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LITERATURE REVIEW1

This Activity received funding from the Department of Industry as part of the Energy Efficiency Information Grants Program.

The views expressed herein are not necessarily the views of the Commonwealth of Australia, and the Commonwealth does not accept responsibility for any information or advice contained herein.

Please note that where commercial services providers are referred in this report, this is for industry guidance only and should not be considered an exhaustive list of available service providers.

LITERATURE REVIEW

Project Code: xxxxx

Prepared by: xxxxx

Date Published: 4 October 2010

Published by: Australian Meat Industry Council Suite 2.09, Level 2 460 Pacific Highway St Leonards NSW 2065

MEAT TECHNOLOGY UPDATE

Literature Review Literature ReviewAUSTRALIAN MEAT INDUSTRY COUNCIL

amic.org.au / www.amic.com.au

Project Code: 120339

Prepared by: Energetics Pty Ltd Phuong tang, Roger Horwood and Mike Johns

Date Published: April 2013

Published by: Australian Meat Processor Corporation Ltd Suite 205, Level 2, 460 Pacific Highway, St Leonards, NSW, 2065

This Activity received funding from the Department of Industry as part of the Energy Efficiency Information Grants Program.

The views expressed herein are not necessarily the views of the Commonwealth of Australia, and the Commonwealth does not accept responsibility for any information or advice contained herein.

Please note that where commercial services providers are referred in this report, this is for industry guidance only and should not be considered an exhaustive list of available service providers.

MILESTONE 5 REPORT FOR EEIG - An engagement, extension and education program for small to medium enterprise of the red meat processing industry.

MEAT TECHNOLOGY UPDATE

LITERATURE REVIEW2

EXECUTIVE SUMMARY The Red Meat Processing Industry in Australia is faced with a wide range of challenges, including; vigorous competition among domestic retailers and international suppliers; declining resources and capability; labour shortages; changing customer and trading partner requirements; increasing regulatory pressures, and rising costs for energy, water and waste. In particular, small to medium domestic red meat processing businesses, processing in the order of 400 to 1,500 head per day (in some cases mixed species), have limited available capability, capacity and resources to proactively manage energy cost and consumption. For these facilities, it is important to understand the potential benefits of energy management best practices and technologies, and be able to benchmark the current performance against other similar facilities. There are a number of energy management practices and technologies which can reduce energy cost and improve business performance. These opportunities can be broadly split into four categories; (1) Energy efficient technologies; (2) Alternative energy systems; (3) Maintenance; and (4) Behavioural and procedural. Based on international case studies for the industrial and manufacturing sectors, energy savings of 5-15% is usually obtained quickly with little to no required capital expenditure. Dedicated programs typically result in 25-35% energy savings, and long range goals typically result in 40-50% energy savings1. Energy key performance indicators (KPIs) reported at Australian red meat processing facilities ranged from 1,400 to 6,600 GJ/tHSCW (AMPC 2011, EEO 2011). Red meat sites participating in the Federal Government’s Energy Efficiency Opportunities (EEO) Program reported energy savings ranging from 1-47% of the total assessed energy use. Energy opportunities were identified across areas such as: refrigeration, hot water service, lighting and compressed air systems. The expected energy savings for the major energy using equipment at processing facilities have been provided in this report and summarized in Table 1 and Table 2. For small to medium red meat processing facilities, energy use, opportunities and KPIs will vary significantly based on factors such as species mix, level of processing (rendering or non-rendering) and throughput. Currently, there is limited publically available data (both within Australia and internationally) with this detail. Based on these identified information gaps, it is recommended that the benchmarks for small to medium red processing facilities be expanded and developed. Some progress to bridging this information gap has been addressed in the Domestic Processors Energy Efficiency Program. This program includes benchmark data from site surveys of four small to medium red meat processing facilities and the information is contained in the two documents “An Energy Management Plan for Red Meat Processing Facilities” (AM12-5066 Domestic Processors Energy Efficiency Program, Energetics Pty Ltd, April 2013) and “Energy Consumption Guide for Small to Medium Red Meat Processing Facilities” (AM12-5066 Domestic Processors Energy Efficiency Program, Energetics Pty Ltd, April 2013)”. Expanding this dataset and analysis over time will further enable small to medium red meat processing facilities to better understand their energy use, and fully benefit from best practice energy management and technologies.

1 Capehart, B.L, et al 2008, Guide to Energy Management, 5th edition, Fairmont Press, USA

LITERATURE REVIEW3

Table 1: Energy efficient technologyEnergy efficient technologies Percentage

of site energy consumption1

Range of savings Areas for improvement

1. Refrigeration 15-30% 15-45% Reducing plant load, plant optimisation,equipment upgrade, heat recovery.

2. Thermal Energy (Hot Water and Steam)

40-80% 0-15% Boiler efficiency, Boiler blowdown, pipinginsulation, steam traps and leaks, heat recovery.

3. Lighting 3-5% 20-50% More efficient technology, lighting controls,voltage optimisation.

4. Compressed Air 3% 10% Equipment, controls, air quality and temperature.

5. High Efficiency Motors 5% 2-4% Refrigeration compressors, conveyor belts, processing equipment, hydraulic equipment, fans and pumps.

6. Variable Speed Drives (VSD) 2-5% 25-40% Pumps, fans and compressors.

1 Includes electrical and thermal energy from gas, oil or coal. 2 $2-3/W covers a wide range of kW sizing and other factors influence the cost, more than the kW size of installation. 3 The capital costs of methane capture and co-generation are highly variable. For example, a 330 kW methane fuelled generator which saves

$170,000 p.a. in electricity purchases (plus $60,000 p.a. in Renewable Energy Certificates) (REC’s) has a capital cost of $700,000. (Source: Red Meat Processing Industry Energy Efficiency Manual). See section 7 for more detailed cost breakdown.

Table 2: Alternative energy systems Alternative energy systems Capital Costs Typical Payback Areas for improvement 7. Renewable energy Technology manufacturer (low cost,

low performance vs higher cost, higher performance), sitting and positioning of equipment to maximize energy generation, maintenance.

7.1 Solar PV $2-3/Wp2 2-7 years7.2 Solar hot water $2/Wt 5-7 years7.3 Wind energy $2-3 Million/MW 5-10 years

8. Biogas capture and reuse Note3 6 years Optimising biogas generation in the AD system, biogas cleaning to remove impurities, biogas leaks or losses, maintenance.

9. Cogeneration

$1000-2000/kW(electric)

>2 years (biogas)> 5 years (natural gas)

System sizing (matching outputwith demand to avoid oversupply of energy), maintenance.

LITERATURE REVIEW4

TABLE OF CONTENTS

INTRODUCTION 6

Part A: Benchmarking and Best Practice Energy Management 7

1. Key challenges facing Small to Medium Red meat processing facilities 7 1.1. Cost of Energy 7 1.2. Cost of carbon 8 1.3. Aging equipment and rising maintenance costs 9 1.4. International competitiveness 9 1.5. Increasing environmental pressures 9 2. Best Practice Energy Management 10 2.1. Overview of best practice 10 2.2. Developing a site based energy management plan 12 2.3. Barriers to implementing energy efficiency initiatives and adopting an energy management plan 12 3. Key factors determining energy use and potential savings 14 3.1. Energy profile 14 3.2. Operating parameters which influence energy use 15 3.3. Energy Efficiency Opporunities 16 4. Energy Key Performance Indicators 17 5. Assessing energy efficiency opportunities 19 5.1. Benefits of energy projects 19 5.2. Financial tools for evaluating projects 19 6. Grants and financial incentives 20 6.1. Funding - The Clean Technology Investment Program (CTIP) / clean technology food and foundries investment program (CTFFIP) 20 6.2. Energy Saving Certificates - NSW Energy Savings Scheme (ESS) 20 6.3. Energy Saving Certificates-Victorian Energy Efficiency Target (VEET) scheme 20 6.4. Clean Energy Finance Corporation (CEFC) 21 6.5. Other 21

Part B: Energy Efficiency Options for the Red Meat Processing Industry 22

1. Refrigeration 22 1.1. Summary 22 1.2. Reducing refrigeraton plant load 23 1.3. Variable Head Pressure Control 23 1.4. Automated Compressor staging and capacity control 23 1.5. Variable speed fans 24 1.6. Defrost Management 25 1.7. Component upgrade or replacement 25 1.8. Heat Recovery from condensers or cooling towers 26 2. Thermal Systems (hot water service and steam) 28 2.1. Thermal Systems- Improving the combustion efficiency of steam boilers 28 2.2. Thermal Systems- Optimising blow down 29 2.3. Thermal Systems - capturing heat from boiler exhaust 29 2.4. Thermal Systems - Pipe sizing, routing and leakage 29 2.5. Thermal Systems- Steam Traps 30 2.6. Thermal Systems- Condensate Recovery 30 3. Lighting 31 3.1. Lighting- Upgrade to energy efficient technologies 31 3.2. Lighting Controls 32 3.3. Voltage Reduction 32 3.4. Reduced heat load 32

LITERATURE REVIEW5

4. Compressed air 33 4.1. Efficient Equipment 33 4.2. Controls 33 4.3. Leak reduction and usage 34 4.4. AIR Quality and Temperature 34 5. High efficiency motors and variable speed drives 35 5.1. High Efficiency Motors 35 5.2. Variable Speed Drives (VSD) 35 6. Renewable energy 36 6.1. Solar Photovoltaic (PV) 36 6.2. Solar Hot Water 36 6.3. Wind Power 37 7. Biogas and methane capture 38 7.1. BIOGAS Flaring 38 7.2. Fuel replacement in burners (from LPG to Biogas) 38 8. Cogeneration 41 9. Demand management 42 9.1. Demand Charges 42 9.2. Power quality 42

APPENDICES 43

1. Acronyms 43 2. Tools 43 3. Financial Evaluation 44 3.1. Simple Payback Period 44 3.2. Net Present Value Method 44 3.3. Internal rate of return 45

REFERENCES 46

LITERATURE REVIEW6

INTRODUCTION 1. BACKGROUND The Red Meat Processing Industry in Australia is faced with a wide range of challenges, including; vigorous competition among domestic retailers and international suppliers; declining resources and capability; labour shortages; changing customer and trading partner requirements; increasing regulatory pressures, and rising costs for energy, water and waste.

In particular, small to medium domestic red meat processing businesses, processing in the order of 400 to 1,500 head per day (in some cases mixed species), have limited available capability, capacity and resources to proactively manage energy cost and consumption. In recognition of this knowledge and resource gap, the Australian Meat Processor Corporation (AMPC) developed the ‘Domestic Processors Energy Efficiency Program (DPEEP)’ involving two main phases.

