment into infrastructure that facilitates access to energy or commerce, is the critical factor in game changing events.

Investment onto infrastructure to support access to energy enabled New York City to gain prominence over Philadelphia and Boston as the largest economic center in the US. Access to energy can be traced back to 1829 when the first American steam locomotive in Honesdale, PA initiating the American Railroad to transport Anthracite coal mined in nearby Carbondale to a canal network ultimately linking to the Hudson River and New York City. See post Coal: Fueling the American Industrial Revolution to Today’s Electric

As a corollary, in demonstrating the importance of investing into infrastructure to support economic growth, this is the tale of two Southern cities. In the 1950’s, Memphis, TN and Atlanta, GA were roughly the same size. While Memphis enjoyed economic growth from its port on the Mississippi River, Atlanta was land locked. Atlanta strategically invested by focusing on the future of jet aircraft building the infrastructure for the largest airport in the US in 1961. Within 10 years Atlanta had double the population and economic growth of Memphis. Today Atlanta has an economy five times that of Memphis because of innovative thinking and investment into infrastructure of the future.

Figure 1 Infrastructure: Tale of Two Cities Infrastructure
Source: Social Science Data Analysis Network

Electric vehicles (EV) and energy storage are perhaps the most important energy strategy second to renewable energy such as solar photovoltaic. The reason EV is so important to a national energy strategy is the fact that oil used for transportation accounts for more than twice the energy required to supply the entire electric needs of the US market. See the Green Econometrics post Energy Perspective The issue is formulating an effective energy strategy that embraces renewable energy and smart grid technologies.

Figure 2 US Electric VehiclesElectric Vehicles
Source: Ward Automotive, Pike Research, Green Econometrics

Just how critical is infrastructure to supporting electric vehicles?

According to information from Tesla Motors’ registration filings with the SEC in June 2010, the charge time on the Tesla Roadster using a 240 volt, 40 amp outlet to full capacity takes approximately 7 hours. Assuming most drivers are in their vehicles for work five days a week and one day on the weekend, the electric energy consumption to charge the electric vehicle amounts to approximately 67 KWH a day and for a six-day per week charging, 20,966 KWH per EV per year.

According to the DOE Energy Information Administration, the average residential home consumes about 11,000 KWH a year. So the electric vehicle is roughly double is energy use of a typical home. Given capacity constraints in electric generation, tripling the electric energy use per house would more exacerbate our already tenuous energy situation,

Figure 3 Smart Grid is Critical for US Electric VehiclesSmart grid
Source: EIA, Green Econometrics

To sustain economic growth and avoid dependence on foreign oil, electric vehicles provide a migration path towards energy independence. To support the adoption of electric vehicles, a tremendous investment in our electric infrastructure is required. A dramatic supply shock to oil could raise substantially the retail price of gas and thereby drive consumer towards EVs at an accelerated rate. If half the vehicles on the road were electric, our electric generating capacity would need to increase dramatically and outfitted with smart grid technologies to stabilize transmission.

The bottom line is vision and innovation require investment into infrastructure and in particular renewable energy generation like solar and wind and the grid to support intelligent transmission and distribution.

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2010 Update on Oil Consumption and CO2 Levels?

January 15th, 2011 · Comments Off on 2010 Update on Oil Consumption and CO2 Levels?

The worst global economic recession in since the Great Depression seems to be abating. Given the severity of the financial crisis, it might serve to review what impact the recession has had on oil consumption. In addition, what impact did the decline in oil consumption have on atmospheric CO2 concentration levels?

Since 2006, global oil consumption declined by 1.1 million barrels per day (BPD) from 85.2 in 2006 to 84.0 in 2009. Oil consumption in the US declined 9% to 18.8 million from 20.7 million BPD in 2006. Europe experienced a decline of 7% over this same period with a drop of 16.5 million to 15.2 million BPD. However, over this same period, oil consumption in China and India increased 16% and 13%, respectively. This data was complied from the US Department of Energy Information Administration (EIA) and is displayed in the following charts.

To measure how significant the impact has been, the following charts provide some insights in evaluating how deteriorating world economies may have impacted oil consumption and secondly, whether reduced oil consumption has mitigated heightened CO2 levels.

Figure 1 Global Oil Consumption Global Oil
Source: EIA

From Figure 1, the impact of the global financial crisis is depicted with the decline in global oil consumption. When a comparison is applied to oil consumption between the US China, and India, the relative drop in oil consumption is less discernable.

Figure 2 US, China, and India US China & India
Source: EIA

Figure 2 provides a summary of oil consumption of the US, China, and India. A measurable decline in oil consumption can be seen, but only in the US market.

Figure 3 China and India China and India
Source: EIA

Figure 3 demonstrates the steady and pronounced growth in oil consumption for China and India. Despite the global financial crisis, oil consumption significantly expands in China and India due to secular growth from rapid industrialization in both countries. When measured with respect to the European market, China and India have grown from 15% of the oil consumption rate of Europe in 1980 to over 74% of the consumption level in 2010.

