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Importance of Monitoring Systems in Pilot Projects

Updated: Feb 27, 2019

When a Utility company or a large business is contemplating energy efficiency, renewable energy, demand-side management or any new form of energy technology, there is normally a previous study to evaluate the technical and financial feasibility of the project in question. When carried out by professionals, these feasibility studies provide a reliable basis for taking decisions; however, there are always assumptions and unpredictable factors that can cause differences between the predicted performance and actual results.

Utility companies and businesses often carry out smaller pilot projects to validate performance under real-world operating conditions: if the test is successful, the technology is then adopted at a larger scale. The following are some examples of projects that may follow this approach:

  • Heating Upgrades: These can be focused on energy efficiency, which would be the case when upgrading a resistance heater to a heat pump; or they can focus on renewable sources, which would be the case if a company switches from gas to biomass for its heating needs.

  • Renewable Energy Generation: There is now a broad selection of viable alternatives to traditional fossil fuels – solar photovoltaic systems, wind turbines and biomass electric generators are just a few examples.

  • Demand-Side Management: Reducing peaks in power grid demand yields benefits for both utility companies and their clients. The most promising storage technologies for small-scale applications are smart batteries and water heaters with thermal storage; and for larger scales there are options such as bulk ice storage for cooling needs, hydrogen-powered fuel cells for combined electricity and heating, and molten salt tanks to produce steam on demand.

How Monitoring Systems can be Used to Assess Financial Viability

All projects related with demand-side management, energy efficiency and renewable energy have two elements in common:

  • An initial investment and yearly maintenance costs

  • Avoided costs compared with the “business as usual” scenario

These two factors determine financial metrics such as the project’s internal rate of return, net present value and payback period, which serve as a basis for electric utilities or their clients to decide if a project is worth deploying at larger scales.

Since the initial investment and maintenance expenses are direct costs, keeping track of them is straightforward. However, the same cannot be said of the savings achieved, because they’re an avoided cost and the procedure to determine then is application-specific – it is only possible with a reliable monitoring system.

Other than for assessing financial viability, monitoring systems are useful in the following cases:

  • When claiming government incentives that are calculated based on a specific performance metric, for example total kWh output of a renewable energy system.

  • Meeting emissions reduction goals: if the carbon footprint of different energy sources is known, a company can calculate the CO2 emissions avoided by an energy efficiency or renewable energy project.

Heating Systems

When deploying energy efficient heating systems, it is necessary to answer a few questions before analyzing their financial performance over a specified time period:

  • What is the heating output in BTU? How does it match up against that of the previous heating system?

  • What has been the energy input? How does the cost of that energy compare with that of the replaced system?

These questions can only be answered by direct measurements on-site, and these measurements are only as reliable as the monitoring system that produces them. If the heating cost reduction in £/BTU is high enough to offer an attractive return on investment, the company carrying out the project can decide to deploy the technology at a larger scale.

Figure 1. Heat pumps consume from 2 to 4 times less energy than traditional resistance heaters

Logic Energy has delivered monitoring systems to assess the performance of heating upgrades carried out by various UK organizations:

  • National Trust: The heating system at the Plas Newydd Mansion, a historical building, was upgraded from an oil-based boiler to a marine-source heat pump and a Logic Energy monitoring system is monitoring key system variables, especially energy savings.

  • Strathclyde Partnership for Transport (SPT): SPT installed energy-efficient heat pumps at two of their subway stations, where one uses water-source heating and the other uses air-source heating. The goal of the project was to compare the savings potential compared with traditional heating, as well as to determine how both heat pump types match up against each other.

  • Wiltshire & Nottinghamshire Councils: Both councils have started deploying biomass heating based on wood pellet for schools in rural locations. Wood pellet has a much higher local availability than oil and can make schools more energy-independent while reducing their heating expenses and carbon footprint.

Renewable Energy

The economic benefit of a renewable energy system depends directly on the kilowatt-hours of electricity generated over a specified time period. In many applications, the system’s ability to reduce peak demand is also important:

The economic benefit of a renewable energy system depends directly on the kilowatt-hours of electricity generated over a specified time period. In many applications, the system’s ability to reduce peak demand is also important:

  • For solar and wind power, the fuel cost of each kilowatt-hour is zero; the only applicable costs are capital expenses, yearly maintenance and, in many cases, interest on a loan.

  • A fuel cost is added to the above in the case of biomass, but the raw material is normally organic waste from business operations: there is only a processing cost, as opposed to the cost of purchasing refined fossil fuels such as oil or gas.

A monitoring system allows the measurement of the exact kilowatt-hour output of renewable energy installations, and in the case of biomass it can also measure the consumption of the fuel input. The project owner can assess the performance of these systems based on the total ownership cost in £/kWh.

Figure 2. Distributed energy generation with solar photovoltaic systems

Logic Energy has installed monitoring systems for various organizations who have deployed renewable generation systems. The following are two examples:

  • Scottish Prison Service (SPS): Logic Energy has been monitoring the kWh output of rooftop PV systems at six facilities owned by the SPS.

  • National Health Service (NHS) Scotland: They have deployed solar PV systems at many of their facilities, including the Queen Elizabeth University Hospital. Project performance across multiple site is being monitored with the LeSENSE web platform by Logic Energy.

Demand-Side Management

Analyzing the financial viability of DSM measures involves a higher degree of complexity, given that DSM provides savings at the power grid scale – the nature of power grid operation requires much more variables to be measured in order to quantify economic benefits:

  • There is a mix of power plants, each with different operating costs and performance characteristics.

  • There is variability in consumption, and some generation technologies like wind and solar power also introduce supply variability.

  • Power grid operation involves operating costs and electric rates that vary by the hour, as well as variation in transmission costs depending on where energy consumption is concentrated at a given moment.

Logic Energy is participating in the RealValue project, which is funded by Horizon 2020 and led by Glen Dimplex, a manufacturer of smart heaters with thermal storage capabilities. The project consists on testing the concept of DSM with thermal storage across 1200 households in Ireland, Germany and Latvia, and Logic Energy is carrying out two key roles:

  • Data measurement and aggregation, which provides the input for a control system by Intel and also for a web dashboard that allows the utility company, SSE Airtricity, to visualize grid operation in real time.

  • Providing a smartphone app for homeowners participating in the project, which allows them to monitor and program smart heaters – optimization is carried out in the background, without placing schedule restrictions on the end user.

Concluding Remarks

Energy efficiency, renewable energy and DSM are three different types of investments with common goals: reducing the cost and environmental impact of energy consumption. Monitoring systems and data aggregation are a key element for validating performance, and Logic Energy brings with it the required expertise in both software and hardware to offer integrated monitoring solutions.

Answers and results from day one.

Matthew Algie

Matthew Algie is the UK's leading independent coffee roaster.

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Reducing our carbon footprint is of great importance to us. This is just one of the many ways in which we are looking to become more sustainable.

Matthew Algie & Company Ltd

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