Energy Technology Expert

Energy Efficiency Market Transformation Concept Paper

By: Marcial T. Ocampo

Energy Consultant

RATIONALE

The surging oil & gas energy prices in the world and domestic market, mainly driven by steep increase in the market price of the widely traded Dubai crude has resulted in serious consequences for the end consumer and the country – rising domestic fuel and electricity prices, surging food prices, higher transport fares and consequently higher inflation, depreciating peso, lower economic growth rate and greater risk of higher budget deficit.

OPPORTUNITIES FOR ENERGY EFFICIENCY (EE) MARKET TRANSFORMATION

Having identified the significant energy source, user, generator, and location of oil & gas energy end-use — we could now propose a comprehensive and integrated approach to EE market transformation.

Energy Efficiency R&D Corporation – its role

An R&D Corporation shall be adequately capitalized with a capital fund whose interest is more than sufficient to fund its manpower and maintenance expenses.  It shall also charge R&D fees for conducting studies and consultancy services to maintain its operational effectiveness.  According to a Japanese Expert in the recently concluded 2008 Energy Summit at the SMX Convention Center, the Philippines does not have an Energy Efficiency Center unlike its neighboring countries which started late in terms of energy conservation legislation and mandatory requirement of designation of  Energy Conservation Officers / Managers.  The Energy Practitioners Association of the Philippines (ENPAP), the successor of ENMAP, could evolve into this Philippine Energy Efficiency Center for this purpose.

a) There is a need to strengthen the energy efficiency R&D program of the country. The DOE, ERC, DENR, DOST, PCIERD and academe need to enhance their technical and R&D capability to seize this opportunity presented by soaring energy prices (oil, gas, electricity).  Previous studies that showed weak break-even prices, marginal economics, poor financial viability, would now suddenly become not only attractive financially, but from the stand point of supply availability and security, the need for higher energy conversion efficiency should now be a top priority of the government, industry and the people.

A needs analysis project to identify weakness in the government R&D as well as regulatory, planning, implementation, monitoring capability should now be conducted by a distinguished panel of experts, in order to equip the bureaucracy with highly trained, competent and adequately compensated personnel akin to what would be considered a normal situation in our neighboring countries like Malaysia, Taiwan, Thailand, China, Japan.

Another needs analysis project to identify shortcomings in the country’s educational system with respect to energy supply, conservation, efficiency, utilization, and advanced fuel and power generation technologies should be conducted hand in hand to have a steady pool of competent graduates that will later man the country’s bureaucracy.

b) The short term, medium term and long term planning capability and resources of the government (NEDA, DOST, DOE) to conductive comprehensive and integrated energy, economic, environmental, educational, agricultural, industrial planning shall likewise be looked into by the distinguished experts of ADB to address the country’s lack of foresight and planning ability.

Transport Sector R&D and Management Corporation – its role

This body shall have a similar function as the MMDA, but with a more precise role for Traffic Management thru Municipal Transport System operation and Urban Facelift (squatter or informal settler housing and retraining).

a) Traffic Management Improvement – A group of experts shall immediately assess the short term and long term effectiveness of the MMDA engineering traffic intervention activities such as the elevated U-turn, permanent and concrete U-turn such as that in Commonwealth Avenue that adds more congestion than a constant wide motorway, aside from being a cause of numerous deaths and accidents due to poor visibility/lighting.  We should instead adopt non-conflict and continuous flow design in planning our next-generation highways (6 lane elevated interchanges) that provide a roadway leaf for each route (straight, left turn and right turn for each of the 2 intersecting roads for a total of 6 dedicated non-conflicting lanes).  When not feasible for lack of space, the use of integrated, coordinated and intelligent traffic signaling systems shall be used instead for smooth flow of traffic and road safety.

A complete time and motion study should be institutionalized in all these engineering projects such that when the time to complete the U-turn on all 4 competing flows (straight, left turn, U-turn and crossing) is more than waiting for the signal to turn green, it is best to leave the intersection under automatic control of an integrated signaling traffic system.

So much fuel is lost in such ill-advised U-turn slots, aside from being a major cause of accidents between small private vehicles and large trucks and buses making the U-turn at the same narrow single U-turn slot.

b) A panel of scientific experts shall be convened and funded immediately to look into all kinds of fuel saving devices for vehicles, with the end of encouraging the use of really cost-effective fuel saving devices (some local inventors of such devices claim to be able to run on water; vehicles don’t need to have thick lubricants but could use vegetable oils).

