IMPROVING THERMAL AND ELECTRIC ENERGY EFFICIENCY AT CEMENT PLANTS: INTERNATIONAL BEST PRACTICE © 2017 International Finance Corporation All rights reserved. 2121 Pennsylvania Avenue, N.W. Washington, D.C. 20433 ifc.org The material in this work is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. IFC does not guarantee the accuracy, reliability or completeness of the content included in this work, or for the conclusions or judgments described herein, and accepts no responsibility or liability for any omissions or errors (including, without limitation, typographical errors and technical errors) in the content whatsoever or for reliance thereon. Cover Image: Bigstock TABLE OF CONTENTS ABBREVIATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v ABSTRACT  .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v FOREWORD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi 1 THE CEMENT MANUFACTURING PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1  Raw Material Preparation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.2  Fuel Preparation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.3  Clinker Production  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.4  Clinker Cooling  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.5  Finish Grinding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2 ENERGY EFFICIENCY TECHNOLOGIES AND MEASURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.1  Raw Material Preparation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2.1.1  High-Efficiency Fans and Variable Speed Drives for Mill Vents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2.1.2  Pre-grinding for Ball Mills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2.2  Fuel Preparation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.2.1  High-Efficiency Fans and Variable Speed Drives for Mill Vents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.3  Clinker Production  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.3.1  Process Controls and Optimization  .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.3.2  Modern Multi-Channel Burners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 2.3.3  Low-Pressure Drop Cyclones for Suspension Preheaters  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.3.4  Waste Heat Recovery for Power Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2.3.5  Oxygen Enrichment Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 2.4  Clinker Cooling  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 2.4.1  Optimizing Heat Recovery  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 2.4.2  Variable Speed Drives for Cooler Fans  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 2.5  Finish Grinding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 2.5.1  Process Control and Management in Finish Grinding  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Replacing a Ball Mill with a Vertical Roller Mill, High-Pressure Grinding Rolls, 2.5.2  or Horomill® for Finish Grinding  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 2.5.3  Optimizing the Operation of a Cement Mill .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 2.5.4  High-Pressure Roller Press as a Pre-grinding Step for Ball Mills  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 2.5.5  Improved Grinding Media for Ball Mills  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 2.5.6  High-Efficiency Classifiers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 2.5.7  High-Efficiency Fans for Cement Mill Vents .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice i 2.6  General Measures  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 2.6.1  High-Efficiency Motors and Efficient Drives  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 2.6.2  Variable Speed Drives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 2.6.3  Preventative Maintenance  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 2.6.4  Compressed Air System Optimization and Maintenance  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 2.6.4.1  Compressed Air System Maintenance  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 2.6.4.2  Reducing Leaks in Compressed Air Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 2.6.4.3  Compressor Controls  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 3 ENERGY EFFICIENCY PROJECT IMPLEMENTATION BARRIERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 4 BUSINESS MODELS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 4.1  Direct Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 4.1.1  Direct Loans (Senior Debt)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 4.1.2  Subordinated Debt Financing (Mezzanine Financing)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 4.1.3  Equity Financing  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 4.1.4 Leasing  .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 4.1.5  Partial Loan Guarantees  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 4.2  Energy Performance Contracting Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 4.2.1  Definitions and Basic Concepts  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 4.2.2  Shared Savings Energy Performance Contract  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 4.2.3  Guaranteed Savings Energy Performance Contract  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 4.2.4 Chauffage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 4.2.5  Comparative Analysis of the Different Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 4.3  Public-Private Partnership  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 4.4  Special Purpose Vehicle  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 INTERNATIONAL BEST PRACTICE BUSINESS MODELS FOR IMPLEMENTING 5  ENERGY EFFICIENCY PROJECTS IN INDUSTRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 5.1  Lending Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 5.1.1  Promoting an Energy Efficiency Market in Chile  .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 5.1.2  China Utility-Based Energy Efficiency Program (CHUEE)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 5.1.3  Bangkok Mitsubishi UFJ Lease Ltd (BMUL) Risk-Sharing Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 5.2  Equity Financing (Private Equity, Risk/Venture Capital, etc.)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 5.2.1  Clean Resources Asia Growth Fund  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 5.3  Partial Guarantee Mechanism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 5.3.1  The Energy Efficiency Guarantee Mechanism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 5.3.2  Krakow Energy Efficiency Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 5.4  ESCO Business Models  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 5.4.1  Green for Growth Fund  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 6 BRAZILIAN MECHANISMS TO SUPPORT THE USE OF DIFFERENT BUSINESS MODELS  .. . . . . . . . . . . . . . 56 6.1  Taking on Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 6.2  Energy Performance Contracting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 ii Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice LIST OF FIGURES Figure 1:  Cement Production Process Flow Schematic and Typical Energy Efficiency Measures . . . . . . . . . . . . . . . . . . . . . 2 Figure 2:  Rotary Cement Kiln (Dry Process with Cyclonic Preheaters)  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Figure 3:  Schematic Depiction of Control Points and Parameters in a Kiln System Control and Management System . . . . . . 9 Figure 4:  Typical Waste Heat Recovery System Using Steam Rankine Cycle  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Figure 5:  Waste Heat Recovery Installations in the Cement Industry  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Figure 6:  Installed Costs for Waste Heat Recovery Systems  .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Figure 7:  Installed Costs for Chinese Stem-based Waste Heat Recovery Systems  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Figure 8:  Fixed Static Inlet Section for a Clinker Cooler . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Figure 9:  Optimized Cooling Air Distribution for a Typical Eight-compartment Reciprocating Grate Cooler  . . . . . . . . . . 22 Figure 10:  Power Consumption of Fan Installations with Different Control Methods  . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Figure 11:  Measurement and Manipulation Points in a Process Control System  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Figure 12:  High-Pressure Roller Press for Finish Grinding  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Figure 13: Horomill® Concept  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Figure 14:  Basic Layout of Cement Grinding Using Horomill®  .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Figure 15:  Energy Savings Potential of Vertical Roller Mills versus Ball Mills  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Figure 16:  Energy Savings Potential of Horomill®  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Figure 17:  High-Pressure Roller Press as a Pre-grinding Step for Ball Mills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Figure 18:  High-Pressure Roller Press as a Semi-finish Pre-grinder with Two-stage Separator  . . . . . . . . . . . . . . . . . . . . . 32 Figure 19:  Schematic of a High-Efficiency Separator/Classifier  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Figure 20:  Efficiency Ranges for Different Motor Classification  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Figure 21:  Structure of Various Financing Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Figure 22:  Partial Loan Guarantee  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Figure 23:  Shared Savings Financial Model  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Figure 24:  Guaranteed Savings Financial Model  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Figure 25:  “Chauffage” Financial Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Figure 26:  Special Purpose Vehicle Financial Model  .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Figure 27:  Institutional Arrangements of CHUEE Program  .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Figure 28:  Krakow Energy Efficiency Project  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Figure 29:  Green for Growth Fund Institutional Structure  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice iii LIST OF TABLES Table 1:  Specific Thermal Energy Consumption by Rotary Kiln Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Table 2:  Production Gains Achieved in Different Plants Using Oxygen Enrichment Technology  .. . . . . . . . . . . . . . . . . . . 18 Table 3:  Improvements in Alternative Fuel Use with the Use of Oxygen Enrichment  . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Table 4:  Impact of Oxygen Injection on Alternative Fuels and Production  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Table 5:  Monitor and Control Parameters  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Table 6:  Use of Expert Control System  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Table 7:  Energy Performance Contracting Models .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 ABBREVIATIONS AC Alternating Current IFC International Finance Corporation BNDES Banco Nacional de Desenvolvimento IFRS International Financial Reporting Standards Econômico e Social (National Bank kWh Kilowatt hour for Social and Economic Development) MJ Megajoule DC Direct Current MW Megawatt ESCO Energy Services Company ORC Organic Rankine Cycle FASB Financial Accounting Standards Board PID Proportional–integral–derivative GJ Gigajoule PP&E Property, Plant, and Equipment IASB International Accounting Standards Board U.S. GAAP U.S. Generally Accepted Accounting Principles iv Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice ACKNOWLEDGMENTS This report was produced in cooperation between IFC, SNIC (Sindicato Nacional da Indústria do Cimento), ABCP (Associação Brasileira de Cimento Portland), and INT (Brazil’s National Institute of Technology). Development of the report was managed by Alexander Sharabaroff (IFC), Gonzalo Visedo (SNIC), and Marcelo Pecchio (ABCP). The primary authors include Stephanie Nour and Pierre Langlois of Econoler, Bruce Hedman, and Victor Turnell. Professor Dr. José Goldemberg, Dr. Mauricio Francisco Henriques Junior and Fabrício dos Santos Dantas of INT shared invaluable insights to the report. The team would like to acknowledge a tremendous contribution to this report by Michel Folliet (IFC), Jigar Shah (IFC), José Otavio Carvalho (President, SNIC), Renato José Giusti (President, ABCP), Hugo da C. Rodrigues Filho (ABCP), and Antonia Jadranka Suto (ABCP); Araceli Fernandez Pales, Kira West, and Steffen Dockweiler of the International Energy Agency (IEA); and Alexios Pantelias, John Kellenberg, Jeremy Levin, Luis Alberto Salomon, Sivaram Krishnamoorthy, Yana Gorbatenko and Alexander Larionov of IFC. ABSTRACT This report and an accompanying report on alternative fuels provide a summary of international best practice experience in the cement sector and focus on specific technical measures that could be implemented by cement plants to reduce their operating costs and improve their carbon footprints. The reports provide a plethora of practical information from implemented projects and include detailed technical descriptions, capital and operating costs, and case studies and references from locations where the measures have been implemented. A combination of general and in-depth information will make these reports a helpful read to both management and technical and operating personnel of cement plants as well as to a larger range of stakeholders. Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice v FOREWORD Cement is paramount for economic development and poverty reduction in emerging markets. Along with aggregates and water, cement is the key ingredient in the production of concrete, and, as such, is an essential construction material that enables large infrastructure projects in energy, water, and transport, as well as, importantly, the construction of modern buildings and urban infrastructure. Given the rapid urbanization rates in developing countries, cement is crucial for delivering on the climate-smart cities agenda. Emerging markets have been rapidly increasing their cement use and now account for over 90 percent of cement consumption worldwide (4.1 billion tons in 2016). Cement accounts for at least 5 percent of anthropogenic emissions of greenhouse gases, and, according to some estimates, this share may be even higher. At the same time, energy-related expenses in the cement sector, mostly on fossil fuels and electricity, account for 30 to 40 percent of the industry’s cash costs. While current energy prices are still recovering from the global financial and economic crises, there is no doubt that they will continue to increase in the long run. In recent years, the cement industry has been successful in reducing its operating costs and improving its carbon footprint (emissions per unit of output) by improving energy efficiency, increasing the use of alternative fuels, and deploying renewable energy sources. With a cumulative investment portfolio in cement of over $4.2 billion, IFC has accumulated a vast experience in the industry, including in sustainable energy projects. To share its knowledge with external stakeholders and to promote sustainable practices in the sector, IFC commissioned two studies on international best practice in the cement sector, covering thermal and electric energy efficiency, and alternative fuels. These studies were developed as part of the Brazil Low Carbon Technology Roadmap led by the National Cement Industry Association of Brazil (SNIC), the Brazilian Association of Portland Cement (ABCP), the International Energy Agency (IEA), the Cement Sustainability Initiative (CSI) of the World Business Council for Sustainable Development (WBCSD), and IFC. This report, and an accompanying report on alternative fuels, provide a summary of international best practice experience in the cement sector and focus on specific technical measures that could be implemented by cement plants to reduce their operating costs and improve their carbon footprints. The reports provide a plethora of practical information from implemented projects and include detailed technical descriptions, capital and operating costs, and case studies and references from locations where the measures have been implemented. A combination of general and in-depth information will make these reports a helpful read to both management and technical and operating personnel of cement plants as well as to a larger range of stakeholders. Michel Folliet Milagros Rivas Saiz Jigar Shah Chief Industry Specialist Manager Principal Industry Specialist Cement, Manufacturing, Agriculture and Services Cross Industry Advisory Energy Efficiency, Climate Business Department vi Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice THE CEMENT MANUFACTURING PROCESS 1 Cement production is a resource-intensive practice involving 1.1 RAW MATERIAL PREPARATION large amounts of raw materials, energy, labor, and capital. Raw material preparation provides a mixture of raw materials Cement is produced from raw materials such as limestone, and additives that has the right chemical composition and chalk, shale, clay, and sand. These raw materials are particle size distribution necessary for clinker production. For quarried, crushed, finely ground, and blended to the correct plants that receive their raw materials already crushed, this chemical composition. Small quantities of iron ore, alumina, stage usually involves grinding (milling), classification, mixing, and other minerals may be added to adjust the raw material and storage. Raw material preparation is an electricity-intensive composition. Typically, the fine raw material is fed into a production step requiring about 25 to 35 kilowatt hours (kWh) large rotary kiln1 (cylindrical furnace) where it is heated per ton of raw material, although it could require as little as 11 to about 1,450 degrees Celsius (2,640 degrees Fahrenheit). kWh per ton.2 The high temperature causes the raw materials to react and form a hard nodular material called “clinker.” Clinker is After primary and secondary size reduction, the raw materials cooled and ground with gypsum and other minor additives are further reduced in size by grinding. The grinding differs with to produce cement. the pyroprocessing process (kiln type) used. In dry processing, the materials are ground into a flowable powder in horizontal ball Beyond the mining of the raw materials, there are five major mills or in vertical roller mills. In a ball mill, steel-alloy balls are process steps in cement production (see Figure 1). Each of responsible for decreasing the size of the raw material pieces in a these steps has specific energy requirements and consumption rotating cylinder. Rollers on a round table provide size reduction patterns, as well as various energy efficiency measures that in a roller mill. Waste heat from the kiln exhaust or the clinker can be applied to reduce energy use and increase productivity cooler vent, or auxiliary heat from a standalone air heater before depending on the characteristics of and conditions at each pyroprocessing, is often used to further dry the raw materials. individual cement plant. The remaining energy consumption The moisture content in the raw material feed of a dry kiln is at cement plants is used for final-product packaging, typically around 0.5 percent (0 percent to 0.7 percent). lighting, and building services. These are typically minor electricity uses compared to the major electricity and fuel 1.2 FUEL PREPARATION consumption in the five major process steps. Solid fuel preparation involves optimizing the size and moisture content of the fuel fed to the pyroprocessing system of the kiln. Solid fuels are typically coal, petrocoke, and/or a mix of alternative fuels. Vertical roller mills are the dominant choice for solid fuel grinding, with a worldwide share of fuel processing capacity of around 90 percent. Ball mills, often 1 Clinker can be produced in many different pyroprocessing used for fuels with poor grindability, make up the remaining systems or kiln types. There are two basic kiln configurations— vertical (or shaft) kilns and rotary kilns—and many variations of each type are in use around the world. Generally, shaft kilns are an older, smaller, less-efficient technology and have 2 U.S. Environmental Protection Agency (EPA), Available been phased out in most countries. Modern cement plants use and Emerging Technologies for Reducing Greenhouse Gas variations on the dry rotary kiln technology, incorporating Emissions from the Portland Cement Industry (Washington, various stages of preheating and precalcining. DC: October 2010). Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 1 Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 2 Figure 1: Cement Production Process Flow Schematic and Typical Energy Efficiency Measures 2 The Cement Manufacturing Process Source: Institute for Industrial Productivity, Industrial Energy Technology Database, http://ietd.iipnetwork.org/content/cement. 