1

Improving Energy Efficiency and Promoting Renewable Energy in the Agro-Food and Other Small and Medium Enterprises (SMEs) in Ukraine

Project GF/UKR/11/004

REPORT

Sectoral Energy Efficiency Improvement Roadmap for the Sugar Industry of the Agro-Industrial Sector of Ukraine

Prepared by: М. Maslikov

Kyiv 2013

2

This page internally left blank

3

CONTENTS ABBREVIATIONS............................................................................................... 4

INTRODUCTION................................................................................................ 5

1 GENERAL PROVISIONS ................................................................................ 7

2 DEFINING THE PROBLEM, WHICH THE ROADMAP SEEKS TO ADDRESS ... 8

3 SWOT ANALYSIS OF PROSPECTS TO CUT ENERGY INTENSITY OF SECTORAL ENTERPRISES............................................................................. 19

4 GOAL OF THE ROADMAP.......................................................................... 20

5 THE LIST OF KEY PERFORMANCE INDICATORS ........................................ 21

6 THE ACTIVITIES AIMED AT IMPLEMENTATION OF THE ENERGY EFFICIENCY POLICY................................................................................... 22

7 REGULATORY FRAMEWORK UNDERLYING THE ROADMAP..................... 26

8 PERIOD AND STAGES OF THE ROADMAP IMPLEMENTATION ................. 27

9 FINANCING OF THE MEASURES STIPULATED BY THE ROADMAP ............ 28

10 EXPECTED OUTCOMES OF THE ROADMAP IMPLEMENTATION ....... 29

11 MONITORING AND SUMMARIZING OF ROADMAP IMPLEMENTATION RESULTS........................................................................ 30

4

ABBREVIATIONS AIS – Agro-Industrial Sector GDP – Gross Domestic Product WE – Waste Energy ESM – Energy-Saving Measures ARES – Alternative and Renewable Energy Sources FEB – Fuel and Energy Balance EMS – Energy Management Systems SES – Secondary Energy Sources HWS – Hot Water Supply ЕА – Energy Audit ЕМ – Energy Management kg o.e. – kilogram of oil equivalent t.o.e. – tons of oil equivalent

5

INTRODUCTION Increased energy efficiency in all domains of social life of the state is an

important factor of influence on current energy security of Ukraine, stable energy supply to productions and individuals. The most important conditions for sustainable and proportional development of the state are to decrease energy intensity of the production and to increase considerably energy efficiency of the economy. These factors have been in recent years and remain among the main factors underlying economic and national security.

In the current context, energy saving is among crucial factors for the energy strategy of Ukraine. Effective performance of the national economy and socio-economic development of Ukraine depend on this factor. Energy intensity of Gross Domestic Product (GDP) is deemed the key energy efficiency parameter of the economy, and this parameter in Ukraine is approximately three-fold higher than the GDPs in the leading developed economies.

The problem of high GDP energy intensity is of national scale as it concerns product competitiveness of the economy, product costs, consumption of power, heat, natural gas, oil and petroleum refinery products in social production, budget sphere and the public.

Industrial enterprises spend several-fold more fuel and energy for production than similar enterprises in other countries. This situation plus higher tariffs for electricity, gas and other resources cause the need to tackle energy saving to grow considerably. However, currently the enterprises in the sector significantly undervalue all the opportunities and benefits they may get via energy efficiency improvement.

The significant available energy-saving potential, the dynamic energy market requires currently an adequate response to the situation and joint efforts of both national and regional authorities as well as top managers of enterprises and organizations regardless of the pattern of ownership.

The implementation of the energy saving potential shall be via restructuring and technological changes in the sectoral economy and further improvement of administrative and economic mechanisms facilitating energy efficiency improvement and energy saving.

This process supposes decommissioning of obsolete and worn out equipment, ceasing manufacturing of inefficient (in terms of energy use) products and launching of new technologies and equipment, as well as creation of the system to monitor production and use of fuel and energy.

Retooling, introduction of novel technologies, machinery and equipment require formation of own capital and raising of investment capital. However, a portion of technological steps on the Roadmap is linked to reducing the consumption of fuel and energy via higher use intensity of existing energy generation facilities, modernization of technological processes, primarily by implementation of low-cost measures focused on improving efficiency of fuel and energy use, prevention of

6

energy wasting, reduction of fuel and energy losses and optimization of operation modes.

Energy saving measures should be implemented in accordance with the target state policy on mandatory governmental expert assessment and supervision over the energy intensive technologies and creation of the conditions thanks to sanctions and legislative restrictions encouraging to stop the use of energy intensive equipment and technologies.

Favorable environment for production and launch of energy efficient technologies and equipment may be formed via efficient pricing policy, target-oriented lending for relevant programs and projects from national and local budgets.

The problems of fuel and energy efficient use, cutting an energy cost share in the total costs of products, optimum use of local energy sources and increasing the use of alternative and renewable energy sources (ARES) are most pressing on sectoral enterprises. Therefore, the priority in executive authorities activities should be to conduct consistent policy focused on implementation of energy efficient and resource saving technologies, identification of priority objectives for governmental bodies and enterprises and coordination of their efforts.