Among the types of fuel saving devices that our R&D experts may study are: fuel pre-heat devices, air pre-heat devices, electronic ignition devices, vacuum release devices, water injector devices, turbo-charging systems, low-back pressure exhaust system, lubrication oil cooling system, aerodynamic drag reduction devices, fan clutch system, and use of fuel cell-powered vehicles (using hydrogen, methane, gasolines, diesels and crop-based fuels such as alcohols, coconut oils, CME).

c) Car and engine manufacturers, with adequate R&D funding, may now consider improving their car/vehicle designs to address high fuel costs. These includes concepts such as lean-burning engines, self-tuning engines, stratified-charged engines, lightweight diesel engines, ceramic-lined engines, automatic and overdrive transmissions (over 5 forward gears), low drag body design and vehicle weight reduction.

d) Fuel substitution R&D in an era of increasingly scarce fossil fuel should likewise be adequately funded to ensure that engines in the near future are capable of utilizing efficiently and cost-effectively new generation fuel substitutes that could be grown or produced locally.  Expand further the use of locally produced alcohol, without competing from food grade alcohol for beverage and other culinary use.  Continued research on appropriate non-edible crops that grow with minimal water on marginal lands, steep slopes should likewise be enhanced.

R&D and commercial development for bio-diesel from surplus or low support-price copra as well as non-food crops like jatropha be adequately funded to secure the country’s future energy supply in case of 10-15% cut-backs on future oil supply deliveries from OPEC countries.  That possibility in the near future is not remote, so the country needs to plan and gear-up now its R&D, financial, agricultural and manufacturing resources to prepare for the time when fossil oil will become scarce and expensive.

Instead of putting up hybrid diesel plants with biomass, wind, solar or mini-hydro plants, some suggestions include using the concept of “hybrid fuel”.  This may be more cost effective as it lowers tremendously the first cost of the power plant (single diesel engine, single generator, simplified fuel system).  For instance, coconut methyl ester (CME) from copra may be blended from 1% up to 20% of diesel/bunker fuel in order to utilize copra produce from poor rural communities that are located away from established coconut oil mills, thereby increasing rural productivity, incomes and opportunities. The local power generation facilities will benefit from the clean and efficient CME fuel, and save on fuel costs since the local CME production could be priced competitively by adjusting mainly the cost of the raw material input – copra.  Local farmers cooperative could be set up and contracted to provide the copra requirements of the CME plant that will supply up to 20% of the diesel/bunker fuel needs of the nearby diesel power plant.  A typical 5MW diesel power plant would require around 5,700 Liters per day of CME.

e) The ADB shall fund immediately a comprehensive traffic management plan for the greater Metro Manila, up to over 300-km radius so that travel into and out of Manila will be as just fast as that in Thailand. A 3-hour travel in Thailand will allow you to easily reach the agricultural and industrial countryside of about 300 km away from the city center, while a 6-hour drive in Luzon will only bring you as far as 250 km in Baguio City.

Clearly, there is something wrong in the way we do things in the Philippines.  We have almost the same population, same exchange rate before, yet the Thai economy is over 4 times that of the Philippines.

In Thailand, when they would expand their provincial roads and freeways, the purchase of right-of-way is as easy as pie.  The government purchases from the landowner a portion of his land to give way to the properly aligned roadway, re-aligns the other owners so that lands are consolidated at one side of the roadway for the benefit of the farmer – he does not have to cross to the other side for his other farming area. He is paid in highly marketable government 10-year bond security for the purchase of land, which he then turns around and sells at a discount or gets a bank loan with the bond as security to start another business with a new piece of land (he gets priority, especially if he is the most aggrieved party in the expropriation of right-of-way) in the new roadway away from his previous home.  Roadways in Thailand are also provided with wide canals for drainage and commerce at both sides of the road, which can also serve as cheap method of transporting goods and peoples, selling of goods in bancas, etc.

f) In the case of EDSA, the ADB shall fund immediately a study to cut the bus routes into three (3) sections, thus cutting by 2/3 the number of idle and less than half-filled buses in EDSA that clogs this important artery in spite of the elevated MRT line.  Transfer points may be set up at the North Triangle in QC and the Food Terminal at the South Super Highway.  Right now, the southern buses clog up Vito Cruz (Pablo Ocampo) as they are only allowed up to this point.  Each bus company may opt to divide his buses into 3 groups – the south, central and north line, and transfer passengers among it self so there is no additional hassle of paying and changing again.  Or they may opt for revenue sharing among members of the consortium.  A one-ticket ride from one point to the other point would suffice and with advanced computer hardware and software as used in the train systems, this same concept could be applied to the bus systems.  This is possible if bus drivers and conductors meet minimum educational standards (e.g. college graduate in Thailand, to be complied within 5 years), are paid monthly regular wages plus consortium-wide productivity bonuses for meeting revenue targets.

