Basic Research Report 18-26
A Study on Mid- to Long-Term Development Directions for Energy Efficiency Management in the Age of the Fourth Industrial Revolution (1/3)
Seongin Lee & Jinyoung Soh
Research Staff
Head Researcher: Seongin Lee, Research Fellow
Jinyoung Soh, Senior Research Fellow
Research Associates: Jihyo Kim, Research Fellow
Hyoseon Lee, Researcher
Outside Participants: Kyeongjin Boo, Professor, Seoul National University
Outside Participants: Yoonhee Ha, Professor, Korea University
Abstract
1. Background and Research Objective
As energy is used through devices and facilities, it is critical to improve their efficiency to save energy. This is even more so with the advent of the Fourth Industrial Revolution and the Internet of Things (IoT). It is expected that the technologies of this new era will make energy-using devices and facilities smart, and consequently, greatly influence the demands of energy, most notably, those of electricity. Not surprisingly, the energy efficiency management is becoming increasingly important.
This research aims to proactively seek directions for the development of energy efficiency management in the age of the Fourth Industrial Revolution. Two major directions are presented as follows. First, given the trend of convergence of the Fourth Industrial Revolution technologies and energy devices, it is necessary to refurbish the institutions to increase effectiveness of the energy efficiency management. Second, we would like to suggest strategies to help apply the technologies of the Fourth Industrial Revolution to energy devices in order to raise effectiveness of the energy efficiency management.
Ex-ante and ex-post evaluations on how technological progress influences the effectiveness of energy efficiency management is a necessary step in designing a realistic and effective policies. It is also important to draw up directions for improvement through feedback of the results of the implementation of policies.
This research is conducted annually for three years. In the first year, we focus on suggesting the directions on how the related institutions should be reformed to manage energy efficiency more effectively. To do this, the influence and meaning of the technological development, convergence, and changes in the market for energy devices, due to the Fourth Industrial Revolution, will be evaluated in terms of energy efficiency management. Next, the directions for improvement of the existing institutions will be suggested. Also, the energy policy evaluation system will be established and operated for three years; during the first year, the focus is placed on examining the models and methodologies of energy policy effect analysis to select the optimal one and designing the structure of the model or system.
2. Summary of Findings
Among the energy devices subject to energy efficiency management where core technologies of the Fourth Industrial Revolution are integrated, the most basic type is combination of mobility and IoT, as in electric rice cooker and air cleaner. The second type is the combination of AI, IoT, and mobility, as in TV, refrigerator, air conditioner, washing machine, computer, and LED lighting equipment. The third type is the combination of AI, IoT, cloud, and big data, which enables big data accumulated for a long-time to be processed with advanced AI to build an optimized system. In the future, some or all of core technologies such as AI, IoT, mobility, cloud, and big data will be converged and so with other Fourth Industrial Revolution technologies such as robots, 3D printing, and block chains.
The influence of the Fourth Industrial Revolution on the effectiveness of energy efficiency management is as follows. First, an environment is being created where energy efficiency management system can be designed by using high-quality data generated in real time and the effect accurately evaluated and improved. Second, as users can have information about energy use of their devices in real time, it will increase the importance of policy to induce them to change behavior. Third, the role of energy efficiency service providers using the Fourth Industrial Revolution technology will become important. Fourth, the complexity of energy efficiency management system in design and operation will increase. Finally, technology development and diffusion of the optimization system through autonomous control can ultimately enhance the effectiveness of energy efficiency management. Within this context, the responses of major countries show the signs of making institutional changes, albeit slowly. The US energy efficiency management scheme includes a smart thermostat. It is characterized by measuring efficiency with the field data, not the experimental data. In the European Union, a preliminary study (Lot 33) was conducted to apply the eco-design rules for smart devices, with the main objective being to explore the applicability of eco- design for electric vehicle chargers. This research begins with defining the concept of “smart,” and makes various strategy suggestions related to economic ripple effect of smart devices and policy approaches to smart devices. Recently, Japan is witnessing new energy-saving projects sprouting in almost every field, evolving around establishing platforms for collecting, using, and providing data on energy management. The CDA (Connected Device Alliance), which mainly consists of the IEA members, presented the principles for design and policy to make core technologies of the Fourth Industrial Revolution, such as ICT, compatible with connected devices for energy efficiency.
South Korea operates three energy efficiency management programs: Energy Efficiency Labeling and Standard, High-efficiency Appliance Certification, and e-Standby Power. Energy Efficiency Labeling targets home appliance products already in the market and e-Standby Power is a program for office and home appliances. High- efficiency Appliance Certification program runs to promote certified devices and equipment and create relevant markets. The labeling and the minimum efficiency system, which lie at the core of energy efficiency management, are considered successful and useful for improving energy efficiency at home and abroad.