The mechanism to address the above problems shall be development and implementation of the target energy efficiency improvement program for sectoral enterprises which will provide the conditions to decrease GDP energy intensity, optimize regional energy balance structure, increase the use of ARES, secondary energy sources, launch of the efficient mechanism for implementation of governmental policy in the energy efficiency domain.

7

1 GENERAL PROVISIONS The Roadmap is a regulatory and institutional instrument to implement a set of

energy-saving measures thus ensuring the transfer of the sectoral economy to energy-saving development along with compliance to the established environmental requirements.

The Roadmap is the basis to implement the governmental and sectoral energy-saving and energy efficiency policies.

The Roadmap implementation will ensure achievement within the established periods of the energy efficiency targets as set for individual subsectors of agrarian economic sector of Ukraine.

Implementation of the actions stipulated in the Roadmap shall create the conditions to improve economic performance indicators of AIS enterprises, improve reliability of energy supply, reduce fuel and energy consumption, cut product costs and shall provide the possibilities:

- to reduce energy intensity of individual types of products; - to improve energy security all over AIS; - to cut fuel and energy consumption for production as well as fuel and

energy losses not related to production; - to optimize fuel and energy balance (FEB) structure and consumption of

fuel and energy, specifically, to ensure reducing the share of natural gas in FEB, its replacement with other types of fuel and energy, primarily, ARES and SES;

- to ensure reduction of contaminant emissions; - to create conditions for raising the funds required for rehabilitation and

modernization of production assets; - to raise awareness among AIS enterprises’ personnel of the need to save

fuel and energy.

8

2 DEFINING THE PROBLEM, WHICH THE ROADMAP SEEKS TO ADDRESS

2.1 Overview of Enterprises in the Sector

The sugar industry is one of the largest in the food industry of Ukraine although due to dissemination of sweeteners, the sugar demand has been falling. According to the National Classifier of Economic Activities of Ukraine DK 009-2010 effective since 01 January 2012, sugar production is assigned code 10.81.

Small capacity (1,500-3,000 t\day) factories, where the equipment is obsolete, form the basis of the production capacity. This results in lower efficiency of the production (including high specific power inputs) as compared to the European sugar industry, where modern factories demonstrate productivity of 8,000 to 12,000 t/day. An optional development of the sugar industry in Ukraine is modernization of sugar factories along with increasing their efficiency per unit of output. Shutting down of many small sugar plants in the long-term will facilitate better supply of feedstock to more competitive, strong enterprises that would create the opportunities to invest in the industry.

The main raw materials for sugar production in Ukraine is sugar beet. Its yields in Ukraine currently are 35-40 tons per hectare. The sugar content in sugar beet vary from 11% to 17.5% depending on seed quality and growing conditions (temperature, precipitation, etc.). Modern European varieties of sugar beet provide the yields of 65-70 tons per hectare along with the saccharose content of 17-20%, which increases sugar outputs, reduces specific consumption of materials and energy for transportation and processing of raw material. One of the areas in the sugar industry development should be selection and launch of high-yielding sugar beet varieties containing much sugar and weather- and insect-resistant.

The major raw material for sugar production all over the world is sugar cane, which contains 12-15% of sugar and provides the yields of 70-80 tons per hectare. In the conditions of temperate climate in Ukraine, it is not feasible to grow cane. Currently Ukraine considers the possibility to grow sugar sorghum, which productivity is approximately similar to that of sugar cane and in the climatic conditions of Ukraine may provide sugar output per hectare not lower than that of sugar beet.

Acceptance, storage and preparation of feedstock. Sugar beet harvesting starts in late August and ends in September-October (depending on a region and weather). The feedstock is delivered to sugar factories and stored in piles prior to processing. A factory is launched in operation when minimum prerequisite amount of beet is accumulated in the piles. The factory operates for 30 through 100 days a year depending on the amount of beet delivered for processing, and then it halts operations. The rest of time is a maintenance period (some factories during those periods process raw cane sugar imported to Ukraine). Processing of raw cane sugar provides the possibility to extend the production season and improve production profitability. Once delivered to the production site, cleaned from stones, sand and

9

organic impurities, root crops are washed and chipped to facilitate saccharose extraction.

Diffusion section. Saccharose is extracted from the chips with diffusion apparatuses of various types (column, rotary, inclined), operating in a non-stop mode. The non-stop facilities provide the opportunity to automate the process, reduce the number of personnel, cut water losses, cut losses of saccharose and heat. The water in the apparatuses is warmed up to 75-85 ºС or the condensate moves counterflow against chips and extracts soluble substances out of them – saccharose and non-sugars. Relative expenditure of the solution (diffusion juice) pumped out from the apparatus, depending on the apparatus type and chips quality, makes up 105-140% of the chips mass. Increased pumping out decreases sugar losses with sugar-free chips (marc) and does not result in significant increases in the heat and electricity consumption for sugar production. Marc is used as forage for cattle. It is dried in a marc-drier and granulated to extend its term of storage.

