Perspectives on Energy Efficiency – Dick Ayres, GM Power Generation Services, Europe


This is an important time for the UK and for UK energy policy.

Currently a hugely significant Energy Bill is passing through Parliament and we are seeing major electricity market reforms being finalised. At the same time the Regulator, Ofgem, recently published its Annual Electricity Market Assessment which forecast a worrying drop in the country’s reserve margin. These circumstances are not unique to the UK but are being observed to greater or lesser degrees in many other European countries.

Yet today, the majority of Member States, including the UK, are not on track to meet the minimum energy-savings targets established by the Energy 2020 plan. Of the three pillars that make up the Energy 2020 strategy making a 20% improvement in energy efficiency has made the least progress. In fact, the EU is currently on track to achieve only half of its 20% energy efficiency target.

Efforts to enhance energy efficiency up to this point have focused mainly on measures to improve end-use (or demand side) efficiency, largely ignoring the potential to reduce huge losses that occur every day in the production and delivery of power. In fact, most of the energy consumed to produce power is not converted to power. According to the International Energy Agency (IEA) the average global efficiency of traditional fossil-fuelled power generation is 35-37%. Roughly two thirds of heat is wasted during fossil-fuelled power generation; transmission/distribution account for an additional 9% of losses.

Armed with this knowledge and confronted with an ageing power infrastructure, the EU last year adopted an Energy Efficiency Directive (EED). This was significant as it identified energy efficiencies across the entire energy supply chain as one of the most cost effective ways to enhance security of the energy supply, reduce greenhouse gas emissions, and as a key step toward achieving the EU’s long-term energy and climate goals. The EED is currently being transposed into Member States law however its interpretation and implementation is uncertain.

The importance of ‘system-wide efficiency’

Since about 30% of the EU’s total energy consumption is used by the energy sector for the production and distribution of electricity and heat, it’s clear that in addition to demand-side efficiency measures, we must also adopt strategies and measures to effectively enhance supply side efficiency. Supply side energy efficiency represents a large, untapped reservoir of opportunity for European society and its energy industry, holding the potential to dramatically improve the performance of existing power generation facilities, and helping member states better manage their natural resources while improving their ability to meet growing power demand.

A recent analysis conducted by Delta Energy & Environment of the primary energy-savings benefits achievable through the adoption of supply side energy efficiency technologies in France, Poland and the UK concludes that “supply side energy efficiency measures have the potential to make a significant contribution to the achievement of the EU’s carbon emissions and primary energy savings targets.” In these three member states, Delta estimates that supply-side options can contribute at least 18% of an overall goal of a 20% carbon emissions reduction and at least 23% of an overall goal to reduce projected energy demand by 20%.” (Delta Report)

Our belief is that Europe’s energy efficiency goal must be end-to-end or “system-wide” efficiency, and that system-wide efficiency must include the supply side or “efficient energy” – producing and delivering more energy for final consumption from less primary energy and other natural resources (notably water and land). Our primary focus is on the more efficient production and distribution of electricity and heat by all conversion technologies, including renewable.

Building this dynamic, system-wide energy efficiency future is vital for Europe if we are to avoid constraints on economic growth due to constraints on the availability and consumption of the energy essential to drive that growth.

Efficiency-Enhancing Technologies: Supply-Side building blocks

Supply side energy efficiency simply means using less energy input to produce the same amount of electricity, so that a higher percentage of the energy consumed to produce electricity is actually converted to electricity or usable heat. There is potential for substantial improvement on the supply side, and the good news is that many of the options currently available to increase supply side energy efficiency are proven, cost-effective, and reliable technologies that are already commercially deployed.

Although the full potential of many of these technologies has yet to be realized, the benefits of supply side efficiency measures are becoming better understood every day, and we are now in a good position to start applying this knowledge to our full advantage.