Figure 4 CO2 Levels CO2
Source: NOAA

With the decline in global oil consumption, perhaps a positive benefit would be a fall in CO2 levels. The atmospheric CO2 readings in part per million (PPM) where taken from the National Oceanic and Atmospheric Administration (NOAA) from the Mauna Loa CO2 Levels monthly measurements. Figure 4 illustrates the average annual atmospheric CO2 concentration readings in Mauna Loa, Hawaii from 1980 through 2010.

The bottom line is even while global oil consumption declined during the recession, growth in China and India remained unabated and subsequently, CO2 concentrations in the atmosphere continue at elevated levels.

In memory of Jamie Kotula – loved by family, friends, teammates, and school.

Comments Off on 2010 Update on Oil Consumption and CO2 Levels?Tags: Alternative Energy · Carbon and Climate · Carbon Economics · Carbon Emissions · Carbon Footprint · CO2 Emissions · Energy Costs · Energy Economics · Fuel Efficiency · Global Warming · Hydrocarbon Fuels · Oil Energy · Oil Independence · Peak Oil

Heating and Cooling – Does Insulation Pay?

November 5th, 2010 · 3 Comments

Insulation is one of the most important factors in improving building energy efficiency. Heating, ventilation and cooling (HVAC) often accounts for more than half the energy expense of a building. Insulation helps to improve the energy efficiency of heating and cooling. Depending on the selected insulating material, the economic impact on heating costs can be quite dramatic.

To understand how insulation helps improve building heating and cooling, it’s helpful to review the dynamics of building heat loss as it applies to building materials and outside actual air temperatures.

To calculate the heating requirements for a building, the overall heat loss from a building can be derived as a function of the combined heat loss of transmission through the roof, walls, windows, doors, and floors, as well as heat loss caused by ventilation and air infiltration. In general, without getting too scientific, the heat loss from transmission through roof, walls, doors, and windows represents the largest impact and is primarily a function of the temperature difference between the inside and outside air and thermal conductance of he building material. For a more detailed review of building heat loss see Heat Loss.

The difference between inside and outside temperature plays a critical role in building heat loss. The first step is to understand heating and cooling requirements from weather data. Heating degree day (HDD) are a measure of energy demand required to heat a building. HDD is derived from the difference between the daily outside temperature observations and the ideal indoor air temperature, say 65 degrees Fahrenheit (18.30 Celsius). The heating requirements for a building in a specific location can be derived from the HDD data in conjunction with building factors such as insulation, windows, solar heat gain, and use. Air conditioning also has a similar metric and is defined as cooling degree day (CDD) and measures the amount of energy used to cool a building.

From the historical data on outside air temperature, an average heating and cooling degree day can be assigned to a specific region. To calculate degree days for both heating and cooling Daily Temperatures can be assessed by zip code to capture historical data on specific climate zones.

When it comes to selecting building materials and insulation, material suppliers often supply two measures – the R-value and C-value. A material’s R-value (thermal resistance) is the measure of its resistance to heat flow. The C-value (thermal conductance) is the reciprocal of thermal resistance and measures the ability of a piece of material to transfer heat per unit time or more specifically, specifies the rate of energy loss through a piece of material.

The US Department of Energy (DOE) has provided revised R-value recommendations based on climate zones. To understand the energy impact of selecting the right R-value insulation material for your building, an on-line heating calculator will help illustrate the heating requirements and associated energy costs for different insulating materials. Building heating requirements are often expressed in BTU (British Thermal Units) per cubic foot.

The Heater Shop BTU Calculator Heating Calculator provides some useful insight into managing energy expenses. The calculations were based on an average of 25 HDD for New York City.

Figure 1 illustrates the heating requirements as measured by BTU per square foot of building space for corresponding insulating materials across ceiling heights from 10 to 40 feet to capture cubic feet. As seen from Figure 1, the heating requirements show significant variance depending on insulation assumptions.

Figure 1 BTUs per Square Foot BTU
Source: Heater Shop BTU Calculator

Taking the building heating requirements one-step further, different insulating assumptions (no insulation, average, and good) translate into wide dispersion in operating costs. The on-line heating calculator was used to estimate the building heating requirements based on the following assumptions: 10,000 square foot facility with ceiling height of 10 feet for 25 HDD for no-insulation average insulation, and good insulation. To derive fuel costs, the BTU per square foot for each insulation category was applied to a heating system operating for five heating months with approximately 1,400 hour of operations to coincide with a gas furnace at 90% efficiency and 20-minute on-cycle and 30-minute off-cycle. Gas pricing for heating are based on $17.00 per million BTU.