Phase one involved an energy efficiency benchmarks and technologies literature review, and an energy assessment at several small to medium red meat processing facilities in New South Wales. Phase two, which is planned to commence in the second half of 2013, involves demonstration of the most innovative and replicable energy efficiency initiatives at a number of small to medium size facilities. This document is the literature review report for phase one of the DPEEP.

2. METHODOLOGY The aim of this literature review is not to duplicate existing material, but to consolidate and update the numerous energy related publications to make it relevant for small to medium red meat processors in Australia. The key sources of publically available data which were reviewed include:

• Energy Efficiency Opportunities Program (EEO) public report 2011 for Cargill Australia, Teys Bros and JBS Swift;

• Existing research and reports by red meat industry bodies in Australia, including Australia Meat Processor Corporation (AMPC), Meat & Livestock Australia Limited (MLA) and Red Meat Innovation; and

• Energy efficiency manuals and tools from Energy Efficiency Exchange and eco-efficiency websites.

The diagram below shows the sphere of influence in the red meat processing industry. The outer circle represents the operating factors which impact the industry, including energy, carbon, water, wastewater, nutrient, health standards, environmental protection and animal protection. The inner circle represents the red meat supply chain, including the feedlot, farms, red meat processing, suppliers, retailer and distributors. This literature review is focused on the energy use at the processing site; however, it is expected that a full life cycle analysis would uncover further energy efficiency opportunities across the red meat supply chain.

LITERATURE REVIEW7

Figure 1: Red Meat Processing Industry sphere of influence

PART A: BENCHMARKING AND BEST PRACTICE ENERGY MANAGEMENT 1. KEY CHALLENGES FACING SMALL TO MEDIUM RED MEAT PROCESSING FACILITIES 1.1. COST OF ENERGY The primary sources of energy used at small to medium red meat processing facilities are electricity, natural gas and liquefied petroleum gas (LPG). A summary of the energy costs and fuel types is illustrated in Table 3. Note that these costs are based on sites in NSW and actual energy costs will vary with each facility.

Table 3: Cost of energy Source: AMPC DPEEP 2012Type of energy cost Range of energy costs (based on site surveys in NSW) Average electricity cost ($/MWh)1 160-190Electricity (c/kWh) Peak LPG ($/L)

10-13 / 10-13 / 3-44 /Shoulder/Off-peak 0.68-1.35

Natural gas ($/GJ) 8-14

There are major changes occurring in the Australian energy market which will affect future electricity and gas prices. Electricity prices over the short-to-medium term will be affected by:

• The Carbon Pricing Mechanism; • Reduced energy demand energy due to factors such as: lower economic growth, and government policies

to improve energy efficiency and increase renewable energy generation; • Network costs, which are around one third of the electricity bill, are stabilizing and therefore flattening the

overall electricity prices.

The following chart shows the projected increase in electricity costs for an example site in New South Wales. Electricity prices have rapidly escalated in the last 3 years and it is expected that prices will stabilise and stay relatively flat for the following 2 years due to the factors listed above.

1 Average electricity price based on total invoiced cost at the plant surveyed under phase one of the DPEEP (includes other charges such as metering charges)

LITERATURE REVIEW8

Figure 2 Projected increases in electricity costs (NSW) Source: Energetics 2012

Gas prices are expected to rise due to the rapid increase in Liquefied Natural Gas (LNG) exports, primarily to Japan and Korea. LPG pricing follows the trend in crude oil prices and is independent of natural gas pricing. Currently there is a surplus of LPG in Australia, leading to price stabilisation. The following chart shows that projected increase in wellhead gas prices.

Figure 3 Projected increases in gas prices Source: Energetics 2012

1.2. COST OF CARBONUnder the Carbon Pricing Mechanism (CPM) introduced in July 2012, red meat processing facilities with greenhouse gas emissions over 25kt CO2 have direct liabilities for the Scope 11 emissions produced by the facility. The first three years is based on a fixed price starting at $23/tonne, and a cap and trade scheme will commence after the year 2015. It is estimated that only the largest 10-12 red meat processing facilities are permit liable under the CPM based on the current 25kt threshold. Therefore small to medium red meat processing facilities are not directly liable for their Scope 1 emissions, however the indirect costs are felt due to other emission sources across the supply chain. These include: increase energy bills (as large, permit-liable energy generators and suppliers pass the cost of the CPM onto customers), nitrous oxide emissions from fertilisers used for feed, increased transport and retail distribution costs.

1 Scope 1 emissions are the release of greenhouse gases into that atmosphere as a direct result of an activity, or series of activities that constitute a facility. Examples include stack emissions from on-site boiler plant, fugitive methane emissions from waste water treatment systems, and transport fuels.

This Activity received funding from the Department of Resources, Energy and Tourism as part of the Energy Efficiency Information Grants Program.

Disclaimer: The views expressed herein ar 11 eht fo sweiv eht ylirassecen ton eCommonwealth of Australia, and the Commonwealth does not accept responsibility for any information or advice contained herein

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1.2. COST OF CARBON

1.3. AGING EQUIPMENT AND RISING MAINTENANCE COSTS

1.4. INTERNATIONAL COMPETITIVENESS

1.5. INCREASING ENVIRONMENTAL PRESSURES

LITERATURE REVIEW9

1.3. AGING EQUIPMENT AND RISING MAINTENANCE COSTS The cost of operating and maintaining equipment within red meat processing facilities will continue to escalate as the equipment ages.

1.4. INTERNATIONAL COMPETITIVENESS The Australian red meat industry is heavily export dependent and therefore factors such as the foreign exchange rate, international market access, availability of labour and inputs costs (i.e. energy, wages, etc) greatly impact upon the industry ability to compete with other export countries such as Brazil, Argentina and the United States. These factors have the greatest impact on the large multinational red meat processing facilities and larger domestic plants with export licenses.

The small to medium facilities servicing the domestic market are less exposed to macro-economic factors such as international market access and the exchange rate, however these facilities compete alongside the large multinationals in terms of securing and retaining labour and controlling other inputs costs. This study focused on red meat processing facilities serving the domestic market, however data was gathered from some plants with export licenses in order to expand the dataset.

1.5. INCREASING ENVIRONMENTAL PRESSURES The red meat processing industry is faced with increasing environmental pressures such as: stricter wastewater discharge quality requirements; tighter greenhouse gas emission regulations; and greater consumer and community expectations relating to sustainable red meat production and processing systems.

1 Scope 1 emissions are the release of greenhouse gases into that atmosphere as a direct result of an activity, or series of activities that constitute a facility. Examples include stack emissions from on-site boiler plant, fugitive methane emissions from waste water treatment systems, and transport fuels.

LITERATURE REVIEW10

2. BEST PRACTICE ENERGY MANAGEMENT 2.1. OVERVIEW OF BEST PRACTICE Energy management is the efficient and effective use of energy to reduce costs and increase profitability. Effective energy management can also drive improved business performance through its effect on production, operations, maintenance and environmental issues.

Understanding the energy usage and setting metrics/KPIs is useful to determine best practice performance. The document “An Energy Management Plan for Red Meat Processing Facilities” (AM12-5066 Domestic Processors Energy Efficiency Program, Energetics Pty Ltd, April 2013) and “Energy Consumption Guide for Small to Medium Red Meat Processing Facilities” (AM12-5066 Domestic Processors Energy Efficiency Program, Energetics Pty Ltd, April 2013) provides guidelines for energy KPIs, benchmarks, and calculating energy consumption.

Best practice principles in energy management include:

Figure 4 illustrates the evolution of energy management practices within a small to medium meat processing facility. At the lowest level of energy management practices, the site is focused on cost cutting. This ad hoc and short term savings approach to energy cost cutting results in a roller coaster ride as show below.

Figure 4: Ad-hoc energy management approach

At the highest level of energy management practices, the site systematically integrates energy management into their business and continuously looks for opportunities. This leads to sustained and increasing savings.

4 Strong commitment from management

4 Integrating energy management principles into day to day operations

4 Appropriate resourcing or contractors to identify and implement energy saving projects

4 Setting energy key performance indicators (KPIs) and targets

4 A commitment from the site to achieve energy KPIs and targets

4 A good understanding of the potential opportunities on the site for energy improvements

4 Continuous improvement in metering, tracking, and reporting systems

4 Effective communication and site wide understanding and engagement on energy issues



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LITERATURE REVIEW11

Figure 5: Integrated energy management approach

Table 4 Evolution of energy management practices

Level 1: Cost cutting • The Plant is ageing and a combination of old and new equipment with processing

operations grown in size to meet production levels. • Low levels of staff experience in respect of energy management. • There is no co-ordinated approach to reducing energy costs.

Level 2: Aware • Awareness of the energy consumption of the plant on a monthly basis. • Understanding of energy consumption of key processes and equipment. • Production meetings start to review energy costs.• Site Engineer undergoes training on energy basics.

Level 3: Basic Systems • Reports are generated with energy data. • Improved sub-metering of major energy consuming areas, processes and equipment. • Equipment surveys done and lists of improvement opportunities. • Equipment replacement and maintenance schedules.

Level 4: Effective Systems • Energy improvement targets as set. • Defined budget for equipment replacement and long term plan. • Site operators trained and sites energy reports are visible/communicated.

Level 5: Continuous Improvement • Site has a culture of continuous improvement. • Energy targets and actions to achieve targets are a key business deliverable. • Public reporting and communication to customers on the achievements made. • Assess alternative energy options.

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LITERATURE REVIEW12

A more detailed assessment of this case study is provided in “An Energy Management Plan for Red Meat Processing Facilities” (AM12-5066 Domestic Processors Energy Efficiency Program, Energetics Pty Ltd, April 2013)

2.2. DEVELOPING A SITE BASED ENERGY MANAGEMENT PLAN The key steps in developing a site based energy management plan are as follows:

1. Understanding your energy usage and cost 2. Review your energy management systems 3. Develop an energy management improvement plan 4. Understand energy use and key opportunities 5. Implement and track energy improvements

For further details on each step and an example template EMP, refer to the document “An Energy Management Plan for Red Meat Processing Facilities” (AM12-5066 Domestic Processors Energy Efficiency Program, Energetics Pty Ltd, April 2013).

2.3. BARRIERS TO IMPLEMENTING ENERGY EFFICIENCY INITIATIVES AND ADOPTING AN ENERGY MANAGEMENT PLAN Attaining endorsement of an energy management plan and implementing energy efficiency initiatives can require overcoming a range of barriers. The potential barriers and example actions to overcome these barriers are detailed in the tables below.

