A systems approach to energy end use

A systems approach to energy end use

The optimization of energy use in buildings and industry requires a systems approach to harvest its full potential. This idea is winning ground, as it is shown by the proposal of the ITRE committee of the European Parliament to include a definition of ‘system efficiency’ in the Energy Efficiency Directive. The definition that has been proposed initially is a good starting point for a reflection on this topic.

The concept of a systems approach to energy efficiency is not new, but was until recently largely neglected by EU regulators, probably because it entails various regulatory complexities. One difficulty is to formulate a clear and unambiguous definition of what such an approach actually means. In their draft report on the EED recast proposal, the ITRE Committee of the European Parliament defines ‘system efficiency’ as the selection of energy-efficient solutions where they also enable a cost-effective decarbonization pathway, additional flexibility and the efficient use of resources[1].

This definition rightly recognizes the existence of multiple policy goals which risk to create conflicts of interest, for example between energy efficiency and resource efficiency. To make sure that the ideal balance between those different goals is sought after, optimization must be realized simultaneously for all those goals and at the level of the entire energy using system.

The efficiency of functional entities

The use of the word ‘solution’ suggests that it is not the equipment itself which should be the finality of energy efficiency measures, but the provision of particular services, such as space heating and cooling, lighting, or industrial motion, to name just a few. It would be more precise to define them as functional entities, which then include all components at the consumption side of utility meters that are required to provide a particular service or function. Such a definition explicitly includes the electricity circuits and tube networks located between the utility meter and the final energy use, which otherwise risk to fall through the cracks of all regulation.

Power cables in particular contain a hidden energy savings potential. The most economic cable cross section is often more than double the mandatory minimum. Cable sizing is hard to regulate by a product oriented approach such as Ecodesign, because the optimal cable cross section depends on the load. Energetically spoken, the electrical circuit is inherently part of the installation it is supplying. Therefore, optimisation should take place at the level of the functional system, be it an electric vehicle charging station, a heat pump system, or a PV rooftop installation. Especially in non-residential buildings, the energy savings potential of economic cable sizing is substantial.

When optimisation is sought after at the level of functional entities, the way that energy using components are combined, controlled and operated is inherently part of the equation. A major benefit of such an approach is that it will tackle over- or under-dimensioning of equipment, which is a common cause of energy losses and not covered by the Ecodesign regulation of equipment. Optimisation at the level of functional entities will also reveal opportunities for recuperating heat losses, for instance by making them pre-heat incoming water flows. And it will ensure that automation and control are optimised based on the particular operating conditions of each specific site.

Figure 1 – The energy intensity reduction achieved through regular energy audits alone, compared to the reduction achieved by embedding those audits within an energy management system (Anton Barckhausen, Juliane Becker, Peter Malodobry, Nathanael Harfst, Ulrich Nissen, Energiemanagementsystem in der Praxis, Umwelt Bundesambt, 2019).

Assessing the energy and cost efficiency of a functional entity must be done independently from the energy source or technology that is used, using primary energy use as a technology-neutral criterion. In this way, the potential gain from switching to another technology or energy source will be considered.

Another question that rises from the ITRE definition is the exact meaning of the term ‘cost-effective’. It would be welcome to clarify that it concerns the life cycle cost efficiency of the measures under investigation. Although total cost of ownership (TCO) and life cycle costing (LCC) are commonplace decision-making tools, their use is still far from systematic. Simple payback terms (PBT) is a more widespread criterion for investment, but has the disadvantage of ignoring any economic savings after the investment has been fully paid back. Regulatory incentives could help shift the practice towards TCO and LCC.

From measurement to decision making

A clear and unambiguous definition of systems efficiency is an important first step, but can an optimization at system level be actually brought into practice? One challenge of the systems approach is the insight it requires in an organization’s energy flows.

Figure 2 –Mapping the energy flows is a first step towards the optimisation of functional domains such as lighting or compressed air (Author: Jinho Jung, licensed under Creative Commons CC BY-NC-SA 2.0).

In the past, mapping the energy flows through a monitoring campaign was hardly executed outside large industrial sites, but in recent years, easy-to-install, plug-and-play energy monitoring systems have entered the market, making data gathering and aggregation accessible to small organisations. Government incentives that stimulate the installation of such systems could be an important leverage of a systems approach towards energy efficiency and decarbonization.

Once the measurement and monitoring results are flowing in, the need to process them will naturally lead to some kind of energy management. To structure and formalize this management is the following key step required to bridge the gap between products and systems and overcome split-incentives between purchase cost and operating costs. Formalized energy management is increasingly adopted in major industrial settings through the ISO 50001 format, but it is practically non-existent in small and medium-sized enterprises (SMEs). A standard for “energy management lite” tailored to SMEs, ideally combined with regulatory incentives, would provide a welcome stimulus.

A comprehensive definition

With the technological evolutions making energy monitoring more widely accessible, the time is right to introduce the systems approach in the energy efficiency directive. Taking all the arguments formulated above into account, the following could be a more precise definition: ‘system efficiency’ means the efficiency of a functional entity, including all its components situated at the consumption side of utility meters, including the way those components are combined and operated, assessed over the entire life cycle of the system and independently from the energy source or technology, enabling a cost-effective decarbonisation pathway, additional flexibility and the efficient use of energy and resources.

A more detailed discussion can be found in the whitepaper ‘A systems approach to energy end-use’.

[1] EP ITRE Draft report on Energy Efficiency Directive (22/02/2022) (2021/0203(COD)). Link: PR_COD_1recastingam (europa.eu)