10 percent.3 Increasingly, alternative waste and byproduct Rotary kilns are divided into two groups, dry process and wet streams—such as waste industrial oils and solvents, waste process, depending on how the raw materials are prepared. plastics, fractions of household waste, used tires, wastewater In wet process systems, raw materials are fed into the kiln as treatment sludge, and others—are being used as fuel. Some slurry with a moisture content of 30 to 40 percent. Wet process of these may require additional preparation infrastructure. kilns have much higher fuel requirements due to the amount of water that must be evaporated before calcination can take 1.3 CLINKER PRODUCTION place. To evaporate the water contained in the slurry, a wet process kiln requires additional length and nearly 100 percent Clinker production, or pyroprocessing, transforms raw materials more kiln thermal energy compared to the most-efficient dry (primarily limestone) into clinker (lime), the basic component of kiln (see Table 1). Wet process kilns tend to be older operations. cement, and releases carbon dioxide during the transformation. Clinker production is the most energy-intensive stage in cement Three major variations of dry process systems are used production, accounting for more than 90 percent of the total worldwide: long dry kilns without preheaters, suspension energy use and virtually all of the fuel use in the industry. Clinker preheater kilns, and preheater/precalciner kilns. In suspension is produced by pyroprocessing the raw materials in large kilns. preheater and preheater/precalciner kilns, the early stages of Three important processes occur with the raw material mixture pyroprocessing occur in the preheater sections, a series of vertical during pyroprocessing. First, all moisture is driven off from the cyclones (see Figure 2), before materials enter the rotary kiln. As materials. Second, the calcium carbonate in limestone dissociates the raw material is passed down through these cyclones, it comes into carbon dioxide and calcium oxide (free lime); this process is into contact with hot exhaust gases moving in the opposite called calcination. Third, the lime and other minerals in the raw direction, and, as a result, heat is transferred from the gas to the materials react to form calcium silicates and calcium aluminates, material. Modern preheater/precalciner kilns also are equipped which are the main components of clinker. This third step is with a precalciner, or a second combustion chamber, positioned known as clinkering or sintering. between the kiln and preheaters that partially calcines the material before it enters the kiln so that the necessary chemical The main kiln type in use throughout the world is the rotary reactions occur more quickly and efficiently. Depending on the kiln (see Figure 2). In rotary kilns, a tube with a diameter of up drying requirements of the raw material, a kiln may have three to eight meters is installed at a three- to four-degree angle that to six stages of cyclones with increasing heat recovery with each rotates one to five times per minute. The kiln is normally fired at extra stage. As a result, suspension preheater and preheater/ the lower end, and the ground raw material is fed into the top precalciner kilns tend to have higher production capacities and of the kiln, from where it moves down the tube countercurrent greater fuel efficiency compared to other types of systems, as to the flow of gases and toward the flame end of the kiln. As the shown in Table 1. raw material passes through the kiln, it is dried and calcined, then finally enters into the sintering zone. In the sintering (or 1.4 CLINKER COOLING clinkering) zone, the combustion gas reaches a temperature of 1,800 to 2,000 degrees Celsius. Hot clinker is discharged from Once the clinker is discharged to the clinker cooler from the the lower end of the kiln and is immediately cooled in large air kiln, it is cooled rapidly to minimize glass phase formation and coolers to ensure clinker quality and to lower it to handling to ensure maximum yield of alite (tricalcium silicate) formation, temperatures for downstream equipment. Cooled clinker is an important component for cement-hardening properties. combined with gypsum and other additives and ground into a The primary cooling technologies in use today are various fine gray powder called cement. Many cement plants include the configurations of grate coolers and older planetary coolers. In final cement grinding and mixing operation at the site. Others the grate cooler, the clinker is transported over a reciprocating ship some or all of their clinker production to standalone cement- grate through which air flows perpendicular to the clinker grinding plants situated close to markets. flow. In the planetary cooler (a series of tubes surrounding the discharge end of the rotary kiln), the clinker is cooled in a 3 Ibid. countercurrent air stream. Planetary clinkers are slowly being Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 3 Figure 2: Rotary Cement Kiln (Dry Process with Cyclonic Preheaters) Source: U.S. Department of Energy, Energy and Emissions Reduction Opportunities for the Cement Industry (Washington, DC: 2003). phased out as new generations of grate coolers enter the market consumption in a clinker cooler is the electricity required to with further operational and efficiency improvements. Modern push cooling air through the cooler. clinker coolers route the heated air to the precalciner to serve as preheated combustion air, or to the preheaters to preheat 1.5 FINISH GRINDING raw material prior to entering the kiln. The primary energy Once the clinker has been cooled, it must be crushed and mixed with other materials to produce the final cement product. After Table 1: Specific Thermal Energy Consumption by cooling, clinker is often stored in domes, silos, or bins. The Rotary Kiln Type material-handling equipment used to transport clinker from the Kiln Type Heat Input clinker coolers to storage and then to the finish mill is similar to (MJ/ton of clinker) equipment used to transport raw materials (for example, belt Wet 5,860–6,280 conveyors, deep bucket conveyors, and bucket elevators). To Long Dry 4,600 produce cement, clinker nodules are ground to the consistency 1-Stage Cyclone Suspension 4,180 of powder. If the blending material is not already in a powdered Preheater state, it also must be crushed and ground prior to blending. 2-Stage Cyclone Suspension 3,770 Preheater Ordinary Portland cement is composed of 95 percent clinker 4-Stage Cyclone Suspension 3,550 and 5 percent additives. “Blended cement” is the term applied Preheater to cement that is made from clinker that has been ground with a 4-Stage Cyclone Suspension 3,140 larger share of one or more additives. These additives can include Preheater plus Calciner such materials as fly ash from power plants, blast furnace slag 5-Stage Cyclone Suspension 3,010 volcanic ash, and pozzolans. The finish grinding is typically done Preheater plus Calciner plus High- Efficiency Cooler in ball mills, ball mills combined with roller presses, vertical 6-Stage Cyclone Suspension <2,930 roller mills, or roller presses. Coarse material is separated in a Preheater plus Calciner plus High- classifier and returned to the mill for additional grinding to Efficiency Cooler ensure that the final product has uniform surface area. Source: Based on N. A. Madlool et al., “A Critical Review on Energy Use and Savings in the Cement Industries,” Renewable and Sustainable Energy Reviews 15, no. 4 (2011): 2,042–60. 4 The Cement Manufacturing Process ENERGY EFFICIENCY TECHNOLOGIES AND MEASURES 2 As noted earlier, each of the process steps has specific • Reduce kiln exit gas losses energy requirements and consumption patterns, as well as • Install devices to provide better conductive heat various energy efficiency measures that can be applied to transfer from the gases to the materials, for example, reduce energy use and increase productivity depending on the kiln the characteristics and conditions of the cement plant. This • Operate at optimal oxygen levels (control section profiles specific energy efficiency technologies and combustion air input) measures that are applicable to the Brazilian cement industry. • Optimize burner flame shape and temperature The team first developed a draft candidate list of • Improve or add additional preheater capacity technologies and measures to improve thermal and electric • Reduce moisture absorption opportunities for raw energy efficiency in the cement sector based on information materials and fuels, avoiding the need to evaporate contained in the Industrial Energy Technology Database, adsorbed water augmented by additional research and resources. The • Reduce dust in exhaust gases by minimizing gas final list of priority technologies was determined in close turbulence: dust carries energy away from the kiln where coordination with the Brazilian counterpart based on it is captured in dust collectors; the dust is recycled into four main factors: 1) applicability to the Brazilian cement the raw material and fed into the kiln where it is reheated sector, which is already quite energy-efficient, 2) level of potential fuel and electricity savings, 3) level of commercial • Lower clinker discharge temperature, retaining more heat development, and 4) cost-effectiveness. The group of priority within the pyroprocessing system technologies generally includes simpler and non-complex • Lower clinker cooler stack temperature approaches to efficiency improvements, such as advanced control and automation systems, improved process • Recycle excess cooler air optimization processes, variable speed drive installations, • Reclaim cooler air by using it for drying raw high-efficiency electrical motors, and optimization of air materials and fuels or for preheating fuels or air compression systems. • Reduce kiln radiation losses by using the correct mix and more energy-efficient refractories to control kiln It should be noted that the technologies and measures temperature zones detailed below are specific capital upgrades that can be evaluated for a facility and that may be applicable depending • Reduce cold air leakage on the condition of current equipment, plant layout, site- • Close unnecessary openings specific conditions, and operating practices at the plant. In • Provide more energy-efficient seals general, a number of basic operating and maintenance best • Operate with as high a primary air temperature practices and objectives should be implemented as basic as possible operating principles for efficiency improvements, including: • Optimize kiln operations to avoid upsets. Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 5 2.1 RAW MATERIAL PREPARATION ENERGY PERFORMANCE 2.1.1 HIGH-EFFICIENCY FANS AND VARIABLE SPEED Electrical energy consumption can be reduced by 0.36 kWh DRIVES FOR MILL VENTS per ton of clinker.4 TECHOLOGY/MEASURE DESCRIPTION CAPITAL AND OPERATIONAL COSTS Process fans are large electricity consumers in cement manufacture, second only to grinding. With better materials Capital costs: $0.04 per ton of clinker and design techniques for fans and with design optimization, Operational costs: $05 fans with a higher operating efficiency are available for all cement industry applications. While also providing higher The specific costs of variable speed drives depend strongly efficiencies, these modern fans are designed for higher wear on the size of the system. In Europe, for systems over 300 resistance, lower material buildup and effects of erosion, kilowatts (kW), the costs are estimated at €70 per kW ($75 better speed control, low vibration, and high operational per kW) or less, and for systems in the range of 30 kW stability. Fans with higher energy efficiency (82 to 84 to 300 kW, the costs are estimated at €115 to €130 per percent) can replace inefficient process fans by both design kW ($120 to $140 per kW).6 In India, the costs of high- and by retrofit of energy-saving speed control devices, temperature and low-temperature variable speed drives are eliminating the control damper. Under a systems approach, assumed to be $240 to $300 per kW and $120 to $200 per pressure drops in inlet and outlet duct systems can be kW, respectively. In India, the costs of high-efficiency fans analyzed and reduced by using computational fluid dynamics are $80 to $120 per kW.7 techniques, further improving fan system efficiencies. FACTORS FOR IMPLEMENTATION Precise design specifications, reduced margins between This is generally a retrofit measure. Layout constraints can requirement and capacity, and the use of appropriate control pose certain barriers in some facilities, where the ideal duct systems can offer a significant energy-saving opportunity. system cannot be accommodated. Optimum design margins for capacity and heat should not be greater than 10 percent, resulting in improved COST EFFECTIVENESS PRIORITY power consumption of up to 25 percent. To minimize this High; however, applicability may be limited depending on margin and offer precise process controls, the choice of an the efficiency of current fan and vent systems. Economics appropriate speed control device becomes essential. Speed also depends on the power price. control is the most effective means of capacity control in centrifugal equipment; the choice of the right speed CASE STUDY control mechanism offers additional margins for efficiency At Birla Vikas Cement Works, owned by Birla Corporation improvements. Variable speed drives have been demonstrated Limited, India, the older and inefficient raw mill vent fans to be the most suitable speed control mechanism, considering were replaced by more-efficient fans, and variable speed the precise control offered and the low inherent system energy losses. 4 W. R. Morrow et al., Assessment of Energy Efficiency Improvement and CO2 Emission Reduction Potentials in India’s Process fans, with efficiency levels of 82 to 84 percent Cement Industry (Berkeley, CA: Lawrence Berkeley National Laboratory, 2013). and with an appropriate speed control mechanism, would 5 Ibid. be the preferred option for optimum energy efficiency in 6 E. Worell and C. Galitsky, Energy Efficiency Improvement and raw mills. Retrofits to replace low-efficiency fans with Cost Saving Opportunities for Cement Making: An ENERGY fans of higher operating efficiency, and the installation of STAR® Guide for Energy and Plant Managers (Washington, DC: 2008). appropriate speed control devices, are generally paid back by resulting energy savings. 7 Cement Sustainability Initiative (CSI), Existing and Potential Technologies for Carbon Emissions Reductions in Indian Cement Industry (2013). 6 Energy Efficiency Technologies and Measures drives were installed to control the air volume. These material hardness and a medium product fineness of 12 reduced the energy consumption by 0.36 kWh per ton of percent residue on a 0.09 millimeter screen.11 clinker. The capital cost for the measure was around $0.033 per annual ton of clinker capacity.8 However, many ball mills remain in use in raw material grinding and are not candidates for complete replacement. 2.1.2 PRE-GRINDING FOR BALL MILLS Most ball mills have two chambers, for coarse and fine TECHNOLOGY/MEASURE DESCRIPTION grinding. Grinding ball size and distribution are designed and adjusted considering, among others, raw material The main trends in grinding processes (encompassing all conditions and mill dimensions. However, the energy processes including raw material and fuel preparation and efficiency in the coarse grinding chamber is extremely poor, finish grinding) in the cement industry are toward higher and there is a limitation to improving the performances efficiency, reduction of power consumption, and system for both coarse and fine grinding on the same mill by simplicity. In the case of new orders (all processing) in 2010, ball size selection. An effective approach to improve ball vertical mills increased their share to over 60 percent, and mill efficiency is to install a roller mill or roller press as a ball mills fell below 30 percent.9 In the case of raw material pre-grinder (for coarse grinding) and to use the existing ball mills, the objectives are to grind and dry the raw materials mill exclusively for fine grinding. This approach improves and produce a homogenous raw meal from a number of specific energy consumption and can improve productivity components that are sometimes variable in themselves. The between 30 and 50 percent. feed moisture contents are generally between 3 and 8 percent but sometimes are over 20 percent by weight. Raw grinding ENERGY PERFORMANCE product fineness requirements are usually <10 percent to 15 By adding pre-grinding, electricity consumption can be percent residue on the 90 micrometer screen (<1 to 2 percent reduced by 8 kWh per ton of raw material (approximately residue on the 200 micrometer screen), with feed particle 22 percent).12 Others have reported electricity reductions in sizes of 100 to 200 millimeters. the range of 9 to 11 kWh per ton of raw material.13 Traditional ball mills used for raw material grinding can be Replacing older ball mills with vertical roller mills or high- replaced by vertical roller mills or higher-efficiency roller pressure grinding rolls can reduce electricity consumption by mills, by ball mills combined with high-pressure roller 11 to 15 kWh per ton of raw material. presses, or by horizontal roller mills. Use of these advanced mills saves energy without compromising quality. Modern, CAPITAL AND OPERATIONAL COSTS efficient plants typically use vertical roller mills for raw A Japanese installation of a pre-grinder increased the material grinding; vertical roller mills represented 80 percent production capacity from 180 to 354 tons of raw material of all new raw material plants in 2008.10 The advantage of per hour and reduced specific grinding power consumption vertical mills is their relatively low power consumption and by 22 percent (~8 kWh). The installation cost of the system the simultaneous grinding, drying, and separation in the was $7.3 million.14 mill itself, together with a wide mass flow control range of 30 to 100 percent. This mill type achieves a specific power requirement of below 10 kWh per ton at a medium raw 11 Ibid. 12 Asia-Pacific Partnership on Clean Development and Climate 8 United Nations Framework Convention on Climate Change, (APP) Cement Task Force, Energy Efficiency and Resource Energy Efficiency Measures at Cement Production Plant in Saving Technologies in Cement Industry (Washington, DC: Central India, CDM project design document, http://cdm. 2009). unfccc.int/Projects/DB/SGS-UKL1175367790.14/view (2007). 13 U.S. EPA, Available and Emerging Technologies for Reducing 9 ZKG International, “Grinding Trends in the Cement Industry,” Greenhouse Gas Emissions from the Portland Cement Industry http://www.zkg.de/en/artikel/zkg_2010-04_Grinding_trends_in_ (Washington, DC: 2010). the_cement_industry_886612.html (2010). 14 APP Cement Task Force, Energy Efficiency and Resource Saving 10 Ibid. Technologies in Cement Industry. Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 7 Capital investment cost estimates for a complete ball mill 2.3 CLINKER PRODUCTION replacement vary widely, but include one estimate of $33 per 2.3.1 PROCESS CONTROLS AND OPTIMIZATION ton of raw material.15 TECHNOLOGY/MEASURE DESCRIPTION RELEVANT FACTORS FOR IMPLEMENTATION The clinker-making process is a countercurrent process, with Most applicable to older plants with raw grinding limitations the kiln located between two heat exchangers that recover the and high power consumption. Feasibility of this measure depends heat of the combustion gases and the hot clinker. Optimum on the age and performance of the existing ball mill. For mills control of the kiln system is key for a smooth and energy- that are older than a threshold (for example, 10 years is used in efficient process. Non-automated or non-optimum process China), it may be more feasible to replace the ball mill with a control systems may lead to heat losses, unstable process new vertical mill. This measure will be more applicable for those conditions, and more operational stops. The latter effects plants where the replacement of the ball mill is not considered lead to increased fuel demand of the system. Automated feasible and increased production is desired. computerized control systems are effective measures to optimize combustion process and conditions and to maintain COST EFFECTIVENESS PRIORITY operating conditions in the kiln at optimum levels. Today, all Medium to low, depending on the total capital cost and the modern kilns are equipped with such systems. extent of productivity gains. Effectiveness also depends on Both raw materials and the fuel mix can be improved the properties of the raw materials from the quarry and on through analysis of chemical and physical characteristics. the grindability of the raw mix components. Besides automating the weighing and blending processes, other parameters such as air and mass flow and temperature 2.2 FUEL PREPARATION distribution can be controlled in order to optimize kiln 2.2.1 HIGH-EFFICIENCY FANS AND VARIABLE SPEED operation. Additional process control systems include the DRIVES FOR MILL VENTS use of online analyzers that permit operators to determine TECHNOLOGY/MEASURE DESCRIPTION the chemical composition of raw materials and the product, Similar to the raw meal mills, the energy efficiency in coal thereby allowing for immediate changes in the blend of mills also can be improved with the use of high-efficiency these materials. Process control of the kiln system can fans (in a dust collector bag fan) and variable speed drives improve heat recovery, material throughput, and reliable for air flow control. control of free lime content in the clinker. As a result, the operating cost of an optimized kiln is usually reduced as a ENERGY PERFORMANCE result of decreased fuel and refractory consumption, lower Electricity consumption can be reduced by 0.16 kWh per ton maintenance costs, and higher productivity. of clinker. Combustion management is of prime importance for kiln CAPITAL AND OPERATIONAL COSTS optimization and requires specific attention to the Installation costs in India are reported to be $0.04 per following items: annual ton of clinker capacity. 1. Fuel grinding management: fuel grinding should be COST EFFECTIVENESS PRIORITY managed to achieve optimally set fineness. High; however, applicability may be limited depending on 2. Air ratio management: to maintain an appropriate the efficiency of current fan and vent systems. Economics air ratio, the oxygen concentration in the combustion also depends on the power price. exhaust gas requires strict management. 15 U.S. EPA, Available and Emerging Technologies for Reducing Greenhouse Gas Emissions from the Portland Cement Industry. 8 Energy Efficiency Technologies and Measures Figure 3: Schematic Depiction of Control Points and Parameters in a Kiln System Control and Management System Source: FLSmidth. 3. Exhaust gas management: carbon dioxide and nitrogen An alternative to expert systems or fuzzy logic is model- oxides should be measured, and the measurement data predictive control using dynamic models of the processes in should be used for combustion management. the kiln. Additional process control systems include the use of online analyzers that permit operators to keep track of 4. Kiln burner management: the basic designs such as the chemical composition of raw materials being processed the fuel discharge angle of the burner, the primary air in the plant. This enables rapid changes to be made to the ratio, etc., should be reviewed to maintain the optimum blend of raw materials. A uniform feed allows for steadier combustion conditions. kiln operation, thereby saving fuel. 5. Cooler operation management: heat recovery at the cooler greatly affects the combustion management of the Modern versions of process control and optimization kiln burner. systems make use of advancements in information and communication technologies and enable real-time Improved process control also will help to improve the monitoring and adjustment of process parameters by product quality and grindability, such as reactivity and multiple users using, among others, mobile devices.16 hardness of the produced clinker, which may lead to more- efficient clinker grinding. A number of management systems ENERGY PERFORMANCE are marketed through the cement industry manufacturers Thermal energy savings from process control systems may and are available and in use throughout the world. Most vary between 2.5 percent and 10 percent, and the typical modern systems use so-called expert control (also known as savings are estimated at between 2.5 percent and 5 percent.17 “fuzzy logic” or rule-based control strategies). Expert control systems do not use a modeled process to control process 16 National Development and Reform Commission of China, conditions, but try to simulate the best human operator, using National Key Energy-Saving Technologies Promotion Directory (Fifth Batch) (Beijing: 2012), 65. information from various stages in the process. 17 EU-China Energy and Environment Program, Cement – A Reference Book for the Industry (Brussels: 2009). Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 9 In addition, electricity consumption can be reduced by up to systems. However, given the high level of technology in 1 kWh per ton of clinker.18 Brazilian plants, the energy savings in general are likely to be on the lower side of the estimated range. For kilns without a control system, savings can be between 50 and 200 megajoules (MJ) per ton of clinker.19 CASE STUDIES In a 4,500 ton per day Chinese plant, with the installation CAPITAL AND OPERATIONAL COSTS of a process control and optimization system, annual Capital costs are estimated at between $0.34 million and energy consumption was reduced by 395.6 terajoules. The $0.47 million (for a plant with 2 million tons per year of installation required an investment of 980,000 Chinese production capacity).20 renminbi and took one month to complete. The system provided annual savings of 8 million Chinese renminbi, Operational costs can be reduced by $0.3 to $0.85 per ton of resulting in a payback time of two months. clinker in new plants and by $0.36 to $1.0 per ton of clinker in retrofitting cases.21 Often, a simple payback period of two In another Chinese plant with 4,000 tons per day of years is achievable for kiln control systems. production, annual energy consumption was reduced by 351.7 terajoules with the installation of a process control The economics of advanced process control systems are very and optimization system. The system required an investment good, and payback periods can be as short as three months. In of 990,000 Chinese renminbi and took one month to general, the estimated payback period is less than two years. install. The associated annual savings was 8 million Chinese RELEVANT FACTORS FOR IMPLEMENTATION renminbi, resulting in a payback time of 1.5 months.22 • The existing plant constellation predetermines the 2.3.2 MODERN MULTI-CHANNEL BURNERS further needs for equipment and consequently the TECHNOLOGY/MEASURE DESCRIPTION implementation costs and system performance. 