See “An Energy Management Plan for Red Meat Processing Facilities” (AM12-5066 Domestic Processors Energy Efficiency Program, Energetics Pty Ltd, April 2013) for more details.

CASE STUDY: CARGILL

Cargill Beef in the US have endorsed a number of best practice energy management principles including a strong commitment from management, integrating energy management into day to day operations, and a commitment from the site to achieve energy efficiency goals and targets. A number of these principles can be applied to smaller meat processors, including:

• Setting goals to improve energy with defined targets;

• Improving energy reporting systems and engaging employees on site;

• Investing in energy efficient technology.

Financial savings from deploying energy efficient technologies A small meat processing site in New South Wales (~10,000 tHSCW p.a) with rendering facilities has ageing refrigeration compressors systems. Refrigeration is 15% of the site’s total electrical costs. A recent audit discovered that upgrading the compressor system to current technologies could deliver $70K p.a cost saving and an additional $20K in energy saving certificates, which resulted in a three year payback period.

LITERATURE REVIEW13

Table 3: Overcoming barrier to adopting an EMP Potential barrier to adopting an EMP Actions to overcome barrierManagement commitment Provide management with facts, statistics and charts to obtain

their commitment on the energy management plan. Discuss the competition and what they are doing

No designated energymanagement coordinator orenergy manager

If a full time energy management coordinator is not feasible, create an energy management committee

Table 4: Overcoming barriers to energy efficiency initiatives Potential barrier to energy efficiency initiatives

Actions to overcome barrier

Lack of capital Look for external sources of funding such as capital grants, third party investment, loans and leases

Projects not having the required payback period.

Double check inputs to financial model including baseline energy consumption, energy tariffs, energy price inflation, equipment purchase and installation costs. Work with someone in your accounts team to ensure you have developed the business case correctly.

Include other project benefits such as improved marketing and consumer preferences.

Lack of time and human resources Involve suppliers, customers, industry associations and specialist consultants to assist you in developing your project and the business case behind it.

Staff awareness, training and lack of management support.

Develop an Energy Management Plan. Discuss energy efficiency initiatives at regular management meetings. Nominate energy champions to raise awareness levels amongst other staff and implement the Energy Management Plan and be accountable to achieving targets in relation to energy efficiency.

LITERATURE REVIEW14

3. KEY FACTORS DETERMINING ENERGY USE AND POTENTIAL SAVINGS 3.1. ENERGY PROFILE The primary energy sources at red meat processing facilities are electricity and natural gas. Electricity is used for refrigeration, compressed air and lighting. Natural gas and LPG is used for the hot water and steam systems. Some sites may also use other fuels such as coal and biofuels.

The average industry split of energy by source is shown in the figure below. The actual energy sources and breakdown will differ between sites.

Figure 6: Industry split of energy by source Source: AMPC 2010

For example, small to medium sized facilities will have less energy sources (primarily using electricity, natural gas and LPG), and the energy breakdown will be different for rendering and non-rendering sites (rendering sites will use more natural gas/LPG/coal due to the additional steam required for the rendering process and wash down activities).

For more details on the energy profile for small to medium sized facilities, refer to the “Energy Consumption Guide for Small – Medium Red Meat Processing Facilities” (AM12-5066 Domestic Processors Energy Efficiency Program, Energetics Pty Ltd, April 2013).



3. KEY FACTORS DETERMINING ENERGY USE AND POTENTIAL SAVINGS 3.1. ENERGY PROFILE

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Electricity31%

Natural gas37%

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Biofuels6%

Fuel oil%%%5

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Diesel %%%1 Unleaded

petrol0%

LITERATURE REVIEW15

3.2. OPERATING PARAMETERS WHICH INFLUENCE ENERGY USE Energy use is influenced by factors such as: the type of species processed, the throughput, the extent of rendering activity, the amount of refrigeration and the level of further processing.

Figure 6: Key factors which impact energy use at red meat processing sites

The key factors that impact energy use are shown in the Figure 6 and described below.

• Location – Each state has different regulations and electricity tariffs which will impact energy cost • Ownership – Internationally owned companies tend to drive energy targets and KPIS from the corporate head

office down to the facility • Market – Meat for the export market will require more energy for chilling/freezing to extend the shelf life and

enable transportation • Species - Cattle and sheep abattoirs tend to need significantly less hot water than pig plants. Sheep processing

generally uses less than pigs or cattle principally because; the animal is less bulky and less energy is required for chilling; Sheep meat is not normally aged for as long; less processing is required for stomachs; and many sheep companies ship a lot of their product out as whole animal.

• Age of facility – Technology improvements has significantly reduced energy consumption of the equipment • Throughput – Total energy use will increase with production • Increased processing level – Facilities which have more processing (such as on site rendering, producing high

value meat) will use more energy due than those which do not Further detail can be found in the Energy Consumption Guide for Small – Medium Red Meat Processing Facilities (AM125066 Domestic Processors Energy Efficiency Program, Energetics Pty Ltd, April 2013).



3.2. OPERATING PARAMETERS WHICH INFLUENCE ENERGY USE

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3.3. ENERGY EFFICIENCY OPPORUNITIES Based on international case studies, typical energy savings of 5-15% is usually obtained quickly with little to no required capital expenditure. Dedicated programs typically result in 25-35% energy savings, and long range goals typically result in 4050% energy savings1.

For small to medium red meat facilities, there is limited public data on the energy savings identified or implemented. However, the federal Energy Efficiency Opportunities (EEO) Program provides an indication of the potential energy opportunities in the red meat sector. As shown in the figure below, the red meat processing sites which participate in the EEO program have reported energy savings ranging from 1-47% of the total assessed energy use. Energy opportunities were identified in the refrigeration system, hot water service, lighting and compressed air. Sites also identified opportunities to capture the methane from the wastewater lagoons.

Details of energy saving opportunities specific for small to medium facilities are described in Section B and more details can be found in the document Energy Consumption Guide for Small – Medium Red Meat Processing Plants (AM12-5066 Domestic Processors Energy Efficiency Program, Energetics Pty Ltd, April 2013).

1 Capehart, B.L, et al 2008, Guide to Energy Management, 5th edition, Fairmont Press, USA 2 Capehart, B.L, et al 2008, Guide to Energy Management, 5th edition, Fairmont Press, USA3. TBA



3.3. ENERGY EFFICIENCY OPPORUNITIES

4. ENERGY KEY PERFORMANCE INDICATORS

1 Capehart, B.L, et al 2008, Guide to Energy Management, 5th edition, Fairmont Press, USA

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Figure 7: Savings identified Source: EEO public report 2010-11

Energy savings of 5-15% are usually obtained quickly with little to no required capital expenditure. These include simple actions such as fixing steam leaks or turning off equipment when not in use (lighting, motors and pumps)2.

Dedicated energy management programs typically result in 25-35% energy savings, and long range goals typically result in 40-50% energy savings3.

LITERATURE REVIEW17

4. ENERGY KEY PERFORMANCE INDICATORS Key Performance Indicators (KPIs) are useful to compare a site’s performance with similar processing facilities, and identify areas for improvement. KPIs can also be linked to staff incentive schemes and other management programs to promote improvements in energy efficiency.

Energy KPIs at a meat processing site can be determined using various metrics. These include:

• Reduction in total energy use (in percentage, GJ or kWh); • Units of energy consumed (in kWh or MJ for example) per head of livestock slaughtered; • Units of energy consumed (in kWh or MJ for example) per tonne of live carcass weight (tLCW) produced; • Units of energy consumed (in kWh or MJ for example) per tonne of dressed weight (tDW) produced; • Units of energy consumed (in kWh or MJ for example) per tonne of hot standard carcass weight (tHSCW)

produced; or, • Units of energy consumed (in kWh or MJ for example) per number of full time employees (FTE).

The most common metric used is units of energy consumed (in kWh or MJ for example) per tonne of hot standard carcass weight (tHSCW), which is a measure of the production from the kill floor in a meat processing plant, and does not indicate other processes or value adding at the site.

The figures below shows the energy KPI of various Australian red meat processing sites based on data available in previous AMPC and EEO reports. On average, sites with on-site rendering facilities have a greater energy intensity (MJ/tHSCW), that is greater energy use per tHSCW produced, due to the additional energy required for rendering. Sites processing sheep have higher energy intensity than those processing beef. The significant spread of energy KPI across the sites signifies the large impact that various operating factors have on energy use. As such, it is important to understand the operating parameters which impact energy use (refer to section 0).



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Figure 9: Comparison of energy KPI based on on-site rendering Source: AMPC 2011, EEO 2011

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Energy management best practice also involves setting internal performance targets. There is limited public information on performance targets set by red meat processing facilities. However, targets are generally driven ‘top down’ and set with a medium term date (i.e. 5 to 10 years). For example, by 2015, Cargill aims to improve energy efficiency by 5 percent; improve greenhouse gas (GHG) intensity by 5 percent; increase renewable energy to 12.5 percent of its energy portfolio; and improve freshwater efficiency by 5 percent1.

1 Cargill website, http://www.cargill.com/corporate-responsibility/environmental-sustainability/goals-actions/index.jsp

Figure 10: Comparison of energy KPI based on species Source: AMPC 2011, EEO 2011

Considerations for measuring and setting energy KPIs: • Determine several KPIs: such as electricity KPIs, gas KPIs and total energy KPIs • Energy use is generally higher for sites with rendering and sheep processing • There is a strong relationship between electricity use and production • There is a weaker relationship between gas use and production • Based on existing data at red meat sites (APMC 2011 and EEO 2011), the average Energy KPI ranges

from 2000-4400 GJ/tHSCW



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5. ASSESSING ENERGY EFFICIENCY OPPORTUNITIES 5.1. BENEFITS OF ENERGY PROJECTS There are numerous benefits that arise from energy saving projects other than energy savings and cost reductions. In some cases, the benefits can be difficult to quantify (for example, improved safety); however, they should still be mentioned and highlighted when assessing energy efficiency opportunities.

The checklist below provides guidance for identifying all the potential benefits of an energy project.

5.2. FINANCIAL TOOLS FOR EVALUATING PROJECTS Three common methods to evaluate projects are:

1. Simple Payback method; 2. Net Present Value (NPV); and 3. Internal Rate of Return (IRR).

The Appendix provides details on using these methods to evaluate a project.