There are modern concepts of the use of sugar production waste to generate biogas and use of marc drying and granulating shops to produce straw pellets in the period between seasons. Besides that, over 10 factories have already been in operation in the EU producing bioethanol from sugar beet. A similar plant construction is in process in the USA. Research is under way into feasibility and methods of efficient marc combustion to generate heat.

At the temperature over 75º С, pectin substances fast swell and chips elasticity decreases. At the temperature under 70º С, microorganisms demonstrate intensive growth thus damaging the chips. Therefore the temperature is maintained at 70...75ºС in an active part of a diffusion apparatus with steam warming chambers, warming the feeding water up or circulating the juice warmed up to 90-100 ºС through an active part of a diffusion apparatus. At this stage, the main heat consumers are heaters of feeding water, juice and steam heating chambers for inclined diffusion apparatuses.

It is promising to cut energy consumption via the utilization of secondary heat condensates from the latter cases of the evaporator unit, which temperature is 65-85ºС to feed the diffusion plant. To this end, condensate deammoniation should take place.

Juice purification section. The diffusion juice at the temperature of 35-45 ºС passes multistage treatment including preliminary and principal defecation (treatment with lime solution), first and second saturations (treatment with carbon dioxide) and sulphitation (treatment with sulfur dioxide). Lime and carbon dioxide are obtained at the enterprise through burning limestone in shaft furnaces (coal is used). Sulfur dioxide is also obtained at the enterprise by burning sulfur in furnaces. In the treatment process, the juice is many times warmed up by steam or steam condensate.

At the purification stage, the heat consumers are juice warming systems at various treatment stages. Improving efficiency of heat use at this section is closely linked to development of technological schemes of juice purification. Improvement of heat exchangers, in particular, use of baffle feed heaters provided the opportunity to decrease the temperature driving force of heaters, to cut temperatures of warming steam and to more steam draw-off to tail bodies of the evaporator units. The other

10

line in energy-saving is to use secondary energy sources to heat juice: hot condensates, secondary steam from vacuum apparatuses, etc.

Evaporator unit. The clean juice, warmed up in the group of warming devices is evaporated in a multiple-body evaporator units. Thanks to water evaporation, the content of dry matter in the juice grows from approximately 14% prior to the evaporator to 65-72% in the syrup after the evaporator. The evaporator unit consists of several evaporator apparatuses (bodies), which the evaporating juice passes in turn. The bodies are connected so that the steam evaporated in the first body is fed to the second heating chamber, while the steam evaporated in the second heating chamber is fed to the third chamber and so on. The steam evaporated in the last body is fed to the barometric condenser, which provides vacuum in the last body, gradually decreasing the pressure and boiling temperature from the first to the last body. This kind of design ensures the capability to use the heat from steam condensation process many times. Various modifications of four- and five-chamber evaporators are most often applied in Ukraine. European plants commonly use one-pass evaporator units (lower time of juice processing in the unit provides the opportunity to cut sugar losses because of thermal decomposition). They consist of 6 or 7 plate film evaporator apparatuses. Increased number of apparatuses in the unit increases productivity by evaporated moisture.

An evaporator is not only the main consumer of steam generated by steam generators аt the sugar factory, it also plays an important role in heat supply to the enterprise since the compressed steam at various pressures (secondary steam) obtained in the course of evaporation in the bodies is used to warm the juice, water, syrup boiling and for other consumers. This provides the capability to reduce consumption of the steam generated by the cogeneration plant. Warming up most products is grouped. For instance, the juice could be warmed under the scheme “condensate – secondary steam from body 5 – secondary steam from body 4”. This scheme, despite high complexity, provides the capability to use low-temperature secondary energy sources.

Condensates of heating steam from the evaporator unit and from most other consumers are collected into condensate receivers. Condensate of the heating steam from the first body and partially from the second body is returned to feed steam generators in the sugar factory’s cogeneration plant. The heat from other condensates that could contaminated with sugar and do not fit for feeding steam generators is used to heat the juice in heat exchangers.

Crystallization section. The syrup from the evaporator unit is fed to vacuum apparatuses for boiling, where water residues are evaporated under vacuum at the temperature about 67ºС. While the syrup is boiled, powdered sugar is added, saccharose from the syrup is crystallized on its fine crystals – the crystals grow. Once the crystals reach the required size, the mixture of crystals and massecute syrup (sugar/glucose syrup mixture) are separated in centrifuges. The obtained wet sugar is dried with warm air, packed and supplied to storage. The syrup containing certain amount of saccharose and other dissolved substances is returned for repeated boiling till saccharose is not derived from it in full. Boiling is either two- or three-stage

11

process. The sugar from the second and third boiling stages is dissolved (melted) with cleared juice and supplied to vacuum apparatuses of the previous level. The residues of sugar-free syrup (molasses) are used as fodder additive or for production of alcohol (including bioethanol fuel), yeast, milk acid and other products.

Vacuum apparatuses are main consumers of thermal energy at this stage. Thermal energy is also consumed for sugar drying, melting, warming up of the syrup receivers. The air for sugar drying at the European factories is partially warmed up by the use of secondary energy sources.

