INTRODUCTION TO ENERGY EFFICIENCY INDUSTRY:

INDUSTRY PLAYERS’ PERSPECTIVE

ByZAINI ABDUL WAHAB

Committee Member-Treasurer & Strategic Initiatives

MAESCO

2015

Awareness Program For Malaysian Universities

OUTLINE

1. OVERVIEW OF ENERGY & ENERGY EFFICIENCY

2. INTRODUCTION TO ENERGY SERVICE INDUSTRY

3. BUSINESS POTENTIALS IN ENERGY EFFICIENCY

4. POTENTIAL CAREERS IN ENERGY EFFICIENCY INDUSTRY

5. CHALLENGES IN ENERGY EFFICIENCY INDUSTRY IN MALAYSIA & THE WAY FORWARD

OVERIEW OF ENERGY & ENERGY EFFICIENCY

TYPES OF ENERGY

ENERGY

PRIMARY(FROM

NATURAL SOURCE,

UNUSABLE)

Renewable

Biomass, biogas, solar,hydro

Non renewable

Oil, gas, coal

SECONDARY

(CONVERTED TO

USABLE ENERGY)

Electricity, steam

 Overview Of Energy In Malaysia

Energy related Policies in Malaysia

There is a need to have a dedicated policy on energy efficiency at the national level &recommended by the study by government

Source: SEDA Malaysia

No clear national policy on energy efficiency yet

Malaysia’s Oil And Gas Reserves

CRUDE OIL : 5.46 billion barrels, NATURAL GAS : 88.00 trillion standard cubic feet RESERVE LIFE : Oil – 19 years, Gas - 36 years(source: PETRONAS (as at 1st January 2008)

Oil Production Trends

more on the decreasing trends from the early 90s

Source: PEMANDU

Oil &Gas Resources

Total resources addition has been shrinking despite increased in exploration activities.

Oil explorations activities today require bigger investmentsSource: PEMANDU

Management of Petroleum Energy Sector

PRIME MINISTER

Ministry of Internal Trade & Industry

Licenses for processing & refining of petroleum &manufacture of petrochemical products

Ministry of Domestic

Trade,Cooperative &Consumerism

Licenses for marketing & distribution

PETRONAS

Ownership, management &control of oil & gas resources &activities

Through Petroleum Development Act of 1974 & Petroleum Regulations of 1974 (amended in 1975 &1981)

Structure of Authorities in Electricity Sector

Refer to the right agencies on issues related to electricity based on their scope of authorities and functions

How primary energy is used to produce electricity for consumers

No matter the source, it takes a significant amount of energy to make electricity

Globally, more than 35% of the primary energy consumed on a daily basis is being used to make electricity

Source: Exxon Mobil Energy Outlook 2012

The Integrated And Intelligent Electricity System Of The Future

Source: IEA

Electricity Generation Mix In Malaysia: Oil To Gas Dependency

moved from oil dependent to gas &coal dependent for electricity generation.

The dependency on coal from Indonesia reduced from 84% in 2008 to 65% in 2011.

Source: Energy Commission

The reserve margin for 2013 is 31%•an installed capacity of 21,749 MW

•a peak demand of 16,562 MW•a minimum reserve margin of 25% would be required

source: National Energy Security Forum 2012

Trends Of Energy Use By Type Of Sources

The trend of usage is increasing &the biggest usage is for petroleum related products such as petrol for vehicles &followed is for natural gas &for electricity generation

Source: National Energy Balance 2012

Trends Of Demand, Supply &GDP Growth

GDP growth is strongly related to the increase of final energy supply &demand. Need to get the GDP to grow as are moving towards a developed country To change the trend of the energy demand to increase exactly according to the

GDP growth to show that we are not utilizing our energy resources effectively.

Source: National Energy Balance 2012

Latest electricity consumption sectoral forecast for Peninsula

Source: Energy Commission

Trends in Demands &Available Reserves

Malaysia is expected to become net oil importer by 2020 or earlier if the demand increase in the same period.