4 Has the current energy consumption and operating cost of existing equipment been determined?

4 Have projections been made for energy consumption, upfront cost and operating cost of new equipment?

4 Have lifetime energy and maintenance savings comparisons been made for new versus old equipment?

4 Have environmental benefits from less greenhouse gases emissions and heat discharge been taken into account?

4 Have Energy Saving Certificates (ESCs) been applied to the project (for businesses in NSW and Victoria only)?

4 Have all internal and external funding sources been considered?

4 Have Renewable Energy Certificates (RECs) been applied to the project?

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6. GRANTS AND FINANCIAL INCENTIVES There are a number of State and Federal Government grants available for energy saving projects which may be applicable for red meat processing facilities. 6.1. FUNDING - THE CLEAN TECHNOLOGY INVESTMENT PROGRAM (CTIP) / CLEAN TECHNOLOGY FOOD AND FOUNDRIES INVESTMENT PROGRAM (CTFFIP) The CTIP/CTFFIP supports Australian manufacturers to maintain their competitiveness in a carbon-constrained economy through investment in energy efficiency capital equipment and low pollution technologies, processes and products.

The CTIP/CTFFIP programs provide grant funding over a six year period from 2011-12 to 2017-18. A total of $800 million is available for general industry under the CTIP and $200 million for the food and foundries industry under the CTFFIP.

Refer to the AusIndustry website for further information: http://www.ausindustry.gov.au/programs/CleanTechnology/CleanTechnologyInvestment/Pages/default.aspx

A number of small to medium scale red meat processing facilities have been successful in receiving grant offers under the CTFFIP. Three examples are provided below.

1. Cedar Meats will replace its boiler network with a new high efficiency boiler and heat exchanger. The project is expected to reduce the carbon emissions intensity of Cedar Meats’ boiler system by 35% and result in savings of over $60,000 in energy costs per year. The project was $400K and they received a grant of $212K.

2. Afflick Abattoirs will install solar panels and upgrade their refrigeration system. The project is expected to reduce Afflick Abattoirs’ site-wide carbon emissions intensity by 38% and result in savings of $44,000 in energy costs per year. The project was $224K and the grant was $111K

3. E.C. Throsby will install a new high efficiency burner and PLC to an existing water tube boiler. The project is expected to reduce carbon emissions intensity of E.C. Throsby’s boiler by 15% and result in savings of $46,000 in energy costs per year. The project was $116 K and the grant was $38K

6.2. ENERGY SAVING CERTIFICATES - NSW ENERGY SAVINGS SCHEME (ESS) Businesses can generate revenue from electricity saving projects by creating Energy Savings Certificates (ESCs). Under the ESS rules, one ESC represents one tonne of carbon dioxide saved through reductions in the consumption of electricity. The monetary value of one ESC is driven by the market and currently can range anywhere up to $34 per ESC.

Some projects such as lighting can be ‘deemed’ for 10 years. This means that the accrued monetary value of the certificates over the anticipated 10 year life of the project can be claimed upon project commissioning. This can significantly improve the economics of some projects such as lighting upgrades. Refer to the website for further information: http://www.ess.nsw.gov.au/Home 6.3. ENERGY SAVING CERTIFICATES-VICTORIAN ENERGY EFFICIENCY TARGET (VEET) SCHEME This scheme is similar to the NSW scheme and has only recently been introduced. Refer to the website for further information: https://www.veet.vic.gov.au/Public/Public.aspx?id=Home

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6.4. CLEAN ENERGY FINANCE CORPORATION (CEFC) The Australian Government announced that it will establish a $10 billion commercially oriented Clean Energy Finance Corporation (CEFC) as part of its Clean Energy Future Package.

The objective of the CEFC is to overcome capital market barriers that hinder the financing, commercialisation and deployment of renewable energy, energy efficiency and low emissions technologies.

The Low Carbon Australia (LCA) is now linked to the CEFC. The LCA Energy Efficiency Program provides finance and advice to Australian businesses through innovative loan and lease arrangements to catalyse investment in take-up and use of technologies and practices for achieving cost-effective reductions in greenhouse gas emissions. Refer to the CEFC website for more details: http://www.cefcexpertreview.gov.au/content/Content.aspx?doc=home.htm 6.5. OTHER There are other funding schemes which are also applicable to meat processing sites. This includes the NSW OEH Sustainability Advantage Program which provides services such as subsidised energy audits. In addition, the Sustainability Victoria’s Smarter Resources, Smarter Business Program provides various business and investment support.

Refer to the websites for more details: http://www.environment.nsw.gov.au/sustainbus/sustainabilityadvantage.htm http://www.sustainability.vic.gov.au/www/html/3528-smarter-resources-smarter-business-program.asp

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PART B: ENERGY EFFICIENCY OPTIONS FOR THE RED MEAT PROCESSING INDUSTRY 1. REFRIGERATION 1.1. SUMMARY Refrigeration systems are the largest user of electricity in meat processing plants and can make up between 15-30% of total energy consumption (NSW OEH 2011). Total energy savings of 15-45% can be expected depending upon the type of initiative undertaken (NSW OEH 2011). The most common energy efficiency initiatives undertaken at refrigeration systems at red meat processing facilities are detailed in Table.

Table 8: Refrigeration opportunities and savings Source: NSW OEH 2011Energy efficiency initiative Energy saving technology Plant savings % 1. Reducing the load on the plant Variable room temperature controls 0% -2 %

Reducing cooling load 10%2. Optimisation of refrigeration plant controls

Variable plant pressure control 3% - 12%Compressor staging and capacity control 5% - 15%Remote optimisation of refrigeration plant 5% - 8%Variable evaporator fan speeds 0% - 2%Defrost management 2% -3%

3. Improving system efficiency Plant design review 2% - 10%4. Heat recovery Heat recovery 0% - 2%

A remarkable difference can be observed for the technologies used in refrigeration across the industry. The two main types of refrigeration plants are Freon plants and Ammonia plants:

Freon Plants – Commercial Refrigeration

Small to Medium Sites Facilities that employ Freon refrigeration systems typically have several systems located throughout which serve different cooling tasks. This is because they are acquired at low cost and can easily be added to suit expansion or changing requirements.

Freon is a synthetic refrigerant that has a high global warming potential.

Systems not very energy efficient (Ammonia as a refrigerant is greater than 30% more efficient) and do not lend themselves easily to improvements.

These systems can be up to 20% less expensive than other refrigeration plant.

Ammonia Plants – Industrial Refrigeration

Medium to Small Sites Facilities that employ Ammonia refrigeration plant have a single centralised plant.

Ammonia has an increased safety and toxicity risk but also has a global warming potential of zero.

Systems are able to achieve high energy efficiencies due to the properties of the refrigerant and potential for better control in a centralised system.

Good potential for plant upgrades or extensions but require significant capital compared to adding an additional small Freon system where the cooling is required.

Energy efficiency of existing plant can be significantly improved through further optimisation.

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1.2. REDUCING REFRIGERATON PLANT LOAD Reducing the cooling requirements of refrigeration plant is an effective way of reducing power consumption. Carcass cooling and freezing at red meat processing facilities can account for up to 80% of the total load on the site’s refrigeration plant, with the residual load stemming from other sources such as the building, lights and opened doors.

Energy Saving Actions Opportunities to reduce the load include:

• Ensure doors in refrigeration areas are shut and there is no unnecessary lighting. • Use air to air heat exchangers to pre-cool the incoming fresh air in areas such as boning rooms. • Avoid overcooling product where possible, but check with food safety standards to ensure compliance is

maintained.

Potential Savings 0-10%

1.3. VARIABLE HEAD PRESSURE CONTROL Variable plant pressure control is a strategy which aims to improve a plant’s energy efficiency by optimising both the head pressure and the intermediate stage (inter-stage) pressure of the refrigeration plant, based on instantaneous plant load and ambient conditions.

Energy Saving Actions In a conventional plant, head pressure is fixed and the plant control system attempts to maintain head pressure to the predetermined fixed value. Variable head pressure control (VHPC) aims to optimise the head pressure of a refrigeration plant at any given time while taking into account operational factors such as minimum compression ratios and oil separation as well as variables such as ambient conditions and plant load. When head pressure is optimised, the combined power consumption of the high-stage compressor and the condenser fan is minimised. The savings that can be achieved due to variable head pressure control for a typical cold storage application as shown in Table 9.

Potential Saving 3-12%

Table 9: Percent saving of high stage compressor power consumption Fixed Head Pressure % saving (compared to a system with fixed head pressure settings) 25 Degrees Celsius 9-12% 30 Degrees Celsius 20-25% 35 Degrees Celsius 30-35%

1.4. AUTOMATED COMPRESSOR STAGING AND CAPACITY CONTROL Most large scale industrial refrigeration plants use several compressors. In most cases, the system controlling the compressors maintains and controls capacity without necessarily optimising efficiency. Savings can be achieved by using variable speed drives (VSDs) to modulate the capacity of a compressor, staging compressors and installing capacity control logic.

Energy Saving Actions • Multiple screw compressors running at part load is inefficient due to slide valve control. • The alternative to slide valve control is to use a variable speed drive (VSD) to modulate the capacity of a

compressor. • An automated staging system progressively turns multiple compressors ON or OFF based on suction

pressure. • Potential savings achievable by automated compressor stage and control are expected to be 5-15%.


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The following two case studies highlight the energy savings that can be achieved in the refrigeration systems:

1. Meat processing site in regional NSW The site replaced multiple air cooled Freon racks to refrigerate 10 chiller rooms with a more efficient,

water-cooled ammonia plant. The energy savings were 231MWh. 586 ESCs were created, generating $11,413 ESC income for the site within 3 months. A further estimated $27,184 in ESC income over 10 years is available if energy savings can be shown to have been maintained.

2. G.M Scott, NSW G.M Scott is a privately owned meat processor and the largest employer in Cootamundra, NSW. The

abattoir processes 3,500 lambs and 200 cattle daily. Several energy efficiency upgrades to both the ammonia and R-404a refrigeration plants at G.M. Scott were identified. The project is a prime example of smarter controls to achieve optimum energy efficiency.

1.5. VARIABLE SPEED FANS Conventional fan-coil evaporators consist of fans that operate at fixed-speed and turn on and off as required. These fans can be replaced with electronically commutated fans which vary their speed according to demand. The evaporator fan motor is also an additional refrigerant heat load, therefore minimising fan operation will reduce the cooling requirement in the space.

Energy Saving Actions • Lower fan speed results in less heat being introduced to the cool room. • Reducing the fan’s speed by 20% will reduce its energy consumption by 50%. • The achievable annual savings are expected to be up to 2%.

Potential Saving up to 2%

Example calculation: A red meat processing facility has a large cold store which draws large and constant electrical load, even when the cooling requirement is low. The site plans to install variable speed fans for the fan-coil evaporators, so that the fan speed matches the load and therefore reduce the overall power consumption. The Fan has a 50kW motor which runs 50% of the time at full speed.