This is the concept in Singapore. The outer radial arteries (east and west, north and south) emanate from the farthest rural area and goes only as far as the city limits.  From then on, the passengers transfer seamlessly into the co-intersecting lines of the circular bus routes in the inter limits of Singapore. The passenger alights from the rural bus, goes down a stair that leads to an underpass that also serves as air-conditioned supermarts. He then goes up the stairs to the ramp of the inner city bus line, without crowding the roadway level with pedestrian traffic.  The filled-up bus then merges safely with the rest of the traffic.  The buses therefore take a minor detour without disturbing the parallel plug flow of vehicles driving at more than moderate speeds.

This point of intersection is also where the Singapore government built high-rise tenement housing for the poor and landless residents.  To enable them to pay for the low-cost rent, they provide retraining and start-up capital, which ADB could fund, to start a new business such as shop-keeping, computer and watch repair, appliance repair, shoe and bags repair, fast food stalls, wet and dry goods market, barber shops, spas, etc.  The end result is that the poor residents gain back their self-respect and dignity as they live in a clean and comfortable high-rise tenement, with adequate security, as well as nearby public school for kids (elementary to high school) complete with recreational facilities for the young and old alike.

g) The ADB shall fund immediately a study for roadway level-mass transport system, once the 2/3 of the buses are removed from each section of the long EDSA route.  By adopting CNG buses with inter-city refilling stations for both public buses and private cars, the inner city becomes clean and refreshing to live.  Only CNG buses shall be allowed to traverse the inner city routes due to congestion and pollution levels.  The outer south and north routes shall be for the non-CNG buses as they have not yet been phased out by operation of age (less than 10 years) and the countryside has greater capacity to receive the pollution from the older buses nearing obsolescence.

h) The ADB shall set up immediately a consortium that will buy-back the 10-year old buses that were provided from Japan to solve the transport crises then in the early 1990s.  These old and polluting buses (nearing 20 years old by now) need to be taken out of the inner city route.  Said buses if still operational should be provided to another consortium for the provincial and secondary/tertiary routes. The consortium then buys only the new CNG or electric buses or fuel-cell buses for cleaner city operation.  The owners of the buses that were forced to sell to the consortium become now shareholders in this municipal transport authority consortium and/or become the drivers or conductors if they meet the minimum educational requirements and skills.  In this manner, it would also be easy to control dispatch of vehicles.  The old, unserviceable buses are then sent to the wrecking crews for scrapping.  Right now, there is great scarcity in metal scraps because of the high demand for steel raw materials in China, Taiwan and Japan.

The same concept may be applied to the old, un-economical and smoke-belching jeeps in Metro Manila.  Since it is difficult to phase-out, they should be bought or buy-out by another consortium for jeepneys and FXs once they apply for motor vehicle registration or franchising.  They are then allowed to be shareholders with equity equal to a reasonable value of the vehicle removed from circulation (salvage value or material content value plus value for the benefit of removing a polluting vehicle) in the new consortium, with the municipal transport authority in control.  This will allow proper re-routing of jeeps to secondary feeder routes, which in turn are fed by tertiary tricycle routes from the inner villages.  The jeeps then carry the passengers to their co-consortium in the secondary bus line route, to feed into the primary mass transit stations or the 1/3  consortium company mentioned earlier.  I think this is the only logical, bankable and politically acceptable way of removing the World War II vintage jeepneys in Manila so that it could become a bustling and modern city like Singapore and Kuala Lumpur.

Building & Commercial Establishment Sector R&D and Management Corporation – its role

With the sale of vast tracks of public lands that formerly housed military bases of the Army, Navy and National Police, urban renewal with the best energy and environmental features may now become a reality.

Old buildings likewise that have outlived its purpose or economic life, or bereft of tenants due to extreme deterioration, could now be demolished and rebuilt to provide a variety of urban uses – mass housing, condominium living for the growing workforce in the call industry as well as business processing outsourcing industry.  The need to be housed close to the work place is now the in-thing.  Land and transport fares are now expensive, so the old dream of owning a house and lot in an exclusive subdivision is now a thing of the past.