Cogeneration plant. Sugar factories are supplied energy under the cogeneration scheme where heat and electricity are generated in parallel at own cogeneration plants. These cogeneration plants have counter-pressure steam turbines in place that prevent heat losses for a condenser and have the highest efficiency coefficient. This enables utilization of the steam generated by the turbine thus increasing the efficiency coefficient of energy output.

The excessive condensate generated during juice evaporation is returned to the cogeneration plant and provides the capability to operate the plant’s steam generators in the condensate mode thus significantly decreasing the required productivity of water chemical desalting equipment. Condensate, in contrast to water from technical water supply sources, has the temperature of 90…120 ºС increasing the cogeneration plant’s efficiency coefficient and decreasing the fuel consumption.

Cogeneration plant development recently has been implemented on the account of improvement of energy generation equipment, cut of heat losses, automation of the equipment thus enabling reduction of cogeneration plant’s staff, to be more exact, maintaining optimum modes of equipment operation.

Coal has been the main fuel for sugar factory cogeneration plants since the beginning of XX century. In 1950-60s, the sugar factory cogeneration plants were redesigned to fire HFO. In 1980s they were shifted to fire natural gas. This enable increase in steam generator efficiency, improve working conditions, and reduce hazardous emissions into the atmosphere. However, due to significant rise in the natural gas and HFO prices, the cogeneration plants in 2009-2010 started to be shifted back to fire coal. The ideas also are suggested to ensure sugar factories operation as components of large agribusiness holding companies in order to supply biofuel (biogas, straw, chips, husks and other organic waste) for cogeneration plants in order to reduce the consumption of expensive fossil fuels. Similar complex enterprises have already been in operation in EU.

As a rule, many non-production consumers of heat and power are connected to the sugar factory’s cogeneration plant: office buildings and amenities, residential buildings of the staff, etc. The heat and power generated by the cogeneration plant also may be dispatched to other enterprises located in vicinity.

12

2.2 Sources of fuel and energy

The main types of fuel and energy consumed by enterprises in the subsector are natural gas (the use of HFO is limited with its high price) and power (backup supply) from local networks.

Natural gas is used to operate steam generators of sugar factory’s cogeneration plant. Chemical composition of the natural gas: 94.0% СН4; 1.8% С2Н6; 0.4% С3Н8; 0.1% С4Н10; 0.1% С5Н12; 0.1% СО2; 3.5% N2. An enterprise’s energy service unit gets heat generation parameters of fuel on weekly basis from a gas supplier. Natural gas is supplied to an enterprise from the network. The gas expansion takes place at a gas distributing plant. The system of natural gas metering is instrumental.

Coal is used to operate lime kilns. Anthracite or coke is most common. They are delivered by railway.

Power to the sectoral enterprises within the production season is supplied by turbine generators of own cogeneration plant – their capacity may vary from 3 MW to 9MW – and in the period between seasons, power is supplied from local power networks by 10 kV above-ground or cable lines. If the own generation is not enough in the production season, it is purchased from local power grids. Power is supplied to corporate power consumers directly from on-site transformer substations and package transformer substations. Consumed power is metered either at bushings of 10 kV enterprise’s distribution equipment, or at 0.4 kV leads of each transformer. In some cases, technical metering is established at enterprises in this industry.

Heat supply at enterprises is arranged from an own on-site cogeneration plant equipped with steam boilers (e.g., Е-50-3,9-440 GМ, GМ-50-1, BKZ-75, etc.), one boiler is in reserve. For building heating and dispatch of heat within the period between seasons, a separate heating boiler house is used. It is equipped with steam generators of lower steam productivity or water heating boilers.

2.3. Consumers of fuel and energy

Natural gas. Main consumers of natural gas are steam boilers of the cogeneration plant. The boilers are equipped with automatic control system and technological mode regulation system. In most cases, enterprises timely carry out scheduled and failure-prevention maintenance and mode adjustment works of boiler equipment. The problem is obsolete and worn out boilers at most of the cogeneration plants resulting in their decreased efficiency factor. The natural gas consumption will be the average in the industry 41 nm3 per ton of sugar beets.

Coal. The main coal consumer is a lime kiln, where limestone (СаСО3) is fired and lime (СаО) and carbon dioxide (СО2) are formed, which are required for diffusion juice clarification. Coal consumption makes up approximately 3.5 kg per ton of beet.

Heat. It is not supplied from third party generators. The main consumers of heat in the form of steam from cogeneration plant is a multi-body evaporator unit supplying secondary heat almost to all technological plants of the enterprise. Also,

13

the steam from the cogeneration plant is consumed by the latter group of juice heaters prior to evaporator, sugar drier. For a short term, the steam from the cogeneration plant is consumed during the start and suspension of the factory’s operation period. In the period between seasons, the heat is consumed for heating the buildings.