The implementation of a VSD would enable the fan to run continually at 50% of the speed.

Run fan at 50% fan speed = (50%)^2 * 50 kW = 12.5 kW

Hours of operation = 24 hours x 365 days a year = 8760 hours/year

Before project = 50 kW * 8760 hrs/year * 50 % = 219,000 kWh

After project = 12.5 kW * 8760 hrs/year = 109,500 kWh

Assuming electricity costs of $0.2/kWh, the energy cost savings = 109,500 x 0.2 = $21,900 per annum

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1.6. DEFROST MANAGEMENT Most facilities have cool rooms or freezer rooms that use fan coil evaporator units. Over time, ice forms on these coils and condensate trays due to airborne moisture. Improved defrost methods and management can significantly reduce the energy requirement to defrost evaporator coils and remove any ice build-up.

Energy Saving Actions

• Electric heating is not a cost-effective method to defrost coils. Hot gas, air or water defrost are other methods to mitigate the use of electric heating elements.

• Too much defrosting result in too much heat being needlessly introduced into the room. This can be reduced by frost sensors and the implementation of appropriate control logic.


Example calculation:

A freezer store with a maximum load of 500 kW operating 24/7/365 at an average load of 50% and an average energy cost of $0.20 per kWh will yield energy savings of approximately 100,000 kWh/year or $20,000 following implementation of a sound defrost management strategy. This is based on the assumption that the defrosting is either done by hot gas or electricity.

1.7. COMPONENT UPGRADE OR REPLACEMENT The overall refrigeration system efficiency is a function of the efficiency of the individual components, the system design, component selections and the plant’s control logic.

Energy Saving Actions Examples of component upgrade or replacement are: • Replacement of motors on refrigeration fans and compressors with high-efficient models will usually have

very attractive project paybacks. • Replacing degraded screw compressors. A degraded compressor may be an old or poorly maintained

compressor that indicates a poor efficiency in performance reviews. • Combine existing refrigeration systems to increase overall system efficiency. • Generously sized condensers operating at full capacity to allow minimum discharge pressures can result in

more efficiency gains than an attempt to reduce fan energy use. Reducing the fan energy use can result in high discharge pressures and higher compressor energy consumption. As a rule of thumb, the efficiency of a compressor increases by about 2.5% to 3.5% per ºC reduction in condensing temperature.

• Increasing plant suction pressures will significantly improve the overall system efficiency. The efficiency of a compressor in an industrial ammonia refrigeration system increases by about 3.5% per ˚C in evaporative temperature. Shifting the load on the plant by running a higher suction pressure during off-peak hours will reduce overall energy consumption and costs and avoiding demand peaks by intelligent shifting of load. Load shifting is a cost effective strategy, particularly as peak electricity consumption and demand costs are reasonability high.

• Removal of plant bottlenecks can enable the plant to operate at lower discharge pressures or higher suction pressures. Bottlenecks can occur in items such as heat exchangers, suction lines or other devices configured or in a condition such that there is a design flaw which must be overcome by running the refrigeration plant inefficiently. Potential Saving 2-10%

No Frost Normal Frost Normal Frost Excessive Frost

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1.8. HEAT RECOVERY FROM CONDENSERS OR COOLING TOWERS Heat removed from refrigerated areas in red meat processing facilities is released into the environment via air-cooled condensers or cooling towers. This heat can be recovered and used for other heating purposes such as hot water generation.

Energy Saving Actions • The recovered heat can be used for hot water generation and provides a way to off-set gas consumption of

existing hot water generators. • On screw compressors, optimum heat recovery is achieved through de-superheating and oil heat recovery.

These are detailed below. Note that this opportunity is only available for ammonia plants.

De-superheating Installation of heat exchangers in the common discharge pipe of the compressors can be used to de-superheat the compressor discharge gas.

A site with relatively less demand for heat recovery and higher electrical tariffs ($/kWh) is better suited to adopting a low stage de-superheater. Conversely, a site with greater heat recovery demand for heat recovery and lower electrical tariffs ($/kWh) is better suited to adopting a high stage de-superheater.


Disclaimer: The views expressed herein ar 92 eht fo sweiv eht ylirassecen ton eCommonwealth of Australia, and the Commonwealth does not accept responsibility for any information or advice contained herein.

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1.8. HEAT RECOVERY FROM CONDENSERS OR COOLING TOWERS

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Balance line Hot water

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Heat recovery system with low stage de-superheaters

Figure 7: Schematic of heat recovery system with low stage de-superheater Source: NSW OEH 2011

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Screw Compressor Oil Heat Recovery Screw compressors feature an oil recirculation system which provides lubrication for the compressor and cools down the refrigerant gas as it is being compressed. A significant amount of heat can be recovered from the oil by installation of additional oil cooler, in series with the existing oil cooler.

Note that extra oil cooling cannot be applied to reciprocating compressors.

As a rule of thumb, about 10-15% of the refrigeration load the plant is operating on can be recovered via heat recovery and depends on; the plant requirements for hot water; the refrigeration systems load; and the hot water storage capacity.



For a low stage refrigeration load of 500kW with a suction temperature of -350C, inter-stage temperature of -20C and condensing temperature of 350C, the savings due to installation of de-superheaters and oil coolers was calculated by a refrigeration specialist to be a gas saving of 1,670 GJ/year and a power saving of 23,000 kWh/year. This translates to gas savings of $10,020 p.a and power of $42,000 p.a. The payback was less than 4 years with a capital cost of $47,000.

Source: OEH Energy Saver Technology report

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2. THERMAL SYSTEMS (HOT WATER SERVICE AND STEAM) Thermal energy in the form of steam and hot water accounts for a significant portion (40% - 80%) of energy consumption at small to medium red meat processing facilities. 2.1. THERMAL SYSTEMS- IMPROVING THE COMBUSTION EFFICIENCY OF STEAM BOILERS Energy Saving Actions The boiler efficiency is a measure of the heat input into the boiler and how much heat is contained in useable steam. Boiler efficiency is typically best at 85% with most ranging from range from 75% to 85%. Potential Savings 10%

Economiser 4%

6% Condensate return

55% Useful steam 15% Insula�on loss & leaks

2% Blow-down

3% Structure losses

Flue loss 15%

Fuel imput (100%)

Figure 14: Energy losses in a boiler

Energy Saving Actions • Review the efficiency of the boiler. • Reduce the stack losses from: (1) Maintaining excessive flue gas volume by maintaining the correct fuel/air

ratio entering the boiler and minimising high excess air. (2) Heat in flue gas, (i.e. minimise temperature). (3) Incomplete combustion of fuel (i.e. insufficient air).

Potential Savings

On well-designed natural gas-fired systems, an excess air level of 10% is attainable. An often stated rule of thumb is that boiler efficiency can be increased by 1% for each 15% reduction in excess air or 40°F reduction in stack gas temperature.

Example Calculation: Estimating boiler combustion efficiency

Before you begin to improve the efficiency of your boiler, it is important to establish your current level of combustion efficiency. The steps below demonstrate how to estimate your boiler’s combustion efficiency.

Step 1: Use an oxygen analyser to measure the oxygen (by volume) in the flue gas (e.g. portable or permanent analyser). Step 2: Measure the flue gas exit temperature using existing monitoring or a portable thermocouple. Step 3: Estimate the combustion efficiency using a boiler combustion efficiency curve.

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2.2. THERMAL SYSTEMS- OPTIMISING BLOW DOWN Energy Saving Actions Insufficient blowdown can lead to sludge build-up in the boiler and decrease the steam generation efficiency. Excessive blowdown wastes energy, water and treatment chemicals. Blowdown rates typically range from 4% to 8% of boiler feedwater flow rate, but can be as high as 10% when makeup water has high solids content. Recovering heat from the blowdown to either re-use in the process or to pre-heat boiler feedwater is also an option.

Potential Saving 2%

2.3. THERMAL SYSTEMS - CAPTURING HEAT FROM BOILER EXHAUST Approximately 15 -18 % of the energy used in a steam boiler is carried away with the exhaust gases into the atmosphere. The use of an economiser allows recovery of some of this energy from the flue gases and utilise it for heating the feed water to the boiler.

Energy Saving Actions • By fitting an economiser, fuel consumption of the boiler can be lowered thus increasing the efficiency. • Typically a 5% improvement in boiler efficiency can be expected from installing a non-condensing

economiser

Potential Saving 5%

2.4. THERMAL SYSTEMS - PIPE SIZING, ROUTING AND LEAKAGE Proper sizing of the steam piping system, ensuring adequate insulation and avoiding leaks are very important to minimise energy losses.

Energy Saving ActionsSizing and location • Steam supply lines may not take the most direct route from the boiler to the point of use.

Insulation • Uninsulated pipes result in a relatively large heat loss, which increases the amount of condensate in the

steam. Special attention should be given to flanges and valves. • Consider insulating any surface (pipe, flanges, valves etc.) hotter than 50˚. • The lagging can become ineffective if those air cells are filled with water or are crushed. • A typical uninsulated 100mm steam pipe will: lose approximately 21GJ/yr in natural gas (heating fuel), cost

$300 per meter to insulate and have a payback period of approximately 3 years for the insulation. (source www.pacia.org.au)

• Pipe insulation can save 3-13% depending on the level of maintenance on the plant (source: spirac sarco). Steam Leaks Survey your plant for steam leaks, Ultrasonic detection and thermography can assist this. Fixing steam leakage can save 3-5% depending on the level of maintenance on the plant (source: spirac sarco).


Case study: JBS Australia - Longford facility

JBS Australia upgraded its hot water ring main and insulation. The savings estimated per annum were $15,000 and 25,000 GJ in energy. This simple project had a payback period of less than 2 years.

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2.5. THERMAL SYSTEMS- STEAM TRAPS Steam traps are essential in steam distribution networks. They are used to separate steam and condensate in distribution pipe work and process equipment. If a steam trap fails, it can account for a large amount of steam wastage and thus energy wastage in a plant. Energy Saving Actions Leaking steam traps can be identified from steam plumes. Temperature measurement of trap discharge is generally only useful with traps that have failed in the closed position. Listening to the sound of trap operation is also useful with the thermodynamic types, although considerable expertise is required in interpreting the sounds. Having a steam trap maintenance program can save 10-15% on a large plant (source: spirac sarco). For a meat processing plant savings of 0-5 % are expected.