 Some cement kiln systems are equipped with direct-fired • A high educational level of operators and staff is critical solid fuel systems that use a mono-channel burner pipe to the for process control and optimization. 
 kiln. Mono-channel burners are basically a refractory-lined • Expert control systems simulate the best operator by single pipe with a nozzle. Primary air and fuel are conveyed using information from various
stages in the process. 
 together through the mono-channel for combustion into the rotary kiln. These systems typically have primary air • Computational modeled predictions may be used for flow rates that are 20 to 40 percent of the total combustion future applications. 
 air required. A mono-channel burner also has operational • Electrically driven control fittings consume power. 
 disadvantages: the exit speed obtains a fixed velocity at the tip of the burner by design of the nozzle diameter. The COST EFFECTIVENESS PRIORITY velocity cannot be adjusted during operation. Furthermore, High. There are no barriers to installing advanced process shaping the flame by changing the burner adjustment is not controls on new construction. Most existing facilities should possible during operation, if, for example, one wanted to be able to retrofit the operations to accommodate control optimize the temperature profile in the sintering zone. State-of-the-art cement kiln systems use indirect-fired solid 18 European Cement Research Academy (ECRA)/CSI, Development of State of the Art-Techniques in Cement fuel systems that use multi-channel burners. The multi- Manufacturing: Trying to Look Ahead (Dusseldorf/Geneva: channel burners give the kiln operator flame-shaping ability. 2009). 19 Ibid. 22 National Development and Reform Commission of China, 20 Ibid. National Key Energy-Saving Technologies Promotion Directory 21 Ibid. (Fifth Batch) (Beijing: 2012), 65–66. 10 Energy Efficiency Technologies and Measures These systems typically have primary air flow rates that (2009 figures). Figures for India are between $0.2 million and are 8 to 12 percent of the total combustion air required. $0.4 million, depending on the plant capacity.24 The additional air (secondary air) required for combustion originates from the clinker cooler at 600 to 1,000 degrees Operational costs are expected to decrease by $0.11 to Celsius (depending on cooler type and operation) and leads $0.34 per ton of clinker.25 to the kiln and the calciner, respectively. If the primary air COST EFFECTIVENESS PRIORITY ratio is reduced by replacing, for example, a mono-channel burner with a multi-channel burner, a bigger share of hot Low. Applicability may be limited given the high level combustion air can be taken from the cooler, leading to a of technology in the Brazilian industry. Adoption of low decrease in specific fuel consumption. nitrogen oxide combustion techniques also limits savings potential. Besides the energy-saving effect, modern multi-channel 2.3.3 LOW-PRESSURE DROP CYCLONES FOR burners have several advantages related to kiln operation: SUSPENSION PREHEATERS nitrogen oxide emissions may be reduced due to the decreased TECHNOLOGY/MEASURE DESCRIPTION oxygen availability in the core flame. Furthermore, these modern burners allow the use of significant amounts of Multi-stage cyclone preheaters are the main components secondary fuels. for the heat exchange of raw gas and raw meal in the clinker-burning process. Cyclones are used to preheat the ENERGY PERFORMANCE raw meal prior to the kiln. Exhaust gases from the kiln or Depending on the secondary air temperature, reduction clinker cooler are routed to the cyclone and provide the of the primary air ratio by 5 to 10 percent will lead to a heat to preheat the raw meal suspended or residing in the fuel energy saving of 50 to 80 MJ per ton of clinker at cyclone. The larger the pressure drop losses in the cyclone, conventional kilns and about half of this at precalciner the greater the energy requirements for the kiln or clinker kilns. The electricity demand will remain more or less cooler exhaust fan. Modern cyclones are designed with unchanged as the higher consumption for control fittings and lower pressure drop and higher material separation efficiency air delivery channels can be offset by the reduction of the than older designs. Plants with older design cyclones may be primary air. 23 able to upgrade their preheater cyclones with modern design cyclones. By doing so, the static pressure at the preheater CAPITAL AND OPERATIONAL COSTS vent fan will decrease, resulting in potentially lower specific If the existing system is a direct-fired system with a mono- power consumption. In addition, the increased material channel burner, then the plant will be required to convert the separation efficiency will improve heat transfer in the direct-fired system to an indirect-fired system (or a variation preheater, thereby lowering the specific fuel consumption. of it) before changing to a multi-channel burner. The capital ENERGY PERFORMANCE cost to convert a direct-fired system to an indirect-fired system can vary greatly depending on the plant conditions. The Depending on the efficiency of the fan, for each hectopascal typical range can be between $5 million and $10 million. of pressure loss reduction, 0.12 to 0.15 kWh of electricity can be saved per ton of clinker. For older-type kilns, this If the existing system is an indirect-fired system with a mono- amounts to savings of 0.6 to 1.5 kWh per ton of clinker. channel burner, then the plant retrofitting costs for Europe are estimated to be between $0.54 million and $0.68 million 24 ECRA/CSI, Development of State of the Art-Techniques in Cement Manufacturing. 23 Ibid. 25 Ibid. Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 11 CAPITAL AND OPERATIONAL COSTS remaining portion of the heat in these exhaust streams for power generation. Capital costs are estimated at between $10.8 million and $13.5 million (for a plant with 2 million tons per year of Because raw material drying is important in a cement clinker capacity and including the replacement of three plant, heat recovery has limited application for plants with cyclone stages in a double-string preheater) (2009 values). higher raw material moisture content. Often drying of other materials such as slag or fly ash requires hot gases from the Operational costs are expected to decrease by $0.068 to preheater or cooler; in that case, opportunities for waste heat $40.11 per ton of clinker. recovery will be further decreased. RELEVANT FACTORS FOR CONSIDERATION Power production with residual hot gases from the preheater Replacement with low-pressure drop cyclones can be and hot air from the cooler require a heat recovery boiler economically reasonable when the foundation and tower and a turbine system. Power generation can be based on of the preheater are usable without rebuilding. The costs a steam cycle or an organic Rankine cycle (that is, the of such refurbishment are very site-specific. The main conversion of heat into work). In each case, a pressurized parameters influencing the feasibility of this measure include: working fluid (water for the steam cycle or an organic compound for the organic Rankine cycle) is vaporized by the • Efficiency and flow volume of the induced draft fan 
 hot exhaust gases in a heat recovery boiler, or heater, and • Need for extra capacity 
 then expanded through a turbine that drives a generator.26 • Temperature/number of cyclone stages 
 Steam Rankine Cycle—The most commonly used Rankine • Pressure drop and efficiency of existing cyclone stages 
 cycle system for waste heat recovery power generation, the • Electricity price. 
 steam Rankine cycle, uses water as the working fluid and involves generating steam in a waste heat boiler, which then COST EFFECTIVENESS PRIORITY drives a steam turbine. As shown in Figure 4, in the steam Low. Applicable to old plants. Replacement with low-pressure waste heat recovery cycle, the working fluid—water—is drop cyclones can be economically reasonable when the first pumped to elevated pressure before entering a waste foundation and tower of the preheater are usable without heat recovery boiler. The water is vaporized into high- rebuilding. The costs of such refurbishment are very site-specific. pressure steam by the hot exhaust from the process and then expanded to lower temperature and pressure in a 2.3.4 WASTE HEAT RECOVERY FOR POWER turbine, generating mechanical power that drives an electric PRODUCTION generator. The low-pressure steam is then exhausted to a TECHNOLOGY/MEASURE DESCRIPTION condenser at vacuum conditions, where the expanded vapor In the case of dry process cement plants, nearly 40 percent is condensed to low-pressure liquid and returned to the of the total heat input is available as waste heat from the feedwater pump and boiler.27 The steam turbine technology exit gases of the preheater and clinker cooler. The quantity is best known from power plants. While in modern power of heat from preheater exit gases ranges from 750 to 1,050 plants, electric efficiency is raised to 45 to 46 percent, the MJ per ton of clinker at a temperature range of 300 to relatively low temperature level from the cooler (200 to 300 400 degrees Celsius. The quantity of heat from the clinker cooler ranges from 330 to 540 MJ per ton of clinker at 26 A third type of Rankine cycle is based on a mixture of water a temperature range of 200 to 300 degrees Celsius from and ammonia and is called the Kalina cycle. Application of the Kalina cycle to the cement industry is still in the demonstration the exhaust air of the grate cooler. A portion (or in some phase. cases all) of this heat is used to dry raw materials and coal. 27 Institute for Industrial Productivity/International Finance In certain cases, it may be cost effective to recover the Corporation (IIP/IFC), Waste Heat Recovery for the Cement Sector: Market and Supplier Analysis (Washington, DC: 2014). 12 Energy Efficiency Technologies and Measures Figure 4: Typical Waste Heat Recovery System Using Steam Rankine Cycle Source: Adapted from Holcim, 2012–2013. degrees Celsius) limits the efficiency in waste heat recovery • Can recover heat from the middle of the air cooler systems in cement kilns to a maximum of 20 to 25 percent. 28 exhaust flow to increase waste gas temperatures to an acceptable level for the system, but at the expense of not Steam cycles are, by far, the most common waste heat recovering a portion of cooler waste heat. 
 recovery systems in operation in cement plants. These • Often require a full-time operator, depending on systems are generally characterized by the following: local regulations. 
 • Are most familiar to the cement industry and • Require feedwater conditioning systems. 
 economically preferable where source heat temperature • Require a water-cooled condenser; air-cooled condensers exceeds 300 degrees Celsius. can be used but create a performance penalty due to • Are based on proven technologies and simple to operate. 
 higher condenser vacuum pressures. • Are widely available from a variety of suppliers. 
 • Match well with large kilns and systems with low raw • Are less costly to install than other systems on a specific material water content (resulting in higher waste gas cost basis ($ per kW). 
 temperatures).29 • Require higher-temperature waste heat to operate Organic Rankine Cycle—Other types of working fluids optimally
(minimum >260 degrees Celsius); generation with better generation efficiencies at lower heat-source efficiencies fall significantly at lower temperatures, and temperatures are used in organic Rankine cycle (ORC) lower pressure and temperature steam conditions can systems. ORC systems typically use a high-molecular-mass result in partially condensed steam exiting the turbine, organic working fluid such as butane or pentane that has a causing blade erosion. 
 lower boiling point, higher vapor pressure, higher molecular mass, and higher mass flow compared to water. Together, 28 CSI, Existing and Potential Technologies for Carbon Emissions Reductions in Indian Cement Industry. 29 IIP/IFC, Waste Heat Recovery for the Cement Sector. Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 13 these features enable higher turbine efficiencies than those They are limited in sizing and scalability and generally offered by a steam system. ORC systems can be used for are smaller in capacity than steam systems. waste heat sources as low as 150 degrees Celsius, whereas • Depending on the application, often have a higher steam systems are limited to heat sources greater than 260 specific cost ($ per kW) than steam systems. degrees Celsius. ORC systems typically are designed with two heat transfer stages. The first stage transfers heat from • Create some system inefficiencies related to the the waste gases to an intermediate heat transfer fluid (for two-stage heat transfer process. example, thermal transfer oil). The second stage transfers • Normally use heat transfer fluids and organic fluids heat from the intermediate heat transfer fluid to the organic that are combustible, requiring fire protection measures working fluid. ORCs have commonly been used to generate and periodic replacement over time. Also, there may be power in geothermal power plants, and more recently, in environmental concerns about potential system leaks. pipeline compressor heat recovery applications in the United • Are generally well-matched with small- to medium-size, States. ORC systems have been widely used to generate high-efficiency kilns or kilns with elevated raw material power from biomass systems in Europe. ORC system’s moisture content.30 specific features include the following: Japanese companies spearheaded the introduction of • Can recover heat from gases at lower temperatures than is waste heat recovery power systems in the cement industry possible with conventional steam systems, enabling ORC and introduced the technology to China in 1998. Since systems to use all recoverable heat from the air cooler. 
 then, China has become the market leader in waste heat • Operate with condensing systems above atmospheric recovery installations in the number of systems installed pressure, reducing risk of air leakage into the system domestically (see Figure 5) and in the number of systems and eliminating the need for a de-aerator. 
 installed internationally by Chinese companies (particularly in Asia). Initially, waste heat recovery development in China • Are not susceptible to freezing. was driven by incentives such as tax breaks and Clean • Operate at relatively low pressure, meaning that they Development Mechanism (CDM) revenues for emissions can operate unattended and fully automated in many reductions from clean energy projects. In 2011, a national locations depending on local regulations. 
 energy efficiency regulation mandated waste heat recovery on all new clinker lines built after January 2011. These • Avoid blade erosion because the organic fluid properties drivers were reinforced when multiple Chinese waste heat result in the working fluid remaining dry (no partial recovery suppliers entered the market, lowering waste heat condensation) throughout the turbine. 
 recovery capital and installation costs by adopting domestic • Can use air-cooled condensers without negatively components and design capability, which developed the impacting performance. 
 technology for the Chinese market. The experience in China • Have a lower-speed (rpm) turbine, which allows on waste heat recovery for cogeneration of power has shown for generator direct drive without the need for and that, in large plants, about 22 to 36 kWh per ton of clinker inefficiency of a reduction gear. 
 (25 to 30 percent of the total requirement) can be generated. This power is considered sufficient to operate the kiln section • Utilizes equipment (turbines, piping, condensers, heat
 on a sustained basis.31 exchanger surface) that is typically smaller than that required for steam systems, and the turbine generally consists of fewer stages. • Are typically applied to lower-temperature exhaust 30 Ibid. streams, although ORC systems can provide generation 31 CSI, Existing and Potential Technologies for Carbon Emissions efficiencies comparable to a steam Rankine system. Reductions in Indian Cement Industry. 14 Energy Efficiency Technologies and Measures Figure 5: Waste Heat Recovery Installations in the ENERGY PERFORMANCE Cement Industry Power generation potential is up to 22 kWh per ton of 739 clinker; based on the chosen process and kiln technology, China 8 to 10 kWh per ton of clinker can be produced from cooler India 26 exhaust air, and 9 to 12 kWh per ton of clinker can be Japan 24 produced from the preheater gases if the moisture content Thailand 12 in the raw material is low and if it requires only a little hot Pakistan 9 gas/air for drying. Thus, in total, up to 22 kWh per ton of Other Asia 24 clinker, or up to 25 percent of the power consumption of a Mid East 15 cement plant, can be produced by using these technologies Europe 7 without changes in kiln operation. If kiln operation is Americas 5 modified in order to produce more electricity (higher Rest of World 4 preheater exit gas and cooler exhaust air temperature), up to 0 100 200 300 400 500 600 700 800 30 kWh per ton of clinker is possible. Power generation can Source: OneStone Research, “Latest Waste Heat Utilization Trends,” CemPower, be further increased by additional co-firing into the boiler 2013. or by modification of the kiln system (for example, fewer cyclone stages or bypassing upper stage(s)). Output up to In part due to market experience in China, interest in cement 45 kWh per ton of clinker has been reported. Depending industry waste heat recovery is expanding among countries on local conditions, this can be an attractive option. Under and global companies, driven by the following: certain conditions, it also can make sense to use the residual energy content of the gases after waste heat recovery for • Rising prices for power and fuel, particularly where cooling purposes.32 captive power plants prevail. The experience in China on waste heat recovery for • Concerns about grid power reliability, particularly in cogeneration of power has shown that, in large plants, developing countries where the electricity supply often is about 22 to 36 kWh per ton of clinker (25 to 30 percent controlled by local, state-owned monopolies and the cost of the total requirement) can be generated. This power of power can represent up to 25 percent of the cost of is considered sufficient to operate the kiln section on a cement manufacture. sustained basis.33 • Industry commitment to and government support for sustainable development. There will be marginal increases in power consumption of the preheater fan and cooler fan due to the additional However, in many other regions with unstable power pressure drop of the boilers. supplies, conventional self-generation solutions, such as captive diesel generators and captive thermal power stations, CAPITAL AND OPERATIONAL COSTS still can be preferred to waste heat recovery systems. The A waste heat recovery installation is a relatively complex generation efficiency of waste heat recovery is normally system with multiple interrelated subsystems. The basic less than 15 percent. If higher power production is needed, package for a steam-based system consists of heat recovery waste heat recovery is in competition with other energy boilers or heat exchangers, a steam turbine, a gearbox, an efficiency measures for clinker production, but ultimately electric generator, a condenser, steam and condensate piping, both techniques are aimed at a minimization of unused waste heat. Power generation can be further increased by 32 ECRA/CSI, Development of State of the Art-Techniques in additional co-firing into the boiler or by operating the kiln Cement Manufacturing. system with fewer cyclone stages or bypassing upper stage(s). 33 CSI, Existing and Potential Technologies for Carbon Emissions Reductions in Indian Cement Industry. Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 15 lubrication and cooling systems, a water treatment system, Chinese suppliers now have greater experience in engineering, electrical interconnection equipment, and controls. constructing, and commissioning steam-based waste heat recovery projects and have substantially reduced the cost The total installed cost, which includes design, engineering, of waste heat recovery systems within China, where project construction, and commissioning, can vary greatly depending costs for these systems are now three to four times lower than on the scope of plant equipment, country, geographical area costs of systems installed in Western countries using Western within a country, competitive market conditions, special site suppliers. Chinese technologies are increasingly available in requirements, and availability of a trained labor force and Asian and European markets. Figure 7 shows the relative prevailing labor rates. cost differences for Chinese waste heat recovery systems in China, Asia, and Europe. The total capital cost (equipment and installation) is a strong function of size: smaller waste heat recovery systems will In India, the installation costs are estimated to range have a higher dollar cost per kilowatt of generation capacity. between $1.6 million and $2 million per MW of capacity. 35 Engineering, civil work, and construction costs can represent as much as 34 to 45 percent of the total project cost. Costs RELEVANT FACTORS FOR IMPLEMENTATION in Western countries are at the high end of the range. The following factors are important in determining the applicability of this measure: Figure 6 shows industry estimates of total installed costs for cement waste heat recovery projects on a $ per kW of • The amount of heat available in the waste gases (exhaust electricity basis and illustrates how costs depend heavily on gas volume and temperature) and the conditions of the project size (in megawatts, MW), local cost variations (region waste gases determine the size, potentially the technology of the installation), and type of technology (systems lower (for example, ORCs are more applicable for lower- than 2 to 3 MW tend to be ORC systems). Hence, total temperature exhaust streams and lower gas volumes), installed costs for waste heat recovery systems are a function and overall generation efficiency (for example, the of all of the factors mentioned above, but costs can range amount of power that can be produced) of the waste from $7,000 per kW of electricity for 2 MW systems (ORC) to $2,000 per kW of electricity for 25 MW systems (steam).34 35 IIP/IFC, Waste Heat Recovery for the Cement Sector. Figure 7: Installed Costs for Chinese Steam-based 34 IIP/IFC, Waste Heat Recovery for the Cement Sector. Waste Heat Recovery Systems Figure 6: Installed Costs for Waste Heat Recovery Typical Range: 3.0 2,000–3,000 $/kW Systems Typical Range: 2.5 1,600–2,200 $/kW Installed Costs, $/kW 8,000 2.0 7,000 Installed Costs, $/kW WHR project in Europe Typical Range: 6,000 1.5 1,100–1,400 $/kW and North America 5,000 1.0 4,000 WHR project 0.5 3,000 in Asia 2,000 0.0 1,000 China Asia Europe China Equip. Local Scope 0 5 10 15 20 25 30 Power System Size, MW Sources: Holcim, 2013; OneStone Research,2013; IFC. Note: Although the figure accurately depicts relative cost differences for Chinese waste heat recovery systems across these three regions, total costs are 20 to 30 Sources: Holcim, 2013; OneStone Research, 2012–2013. percent lower than estimates from other industry sources for a comparable system. 16 Energy Efficiency Technologies and Measures heat recovery system. The amount of heat available margin, followed by India and Japan. Conventional steam and at what temperature is a function of the size and system technology accounts for 99 percent of existing waste configuration of the kiln (that is, tons per day and heat recovery installations (among an estimated 865 such the number of preheater stages) and the raw material systems installed in the cement industry worldwide in 2012, moisture level. only 9 were ORC and only 2 were Kalina cycle systems). Primary interest in non-steam systems has been in Europe and • Capital cost of the heat recovery system is generally a the United States, where kiln efficiencies tend to be higher and function of size, technology, and supplier. clinker line capacities are smaller. ORC and Kalina cycle units • System installation costs (design, engineering, offer higher power efficiencies as kiln efficiencies increase construction, commissioning, and training) are functions and exhaust temperatures decrease. Packaged ORC turbo of the installation size, technology, complexity, supplier, generators are available in less than 1 MW size. and degree of local content. 