The simultaneous need for power for lighting and business operations; heating for cooking, laundry, disinfection; refrigeration for cold storage; and air-conditioning has made it technically, operationally and economically feasible to adopt the advanced cogeneration and tri-generation technologies in utilizing expensive fuels.  Coupled with time of use electricity and gas tariffs, the opportunity for adopting highly efficient technologies are now indeed possible since the high cost of fuels now, together with the volume of energy savings, will be more than adequate to fund capital investments in such energy saving concepts.

The Fort Bonifacio Global City development for advanced hospitals such as St. Lukes Hospital and the high-rise condominium residences and offices offer great savings in both transport fuels and building energy for air-conditioning, hot water and steam laundry. There are plans to extend piped gas service to these major centers once the 500-MW Sucat Power Station is made an anchor load to a new gas pipeline from Batangas to Metro Manila.

The Northern Part of Luzon, from Bulacan, Pampanga, Tarlac and major centers such as Clark Air Base and Subic will be serviced by another LNG re-gassing facility to be built in Bataan, where it could probably provide fuel to the converted NPC  Limay oil fired CCGT plants as well as the moth-balled NPC Morong Nuclear Power Plant.  LNG would be needed since the 3,000 MW Malampaya gas to power project is almost utilized and will also be exhausted after 23 years of extraction.

This gas load aggregating company (a GAS ESCO) may spearhead the rapid development and conversion activities (from fossil oil fuels) to natural gas and LNG.

Industrial & Power Generation Sector R&D and Management Corporation – its role

Finally, the last sector to be handled by this super ESCO is the industry and power generation sector.

First in the line are the old NPC power plants that are reaching their economic life, are now very fuel inefficient and operationally un-reliable.  ADB shall fund immediately a comprehensive study to plan the rehabilitation, upgrading or replacement of these old NPC plants in order to assure reliable supply of cost-effective electricity to its customers. Enough of the buck-passing antics, let’s go to hard business and solve the inefficiency of the old power plants.

Second priority is to consolidate the losing and inefficient operations of the NPC-SPUG generating assets, mainly old and poorly maintained diesel gensets.

Because of their poor condition and inefficiency, the NPC-SPUG plants are incapable of continues 24/7 operation, hence, their operation is uneconomical and not desirable from the view point of the rural customers who dream of having continues 24/7 operation to sustain their rural business activities.

By immediately modernizing the old NPC-SPUG, thru the government’s Qualified Third Party (QTP) Rural Electrification Program, the ADB may have a very important role in this regard.

ADB could provide the start-up capital to fund the acquisition of these rural franchises and covert them into mega franchises of energy efficient generators and electricity distributors.

The last phase is the rural electrification of remote, unviable areas that have been waived by the local franchised distribution utility.  Again, ADB could play a significant role in promoting missionary electrification in said areas.  While the government provides subsidy to these NPC-SPUG areas (subsidy = true cost of generation – socially acceptable retail rate), the ADB could provide the risk capital to bonafide investors capable of rolling out rural renewable and/or hybrid power generation technologies.

For continues and reliable operation, advanced (turbo-charged, inter-cooled, fuel pre-heated) diesel systems shall be hybrid with intermittent renewable technologies such as biomass (gasifier), solar PV, wind, micro-hydro or mini-hydro, biogas and land-fill gas.

Such systems shall as much as possible follow the proven business model of the first QTP applicant (PowerSource): two identical diesel gensets of 210 kW capacity each for continues 24/7 operation (each unit operated 1 day at a time and rests while the other unit operates again), a biomass power plant (gasifier coupled to a diesel engine) and distribution system (donated by waiving distribution utility), livelihood activities (ice making, potable water supply, entertainment TV and movies, internet service and cell site maintenance).

In order to have a minimum safe demand, the households were encouraged to purchase compact refrigerators that will serve as dummy loads at night-time, and at the same time preserve the food of the community.  This will make the rural community more productive as they would be able to store surplus food for longer periods, avoid going to the market everyday just like the urban household.

After power generation, the industrial ESCO, shall then aggregate loads to get the best price from the WESM electricity exchange, engage in time of use purchases for both electricity and gas when such facility are available, and promote the latest energy efficient technologies thru retrofit and/or change in design of proposed industrial projects, keeping in mind the simultaneous use of energy for power, steam, heat, refrigeration and space cooling.

For existing establishments suffering from high fuel costs, the industrial ESCO shall provide also consultancy services for conducting energy audits in order to identify areas of potential energy savings thru behavioral changes, switching from one technology to another, replacing worn-out components, etc.

