EEN-E3001, Fundamentals of Industrial

Energy Engineering

Spring, 2023

March 2023
Goals of this lecture

• Background skills:
• Definitions: system, environment and boundary, The 1. and 2. Laws – key contents, Theory to constitute an energy balance
• Introduction
• Part 1: Boundary aspects
• Theoretical skills: Understand the existence of different boundary levels in energy efficiency evaluation
• Practical skills: Be able to critically set boundaries for any evaluation
• Part 3: Challenges in energy efficiency measurement
• Theoretical skills: get to known the “list of” challenges in energy efficiency measurement
• Practical skills: Abilities to see how challenges in measurement may have different implications in practice
• Additional reading:
• Standards and definitions
• Theoretical skills: -
• Practical skills: To understand the basic regulatory mechanisms and macro-level monitoring
• Energy efficiency management
• Theoretical skills: Introduction to Management Accounting -> Criteria of good performance measurement
• Practical skills: Ideas for of good energy efficiency performance management.

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 Part 1

INTRODUCTION

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 Helsingin Sanomat 27.2.23
https://www.hs.fi/politiikka/art-2000009408032.html

”Eye roll trick”

… more text here…

The story in short:

1. Statistics say that Finland’s CO2 emissions 1990-

2021 have been decreasing (above chart on the right).
2. At the same time the use of wood as fuel has been
increasing.
3. As a consequence, the carbon stock has been
decreasing (LULUFC).

4. In total, the emissions have remained the same (lower

chart on the right) -> message: measuring just CO2
emissions is not enough

March 2023
EU Energy Efficiency Directive
• …“The recast proposal [of the directive] raises the level of ambition of the
EU energy efficiency target and makes it binding by requiring EU countries
to collectively ensure an additional reduction of energy consumption of
9% by 2030 compared to the 2020 reference scenario projections. This 9%
additional effort is measured against updated baseline projections made
in 2020 and corresponds to the 39% and 36% energy efficiency targets for
primary and final energy consumption respectively, as outlined in the
Climate Target Plan….”

• Link to directive
• Link to figure

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Examples

Source: Breyer (2020)

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Industrial energy efficiency context

During this lecture we review energy efficiency measuring aspects that are
present in industrial context.

Suomen Ilmakuva Oy/ SSAB

March 2023
Time to think!

Why should
we measure
energy
efficiency?

Kaukas pulp mill - link to figure

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 Part 1

BOUNDARY ASPECTS

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Example 1 boundary - equipment
A two-stage evaporator

Gaseous phase
feed Gaseous phase
Concentrate

Heating steam

1. stage 2. stage Consentrate

Condensate Condensate

Source: Holmberg, H. Energian perusteet, Termodynamiikka ja lämmönsiirto. Energy manager kurssi, AEL 1.12. 2010

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Time to think!

How would
you draw
boundaries
here?

Kaukas pulp mill - link to figure

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Example 2b boundary – industry, general

Source: Tuomaala et al., Energiatehokkuuden mittarit ja potentiaalit (engl. Energy efficiency metrics and
improvement potentials). Tutkimusraportti. Aalto -yliopisto. Espoo 2012.

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Example 2a boundary
– production site

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Example 3 boundary
– society

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 Part 2

CHALLENGES IN ENERGY EFFICIENCY

MEASUREMENT

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Conceptual challenges of energy
efficiency measurement
There are some conceptual challenges involved in the energy efficiency calculation.
These affect on the comparability of the results.

The conceptual challenges include:

• Boundary definition
• Output definition / grouping
• Energy quality definition

• Allocation of energy
• Definition of other criteria for evaluation
• Definition of the reference value
• Life cycle aspects.

