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 Vegetable Oil Industry of the Agro-Industrial Sector of

Ukraine

Prepared by: M. Maslikov

Kyiv 2013

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CONTENTS

ABBREVIATIONS...................................................................................................... 4

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

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

2 DEFINING THE PROBLEM, WHICH THE ROADMAP SEEKS TO ADDRESS....................................................................................................... 9

3 SWOT ANALYSIS OF PROSPECTS TO CUT ENERGY INTENSITY OF SECTORAL ENTERPRISES............................................................................. 18

4 GOAL OF THE ROADMAP.......................................................................... 19

5 THE LIST OF KEY PERFORMANCE INDICATORS ........................................ 20

6 THE ACTIVITIES AIMED AT IMPLEMENTATION OF THE ENERGY EFFICIENCY POLICY................................................................................... 21

7 REGULATORY FRAMEWORK UNDERLYING THE ROADMAP..................... 25

8 PERIOD AND STAGES OF THE ROADMAP IMPLEMENTATION ................. 26

9 FINANCING OF THE MEASURES STIPULATED BY THE ROADMAP ............ 27

10 EXPECTED OUTCOMES OF THE ROADMAP IMPLEMENTATION ...................................................................................... 28

11 MONITORING AND SUMMARIZING OF ROADMAP IMPLEMENTATION RESULTS........................................................................ 29

SOURCES ........................................................................................................ 30

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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

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

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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.

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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.

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 is 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”.

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;

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- 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.

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2 DEFINING THE PROBLEM, WHICH THE ROADMAP SEEKS TO ADDRESS

2.1 Overview of Enterprises in the Sector

Vegetable oil industry in Ukraine is among the most important ones in the food sector considering its powerful export potential, and production output, and energy consumption volumes. 10% of the total food output falls onto it. The industry manufactures the following products: various types of raw and refined vegetable oils, hydrogenized fat, margarines, mayonnaises, soaps, glycerin. Biofuel production has been spreading at the industry’s enterprises recently.

Sunflower (over 90%) dominates among multiple oil crops growing in Ukraine, while the outputs of rape oil, corn oil and other vegetable oils are far lower. Ukraine is among the leaders by oilseed output (8.5 million tons in standard weight) as well as sunflower oil (3.35 million tons). Ukraine also remains a permanent leader in sunflower oil exports – 2.7-2.8 million tons, or 54% of the world’s sunflower oil exports. In 2011-2012 marketing year, the total output of the main types of oil plants in Ukraine would be over 12 million tons while the domestic processing capacity was 11 million tons as of 1 September 2011. The average sunflower yields in Ukraine are 10-15 hundreds kilograms per hectare, oil percentage is 45-47%. At the same time, the yields in Europe are 15-25 hundreds kilograms per hectare. The best varieties are characterized by high crop yields (35-45 hundreds kilograms per hectare) and high oil percentage in the seeds (52-60%). So, selection activities focused on high-yielding varieties breeding and dissemination may considerably improve economic performance of vegetable oil production.

Sunflower seeds contain 20-25% husks, which contain little oil thus being production wastes. However, sunflower husks are biofuel resource that could be and has been used in the world and at the best factories in Ukraine.

According to DK 009:2010 - National Classifier of Economic Activities effective since 01.01.2012 – vegetable oil and fat production sector includes:

10.4 Vegetable oil and animal fat manufacturing 10.41 Vegetable oil and animal fat manufacturing 10.42 Margarine and similar food fat manufacturing Over 90% of the total sunflower oil output is concentrated at 25 largest oil-and-

fat manufacturers, where oil extraction mill method is applied. This provides the opportunity to increase oil output from seeds and to reduce the costs of seed processing. Depending on the volume of supplied seeds, an oil extraction factory is in operation from 270 to 330 days a year, the factory undergoes maintenance for the rest of the period.

As a rule, an oil extraction factory includes the following sections: - seed elevator; - husking and fanning shop (removing husks from seeds); - milling shop (oil production by press method); - extraction shop (oil production by extraction method);

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- extraction cake elevator; - refining shop; - packing section; - feedstock and finished product warehouses; - oil tank department; - air and refrigerating compressor rooms; - boiler house; - office and welfare buildings, etc. Oilseeds are stored in elevator silos – 10 to 40 meters high, 5 to 10 meter

diameter cylindrical tanks. The heat is developed in silos - where seeds are stored in bulk - due to biological processes (self-warming). To prevent seeds damage, they are cooled down to 5°С by ventilating the silos using cool air at the temperature 1 to 2°С. Refrigerating plants are used to cool the air.