 Most large global cement firms are using waste heat to • System operating and maintenance costs are a function of power systems in some of their facilities. For example, size, technology, and site-specific operational constraints Holcim experimented early with waste heat recovery, or requirements; costs are influenced by staffing: whether commissioning units in 1982 and 1994. Holcim began the system will be handled by existing operating staff installing commercial units in 2006, and, as of 2013, the or by new staff that require training, or operations will company had 271 MW of waste heat recovery power be outsourced. 
 capacity, including 53 MW outside of China. Over the last • Operating hours of the kiln and availability of the heat five years, Holcim has initiated nine waste heat recovery recovery system. 
 projects in Canada, China, India, Lebanon, Romania, • Displaced power prices based on grid electricity no Slovakia, Switzerland, Thailand, and Vietnam. Most Holcim longer purchased, or reduced dependence on captive projects in Asia are steam cycle systems; most projects power plants and associated costs. 
 outside of Asia are ORC systems. As of the end of 2013, Lafarge, Heidelberg Cement, and Cemex had all installed or • Net power output of the waste heat recovery system. were in the process of installing a limited number of waste Net output is more important in determining project heat recovery power generation systems. economics than gross power output. The impact of auxiliary power consumption and process/booster fans While most existing waste heat recovery systems are steam- must be included in efficiency and economic calculations. 
 based, a number of ORC systems have been installed on • Availability of space in close proximity to the preheater, cement kilns. Ormat Incorporated, a leading ORC supplier cooler, and air-cooled condensers. 
 for geothermal applications, operates two ORC systems in cement plants: a 1.2 MW system installed in 1999 at • Availability of water. the Heidelberg Cement plant in Lengfurt, Germany, which COST EFFECTIVENESS PRIORITY recovers heat from the clinker cooler vent air; and a 4.8 MW unit located at AP Cement (now Ultra Tech Cement) Medium. Economics depends on prevailing power prices in Tadipatri, Andhra Pradesh, India. Turboden (acquired and on the amount of available heat after all current by Mitsubishi in 2012) installed its first cement industry requirements (for example, raw material and fuel drying) are ORC system (2 MW) at Italcementi’s Ait Baha plant in met. Waste heat recovery projects are capital intensive. Morocco in 2010 (a 5,000 ton per day clinker line). In 2012, CASE STUDIES Turboden installed a 4 MW unit at a Holcim Romani plant in Alesd (a 4,000 ton per day clinker line); Turboden also There are close to 900 waste heat recovery power installations has systems under construction at Holcim Slovakia (5 MW in the world. As previously shown in Figure 5, China leads at a 3,600 ton per day line at the Rohoznik plant) and at in the number of waste heat recovery installations by a wide Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 17 an undisclosed North American plant (7 MW). Holcim is In response to increasing pressure to lower fuel costs, cement installing another 4.7 MW ORC system at its Mississauga, producers have been very successful in increasing alternative Canada, plant from an undisclosed provider. ABB installed fuel use to meet cost reduction goals. In many European a 1.9 MW ORC system at Holcim’s Untervaz, Switzerland, markets, alternative fuels have replaced on average more plant using heat from the preheater. than 50 percent of the fuel input, with some plants averaging 60 to 70 percent (see Table 3). The use of high alternative 2.3.5 OXYGEN ENRICHMENT TECHNOLOGY fuel rates in the calciner is common, and some plants have TECHNOLOGY/MEASURE DESCRIPTION been very successful with the near-complete replacement of Oxygen enrichment is the process of injecting oxygen fossil fuels. However, the properties of these fuels have posed (as opposed to air) directly into the combustion zone (or challenges for the pyroprocessing section in the kiln. as an adjunct to the combustion air stream) to increase Preheater kilns that require firing most, if not all, fuels combustion efficiency, reduce exhaust gas volume, and through the main burner are especially prone to issues reduce the available nitrogen that may form nitrogen oxides. associated with expanded use of alternative fuels such In general, the use of oxygen-enriched combustion air as a cool burning zone, an unstable and/or long flame, reduces fuel consumption, increases production capacity, and insufficient burnout, and high process variability. Such can enhance the substitution of fossil fuels with low-caloric- problems may ultimately result in poor clinker quality and value or alternative fuels. kiln capacity. These adverse effects limit the possibilities Potential drawbacks of the measure include increased risk for further increasing the use of alternative fuels. Oxygen of damage to the kiln refractory and the potential for higher enrichment also can be used to enhance stable and consistent nitrogen oxide emissions if not adequately controlled due to combustion of low-quality alternative fuels with low heating increasing thermal nitrogen oxide formation in the sintering value and larger particle size. The injection of oxygen into zone. Moreover, production of oxygen requires significant the flame root has proven to be very effective for these additional power consumption. fuels as it enables more rapid heat-up, fuel devolatilization, and fuel ignition. The improved combustion conditions Oxygen enrichment technology is implemented in some can compensate for flame cooling due to fuel moisture. In cement plants in order to increase production capacity. In addition, the available residence time in the flame is used addition to specific fuel savings, experience with oxygen more effectively, which enhances burnout of fuels with larger injection has demonstrated benefits ranging from production particles. This is a concern for clinker quality and clinker increases of up to 25 percent, reduced specific dust losses, sulfur retention if the larger particles fall into the clinker and improved kiln stability, as evidenced by clinker quality bed, and results in locally reducing conditions. and kiln coating (see Table 2). One frequently voiced concern about oxygen injection is the impact on nitrogen oxide emissions, due to increased thermal nitrogen oxide formation. This can be avoided if the oxygen Table 2: Production Gains Achieved in Different Plants Using Oxygen Enrichment Technology injection system is designed correctly. In the case of oxygen injection for alternative fuel combustion, the oxygen raises Company Base Production New Production % Increase (tons per day) (ton per day) rich flame core where the combustion temperatures in the fuel­ A 1,300 1,490 15 overall fuel rich conditions favor the reduction of nitrogen B 4,000 4,360 9 oxide to nitrogen. This effect has been successfully exploited C 3,800 5,000 32 using oxygen injection for nitrogen oxide reduction in the D 2,000 2,140 7 power industry. In addition, the injection of oxygen into the flame compensates the cooling effects of moisture addition Source: Air Products. from the additional alternative fuel. Thus, oxygen brings the 18 Energy Efficiency Technologies and Measures Table 3: Improvements in Alternative Fuel Use with the Use of Oxygen Enrichment Plant A B C D E F Ga H % alternative fuel usage 45.4 31.1 45.9 44.3 42.8 43.9 60.5 27.0 without oxygen % alternative fuel usage 72.9 52.4 69.3 65.6 77.3 58.3 67.0 40.7 with oxygen % reduction in fossil fuel -50.0 -25.9 -40.0 -36.0 -57.5 -25.0 -10.8 -22.0 CO2e savings 13,500.0 8,100.0 10,800.0 9,720.0 34,500.0c 10,800.0 3,780.0 11,880.0 (tons per year)b Source: Air Products. a.  Production rates were held constant except for Plant G where there was a 4% production increase with oxygen. b.  Results are from recent installations (since 2009). c.  Carbon dioxide equivalent (CO2e) savings at Plant E were greater due to the substitution of biomass fuels for fossil fuel. thermal condition in the burning zone back to where they CAPITAL AND OPERATIONAL COSTS are required to be for high-quality clinker production. Both new installation and retrofit costs are estimated to be $6.75 million to $13.5 million (for a plant with 2 million While additional production may not be a primary goal of tons per year of capacity and assuming a cryogenic air oxygen use for alternative fuels, the reduced flue gas volume separation unit). can compensate for the water ballast that negatively impacts the capacity of the flue gas system. Thus, lost production Operational costs are estimated to increase by $0.68 to can be recovered, or, if desired, clinker production can be $2.70 per ton of clinker (only considering increased increased by combining the goals of alternative fuel increase electricity and reduced primary fuel consumption; kiln and production increase. capacity improvements and increased ability to burn secondary fuels are not taken into consideration).38 Oxygen use has proven to be flexible and straightforward from an operational point of view. Kiln operators quickly Studies have shown that an increase of 25 to 50 percent in realize the potential to stabilize the combustion during kiln kiln capacity is possible with oxygen enrichment of 30 to upsets. Experience indicates that oxygen often promotes better 35 percent by volume.39 kiln coating, as the temperature distribution in the burning zone is favorably affected by the additional flame stability. RELEVANT FACTORS FOR IMPLEMENTATION None of the applications has led to a reduction in refractory The decision for a dedicated oxygen supply system (on-site/ life, and many kilns have benefited from a stronger coating.36 off-site) depends on the specific need of the cement ENERGY PERFORMANCE plant. Oxygen production itself leads to comparatively high additional power consumption. Other factors for Thermal energy consumption can be reduced by 100 to consideration include: 200 MJ per ton of clinker. • Integration of energy flows between the additional Electricity consumption can increase by 10 to 35 kWh air separation unit and the cement plant Further per ton of clinker due to oxygen production.37 development of oxygen supply technology has an influence on the process and financial conditions. 
 36 Global Cement, “Oxygen-enhanced Combustion of Alternative Fuels,” http://www.cemfuels.com/articles/320-oxygen-enhanced- combustion-of-alternative-fuels (February 2, 2011). 38 Ibid. 37 ECRA/CSI, Development of State of the Art-Techniques in 39 U.S. EPA, Available and Emerging Technologies for Reducing Cement Manufacturing. Greenhouse Gas Emissions from the Portland Cement Industry. Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 19 • Durability of refractory lining and wear elements. 
 Table 4: Impact of Oxygen Injection on Alternative • Economics are ruled by power price and investment costs. 
 Fuels and Production Baseline With oxygen COST EFFECTIVENESS PRIORITY injection Total alternate fuel 66% 75% Low to medium. May be useful for plants that need additional rate (% heat input) capacity or want to maximize alternative fuel use. An oxygen Liquids AF 36% 21% source is required, and dedicated air separation plants are capital intensive. Increased electricity use for oxygen Plastic fluff 21% 35% production must be included in the plant energy balance. Other AF 9% 9% CASE STUDY Production 100% 105% The injection of oxygen to increase the use of alternative fuels was implemented at Lafarge’s Karsdorf plant in Source: Global Cement, “Oxygen-enhanced Combustion of Alternative Fuels.” Germany in 2008. The plant has three kilns, of which kiln stage cyclone preheater kilns lines three and four are four­ Even at the baseline conditions, the plant already was using an with a nominal daily production of 2,000 tons per day. impressive 66 percent alternative fuel. As Table 4 shows, these These kilns fire-dried lignite dust, low-quality waste oils, were mostly liquid alternative fuels. Although these liquids animal meal, and shredded plastic fluff in the main burner usually combust very well due to their high volatile content, and whole tires through the feed shelf. To allow for higher general availability (at a reasonable cost) did not allow a chlorine input resulting from alternative fuel combustion, further increase of this fuel group. Instead, with injection each kiln was retrofitted with a 5 percent bypass. of oxygen, the amount of low-cost fluff could be increased significantly. The percentage of tires and animal meal stayed The oxygen is produced cryogenically and is injected via a nearly constant. However, overall economic success of the proprietary stainless steel lance through the burner into the oxygen injection is due mainly to the reduction of heat input flame root and through a second lance installed in the kiln from dried lignite from 34 percent to 25 percent, as this fuel hood. The lance in the kiln hood is installed to maximize is clearly the most expensive. oxygen injection flexibility for both improving the alternative fuels rate and increasing production. Initial optimization of In addition to the installation of the oxygen delivery system, the oxygen injection system had the following goals: only a few minor changes were necessary to make the above possible. The original kiln control approach had to be modified, • Increase of solid alternative fuel (fluff) as it did not allow the reduction of lignite as the control fuel • Minimization of dried lignite use below a certain minimum value, and the fluff dosing system had to be upgraded to allow higher flow rates. Apart from • Maximization of tire use permitting considerations, further increase of alternative fuels • Maintenance of the clinker quality. will likely face the following process restrictions: Recovery of the approximately 10 percent production 1. Further decrease of dried lignite will remove the major capacity that was lost due to the combustion of alternative source of sulfur for the clinker. This would require a new fuels was desirable. The reduction of the fuel costs as the low-cost sulfur source to be added to the fuel mix. main purpose of the oxygen injection is reflected in these goals. The baseline condition and the typical fuel mix arrived 2. Further increase of fluff will result in additional chlorine after optimization are shown in Table 4. to the system. The current bypass design is at its limit. While this restriction can be removed, it would require further investment. 20 Energy Efficiency Technologies and Measures These plant-specific limits to a further increase of alternative of secondary air and to reduce clinker temperature. While fuels are only an example. Each kiln has specific challenges reducing fuel consumption, optimized heat recovery also that require careful consideration as to whether oxygen is may improve product quality and emission levels. beneficial for production costs. 40 Proper burner pipe positioning is one way of improving 2.4 CLINKER COOLING cooler operation. Today’s low-fuel-consuming kiln systems have low combustion air requirements, resulting in high 2.4.1 OPTIMIZING HEAT RECOVERY secondary air temperatures and slower clinker cooling. In TECHNOLOGY/MEASURE DESCRIPTION such systems, positioning the burner tip approximately 1 to The clinker cooler cools the clinker discharged from the 2 meters into the kiln—as opposed to positioning it at the kiln down to an ideal temperature range of 100 to 150 kiln nose or even into the kiln hood as practiced in older- degrees Celsius. The design of clinker coolers has evolved generation kilns—improves the kiln’s own heat recuperating significantly over time. In the past, rotary coolers, planetary and cooling zone. This way, pre-cooled clinker drops at coolers, and older-design grate coolers were used. Today, the a lower temperature into the cooler, and the secondary modern clinker cooler features a static inlet section followed air temperature drops. The clinker can be cooled quickly by a deep clinker bed section (or sections). Air is passed and reaches the latter clinker cooler zones at a lower through the clinker bed to cool the clinker and preheat temperature, resulting in lower clinker discharge and vent the secondary and tertiary air for combustion. The clinker temperatures. Reduced need for cooling air reduces the load conveying method and air control methods vary from one on the vent air system and saves considerable electricity. vendor to another. While improving the overall cooler thermal efficiency, the cooler also runs at a higher availability, and maintenance Clinker cooler optimization aims to maximize heat recovery, costs are reduced. However, pushing the burner into the kiln minimize clinker temperature, and reduce specific fuel requires the use of extremely high-strength refractories on consumption. This also may improve product quality and burner pipes in very severe applications. emission levels. Heat recovery can be improved through reduction of excess air volume, control of clinker bed depth, Reducing primary air use and air infiltration rates at the and new grates such as ring grates. Control of cooling kiln discharge maximizes the amount of secondary air. air distribution over the grate may result in lower clinker Low primary air rates are possible with semi-direct and temperatures and high air temperatures. A recent innovation indirect firing systems, offering primary air rates as low as in clinker coolers is the installation of a static grate section 6 percent. Low air infiltration rates, on the other hand, can at the hot end of the clinker cooler. Additional heat recovery be accomplished with good hood sealing and an effective results in reduced energy use in the kiln and precalciner, due kiln discharge seal. Leaf-type kiln discharge seals, where to higher combustion air temperatures. overlapping sheets of high-quality steel ride on the kiln cowling, is an effective way of reducing infiltration. In kiln All coolers heat the secondary air for the kiln combustion systems with a precalciner, any potential opening to ambient process and sometimes also heat tertiary air for the air between the calciner and the cooler—such as inspection precalciner, using the highest-temperature portion of the doors, material discharge flaps, damper housings on tertiary remaining air. Grate coolers use electric fans and excess air ducts, and kiln material inlet seal and kiln riser poke air. Rotary coolers and planetary coolers do not need holes—should be kept as tight as possible. combustion air fans and use little excess air, resulting in relatively lower heat losses. Optimization of heat recovery Optimized distribution of both the clinker bed and the cooling in coolers aims to maximize the amount and temperature air are also critical. Particularly in larger-diameter kilns, getting an even clinker distribution can be a challenge; the 40 Global Cement, “Oxygen-enhanced Combustion of Alternative over-concentration of fine clinker particles poses a particular Fuels.” Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 21 problem. The air flow can be improved by narrowing and 3-degree inclined coolers, and 2.0 to 2.5 kilopascal in old the cooler grate area on the fine clinker side, slowing the 10-degree inclined coolers. movement of the fine clinker bed, and diverting more fine clinker to the coarse cooler side by using wedge-type grates. Careful adjustment of airflow rate is another critical parameter, as both too little and too much air has To avoid heavy air channeling and bypassing the clinker undesirable consequences. To achieve this goal, predefined load, some air holes can be blanked off and cooling air amounts of cooling air need to be established for every thus can be diverted into the clinker load. When severe cooler compartment. Coolers with air beams or mechanical “red river” conditions exist and loss of cooler grates is air flow regulators can refine the air distribution even more experienced, “Ondufin” grates, which have cooling fins on to sections of grate plates or to individual plates. Figure 9 the underside and which can stay cooler and last longer, shows a chart of optimized cooling air distribution for a can be applied. A proper and uniform distribution of the typical eight-compartment reciprocating grate cooler—where clinker on the grate is of importance and can be achieved by: the first five compartments (including the quench compartment) 1) using a sloped inlet; 2) using a water-cooled, adjustable supply secondary air and tertiary air, if applicable, and steel impact inlet plate; 3) reducing the effective grate width compartments five through eight cool the clinker to a final (horseshoe pattern of inlet grate plates); 4) using stationary temperature of approximately 100 degrees Celsius.41 Modern quench grates at the front of the cooler; and 5) using a automation systems employ high-temperature, high-sensitivity spreader beam across the cooler. An example of a fixed radar transmitters that allow precise measurement of the cooler inlet is shown in Figure 8. clinker bed depth and adjust the cooling air flow rate and grate speed accordingly to achieve optimal performance.42 Increasing the clinker bed thickness generally improves the overall clinker distribution and heat transfer. In addition, lower grate speed has had a positive effect on grate wear rates. 41 E. H. Steuch, “Clinker Coolers,” in Bhatty et al., eds., Innovations in Portland Cement Production (Skokie, IL: High under-grate pressures and airflows adversely affect the Portland Cement Association, 2004), 477–98. conveying action of a reciprocating grate. To prevent clinker 42 Toshniwal Industries Pvt. Ltd., “Clinker Cooler Optimization,” from flowing forward, the single grate surface should be at http://www.tipl.com/blog/70-clinker-cooler-optimization.html, viewed April 4, 2016. least horizontal. Best results can be attained with a maximum of 4.7 to 5.5 kilopascal under-grate pressures in horizontal Figure 9: Optimized Cooling Air Distribution for a Typical Eight-compartment Reciprocating Grate Cooler Figure 8: Fixed Static Inlet Section for a Clinker Cooler 1st 2nd 3rd Grate drive Grate drive Grate drive Undergate Air pr. grate area, pressure, IWR SCFIWsq. ft. 20 600 15 450 10 300 5 150 0 Q 1 2 3 4 5 6 7 8 Compartment number Source: Steuch, E.H. 2004. “Clinker Coolers,” Chapter 3.8, page 495 In Source: Steuch, E.H. 2004. “Clinker Coolers,” Chapter 3.8, page 495 In Innovations in Portland Cement Production page 498. Innovations in Portland Cement Production page 495. 22 Energy Efficiency Technologies and Measures In some older coolers where individual cooling fans serve RELEVANT FACTORS FOR IMPLEMENTATION multiple compartments, the distribution of air into each Primary factors influencing the effectiveness of this measure compartment is difficult, since the cooling air will try to include the existing cooler efficiency, the production rate, the fuel migrate into the compartment with the lowest under-grate mix, tertiary air requirements for the precalciner, the amount pressure—particularly when heavy loads travel down the of air leakage, and the desired clinker outlet temperature. cooler. Employing one air fan for each compartment and making sure that the compartments are well air-sealed from COST EFFECTIVENESS PRIORITY each other will result in a lower overall clinker discharge Medium. More effective on high-capacity kilns. Need to temperature and less air use. Where drag chains are located balance waste heat needs between drying and heat recovery. below the cooler, the best sealing is accomplished with flap valves controlled by level indicators located in the under- 2.4.2 VARIABLE SPEED DRIVES FOR COOLER FANS grate compartment. It also is important to avoid the mixing TECHNOLOGY/MEASURE DESCRIPTION of low-temperature back-end air with high-temperature In most plants, the cooler requires a continuously changing air from the recuperation zone. Installing an arched brick air flow in order to provide proper cooling of the clinker. wall or some hanging stainless steel dampers at the point in The amount of cooling air provided needs to be adjusted the cooler where these two air streams split off in different depending on the demand. The use of dampers is a directions, and adjusting the slope on the cooler roof common way of controlling air flow from the fan to the (approximately 15 degrees as it approaches the cooler throat cooler. Although dampers may offer advantages in certain and 5 to 10 degrees as it approaches the vent air takeoff).43 circumstances, generally they are an inefficient flow control ENERGY PERFORMANCE approach as the fan continues to operate at full load while substantial energy loss takes place at the damper. Savings of 0.05 to 0.08 gigajoules (GJ) per ton of clinker are reported through the improved operation of the grate cooler, Variable speed drives allow partial load operation of the fan, and savings of 0.16 GJ per ton of clinker are reported for reducing power consumption and providing more precise retrofitting a grate cooler. In another case, thermal energy control of the cooling air flow. (Figure 10 shows the power savings of 0.08 GJ per ton of clinker were coupled by an consumption of fan installations with different control increase in electricity use of 2.0 kWh per ton of clinker.44 mechanisms.) When the air pressure at the kiln outlet is to be kept within tight tolerances, without compromising efficient Installation of a static grate section could improve the heat cooling, the exhaust air fan and the clinker cooler fans need recovery rates by 2 to 5 percent.45 to be operated in close cooperation. The use of variable CAPITAL AND OPERATIONAL COSTS speed drives to control the speed of both clinker cooler fans and exhaust air fans guarantees fast and precise regulation The costs of cooler optimization measures are assumed to be of cooling air and an easy connection to the cement plant’s half the costs of replacing the planetary cooler with a grate automation system. Variable speed drives also enable soft cooler, or $0.22 per annual ton of clinker capacity. start of the fans, which minimizes mechanical stress on the Investments for the installation of a static grate are estimated at fans, pipes, and other mechanical equipment. Through soft between $0.11 and $0.33 per annual ton of clinker capacity. 46 start, the supply network can be dimensioned with a low starting current, thus reducing the low-voltage switchgear, transformer, and cabling costs.47 43 Steuch, “Clinker Coolers.” 44 E. Worell, C. Galitsky, and L. Price, Energy Efficiency Improvement Opportunities for the Cement Industry (Berkeley, CA: Lawrence Berkeley National Laboratory, 2008). 45 Ibid. 47 ABB, “AC Drives Ensure Efficient and Precise Cooling of 46 Ibid. Clinker and Reduce Energy Consumption” (Zurich: 2009). Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 23 Figure 10: Power Consumption of Fan Installations with Different Control Methods 140 Required fan power Speed control by variable speed drives 120 (both for centrifugal and axial-flow fans) Variable pitch angle (for axial fans only) 100 Fluid coupling (slip control) Power input (%) 80 Inlet vane control (for centrifugal fans with backward-curved impeller) 60 Bypass control (for axial fans) 40 Damper control (for centrifugal fans with forward-curved impeller Damper control 20 (for centrifugal fans with backward-curved impeller) Damper control (for axial fans) 0 20 40 60 80 100 Volume flow, % Source: ABB. Benefits of using variable speed drives in cooler fans include COST EFFECTIVENESS PRIORITY the following: High; however, applicability may be limited depending on the efficiency of current fan and vent systems. Economics • Substantial energy savings can be realized through also depends on the power price. optimal control of cooling air. 