Table 10: How to identify steam trap malfunctions Trap Proper Operation Malfunctioning Disk type (impulse or thermodynamic)

Frequent opening and snapclosing of disk Rapid chattering of disk

Mechanical type(bucket)

Cycling sound of the bucket Fails open - sound of steam blowing through; Fails closed - no sound

Thermostatic type Sound of periodic discharge. Possibly no sound if light load: throttled discharge

Fails closed - no sound

2.6. THERMAL SYSTEMS- CONDENSATE RECOVERY Not recovering hot condensate back into boiler feedwater can to 6% of heat lost in the boiler and steam systems.

Energy Saving Actions Review your condensate system and estimate the amount of condensate that is returned to the boiler feedwater.

The benefits of increasing condensate return are: • Reduction in heating load by increasing feedwater heat content and reduced blowdown; • Reduction in water treatment costs by reducing raw water makeup requirements; • Reduction in the thermal load on the waste water system; and • Possible opportunity for using low pressure flash steam from the condensate. Potential Saving 0-6%

Case study: Nippon Meats, Oakley facility

Recovery of the condensate from the boning room heat exchanger has reduced heating time for hot water, thus reducing coal and natural gas consumption. Cost savings: $11,133 Energy savings: 5,753 GJ Payback period: 1 year

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3. LIGHTING Lighting typically accounts for 3-5% of total energy use but is often overlooked as an opportunity for reducing energy load and costs. Effective lighting can bring not only energy savings, but can result in productivity and safety improvements due to better illumination.

Case Study: Australian small-medium meat processing sites

Recent audits at small meat processing sites provide a good indication of the most likely opportunity areas for lighting systems:

Across most sites the common lighting technology was twin and single 36 W T8 fluorescents and metal halides with many lighting areas being manually controlled via wall mounted switches.

Retrofit of fluorescents and metal halide lighting with more efficient alternatives combined with the use of timers and sensor controls. Voltage reduction was also an option.

3.1. LIGHTING - UPGRADE TO ENERGY EFFICIENT TECHNOLOGIES There are many opportunities to improve the energy efficiency of lighting. This has become particularly cost effective in states with energy certificate schemes (NSW and VIC).

Energy Saving ActionsTable 12: Potential Lighting Savings Source NSW OEH 2012Current Technology New Lighting % Saving Years Payback Twin T8 Fluorescent New Twin T5 33% 5

LED replacement 48% 5

T5 Conversion 33% 4

Di-chroic Halogen LED 77% 2

Compact Fluorescent 77% 2

400 W Mercury Vapour 250 W metal Halide 38% 3

150 W LED 65% 5

400W metal halide 320 W Metal Halide 51% 5

150 W LED 41% 13

300 W induction 31% 11

Floodlights Metal Halide 66% 1

LED 82% 3


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3.2. LIGHTING CONTROLS Energy Saving Actions The following are lighting control energy saving options: • Dimming controls to adjust lighting levels depending on the available natural daylight; • Manual or timer switches to turn off lights when not required; • Photoelectric switches to activate lights based on sensing daylight; • Occupancy sensors to operate lights when people are present.


3.3. VOLTAGE REDUCTION Fluorescent lights are suited to voltage reduction since operating at higher than optimum voltages leads to higher energy consumption.

Energy Saving Actions Voltage reduction units are compact voltage controllers and designed for installation at the energy distribution board. Voltage reduction units can be easily installed by retrofitting into existing installations with no expensive modifications. A single unit is capable of managing multiple lighting circuits, and they can be easily integrated into existing building management systems.

Savings are quoted by manufacturers of up to 30% saving. A more conservative saving is 8%.

Implementation Cost Considerations Voltage reduction is suited to electronic ballasts and will not work on magnetic ballasts and compact fluorescents. Typical costs of volatage reduction units is $1000 installed.


3.4. REDUCED HEAT LOAD Energy Saving Actions Energy efficient lighting is very important in cooled and refrigerated areas because of the reduced heat load which means that less energy is required to condition a space. This can reduce the amount of energy used by heating, ventilation and air conditioning (HVAC) systems. The lighting technology used in air conditioned or refrigerated areas should be reviewed across the site.


A site has 100 T8 lights which draw 0.085 kWe. The site operates 10 hours x 5 days x 52 weeks a year and pays $0.20/kWh for electricity. The maintenance team proposes to upgrade to energy efficient T5 lights, which draw 0.035 kWe. The savings estimated for this simple upgrade is:

Operation hours = 10 x 5 x 52 = 2600 hours per annum Total load savings = (0.085 kWe – 0.035 kWe ) x 100 lights = 5 kWe Annual electricity savings = 5 kWe x 2600 hours = 13,000 kWh Annual cost savings = 13,000 kWh x $0.20/kWh = $2,600

Case study: Milton Meats Energy project: Installing zone switching for lighting in the plant area. Cost savings: $837 Energy savings: 17 GJ Payback period: 3 years

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4. COMPRESSED AIR Compressed air accounts for approximately 3% of site energy consumption. Compressed air systems are highly inefficient, with up to 80% of the energy lost as heat at the compressor and leaks contributing much as 20-50% of total air consumption.

Typically, 10% savings can be achieved by implementing low cost improvements with less than two year paybacks.

Case studies: Australian small-medium meat processing sites

Recent audits at small meat processing sites provide a good indication of the most likely opportunity areas for compressed air systems:

Compressors that are located close to the steam boilers and operate during production hours present an opportunity to recover waste heat and use it to pre-heat the boiler make up water.

Air compressors that are located a long distance (e.g. 25 meters) further than it should be from the process will cause an unnecessary pressure drop. Typically, however, relocation does not present an economically attractive opportunity.

Compressed air leaks were common.

Improved efficiency could be gained by using variable speed compressors or correct compressor staging control.

For an efficient compressed air system, management of (1) the compressor controls, (2) the Air quality and (3) the compressed air demand (leaks and usage).

4.1. EFFICIENT EQUIPMENT Compressed air is a large energy consumer on meat processing sites. The choice or implementation of energy efficient choices in air compressor equipment, generally has an attractive payback

Energy Saving Actions • Make sure the right type of compressor is used to suit the applications. • Fit existing compressed air systems with variable speed drives (saving 0-50%). • An air receiver tank can be utilised to cover for short-term demand changes. • Shorten the distance from air compressor to appliances the energy usage should decrease. • Check the belt tension of belt driven compressors. • Replacing pneumatic equipment with alternative electric equipment. • Heat recovery units can recover in the order of 80 percent of the hot exhaust air. Potential Saving 0-50%

4.2. CONTROLS The control system influences the loading and unloading of compressors as demand changes and what delivery pressure is maintained. This has a large impact on the energy consumption of compressors. Energy Saving Actions • Incorrect sequencing and low part-load performance of screw compressors is a major source of

inefficiency. VSD fitted compressors are increasingly being used as the trim compressors during upgrades and compressor replacements.

• Air pressure should be kept as low as possible. Every 50kPa operating pressure reduction decreases energy use by 4 percent

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1 Based on $0.10/kWh and 2000 operating hours per annum.

4.3. LEAK REDUCTION AND USAGE The greatest losses in a compressed air system are usually associated with leaks and unplanned losses of air in the system.

Energy Saving Actions • Periodic auditing and checking of the reticulation system is required. • Non-operating equipment should be isolated with a valve in the distribution system. • Use ultrasonic detectors and spraying pipes with soapy as detection methods • Compressed air is often treated as a free resource even without consideration of its energy cost. • Every 10 l/s of compressed air leakage increases energy use by about 7 MWh/yr.1

Source: http://www.originenergy.com.au/files/SMEfs_CompressedAir.pdf Table 5 shows the annual cost of air leaks based on the equivalent hole diameter of the pipe. Leaks in a compressed air system can contribute as much as 20-50% of total air consumption.

Table 13: Air leakage, wasted energy and cost for equivalent hole diameter[1] Source: Sustainability Victoria 2009 Equivalent Hole Diameter (mm)

Quantity of air lost in leaks (L/s)

Annual energy waste (kWh)

Annual cost of leaks ($)

1.6 3.2 2,128 2133.2 12.8 8,512 8516.4 51.2 34,040 3,40412.7 204.8 136,192 13,619

Case study:

JBS Rockhampton site in Queensland conducted a compressed air audit and by fixing the air leaks, 136 GJ of energy and $10,000 were saved per annum.

Implementation Cost Considerations The implementation cost is minimal compared to the savings. Potential Saving 0-20%

4.4. AIR QUALITY AND TEMPERATURE Poor Air Quality leads to production contamination, increased failure rate of pneumatic components (up to 70%) and rapid leak formation.

Energy Saving Actions • Entrained water from condensed water should be effectively collected and removed. • Blocked inlet filters can result in energy losses in the order of 3 percent. • Plant rooms should be well ventilated with waste heat ducted away. • Every 10°C increase in inlet temperature increases electricity consumption by 3%.

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1 Based on $0.10/kWh and 2000 operating hours per annum.

5. HIGH EFFICIENCY MOTORS AND VARIABLE SPEED DRIVES Electric motors account for a significant portion of a site’s energy usage, primarily due to usage of motors for the refrigeration compressors. The smaller motors on sites operate the conveyors belts, processing equipment, hydraulic equipment, and a large number of fans and pumps.

5.1. HIGH EFFICIENCY MOTORS Meat processing sites should have a program to replace standard efficiency motors with more efficient alternatives as they are replaced.

Energy Saving Actions Replace motor stock with high efficiency models on failure of existing motor stock. Over a motor lifecycle, the higher efficiency motor (HEM) is more cost effective when a new motor is purchased or a failed motor requires replacement. The typical return on investment ranges between 1-3 years and HEMs are readily available in Australia.

Based on a typical 10kW high efficiency motor, a high efficiency motor (HEM) will have an efficiency of 93%. Standard electric motors have an efficiency of 88%. This provides a saving of 4.3% in both energy and greenhouse gas emissions.

Potential Saving 4%

5.2. VARIABLE SPEED DRIVES (VSD) Energy consumption can be reduced by adjusting the motor speed to continually match the load of the equipment such as pumps, fans and compressors using VSD.

Energy Saving Actions Most electric motors in industry are AC units. VSDs (sometimes called adjustable frequency drives (AFD) or variable frequency drives (VFD)) reduce energy consumption by adjusting the motor speed to continually match the load of the equipment such as pumps, fans and compressors.

VSDs are cost effective for motors that operate equipment with variable demands such as throttle valve controlled water pumps, variable flow requirements for evaporator fans, air compressors and others. VSDs also provide additional benefits such as soft starting, over speed capability, and power factor improvements. When VSDs are appropriately applied to control AC electric motors, significant energy savings are achieved. Industrial experience has shown that VSD’s can save 25% - 40% of energy consumed by pumps, fans and blowers depending on the application.