Once sunflower seeds are delivered to production site, they are cleaned from impurities in a trommel – a drum consisting of two nets with different orifice sizes. This way both large (residual leaves) and small (sand) impurities are removed.

To reduce excessive moisture and facilitate seeds cleaning, seeds are dried in tower driers or drum driers. Warm air for a drier may be obtained from waste energy or biomass.

Unhusking of seeds with husking-fanning machines provides the capability to separate seed kernels, that contain main portion of oil, from husks. Most factories incinerate husk in solid fuel boilers, cyclone boilers or, upon thermochemical conversion into gas, in gas-fired boilers generating thermal energy. This provides the capability to save natural gas. Pellets (granules) are also formed of husk to further utilize them as biofuel. The problem with husk incineration is the large amount of gluey and abrasive ash and large content of hazardous compounds in flue gases.

Seed kernels are crushed at roller breakers to facilitate further processing and oil release. The received material (oil seed meal) passes two-stage thermomoist processing:

• Inactivation in a screw conveyor with hot water at 60 °С to inactivate oil seed meal ferment system. At EU enterprises, the water for inactivation is warmed up with the use of secondary energy sources (heat from condensate, stack gases, etc.).

• Cooking in oil seed cookers at 105°С to destroy cells and facilitate oil release.

Medium and large enterprises use heating kettles consisting of 6-8 vapor-filmed steaming vats and mixers. Oil seed meal is fed to them from the upper vat and is cooked little by little while being poured down to the lower vats. Heating kettles are main consumers of thermal energy in oil production by press. The problem of heating kettles is stable removal of condensate from heating jackets.

Medium and small enterprises use electric heating kettles. By structure, they are similar to steam kettles, but the jackets are fed not with steam, but with mineral oil heated by electric heaters. These heating kettles are efficient in the cases where electricity is cheap and construction and operation of steam boiler house involve high capital and operating expenditures.

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Once cooked, the generated mass (squash) immediately moves for pressing. The first pressing (forepressing) takes place at expellers. After that, the oil moves for refining. Forepressed cake contains approximately 20% oil. It is fed to the second level presses – expellers. The second-stage pressure oil goes to refining, and forepressed cake (5-9% oil content) – for mixed feed production.

Large enterprises (oil extraction mills) use extracting instead of expeller pressing. Forepressed cake is shaped into granules and fed to a column-type or belt-type extractor, where a pre-heated solvent at 30 to 40°С (gasoline, hexane, nefras, for aromatic oils – ethyl alcohol) is added. Solvent is heated with steam in a shell-and-tube or plate-type heater. Oil dissolves in a solvent, therefore its residues are extracted from cake. Oil solution in solvent (miscela) and defatted protein residues (protein meal) are obtained as a result of extracting.

Currently oil extraction factories in Ukraine mostly use two types of extractors – belt-type MEZ extractors and column-type ND extractors. Loop extractors with a thin layer of material are also common worldwide (Crown ІІІ) and Reflex, Rotocell carousel extractors. These extractors are more reliable, user-friendly. The primary areas to develop extractors are to accelerate extraction, to cut solvent losses due to evaporation (thus improving maintenance safety as well) and those with oil cake (facilitates reduction of steam consumption in a toaster) and reduction of oil losses in oil cake.

The solvent is evaporated from miscela at triple-effect distillation vacuum evaporator. Each tube film distiller is heated with saturated steam, and solvent steam is fed out to a vacuum condenser. To absorb residual solvent, superheated steam is supplied to a final distiller. The solvent steam is condensed, received solvent is used for repeated extraction. The oil, from which solvent has been evaporated (extracted oil), is used for manufacturing of paints, oil varnishes, pharmaceuticals, etc.

Oil cake contains 12-15% of solvent. To remove solvent, the oil cake is treated with heat in a heating kettle (toaster), which resembles a cooker by structure, but consists of 10 vats, where saturated steam (to their vapor films) and superheated steam (directly to vats) is fed to absorb evaporated solvent. The solvent-free oil cake is used as fodder additive.

A toaster (like a heater) consumes a lot of steam. To reduce steam consumption, the ways to improve heat insulation and to intensify mass exchange should be considered.

The solvent is reused. To this end, the mixture of solvent vapors and the water from distillers and toaster is condensed in vacuum condensers, where the first stage of a condenser is cooled with a cooling water, the uncondensed gases from it goes to the second stage, which is cooled with a coolant from refrigerating machines. The mix of water and solvent is separated in precipitation tanks.