Electricity. The main electricity consuming equipment include: electric motors of technological equipment, transporters, pumps and mixers, inlet and exhaust ventilation, equipment for maintenance and repair (turning and drilling machines, electric tools), cogeneration plant and boiler house equipment (air ventilators, pumps, smoke extractors), production premises and site illumination equipment. Losses of electricity make up approximately 30 kW·h per ton of beet.

2.4. Fuel and energy consumption balance

A structural scheme of fuel consumption breakdown by components is illustrated at Diagram 1.

Heat generation

Power generation

Limestone burning

LOSSES

ENERGY GENERATION

Other needs

OTHER CONSUMPTION FOR PRODUCTION

Diagram 1. Structural scheme of fuel consumption

A structural scheme of heat consumption breakdown by components is

illustrated at Diagram 2.

Production of granulated sugar

Sugar refining (where available)

Heating

Ventilation

Hot water supply

Losses

PROCESSING NEEDS

Illumination

AUXILLIARY NEEDS

Diagram 2. Structural scheme of heat consumption

14

A structural scheme of electricity consumption breakdown by components is

illustrated at Diagram 3.

Production of granulated sugar

Production of dried beet chips

Heating

Ventilation

Hot water

Losses

PROCESSING NEEDS

Illumination

AUXILLIARY NEEDS

Other consumption for production

Diagram 3. Structural scheme of electricity consumption

Typical composition of heat and electricity consumption includes: 1) technological needs: - consumption of energy for technological processes including consumption

for maintaining process units in hot reserve, their warming up and start-up upon maintenance;

- losses of heat and electricity in process units and plants. 2) heat and electricity consumption for general workshop needs: - heating, ventilation of workshops, shops, certain housing resource; - illumination; - operation of shop conveyance and hoisting facilities; - operation of shop’s repair workshops; - household and sanitary needs of a shop or section (shower rooms, wash

basins, etc.); - technically unavoidable energy losses in in-plant (in-section) networks and

transformers. 3) general production facilities needs: - production of compressed air; - water supply; - production needs of auxiliary and servicing shops, sections and services

(works repair, instrumental shops, laboratories, warehouses, etc.), including illumination, ventilation and heating;

- operation of factory conveyance and hoisting facilities (electric trucks, motor trolleys, cranes, transport trolleys, pneumatic and hydro vehicles);

- on site outdoor lighting; 4) technically unavoidable energy losses in factory networks and transformers

prior to shop points.

15

The main factors of impact on quantitative value of fuel, heat and electricity consumption in item “auxiliary production needs” are as follows:

1) by fuel: - the following equipment condition is of impact on heat generation and

dispatch (steam generators, technological pressure-reducing and desuperheating station, cooling unit of a turbine), as well as the modes of operation;

- the following equipment condition is of impact on power generation (steam generators, turbine generators), as well as the modes of operation;

- the number and dimensions of the equipment, modes of operation and other factors are of impact on other production consumption (beet pulp drying station, etc.);

- efficiency and condition of cogeneration plant, as well as the modes of operation are of impact on losses at cogeneration plants (compensation of heat losses into environment, etc.) and own needs of the cogeneration plants (heating, ventilation, hot water supply);

2) by heat consumption: - the following factors are of impact on heating of buildings, facilities,

individual premises: intended purpose of facilities, type, design, dimensions, number of floors, location, climatic conditions, temperature conditions, moisture conditions, manufacturing process management, maintenance process management;

- the following factors are of impact on ventilation in buildings, facilities, individual premises: intended purpose of facilities, type, design, dimensions, location, climatic conditions, temperature conditions, process requirements, manufacturing process management, maintenance process management;

- the following factors are of impact on hot water supply to production premises, household and office premises: intended purpose of facilities, design, rates of hot water consumption, number of consumers, temperature indicators of water supply, water consumption mode, hours in operation, manufacturing process management, maintenance process management;

- losses of heat at a sugar factory include the losses as a result of arrhythmic operation in environment, along with condensates of the end bodies of evaporator units, along with the steam of vacuum apparatuses and from the tail body of the evaporator unit to a condenser, along with beet pulp, along with filtration sediment;

- return of hot condensates from the main bodies of evaporator unit to cogeneration plant are taken into account.

3) by electricity consumption: - the following factors are of impact on heating and ventilation: drive power,

mode of system operation, technical specifications of equipment, operation conditions and requirements, manufacturing process management, maintenance process management;

16

- the following factors are of impact on outdoor lighting: intended purpose, lighting intensity, mode of operation, technical specifications of lights, manufacturing process management, maintenance process management;

- the following factors are of impact on in-factory (in-plant) conveyance and hoisting machinery: intended purpose and type of machinery, technical specifications, type and scope of transportation and handling works, mode of operation, design, manufacturing process management, maintenance process management;

- the following factors are of impact on electric motor drives: equipment type (machine-type, non-standard, processing die-forging, etc.), design and technical specifications of motor drives, mode of operation (time, load, type of operations, etc.), manufacturing process management; technology requirements, performance standard of equipment, maintenance process management;

- the following factors are of impact on welding equipment: type of welding works, equipment specifications, intended purpose, performance and technology requirements, mode of equipment operation;

- the following factors are of impact on electricity losses: type of electricity losses (active, reactive), mode of equipment operation, equipment type, equipment specifications, network performance parameters.