Coal is biggest imported energy source for Malaysia until 2030

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

2002 2010 2020 2030

Pe

rce

nta

ge

Coal Oil Gas Hydro Nuclear NRE Electricity Heat

Source: APERC 2006

The Prime Minister has announced in January 2015 that Malaysia is already a net importer of petroleum

Why EE is crucial for Malaysia?

Energy demand projected to increase from 2,000 PJ(2009) to 4,013 PJ(2030), average rate of 3.6% /year

Short term &long term measures that can be taken is through EE initiatives while working on looking for new energy sources (RE& alternative energy)

To balance and reduce the supply and demand gap

Source: EPU,2011

WE NEED TO

CREATE THE EE LINE!

TO QUANTIFY!

Movement Of Oil Prices: Crude Oil Prices (Dollar)

World oil price is directly affected by major events or crisis in the world

Will affect by supply quantity & demand from energy users.

Source: www.wtrg.com

Average fuel price trend in RM/mmBtu for the energy sector in Malaysia

Challenges In Using Energy To Ensure Sustainable Energy Resources

For the policy makers, regulators, utility suppliers &users is the need to address impacts on energy costs &environment with the distortion in energy pricing from efficient use of energy among intensive energy users

0

10

20

30

40

50

60

70

80

90

100

Pri

ce (

RM

/M

MB

tu)

INDUSTRIAL DIESEL

GMSB WEIGHTED AVERAGE TARIFF

INDUSTRIAL LPG

INDUSTRIAL MFO63% discount

53% discount

67% discount

72% discount

70% discount

63% discount

RM22.06/MMBtu

RM15.00/MMBtuRM12.87/MMBtu

GAS PRICE TO POWER SECTOR RM6.40/MMBtu

RM14.31/MMBtu

RM10.50/MMBtu

What is ENERGY EFFICIENCY?

Using the same/less amount of energy

to produce the better Output

Using less energy to accomplish

the same task/to enjoy the same comfort level

Process ( Equipment/Operations)

INPUT OUTPUT

• Comfort level

• Production volume

• Quality• Safety

• Electricity• Fuel

THE BASIC APPROACH…

….but how Malaysia has been doing

it?

….we MUST CHANGE

THIS!

KENAPA KITA PERLU MENGGUNAKAN TENAGA DENGAN CEKAP?

SUMBER BAHAN API MAKIN TERHAD &AKAN HABIS

Keperluan semakin meningkat (Pertambahan penduduk,peralatan & kenderaan)

Persaingan mendapatkan bekalan & sumber tenaga semakin sengit(dalam negara & antara negara)

Harga bahan api semakin tinggi/mahal di pasaran tempatan & global

Kos penjanaan/carigali, penghantaran & pengagihan bekalan elektrik meningkat

KADAR TARIF/BIL ELEKTRIK MENINGKAT

Kos barang keperluan

Kos operasi syarikat

Kos pengangkutan

KRISIS!!!Jika tenaga tidak diuruskan dan digunakan dengan cekap

TOWARDS ENERGY EFFICIENT SCENARIO :NEW POLICY

Economically viable efficiency measures can halve energy demand growth to 2035

Source: IEA

GLOBAL ENERGY EFFICIENCY POTENTIALS

Energy efficiency potential used by sector in the New Policies Scenario

2/3 of the economic potential to improve energy efficiency remains untapped in the period to 2035