MUNICIPAL ENERGY & WASTE UTILIZIATION R&D AND MANAGEMENT CORPORATION – its role

The rural and municipal LGUs in the countryside are in great need for sustainable livelihood opportunities.  Affordable energy is a must to sustain their economic activities, and at the same time, municipal garbage/waste disposal remains a problem of the community and its neighboring towns and cities.  A great opportunity is presented to enterprising LGUs to provide solutions to this problem.

This rural waste to power ESCO needs to be established immediately to jumpstart rural development.  It shall coordinate with R&D institutions and funding agencies such as ADB in setting up municipal waste to power cooperatives.  More often, the rural community has access to local renewable resources such as micro or mini hydro, biomass, biogas, landfill gas, solar PV, wind turbines, etc.  The cheap power from renewable resources could be used to power municipal facilities and support local industries following the one-product one-community concept of Japan which is being promoted by DTI in the Philippines.

After conversion of waste to energy, the residual sludge or ash could then be placed into compact sanitary landfill or in the case of landlocked cities like Manila, the ash is disposed into lined paddies at reclamation areas. This will greatly reduce volume to 10% of the original garbage.  In this way, the difficulty of securing large gorges or valleys to contain the enormous garbage is adequately addressed.

While the power may be more expensive than traditional technologies, it is cheaper than expensive diesel generators and other oil-based power generation technologies since the fuel is free garbage. In fact a waste to power generator is compensated with tipping fees for taking care of their garbage.  The cost of the power from waste could easily be absorbed in the grid as it is of insignificant quantity and any cost increase will be very minimal.  Carbon emission reduction (CERs) credits will likewise contribute to reducing the capital and operating cost of the plant.

This is what is being done in Tokyo Bay and New York because no community wants outside garbage to be dumped into its own backyard.  Small municipalities without access to suitable terrain for landfill may use circulating fluidized bed to combust segregated garbage (after removing all recyclable metals, bottles, plastics) consisting of burnable wastes.  The reclaimed land, once stabilized over 20 years, because valuable open public spaces for recreation, housing and commercial livelihood activities.

OIL INDUSTRY JOINT LOGISTICS CORPORATION – its role

One of the major components of pump price/retail price of petroleum products is the logistical support needed to bring the finished product to the various depots and direct customers nationwide and pump stations for retail customers.

A number of oil industry joint operations include the white oil pipeline to supply aviation gasoline (avgas) and avturbo (Jet A1 Kerosene) for the Domestic and International Airports at NAIA.  The Manila Pandacan Joint Oil Depot is also another example as the separate oil depots of Caltex, Shell and Petron have been ordered to be phased out of this highly populated area, so the oil majors have no choice but to form a joint operations committee to enable them to continue operation in an economical manner while planning for their final phase out from Pandacan.

Near the oil refineries of each oil major, there are so called Borrow and Loan Arrangements (BLAs) which enable each oil marketer to source its base fuel requirements from the nearest oil refinery of the competitor, as it would be illogical, for instance, for Shell to deliver by tanker its requirements in Bataan when Petron’s Refinery in Limay, Bataan could readily supply the same, minus the final fuel additives for its gasoline and diesel products.

Apart from these initiatives, little has been done to “rationalize” the operations of all other oil depots throughout the country from Luzon, Visayas and Mindanao.  It is therefore suggested that with the continued rise in crude oil and finished products, it is imperative that ADB initiate the formation of a joint oil depot and terminal ESCO that will service all the needs of the oil majors and other industry players and charge minimal toll fees as a rationalized operation of oil depots will create numerous opportunities for cost savings – common security, manpower and management, storage tank utilization, tanker fleet sizing and tank truck delivery scheduling, oil loss management (pilferage).

ADB could provide the seed capital to buy-out all these individual depots from the oil majors and new players, form a single oil depot & terminal operation ESCO to serve all the needs of the oil industry.  In this way, unit operating costs are significantly reduced at large thruput which will reduce further pump prices.  In addition, the implementation of the Philippine Bio-fuels Law will be enhanced further as the injection of alcohol to gasoline and bio-diesels such as CME from coconut oil and jatropha to diesels would be done economically at the rationalized depots.

Prepared by:

Marcial T. Ocampo

Energy Consultant (DOE, WB)

Res (63-2)-931-3713

Fax (63-2)-932-5530

Cel (63-915)-606-7949

Sun (63-922)-866-9598

Email: mars_ocampo@yahoo.com