Consolidated fuel equivalent balance structure is described below in table 1.

Table 1 Model fuel equivalent balance of a sugar factory

No. Balance items Share of Supply, % 1 2 3 1 Supply: 100.00

1.1 Natural gas for a cogeneration plant 89.0 1.2 Coal for a lime kiln 11.0 2 Consumption (total): 89.00

2.1 Heat generation 71.5 2.2 Power generation 7.5 2.3 Other production consumption 10.0 3 Losses 11.0

Consolidated heat balance structure is described below in table 2.

Table 2 Model heat balance of a sugar factory

No. Balance items Share of Supply, % 1 2 3 1 Heat generated at a cogeneration plant 100.0 2 Own needs of a cogeneration plant 8.0

17

3 Dispatched from a cogeneration plant: 92.00 4 Consumption (total): 74.00 including: - for processing needs 71.00 - for heating, ventilation, hot water supply 3.00 5 Losses 18.00

Consolidated electricity balance structure is described below in table 3.

Table 3 Model electricity balance of a sugar factory

No. Balance items Share of Supply, % 1 2 3 1 Electricity generated at a cogeneration plant: 100.0 2 Own needs of a cogeneration plant 8.0 3 Dispatch to third party consumers 1.0 4 For technological processes - total: 56.5 including - for sugar production 55.5 - for dried beet chips 1.0 5 Other consumption for production 32.0 6 Utilities consumption 1.5 7 Losses in the lines and transformers 1.00

2.5. Energy-saving potential

To identify energy saving potential precisely, the following input data are necessary:

- primary technology documentation (process procedures and guidelines); - rated values of process and energy equipment; - fuel and energy balances and energy specifications of processing and

energy equipment (manufacturer’s specifications or performance characteristics identified in the process of its operation);

- standard indicators characterizing the most optimum and energy efficient conditions of production (capacity use factor, energy consumption values and energy losses during transmission and transformation, sanitary norms, thermal characteristics of premises, etc.);

- data about product assortment and outputs; - feedstock and raw materials parameters; - data about planned and actual specific consumption of fuel and energy in

previous periods as well as energy and fuel consumption inspection reports;

18

- data about best practices of fuel and energy saving and efficient use at domestic and foreign facilities manufacturing similar products;

- plans of management and technical measure to save fuel and energy. Since most of this information is commercial secret of the enterprises, it is

difficult to get such information without consent. So the sector’s energy saving potential is estimated on the basis of aggregates via application of benchmarking technique and the methodology offered in UNIDO manual [1].

To estimate energy-saving potential of specific enterprises in the industry, we use the following expression:

xj

xlowest

EEIEEI

Potential,

,1-= (1)

where xlowestEEI , - the lowest value of energy efficiency index for enterprises in the industry (ВРТ);

xjEEI , - value of energy efficiency index for a specific enterprise in the industry.

Therefore, benchmarking provides the opportunity to assess energy efficiency of a specific enterprise as compared to other enterprises and to identify potential of energy-saving.

Based on this approach, we can find energy-saving potential for this sector of the national economy as follows:

( )xj

xlowest

SECSECorBPTbenchmarknalInternatio

Potential,

,1-= , (2)

where xjSEC , - averaged value of specific energy consumption for this sector of national economy in 2011. According to the data provided by the National Association of Sugar Manufacturers of Ukraine “UKTZUKOR”, the average value of specific energy consumption for this industry of the national economy was 48.1 kW*h/t in the season 2010-2011. Then, the energy-saving potential of this industry will be:

287.048.134.31 =-=Potential .

So, according to the data of 2011, the industry potential made up 28.7 %.

19

3 SWOT ANALYSIS OF PROSPECTS TO CUT ENERGY INTENSITY OF SECTORAL ENTERPRISES

Strengths

1. to cut fuel consumption 2. to cut product costs 3. to reduce greenhouse gas emissions

Weaknesses 1. investments required for purchase

and manufacturing of energy-efficient equipment

2. the need in large volume of energy from renewable sources

Opportunities 1. improvement of product

competitiveness on the world markets

2. increased attractiveness of enterprises for investors

Threats 1. decrease in natural gas prices as a

result of its higher production in Ukraine, which makes its use more profitable

2. bad harvest of sugar beet, which will cause enterprise profits to fall

20

4 GOAL OF THE ROADMAP The goal of the Roadmap is to improve energy efficiency of sugar industry,

which will provide the opportunity: - to cut energy intensity of product manufacturing, and in its turn, to cut the

costs, to increase competitiveness; - to reduce emissions of combustion products and greenhouse gas emissions into

atmosphere.

21

5 THE LIST OF KEY PERFORMANCE INDICATORS

1. Reduction of specific energy intensity of granulated sugar down to ВРТ level (34.3 kW·h/t).

2. Reduction of emissions of combustion gases into atmosphere. 3. Quantitative indicators of the implementation of new energy efficient

measures, technologies, equipment.

