Managing energy

The recent rapid rise in energy prices, coupled with growing concerns over emissions and environmental performance, has led to a renewed interest in energy efficiency and energy management among process manufacturing companies.

For the majority of refiners and chemical producers, energy costs represent the second greatest operating expense after the purchase of raw materials. For example, in the refining industry, the cost of energy can exceed 60% of the total operating cost (excluding crude oil purchases), while in chemicals, a figure of 40% is common.

Since most industry observers accept that the days of low energy prices are over, many companies are already considering new investments to help reduce energy costs. However, compared to the previous energy crisis during the late 1970s, the current situation is made more complicated by other factors that are making energy efficiency and energy management programmes much more compelling than in the past.

There are now much greater concerns over environmental performance, particularly regarding gaseous emissions such as SOx, NOx and CO2. In Europe, the new EU greenhouse gas emissions regulations have resulted in CO2 emissions quotas for individual energy-intensive production sites and have created a market for CO2 trading. As the utility and energy systems are often the major source of SOx, NOx and CO2 emissions, the control of these emissions and management of credits are inextricably linked with energy management.

In parallel with this, the deregulation of national utility markets has typically led to more complex supply arrangements. Many producers now have multiple energy contracts, each with different conditions, and there is a greater focus on the user being able to specify in advance (or nominate) their requirements. In some cases, for example where sites have their own cogeneration facilities, process companies become utility suppliers by exporting ‘excess’ energy into the market. In this case, there is a clear need to be able to predict accurately the cost of energy and the amount that can be made available for export.

The net result of deregulation is greater choice and flexibility. However, these changes also bring the need for producers to better understand and control their true site energy requirements.

While most process manufacturers are aware of the need to manage these new energy and emissions challenges more effectively, they face some serious internal obstacles. Companies typically don’t have the processes or systems in place to measure their current performance, and in many cases responsibility is spread across multiple stakeholders — from the power plant manager, to the process engineer, to the energy purchasing manager.

Since most companies have already implemented ‘good housekeeping’ energy- saving programmes to eliminate wasteful practices and update faulty or inefficient equipment, the challenge facing process manufacturers is to take a more strategic approach to energy and emissions management that will enable them to achieve sustainable, ongoing improvements.

The answer lies in a new generation of software solutions for ‘energy performance management’. These integrated solutions are based on accurate simulation models of a site’s key process units and utility systems, incorporating the true operating constraints and cost information, so that users can visualise exactly how changes in operating strategy or utility supply will impact their energy system performance. This knowledge can be applied to both long-term decision-making, such as identifying the best energy supply contracts and capital investment plans, and real-time operational decisions, to optimise energy use and identify the lowest cost operating strategy taking into account demand, equipment availability, and other operational constraints.

Adopting an integrated approach can deliver some significant benefits:

• Utilities Planning — the ability to forecast energy demands for the production units, coupled with knowledge of the different supply options, allows the setting of optimal, energy-efficient utility production plans without excess energy capacity;
• Optimal Execution — while setting a plan in advance is important, being able to work to the plan is imperative if the benefits defined are to be achieved in practice. Optimal operation involves not only sharing of the plan with those in a position to implement but also the ability to modify the plan as conditions change;
• Better Purchasing — the utilities operations manager’s ability to forecast demand accurately and control the actual operation within the forecasted range will enable the procurement manager to buy energy more cheaply than competitors without that capability;
• Optimised Investment Decisions — an enhanced understanding of the energy supply system makes it possible to identify the investments in new energy-efficient equipment that will both achieve the improvement in energy performance and deliver the predicted return on investment;
• Energy and Emissions Trading — the ability to export energy can provide a lucrative additional revenue stream. By understanding how much energy can be exported and the cost of generating it, traders can decide when and how much energy to sell. The trading of emission credits can offer similar opportunities;
• Continuous Improvement — adopting new systems and formalised work processes makes it possible to ensure that improvements in energy efficiency and emissions performance can be sustained and further improved in the future, unlike some short-term energy-saving initiatives.

Model-based software solutions for energy performance management are now enabling companies to both manage and optimise their energy systems, taking into account the specific operating constraints and cost drivers at individual sites. Initial implementations by both refiners and chemical producers have shown that this approach can deliver significant financial and operating benefits.

Eric Petela is Director, Energy Optimisation, with Aspen Technology, Warrington.

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Energy management in action

Major energy users such as oil refineries and large chemical complexes are typical of the sites that can benefit from adopting a model-based approach to energy performance management. Valero Energy Corporation, for example, operates 14 refineries processing approximately 2.4million bpd of crude oil and associated feedstocks. Valero has developed an energy strategy with the aim of being among the top 25% of refiners in terms of energy efficiency by 2009 and, in so doing, reducing greenhouse gas emissions by 4million tonnes a year.

In 2002, Valero’s Houston, Texas, refinery embarked on a plan to improve its energy performance. An energy management system was a key component of the plan. The refinery implemented AspenTech’s aspenONE Energy Management for Petroleum system and was able to identify operational changes that would deliver major reductions in energy costs. Overall, Valero has identified potential first-year benefits of $2.7 million, including reduced imports of both natural gas and electricity.

With aspenONE software, energy management solutions are based on simulation models of the main process units and utility systems

Similarly significant savings can also be found in the chemical industry. DSM is a multi-speciality chemicals company with 200 locations and 26 000 employees worldwide and sales of over €6 billion per year. At its largest facility in Geleen in the Netherlands, DSM identified the need for an integrated energy management system with capabilities such as:

• Actual operational optimisation to reduce daily costs;
• Short-term tactical planning/optimisation (1 - 30 days) — for example, boiler maintenance;
• Longer term strategic planning (up to 5 years);
• Future contracts selection;
• Evaluation of future investments.

DSM implemented AspenTech’s aspenONE Energy Management for Chemicals solution, and has quantified the benefits of the system at 3 to 4% of total site energy cost with a return on investment of >25%, resulting from reduced energy consumption and more favourable contracts with energy suppliers.