  • Best Available Technology (BAT) efficiency at thermal plants

Europe’s coal and gas power plants operate at thermal efficiency levels that are significantly below what best available technology can deliver. E.g. the average efficiency of Europe’s coal plants is 38%, whereas new plants built with best available technology can deliver up to 46% under best operating conditions and in early life. For gas plants the manufacturer’s equivalents figures are 52% and 60%. There is a compelling case for requiring all new thermal plants to be built at best available technology levels of efficiency. Equally, retrofitting and upgrading existing plants can deliver significant efficiency gains and CO2 savings.

However, the main challenge is the economic rationale for investing in existing plants. Neither the operation of Europe’s electricity markets nor the level of the carbon price is sufficient to incentivise plant owners to invest in efficiency improvements. There is insufficient economic incentive to invest in more sophisticated performance monitoring regimes – meaning that potential efficiency losses are not identified, and therefore not addressed. And finally, the market operates in such a way that plants are generally dispatched on the basis of cost rather than on the basis of energy or carbon efficiency.

  • Combined Heat and Power (CHP)

CHP is the simultaneous production of electricity and heat both of which are used, thereby converting up to 90% of primary energy into usable energy. Where the heat generated by electricity production is not captured and used, the conversion for the electricity alone typically ranges from X-Y% depending on a variety of factors and according to fuel.

As a result of this greater efficiency in the conversion of primary energy to usable energy, today cogeneration saves Europe around 200 million tonnes of CO2 per year. Scope for expanding the uptake of CHP across Europe is substantial and greatly improves supply-side efficiency where circumstances make it attractive.

  • Waste Heat to Power (WH2P)

While wind, solar and geothermal resources are well known to the public and formally recognized in EU energy policy, WH2P – also an emissions-free energy resource widely underutilized – works by recovering and harnessing the heat industrial smokestacks and oil and gas processing flues across Europe, (and now increasingly the heat from cooling systems for large “cloud computing” server installations). In other words, WH2P offers a second chance to capture and use heat within the overall system, this time created through large-scale electricity use by consumers.

WH2P is a valuable, yet untapped energy resource that can be deployed onsite by many industry operators to reduce their electricity demand, generate a new sort of profit by selling their waste heat to third parties, or place emissions-free electricity on the grid. But the European waste heat industry is completely nascent due largely to a lack of public and government awareness.

Big Data

Significant efficiency gains can also be realised from industrial internet technologies and in particular tied to the growing integration of electricity generation with the smarter management of transmission and distribution networks. One of the key benefits of the integration of smarter technologies and networks is the ability to create energy saving efficiencies and reduce costs through:

  • Intelligent Machines: New ways of connecting the word’s myriad of machines, facilities, fleets and networks with advanced sensors, controls and software applications.
  • Advanced Analytics: Harnessing the power of physics-based analytics, predictive algorithms, automation and deep domain expertise in material science, electrical engineering and other key disciplines required to understand how machines and larger systems operate.
  • People At Work: connecting people, whether they be at work in industrial facilities, offices, hospitals or on the move, at any time to support more intelligent design, operations, maintenance as well as higher quality service and safety.

Globally, GE estimates that the power sector spent more than $250 billion last year on fuel gas, and by 2015 spending is expected to grow to about $300 billion and may exceed more than $440 billion by 2020. Using a conservative assumption that the fuel savings from a 1% improvement in country-level average gas generation efficiency can be realised, fuel spending would be reduced by more than $3 billion in 2015 and $4.4 billion in 2020. Over a 15-year period, the cumulative savings could be more than $66 billion.


System wide efficiency means leveraging all sources of energy efficiency in the energy supply chain. Adopting this approach means addressing supply-side opportunities and is a strategic imperative for achieving a more resource-efficient electric power generation and delivery infrastructure in the EU. However, the average efficiency of generation capacity in the EU today is considerably lower than the best available technologies. When energy providers make supply side efficiency investments, they dramatically improve power plant performance, reduce carbon emissions, and improve resource management-all while maintaining the ability to meet power demands.

As the Energy Efficiency Directive is implemented, reaching the 2020 targets will require a European approach-a concerted and collective effort where all regions and member states share a common understanding of the keys factors for transitioning to a high-efficiency, low-carbon energy system.

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