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1 AusIndustry website 2012, http://www.ausindustry.gov.au/programs/CleanTechnology/CleanTechnologyInvestment/Pages/CTIP-GrantRecipients.aspx

6. RENEWABLE ENERGY 6.1. SOLAR PHOTOVOLTAIC (PV) Red meat processing sites are generally located in areas with good solar potential and the solar output profile often closely matches that the facility’s operation. As such, there is significant potential for solar PV energy to supplement electricity needs on site.

The following diagram shows the areas of greatest solar potential in Australia.

Figure 17: Australian Mean Annual Solar Radiation Levels Source: CRES, ANU

Implementation Cost Considerations Solar PV costs have significantly reduced from $5-7/W in 2006 to around $2.5/W in 2010. This reduction in technology costs has decreased the payback for solar PV to approximately 5-7 years (depending on location and the electricity tariff).

Solar PV case study: Jertva WA

Jertvu meat processing plant in Midland Western Australia will install two 10kW solar photovoltaic panels on its factory roof, resulting in savings of $7,800 in energy costs per year. The project will cost $50,000 and the company has successfully secured half of this capital cost ($26,000) in government grant funding under the Federal CTIP program.1

6.2. SOLAR HOT WATER Solar thermal energy can be used to heat water and create steam for use throughout the site. As the hot water and steam requirements on meat processing sites are significant, solar hot water can be a good opportunity to save energy.

Simple flat plate collectors are the most cost-effective method of small scale solar thermal for use at meat processing plants. Flat plate collectors could be used to preheat boiler feed water. For example, a plant currently has a feed water rate of 41 kL/day at an average temperature of 20°C. In order to heat this water to 80°C, approximately 750m2 of collectors are needed at a cost of approximately $340,000 (excluding extra

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plumbing and installation). For sites with limited space, these collectors could be mounted on the roof of the facility. However, the analysis shows a very long payback and that flat-plate collectors for preheating boiler feed water are not cost-effective given the current low price of gas. Other solar thermal technologies (parabolic troughs, heliostats, parabolic dishes) are much less economical.

6.3. WIND POWER Wind turbine systems can also be installed to supplement the site’s electricity needs. The output of wind turbines is related to the available wind resources and these resources vary considerably between sites (Error! Reference source not found.).

Detailed wind monitoring must be undertaken to fully assess the appropriateness of wind power options. For small wind systems up to 100kW in capacity, the payback period is approximately 10 years. Government funding can also reduce the payback period, making these projects more feasible for business. Implementation Cost Considerations The capital cost of wind power is approximately 1.7-3.4 $AUD/MW (Source: Review of the Australian Wind Industry 2011, CEE)

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7. BIOGAS CAPTURE Biogas is a mixture of carbon dioxide and methane, which is generated when the biological material in organic waste is degraded by bacteria in the non-oxygen environment. This process is known as anaerobic digestion. Since biogas is produced from the waste treatment process where methane is captured and burnt, it is considered a source of renewable energy. The biogas generated in anaerobic digestion ponds at meat processing plants normally can be captured and used by covering the ponds with membrane structures.

Figure 8 Biogas capture from ponds Source: PMP Environmental

The trend in meat processing plants is for integrated supply chains, whereby feedlots supply meat processing plants with stock, and plants carry out value adding on site. This increases the bio-energy resource available at a meat processing plant as it may have access to manure from feedlots as well as its own wastewater and waste organic material from the process. Waste organic material from the process can include paunch material, wastewater solids from the pre-treatment upstream of the anaerobic pond and manure from the stockyards. Capture options are: • Capture of biogas from paunch and yard manure through the use of Anaerobic Sludge Digester systems (ASD) • Covering of effluent ponds to capture biogas

Usage options are: • Flare the biogas • Co-firing along with natural gas in boilers to displace some of the plant’s natural gas

The return on investment for these opportunities is dependent on the quantity and quality of waste water coming from the process. However, the introduction of the carbon pricing mechanism has improved the economics of biogas projects as the carbon liability per tonne of methane is significantly higher than the carbon dioxide equivalent.

7.1. BIOGAS FLARING Many meat processing plants have issues with odour emissions from anaerobic ponds. Some plants will be required to include methane emissions from the ponds in their greenhouse and energy reports as part of the new National Greenhouse Gas and Energy Reporting Scheme (NGERS).

Flaring, converts the biogas into carbon dioxide (CO2) and results in a significant reduction of greenhouse gas emissions (by a factor of 21).

7.2. FUEL REPLACEMENT IN BURNERS (FROM LPG TO BIOGAS) Biogas can be utilised for direct burning applications on site. For example, biogas could be used to supplement natural gas or LPG used by the boiler.

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1 EEO Public report, 2011

Biogas from rendering plants’ effluent ponds can have a methane content of 60-70% and boilers can operate on a biogas to natural gas ratio of 70% to 30% (source: Red Meat Processing Industry Energy Efficiency Manual). The biogas can replace or co-fire the fuel to the existing boilers.

Carbon credits (the same as if flared) can be claimed as well as achieving energy cost reduction benefits.

Implementation Cost Considerations This may require only minimal alterations to existing equipment as this is only a substitution of the existing gas supply to the boilers. However, the biogas has high hydrogen sulphide content and a lower calorific value compared to natural gas which may need additional action. The following table shows indicative costs based on LPG substitution in a piggery.

Equipment Costs Biogas Scrubbing and Transfer Scrubbing Vessel $25,000

Biogas blower $30,000Biogas transfer pipeline $12,400Biogas transfer pipeline install $10,000

LPG Substitution Modify Burners $7,400

Figure 9 Indicative LPG substitution costs at a piggery

Case study #1: JBS Dinmore, Queensland

JBS Australia’s Dinmore plant processes up to 3,350 beef per day. The site reported a total energy use of 590,000 GJ per annum. Given the high gas usage on site and increasing cost of gas, the site is investigating alternative fuel sources.

Currently under investigation is the possibility of capturing methane from anaerobic lagoons and using this as a substitute for natural gas in the boiler1. This will both reduce the emissions create on site and gas cost and usage for the boilers.

Total capital cost: $2,000,000 Total Savings: $500,000/yr Energy saved: 100,000 GJ/yr Payback: 4 years Case study #2: Burrangong Meat Processors, New South Wales1.

Burrangong Meat Processors in Young, NSW received AUS $700,000 ($622,000) in Round 2 of the New South Wales Energy Saving Fund to recover biogas from their effluent ponds.

This will save 3600 MWh of electricity each year, which is 65% of the site’s needs, and is the equivalent of 3500 tonnes of greenhouse gas emissions. This is part of a larger Burrangong Meat Processor programme to become the leader in greenhouse reductions in the meat industry and achieve a position where the plant will become greenhouse-emission neutral.

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1 Meeting heat and power loads down under - Australian meat processing plants are a fine match for cogeneration 2007, http://www.cospp.com/articles/print/volume-8/issue-6/features/meeting-heat-and-power-loads-down-under-australian-meat-processing-plants-are-

afine-match-for-cogeneration.html 13 Biogas quality & cleaning technology AMPC Fact Sheet

H2S Removal The following two tables show the capital and operating costs of scrubbing systems. Engines and gas turbines (see section on Cogeneration below) require scrubbing while flaring and use in a boiler may not be as stringent.

Removal technology 50 m3/hr 150 m3/r 500 m3/hrWater scrubbing - $240,000 $380,000Iron absorptive media $150,000 $190,000 $260,000Biological scrubbing $200,000 $300,000 $550,000Biological trickling filter - $250,000 $450,000

Figure 10 Scrubbing Capital Costs 13

Operating costs (per annum) 50 m3/hr 150 m3/r 500 m3/hrWater scrubbing - $15,000 $25,000Iron absorptive media $12,000 $36,000 $120,000Biological scrubbing $6,000 $12,000 $24,000Biological trickling filter - $3,000 $6,000

Figure 11 Scrubbing Operating Costs

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8. COGENERATION Cogeneration or Combined Heat and Power (CHP) systems use a single source of fuel to produce both electrical and thermal energy. The main advantage of a cogeneration system is the overall system efficiency. The efficiency of a cogeneration plant can be as high as 80%, because energy is extracted from the system in the form of both heat and power. At a conventional power station, producing only power and the conversion efficiency is only 30%, with the remaining 70% lost as unrecovered heat. For this reason cogeneration is seen to provide good environmental outcomes because of the lower consumption of fossil fuel resources, resulting in the conservation of fossil fuel resources and reduced greenhouse gas emissions.

There are 3 main types of cogeneration; (1) steam turbines; (2) gas turbines; and (3) reciprocating engines. Cogeneration systems are ideally suited to the red meat industry as it uses heat and electricity at the same time and requires only low pressure steam. Reciprocating cogeneration systems are the most typical system for the meat industry, due to the one to one electrical and thermal loading on sites. Cogeneration systems typically have a greater than five year payback. However this is expected to decrease with access to Government grants (such as the Clean Technology Investment Program) or funding and rising energy costs. Additional income is achieved through Renewable energy certificates (REC). Implementation Cost Considerations Typical implementation costs are approximately $2000/W. A cost breakdown of associated equipment is shown in the previous section.

Cogeneration may be viable for plants that meet the following criteria: • a steady demand for steam and power throughout the year; • a higher demand for thermal energy than for electrical energy; • a thermal fuel consumption of more than 2,000 GJ/yr; • a maximum electricity demand of more than 100 kW; • long annual operating hours (more than 3,000 h/yr); • operations taking place during peak electricity charging periods; and • a high price paid for electricity.

Case study: Rockdale Beef, New South Wales

1MW cogeneration plant at Rockdale Beef, Yanco, NSW.

Rockdale Beef installed a reciprocating gas engine that drives a 920 kW generator to produce electricity and hot water. The system initially supplied 90% of the plant’s power demand, but this has been reduced to 50% due to plant expansions. Heat from the engine supplies about 80% of the plant’s hot water requirements. The average annual energy outputs are 4,335 MWh of thermal and 4,488 MWh of electrical energy.

Total capital cost: $1,000,000 Total Savings: $300,000/yr Payback: 3-4 years

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9. DEMAND MANAGEMENT The total electricity cost is made up of several components, including demand, consumption, and power factor costs. Demand charges are based on the largest electrical demand (kVA) in any single demand period (typically 30 minute period) during the billing period.

9.1. DEMAND CHARGES Meat processing facilities are generally in remote areas, where demand charges are relatively high at $10-13/kVA/month. There are substantial savings possible through managing the these demand costs through managing the operation of equipment to utilise off-peak supplies, load shedding, and staggering the start-up times of large equipment items such as compressors or dryers. Soft starters on motors will also flatten out power demand during start-up.