In South Korea, ‘New Energy Industries’ policy is leading digitalization in the energy sector and technology convergence of the Fourth Industrial Revolution and the government is currently promoting eight new industrial business models. To boost the new energy industries, AMI (Advanced Metering Infrastructure) and related businesses are activated. In addition, energy management system (EMS), such as FEMS (factory energy management system) or BEMS (building energy management system), has been distributed on a small scale while smart-gird pilot projects and platforms for energy big data are being prepared.
The effect of the energy demand management policy, that is, the reduction of energy consumption, can be realized through the facilities or the change of energy consumption behavior, or combination of both. The energy saving effect of the programs for facilities can be measured with the methods proposed by the guidelines of the International Performance Measurement and Verification Protocol (IPMVP). The impact of policies inducing behavioural changes of consumers through education, promotion, and campaign, can be assessed using survey- based evaluation or experiment design evaluation methods. To analyze the overall influence of a number of demand management policies, an analysis model can be built with energy-economy modelling tools, such as LEAP, TIMES or CGE. In particular, LEAP-based models have an advantage in making an in-detail analysis of the changes in energy consumption and GHG emission by changing decision-making of economic subjects. (Jaekyu Lim et al., 2013, p. 102).
Since the Fourth Industrial Revolution influences the policy effectiveness, the evaluation system also has to reflect the technological characteristics and directions. First, the energy technology DB and consumption pattern DB need to be flexible enough to timely apply the real-time information for an update. Second, it is also important to measure saving effects on the system level, as well as evaluation by individual facilities/devices. Third, the energy saving effect of the behavioral changes should reflect the influence of continuous flow of information. Finally, the behavioral changes are expected, ultimately to be included in the area of system optimization. The evaluation system, developed annually in this research, is expected to provide basic analysis for the design of a reasonable and effective energy efficiency management policies to respond to the Fourth Industrial Revolution.
3. Implications
The influence of the Fourth Industrial Revolution on the area of energy efficiency and the energy efficiency management system and the responses were integrated and organized to derive policy implications. First, it is mandatory to change energy management policies and system to cope with the rapidly evolving technologies in the Fourth Industrial Revolution. Second, standardization of digital energy devices and technology is needed. Third, smart and IoT devices have to be included in the energy efficiency management target with the focus shifting from single devices to the overall system. Fourth, energy efficiency criteria should be created for the products based on smart technology. Fifth, the scope of the energy efficiency management policies should be extended to cover buildings and industrial devices, not just home and office appliances. In particular, stricter regulations for energy efficiency are needed for industrial products. Sixth, the labelling of maximum energy performance standard needs be introduced and adjusted regularly. Seventh, consumers need to be provided with customized information. Finally, since the individual monitoring and control devices allow users to monitor the energy use of individual devices, it is important to strengthen the efficiency verification system and provide information close to the actual environment where the devices are used.
Table of Contents
Abstract ...... 3
Chapter 1. Introduction ...... 11
Chapter 2. Application of Fourth Industrial Revolution Technologies ...... 13
Section 1. Energy Efficiency and the Significance of the Fourth Industrial Revolution ...... 13
1. Literature Review ...... 13
2. Definition of Energy Efficiency ...... 14
3. Significance of the Fourth Industrial Revolution ...... 15
4. The Fourth Industrial Revolution and Energy ...... 20
5. Major Technological Changes in the Power Demand Sector ...... 30
Chapter 2. Convergence Trends of Fourth Industrial Energy Technologies and Energy-Using Devices ...... 35
1. Devices Subject to Energy Efficiency Management...... 35
2. Examples of Energy-using Devices Integrated with IoT-based Technologies...... 42
Section 3. Technology Standardization and Certification Trends for Energy-Using Devices ...... 46
1. Necessity of Policy Implementation and the Standardization of Energy Efficiency ...... 46
2. International Standardization and Certification Trend ...... 47
3. Recent Energy Efficiency Standardization Trends in Korea ...... 49