Figure 2 Heating Energy Cost  Heating
Source: Green Econometrics research

Figure 2 demonstrates that heating cost per square foot for good insulation saves approximately $2.90 per square foot in comparison to no-insulation at all. If we compare the heating costs savings to the cost of insulation, the payback period for insulation can be achieved in a year under most circumstances.

Figure 3 Insulation Cost  insulation
Source: Green Econometrics research

To assess the C-value and R-Value of various building materials, there are some useful charts available on the web. Insulation and Building Materials R-Values

The bottom line is that insulation is one of the most important building components materials to improve energy efficiency and lower utility costs.

→ 3 CommentsTags: Alternative Energy · Cooling · Energy Costs · Energy Economics · Heating · Home Energy Economics · Home Heating Costs · Hydrocarbon Fuels · Insulation · Natural Gas Energy · Oil Energy · Propane Energy · Wood Energy

Should we be Concerned over Elevated CO2 levels?

July 7th, 2010 · Comments Off on Should we be Concerned over Elevated CO2 levels?

With the oppressive heat and appalling humidity along the Eastern Seaboard, one considers the possibility of climate change and the impact of that greenhouse gases may have on our environment. Without developing statistical regression models to gleam any semblance of understating of carbon dioxide’s impact on climate change, let’s just look at some charts that illustrate the changes of CO2 levels though history.

While industry experts and scientist debate whether elevated CO2 levels have an impact on climate change, the scientific data taken from ice core samples strongly suggests CO2 levels have remained in a range of 180-to-299 parts per million (PPM) for the last four-hounded thousand years. Scientists have developed models to suggest that rising CO2 levels contributes to global warning which are subsequently followed by dramatic climate changes that lead to periods of rapid cooling – the ice ages.

Scientific theories suggest that rising global temperatures melts the Polar ice which allows substantial amounts of fresh water to enter the oceans. The fresh water disrupts the ocean currents that are responsible for establishing a nation’s climate. As oceans warm near the equator, the warmer water travels towards each of the Polar areas. The cooler water near the Polar areas sinks and travels towards the equator. These ocean currents allows for stable climates. The issue is that fresh water is less dense because it is not salty like seawater. Therefore, the fresh water does not sink like the cold salinated seawater thereby disrupting the normal flow of the ocean currents.

Figure 1 CO2 Ice Core Data – illustrates the level of CO2 over the last four-hounded thousand years. The Vostok Ice Core CO2 data was compiled by Laboratoire de Glaciologie et de Geophysique de l’Environnement.
Ice Core Data

Figure 1 CO2 Levels – Vostok Ice Core CO2 Ice Core
Source: Laboratoire de Glaciologie et de Geophysique de l’Environnement

If this Ice Core CO2 data is correct, then the current data on atmospheric CO2 levels is quite profound. CO2 data is complied by the National Oceanic and Atmospheric Administration NOAA at the Mauna Loa Observatory in Hawaii. The latest trend indicates CO2 levels for June 2010 are at a mean of 392 ppm versus 339 in June 1980 and 317 in 1960. Clearly these CO2 levels are elevated. The question is what is the impact on our environment.

Aside from the catastrophe in the Gulf of Mexico and the dire need to find an alternative to our dependence on oil, should we not accelerate our efforts to find an alternative energy solution and as a way to mitigate the impact of CO2 on our environment? Maybe investment into alternative energy could help solve multiple problems.

Figure 2 Mauna Loa CO2 Readings  Mauna Loa
Source: Source data published by the National Oceanic and Atmospheric Administration (NOAA)

The bottom line is that we need to consider the possibility that elevated CO2 levels in our atmosphere could potentially have a detrimental impact on our climate. In any event, limiting our dependence on fossil fuels, the main contributor to CO2, should be paramount. Let us not forget oil is supply-constrained – there are no readily available substitutes aside from electric vehicles, and without a strategy to embrace renewable energy, supply disruptions will have a painful impact on our economy, national security, and environment.

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University of Illinois Researchers Demonstrate Innovative Approaches to Lower Photovoltaic Panel Production Costs

June 7th, 2010 · 2 Comments

Even if silicon is actually the industry common semiconductor in the majority of electric products, including the solar cells that photovoltaic panels employ to convert sunshine into electricity, it is not really the most effective material readily available. For instance, the semiconductor gallium arsenide and related compound semiconductors offer practically two times the performance as silicon in solar units, however they are rarely utilized in utility-scale applications because of their high production value.

University. of Illinois. teachers J. Rogers and X. Li discovered lower-cost ways to produce thin films of gallium arsenide which also granted usefulness in the types of units they might be incorporated into.

If you can minimize substantially the cost of gallium arsenide and other compound semiconductors, then you could increase their variety of applications.

Typically, gallium arsenide is deposited in a single thin layer on a little wafer. Either the desired device is produced directly on the wafer, or the semiconductor-coated wafer is cut up into chips of the preferred dimension. The Illinois group chose to put in multiple levels of the material on a one wafer, making a layered, “pancake” stack of gallium arsenide thin films.