 • Enables removal of mechanical control devices, for 2.5 FINISH GRINDING example damper control (plates) of fans, which require 2.5.1 PROCESS CONTROL AND MANAGEMENT IN regular maintenance due to the harsh environment. 
 FINISH GRINDING • Enables soft start of fan motors. TECHNOLOGY/MEASURE DESCRIPTION • Flying start of fan motors without high-starting torques Grinding operations are highly energy-intensive processes or high-starting current peaks is possible. and are coupled with high risk to influence product quality. Process control and management systems aim to maximize • Easy connection to the cement plant‘s automation system production with minimum energy use, while minimizing via various fieldbus adapters. 
 quality variations. Control systems for grinding operations ENERGY PERFORMANCE are developed using the same approaches as for kilns (see above). The systems control the flow in the mill and classifiers, Electricity consumption can reduced by 0.04 to 0.17 kWh producing a stable and high-quality product. Several systems per ton of clinker.48 are marketed by a number of manufacturers. Expert systems CAPITAL AND OPERATIONAL COSTS have been commercially available since the early 1990s. Capital costs are estimated to be in the range of $0.01 per In finish grinding, a conventional control solution with annual ton of clinker. proportional–integral–derivative (PID) loops is insufficient, 48 Worell, Galitsky, and Price, Energy Efficiency Improvement as process delays (for example, fineness analysis delay) Opportunities for the Cement Industry. 24 Energy Efficiency Technologies and Measures cannot be handled well. Furthermore, the process contains Table 5: Monitor and Control Parameters internal couplings. For example, the separator speed impacts Parameters Monitored Parameters Controlled not only the fineness, but also the mill filling level through • Product quality such as • Feed and fineness control the reject flow. Therefore, a change in one of the PID loops Blaine or online particle size by fresh feed and separator causes disturbance in the other PID loop, causing a conflict analyzer, SO3, LOI; separator speed and fan speed between the loops to reach their own objectives. This lack • Feeder ratio control for of coordinated action causes undesired disturbances and • Fresh and reject feed quality operation inefficiency. Expert systems aim to achieve the best possible grinding efficiency through advanced multi- • Mill folaphone or elevator • Mill draft power input multi-output control strategies and using model-based • Water flow predictive control (MPC) techniques. The MPC controller • Draft and temperature frequently calculates new set points for separator speed • Online process state • Feeder response to a given estimation and fresh feed rate in order to obtain minimum deviation setpoint from production targets and minimum changes of separator speed and fresh feed. The typical parameters monitored and controlled in such systems are summarized in Table 5. According to one manufacturer, while also reducing energy Figure 11 depicts the monitoring and manipulation points of consumption, application of their control system to ball mills a process control system. typically increases productivity by 6 percent, reduces quality variations by as much as 30 percent, and reduces product change over time between recipes. Figure 11: Measurement and Manipulation Points in a Process Control System Source: FLSmidth. Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 25 ENERGY PERFORMANCE Another important feature is the smooth handling of recipe changeover. This strategy ensures changeover from one product Energy savings can be between 2.5 and 10 percent, or type to another in the shortest possible time with the least loss between 3.8 and 4.2 kWh per ton of cement.49 of production. This is achieved through auto changeover of all CAPITAL AND OPERATIONAL COSTS operating parameters and manipulated variables.50 The payback is estimated to be between one and two years. 2.5.2 REPLACING A BALL MILL WITH A VERTICAL ROLLER MILL, HIGH-PRESSURE GRINDING ROLLS, COST EFFECTIVENESS PRIORITY OR HOROMILL® FOR FINISH GRINDING High. There are no barriers to installing advanced process TECHNOLOGY/MEASURE DESCRIPTION controls on new construction. Most existing facilities should be Cement grinding accounts for nearly 40 percent of the able to retrofit the operations to accommodate control systems. electricity used for cement production. Ball mills commonly CASE STUDY used for finish grinding have high energy demands, consuming up to 30 to 42 kWh per ton of clinker depending Maihar Cement in India had earlier adopted an expert on the fineness of the cement. Complete replacement of control system in its roller press and ball mill combination. ball mills by more-efficient milling systems, such as vertical In 2008, the plant decided to implement an expert system roller mills, high-pressure grinding rolls, and Horomills® in two additional mills, following an upgrade of its control is regarded as best practice and can improve both energy system in those mills. efficiency and productivity. Auto tuning of targets in an automation expert system Vertical roller mills employ a mix of compression and during mill operation has been very successful, reducing the shearing, using two to four grinding rollers carried on need to change operating conditions in the mill. The system hinged arms riding on a horizontal grinding table. The use uses a standard strategy of optimized feed rate and classifier of vertical roller mills with an integral separator in finish control to regulate the mill loading and separator circuit grinding combines grinding with high-efficiency classification loading optimization to operate the two mills. These standard and improves both energy efficiency and productivity. controls are assisted by 1) external static pressure fan control to ensure optimum ventilation in the mill and 2) separator In high-pressure roller press grinding, the feed material is fan control to secure an optimum air-to-material ratio in the exposed to very high pressure (up to 3,500 bar) for a short separator circuit for better separation efficiency. The system time, improving the grinding efficiency dramatically. High- continuously sets best mill operation conditions by tracking pressure roller presses are most often used to expand the the achievement of or deviation from targets and making capacity of existing grinding mills, and are found especially necessary adjustments. These controls, in combination with in countries with high electricity costs or with poor power self-tuning targets, have improved levels of production and supply. A schematic depiction of a grinding system based on quality and reduced specific power consumption in both mills. a high-pressure roller press is given in Figure 12. Table 6 depicts the obtained results. Whereas required grain sizes up to 4,500 to 5,500 Blaine in 49 Ibid. vertical roller mills and high-pressure grinding rolls can be achieved, the resulting particle size distribution of the cement Table 6: Use of Expert Control System (and thus the cement performance) can vary in the different Mill Production Reduction in Specific Power systems, raising the need for product quality-control plans. Number Increase (percent) Consumption (percent) 1 9 10 50 FLSmidth, “Case Study 1: ECS/ProcessExpert® System Increases Ball Mill Production,” http://www.flsmidth.com/~/ 2 17 15 media/01201KrebsSandStackingCyclones/website/Files/PDF/ CaseStudy_ECSPXP_increases_Ball_Mill_Production.ashx (2009). 26 Energy Efficiency Technologies and Measures Figure 12: High-Pressure Roller Press for Finish Grinding Source: FLSmidth, 2010. The higher the pressure during comminution, the narrower Within a grinding plant system, the Horomill® is, without the particle size distribution and the higher the impact on exception, used as a closed-circuit bucket elevator mill. water demand, strength development, and setting time of the It therefore has relatively low capital costs. For drying cement paste. 51 raw materials and granulated blast furnace slag with moisture contents of up to 10 percent, it is connected with The Horomill® operates on the principle of a horizontal a flash dryer and, for higher moisture contents, with an ring-roller mill and was first demonstrated in Italy in 1993. In “aerodecantor.” The mill can achieve levels of fineness the Horomill®, a horizontal roller within a cylinder is driven. corresponding to Blaine values of up to 5,000 square Like the vertical roller mill, the Horomill® uses the principle centimeters per gram when grinding cement. As far as power of centrifugal force to transport the material (Figure 13). The consumption is concerned, the Horomill® lies between the short mill cylinder driven through a girth gear runs above high-pressure roller press and the vertical roller mill, and, the critical rotational speed, and a horizontally supported in contrast to the high-pressure roller press in closed-circuit and hydro-pneumatically loaded grinding roller is dragged with a high performance separator, it always supplies a over the lower cylindrical internal surface of the mill cylinder finished ground product (Figure 14). In certain installations, by frictional engagement with the mill feed. The mill feed parallel arrangement of two mills was implemented, with introduced at the static end wall of the mill is carried by savings and pooling of resources in the peripheral equipment centrifugal force to the internal cylindrical wall and guided in order to achieve particularly high outputs and high by scrapers into the sickle-shaped stressing gap between the flexibility. The Horomill® also requires a moderate amount mill cylinder and the grinding roller. The centrifugal forces of maintenance and has favorable wear characteristics.52 resulting from the movement of the cylinder cause a uniformly distributed layer to be carried on the inside of the cylinder. The layer passes the roller (with a pressure of 700 to 1,000 bar). The finished product is collected in a dust filter. 51 ECRA/CSI, Development of State of the Art-Techniques in 52 E. Edet, “20 Years of the Horomill – A Review,” Cement Cement Manufacturing. International 4 (2013): 76–81. Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 27 Figure 13: Horomill® Concept Source: http://ietd.iipnetwork.org/content/cement-grinding-horomill. ENERGY PERFORMANCE Figure 14: Basic Layout of Cement Grinding Using Horomill® The energy efficiency of ball mills for use in finish grinding is relatively low, consuming up to 30 to 42 kWh per ton of clinker depending on the fineness of the cement. Power consumption in the finish mill can be reduced to 20 to 30 kWh per ton of clinker with the use of roller presses or roller mills.53 Energy-savings potential is influenced by the quality requirements of the final product and the specific system layout as well as the auxiliary equipment installed. Figure 15 shows the extent of energy-saving potential that vertical roller mills offer over ball mills for different product qualities. Typical energy saving by replacing a ball mill with a vertical roller mill is reported to be 9 kWh per ton of cement.54 Source: Fives Fcb. 53 Worell, Galitsky, and Price, Energy Efficiency Improvement Opportunities for the Cement Industry. 54 U.S. EPA, Available and Emerging Technologies for Reducing Greenhouse Gas Emissions from the Portland Cement Industry. 28 Energy Efficiency Technologies and Measures Figure 15: Energy Savings Potential of Vertical Roller Mills versus Ball Mills 70 65 Specific energy consumption, Total (kWh/t) 60 Ball mill 55 50 45 ≈ 45% 40 35 VRM 30 ≈ 33% 25 20 2,500 2,700 2,900 3,100 3,300 3,500 3,700 3,900 4,100 4,300 4,500 Blaine value (cm /g) 2 Source: FLSmidth (as appeared in Harder, 2010). Grinding Portland cement with a Blaine of 3,200 Figure 16: Energy Savings Potential of Horomill® square centimeters per gram in a Horomill® consumes approximately 23 kWh per ton, and even for pozzolanic 80 up to 60% cement with a Blaine of 4,000, power use may be as low 70 as 30 kWh per ton.55 Industrial results of the Horomill® Mill Specific energy (kWh/t) 60 operating worldwide have shown energy savings ranging 50 up to 55% between 35 and 70 percent, as shown in Figure 16. 40 CAPITAL AND OPERATION COSTS up to 35% up to 45% up to 70% 30 Replacing ball mills with vertical roller mills is estimated to 20 require an investment cost of $35 per ton of cement capacity up to 50% and to increase operating costs by $0.17 per ton of cement 10 to account for more-frequent maintenance. Power savings 0 Ordinary Blended Cement Slag Slag Minerals were estimated to be 9 kWh per ton of cement. Portland cement raw meal cement cement Ball Mill HOROMILL® Energy savings Source: Fives Fcb. 55 Worell, Galitsky, and Price, Energy Efficiency Improvement Opportunities for the Cement Industry. Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 29 Capital cost estimates for installing a new roller press vary 2.5.3 OPTIMIZING THE OPERATION OF widely in the literature, ranging from low estimates of $2.5 A CEMENT MILL to $3.6 per annual ton of cement capacity to high estimates TECHNOLOGY/MEASURE DESCRIPTION of $8 per annual ton of cement capacity. 56 Ball mills account for the majority of all mills in cement plants, and therefore the optimization of established ball Additionally, new grinding technologies may reduce mills has high savings potential. Fine tuning of operating operating costs by as much as 30 to 40 percent. parameters represents an attractive approach because almost RELEVANT FACTORS FOR IMPLEMENTATION no additional capital costs are required. Parameters that hold potential for energy savings are load level, revolution Vertical roller mills had initial issues with vibration in the mill, speed, combination of the ball charge, lining design, and the wear of the grinding roller and grinding disc, and product adjustments of the separator. Standard optimization methods quality issues in finish grinding. These issues generally have been include meter sampling of the effective length as well as with more recent systems. This technology is considered to be separator sampling. By determination of the particle size suitable for new installations as well as for those undertaking distribution, electricity reduction potentials can be revealed. major upgrades. Plants interested in this technology are advised In addition, enhanced measures have been developed that to carefully consider logistical aspects of maintenance and parts allow for more directed control of the grinding process. This replacement by technology providers.57 includes electric ears with a downstream frequency analysis In pure energy efficiency terms, when using vertical roller for a wide range of oscillations or online monitoring. Feeding mills in finish grinding, the benefit of grinding power such monitoring data to expert control or fuzzy logic systems reduction is countered by the very high power required by can support mill optimization. As mentioned earlier, the mill fans. In addition, the absence of the heat generated in a main obstacles are the complex interdependences between ball mill and the high volume of air required by the vertical the mentioned parameters. The modeling and simulation of mill have required the provision of waste heat from cooler ball mills have proven to be effective methods for obtaining exhausts and/or auxiliary furnaces to dry raw materials and further understanding. Besides providing savings in electricity, achieve a limited dehydration of gypsum. 58 this can reduce the cost induced by wear.59 COST EFFECTIVENESS PRIORITY Optimizing the grinding media in the ball mill is another measure that can reduce energy consumption and increase Medium. Effectiveness depends on clinker properties, desired productivity. product quality, and equipment durability. Initial problems with equipment reliability, maintenance, and product quality ENERGY PERFORMANCE have been solved in current product offerings. Electricity consumption can be decreased by between 0 and 2 kWh per ton of cement. CAPITAL AND OPERATIONAL COSTS For a 2 million ton per year plant, the installation costs are estimated to be around €0.01 million. Operational costs are expected to decrease by €0 to €0.15 per ton of cement. 56 Ibid. 57 Ministry of Industry and Information Technology, Advanced and Applicable Technology Guide for Energy Saving and Emission Reduction in Building Materials Industry (First Batch) (September 2012), 26–27. 58 L. Evans, “Best Energy Consumption,” CemNet.com (February 59 ECRA/CSI, Development of State of the Art-Techniques in 16, 2015). Cement Manufacturing. 30 Energy Efficiency Technologies and Measures RELEVANT FACTORS FOR IMPLEMENTATION to approximately 5 kWh per ton in the pre-grinding mode. Such a configuration is demonstrated in Figure 17. The effect of the measure is highly dependent on the clinker properties (grindability, moisture content) as well as product A better use of the high-pressure roller press can be ensured qualities (for example, fineness). when it is used as a semi-finish grinding system. The roller press operates in closed circuit with two separators on The measure requires a deeper understanding of the top of each other: a static separator that undertakes both grinding process. For bigger improvements, better control disagglomerating and coarse separation, and a dynamic and measurement techniques and improved modeling and separator. Fines from the roller press circuit are finish-ground simulation approaches are needed. in a one-compartment ball mill to the required fineness. COST EFFECTIVENESS PRIORITY A very compact and energy-efficient semi-finish grinding Medium. Requires deep understanding of the grinding installation can be attained by combining the roller press and process and better measurement and control techniques. the ball mill with a two-stage separator. The roller press then Methods for modeling and simulation of the comminution operates in closed circuit with the static separator working process are still improving. as both disagglomerator and coarse separator, while the 2.5.4 HIGH-PRESSURE ROLLER PRESS AS A PRE- ball mill operates in closed circuit with the high-efficiency GRINDING STEP FOR BALL MILLS dynamic separator. Because the separator air is used for TECHNOLOGY/MEASURE DESCRIPTION both separation stages, the overall quantity of air and the fan power consumption remain at a very low level. Such a Product quality concerns related to complete replacement of configuration is depicted in Figure 18. ball mills with alternative milling systems can be addressed by combined grinding layouts. These systems are commonly installed, set the standard for product quality, and do not have Figure 17: High-Pressure Roller Press as a Pre-grinding to face quality problems. One such system involves the use of a Step for Ball Mills high-pressure roller press as a pre-grinding step for ball mills. In high-pressure roller press comminution, the feed material is exposed to very high pressure for a short time. The high pressure causes the formation of microcracks in the feed particles and generates a substantial amount of fine material. If the pressed material is fed directly to a ball mill, the power consumption required to produce finished cement will be much lower than that of a mill fed with unpressed material. This makes it possible to increase the throughput of a given size ball mill and to reduce the specific power consumption of the whole mill system. Here, two process configurations are possible. In the pre-grinding system, the roller press is used for grinding Source: FLSmidth, 2010. fresh feed and a certain amount of recirculated pressed flakes. The roller-pressed material is finish-ground in a conventional ball mill grinding circuit. Excessive flake recirculation may cause operational instability, so, in practice, the power consumption of the roller press is limited Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 31 CAPITAL AND OPERATIONAL COSTS Figure 18: High-Pressure Roller Press as a Semi-finish Pre-grinder with Two-stage Separator For a 100 ton per hour mill in Japan, the installation costs are reported to be about $2.7 million ($1 = 110 Japanese yen), including auxiliary and construction. For India, installation costs are reported to be between $10 million and $20 million, or between $55,000 and $65,000 per ton per hour of system capacity. COST EFFECTIVENESS PRIORITY Medium to low, depending on total capital cost and the potential extent of productivity gains. Effectiveness depends on clinker properties, desired product quality, and equipment durability. CASE STUDIES Source: FLSmidth, 2010. Hefei Donghua Building Materials Co., Ltd. in China installed a combined open-circuit roller press (HFCG160- 140), SF650/140 dispersing classifier and a ϕ4.2 × 13.0m Such pre-grinding configurations can greatly increase ball mill and reached a capacity of 180 tons per hour, with throughput (up to 100 percent increases are reported in specific grinding power consumption of 27 kWh per ton India) as compared to single-stage grinding in ball mills. of cement and overall grinding station consumption of less They are particularly interesting for countries with high than 32 kWh per ton of cement—saving 12 kWh per ton of electricity costs or with poor power supply. Multi-stage cement as compared to a traditional ball mill system. The configurations are, however, more complex to operate. company realized annual savings of more than 6 million Chinese renminbi, due to reduced electricity consumption. ENERGY PERFORMANCE Saving potentials approach 30 percent. In another Chinese case, Tianjin Zhenxing Cement Co, Ltd. reduced specific energy consumption by 7.0 kWh per ton of Reductions in specific energy consumption have been cement by installing a combined roller press and ball mill reported in the range of 7 to 24 kWh per ton of cement.60 grinding system in a 2,400 ton per day cement production line. For an annual production of 900,000 tons, this In China, reductions in specific electricity consumption of provides a saving of around 6.3 terawatt-hours per year. The 8 to 12 kWh were achieved, representing 15 to 30 percent plant realized annual savings of more than 3 million Chinese savings over a traditional ball mill system. For a typical renminbi due to reduced power consumption.62 5,000 ton per day plant in China, such configurations are reported to save 20 terawatt-hours per year.61 2.5.5 IMPROVED GRINDING MEDIA FOR BALL MILLS TECHNOLOGY/MEASURE DESCRIPTION Improved wear-resistant materials can be installed for grinding media, especially in ball mills. Grinding media are usually selected according to the wear characteristics of the 60 Worell, Galitsky, and Price, Energy Efficiency Improvement Opportunities for the Cement Industry. material. Increases in the ball charge distribution and surface 61 Chinese Ministry of Industry and Information Technology, hardness of grinding media and wear-resistant mill linings Advanced and Applicable Technology Guide for Energy Saving and Emission Reduction in Building Materials Industry (first batch) (Beijing: 2012). 62 Ibid. 32 Energy Efficiency Technologies and Measures have shown a potential for reducing wear as well as energy Figure 19: Schematic of a High-Efficiency Separator/ consumption. Improved balls and liners made of high- Classifier chromium steel are one such material, but other materials also are possible. Other improvements include the use of improved liner designs, such as grooved classifying liners. ENERGY PERFORMANCE Power use can be reduced by 5 to 10 percent in some mills, which is equivalent to estimated savings of 3 to 5 kWh per ton of cement.63 CAPITAL AND OPERATIONAL COSTS Based solely on energy savings, the payback times are estimated to be around eight years.64 COST EFFECTIVENESS PRIORITY Low. Potential improvements are relatively limited compared to cost. 2.5.6 HIGH-EFFICIENCY CLASSIFIERS Source: Gebr. Pfeiffer and http://ietd.iipnetwork.org/content/high-efficiency- TECHNOLOGY/MEASURE DESCRIPTION separatorsclassifiers-finish-grinding. Earlier-generation classifiers had low separation efficiencies Typical savings of 5 kWh per ton of cement are reported compared to modern higher-efficiency designs. The lower in China. separation efficiency leads to the recycling of fine particles, CAPITAL AND OPERATIONAL COSTS resulting in extra power use in the grinding mill. As a result, the number of circulations of the mill feed declines and the Investment costs were estimated at $2 per annual ton of throughput rises (by up to 15 percent). This also involves a finished material. Operational costs were estimated to reduction of the specific energy demand compared to grinding increase by $0.04 per ton of cement. circuits with lower efficiency separators. Newer designs of high-efficiency separators (Figure 19) aim to improve the Capital costs for both new installations and retrofitting in separation efficiency further and reduce the required volume Europe are estimated at €2.5 million (for a plant size of 2 of air (hence reducing power use). million tons per year of capacity). The operational costs are expected to go down by €0.28 per ton of cement. ENERGY PERFORMANCE For India, the investment costs are reported to vary between Overall grinding energy use can be reduced by 10 to 15 percent, $0.2 million and $0.4 million, or around $20,000 per ton of despite the extra power required by higher-efficiency separators. hourly capacity. Energy savings of between 0 and 6 kWh are reported, RELEVANT FACTORS FOR IMPLEMENTATION depending on the existing plant configuration, the type of cement, and the fineness required. This conversion would require, in addition to the high- efficiency classifier, a product dust collector and a new fan. Retrofitting existing facilities with high-efficiency classifiers 63 Worell, Galitsky, and Price, Energy Efficiency Improvement should be considered where the physical layout of the finish Opportunities for the Cement Industry. grinding system allows it. 64 Ibid. Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 33 The separator technology has to be optimized for 2.5.7 HIGH-EFFICIENCY FANS FOR CEMENT each application. MILL VENTS TECHNOLOGY/MEASURE DESCRIPTION The particle size distribution of the finished material will be As discussed earlier, process fans in a cement plant are slightly changed (lower proportion of fines), but not to the the second-largest users of electricity; therefore, measures extent that the quality of the cement is significantly affected. that can reduce their power consumption are important. To ensure process reliability and to use the separators to full With better construction materials for fans and with design capacity, the operation parameters of the particular mill have optimization, fans with a higher operating efficiency are to be adjusted, which is very often restricted by the still-limited available for all cement industry applications. These modern knowledge of the comminution mechanisms. fans are designed for higher energy efficiency, higher wear resistance, lower material buildup and effects of erosion, The impact of grinding aid has to be specified for each better speed control, low vibrations, and high operational product (for example, workability). stability. Fans with higher energy efficiency (82 to 84 percent efficiency) can replace inefficient fans in finish grinding by COST EFFECTIVENESS PRIORITY both design and by retrofit. Higher pressure drops in inlet Medium to high. Effectiveness depends on clinker properties, duct systems also can be analyzed and reduced by using product quality and condition, and the efficiency of existing computational fluid dynamics techniques. classifiers, but demonstrated payback periods for the ENERGY PERFORMANCE investment have been low. Applicability also is limited by physical layout limitations. In an Indian plant, replacement of the cement mill fans with more-efficient versions reduced the energy consumption by CASE STUDIES 0.13 kWh per ton of cement. In Hushan Group’s 5,000 ton per day plant in Zhejiang, CAPITAL AND OPERATIONAL COSTS China, the installation of a high-efficiency separator/classifier took three months to complete. The unit reduced specific For India, the implementation costs of this measure are energy consumption in finish grinding from 36 kWh to less reported to be between $0.05 million and $0.15 million than 31 kWh per ton of cement. Annual electricity savings depending upon the capacity, or around $400 per ton of of 10 gigawatt hours are realized, corresponding to annual hourly mill capacity. production of 2 million tons of cement. The installation COST EFFECTIVENESS PRIORITY required an investment of 2 million Chinese renminbi and was paid back in less than one year. High; however, applicability may be limited depending on the efficiency of current fan and vent systems. Economics Huaihai China United Cement Company Limited also also depends on the power price. installed a high-efficiency separator/classifier in its 3,700 ton per day plant and thereby reduced specific energy CASE STUDIES consumption in finish grinding by 2 to 3 kWh per ton of Siam White Cement Co., Ltd., located in Saraburi, Thailand, cement, resulting in annual electricity savings of around is the largest white cement producer in the country with 4.2 gigawatt hours. The unit required an investment of 2.4 a production capacity of 160,000 tons. The company’s million Chinese renminbi and took one month to complete. team found that electricity consumption at Cement Mill 1 The system helped improve the product quality, increased was excessive due to the high separator load (kilograms of output by 10 percent, allowed for increased use of cement cement per cubic meter of air). The airflow rate could be additives by 5 to 10 percent, and reduced dust emissions. increased by installing a new efficient circulating fan that The payback time for the investment was less than one year. would reduce the separator load and electricity consumption. 34 Energy Efficiency Technologies and Measures Three new efficient circulating fans (35 kW, 35 kW, and 70 using high-efficiency motors and drives. Figure 16 shows kW) were selected to replace the existing circulating fans at the typical efficiencies of electrical motor classes according Cement Mill 1. to IEC60034-30: 2008 definition. Although rewiring old motors is a more common practice in industry, replacing The implementation requires a $30,000 investment, and the old motors with new and more efficient ones may prove expected annual savings are $25,000, with a 1.2-year payback more beneficial, particularly in light of the fact that a motor period. Expected electricity savings are 427,300 kWh (almost can cost 100 times more to run over its lifetime than its cost 10 percent) per year, which is equivalent to the reduction of purchase. of 264 tons of carbon dioxide emissions per year. The installation of efficient circulating fans also could increase the For example, for rotating the kiln—a task that requires cement production rate by more than 14 percent.65 significant amounts of power—direct current (DC) motors are traditionally used. Recently, replacement of these DC 2.6 GENERAL MEASURES motors with alternating current (AC) versions is increasingly advocated. Thanks to technological advances, modern In addition to the specific measures above, a number of AC drives are able to supply the enormous starting torque general measures to improve energy efficiency and reduce required for cement kilns. These drives also use less energy, associated emissions can be considered by cement plants. are more reliable, and are easier to maintain. Similarly, high- 2.6.1 HIGH-EFFICIENCY MOTORS AND EFFICIENT efficiency motors used in other applications not only reduce DRIVES energy consumption, but also are typically more reliable, last Motors and drives are used throughout a cement plant to longer, and result in lower transformer loading. move fans (for example, preheater, cooler), to rotate the kiln, Further, it is not uncommon to find that motors used in to transport materials, and, most importantly, for grinding. industry are oversized. This results in poor efficiency, which In a typical single kiln cement plant, 500 to 700 electric leads to more energy consumption and a higher energy cost motors may be used, varying from a few kW to MW size. (by more than 25 percent in certain scenarios). Therefore, Cement producers can achieve significant energy savings by onsite motor loading surveys and corrective action must be a 65 Energy Efficiency Asia, SIAM WHITE CEMENT Co., Ltd: part of any comprehensive energy conservation effort. Energy Consumption Reduction at Cement Mill, 2006. Figure 20: Efficiency Ranges for Different Motor Classification 100 95 E ciency (%) 90 85 80 75 Classification acc. to IEC 60034-30:2008 70 1.1 2.5 3 4 5.5 11 15 18.5 20 30 37 45 75 90 132 200 375 Power (kW) IE1 IE2 IE3 Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 35 ENERGY PERFORMANCE $134,000 (including a rebate from the local utility company), giving a payback time of around eight months.69 Power savings may vary considerably by plant, ranging from 3 to 8 percent.66 Substituting the DC motor system with an 2.6.2 VARIABLE SPEED DRIVES AC version for the kiln drive may result in a reduction in Most electric motors used in cement plants are fixed-speed electricity use of the kiln drive of between 0.5 and 1 percent.67 AC models; however, motor systems are often operated at When considering smaller motors used in other applications, partial or variable load, particularly in cement plants where high-efficiency motors are typically between 1 and 4 percent large variations in load often occur. Variable speed drives more efficient than traditional ones. can increase motor efficiency by decreasing throttling and coupling losses. Variable speed drives can be applied primarily CAPITAL AND OPERATIONAL COSTS for fans in the kiln, clinker cooler, preheater, separator, and For a 5,000 ton per day plant, it is estimated that replacing all mills, and for various drives in a cement plant. motors in plant fan systems with high-efficiency motors costs ENERGY PERFORMANCE $0.22 per annual ton of cement capacity.68 AC drives for kiln systems have a lower investment cost than DC drives. Variable speed drives can reduce electricity consumption by between 7 and 60 percent, depending on the flow pattern FACTORS FOR IMPLEMENTATION and loads in a plant.70 Other sources estimate the potential If the replacement does not influence the process operation, savings to be 15 to 44 percent of the installed power, or motors may be replaced at any time. Further, oversized roughly equivalent to 8 kWh per ton of cement.71 motors are commonly found in cement plants, resulting in CAPITAL AND OPERATIONAL COSTS poor energy efficiency and high consumption and costs. Therefore, onsite motor loading surveys and corrective The specific costs depend strongly on the size of the system. action must be a part of any comprehensive energy In Europe, for systems over 300 kW, the costs are estimated conservation effort. at €70 per kW ($75 per kW) or less, and for systems in the range of 30 to 300 kW, costs are estimated at €115 to COST EFFECTIVENESS PRIORITY €130 per kW ($120 to $140 per kW).72 Based on these, the High; however, applicability may be limited depending on specific costs for a modern cement plant were estimated to the efficiency of current fan and vent systems. Economics be roughly $0.9 to $1.0 per annual ton of cement capacity. also depends on the power price. In India, the costs of high-temperature and low-temperature variable speed drives are assumed to be $240 to $300 per CASE STUDY kW and $120 to $200 per kW, respectively.73 By retrofitting 13 motors with high-efficiency versions, a cement plant in Davenport, California, has saved 2.1 megawatt hours of electricity annually. The plant has reduced its annual energy and maintenance costs by $168,000 and $30,000, respectively. The implementation costs amounted to 69 U.S. Department of Energy, CEMEX: Cement Manufacturer Saves 2.1 Million kWh Annually with a Motor Retrofit Project (Washington, DC: 2005). 70 ECRA/CSI, Development of State of the Art-Techniques in Cement Manufacturing. 66 Worell, Galitsky, and Price, Energy Efficiency Improvement Opportunities for the Cement Industry. 71 Worell, Galitsky, and Price, Energy Efficiency Improvement Opportunities for the Cement Industry. 67 ESKOM, Concrete Steps Towards Profitability—Solid Ways to Ensure Energy Efficient Cement Production (Sunninghill, 72 ECRA/CSI, Development of State of the Art-Techniques in Sandton, South Africa: 2011). Cement Manufacturing. 68 Worell, Galitsky, and Price, Energy Efficiency Improvement 73 CSI, Existing and Potential Technologies for Carbon Emissions Opportunities for the Cement Industry. Reductions in Indian Cement Industry. 36 Energy Efficiency Technologies and Measures COST EFFECTIVENESS PRIORITY plants, compressed air is a vital input to the production process. However, too often, compressed air systems are highly High; however, applicability may be limited depending on inefficient, resulting in significant wasted energy and cost. the efficiency of current fan systems. Economics also depends While compressed air is often considered low cost, it can be on the power price. fairly expensive given that only 10 to 20 percent of the electric 2.6.3 PREVENTATIVE MAINTENANCE energy input reaches the point of end use. The remaining energy is converted to wasted heat or is lost through leakage. While many processes in cement production are primarily Below are several best practices that can be used to improve air automated, there are still opportunities to increase energy compressor system efficiency and reduce costs: savings through preventative maintenance. Preventative maintenance will assure that the equipment and other 1. Detect and Repair Leaks. Leaks in an industrial infrastructure is in good condition to deliver optimal outputs. compressed air system can waste significant amounts In addition to energy savings, preventive maintenance can of energy, as much as 20 to 30 percent of compressor help avoid problems with product quality, reduce downtime, output. Detection and repair can reduce leaks to less than and improve capacity utilization. Maintenance of the kiln 10 percent of compressor volume. Leak repair, when refractories, or reduction of false air input into the kiln, are combined with adjustments to compressor controls, can among typical areas where preventive maintenance can focus. reduce compressor run time, increase equipment life, Effective preventive maintenance will require the development and reduce maintenance. However, without appropriate and implementation of a carefully crafted maintenance plan, compressor controls, there may not be much energy as well as basic training of the employees. savings. Repairing leaks also reduces demand for new ENERGY PERFORMANCE compressor capacity by reducing wasted air. While leakage may come from any part of the system, the most Savings that can be harvested through preventive common problem areas are couplings, pressure regulators, maintenance will depend on the measures already taken condensate traps, shut-off valves, and pipe joints. in a particular plant. Reduction of up to 5 kWh per ton of clinker through various preventative maintenance and 2. Eliminate Inappropriate and Unnecessary Uses. process control measures have been reported. Typical savings Compressed air generation is one of the most expensive are around 3 kWh per ton of clinker.74 auxiliary processes for an industrial facility. Over 80 percent of the electricity used for this process is CAPITAL AND OPERATIONAL COSTS attributed to wasted heat at the compressor. Plants need Startup and implementation costs of preventive maintenance to consider more cost-effective ways to accomplish the tend to be very low, often resulting in payback times of less same tasks. If air nozzles are required, a Venturi-type than one year. nozzle can significantly reduce compressed air demand, as well as lower noise levels. If an air motor is used COST EFFECTIVENESS PRIORITY for mixing, a plant can consider replacing this with an High. Preventive maintenance is low cost and should be electric motor. The plant also can check to ensure that air included as standard procedure in plant operation. is not being supplied to unused or abandoned equipment. 3. Minimize Pressure Drop. Pressure drop is the reduction 2.6.4 COMPRESSED AIR SYSTEM OPTIMIZATION AND MAINTENANCE in air pressure from the compressor to the actual point of use. A properly designed system should have a pressure Compressed air is often called the “fourth utility” in many drop of below 10 percent of the compressor’s discharge facilities, after electricity, fuel, and water. For most cement pressure. Systems are frequently operated at higher pressures than necessary to compensate for unnecessary 74 Worell, Galitsky, and Price, Energy Efficiency Improvement pressure drops, which waste energy and money. The most Opportunities for the Cement Industry. Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 37 frequent problem areas are after-coolers, separators, rate of pressure decay by locating receivers near surge dryers, filters, regulators, and poor connection practices at demands. For systems with highly variable air demand, the point of use. For systems in the range of 100 pounds the plants can achieve tight control by combining storage per square inch gauge (psig), every increase in discharge with a pressure/flow controller. Narrowing the pressure pressure of 2 pounds per square inch (psi) will increase variation with better controls uses less energy and energy consumption by about 1 percent at full load. minimizes potential negative effects on product quality. 4. Reduce System Pressure. Many plant air compressors 6. Use Efficient Part-Load Controls. For rotary screw operate with a full load discharge pressure of 100 psig compressors, throttling the air can allow the output of and an unload discharge pressure of 110 psig or higher. a compressor to meet flow requirements. Throttling is The actual pressure requirements of machinery and usually accomplished by closing down the inlet valve, tools are often 80 to 90 psig or lower. Reducing and which restricts inlet air to the compressor. However, controlling system pressure downstream of the primary this control scheme is inefficient for controlling receiver can reduce energy consumption, leakage, and compressor output for displacement compressors. demand for new capacity, as well as cause less stress on Most manufacturers offer control options for larger components and operating equipment. However, caution compressors that are more efficient at part loads. Load/ should be exercised in lowering system pressure because unload controls can improve the efficiency at part-load large changes in demand can cause the pressure at points operation if there is enough storage capacity. Another of use to fall below minimum requirements. This can efficient approach uses variable displacement control or be avoided by carefully matching system components, variable capacity control, which reduces the effective controls, and storage. Plants can address unnecessary length of the rotors at part loads. Variable speed control pressure drops prior to lowering system pressure. can be a very efficient approach to provide “trim” duty. In some plants, the high-pressure requirements of a Proper selection of part-load controls depends on specific few uses drive the pressure requirements for the entire compressed air system requirements. system. If these uses can be supplied by a dedicated 7. Optimize Distribution System Operation. The air compressor, the rest of the system can operate effectively distribution system that connects major compressed at a lower pressure. air system components is very important. Appropriate 5. Size and Control Compressors to Match Loads. Since sizing and layout will ensure proper air supply, good compressor systems are typically sized to meet a system’s tool performance, and optimal production. A plant maximum anticipated demand, a control system often can size and arrange the complete drying, filtration, is required to reduce output for low-demand periods. and distribution system so that the total pressure drop The compressor package usually includes controls. For from the air compressor to the points of use is below 10 systems with multiple compressors, it is usually good percent of the compressor discharge pressure. The plant practice to follow a baseload/trim strategy. This allows can choose equipment and piping components to avoid some compressors to be fully loaded to meet the baseload excessive pressure drops and leakage. A plant also may demand. The compressor(s) with the highest part-load dramatically improve the operation of existing systems efficiency is placed in trim service to handle variations by replacing worn-out or inadequately sized hoses and in load. This strategy requires controls that operate the couplings, inspecting and maintaining filter/regulator/ group of compressors as an integrated whole. This is lubricator components, and installing adequate storage. typically far more efficient than placing compressors in 8. Improve Routine Maintenance. Inadequate compressor modulation, which is a common practice. maintenance can increase energy consumption An effective control strategy includes adequate storage. significantly via lower compression efficiency, air leakage, A plant can employ storage to cover peak air demands pressure variability, higher operating temperatures, poor by reducing both the amount of pressure drop and the moisture control, and poor air quality. A plant can keep 38 Energy Efficiency Technologies and Measures radiators clean and clear of oil and sawdust to keep the COST EFFECTIVENESS PRIORITY air and oil cool. This can add up to thousands of dollars High. Economics also depends on the power price. every year. The plant also can inspect and adjust controls periodically to ensure that they are operating properly 2.6.4.2 REDUCING LEAKS IN COMPRESSED AIR and at appropriate settings for system requirements. For SYSTEMS basic maintenance, the plant can inspect and clean inlet Leaks in compressed air systems are very common and filters, drain traps, maintain lubricant levels, condition are significant sources of wasted energy and money. Plants belts, maintain operating temperature, inspect air-line without proper maintenance of the system may have 20 filters, and check water cooling systems. to 50 percent leakage, and this value can be reduced to In addition to the general best practices for air compressor below 10 percent with proper leak detection and correction system efficiency listed above, the following three measures are programs. Couplings, hoses, tubes, fittings, pressure particularly effective when implemented at cement facilities. regulators, open condensate traps and shut-off valves, pipe joints, disconnects, and thread sealant are among the most 2.6.4.1 COMPRESSED AIR SYSTEM MAINTENANCE common areas of leaks. Leaks can be detected by either Proper maintenance of compressed air systems is of utmost simple methods (such as the use of soapy water in suspected importance and can help maintain compression efficiency, areas) or advanced methods (for example, the use of reduce air leakage or pressure variability, and avoid ultrasonic acoustic detectors). increased operating temperatures, poor moisture control, Besides increased energy consumption, leaks can add and excessive contamination. Proper maintenance includes unnecessary compressor capacity, make air tools less the following: efficient and adversely affect production, shorten the life of • Keeping the compressor and intercooling filters clean equipment, lead to additional maintenance requirements, and foul-free. and increase unscheduled downtime. • Keeping motors properly lubricated and cleaned. ENERGY PERFORMANCE • Regularly inspecting drain traps. By fixing leaks, the energy consumption of the compressed air system can be reduced by up to 20 percent. • Maintaining the cooler to assure lowest possible inlet temperature to the dryer. CAPITAL AND OPERATIONAL COSTS • Adjusting the belts and checking them for wear. Typical capital costs for systemic leak management in • Replacing air lubricant separators at optimal intervals. compressed air systems, combined with system controls, are estimated as follows for different system sizes: • Maintaining the water quality of water cooling systems. • $1,250 for <37 kW. ENERGY PERFORMANCE • $3,000 for 37 kW to 75 kW. Through more-frequent filter changing, a 2-percent reduction of annual energy consumption in compressed air systems can • $5,000 for 75 kW to 745 kW. 76 be realized. 75 CAPITAL AND OPERATIONAL COSTS The payback for filter cleaning and maintaining drain traps is usually under two years. 75 Worell, Galitsky, and Price, Energy Efficiency Improvement 76 United Nations Industrial Development Organization, Motor Opportunities for the Cement Industry. System Efficiency Supply Curves (Vienna: 2011). Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 39 2.6.4.3 COMPRESSOR CONTROLS ENERGY PERFORMANCE The demand patterns in compressed air systems are often Sophisticated controls can provide up to 12 percent energy dynamic, and therefore few systems operate at full load all savings annually. Changing the compressor control from on/ the time. Part-load performance of a compressed air system zero/off to a variable speed control can save up to 8 percent is a critical factor affecting the efficiency of the system per year.77 and is influenced primarily by compressor type and system CAPITAL AND OPERATIONAL COSTS controls. When the pressure in the system is higher than what is required, more energy—approximately 7 percent for Typical payback for start/stop controls is one to two years. every extra bar—is consumed. COST EFFECTIVENESS PRIORITY The objective of any control strategy is to shut off High. Economics also depends on the power price and on compressors that are not needed or to delay bringing on the condition of the current system and controls. additional compressors until needed. All units that are on should be running at full load, except for one. Positioning of the control loop also is important; reducing and controlling the system pressure downstream of the primary receiver can result in energy consumption of up to 10 percent or more. Start/stop, load/unload, throttling, multiple (fixed) speed, variable speed, and network controls are options for 77 Worell, Galitsky, and Price, Energy Efficiency Improvement compressor controls. Opportunities for the Cement Industry. 40 Energy Efficiency Technologies and Measures ENERGY EFFICIENCY PROJECT IMPLEMENTATION BARRIERS 3 Energy efficiency projects are often sound investments Energy efficiency financing is distinguished in the following that can generate good return and have low risks. Still, ways:78 important energy efficiency potential remains in all sectors of the economy worldwide, including the industrial sector. • In most cases, the assets financed have little or no The main reason for this is the presence of different market residual value, making them unusable as collateral barriers that remain in all markets: against a bank loan. • The project benefits are “energy and other savings” • Unfavorable regulatory framework for energy (that is, money not leaking out of the company, rather efficiency measures. than money flowing in, which is a more abstract concept • Lack of awareness about energy efficiency opportunities. than an increase in revenues, where there is actual cash coming into the company accounts). • Lack of knowledge and capacity to identify, develop, and implement projects. • The projects (especially in industry) are more “intricate.” They are not more technically complex than a greenfield • Lack of capacity to identify gains generated by projects. investment or a production expansion, but they are more • Lack of trust in future energy efficiency project results complicated to understand from a banker’s perspective. (that is, in energy savings). • There is a knowledge gap between the engineering • High internal competition for project support in terms of companies developing and implementing energy human and financial resources. efficiency projects and the beneficiaries (project hosts) • Production line expansion projects have priority over and bankers. energy efficiency projects. • There is a lack of widely adopted and proven • Low energy cost. measurement and verification standards and protocols for energy efficiency investments. Different countries • Low carbon emission factor for electricity. adopt different guidelines regarding measurement and • Lack of adapted and attracted financing. verification. Also, different engineering companies develop and use their own proprietary models for energy efficiency Specifically related to the last barrier, experts have long evaluation. As a result, bankers do not trust the estimated recognized that the lack of commercially viable adapted benefits from energy efficiency projects, as they are financing is one of the major barriers to implementing energy technical in nature and are derived from non-transparent efficiency projects. Competing for financing with other core and non-standardized models. This also makes it very business investment projects, energy efficiency projects often difficult to compare energy efficiency projects. rank low on the priority lists of high-level private sector managers or investors. • Average energy efficiency project size is in the range of €1 million to €5 million, which is considered rather small by local financing institutions. 78 International Energy Agency (IEA), Joint Public-Private Approaches for Energy Efficiency Finance (Paris: 2012). Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 41 These properties create a mismatch between the current lending practices of local financial institutions and the needs of energy efficiency projects, making energy efficiency lending discouragingly difficult. Local banks typically: • Provide asset-based lending limited to 70 percent to 80 percent of asset value (energy efficiency project value = savings). • Do not believe or acknowledge that cash flow from energy efficiency projects = increased host credit capacity. • Are not familiar with unique “intricacies” of energy efficiency projects. • Do not have internal energy efficiency finance capacity to properly evaluate the risks/benefits of energy efficiency projects. • Lack experience to properly evaluate the risks/benefits of energy efficiency projects. • Are unwilling to invest in building energy efficiency finance capacity due to the relatively small monetary size of energy efficiency projects. To address these barriers, various business models were developed and used in different countries that have proved successful. 42 Energy Efficiency Project Implementation Barriers BUSINESS MODELS 4 This section presents different business models that could 4.1.1 DIRECT LOANS (SENIOR DEBT) be considered to facilitate the implementation of energy Direct lending from local financial institutions constitutes the efficiency projects in the cement industry in Brazil. simplest and direct way to finance energy efficiency projects at any facility level. In some cases, the loan can finance a large 4.1 DIRECT IMPLEMENTATION portion of the requested investment, or, in other cases, the loan The most conventional way to implement energy efficiency can be leveraged with other mechanisms (equity, leasing, etc.). projects is through direct implementation by project This is known as “senior debt” in the financing world. beneficiaries. Even though this model does not address many of the identified barriers, it has the advantage of simplicity The main financial barriers to direct lending are the and good understanding by decision makers. high interest cost in some countries (such as Brazil), the non-adapted timeframe for repayment, the limitation that The use of internal or external expertise, project management, it creates on the financing space in relation to competition and commissioning are the two main approaches used for this with other non-energy-efficiency-related projects, as well as model. To address the financing needs, different approaches the technical risk still being borne by the energy end-user. have been developed. When the local financing market is reluctant to provide adapted lending to energy efficiency projects, other organizations—such as national development banks or Figure 21: Structure of Various Financing Methods international financing institutions—for eligible countries can offer such mechanisms through dedicated credit lines. Such credit lines are a dedicated source of credit that is Equity on-lent to financial intermediaries (generally commercial banks) that can use this liquidity to offer loans for developers of energy efficiency investment projects. When a credit line Mezzanine is set, the financial intermediaries are responsible for repayment Financing of the loan and assume all financial risks. In some cases, it has been agreed that the financial intermediaries will lend a percentage of the investment from other source(s) of liquidity to which they have access. The main financial barriers Senior Debt addressed by credit lines are the lack of liquidity or adapted conditions for energy efficiency projects in the market, the competiveness between all the business opportunities within the financial institutions, and the disinterest of local financial institutions in the energy efficiency business as compared to other traditional opportunities. Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 43 4.1.2 SUBORDINATED DEBT FINANCING Equity financing can come from professional venture (MEZZANINE FINANCING) capitalists. Venture capital is a specific sub-segment of Subordinated debt financing, also called mezzanine private equity investment, which entails investing in startup financing, is capital that sits midway between senior debt companies with strong growth potential; private equity and equity and has features of both kinds of financing. entails investment in the expansion and growth of any Subordination refers to the order or priority of repayments: company that is not listed on a public stock exchange. subordinated debt is structured so that it is repaid from Venture capital investors obtain equity shares in the energy efficiency project revenues after all operating costs companies that provide energy efficiency goods or services and senior debt service has been paid. and generally play a significant role in the management and technical aspects of the company. Without clear exit paths, Subordinated debt is substantially riskier than senior debt typically through resale or initial public offerings, venture since it is generally subordinate to senior debt in terms of capital investors cannot easily commit to the deal, even when collateral rights and rights to cash flow. Subordinated debt they are convinced of the investment potential. financing is generally made available directly from insurance 4.1.4 LEASING companies, subordinated debt funds, or finance companies. Alternatively, it is raised with public offerings of high-yield Leasing consists in getting new energy efficiency equipment bonds to institutional investors. These funds are loaned under a rental contract within a determined period. It based on the amount and predictability of energy efficiency makes it possible to finance up to 100 percent of the energy project cash flow exceeding that required to service senior efficiency project cost. Leases are guaranteed by the new debt. Because subordinated debt usually has little collateral equipment and usually do not require any other guarantee. protection, the lending institution may be granted stock Typically, leasing finances large pieces of equipment that options to own equity of the outstanding stock. can easily be removed from the site and resold (for example, boilers, chillers, compressors, etc.). There are two types of Subordinated debt funds can be undertaken in partnership lease: operating lease and capital lease. with senior lenders. Alternatively, a subordinated credit facility can be provided to the local financial institution, which acts OPERATING LEASE as senior lender; the senior lender then on-lends to the project, An operating lease is a mechanism that involves making blending together the subordinated debt with its senior debt regular payments as a standard operating expense with provided from its own resources. The borrower sees one single no ownership of the asset by the end-user (lessee) during loan, but the senior lender applies loan payments to repay the the lease term. At the end of the lease term, the lessee may senior debt component on a priority basis. purchase the asset at the then-fair market value, return the equipment, or renew the lease for a new lease term. This 4.1.3 EQUITY FINANCING helps facility owners preserve their corporate line of credit as Equity financing for energy efficiency projects refers to well as any cash they may have set aside for other business the acquisition of funds by issuing shares of common or needs, since the transaction is not recorded on the balance preferred stock of a corporation in anticipation of income sheet of the lessee. from dividends and capital gain as the value of stock rises. Equity is the residual claim or interest of the most junior CAPITAL LEASE class of investors in an asset, after all liabilities are paid: For a facility owner who prefers to enjoy the benefits of ownership equity is the last (residual) claim against assets, ownership of the assets without actually owning the energy paid only after all other creditors are paid. Ownership equity efficiency project assets, a capital lease may be the best is also known as risk capital or liable capital. financing vehicle. It is still a lease where the facility owner is a lessee, but the lessee has access to any tax and depreciation benefits that the equipment may have. In terms of the facility 44 Business Models owner’s balance sheet, the equipment would need to be 4.2 ENERGY PERFORMANCE CONTRACTING recorded as a capital asset and the lease payments would be MODEL recorded as a liability. At the close of the lease contract term, 4.2.1 DEFINITIONS AND BASIC CONCEPTS the energy-efficient equipment transfers ownership to the Energy services companies (ESCOs) develop, implement, and facility owner for a nominal purchase price. provide or arrange financing for upfront energy efficiency 4.1.5 PARTIAL LOAN GUARANTEES investments for their clients. Repayments from savings allow clients to compensate the ESCO’s ongoing savings monitoring, A partial loan (or credit) guarantee refers to a program measurement and verification costs, and assumption of administrator who offers credit guarantees to back up loans risk through energy performance contracting or third- or leasing issued by financial institutions to project developers. party financing. The fundamental concept of the energy These guarantees are used as collateral for the financial performance contracting business model is that the client does institutions and thus allow them to offer better loan conditions not have to come up with any upfront capital investment to the project developers. In addition, this removes from the and is only responsible for repaying the investment made or borrowers the burden of using personal assets as guarantees. arranged by the ESCO. The program administrator can do this on the base of a fund kept in a reserve account, which can be withdrawn to cover Three dominant energy performance contracting models have for defaulted payments from the clients of the banks. The loan been developed to help address the different market needs guarantees may not cover the loans entirely, so that the local in specific sectors: shared savings, guaranteed savings, and financial institutions must accept part of the risks. Partial loan “chauffage.” guarantees generally cover up to 90 percent of the investment. The level of coverage is established based on the risk perception 4.2.2 SHARED SAVINGS ENERGY PERFORMANCE CONTRACT of the commercial banks. In a shared savings energy performance contract, the ESCO The financial barriers mainly addressed by partial loan finances the total upfront capital cost of the project and is guarantee activities are the high cost of financing due to totally responsible for repaying the lender. The client pays high real or perceived risk and the perception of high risk of the ESCO a percentage (or it can be a fixed amount) of financial institutions in the energy efficiency business. its achieved savings from the project, large enough for the Figure 22: Partial Loan Guarantee Figure 23: Shared Savings Financial Model Partial Credit Guarantee Fund Leveraged x% PCG Claims on PCG Local Commercial Bank EE Loan Partial Collateral/ Loan Repayments Borrower for EE Project Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 45 ESCO to repay the project investment to its lenders, cover Figure 25: “Chauffage” Financial Model measurement and verification costs, and pay any other associated costs. The energy end-user assumes no direct contractual obligation to repay the lender; only the ESCO has this obligation. 4.2.3 GUARANTEED SAVINGS ENERGY PERFORMANCE CONTRACT In a guaranteed savings energy performance contract, the client essentially applies for a loan, finances the project, and makes periodic debt service payments to a financial institution. The ESCO bears no direct contractual obligation to repay the lender; only the energy end-user assumes this obligation. The ESCO’s guarantee is not a guarantee of payment to the lender, but rather a guarantee of savings performance to the energy end-user that is usually equal to its repayments to the lender. owner of aggregate properties) called “contrat d’exploitation de chauffage” leading to the wording “chauffage” to qualify 4.2.4 CHAUFFAGE this form of energy performance contract. In the former “Chauffage” or integrated solutions generally refer to a French approach, the contract contained up to three elements greater value-added approach. The concept offers conditioned corresponding to the following services: space at a specified price per energy unit to be consumed or • Energy supply cost. per some measurable criteria (square footage, production unit, etc.) through a supply-and-demand contract offered by the • Maintenance cost. ESCO. The ESCO manages all supply-and-demand efficiencies. • Total guarantee cost (replacement cost of the equipment This concept derives from a previous contractual French at the end of its life). approach of energy services delivered by a private company to a public authority or to another private body (for example, Figure 24: Guaranteed Savings Financial Model 46 Business Models 4.2.5 COMPARATIVE ANALYSIS OF THE DIFFERENT The main features of public-private partnerships include: MODELS • Long-term agreement for delivery of service by a private Table 7 shows a comparison of the various energy performance sector firm in a public sector facility. contracting models along with three important questions.79 • Transfer of risks to the private sector. • Mobilization of private sector financing. Table 7: Energy Performance Contracting Models Contract Type Whose Who Takes Project-Specific • Payment to the private sector for the services delivered. Balance Performance Financing? Sheet? Risk? • The goal of delivering a service, which is directly or indirectly related to optimizing energy efficiency at the Shared Savings* ESCO ESCO Yes end-user level. Guaranteed Customer ESCO Yes Savings Public-private partnerships are not a process of privatization “Chauffage” ESCO ESCO No of public assets. Under public-private partnerships,  ote that ESCOs generally sell their right to receive payments from a project to * N accountability for public service delivery is retained by the other “third” parties as a means of recovering project investment and working capital to use in future projects. public sector, whereas under privatization, accountability moves across to the private sector (the public sector might retain some regulatory price control). Under public-private partnerships, there is no transfer of ownership and the public 4.3 PUBLIC-PRIVATE PARTNERSHIP80 sector remains accountable. Public-private partnership for the implementation of energy The term “public-private partnership” is not defined in the efficiency projects is a business model that combines the legislation of many countries. The vast majority of public- efforts and support of both the public sector and the private private partnerships are in infrastructure projects. However, sector for design, financing, construction, operation, and in recent years, these structures have been used increasingly management of energy efficiency equipment or projects in in energy efficiency implementation and energy efficiency public sector facilities. It enables the private sector to finance finance. Practice shows that the existence of specific legislation and engage in public sector investments. Generally, the is not crucial for the structuring and implementation of public sector is responsible for monitoring and evaluation of public-private partnerships, particularly those in energy quality, while the private sector is more closely related to the efficiency finance. The partners usually work around the gaps implementation of the project and the actual service delivery. in the local legislation and structure the form and nature of In addition to public contracts and concessions, this legal their partnership in public-private partnership contracts. form is best suited for heavy operations in which the payment of public service cannot be assured by users. The structure has Supporting legislation, however, can be a catalyst for the the advantage of promoting rapid implementation of projects development of public-private partnerships. Regulations that without burdening public finances. make a public-private partnership possible and facilitate its functioning (such as the legal right to establish a project company) or regulations that govern the provision of public financing, where relevant (for example, to provide subsidies or to make long-term commitments of public expenditure for the life of the public-private partnership contract), make the 79 Econoler, IFC Energy Service Company Market Analysis, June implementation of public-private partnerships much easier. 23, 2011. The degree to which public-private partnership structures are 80 IEA, Joint Public-Private Approaches for Energy Efficiency Finance. The text, drafted originally for the IEA by Econoler, being used today for energy efficiency financing depends to has been edited to fit the needs of the present section. Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 47 a large extent on the level of sophistication of the different international financial institution. Limited partnerships governments and on the development of the judicial systems. are created for large investments (for example, $5 million and above) because of the amount of legal and accounting 4.4 SPECIAL PURPOSE VEHICLE services required, which cause the transaction cost to be very high. It is appropriate for projects in industrial facilities The use of a special purpose vehicle consists in the setup or for the retrofitting of many facilities owned by a single of a special-purpose company owned by whomever injects entity (for example, a municipality or a state government). equity in it. The “other project owner” could be, for Nevertheless, it is a very innovative scheme that makes it instance, an equipment vendor with whom the ESCO will possible to fine tune the risk assignment. partner. It also could be a program administrator or an Figure 26: Special Purpose Vehicle Financial Model Lender (Secured Party) Credit Interest Equity Fees Limited Other ESCO Partnership Project Owner Fees Equity Financing Customer (Project Beneficiary) Source: Adapted from C. Bullock and G. Caraghiaur, A Guide to Energy Services Companies (The Fairmont Press / Prentice Hall, 2000). 48 Business Models 5 INTERNATIONAL BEST PRACTICE BUSINESS MODELS FOR IMPLEMENTING ENERGY EFFICIENCY PROJECTS IN INDUSTRY Several examples of successful business models exist • The general objective is to promote and strengthen throughout the world. This section covers those models energy efficiency in the industrial and commercial sectors that are considered most relevant for the Brazilian cement in Chile. sector. More examples can be found in publications such • The specific objectives are to: as the Institute for Industrial Productivity’s Delivery • Obtain a critical mass of trained government staff, Mechanism for Financing of Industrial Energy Efficiency;81 energy efficiency auditors and consultants, as well as the Inter-American Development Bank booklet Programas representatives from the industrial and commercial de Financiamiento de Eficiencia Energética,82 written by sectors, with on-site practical experience of available Econoler; and the International Energy Agency publication technologies for energy efficiency, including their Joint Public-Private Approaches for Energy Efficiency implementation and measurement and verification of Finance,83 co-written by Econoler. energy savings. • Provide the necessary tools to make financing 5.1 LENDING PROGRAMS options available to end-users and ESCOs. 