March 2023
 (1) Boundary definition
System boundary:
• Defines the object for calculation

• Defines what is included and what is excluded from the study

• Is a conscious way to affect the result – offers a possibility for manipulation

Sector-specific examples:
• Industry: Energy consumption of a mill site vs. this plus the production of pre-processed feeds

• Logistics: Fuel used by company’s own fleet vs. fuel used in the value chain incl.all transport services*)

• Building sector: Total floor area vs. heated surface area

*) ref. Carbon footprint analysis, where Scope 1 is own fuel used (incl. own car fleet) versus Scope 3
which includes the whole value chain (bought as a service)

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Example of boundary calculation

1) 2)

3)

Source: Tuomaala M., Holappa L., Ahtila P. Improving energy efficiency in steel industry by process integration. SCANMET IV, 4th
International Conference on Process Development in Iron and Steelmaking, Luleå, Sweden, 10-13 June 2012

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Time to think!

/Greenhouse gases
An example of reporting

Source:
-a company annual report

What happened in 2004/2005:

-real progress or something else?

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What is different between equipment and
at site mesurement
1. Energy efficiency at equipment level

• Measurement relatively easy

• Emphasizes equipment efficiencies (eg. kWh/t)
• The potential for improvement can usually be calculated
• Energy efficiency improves along equipment replacements as new
equipment is installed.

2. Energy efficiency at site level (/facility/ factory)

• Measurement is usually based on ’specific energy consumption’ (MWh/t)

• Challenges for evaluation include especially such as:
• Balance boundary definition
• Definition of evaluation criteria
• References are rather difficult to define (product/production is unique).

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(2) Output definition
The usual industrial energy efficiency indicator called the ’specific energy efficiency’

Energy input
Specific energy consumption =
Output of performance

Each production process is unique and there is no single ”output”.

This challenge is overcome by:

-> making industry categorization e.g., tpaper, tsteel, tolefins, etc. (means ”a sum of production”).

-> Further categorization can be made into industrial sub-sector e.g., tLWC, tSC, etc.

See part additional reading for definitions

”Output of performance” in industry is expressed as tonnes of production [tproduct]

March 2023
Example of output definition challenge

The point here:

Same steel quality may be
achieved via different
process routes, and we
need ways to understand
the differences in the
product manufacturing
when we compare energy
efficiencies.

Source: Odyssee-Mure: ENERGY EFFICIENCY TRENDS IN INDUSTRY IN EU COUNTRIES https://www.odyssee-

mure.eu/publications/policy-brief/industry-energy-efficiency-trends.html

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Example of output definition challenge
(additional reading)
This explanatory text was given:

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(3) Energy quality

Energy can be used in a variety of forms. Typical forms of energy used in industry are
fuels, electricity and heat.

Although the energy forms carry the same unit (J), it is argued that the quality of
various forms of energy is not equal, i.e., coal, electricity and steam feature a
different energy quality.

In practice, energies are categorized into primary energies and secondary energies.
There are variations in the use of term “secondary energy”.

March 2023
Energy quality
According to energy efficiency BREF (EC, 2008), “secondary energy should ideally be
converted to the primary energy content to calculate the specific consumption of primary
energy by multiplying with production efficiency factor”.

This is basically done by calculating the amount of primary energy consumed to produce
the secondary energy, i.e. by dividing the secondary energy by the efficiency of the
transformation process. This is most typically applied for electricity.

The primary energy should always be calculated on the same basis for a comparative
study. This has significance e.g. in benchmarking. This is, however, a laborious task and
not free of interpretation problems. -> see also the next lecture about boundaries.

Theoretically, the exergy content is a measure for energy quality (not used in practice).

March 2023
Standard way to define the primary
energy content
Fuels, electricity and heat can be converted into primary energy before summarizing:

𝐸 𝐸𝑒𝑙𝑒𝑐𝑡𝑟𝑖𝑐𝑖𝑡𝑦
𝐸𝑓𝑢𝑒𝑙𝑠 + 𝜂 ℎ𝑒𝑎𝑡 + 𝜂
ℎ𝑒𝑎𝑡 𝑒𝑙𝑒𝑐𝑡𝑟𝑖𝑐𝑖𝑡𝑦
𝐸𝑆𝐸𝐶,𝑆𝑇𝐴𝑁𝐷𝐴𝑅𝐷 =
𝑡𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑠

Typically, ηheat is 0.85 and ηelectricity is 0.40.

