Chapter 10: Sustainable Energy Management PDF

Chapter 10: Sustainable Energy Management Sustainable Business Management Introduction – Definition • Sustainable energy management is not the same as renewable energy management as not all renewable energy is sustainable 1. Fossil fuels or “dirty” energy • Energy sources such as coal, gas and oi...

Chapter 10: Sustainable Energy Management Sustainable Business Management Introduction – Definition • Sustainable energy management is not the same as renewable energy management as not all renewable energy is sustainable 1. Fossil fuels or “dirty” energy • Energy sources such as coal, gas and oil • Take a very long time to replenish • Extraction and use has a negative impact on society • Coal mining and oil/gas extraction leads to landscape changes • Burning fossil fuels leads to huge CO2-emissions • Political tension is created as these resources are often to be found only in specific parts of the world Sustainable Business Management Introduction – Definition 2. Renewable energy or “clean” energy • Energy sources such as sun, water and wind • Most renewable energy sources are available everywhere • Differences exist due to geographical reasons • Decreased or even no pollution due to the energy-creating process • Renewable energy replenishes in the short term 3. Sustainable energy • Not all renewable energy is considered to be sustainable • Hydroelectric dams will disturb biosphere and change water flows • Biomass plants still release CO2 • Windmills have impact on the surrounding communities • Sustainable energy is not harmful to the environment or society Sustainable Business Management Introduction – Use of sustainble energy sources today • Global energy use has increased exponentially • Traditional energy sources are still the dominant source for energy today • Amount of renewable energy has not really increased • 5-6% over the last decade • Substitute for a decrease of 5-6% in nuclear energy • No real effort in reducing CO2-emission Sustainable Business Management Introduction – Use of sustainble energy sources today • Huge differences between countries when it comes to electricity production from renewable sources • Explained by geographical position • Countries with a large reserve of fossil fuels are not investing in a switch to renewable energy Sustainable Business Management Introduction – Use of sustainble energy sources today • Huge differences between countries when it comes to investments in renewable energy • APAC region is the biggest investor • Investments in the EU have decreased since 2011 • In most countries, investment in renewable energy stays below 1% of the GDP • Emerging countries tend to invest more as they need to invest now anyway and green energy will pay off in the future • Established economies already made these investments in the past Sustainable Business Management Types of sustainable energy sources - Solar • Solar energy is using the energy of the sun that is converted in thermal or electrical energy • Has been around for ages to grow crops or stay warm • Today we have the technology to generate electricity or heat water from solar power • 5 techniques commonly used in households and businesses 1. 2. 3. 4. 5. Solar photovoltaic technology: photovoltaics are cells that are converting light to electricity Passive solar technology: when constructing low energy buildings, the design of the buildings is adapted to use solar energy to heat the buildings and natural elements to cool them down. Solar water heating: in this technology, the thermal energy of the sun is used to heat water that can be used for central heating or hot water in houses and businesses Solar process heat: in larger buildings and industrial applications, solar heating can also be used for other processes than heating water. Concentrating solar power: most power plants use some kind of energy to heat water to create steam that can power a steam engine. In some cases, power plants concentrate the power of the sun using mirrors to heat big amounts of water to produce steam to power the steam engine. Sustainable Business Management Types of sustainable energy sources - Solar • There is still a huge untapped potential for solar power in the world but solar power is only available when the sun is shining • This will be solved when batteries will be more efficient, smaller and cheaper • Photovoltaic cells will become more efficient as well • Solar power is quite sustainable as its placement rarely affects the communities or biosphere • Today, the production of solar panels is not always very sustainable • Most panels are not yet at their end-of-life so they cannot yet be recycled • Solar panels will be hard to recycle • 315.000 metric tonnes of waste predicted (residential installations) • Production still requires toxic materials and produces waste Sustainable Business Management Types of sustainable energy sources - Wind • Wind has also been used for ages by using windmills to grind grain for example • Today wind mills are a common sight in industrial and remote areas • The rotor of a wind turbine will spin due to the wind and this will in turn spin a generator to create electricity • Wind turbines can be placed on land as well as offshore • In 2021, 6,6% of the global energy production was based on wind energy • Wind turbines do not pollute the air or submit CO2 • They can disturb landcape and communities but most turbines are still placed in remote areas Sustainable Business Management Types of sustainable energy sources - Wind • In most cases, traditional energy is still cheaper than wind energy • High initial investment is required • Wind turbines are not always the most interesting option for land use • Locations that are interesting for wind farms are often remote so extra investment is needed to install transmission