5.1.1 PROMOTING AN ENERGY EFFICIENCY MARKET • Provide practical experience in design and imple- IN CHILE mentation of energy efficiency measures and verify INTRODUCTION energy efficiency projects in specific identified areas. The program, implemented through the Chilean Energy BARRIERS TARGETED Efficiency Agency (AChEE), aims to facilitate the The program addresses the following barriers to energy implementation of energy efficiency projects in several efficiency financing: sectors. The estimated cost of the program is $42.35 million; of this, the Global Environment Facility (GEF) will • Lack of knowledge of energy efficiency in the industry finance (grant) $2.64 million, which will be administered and of capacity to develop energy efficiency projects. by the Inter-American Development Bank. In addition, This barrier is targeted through the solid technical $39.72 million in co-financing will be provided by project assistance package integrated in the program and partners ($3.69 million from AChEE; $31.89 million through the investment in the program of a number of from CORFO; $0.98 million from the Inter-American market stakeholders. AChEE is actually a private energy Development Bank, and $3.14 million from the beneficiary efficiency agency, and, as such, it makes sure that the small and medium enterprises). program is designed and implemented on a commercial basis, not distorting or conditioning the market. • Limited access of small and medium enterprises to energy 81 Institute for Industrial Productivity, Delivery Mechanisms for Financing of Industrial Energy Efficiency: A Collection of Best efficiency financing. The program will actually focus on Practices (Washington, DC: 2012). small and medium enterprises and ESCOs, which in Chile 82 Inter-American Development Bank, Programas de also are small companies with small project development Financiamiento de Eficiencia Energética: conceptos básicos (Washington, DC: 2012). and implementation capacities. A large portion of 83 IEA, Joint Public-Private Approaches for Energy Efficiency Finance. Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 49 the technical assistance package will target small and • Direct measurements (for example, reports on energy medium enterprises and information awareness issues. savings resulting from pilot projects and other energy efficiency investments facilitated by the GEF project • Lack of technical capacity at the local financial calculations greenhouse gas emission reductions through institution level to evaluate energy efficiency projects. the method in the GEF guideline). Through evaluation of existing credit lines and investment facilities, the program aims to suggest energy • Indirect measurements (for example, the amount of efficiency financing mechanisms that address the current resources invested in energy efficiency projects in small barriers and issues. and medium enterprises implementing technologies promoted by the project). DESIGN OF THE MECHANISM It will be good to monitor on a regular basis the To address the above barriers, the program design includes a implementation of this program, as it has the embedded package with the following components: versatility and potential to have a positive impact in Chile and also to increase the awareness of energy efficiency in • Institutional strengthening and capacity building the market. Because this is reimbursable program, it is in energy efficiency. The technical support package expected to run for some time and to compound the market aims to consolidate AChEE as a “one-stop shop” for transformation effect. energy efficiency by increasing the know-how in energy efficiency, establishing an energy efficiency strategy for 5.1.2 CHINA UTILITY-BASED ENERGY EFFICIENCY the country and its implementation plan, and developing PROGRAM (CHUEE) a communication strategy to create awareness among INTRODUCTION the rest of the market stakeholders. The package also The CHUEE program is implemented by IFC in China. will finance workshops and seminars on energy efficiency Although the name suggests that the program is linked to a program design and evaluation, benchmarking, risk utility, this is not the case. Initially, the program was designed assessment of energy efficiency projects, as well as to promote the switch from coal to natural gas and was to measurement and verification protocols to be taught to be implemented through a gas utility in China. However, this AChEE staff members, ESCOs, and market stakeholders. concept was abandoned due to misalignment of interests, • Implementation of energy efficiency pilot projects in and the program evolved into a partial guarantee mechanism, selected and prioritized areas. disbursed through local banks in China. • Development of energy efficiency financial mechanisms After a successful Phase I in 2006, the program was repeated as through evaluation of several existing energy efficiency Phase II in 2009. Currently, a Phase III is ongoing. The lessons credit lines and a partial guarantee fund. This component learned from the first two phases have been described in detail also will provide recommendations for optimization of the in the impact assessment report of the first two phases.84 existing financial instruments and development, testing, and dissemination of a standardized process for assessing BARRIERS TARGETED loan applications for energy efficiency investments. The program was based on market research, which assessed MARKET IMPACT the market constraints to energy efficiency in China. Several major barriers were identified as key targets for the program: This is still an ongoing program, and, as yet, there are no reports on its implementation progress and market impact. • Lack of information at the level of end-users, which limits However, program results will be monitored by two groups their ability to understand the energy efficiency savings of indicators: 84 World Bank, Assessing the Impact of IFC’s China Utility-Based Energy Efficiency Finance Program (Washington, DC: 2010). 50 International Best Practice Business Models for Implementing Energy Efficiency Projects in Industry potential at their facilities, to develop energy efficiency DESIGN OF THE MECHANISM projects, and to assess the risks of such projects. The design reflected the objectives of the program to target the • Lack of awareness and experience among Chinese above barriers. The CHUEE design had three main components: commercial banks about financing energy efficiency projects. • An energy efficiency partial credit guarantee mechanism. This was a mechanism intended to overcome the risk- • High risk aversion among local banks in China. averse behavior of Chinese banks and to give them an • Use of asset-based lending as the only approach to incentive to experiment and lend to energy efficiency lending by local banks, which discredited energy projects. The partial credit guarantee, provided by the efficiency stakeholders such as equipment suppliers and program was a “first-loss,” where IFC would cover: ESCOs that have a weaker asset base. • 75 percent of the first 10 percent losses of the Chinese bank • 40 percent of the remaining 90 percent losses of the Chinese bank. • A technical assistance package for capacity building of market players. This boosted the capacity of the participating banks and changed the role of the banks from financing-only to providing project development guidance plus financing. • Development of an energy efficiency awareness component. Figure 27: Institutional Arrangements of CHUEE Program Technical assistance Technical assistance Bank partners guarantee Banks Loan CHUEE Corporation Loan (Program) agreement Market partners Customers Utilities, ESCOs, energy users vendors, and so forth Equipment engineering services Technical assistance Source: IEG Note: CHUEE = China Utility-Based Energy Efficiency; ESCOP = energy service company. Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 51 The total funds allocated to the program were $215.5 A number of recommendations were made for Phase III of million (including the technical support components). the program (CHUEE III), such as: MARKET IMPACT • The additionality from the experience of the involved In the first two phases of the program, the local banks international financial institution should be exploited as provided a total of $512 million in loans for energy much as possible. efficiency projects. The environmental impact was estimated • Market focus should be on sectors that have high at 14 million tons of carbon dioxide per year, which exceeds potential for energy efficiency savings but are currently the target set by IFC at the design stage. overlooked by local banks. Apart from the market transformation impact, the effect was • Subsidies should be used in areas with market failures. much more pronounced at the level of the two participating To the extent possible, energy efficiency financing should banks (Bank of Beijing and Industrial Bank). CHUEE be done on a commercial basis. practically started the energy efficiency lending business for 5.1.3 BANGKOK MITSUBISHI UFJ LEASE LTD (BMUL) the two banks, and it continued in a sustainable manner RISK-SHARING PROJECT after the end of Phase II of the program. The exposure INTRODUCTION to energy efficiency transactions of the two banks was significantly influenced by CHUEE, and now they have a The project entails the development of a risk-sharing facility much higher proportion of energy efficiency transactions in to support the energy efficiency, renewable energy, and their loan portfolios, compared to competitor banks. ESCO sectors. It will contribute to increasing efficiency in industry, reduction of operating costs, and pollution A number of lessons were learned from this program, which reduction. Thailand is heavily dependent on energy as an can be transferred to the Brazilian market context: input and has one of the highest electricity rates in the Southeast Asia region. • For programs that aim for market transformation, careful selection of the local partner banks is required The total size of the facility is estimated to be $70 million, as a prerequisite for success. and IFC investment totals $36.81 million. BMUL would be responsible for generating a portfolio of energy efficiency • Flexibility in the program design is a key to help leases. IFC will share the risk of that lease portfolio, which respond to unexpected market changes. will include support from the Clean Technology Fund. • Supporting government policies are a strong market driver that can influence the implementation BARRIERS ADDRESSED of the program. Leasing comes as an alternative to bank lending. The • Indiscriminate use of subsidies impedes the different set of regulations governing the leasing business commercialization of energy efficiency finance. makes leasing companies more flexible and particularly suitable to financing energy efficiency equipment. • Caution is needed when applying a utility-based model in emerging markets. The main barrier addressed by the program in Bangkok was • A program exit plan is critical to success. the high perceived risk of energy efficiency investments by local financial institutions, and respectively the high requirements for collateral and business cash flows from borrowers. DESIGN OF THE MECHANISM The program is designed to skim the market for viable energy efficiency projects, where different pieces of efficient 52 International Best Practice Business Models for Implementing Energy Efficiency Projects in Industry equipment are being installed, replacing old and obsolete BARRIERS equipment. By design, the equipment itself is enough as The main barrier to be addressed is the lack of low-cost collateral on the transaction. The leasing mechanism, energy efficiency, renewable energy, and sustainable energy although not targeting the entire energy efficiency market technologies in the region. potential, focuses on a good portion of the market and has a unique market transformation effect. DESIGN OF THE MECHANISM The Fund will invest in a diversified portfolio in the The program will contribute to the development and Asia-Pacific region. The Fund is expected to consist of a diversification of the financial sector by assisting in the portfolio of 10 to 12 companies with investments generally development of new markets and product lines with ranging from $10 million to $30 million. significant growth potential. The risk-sharing facility by IFC will provide comfort and reduce risks taken by financial IMPACT institutions, especially those entering into such new markets By providing equity financing to companies in the business in Thailand for the first time. of technology transfer in the clean technology space, the lack IMPACT of knowledge should be reduced because of: The project is still ongoing, but it is expected to contribute • Adoption of more sustainable practices. largely to the increase in efficiency in the industry sector as well as to the reduction in operating costs. In addition, the project • Dissemination of low-cost technologies to will contribute to pollution reduction by increasing the use of developing markets. more-efficient technologies with fewer harmful side effects. • Global improvement in clean energy technology in Asia. 5.2 EQUITY FINANCING (PRIVATE EQUITY, RISK/ 5.3 PARTIAL GUARANTEE MECHANISM VENTURE CAPITAL, ETC.) 5.3.1 THE ENERGY EFFICIENCY GUARANTEE 5.2.1 CLEAN RESOURCES ASIA GROWTH FUND MECHANISM INTRODUCTION The Energy Efficiency Guarantee Mechanism (EEGM)85 is a Although equity financing takes only a small niche in the $25 million mechanism exclusively for buildings, including energy efficiency financing market, this program is an industrial buildings. However, projects related to the interesting approach to energy efficiency financing in the improvement of the process are excluded. The mechanism general framework of clean energy support. CLSA Capital is the result of a partnership between the Inter-American Partners Limited, a financial institution with a strong Development Bank, the United Nations Development presence in Asia, is raising the Clean Resources Asia Growth Programme, and the GEF, which offers partial credit Fund, a $200 million clean technology fund. The Fund will guarantees of up to 80 percent of the value of the energy target opportunities across the value chain within the clean efficiency contract, or up to 100 percent of the financed technology sector, including several areas that are currently amount, for the maximum term of seven years, in the form underserved by capital sources: of two guarantee products: • Pollution and waste management technologies. • The comprehensive risk guarantee: covers defaults for technical and financial creditworthiness reasons. This • Water and wastewater solutions. product is available to financial institutions, ESCOs, • Sustainable agriculture technologies. and their clients. The EEGM takes up to 80 percent of • Energy efficiency technologies. • Supply chain investments for alternative energy. 85 Energy Efficiency Guarantee Mechanism, http://eegm.org. Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 53 the payment risk of the borrower participating in the Figure 28: Krakow Energy Efficiency Project underlying energy efficiency contract (credit risk). • The technical risk guarantee: covers defaults due to Disbursement GEF (US$5.7 million) technical reasons. This product is available to financial institutions and ESCOs. The EEGM takes up to 80 percent of the performance risk of the underlying energy BGK efficiency contract. Guarantee Reserve Fund The EEGM emits guarantees for a period of five years and Legal Loss offers a maximum tenor of seven years. The guarantees are Agreements Partial payment Guarantee (GFA & LGA) guarantee to lender claim done in Brazilian reals within the following limits: • Minimum Guarantee: $100,000 (equivalent in Brazilian Participating reals) (within the maximum percent per project) Bank/Lender • Maximum Guarantee: $1,600,000 (equivalent in Brazilian Loan Default reals) (within the maximum percent per project). Loan Repayment event 5.3.2 KRAKOW ENERGY EFFICIENCY PROJECT Energy Efficiency Investment A good example is the Krakow Energy Efficiency Project, where a GEF-supported86 partial credit guarantee mechanism Project Investment Cash flow from is implemented through the Polish State Bank BGK (Bank Energy Savings Gospodarstwa Krajowego). Apart from monitoring the performance indicators, set in the project design, the following contract management aspects were involved: Investment/disbursem Repayment Partial guarantee Guarantee claim payment • Contract between GEF and BGK (as representative of the Government of Poland) Source: GEF • Contract between BGK and partner banks. BARRIERS 5.4 ESCO BUSINESS MODELS The main barriers to be addressed are: 5.4.1 GREEN FOR GROWTH FUND • Limited access to sustainable energy finance. INTRODUCTION • Lack of knowledge in energy conservation, energy The proposed project envisages an IFC investment in the efficiency, and renewable energy. Green for Growth Fund (GGF), Southeast Europe SA SICAV-SIF (formerly known as the Southeast Europe Energy • Low interest of private investors in renewable energy and Efficiency Fund, SA SICAV-SIF) (the Fund), which was energy efficiency. launched in December 2009. DESIGN OF THE MECHANISM Promoted by KfW Entwicklungsbank and the European Investment Bank, the Fund is a proposed €400 million collective debt investment vehicle that will provide financing for on-lending to sustainable energy projects through 86 Global Environment Facility, “Krakow Energy Efficiency financial institutions, ESCOs, and renewable energy/ Project,” http://gefonline.org/projectDetailsSQL.cfm?projID=786. 54 International Best Practice Business Models for Implementing Energy Efficiency Projects in Industry energy efficiency projects/companies and service and supply • Provides financing to energy efficiency/renewable energy companies, collectively partner institutions in the Southeast service or equipment manufacturing companies that require European Region. More specifically, the GGF: funding for growth capital to expand their business. • Builds beneficial relationships with companies that • Provides financing arrangements to ESCOs for projects have compelling business models and well-defined that aim to achieve a minimum of 20 percent energy or growth strategies. carbon dioxide savings. Eligible measures are energy efficiency and renewable energy projects, energy • Offers structured and tailored senior debt, mezzanine, performance contracting projects, or energy supplying project finance, and equity products, pursuing proven contracting projects. high-growth energy technologies and services. • Provides medium- to long-term financing for energy IMPACT efficiency and renewable energy products/projects to The project is expected to have a significant developmental strong and reputable commercial banks, microfinance impact in promoting energy efficiency and renewable energy institution leasing companies, and other non-bank and expanding lending to households, small and medium financial institutions committed to the same energy- enterprises including ESCOs, municipalities, and public saving objectives. The financial institutions on-lend sector entities in Southeast Europe. Key developmental these funds to sub-borrowers such as households, impacts include: household associations, small and medium enterprises, large business, municipalities, public sector entities, and • Broadening access to sustainable energy finance. renewable energy projects. • Demonstrated effects of improved energy efficiency among sub-borrowers. Figure 29: Green for Growth Fund Institutional Structure Source: http://www.ggf.lu Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 55 6 BRAZILIAN MECHANISMS TO SUPPORT THE USE OF DIFFERENT BUSINESS MODELS A limited number of mechanisms are available in the and the limits defined by the BNDES and undertakes the Brazilian market to support energy efficiency investment in related credit risks. the industrial sector. The isolated acquisition of machines and equipment requires 6.1 TAKING ON DEBT automatic indirect financing, regardless of the amount, obtained through Cartão BNDES or FINAME. Automatic The Banco Nacional de Desenvolvimento Econômico e indirect financing of projects requires the use of the BNDES Social/BNDES (National Bank for Social and Economic Automático product. Development) is the biggest and leading agent for the financing of long-term projects and investments in The main products offered by the BNDES for the industrial Brazil. The BNDES is a state-owned bank that acts as sector are as follows: the instrument of government policies on credit for long- term developments. As such, the bank has access to long- • BNDES Finem: for the financing of business ventures term financing under favorable conditions and can offer of more than 20 million Brazilian reals. This product longer-term and less-expensive funds than other financial has a high number of lines, with specific characteristics, institutions. The BNDES is the main financing agent of depending on the sector or program. One line is dedicated energy efficiency projects in the Brazilian market. to energy efficiency, Finem–linha Eficiência Energética.88 • BNDES Finame: indirect financing for new, Brazilian- The bank has developed a number of financing instruments made machines and equipment. Among the several over the last few years, and several of them are dedicated to lines that can be used for energy efficiency investments, the industrial sector.87 The BNDES provides two financing one of the most appropriate is the Bens de Capital– modalities: direct and indirect financing. To qualify for Commercialização–Aquisição de Bens de Capital (BK direct financing, the borrower must submit a “previous Aquisição) line for the acquisition of new, Brazilian-made consultation” document that has to be approved by the machines and equipment. There is also a leasing facility, bank. The Finem is the BNDES product used for the direct Finame Leasing, that could be used for specific Brazilian- financing of investment projects, even though some financing made machines and equipment. programs allow direct financing in specific cases. Only projects of more than 20 million Brazilian reals qualify for • BNDES Automático: indirect financing of investment direct financing, but there are exceptions for specific cases. projects of up to a maximum of 20 million Brazilian Indirect financing, the other modality, requires resorting to reals. This product has several lines. In relation to energy accredited financial institutions. In these cases, the analysis efficiency initiatives, the most appropriate one is the of the credit facility is made by the accredited financial Linha Médias–Grandes e Grandes Empresas–Demais institution, which negotiates the financing conditions—such Setores line. as payment terms and required guarantees—with the client. The accredited financial institution complies with the rules 88 BNDES, “Temos as melhores opções de financiamento para você,” 87 BNDES, “Indústria, comércio e serviços,” http://www. http://www.bndes.gov.br/SiteBNDES/bndes/bndes_pt/ bndes.gov.br/SiteBNDES/bndes/bndes_pt/Areas_de_Atuacao/ Institucional/Apoio_Financeiro/Produtos/FINEM/eficiencia_ Industria/. energetica.html. 56 Brazilian Mechanisms to Support the Use of Different Business Models • BNDES Project Finance program: This program is academia. Some still work as university professors and applicable under very specific conditions outlined on the serve as consultants as well. Others are small consulting or program webpage. 89 engineering firms that focus on energy efficiency projects. 6.2 ENERGY PERFORMANCE CONTRACTING Out of the 90-plus ESCOs associated with ABESCO, Brazil has had firms providing specialized energy efficiency only about 5 or 6—the largest ones—count as “real” project services since the early 1990s, as well as an ESCO ESCOs, working in the typical business model (in energy association, ABESCO, since 1997. ABESCO, the Brazilian performance contracting). Several— including Efficientia Association of Energy Services Companies,90 is a nonprofit (CEMIG, Minas Gerais) and Light ESCO (Light, Rio entity that officially represents the segment of Brazilian de Janeiro)—were founded by utilities as a project energy efficiency, representing ESCOs and encouraging implementation arm. Other large private ESCOs include APS and promoting activities and projects for the growth of the Engenheria and Vitalux Eficiência Energética. Those ESCOs energy market. According to ABESCO, several financing have implemented projects in the industrial sector, including lines exist for financing energy efficiency projects,91 including in the cement sector. the BNDES lines presented above. According to a 2014 survey conducted by Econoler, the The majority of the ESCOs associated with ABESCO are commercial, services, and industrial sectors are the main in fact energy consultants, as they do not all necessarily potential clients of both big and small companies. The big work with energy performance contracts and do not companies that work 100 percent under energy performance follow the typical ESCO type of company management. contracting all stated that they focus all of their efforts on Several professionals (the majority), who work in the industrial sector. individual companies as consultants, originally came from 89 Ibid. 90 ABESCO, http://www.abesco.com.br/pt/. 91 ABESCO, “Formas de Financiamento de Projeto,” 2015, http:// www.abesco.com.br/pt/forma-de-financiamento/ (February 21). Improving Thermal and Electric Energy Efficiency at Cement Plants: International Best Practice 57 NOTES 58 Brazilian Mechanisms to Support the Use of Different Business Models ifc.org 2017 June