State-of-the-art technology : Making the right decision.

Are you sure that today´s state-of-the-art technology will be competitive in a few years?

From «ESCOs, Myth and Reality» Ribes&Casado
The continuous progress of technology gives us another evidence of the virtual character of the ESCO Business model post-contract gains.

The International Space Station is featured in this image photographed by an STS-134 crew member on the space shuttle Endeavour after the station and shuttle began their post-undocking relative separation. Photo credit: NASA

Energy-saving is a relative concept. It is accepted that it is the difference between the current consumption and the former consumption of the pre-contract period. In the short/medium term, it is a reasonable way of measuring the improvements and advantages of the new system, but the reasonability of this concept is decreased as the considered term is increased.

Is it realistic to think that we are saving energy because our current incandescent lighting system is better than the former one installed during the fifties? The answer is no. The comparison between technologies is only honest when they are produced inside the same temporal context.

What happens if along the useful life of our current system emerges a brand new technology more efficient and we persist on the imperfect idea of “energy-saving” without any other consideration?

The answer is that we are supposing gains that are absolutely unreal because actually, our technology became obsolete. The reference inefficiency matters must be updated.

Making the right decision. Two learnings.

In January 2013, six months ago, a hotel manager has upgraded the incandescent indoor illumination system of the building with a brand new CFL –compact fluorescent lamp- low consumption technology.

The benefit is immediate, the monthly cost of the hotel´s traditional 5,000 light bulbs was 5,689 USD –including purchase price, installation work, and consumption-, while the monthly cost of the new CFL system is 1,915 USD. This is a monthly saving of 3,774 USD. Obviously a good business.

But now, six months after the retrofit, the manager receives a new offer of a better LED technology whose monthly cost is only 1,511 USD. The illumination characteristics of the three technologies are equivalent to the incandescent 60 watts bulbs with a warm white (2,700k) light range. In this case, CFL and LED bulbs are high-quality made.

Doubt is here. Does a new retrofit suppose any benefit right now? Let´s analyze this issue.

ConceptIncandescentCFLLED
Units5,0005,0005.000
Watts601410
Useful life (hours)1,2007,70025,000
Useful life (months)957185
Unit price (USD)0.708.0025.00
Purchase cost3,50040,000125,000
Installation work cost4,5004,5004,500
(1) Retrofit total cost8,00044,500129,500
kWh cost (USD)0.120.120.12
(2) Useful life consumption total cost43,20064,680150,000
Total cost (1+2)51,200109,180279,500
Monthly total cost5,6891,9151,511

Apparently, LED technology supposes each month an advantage of 404 USD with respect to the CFL, but this is only true when we compare a simultaneous retrofit of both technologies. Chronologically it is not our case.

In our case, the CFL retrofit purchase and installation payment of 44,500 USD has been done six months ago. So, if the retrofit useful life is 57 months, the conclusion is that for the next 51 months we only have to pay the illumination consumption. Which is strictly the monthly consumption?

ConceptIncandescentCFLLED
Monthly consumption cost4,8001,135811

Learning 1: During the next 51 months, the right comparison is CFL 1,135 USD vs LED 1,511 USD. No doubt, the smart decision is to wait 51 months until the CFL system useful life ends and then to implement the LEDs.

Furthermore, in the next years, LED technology will mature very positively in all parameters: price, useful life, and saving performance. It is perfectly foreseeable prices of 15 USD/unit for 6 watts high-quality bulbs with a useful life of 40,000 hours; in fact, the Swedish IKEA is currently offering in Europe low-cost LED bulbs with these characteristics. This future data will mean in the hotel case a monthly total cost of only 755 USD –around 50% of the present case-.

This evolution shows us another learning. Someone could think, in business terms, that six months ago the hotel manager was wrong because then the LED already was better than the CFL one; evidently, always is better to pay 1,511 USD each month than 1,915 USD. But that decision was absolutely right because in the LED 1.511 USD cost there is a hidden condition: the duty of maintaining the system for 185 months.

Seeing the LED technology maturation process –a few years ago the price was around 100 USD/unit- it is obvious that the 2013 products will probably become obsolete in 2018. So, it is easy to see that:

  • January 2013 CFL solution was the best one because having a satisfactory performance, permits in only 57 months to be refreshed by a better one –post 2018 LED-.
  • January 2013 LED solution was not the best one because its high purchase price requires of 185 months to achieve enough good savings, what means a long payback. This fact obstructs any possibility of refreshment during a long term. In our example, it means wasting money when a more mature LED technology will be accessible –supposedly in 2018-.

Learning 2: Immature state-of-the-art technologies are not competitive compared with their own future development. When long paybacks are required, to purchase new devices it is better to wait for the arrival of mature products with better price and technological performance.

Hipocresía política al cubo. El proyecto Castor.

«Hipocresía política al cubo. El PSOE recurre la indemnización por el proyecto Castor«es el título de un post publicado en Gurusblog por Guru Huky.