Source: IEA

Impacts Of Energy Efficiency Policies In Japan

1,327

1,273

1,192

1,101 1,101

1,059 1,059

1,000978

951

1,036

1,013

1,013

985

1,0491,091

1,051

1,0701,077

1,037

1,0441,021

1,059

1,036

1,038

1,050

1,1311,142

1,345

1,405

1,467

1,566

1,573

1,438

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600

1,700

Fiscal Year

Pri

ma

ry e

ne

rgy

co

ns

um

pti

on

/ G

DP

Ton oil eq. / Billion

yen

2nd Oil Crisis

1st Oil Crisis

Source: METI/General Energy Statistics

10 years

Improvement by 30%

10% improved for 20 years

Main Improvements:• Energy Management• Energy Efficient

Equipment• Efficient Processes

Technologies• R&D

Energy Consumption Performance With National Energy Efficiency Implementation In Thailand

Through strong regulatory implementation framework, sustainable funding & holistic approach for focused sectors

ENERGY EFFICIENCY SCORECARD 2014

Source: American Council for an Energy Efficient Economy(ACEEE)

OVERVIEW OF ENERGY SERVICE INDUSTRY

What Is ESCO?

An Energy Service Company(ESCO) Develop and implement turnkey, comprehensive energy efficiency

projects

ESCOs offer performance-based contracts (i.e., contracts that tie the compensation of the ESCO to the energy savings generated by the project) as a significant part of their business

To ensure credentials, ESCOs must demonstrate the technical & managerial competencies to design & implement projects involving multiple technologies :

Lighting Motors & Drives Heating & steam systems HVAC Systems Control Systems Maximum Demand Controls Building Envelope Improvements

…at building/industrial facilities

SCOPES IN ENERGY SERVICE

Consultancy & AdvisoryDesign & Development Of Energy Efficient

Systems/TechnologiesFinancing & PurchasingImplementation & Project ManagementConstruction ManagementEnergy Performance Targeting, Monitoring &

VerificationTesting & CommissioningOperation & MaintenanceEnergy Analysis &ReportingRegulatory ComplianceStandards & Ratings

Registered in September 2000 n conjunction with the launching of the Malaysian Industrial Energy Efficiency Improvement Project (MIEEIP) by the Government-UNDP

OBJECTIVES To develop recognized ESCO

businesses in collaboration with Government & private sectors.

To actively promote the activity of cost reduction and efficiency standards of the industrial and commercial sector

To oversee the well being of  it’s members

To facilitate and do all things necessary towards developing successful energy related projects.

To introduce related products and services for the industry

To foster healthy co-existence amongst members through ethical professional practices

Ensure quality of services by members

Key Activities & Involvement In Industry Development

Energy Management Training Courses for Energy Managers

Producing guidelines & provide advisory in services delivery

Awareness & promotional programs

Provide inputs on EE industry to the Government with other Stakeholders

Rental of Equipment for energy audit and M&V

Elected Committee Members(2014 /2016)

President Ar. Zulkifli b. Zahari

Vice President, Policies & Int. Liaison

Ir. Ong Ching Loon

Honorary Secretary & Historian

VTR Dharamarajah

Honorary Advisor / Internal Auditor

Ir. Dr. KS Kannan

Business Development Ir. Phang Chen

Faut

Training Mohd

Iskandar b. Majidi

Green TechnologyKevin Yap

Publicity & Promotions

Ir. Kumarason S Kandiah

Government Liaison

Ahmad Zaky b. Mohd Amin

Internal Auditor

Khairol Nizam b. Abd Muen

Treasurer & Finance/Strategic

Initiatives Zaini b. Abdul WahabAsst. Honorary Secretary &

Membership and Practice Koay Keong Tay

Program Coordinator

Anuar b. Mat Saad

Admin / SecretariatAfiza bt. Mohd

Sa’ad

Accountant Mohd Izzuddin

b. Salahudin

ESCO industry size estimates by selected country

Source: Lawrence Berkeley National Laboratory , National Association of Energy Service Companies, USA September 2013

ESCO Industry in the US…

Source: Lawrence Berkeley National Laboratory , National Association of Energy Service Companies, USA September 2013

Comparison of Energy efficiency potentials in ASEAN

Ranked #1 in investment potential &#4 in payback period due to Malaysia’s lower electricity tariff

Lagged behind Singapore &Thailand to unavailability of comprehensive regulatory support

SEA: INVESTMENT POTENTIALS (US$MIL.)