Figure 1 Thin Film Solar Thin Film
Source: University of Illinois

If you increase ten levels in one growth, you only have to load the wafer once saving substantially on production costs. Current production processes may require ten separate growths loading and unloading with heat range ramp-up and ramp-down adds to time and costs. If you take into account what is necessary for each growth – the machine, the procedure, the time, the people – the overhead saving derived though the new innovative multi-layer approach, a substantial cost reduction is achieved.

Next the scientists independently peel off the levels and transport them. To complete this, the stacks alternate levels of aluminum arsenide with the gallium arsenide. Bathing the stacks in a solution of acid and an oxidizing agent dissolves the layers of aluminum arsenide, freeing the single thin sheets of gallium arsenide. A soft stamp-like device picks up the levels, one at a time from the top down, for shift to one other substrate – glass, plastic-type or silicon, based on the application. Next the wafer could be used again for an additional growth.

By doing this it’s possible to create considerably more material much more rapidly and much more cost effectively. This process could make mass quantities of material, as compared to simply the thin single-layer way in which it is usually grown.

Freeing the material from the wafer additionally starts the chance of flexible, thin-film electronics produced with gallium arsenide or many other high-speed semiconductors. To make products which can conform but still retain higher performance, which is considerable.

In a document published online May 20 in the magazine Nature the group explains its procedures and shows three types of units making use of gallium arsenide chips made in multilayer stacks: light products, high-speed transistors and solar cells. The creators additionally provide a comprehensive cost comparability.

Another benefit of the multilayer method is the release from area constraints, specifically important for photo voltaic cells. As the levels are removed from the stack, they could be laid out side-by-side on another substrate to create a significantly greater surface area, whereas the typical single-layer process confines area to the size of the wafer.

Figure 2 Solar Arsenium Arsenium
Source: University of Illinois

For solar panels, you want large area coverage to catch as much sunshine as achievable. In an extreme situation we could grow adequate levels to have ten times the area of the traditional.

After that, the team programs to explore more potential product applications and additional semiconductor resources that might adapt to multilayer growth.

About the Source – Shannon Combs publishes articles for the residential solar power savings web log, her personal hobby weblog focused on recommendations to aid home owners to save energy with solar power.

→ 2 CommentsTags: Alternative Energy · Carbon Footprint · Energy Costs · Solar Efficiency · Solar Energy · Solar Energy Economics

Energy Perspective

April 13th, 2010 · 5 Comments

After reviewing oil data from the Energy Information Administration (EIA), Global Petroleum Consumption , it may be helpful to put energy consumption into perspective. Most of us are quite familiar with alternative energy such as solar and wind, but the reality is, even if solar and wind could supply all of electric energy needs, the majority of our energy needs is still predicated on access to oil.

While industry experts and scientist debate whether more drilling will ameliorate the energy challenge we face, let’s look at a couple of data points. Figure 1 US Oil Field Oil Production and Drilling Rigs – illustrates that higher drilling activity as measured by Baker Hughes Rig Count data does not necessarily correlate to more oil production as measured by US Oil Field Production by the EIA. Higher drilling activity does not produce more oil.

Figure 1 US Oil Field Production and Drilling Rigs US Oil Demand
Source: Energy Information Administration and Baker Hughes research

Despite the large investment in drilling rigs that more than doubled from 1,475 in 1974 to over 3,100 in 1982, US oil production remained relatively flat. Moreover, even the most recent drilling expansion activity that again more than doubled from 1,032 rigs in 2003 to over 2,300 rigs in 2009, resulted in relatively flat oil production, suggesting that on the margin unit oil production per drilling rig was declining. Perhaps even more disturbing is that the most recent drilling activity in the US was accomplished through extensive use of technology. Seismic imaging technology is being used to better locate oil deposits and horizontal drilling technologies are employed to more efficiently extract the oil, yet oil production still lags historic levels. While on the margin, newly announced offshore drilling could add to domestic oil production, extraction costs of oil will continue to rise adding to further oil price increases.

However, what is most profound is our dependence on oil for most of our energy needs similar to how wood was used for fuel construction material during the 1300’s and 1600’s. If we translate energy consumption into equivalent measuring units such as kilowatt-hours, we can compare and rank energy consumption. Although electricity is captured through consumption of several fuels most notably coal, a comparison of energy usage between oil and electric provides an interesting perspective.

Figure 2 Energy Perspective – provides a simple comparison of the consumption of oil and electricity measured in gigawatt-hours (one million kilowatt hours). A barrel of oil is equivalent to approximately 5.79 million BTUs or 1,699 KWH and the US consumed approximately 19.5 million barrels per day equating to 12 million gigawatt-hours a year. The US uses 4 million gigawatt-hours of electric energy annually. The critical point is that even if solar and wind supplied all of our electric energy needs, it would still only comprise 30% of our total energy needs. Therefore, without an energy strategy that facilitates migration towards a substitute for oil, particularly for transportation, we are missing the boat.