This is a standard way to convert heat and electricity consumptions to primary energy
consumption. The equation does not pay attention to the actual energy conversion
system. For example, it does not take into account heat and electricity produced in a
CHP plant (affecting the efficiency rates) or secondary heat sources that are available for
use alongside with primary heat (e.g. use of thermo-mechanical pulp (TMP) heat).

March 2023
Primary energy content when CHP is
considered
The standard primary energy consumption does not consider heat and electricity produced in a
CHP plant. To take this onto account ESEC can be expressed as follows:

Eheat Eheat ,CHP  Eelectricity ,CHP Eelectricity  Eelectricity ,CHP

E fuels   
heat CHP electricity
ESEC ,CHP 
t products

where Eheat represents heat produced at heat-only-boilers (HOB), Eheat, CHP represents heat
produced in a CHP and Eelectricity, CHP is electricity production of a CHP. Typical CHP is
approximately the same as heat (0.85).

This equation is theoretical, and it must be first checked that this is the actual process.

March 2023
(4) Energy allocation

This arises from the fact that, multiple products can be produced from a plant or a
process (joint production).

Example:
An olefin plant producing feedstock for polymer and chemicals manufacturing.
This raises the following question:
How to allocate the amount of energy used in a steam cracker to different products?
Solution:
-> Allocation based on mass [kg], value [€], HVC (high value chemicals as a group), etc.

Similar question discussed in the LCA context:

How to allocate a farm’s energy use to wool (kg) and meat (kg)?

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(5) Definition of other criteria
Examples of indicators
- Investment cost
- operational cost
Examples of indicators
Examples of indicators - pay back, NPV
- Water usage
- Energy efficiency index
Cost efficiency - material efficiency
- specific energy consumption
- Recycling rate
- fuel efficiency Energy Material
efficiency efficiency

Examples of indicators
Examples of indicators
- Capacity utilization rate
- CO2 efficiency Environmental Operational
efficiency efficiency - product quality
- carbon footprint
- delivery time
- COD, BOD

Parameters correlate with each other - correlations are often unknown and not linear

Figure source: Tuomaala et al., Energiatehokkuuden mittarit ja potentiaalit (engl. Energy efficiency metrics and improvement potentials).
Tutkimusraportti. Aalto -yliopisto. Espoo 2012.

March 2023
How this shows in practice?
-example paper mill energy consumption

2,5
The point here:
2 There are many factors
MWh/tp

affecting the consumption.

Steam
1,5 For example: quality of the
Electricity wood, use of water, sudden
1 breaks in the paper web,
etc.…
0,5 The process conditions
must be studied to
0
understand the causes of
0 50 100 150 200 the changes.
Time interval (h)

Source: Paper machine drying section. Source: Ahtila P., Holmberg H., Tuomaala M., Turunen T. (2010) Energy
management. In series: Papermaking Science and Technology, Papermaking Part 2, Drying. Helsinki, Finland.

March 2023
How this shows in practice?
-example mill management and SEC

The point here:

Changes in the
consumption causes
difficulties to measure the
actual performance or set
benchmarks.
The (both) of the
challenges can be
overcome by lengthening
the measurement period.

Source: Auvinen H., (2008) Measuring energy and CO2 efficiency in petrochemical industry by using energy balance analysis. M.Sc. Thesis. Helsinki
University of Technology. Espoo

March 2023
Example: practical implications
(additional reading) – a reporting aspect

Source: Odyssee-Mure: Energy efficiency trends

in industry in EU countries
https://www.odyssee-mure.eu/publications/policy-
brief/industry-energy-efficiency-trends.html

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(6) Definition of the reference (target) values
Theoretical aspet
Improvement potential, single criterion considered

Improvement potential, multiple criteria considered

Performance of the system

Theoretical Technical Economic

potential potential potential

Current
level

Theoretical
best
performance

Source: Tuomaala M., Hurme M., Leino A-M, Evaluating the efficiency of integrated systems in the process
industry–Case: Steam cracker, Applied Thermal Engineering 30 (2010) pp. 45–52.