lines Sustainable Business Management Types of sustainable energy sources - Geothermal • Geothermal energy is using the heat that is produced inside the earth to heat water or create electricity. • Over the last decade, geothermal energy has become mainstream in domestic applications (heat pumps) • In some locations, hot water reservoirs can be used • Use of geothermal energy has increased, it is believed that 8% of the global energy production could be retrieved from geothermal energy • In Africa for example, 100% of the energy need could be retrieved from geothermal • Almost no C02-emissions and some techniques are carbon-neutral • Initial investment is high but direct use of geothermal heat is quite cheap Sustainable Business Management Types of sustainable energy sources - Geothermal • Sustainable as it is a never-ending source of energy and low on CO2emission • The process of retrieving geothermal energy, releases some gases and fluids that might contain low levels of toxins • Geothermal patterns might change over time, making the investment not risk-free Sustainable Business Management Types of sustainable energy sources – Hydro/Ocean • Both hydropower and ocean energy are generated based on capturing energy from flowing water • Hydropower will use a dam or another structure to alter the natural flow of a river, using the power of the flowing water to generate electricity • Ocean power will use the power in the waves • Almost 17% of the world’s electricity is generated using hydropower • Initial investment is high but the “fuel” afterwards is free • Supply is easy to control • Not always sustainable • Change the natural flow of water creating floods or droughts • Impact on the river habitat by changing oxygen levels for example Sustainable Business Management Types of sustainable energy sources – Biomass • Biomass used for fuel can be any organic product such as food crops, plants, organic waste, algae, etc. In a sense, the energy retrieved from biomass is energy derived from the sun • Approximately 6% of the energy supply today is created by burning biomass • Biomass is considered to be carbon-neutral • The released CO2 in the burning process is equal to the absorbed CO2 during growth • But: these organic materials need to be grown and harvested sustainably • Cutting trees is not as it takes a long time for trees to grow and sequester CO2 • Use underused land to grow the crops • Large part of biomass is water, which is lost in the process of burning • The energy remains within the organic materials until it is burned Sustainable Business Management Types of sustainable energy sources – Hydrogen • Hydrogen is a clean fuel • Can be stored for future use • Can be found in 75% of matter on the planet • Not an energy source, but an energy carrier (we need energy to extract hydrogen) • All hydrogen is clean when consumed but not when produced Sustainable Business Management Clean Energy Strategies – European Energy Union • Targets • Created as an answer to global warming • The goal of the Energy Union is to provide secure, affordable and clean energy for all EU citizens and businesses • The Energy Union is based on five pillars: • • • • • Security, solidarity and trust A fully integrated energy market Energy efficiency Climate action – decarbonising the economy Research, innovation and competitiveness • Attain a net-zero-emission by 2050 at the latest Sustainable Business Management Clean Energy Strategies – European Energy Union • The Energy Union has adopted a first set of key targets for 2030 (EU, 2020): • at least 40% cuts in greenhouse gas emissions (from 1990 levels) • In September 2021, as part of the European Green Deal, the European Commission proposed to raise the target for greenhouse gas emissions to a55% reduction from 1990 levels. • at least 32% share for renewable energy • at least 32.5% improvement in energy efficiency • Solutions • Not only ecological advantages but also economical as 50% of energy consumed in the EU is imported • Huge dependencies on other countries • Traditionally the price of imported energy was lower than investing in renewable energy Sustainable Business Management Clean Energy Strategies – European Energy Union • Solutions • Higher energy efficiency can be reached both in domestic applications and industry • All sectors should be involved in the transition to clean energy • No use in producing circular products if the transport is still done on dirty energy • Energy market should become integrated across borders • Not all countries have the same geographical advantages • Eliminate politics Sustainable Business Management Clean Energy Strategies – Corporate energy strategies • The transition to renewable energy is no longer driven solely by environmental organisations and governmental bodies • In the last decade, businesses have also been confronted with issues concerning their energy management • This has driven them to look into renewable and sustainable energy as well • Switching to renewable energy delivers both financial and social value • Traditional instruments • A green energy tariff means that the energy supplier promises to supply (part of) the energy with green energy coming from renewable energy sources • The energy on the grid is the same for those with a green energy tariff and those without • At least part of the energy will be green Sustainable Business Management Clean Energy Strategies – Corporate energy strategies • Traditional instruments • Renewable energy certificates represent the social and environmental value generated by renewable power sources. When a wind turbine produces one megawatt- hour of power, it creates both electricity and one renewable energy certificate. • The price of a renewable energy certificate is based on the energy source, the age of the generator and its geographical