9.2. POWER QUALITY Power factor gives an indication of how effectively electricity is purchased. The ideal power factor is 1.0. Poor power factor (e.g. below 0.80) increases demand charges, therefore cost savings can be achieved by improving PF through cost effective manners such as installation of Power Factor Correction equipment. Low power factor is caused by inductive loads, such as transformers, electric motors, and high-intensity discharge lighting.

Each site is on a specific electricity tariff and electricity is typically paid as $/kWh, but if there is a demand component (often charged as $/kVA), a low PF means a higher kVA and consequently a higher electricity bill for the same plant load (kW). Therefore, demand savings can be achieved by improving the site’s PF.

As mentioned earlier monthly peak demand charges can be as high as $10-13 per kVA which is directly related to power factor performance.


Installing Power Factor Correction capacitors at a site will reduce the peak demand from 180kVA to 150kVA.

The site currently pays $13/kVA month, so the savings are:

Demand reduction = 180 – 150 = 30 kVA month Cost savings = 30 kVA x $13/KVA = $ 390 month Annual cost savings = 390 x 12 = $4,680

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APPENDICES 1. ACRONYMS

AMPC Australian Meat Processor Corporation

CEFC Clean Energy Finance Corporation

CPM Carbon Pricing Mechanism

CTFFIP Clean Technology Food and Foundry Investment Program

CTIP Clean Technology Investment Program

DPEEP Domestic Processors Energy Efficiency Program

EEO Energy Efficiency Opportunities

EMP Energy Management Plan

FTE Full time employees

KPI Key Performance Indicators

kWh Kilo watt hour

LCA Low Carbon Australia

LPG liquefied petroleum gas

MJ Mega Joule

MLA Meat & Livestock Australia Limited

tDW Tonne of dressed weight

tHSCW Tonnes of Hot Standard Carcass Weight

tLCW Tonne of live carcass weight

2. TOOLS Area Further References and Tools Refrigeration Technology Report Industrial refrigeration and chilled glycol and water applications.

http://www.minus40.com.au/resources,

Lighting Energy Saver Energy efficient lighting Technology report,

http://www.environment.nsw.gov.au/resources/sustainbus/120434EnEffLight.pdf

Renewable energy

Consumer Guide to Small Wind Turbine Generation, http://www.sustainability.vic.gov.au/resources/documents/Small_Wind_Generatio n1.pdf

Large Scale Solar Thermal Systems Design Handbook, http://www.sustainability.vic.gov.au/resources/documents/LSTS_Design_Handboo k_-_FINAL_Print2.pdf

Renewable energy and energy efficiency options for the Australian meat processing industry, http://www.ampc.com.au/site/assets/media/Climate-Change/On-site-Energy-Generation-Research/Renewable-energy-energy-efficiency-options.pdf

Compressed air

http://www.compressedait.net.au/compressed air facts.html

Energy efficiency Best Practice Guide Compressed Air systems, http://www.capsaust.com.au/docs/resources/best-practices-manual.pdf

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1 IEA 2012, World Energy Outlook 2012

3. FINANCIAL EVALUATION 3.1. SIMPLE PAYBACK PERIOD One of the most commonly used cost analysis methodologies is the simple payback period (SPP) method. The payback period determines the number of years required to recover an initial investment through project returns and is calculated by: SPP = (initial cost) / (annual savings)

This method is commonly used for small investment decisions. While the SPP method is quick and simple, shortcomings are: • The time value of money is not taken into account; • The process ignores all the cash flows occurring after the payback period; • It does not account for the timing of the cash flow within the payback period - effect is small for energy

projects with uniform annual savings; and • The setting of the criteria (e.g. less than two years) for investing in projects is relatively ‘arbitrary’

compared to other methods.

Energy efficiency opportunity identified at Milton. Install lighting zone switching in the plant area

Annual energy savings: 17GJ

Annual cost savings: $837

Total cost to implement: $2,640

Simple payback period: Implementation cost/ Cost savings = 2,640 / 837 = 3.15 years

Globally, the average industry payback for energy efficiency measures is 5 years1. Within Australia, the majority of energy savings adopted by EEO corporations had paybacks of two years or less. Specifically, 70% of adopted savings had a payback of two years or less, 15% had a payback of between two and four years and 15% had a payback of four years or more. This trend is also consistent for the food and manufacturing sector, highlighting that the majority of energy projects identified are highly cost effective.

Within the red meat sites participating in the EEO program, the average simple payback period ranged from 0-4 years. Lighting and refrigeration measures had the shortest payback period. Renewable energy opportunities had an average pay back of 4 years, and this is expected to be less the decreasing cost of renewable technology and government policies such as the carbon tax and the renewable energy target. 3.2. NET PRESENT VALUE METHOD All the future cash flows (positive for savings and negative for costs) of a project are brought back to the present value and compared to the investment which is made at the start of the project. The larger the NPV is the better the investment.

NPV = (investment) + [Savings1/(1+r)1] + [Savings2/(1+r)2] + [Savingsn1/(1+r)n]

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Where: r is the prevailing market interest rate available to your firm n is the total life of the project in years NPV is the Net Present Value Why is NPV commonly used in industry? • Takes into account the time value of money. • Simple method to use for evaluating whether to implement an energy project. • Considers all the cash flows associated with the project beyond the payback period. • Can easily handle variable annual cash flow (e.g. lower savings due to maintenance cost).

3.3. INTERNAL RATE OF RETURN This method provides us with a single number (%) that can be used to decide whether implementing a project is financially worthy. The IRR method does not depend on any external interest rate and is independent of the prevailing interest rate. NPV = (investment) + [Savings1/(1+r)1] + [Savings2/(1+r)2] + [Savingsn1/(1+r)n] Where: r is the calculated interest rate. NPV is the Net Present Value. IRR is the value of r when the NPV = 0 Consider implementing the energy saving project if the IRR is greater than the interest rate available to your firm. In other words you will get a higher return for your money if you finance the project than say, investing in a bank deposit. Why is it commonly used in industry? • Takes into account the ‘time value of money’ • Considers cash flow throughout the life of the project. • Can easily handle variable annual cash flow (e.g. fluctuating savings due to maintenance cost etc.).

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REFERENCES 1. Australian Meat Processor Corporation (AMPC), Fact Sheet – The Red Meat Processing Industry in

Australia. Available at http://www.ampc.com.au/site/assets/media/Factsheets/Business-Development-Capability-ExtensionEducation-Training/18-The-red-meat-processing-industry-in-Australia.pdf, accessed on October 2012

2. AMPC 2012, Red Meat Processing Industry Climate Change Strategy. Available at http://www.ampc.com.au/reports/Red-Meat-Processing-Industry-Climate-Change-Strategy, accessed on October 2012

3. AMPC (2009) Introduction to Meat Processing environmental best practice manual. Available at http://www.ampc.com.au/site/assets/media/reports/Resources/ENV_2010_Enviromental-best-practice-manual--introto-meat-processing.pdf, accessed on October 2012

4. Cargill Australia website 2012, Environmental Sustainability goals and actions, http://www.cargill.com/corporateresponsibility/environmental-sustainability/goals-actions/index.jsp, accessed on October 2012

5. Cogeneration & On-site power production 2007, Meeting heat and power loads down under - Australian meat processing plants are a fine match for cogeneration. Available at http://www.cospp.com/articles/print/volume8/issue-6/features/meeting-heat-and-power-loads-down-under-australian-meat-processing-plants-are-a-fine-matchfor-cogeneration.html, accessed on November 2012

6. Department of Agriculture, Fisheries and Forestry (DAFF) 2011, Australian food statistics 2010-11. Available at, http://www.daff.gov.au/__data/assets/pdf_file/0015/2144103/aust-food-statistics-2011-1023july12.pdf, accessed on October 2012

7. Department of Agriculture, Fisheries and Forestry 2004, Price Determination in the Australian Food Industry A Report. Available at http://www.daff.gov.au/__data/assets/pdf_file/0003/182442/food_pricing_report.pdf, accessed on February 2013

8. Department of Resources, Energy and Tourism (DRET) 2012, Energy Efficiency Opportunities – Continuing Opportunities 2011. Results of EEO Assessments reported by participating corporations. Available at http://www.ret.gov.au/energy/Documents/energyefficiencyopps/res-material/continuing-opportunities-for-2011.pdf, accessed on October 2012

9. Energy Efficiency Exchange 2012, The Strategic Case for Energy Management. Available at http://eex.gov.au/energymanagement/the-strategic-case-for-energy-efficiency/, accessed on November 2012

10. Fairmont Press, Inc. 2008, Guide to Energy Management International Version 5th Edition 11. Meat and Livestock Australia 2002, Eco-Efficiency Manual for Meat Processing. Available at

http://www.ecoefficiency.com.au/Portals/56/factsheets/foodprocess/meat/ecomeat_manual.pdf, accessed on October 2012

12. Meat and Livestock Australia 2011, Energy Efficiency opportunities program report (federal government)

1. Meat and Livestock Australia 2010, Renewable energy and energy efficiency options for the Australian meat processing industry. Available at, http://www.ampc.com.au/site/assets/media/Climate-Change/On-site-Energy-Generation-Research/Renewable-energy-energy-efficiency-options.pdf, accessed on October 2012

2. NSW Office of Environment and Heritage 2012, Energy Saver Energy efficient lighting Technology report. Available at, http://www.environment.nsw.gov.au/resources/sustainbus/120434EnEffLight.pdf, accessed on November 2012

3. NSW Office of Environment and Heritage 2011, Technology Report Industrial refrigeration and chilled glycol and water applications. Available at, http://www.minus40.com.au/resources, accessed on December 2012

4. Sustainability Victoria 2009, Energy Efficiency Best Practice Guide Compressed Air Systems. Available at, http://www.capsaust.com.au/docs/resources/best-practices-manual.pdf, accessed on November 2012

5. Sustainability Victoria 2011, Midfield Meat International – Utilities System Optimisation Cogeneration and geothermal energy utilisation. Available at, http://www.resourcesmart.vic.gov.au/documents/Midfield_Casestudy.pdf, accessed on November 2012

6. Sustainability Victoria 2012, Victorian Consumer Guide to Small Wind Turbine Generation. Available at, http://www.sustainability.vic.gov.au/resources/documents/Small_Wind_Generation1.pdf, accessed on November 2012

7. Sustainability Victoria 2009, Large Scale Solar Thermal Systems Design Handbook. Available at, http://www.sustainability.vic.gov.au/resources/documents/LSTS_Design_Handbook_-_FINAL_Print2.pdf, accessed on November 2012