22

6 THE ACTIVITIES AIMED AT IMPLEMENTATION OF THE ENERGY EFFICIENCY POLICY

6.1. Organizational steps To launch European energy efficiency standards, in particular ISO 50001

“Energy Management”, in the agro-industrial sector of Ukraine. This would provide the capability to bring Ukrainian enterprises gradually to the EU approaches to energy saving.

- Energy audits at enterprises, development and implementation of action plans on fuel and energy saving. Continuous adjustment of the plans against the achieved indicators.

- Training sectoral enterprises’ employees in the basics of energy-saving and energy efficiency improvement.

- Improvement of institutional structure for energy saving management and improvement of energy efficiency in the industry.

- Development of the mechanisms to motivate sectoral enterprises to launch energy-saving measures and technologies.

- Compiling and analysis of fuel and energy balances at sectoral enterprises. 6.2. Measures of technical nature For heat technology system of an enterprise: - to develop energy efficient technologies of sugar beet processing. For

example, freezing out is applied instead of evaporation in order to concentrate the beet juice;

- to launch energy efficient technological equipment - to optimize modes of operation of energy consuming equipment, which is in

operation, and to increase its performance efficiency and cut energy losses - to extend applications of low potential heat from secondary energy sources

such as heat of waste water, ventilation emissions, etc. Secondary energy sources have been relatively extensively used at the enterprises in the sugar industry as compared to other subsectors of the food sector. In particular, heat of hot condensates and secondary steam, however, large reserves still are available.

- to improve metrological control, oversee technological modes and meter energy consumption at all stages of production. To install modern devices for metering consumption of natural gas, power, heat, hot and cold water at enterprises. To replace damaged devices. To launch automated system of fuel and energy control and metering.

For heating and ventilation systems: - To cut losses of energy in external and internal heat supply networks,

control of heat insulation condition and losses of heat media. To replace worn out heat supply networks, to improve heat protection.

23

- To apply heat insulation in buildings, to cut losses of heat. To seal door and window openings. To replace old windows with new plastic frames and double glazed units. To install heat recuperators for ventilation air. To remove decorative grating from heating surface of heating devices. To install reflecting shields behind heating devices.

- To carry out flushing of heating system on a regular basis. - To equip heating devices with individual automated regulators of heat

current. To install automatic temperature control systems at inlets to buildings to enable heating medium regulation against ambient air temperature.

- To install energy efficient heating boilers, in particular, the biomass-fired boilers.

For power consumption system:

- To modernize illumination systems via installation of energy-saving lamps and automated illumination control systems. To install frequency converters in electric drives of equipment.

- To install automated ventilation control systems to enable regulation depending on ambient air temperature and time of day.

- To modernize a wiring system. - To compensate reactive power.

6.3. Use of SES The secondary energy sources (SES) in sugar industry cover: - Heat of waste hot gases and liquids (stack gases, condensates, ventilation

air, etc.); - Heat of secondary steam of evaporating juice and syrup; - Heat of wet hot air from a sugar drier; - Heat lost with the products and byproducts of the production (oil, cake,

etc.). Modern schemes of heat utilization suppose the use of portion of this heat to

heat juice, barometric water, air and for other needs, however, most enterprises of Ukraine still have room to use SES. To increase SES potential, it is possible to use heat pumps, however, their installation is classified as high-cost measures.

6.4. Use of ARES Given steadily growing prices for natural gas, it is feasible in economic terms

to use ARES for heat supply to enterprises. Considering that most sugar factories are located in rural area, it seems most beneficial to use biomass as fuel. The advantages of this decision is that annual renewable potential of biomass is estimated to be 10-fold higher than the world output of fossil fuels. And, the investments in retooling of the existing equipment that will enable the use of this energy are relatively low. Efficient use of biomass provides the capability to reduce significantly emissions of

24

NOx, fossil СО2, and anaerobic СН4(in particular, via reduction of beet pulp soil heaps).

According to the Institute of Technical Thermal Physics of the National Academy of Sciences of Ukraine, the annual economic potential of biomass in Ukraine looks as follows:

Table 4

Biomass type Total

generated, million tons

Economic potential,

million t.o.e.

Straw of grain crops 32 3.17

Rape straw 2.9 0.96

Waste of grain corn (stalks, cobs) 34 8.59

Sunflower waste (stalks) 17 5.55

Secondary waste (husks, oil cake) 9.7 0.99

Wood biomass 3.9 1.87

Biodiesel - 0.35

Bioethanol - 2.36

Biogas from manure - 0.35

Biogas from solid municipal waste landfills - 0.26

Biogas of wastewater - 0.09

Energy crops: - poplar, acacia, willow, etc. - rape (straw) - rape (biodiesel) - corn (biogas)

20 3.2 - -

10.30 1.13 0.77 1.10

Peat - 0.4

TOTAL - 38.24 Possible applications of biomass:

1. Combustion of refined biomass (straw, beet pulp, etc.) in solid fuel boilers. 2. Manufacturing of biomass pellets and their use to generate heat or for

cogeneration of heat and electricity. 3. Combustion of biomass (in particular, beet pulp) mixed with coal, which

generates low volume of volatile substances. This provides the opportunity partially or completely to replace natural gas at the enterprises.