Besides unrefined oil, oil-and-fat enterprises produce refined (bottled and bulk) oil. However, total heat and electricity spent to manufacture these products is significantly lower – this is attributable both to lower unit spending and smaller volumes of manufacturing.

The main portion of energy could be saved within unrefined oil production process. This production also generate wastes – husks – this is feedstock for biofuel.

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Oil extraction factories get thermal energy supply from own boiler houses. Most EU factories and many Ukrainian factories have already installed equipment for husk combustion (gas generators, cyclone steam generators, solid fuel steam generators) giving the opportunity to get some steam to satisfy certain enterprise’s needs and to cut costs of husk removal and disposal. Heat consumption is defined by enterprise productivity and ambient temperature and relatively lowly varies during a day and season of oil extraction. This provides the capability to install mini cogeneration plants at oil factories and to generate power on heat consumption.

2.2 Sources of fuel and energy

The main types of fuel and energy consumed by enterprises in the subsector are natural gas, power and heat. Since most enterprises in the sector are located in urban area, natural gas and electricity are supplied from municipal distribution networks.

Natural gas is used to operate heat generating equipment located on site of an enterprise. 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 municipal network. The gas expansion takes place at a gas distributing plant. The system of natural gas metering is also instrumental.

Most enterprises use sunflower husks as fuel in order to save natural gas. Power to the sector enterprises is supplied primarily by 10 kV above-ground or

cable lines from municipal distribution lines. Power is supplied to corporate power consumers directly from on-site transformer substations and package transformer substations. In most cases, enterprises fall into the second category by power supply reliability. 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 sectoral enterprises.

Heat supply at enterprises is arranged from on-site industrial boiler houses equipped with steam boilers (e.g., DЕ-10-14, DE-25-14), one boiler is in reserve.

2.3. Consumers of fuel and energy

Natural gas. Main consumers of natural gas are steam boilers. 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 heat generation equipment, so efficiency of the equipment is within the range of the values set in manufacturer’s certificates.

Heat. Heat consumers are heaters, worm inactivators (press shop), heating units for solvent and miscella, distillation unit, toaster (extraction shop), heating units for oil and water, column deodorizer (refining shop), heating of premises, forced-air-exhaust ventilation and public utility use.

Electricity. The main electricity consuming equipment include: sieves, ventilators, inlet and exhaust ventilation units, air conditioners, electric motors, pump and mixer transporters, equipment for maintenance and repair (turning and drilling

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machines, electric tools), boiler house equipment (air ventilators, fans, pumps), production premises and site illumination equipment, compressors.

2.4. Fuel and energy consumption balance

A structural scheme of heat consumption breakdown by components for production of unrefined oil by press and extraction method is illustrated at Diagram 1.

Seed drier

Heaters

Solvent heating

Distillation

Toaster

Heating

Ventilation

Hot water supply

Losses

PROCESSING NEEDS AUXILLIARY NEEDS

Other losses

Diagram 1. Structural scheme of heat consumption A structural scheme of electricity consumption breakdown by components for

production of unrefined oil by press and extraction method is illustrated at Diagram 2.

Seed feeding

Dehulling

Flaking

Pressing

Oil pumping

Heating and ventilation

Generation of

compressed air

Heat supply

Losses

PROCESSING NEEDS AUXILLIARY NEEDS

Other losses

Illumination

Other consumers

Diagram 2. Structural scheme of electricity consumption

Typical composition of heat and electricity consumption includes: 1) technological needs:

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- 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. The main factors of impact on quantitative value of fuel, heat and electricity

consumption in item “auxiliary production needs” are as follows: 1) 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.

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

mode of system operation, technical specifications of equipment, operation

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conditions and requirements, manufacturing process management, maintenance process management;

- 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 heat balance structure of an oil extraction factory is described

below in table 1. Table 1

Model heat balance of an oil extraction factory

No. Balance Items Share of Supply, % 1 2 3 1 Supply: 100.00 From boiler 100.00 2 Consumption (total): 98.00

2.1 Technological needs 90.50 2.2 Heating and ventilation of production buildings 4.50

2.3 Heating and ventilation of auxiliary production and office premises 1.5

2.4 Sanitary and hygienic needs 0.5 2.5 Other consumption 1.00 3 Losses in heat supply networks 2.00

Consolidated electricity balance structure of an oil extraction factory is

described below in table 2.