Figure 2 Energy Perspective Oil
Source: Energy Information Administration and Green Econometrics research

It’s not all doom and gloom. Technologies are advancing, economies of scale are driving costs lower, and the economics for new approaches to transportation are improving. From hybrids and electric vehicles benefiting from advances lithium-ion batteries to hydrogen fuel cell vehicles getting 600 miles on a tank of fuel. These advanced technologies could mitigate our addiction to oil, however, without formulating an energy strategy directing investments towards optimizing the economics, energy efficiency, environment, and technology, we may miss the opportunity.

The bottom line is that oil is supply-constrained as there are no readily available substitutes, and therefore, without a means to rapidly expand production; supply disruptions could have a pernicious and painful impact on our economy, national security, and welfare.

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Global Oil: Economic Recovery should Drive Demand and Price

January 16th, 2010 · 1 Comment

Despite the global economic recession, preliminary data suggest oil demand remains rather resilient. According to the latest reported information from the Energy Information Administration (EIA), Global Petroleum Consumption is down one percent y/y in 2008 while China and India show increases of 4% and 5%, respectively. However, current data through September 2009, show oil demand fell quite precipitously in the US. Through September 2009, oil consumption is down over two million barrels per day form the 2007 annual average (an 11% decline). Most of the change in oil consumption is cyclical and with an economic recovery expected, oil demand should rebound and perhaps drive prices higher.

Figure 1 US Average Annual Oil Consumption US Oil Demand

Historically, the US has seen this type of demand erosion before. From 1979 to 1983, oil demand in the US declined 28% with annualized rate of a 10% decline per year. Over this same period, oil prices actual rose despite the fall in demand. Oil prices by barrel (42 US gallons) rose from $3.60 in 1972 to $25.10 in 1979. Oil prices are up significantly in 2009. In January 2009, oil was traded at $33.07 a barrel and in January 2010, oil is trading at 2010 Oil prices $78.00 per barrel.

On a global basis, oil demand has only contracted by one percent in 2008, the latest data from the IEA. Despite the fall out in US oil demand, global markets driven from demand from China and India, has kept the global demand for oil relatively stable.

Figure 2 Global Oil Demand Oil

The growing demand for oil from China and India increased their respective share of the global oil markets from 3% and 1%, respectively in 1980 to over 9% and 3% in 2008. At the same time, the US share of global oil consumption has declined from 27% in 1980 to under 23% in 2008. See Figure 3 China and India Oil Demand.

Figure 3 China and India Oil Demand Global Oil Demand

The bottom line is that as financial growth emerges across the globe, oil demand should increase commensurately and with oil process already at elevated levels, further prices increases are expected. – demand for oil will increase and so will oil prices.

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Falling Panel Prices could bring Solar closer to Grid Parity

October 27th, 2009 · 3 Comments

Rising inventory levels of photovoltaic (PV) panels and new production capacity coming online is driving solar PV prices lower and thereby, bringing solar energy closer to grid price parity. With the release of the latest earnings of solar energy companies, Wall Street’s keen attention to revenue guidance, inventory levels and pricing are paramount in diagnosing the health of the solar energy industry. Expectations call consolidation of the solar industry with some key players gaining market share and for others it becomes more challenging. However, despite the turbulence in the industry, consumers will benefit in the near-term as solar PV prices fall and government incentive fuel growth in solar PV deployment.

To get a better perspective on the solar PV industry, let’s examine inventory levels for some of the leading solar PV suppliers. The following chart, Figure 1, compares inventory levels in relationship to sales volume. While inventory levels have increased, the level of inventories to sales is not egregious

Figure 1 Sales and Inventory levels install

While it is important to control inventory levels in relationship to sales, revenue growth is predicated upon price, performance, and return on investment for prospective customers. Thin-film PV has emerged as the low-cost solar solution even with its lower efficiency levels in comparison to mono-and poly-crystalline PV panels. Thin-film still offers a lower cost/watt than crystalline PV, see Solar Shootout in the San Joaquin Valley , but prices for crystalline PV are falling as a result of rising production capacity and inventory levels.

Figure 2 Market Value Market Value

In Figure 2 Green Econometrics is comparing the market value of some of the leading PV suppliers as measured by their respective stock prices. In the valuation of solar PV suppliers, the stock market appears to be betting heavily on thin-film PV, as First Solar (FSLR), the leading thin-film PV supplier, enjoys a market value that accounts for over half the value of the entire solar industry. FSLR is positioned as the low-cost supplier in the solar industry with its announcement of $1 per Watt reducing its production cost for solar modules to 98 cents per watt, thereby braking the $1 per watt price barrier. However, new panel suppliers, mainly from China are pushing prices lower for poly-and mono-crystalline panels suppliers. ReneSolar (SOL) is seeing average selling prices for wafers at $0.93 per watt and bring PV panels prices to under $2.00 per watt.