4. Generation of biogas from beet pulp and its use to replace natural gas partially.

25

6.4 Forecast inidivicative fuel and energy balance for the industry

The change of specific consumption of fossil fuels (primarily, natural gas) for granulated sugar production is forecasted. Due to unstable yields of sugar beet related to differing weather conditions, the sugar production in Ukraine will vary. The accepted scenario of sugar output in Ukraine till 2030 supposes 2% annual growth. Four scenarios of energy consumption development in the industry are proposed:

1) no changes – baseline scenario, where energy-saving measures will not be implemented, ARES are not used and due to aging of equipment, specific energy consumption will grow in stable manner from 48.1 kW∙h/t to 60 kW·h/t.

2) basic changes – implementation of main energy-saving measures – organizational and low-cost technical measures. This would provide short-term effect of energy consumption reduction, however this effect will soon be neutralized by equipment aging impact unless significant investments are made.

3) all changes – implementation of energy-saving measures and achieving BPT energy consumption level = 34.3 kW∙h/t till 2030.

4) ARES – additionally suppose gradual growth in ARES share in energy supplied to enterprises up to 50% by 2030.

Diagram 4. Fossil fuel consumption by enterprises in the sugar industry, million kW∙h (forecast)

26

7 REGULATORY FRAMEWORK UNDERLYING THE ROADMAP The Roadmap will facilitate the implementation of the State Target Economic

Program of Energy Efficiency for 2010–2015 approved by the Resolution of the Cabinet of Ministers of Ukraine dated 01 March 2010 No. 243.

The Roadmap has been developed in order to implement the following legislative and regulatory acts:

- Decree of the President of Ukraine dated 27.12.2005 No. 1863/2005 “On the Resolution of the National Security and Defense Board of Ukraine dated 9 December 2005 “On the Status of Energy Security of Ukraine and the Main Principles of the State Energy Saving Policy”;

- Resolution of the Cabinet of Ministers of Ukraine dated 27.04.2011 No.447 “The Matters of Implementation of the State Target Economic Energy Efficiency Program for 2010-2015”;

- Resolution of the Cabinet of Ministers of Ukraine dated 01.03.2010 No.243 “On Approval of the State Target Economic Energy Efficiency Program for 2010-2015”;

- Directive of the Cabinet of Ministers of Ukraine dated 15.03.2006 No.145-r “On Approval of the Energy Strategy of Ukraine for the period till 2030”;

- Directive of the Cabinet of Ministers of Ukraine dated 29.07.2009 No.891-r “On Approval of the Action Plan for 2010 on the Implementation of the State Regional Development Strategy for the Period till 2015”.

27

8 PERIOD AND STAGES OF THE ROADMAP IMPLEMENTATION The Roadmap implementation consists of two stages. The first stage (2015-2020) includes the implementation of the low-cost

measures. At the second stage (2021-2030), higher profits and growing investment

attractiveness will provide the capability to implement more efficient actions.

28

9 FINANCING OF THE MEASURES STIPULATED BY THE ROADMAP

Financing of energy-saving measures is planned from the following sources: - own resources of the enterprise (at the second stage – partially on the

account of extra profits gained thanks to the implementation of energy-saving measures implemented at the first stage);

- third party investments (additional share issue, etc.); - borrowings from Ukrainian banks (credit lines, target loans for purchase of

energy efficient equipment, etc.); - loans from international organizations.

29

10 EXPECTED OUTCOMES OF THE ROADMAP IMPLEMENTATION

Implementation of the Roadmap measures will create favorable conditions to improve economic performance indicators of AIS enterprises, to improve reliability of energy supply, to reduce fuel and energy consumption, to cut the costs of products and will provide the possibility:

- to cut energy intensity of certain product types; - to improve energy security in the agro-industrial sector; - to cut production costs and nonproduction losses of fuel and energy; - to optimize structure of fuel and energy balance as well as fuel and energy

consumption, in particular, to cur the share of natural gas in fuel and energy mix, to replace it with other types of fuel and energy, primarily, obtained from ARES and SES;

- to ensure reduction of contaminant emissions; - to create conditions for raising the funds required for renovation and

modernization of production assets; - to improve awareness among the staff of AIS enterprises about the requirement

to save fuel and energy.

30

11 MONITORING AND SUMMARIZING OF ROADMAP IMPLEMENTATION RESULTS

Monitoring of the Roadmap implementation results shall be against the State Statistics Committee’s data since the Committee gets annual reports of the enterprise activities. Where necessary, the changes may be initiated to effective reporting forms of enterprises or new reporting forms may be developed, which will consider the specifics of energy consumption and energy-saving in the agro-industrial sector.

Monitoring by AIS industries is feasible, then there will be the opportunity to get data on the status of the Roadmap implementation from sectoral associations, which analyze activities of their member enterprises.

31

SOURCES 1. Global Industrial Energy Efficiency Benchmarking. An Energy Policy Tool.–

Working Paper.– November 2010