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Reference values for energy efficiency
potentials calculation
Potental for improvement is assessed against a defined ”reference” value.
• Note: Only similar entities are comparable!

A reference value can be e.g.:

• A theoretical minimum
• -> Difficult to define and calculate in all fields

• Best available solutions (BAT, ”BET”, etc.)

• Categorizations exist e.g., in the EU level

• Own history parameter

• See example in step ”other criteria”.

March 2023
(7) Considering the life cycle
Practically means the age of the facility and how that affects all improvement.

The potential for improvement is different in various phases of process the mill’s life cycle.

closure

concept development retrofitting

detailed design

construction

start-up
operation
Figure source: Tuomaala M., Conceptual approach to process integration efficiency (2007) p. 96

March 2023
Time to think!

What do you
now think
about the
industrial
energy
efficiency
measurement?

Kaukas pulp mill - link to figure

March 2023
Additional material

March 2023
 Part A1

STANDARDS AND DEFINITIONS

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Definitions, Criteria and Indicator

Criteria: a standard by which something can be judged or decided (Collins

dictionary, 2022).

Indicator is a measurable (quantitative) or descriptive (qualitative) variable. Each

indicator has to be considered in relation to all the other criteria and indicators,
and not separately (Tuomaala, 20071)).

Source: Tuomaala M., Conceptual approach to process integration efficiency (2007) pp.31-54

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Definitions from the DIRECTIVE 2012/27/EU1)

‘energy efficiency’
means the ratio of output of performance, service, goods or energy, to input of energy;” so:
• Energy efficiency is always a ratio
• Output may be “a performance”, service, goods or energy
• Input is energy.

‘energy savings’
means an amount of saved energy determined by measuring and/or estimating consumption
before and after implementation of an energy efficiency improvement measure, whilst
ensuring normalisation for external conditions that affect energy consumption

1) DIRECTIVE 2012/27/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 25 October 2012 on
energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and epealing Directives 2004/8/EC and
2006/32/EC

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Examples of energy efficiency indicators
Sector Output of performance, Energy efficiency
service, goods or energy1) indicator

Communities No. of inhabitant [as] MWh/as

buildings floor area [k-m2] kWh/k-m2

Buildings floor area [m2] kWh/m2 The point here:

-output of performance
is very different in all
Logistics Weight [t] MJ/t
sectors
-indicators are different
Transportation tonns [tonnikm] MJ/tonnikm in all sectors
-difficulty to compare or
Process industry Production tonns [t] MWh/t sum figures!

Energy production Electricity and/ or heat [MWh] MWhpa/MWh2

Source: Tuomaala et al., Energiatehokkuuden mittarit ja potentiaalit (engl. Energy efficiency metrics and improvement potentials).
Tutkimusraportti. Aalto -yliopisto. Espoo 2012:
- Research was about the ways of measuring energy efficiency in various sectors
- Different fields in terms of ee measuring were brought together
- Possibilities to combine ee figures originating from different sectors were analysed

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Practical macro-level management
The Odyssee database contains detailed energy consumption by end-use and their drivers as well
as energy efficiency and CO2 related indicators.

The access is free for all EU Ministries, Concerted Action EED, EED Committee Members and EU
universities and research centres for non-commercial uses and via subscription for other users.

The ODYSSEE data base

provides a variety of indicators
of specific consumption,
measured in
physical units, at a detailed
level (e.g. toe/ton for steel).

These detailed indicators can

be used to assess energy
efficiency progress at the level
of sub sectors, end-uses and
mode of transport.

Source: https://www.odyssee-mure.eu/publications/other/odex-indicators-database-definition.html

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 Part A2

ENERGY EFFICIENCY MANAGEMENT

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Financial and Managerial accounting

Performance
measurement

Financial accounting (FA) focuses on external reporting that is directed by authoritative guidelines. Organisations are required
to follow these guidelines in their financial reports to outside parties.