The total market size = US$6.7 billion;Industrial = US$2.9 billion(44%)Commercial = US$3.7 billion(56%)

source: www.reexasia.com

Biggest potentials in the industrial sector

BUSINESS POTENTIALS IN ENERGY EFFICIENCY 

IMPLEMENTATION

Building owners can see reduced operating costs, increased building values, greater return on investment, and higher occupancy from new and retrofitted green buildings

UNEP - GEO-5 for BusinessImpacts of a Changing Environment on the Corporate Sector

Companies may receive reputational benefits from achieving green building certifications . A 2011 survey of U.S. adults- 64% would prefer to patronize a business whose facility is certified as green, while 48% indicated that green certification of a facility improves their image of a company.

University of Missouri researchers - consumers would be more willing to pay between 15 & 20% more for retail products from companies that support sustainable practices

UN Global Compact of 766 CEOs worldwide-93 % of CEOs said sustainability issues will be a critical factor to the future success of their business

2012 Ernst & Young Survey – 66% of executives saw an increased amount of sustainability-related inquiries from investors in the past year. 70% inquiries focused on energy management and greenhouse gas emissions & more than ½ questions about sustainability reporting

The Corporate Trends…Survey on 250 CFOs in 14 countries by Deloitte - CFOs are increasingly aware the benefits sustainability can bring to the business. 2/3 respondents said they are involved in driving sustainability strategies .More than 50 % said their involvement in pushing sustainable practices has increased in the past year.

IS ENERGY EFFICIENCY AN OPTION OR A MUST

DO NOW?

Energy Management System Implementation By Companies In Ireland

160 companies - 60% of Ireland’s industrial energy use

2% improvement in energy performance per year

Long-term members - have improved energy performance by 33% (1995 and 2010)

Energy Management Standard helps up to €150m in avoided energy costs (2005-10)

44

ENERGY EFFICIENCY

IMPROVEMENT PROGRAM

Sustainable Energy Management

Awareness Program

Capacity Building – Training &

Development

HRDF refundable programs

Measurement & Verification (M&V) Internal/3rd Parties

Adoption of Energy Management System

(ISO50001)

Internal/Consultant

Energy Saving Project

Energy Auditing

Internal Budget

EPC Model

Full/matching grant – with

commitment to implement

Energy Saving Projects

Implementation

EPC model

Standard Procurement

SUPPORT MEASURES NEEDED

TA

RG

ET

GR

IOU

P

S

OPTIONS TO SAVE ENERGY COSTS

INTRODUCTION TO ENERGY MANAGEMENT

ProfitabilitySustainabilityCompetivenessCompetencyWorking environment quality

Corporate Image

Operating Costs - EnergyRisks – price fluctuation & supply shortagesPollutionCarbon emissionDepletion of fossil fuel

Why Energy Management?

INCREASE USERS’ COMFORT

SALES & ENERGY COST SAVINGS

BOOST IMAGE & VALUES

Energy Management

One of management resources of an organization

Required due to its influence to operation and activities

All activities to ensure efficient use of energy

in the organization

Sustainable Energy Management

The process of managing the energy use in the organization to ensure that energy

has been efficiently use

adopting energy management system

to achieve desired results and for continual improvement

Covers all aspects of energy the people

the equipment

in the daily operation of the facilities

Sustainable Approach To Reduce Energy Costs – Energy Management System(EnMS) for organizations

MANAGEMENT COMMITMENT

ENERGY POLICY

PLANNING

IMPLEMENTATION &

OPERATION

SYSTEM & PERFORMANCE CHECKING

MANAGEMENT REVIEW

Energy saving measures – to

bring results in improving energy

performance & cost reduction!