location • Buying renewable energy certificates makes it possible to transform the energy a company buys into “green” energy, even if that energy was not produced by renewable sources • Carbon offsets schemes offer companies and individuals the possibility to invest in environmental projects to compensate for their carbon footprint • A well-known example is the fee someone can pay to compensate for the carbon emission when taking a flight • Not really solving the problem Sustainable Business Management Clean Energy Strategies – Corporate energy strategies • Sustainable energy strategies • Purchasing and generating energy • Power Purchase Agreements (PPA) • Long-term contracts (usually five years or more) between a company and an electricity generator • Direct (power delivered to the company that purchased it) or virtual (power resold to the market) • Direct investment in renewable assets on- or off-site • companies will act as investors in renewable energy projects • start projects to generate sustainable energy themselves Sustainable Business Management Clean Energy Strategies – Corporate energy strategies • Sustainable energy strategies • When making decisions for investments in sustainable energy, companies will have to assess which projects are worth investing in and which energy mix is appropriate 1. Technology • Largely dependent on the amount of energy needed • ROI on a type of technology • Established technologies will result in a lower ROI • Established technologies contain less risk Sustainable Business Management Clean Energy Strategies – Corporate energy strategies • Sustainable energy strategies 2. Geography • Depending on location of a company, certain renewable energy sources will be more available than others • Rules and regulations may differ from country to country • Political stability and weather conditions are also important 3. Implementation • Different types of investment are possible 4. Procurement • Existing opportunities or competitive procurement process Sustainable Business Management Clean Energy Strategies – Corporate energy strategies • Energy efficiency • Energy efficiency is high on the agenda of most companies but is often not integrated in their corporate strategy. To ensure this integration, according to Winston, Favaloro and Healy (2017), 5 steps can be followed: 1. 2. 3. 4. 5. Start with a C-level mandate: when energy management should become part of the company’s strategy, it is important to have the CEO on board Integrate energy into the company’s vision and operations: the first task of the working group should be to analyse the current levels of energy use and the current costs that are linked to this use Track energy at all levels: although energy is one of the biggest costs for many companies, it is not easy for companies to track how much energy they are using Shift to renewables and other advanced energy technologies: once opportunities on energy efficiency have been identified, it is also necessary to integrate energy use and energy supply Engage key stakeholders: as with all strategies that aim to create share value, stakeholder management is critical to success Sustainable Business Management Clean Energy Strategies – Clean energy solutions • Smart energy systems • Combines energy management with digitalisation • Both in new buildings and old • Central heating control and maintenance with the help of AI and IoT • Adjust to weather or living patterns to deliver heating when needed • Prediction based on habits • Effectively monitor the use of energy in corporate buildings • Share this data to be able to benchmark (Energy Leap in Denmark) • Fix problems before they occur or become problematic Sustainable Business Management Clean Energy Strategies – Clean energy solutions • Waste-to-energy plant Amager Bakke Copenhagen • Opened in 2017 • Can collect and process up to 400.000 tons of waste per year • Produces electricity for 150.000 homes • Waste is collected from households and companies around Copenhagen • The plant emits CO2 but is considered carbon-neutral as it burns organic material • The plant also emits other gases but is equipped with flue gas cleaning technology Sustainable Business Management Clean Energy Strategies – Clean energy solutions • Reduces the amount of waste and therefor the need of landfill with 90% • Creates social value by being equipped with a ski slope on top of the facility • Used for district heating • Challenge: the plant was built too big and needs to import waste from the UK to maintain operational Sustainable Business Management Clean Energy Strategies – Clean energy solutions • District Energy • District energy will use the heat produced by power plants and excess heat from industrial sites and distribute it through pipelines to a large number of users • Heat that is otherwise wasted is reused to heat the homes of many people • Can combine energy sources so the perfect mix can be attained • District heating has been around for 100 years • New technologies make it possible to store heat for a longer time • Digitalisation makes it possible to monitor and process data which allows a lower average temperature in the network as temperature changes are easily detected • Preventive maintenance ensures uptime • In use in for example Hamburg and Copenhagen Sustainable Business Management Case: Copenhagen 2025 (p.317-319) • Do you think it is possible for Copenhagen to be completely carbon neutral by 2025? Can you see additional challenges? • When the CO2-emissions are calculated, emissions from ships and planes are not counted. Do you think this is a fair assessment? • Copenhagen wants to achieve its targets by using wind and biomass as renewable energy sources. Why do you think they limit themselves to these energy sources? Could they expand to others? Sustainable Business Management