Table 2

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Model electricity balance of an oil extraction factory

No. Balance Items Share of Supply, % 1 2 3 1 Supply (total electricity supply): 100.00 2 Consumption for technological processes: 73.19 3 Consumption for auxiliary processes - total: 21.74 including: - water supply 2.22 - cold generation 0.22 - compressed air generation 0.06 - wastewater pumping 0.44 - oil pumping 1.19 - auxiliary service needs 1.89 - heating and ventilation 2.38 - indoor lighting 10.75 - outdoor lighting 1.59 - other consumers 1.00 4 Losses in networks and transformers 5.07

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; - 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].

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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.

So, according to the data provided by the enterprises of Ukraine, the average value of specific energy consumption for this sector of national economy was 845.00 kW*h/t in 2011. BPT value assumed at the level of the best Ukrainian manufacturer makes up 451.70 kW*h/t. Then, energy-saving potential of this industry will be:

47.0845.00451.701 =-=Potential .

So, according to the data of 2011, the sectoral potential made up 47 %.

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

SWOT analysis is the analysis in strategic planning sector via grouping of the factors and phenomena into four categories.

The findings of SWOT analysis into the prospects of energy intensity reduction and launch of ARES at sectoral enterprises.

Table 2 Strengths

- to cut actual fuel and energy consumption

- to cut product costs - to reduce greenhouse gas emissions

Weaknesses - investments required for purchase

and manufacturing of energy-efficient equipment

- the need in large volume of energy from renewable sources

Opportunities

- improvement of product competitiveness on the world markets

- increased attractiveness of enterprises for investors

- lower costs of sunflower seed processing will encourage manufacturers to cut exports and increase processing at Ukrainian enterprises

Threats - decrease in natural gas prices as a

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

- bad harvest of sunflower, which will cause enterprise profits to fall

- higher costs of sunflower seed processing will encourage manufacturers to export it

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4 GOAL OF THE ROADMAP The goal of the Roadmap is to improve energy efficiency of oil and fat

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

costs, to increase competitiveness at the domestic and foreign markets; - to reduce emissions of combustion products and greenhouse gas emissions into

atmosphere.

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5 THE LIST OF KEY PERFORMANCE INDICATORS 1. Reduction of specific energy intensity of oil manufacturing up to ВРТ level

(452 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.

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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 oil production - 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.

- To improve metrological control, to oversee technological modes and metering of energy consumption at all stages of production. To install modern devices for metering consumption of natural gas, power, 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.

- 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.

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- 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 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 oil and fat industry cover: - Heat of waste hot gases and liquids (stack gases, condensates, ventilation

air, etc.); - Heat of secondary steam from heaters; - Heat of secondary steam of evaporating solvent; - Heat of wet hot air from a seed drier; - Heat lost with the products and wastes of the production (sugar, beet, etc.). Modern schemes of heat utilization suppose the use of portion of this heat to

heat air and for other needs, however, most sugar factories 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 of enterprises. Considering that sunflower husks is the waste of oil production, it seems most beneficial to use them and other biomass as fuel. The advantages of this decision is that annual renewable potential of biomass is estimated to be 10-fold higher that 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 NOx, fossil СО2, and anaerobic СН4.

Many factories of Ukraine have already installed the boilers and equipment for firing sunflower husks. However, there is potential to use ARES for generation of heat and power.

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 3

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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, husks, 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, husks) mixed with coal, which generates

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

4. Generation of biogas from husks and its use to replace natural gas partially. 6.5 Forecast inidivicative fuel and energy balance for the industry

The change of specific consumption by oil production of fossil fuels (primarily, natural gas) is forecasted. Due to unstable yields of sunflower related to differing weather conditions and changes in seed exports caused by price fluctuations on foreign markets, the oil production in Ukraine will vary. The accepted scenario of oil output in Ukraine till 2030 supposes 5% annual growth. Four scenarios of energy consumption development in the industry are proposed:

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1) no changes – baseline scenario, where energy-saving measures will not be implemented, ARES use will not extend and due to aging of equipment, specific energy consumption will grow in stable manner from 839 kW∙h/t to 1,100 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 = 452 kW∙h/t till 2030.

4) ARES – additionally suppose gradual growth in ARES share in energy supplied to enterprises up to 80% by 2030.

Diagram 3. Fossil energy consumption by enterprises in the oil and fat industry, million kW∙h (forecast)

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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”.

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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.

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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.

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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.

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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.

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

Working Paper.– November 2010