There appears to be a lot riding on the success of thin-film PV and as prices fall for crystalline PV, the closer we get to grid parity. In the following chart, Figure 3, price for crystalline PV have declined quite dramatically in the last 30 years. According to the Energy Information Administration, in 1956 solar PV panels were $300 per watt, and in 1980, the average cost per solar modules was $27/watt and has fallen precipitously to approximately $2/watt in October 2009. As the installed cost of solar PV falls closer to $4/watt, pricing per kilowatt-hour (KWH) (depending on your climate and geography), equates to approximately $0.16/KWH that would be inline with utility rates after rates caps are removed.

Figure 3 Solar PV Prices econ

The bottom line is that despite the lower PV panel costs; we are still not at parity with hydrocarbon fuels such as coal and oil. Carbon based taxes or renewable energy incentives as well as more investment into alternative energy should improve the economics of solar and wind and bring us to grid parity.

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A Case for Natural Gas CHP Systems

August 25th, 2009 · Comments Off on A Case for Natural Gas CHP Systems

A combined heat and power system (CHP) is the cogeneration or simultaneous generation of multiple forms of energy in an integrated system. CHP systems consume less fuel than separate heat and power generating systems. According to the Environmental Protection Agency in their Combined Heat and Power Partnership report, (EPA), CHP systems typically consume only three-quarters the amount of energy separate heat and power systems require. By combining both heat and power into the same energy systems, efficiency gains for the total system. Heuristically, high temperature and high pressure fuel ratios results in higher efficiency systems. In addition, the thermal energy produced from the CHP system could be used to drive motor applications or to produce heat, steam, and hot water.

As an initial step to reducing greenhouse gas (GHG) emissions, natural gas turbines could improve overhaul efficiency of 65-80%. In addition, the CHP offers lower greenhouse gas (GHG) emissions in comparison to conventional standalone systems. Gas turbines CHP systems operate under a homodynamic principle called the Brayton cycle. The design characteristics of a CHP gas turbine provide: 1) high electric and total system efficiency; 2) high temperature/quality thermal output for heating or for heat recovery steam power electric generation; 3) offer options for flexible fuels such as propane, natural gas, and landfill gas; 4) high reliability with 3-to-5 years before overhaul running 24/7; and 5) significantly lower GHG emissions.

Figure 1 Gas Turbine CHP System

Figure 1 demonstrates the mechanics and variables of a CHP system. In summary, the CHP technology enables the supply of efficient heat and power while minimizing GHG emissions. Total CHP efficiency is defined as the sum of net power produced plus the thermal output used for heating divided by total fuel input.

The use of methane (natural gas) as the main fuel for the CHP system offers advantages because methane offers the highest hydrogen-to-carbon ratio among fossil fuels, thereby, combusting with the lowest GHG emissions. According to EPA data, the emissions NOx particulates from gas turbines ranges between 0.17-to-0.25 lbs/MWH with no post-combustion emissions control versus 1.0-to-4.2 lbs/MWH for coal fed boilers. The carbon content of natural gas is 34 lbs carbon/MMBtu in comparison to coal at 66 lbs of carbon/MMBtu.

There are two valuable metrics used to measure efficiency for CHP systems. One is the total system efficiency which measures the overall efficiency of the CHP system including heat and electric and the other is the effective electric efficiency which is useful in comparing the CHP electric production versus grid supplied power. These two metrics, the total system and effective electric efficiencies are important for evaluating CHP system. The following provides a guideline foe measuring these two efficiency metrics and can be found at EPA – Efficiency Metrics for CHP Systems

Figure 2 CHP Efficiency

The economics of the CHP system depends on effective use of thermal energy n the exhaust gases. Exhaust gases are primarily applied for heating the facility and could also be applied to heat recovery steam generators (HRSG) to produce additional electric power. The total efficiency of the CHP system is directly proportional to the amount of energy recovered from the thermal exhaust. Another important concept related to CHP efficiency is the power-to-heat ratio. The power-to-heat ratio indicates the proportion of power (electrical or mechanical energy) to heat energy (steam or hot water) produced in the CHP system. The following provides an overview of the economics of a CHP system.

Figure 3 CHP Economics
CHP Econ

Figure 3 illustrates the economics of a CHP system in comparison to competing energy sources. While the CHP does not have the low cost of coal in producing electric, the economic value of reducing GHG emissions is quite significant and beyond the scope of this article. However, natural gas prices remain below that of oil and better ways of capturing heat exhaust will further improve CHP efficiency. The bottom line is that natural gas produces less GHG emissions than coal or oil therefore; businesses should consider the benefits of CHP as a source of heat and power.