El que este blog se encuentre en la órbita de los partidos emergentes no le resta ningún valor a la crítica que en el citado post se hace. Es más, quitándole los acentos y ciñéndonos a los hechos que relata, conviene leerlo atentamente.

Éste es un ejemplo de libro de lo que pagamos y por qué cosas pagamos en la factura energética en España.

Anonymous Protests by Paul Williams CC BY 3.0

La idea de los almacenes estratégicos de gas está bien, pero la gestión específica del proyecto Castor no puede ser más incompetente, particularmente: 1) la concesión, en condiciones contrarias al interés público, que se hizo a la empresa adjudicataria de su explotación y 2) su declaración de impacto ambiental falta de fundamento sólido.

Naturalmente, la empresa concesionaria es todo menos tonta y así ha terminado la historia. Un gobierno encantado con la incompetencia de sus predecesores; la concesionaria también encantada. Los vecinos de Castor asustados e indignados y los españoles obligados a pagar durante 30 años dicha pifia.

Todo lo anterior es sabido, lo interesante del post de Guru Huky es que pone el dedo en el punto exacto: la hipocresía política de los responsables directos de tamaña incompetencia cuando recurren ante el Constitucional la prácticamente inevitable decisión final sobre Castor.

Aparentar, aparentar, aparentar….

Es tremendamente hipócrita este repetido paripé que trata de aparentar ante la opinión pública que el partido esencialmente responsable de este desaguisado es una organización ideológicamente contrapuesta a la del partido que le ha sucedido. Es como volver al Pacto del Pardo entre Cánovas y Sagasta en la atrasada España de finales del s.XIX. Aquí y ahora, la única disputa real es entre dos lobbies de profesionales de la política por el control del poder.

ESCOs y BEI.

Las relaciones entre las ESCOs y el BEI parecen prometedoras en el futuro

Ralf Goldmann, asesor senior del Banco Europeo de Inversiones BEI en el sector de la eficiencia energética ha confirmado en una entrevista concedida a Engerati el interés de la institución por seguir financiando proyectos de las ESCOs.

European Investment Bank Luxembourg (view from S) by Palauenc05 CC BY-SA 3.0

La clave radica en garantizar el logro efectivo de los ahorros planeados. Goldmann incluso propone el recurso a compañías aseguradoras. También incide en el desarrollo de modelos de contrato específicos, aspecto en el que coincide con las tendencias en EEUU para aplicar el modelo ESCO más allá del sector MUSH.

Los interesados en esta materia pueden consultar el Energy Lending Criteria del BEI en el que se establecen las condiciones y parámetros para acceder a la financiación de proyectos energéticos.

MUY IMPORTANTE, para saber “de dónde sopla el viento”, hay que estar al tanto de las contribuciones individualizadas al documento del BEI de los principales agentes europeos en esta materia. Estamos hablando de:

Abengoa Solar, Airbus, Alstom, APREN – Portuguese Renewable Energy Association, Areva, Asociación de Constructores Promotores de Zaragoza, Axel Hörhager (individual), Caisse des Depots, CEE Bankwatch, Central Europe Energy Partners, Centre for European Reform, Clariant, Client Earth, Climate Action Network Europe, Climate Bonds Initiative,  Committee of the Regions, CoalPro, Counter Balance, Cyprus Energy Agency, Dalkia, Dii GmbH, Direction General du Tresor, Edison, Edso for Smart Grids, Electricite de France, Electricite de France (Energy), Energy Cities, EU Ocean Energy Association,  eu.bac/eu.ESCO, EUREC Agency, EuroACE, Eurocoal, Eurogas, Eurelectric, European Economic and Social Committee, European Federation of Local Energy Companies, European Geothermal Energy Council, European Insulation Manufacturer’s Association, European Nuclear Energy Forum, European Photovoltaic Industry Association, European Renewable Energies Federation, European Solar Thermal Electricity Association, European Wind Energy Association, E3G, Food & Water Europe, FORATOM, GAMESA, Gas Infrastructure Europe, GAZ-SYSTEMS, GDF Suez, Glennmont Partners, Greenpeace, Health & Environment Alliance, Housing Europe, Iberdrola, Industry Grouping  Fuel Cells/Hydrogen Technology, Jean-Marc Jancovici (individual), Jorge Nunez Ferrer, Klima Allianz / Urgewald, Kreditanstalt für Wiederaufbau, Annex I, Annex II, Members of the European Parliament, Ministry of Energy Lithuania, Michael Grubb, Prof. (individual), National Ecological Centre Ukraine, National Grid UK, Nathalie Griesbeck (MEP), Ofgem, Oesterreichs Energie, Polish Climate Coalition, Quaker Council for European Affairs, Randall Bowie (individual), Red Electrica de Espana, RenewableUK, Réseau de transport d’électricité, Scotia Gas Network, Scottish Enterprise, Siemens, Sustainable Nuclear Energy Technology Platform, SSE, TVO – Teollisuuden Voima Oyj, Union Habitat, Ukrainian Ecological League, Wärtsilä, Westinghouse Electric, Wien Energy GmBH, World Coal Association, World Wide Fund for Nature.