The Ideal Approach To embrace EnMS among all employees at all

levels from the beginning› Inclusiveness through capacity building & awareness

Integrating existing good practices & other Management Systems

The use of a single updating point & reference for EnMS implementation in long term› Defined responsibilities in the system› Continuous energy review, planning & performance monitoring› Updated document controls & reviews

User friendly & replicable system for all facilities› Concurrently & future

INTRODUCTION TO ISO50001:2011

STANDARD – Energy Management

System(EnMS)

ISO 50001: 2011 - Scopes Standardization in the field of energy management,

including: • energy supply• procurement practices for energy using equipment

and systems• energy use, and any use-related disposal issues

Also address

measurement of current energy usage

implementation of a measurement system to document, report

validate continual improvement in the area of energy management

How ISO 50001 Standard will help?

Will provide organizations with technical and management strategies to increase energy

efficiency, reduce costs, & improve environmental performance

a recognized framework for integrating energy efficiency into their management practices.

An access to a single, harmonized standard for implementation across the organization

…..with a logical and consistent methodology for identifying & implementing improvements

The Basic Approach of ISO50001 Standard

WHERE & HOW TO SAVE ENERGY?

ASSET RESPONSIBILITY PERIOD

Energy Supply & Utilization

Source: Institute of Asset Management, UK

Building life cycle

Source:The American Institute of Architects,2010

WHERE TO SAVE?...MANUFACTURING FACILITIES

Source: Energy Conservation Centre of Japan, 2011

Pumps (25% - 35%) Chiller (20% - 25%) AHU/FCU (25% - 35%) Cooling Tower(15% -

20%

WHERE TO SAVE?... AIR CONDITIONING SYSTEMS

Energy Efficient Lighting Technologies

Savings at 40-60% from lighting systems

Energy Saving Micro Ballast

and HP Fluorescent T8-28 watts

LED Fluorescent Tubes

LED Down Light

LED Ceiling Light High Performance LED Street Light

LED Spot/Flood Light

Example of Findings from Energy Audits

No. Building Year Potential Savings

(RM)

Implementation Costs(RM)

ROI(Year)

1 Ministry Of Health 2010 740,652 1,546,545 2.0

2 MAMPU 2010 254,500 964,737 3.8

3 Ministry Of Human Resource

2010 195,146 405,180 2.1

4 Public Service Department 2010 174,480 897,000 5.1

5 Ministry of Natural Resources &Environment 2010 316,440 963,500 3.0

6 Ministry of Finance 2008 355,892 2,326,259 6.5

7Selayang Hospital, Selangor 2008 1,612,800 3,294,350 2.0

8Kuala Lumpur General Hospital, Kuala Lumpur

2008 2,538,705 8,423,740 3.32

9University Malaya Medical Center, Kuala Lumpur 2008

4,477,067 622,500 0.1

(Source: KeTTHA,2011)

CAREER POTENTIALS IN ENERGY EFFICIENCY

INDUSTRY

The Career Pyramid

Career :Life long learning

Tertiary Education:

College/University

PRIMARY & SECONDARY EDUCATION:

SCHOOL

Lesser

tim

e t

o p

rep

are

& f

reed

om

to

ch

oose

Building Foundation

Building & confirming targets

Leading & exploring the fullest potentials

Good Study Habits

Good Results

Good & More

CAREER Options

GOOD LIFE!

...and UNFORTUNATELY there is no single formula for a SUCCESSFUL CAREER but still the best thing to do is PLAN and WORK HARD that will keep us ON TRACK. GIVE YOUR BEST SHOT!

CAREER

EmployeeEmployer/

Entrepreneur

What do you love or what do you have to?