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Formulating an Effective Energy Efficiency Strategy with Measurement and Verification Copyright © 2009 Green Econometrics, LLC

June 27th, 2009 · 2 Comments

The development of an energy efficiency strategy incorporates analysis of energy expenditures and energy consumption. The energy strategy must incorporate dynamics between costs, budgets and the consumption of energy including the monitoring of kilowatt-hours (KWH) of electricity and liquid hydrocarbon fuels consumed. By analyzing both the financial and the energy consumption components we are better positioned to frame the scope of the energy efficiency projects.

We start with a comprehensive energy audit analyzing energy consumption and expenditures. After determining which activities offer the fastest, cheapest, and greatest economic impact we are then able to define the scope of energy efficiency projects. The next step in the energy strategy process is to assess, rank and specify energy saving opportunities. At this phase, we have a broad understanding of the scope of energy efficiency projects within the appropriate budgetary considerations.

Conduct Energy Audit and Analyze Energy Spending

Upon analysis of the energy expenditures and the appropriate budgetary considerations, we commence with an energy audit to examine the dimensions of energy consumption. The energy audit establishes an energy efficiency baseline for buildings and vehicles. In the energy audit, energy consumption is measured by source and activity using monitors attached to branch circuits, gas pipes, and fuel lines. In this manner, energy consumption is evaluated from a financial and physical perspective and baseline usage patterns are established for electricity and other fuels.

During the energy audit, an analysis of energy intensity is measured. For buildings, energy consumption is measured in kilowatt-hours per square-foot to identify which activities consume the most energy. The energy intensity measurements are then ranked by consumption activity and compared to actual energy expenditures.

The purpose of the energy audit is to establish a baseline of energy consumption and the energy intensity associated with each building, department, vehicles, and/or activity usage category. By constructing an effective energy efficiency strategy that identifies and measures energy demand by activity, a better understanding of economic- and financial-impact is established. The critical component to the energy audit is measurement and verification were wireless Internet-based energy monitoring provide data before and after energy efficiency projects commence. The energy audit and energy monitoring systems together with financial analysis of energy consumption serve as the framework to rank and assess energy efficiency projects.

Heuristically, energy consumption in buildings is tied to lighting; and heating, cooling, and ventilation systems see Energy Intensity . The following chart, Figure 1 serves to illustrate which activities contribute most to energy consumption in buildings.

Figure 1 Kilowatt-hours (KWH) per Square Foot KWH sq ft

According to information provided by the DOE, lighting, cooling and ventilation alone account for nearly two-thirds of all energy consumption in a building. For perspective, electric energy demand is increasing at an annualized rate of 1.6%. According to the Energy Information Administration (EIA), demand for electricity grew 21% between 1995 and 2006.

The energy consumption audit provides a means to assess which activities should be further analyzed for energy efficiency projects. The baseline energy usage measured in KWH per square foot serves as the framework to evaluate that locations and activities could benefit from lighting retrofits, equipment upgrades, structural improvements, and energy monitoring systems.

As a consequence of increasing energy consumption in buildings, electric generation relies extensively on hydrocarbon fuels that carry adverse environmental effects. Figure 2 illustrates the proportion of coal and other hydrocarbon fuels that are used to generate electricity in comparison to renewable energy sources. Coal still accounts for nearly half of all electric generation while contributing the most in terms of harmful emissions such as carbon dioxide, nitrous oxide, and sulfur dioxide.

FIGURE 2: Electric Generation Method Electric

As part of the energy audit process for buildings, an energy consumption analysis of lighting and HVAC systems is evaluated along with the building’s insulation R-Value (resistance to heat flow where the higher the R-value, the greater the insulating effectiveness). In addition to lighting and HVAC systems, specialized equipment may also account for large energy demand. During our energy audit, we plan to identify and measure energy usage of special equipment in order to construct energy efficiency initiatives with clearly defined and measurable energy reduction targets.

Energy efficiency for transportation vehicles is one of the most significant factors to manage. The fact that there are no real substitutes for oil in the transportation industry illustrates two important points: 1) structural changes to driving patterns are required to see appreciable changes to oil consumption and 2) government authorities are vulnerable, with no readily available substitutes for oil, supply disruption could negatively impact transportation systems. Therefore, we emphasize fuel management systems for fleets and vehicles that monitor fuel consumption and efficiencies. DOE studies have indicated that changing driving habits could improve fuel efficiency by up to 30%.

Vehicle mounted devices that integrated fuel consumption feedback as the vehicle is driven promotes higher fuel efficiency. These off the shelf products are cost-effective, offering payback in months that dramatically improves fuel efficiencies. Aside from routine tune-ups, limiting weight, and checking tire pressure, augmenting driving patterns through gauges that provide feedback on fuel efficiency make the difference in saving energy.