Management accounting (MA) measures and reports financial information as well as other types of information that are
intended primarily to assist managers in fulfilling the goals of the organisation. Additionally, a management accounting system is
an important facet of overall organisational control.
Source: Bhimani A., Horngren C.T., Datar S.M., Foster G. (1999). Management and cost accounting. 4th ed. Prentice Hall.

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Performance measurement

• The performance measurement literature discusses the criteria for determining good performance
indicators.

• Various studies have emphasized different characteristics of good performance indicators 1).

• The suggested characteristics include: 2)

– low measurement costs
– the relevancy, timeliness, objectivity, precision, validity, reliability, controllability and understandability of the measurement
results.
– In addition, the employees whose behaviors are being controlled should find the measure credible and the measure
should assist them in identifying and solving problems.
– Furthermore, it should be possible to adapt the measure to the organisational level, set target values for the measure, and
integrate the measure with incentive systems.

1) e.g.,
Merchant & Van der Stede, 2007; Partanen, 2007, p. 280; Järvenpää, Partanen & Tuomela, 2001, p. 186; Laitinen, 1998, p. 121; for exact references,
see ref 2
2) Adapted from several sources, see Virtanen, T., Tuomaala, M. & Pentti, E., Challenges in the energy efficiency performance measurement in the process
industry. In T. Davila, M. Epstein & J-F. Manzoni (Eds.), Performance Measurement and Management Control: Global Issues, Emerald .

March 2023
Performance measurement – definitions1)
(additional reading)
• Timeliness refers to the lag between the employee’s performance and the measurement results (and the provision of rewards).

• Objectivity means freedom from bias. Measurement objectivity is low where either the choice of measurement rules or the actual measuring are
conducted by the employees whose performances are being evaluated.

• Precision refers to the degree of randomness in the measure (Merchant & Van der Stede, 2007, p. 34). Validity means that the measures capture what
they are supposed to capture. In a valid measure the observed score should be equal to or close to the true score.

• Reliability refers to the stability of the measure (Ghauri & Grønhaug, 2010, pp. 78-79).

• The controllability principle underlies the logic guiding the design of responsibility structures. The principle states that responsibility structures should be
designed so that employees are held accountable only for what they can control. In other words, employees should neither be penalised for bad luck
nor rewarded for mere good luck. A measure is totally controllable by an employee if it is influenced only by his/her actions (Merchant & Van der Stede,
2007, p. 533).

• Merchant & Van der Stede, 2007 (pp. 34-35) also introduce an understandability criterion, which means that employees understand what they must do
to exert an effect. In the later part of the text, understandability is not discussed separately, but in connection with controllability.

• 1)For exact references, see Virtanen, T., Tuomaala, M. & Pentti, E., Challenges in the energy efficiency performance measurement in the process
industry. In T. Davila, M. Epstein & J-F. Manzoni (Eds.), Performance Measurement and Management Control: Global Issues, Emerald .

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Energy efficiency criteria from the

managerial perspective
Research results regarding Energy efficiency criteria and their ranking (+/-) 1)

• low measurement costs (+) and the relevancy (+), timeliness (-), objectivity (+),
precision (-/(+)), validity (+), reliability (+), controllability (--) and understandability of
measurement results (-)

• Credibility (-/(+)), ability to assist in identifying/solving problems (-)

• possibility to adapt the indicator on an organisational level (-), to set target values to
the indicator (--) and to integrate it to an incentive system (-)

1)Virtanen, T., Tuomaala, M. & Pentti, E., Challenges in the energy efficiency performance measurement in the process industry.
In T. Davila, M. Epstein & J-F. Manzoni (Eds.), Performance Measurement and Management Control: Global Issues, Emerald.

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Time to think!

• Imagine a pulp and paper company e.g., a paper production line.

• Imagine yourself as a person being responsible for developing energy efficiency

performance measurement system.

• What criteria (adjectives) would describe your ideal measurement system?

March 2023