ENERGY EFFICIENCY

Energy Management

Energy Management

System

Consultancy/Advisory

Standard &Certification

Performance Measurement &

Verification

EnMS Tools

Hardware(meters , sensors & etc)

Software (Computerized EnMS)

Energy Engineering

Energy Efficient

technologies

Testing, Rating & Labeling

R&D, TQM

Manufacturing

Energy Auditing

Capacity Building

Education & Awareness

Training & Development

Policy

Policy research & development

Regulatory

Fiscal & FinancialInvestments &

FundingAnalysis & Evaluation

Potential Areas to Explore In EE Industry

Options For Careers In Energy Efficiency

Energy Auditors

Energy Efficient Technology

Application Experts

Measurement &Verification Specialists

Energy Efficient Equipment Inventors

Energy Efficient Facilities Designers

Energy Economists & Data Analysts

Policy & Regulatory Experts

Demand Side Management Specialists

Energy Managers

Energy Management Consultants

Documentation & Certification Specialists

ISO50001 EnMS(System/

Technical Auditors)

Expert Trainers

WHAT STOPPING US?

Challenges in Energy Efficiency industry in Malaysia & the way forward

ENERGY EFFICIENCY FEARS

Some issues that provoke this fear include Investment insecurity Fear of policy changes No experience in similar projects Lack of management involvement Unclear ROI Unclear steps to achieving results Unclear results Huge commitment Lack of urgency Lack of competitive pressure Too many things to do Too many things to know Too many people to involve Too many decisions to make Lack of clarity about who and what to believe

The solution: Provide action plans, not raw information.

Common BARRIERS of EE in Malaysia…lack of…

• Clear policy & targets• Comprehensive regulatory & implementation framework

• Competencies in institutional set up

Strong governance in policies implementation

• Competency programs• Career opportunities

Technical competencies & human resource capacity

• Sources of funds• Understanding risks & mitigating factors in green investments

Sustainable financing & business friendly

mechanisms

• On green practices• Business opportunities • Impacts to climate change mitigation

Information ,education &awareness

• Funding• Academic vs. Commercial values

R&D & commercialization

Our WAY forward… Solution or

technology based approaches?

or

Project based or sustainable implementation plans & strategies?

For the industry development…

Strong Governance

Financing & business

friendly mechanism

s

Accountable & competent implementing

agency

Information,

Education &

Awareness

R&D & Commercializati

on

ENERGY EFFICIENCY Industry Growth

Policy Targets

Policy Introduction

Focused Sectors +Industry Players + Consumers

Industry players just need the basic & right “infrastructure” & supports .We can take it from there!

Expected Impacts From Holistic Energy Efficiency Implementation

INTRODUCTION &

AWARENESS

IMPLEMENTATION & SUPPORT

MEASURES

PERFORMANCE

MONITORING&

MEASUREMENT

IMPROVED• Energy

Performance• Competitiven

ess/• profits

• Environmental quality

REDUCED• Energy

consumption & costs

• Pollution• CO2

emissionsCREATED

• Business & job opportunities• More experts/workers from energy efficiency

industry• New source of economic growth

• More Direct Domestic Investments

EXPECTATIONS FROM THE GOVERNMENT

Look and act on EE holistically & urgently! …not with ad-hoc approaches

Clear policy goals & targets

Strong governance & comprehensive framework

Consistency, accountability & competency

Inclusiveness in policies development & reviews

A HOLISTIC ENERGY EFFICIENCY IMPLEMENTATION AT NATIONAL LEVEL WILL DELAY THE NEEDS TO HAVE NEW POWER PLANTS FOR LONGER PERIOD

FINAL MESSAGE

WHAT ROLES YOU WOULD LIKE TO PLAY FOR ENERGY EFFICIENCY FOR

YOUR OWN FUTURE?

The journey continues…and follow me to pursueEE agenda in Malaysia at…

www.energy-saving-malaysia.blogspot.com.my

www.facebook/zaini.abdulwahab1

www.slideshare.net/ZAINIABDULWAHAB

www.linkedin.com/pub/zaini-abdul-wahab/31/239/882

THANK YOU & GOOD LUCK!