In most situations, fuel management systems can be installed without significant mechanical aptitude. The ScanGaugeII from Linear-Logic is useable on most vehicles manufactured after 1996 including Gas, Diesel, Propane and Hybrid Vehicles and are designed to be installed by the consumer with plug-and-play instructions.

Identify and Measure Energy Demand by Activity

From the Energy Audit, the energy intensity of targeted buildings and fuel efficiencies of official vehicles are established. In buildings, it’s the lighting and heating, ventilation, and cooling that comprise the bulk of energy consumption.

Heating, ventilation, and cooling represent a significant portion of energy consumption in buildings and are a priority target for energy analysis. The Seasonal Energy Efficiency Ratio (SEER) is employed as an assessment of the equipment and analyzed in conjunction with building insulation. The efficiency of air conditioners is often rated in SEER ratio, which is defined by the Air Conditioning, Heating, and Refrigeration Institute and provides a standard unit measure of performance. The higher the SEER rating of a cooling system the more energy efficient the system is. The SEER rating is the amount of BTU (British Thermal Units) of cooling output divided by the total electric energy input in watt-hours.

For heating systems in a building, Annual Fuel Utilization Efficiency (AFUE) is used to measure and compare the performance of different systems. DOE studies have indicated that even with known AFUE efficiency ratings, heat losses defined as idle losses contribute to degradation in heating system efficiency,

To analyze energy consumption of heating and air conditioning systems (HVAC), we evaluate the building’s R-Value in comparison to the energy efficiency of the current heating and air conditioning systems. The energy demand evaluation includes a cost-benefit analysis comparing options in either HVAC system upgrade and/or improvements to the building’s insulation R-Value. By comparing the buildings R-Value in conjunction with HVAC efficiency performance, projects offering the greatest cost effectiveness are identified. The building’s R-Values can be measured using FLIR Systems infrared camera and software system. In this manner, the replacement cost of an HVAC system and costs to improve the building’s R-Value are analyzed to measure economic benefits. This information will allow the building owner to make an informed decision on whether any energy efficiency investment into HVAC upgrade or improvement to R-Value demonstrate economic benefit, i.e. positive financial return.

Consideration for heating and cooling systems upgrades are assessed by equipment SEER and AFUE ratings, installation costs, and efficiency payback. After equipment assessment is complete, proposals will be provided along with estimates for upgrade costs and payback analysis.

Benchmark and Analyze Energy Intensity

After conducting the energy audit, and compiling data on energy usage by activity category, we benchmark and analyze energy projects offering the greatest opportunities. As illustrated in Figure 3, energy efficiency for lighting systems can be substantially improved by retrofitting legacy light fixtures with higher efficiency fixtures and bulbs.

The energy audit and analysis provide the framework to evaluate energy efficiency projects. By analyzing energy consumption and the economic benefits associated with the energy savings projects, the most efficient and economically beneficial initiatives are identified and ranked.

FIGURE 3: Energy Savings in KWH per Square Foot Figure 1 Kilowatt-hours (KWH) per Square Foot KWH sq ft

Establish Measurable Goals and Objectives

To establish relevant goals and objectives we are evaluating projects that are adhering to the SMART goal approach: specific, measurable, attainable, realistic and timely. Energy efficiency gains are most pronounced with lighting retrofits and energy monitoring in buildings in buildings and energy monitoring in vehicles.

After conducting an energy audit, analyzing energy consumption activities and the economics of energy efficiency projects, realistic and achievable energy savings goals are defined. Key performance metrics for energy savings are defined for buildings and vehicles. Key performance indicators are established for each project. For example, KWHs saved are defined for lighting retrofit projects, efficiency improvements for HVAC system upgrades, R-Value improvements for building insulation, and MPG gains for vehicles.

For each energy savings project, timelines are established with clearly defined milestones. Energy projects are presented with costs; expected energy savings measured in energy and dollar units, cost benefit analysis, and timelines.

Architect the Deployment of Energy Monitoring Systems

One of the first energy initiatives to consider in any energy savings project is the installation of an energy monitoring system for vehicles and buildings. Energy monitoring systems demonstrate the fastest and most economical pathways to achieving energy savings.

Energy monitoring systems for motor vehicles also demonstrate positive economic returns and real energy savings. The $180 energy-monitoring device with 10% fuel efficiency gain achieves breakeven at 14,500 miles with gasoline costing $2.50 a gallon.

Evaluate Feasibility of Renewable Energy Projects

Renewable energy projects such as solar and wind energy systems are often costly with long payback periods. Without tax incentives and grants, renewable energy projects are unable to demonstrate positive financial returns. However, utility rates for electric are expected to increase, improving the case for renewable energy projects. To improve the viability of alternative energy projects, energy efficiency projects such as lighting retrofit serve to lower energy consumption and therefore enhance the feasibility of solar and wind energy projects.

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