Chapter 3. Institutional Effects of the Fourth Industrial Revolution ...... 50
Section 1. Status and Achievements of Energy Efficiency Management in Major Countries ..... 50
1. Status of Energy Efficiency Management in Major Countries ...... 50
2. Achievements of Energy Efficiency Management in Major Countries ...... 67
Section 2. Institutional Effects and Response Trends of Major Countries ...... 69
1. The Effects of the Fourth Industrial Revolution on Energy Efficiency Management ...... 69
2. Responses by Major Countries ...... 70 Chapter 4. The Status and Response of Institutions in Korea ...... 75
Section 1. Status of the Energy Efficiency Management System in Korea ...... 75
1. Overview of Korea’s Energy Efficiency Management System ...... 75
2. Status and Standards of Energy Efficiency Labeling in Korea ...... 77
3. Status of the e-Standby Program ...... 83
4. Status of the High-efficiency Appliance Certification Program ...... 85
Section 2. Evaluation of the Performance of Korea’s Energy Efficiency Management System ... 88
1. Achievements of the Energy Efficiency Labeling and Standard Program ...... 88
2. Achievements of the e-Standby Power Program ...... 96
3. Achievements of the High-efficiency Appliance Certification Program ...... 97
Section 3. Korea’s Response ...... 99
1. The Fourth Industrial Revolution and the Energy Industry ...... 99
2. Status of Energy Policy Related to the Fourth Industrial Revolution ...... 100
Chapter 5. Designing a Policy Assessment Model with Technological Progression Considerations ...... 102
Section 1. Overview of Energy Demand Management Policy in Korea ...... 102
Section 2. Methods for Analyzing the Effects of Measures Designed to Reduce Energy Demand ...... 103
1. Equipment and facilities: IPMVP ...... 103
2. Education and Promotion ...... 105
3. Energy-economy Models ...... 106
Section 3. System Created for Energy Policy Impact Analysis ...... 111
1. Structure of the Energy Efficiency Policy Assessment System ...... 111
2. Reflection and Use of Fourth Industrial Revolution Technologies ...... 113
Chapter 6. Policy Implications ...... 114
References ...... 120
List of Tables
Tab le 2-1. Smart Factory Changes made by Companies in Korea and Abroad ...... 32
Tab le 2-2. Energy Efficiency Ratings for AI/Traditional TVs ...... 36
Tab le 2-3. Standby Power Use of Devices in the Smart Home Sector ...... 44
Tab le 2-4. Energy Consumed by Refrigerators in Korea...... 44
Tab le 2-5. Energy Reduction Effects of Smart Home Technologies ...... 45
Tab le 2-6. Categories and Aspects of Energy Efficiency as Defined by the IEC ...... 48
Tab le 3-1. U.S. Minimum Energy Performance Standards (MEPS) ...... 50
Tab le 3-2. U.S. Energy Efficiency Labels and Target Products ...... 53
Tab le 3-3. Products Subject to the China Energy Label ...... 56
Tab le 3-4. Priority Product Groups for the Ecodesign Directive ...... 58
Tab le 3-5. Changes in the Target Products of the Top Runner Program ...... 62
Tab le 3-6. Target Products for the Top Runner and Energy Labeling Programs ...... 64 Tab le 3-7. Energy Star Criteria for Smart Thermostat Devices ...... 71
Tab le 3-8. Energy-saving Criteria for Smart Thermostats ...... 72
Tab le 3-9.CDA Design Principles for Energy Efficient ICT-connected Devices ...... 74
Tab le 3-10. CDA Policy Principles for Energy Efficient ICT-connected Devices ...... 75
Tab le 4-1. Target Products for the Energy Efficiency Labeling and MEPS Programs ...... 79
Tab le 4-2. Label Information and Placement by Product Group ...... 80
Tab le 4-3. Expansion of Products Subject to the Standby Power Warning Label ...... 84
Tab le 4-4. Products Subject to the e-Standby Program ...... 84
Table 4-5. Selection Process for Target Products of the High-efficiency Appliance Certification Program ...... 85
Tab le 4-6. Target Products of the High-efficiency Appliance Certification Program ...... 87
Tab le 4-7. Support Programs for Certified High-efficiency Appliances ...... 87
Tab le 4-8. Research Results on the Improvement of Energy Efficiency in Applicable ...... 88
Tab le 4-9. Sales of Appliances by Energy Efficiency Rating ...... 93
Tab le 4-10. Sales and Energy Savings of Outstanding Standby Power Products (2016) ...... 96
Tab le 4-11. Product Groups Subject to the High-efficiency Appliance Certification Program ...... 97
Tab le 4-12. Progress of the Sales of Certified High Efficiency Appliances (count) ...... 98
Table 5-1. Four Measurement and Verification (M&V) Options for Energy Conservation Using the IPMVP ...... 103
Tab le 6-1. Standby Power for Smart LEDs and Home Automation Devices ...... 115
List of Figures
Figure 2-1. Meaning of the Fourth Industrial Revolution ...... 15
Figure 2-2. Discussions on the Fourth Industrial Revolution ...... 16
Figure 2-3. Core General-Purpose Technologies of the Fourth Industrial Revolution and Applicable Sectors ...... 18 Figure 2-4. Plans for Energy Portfolio Transition in South Korea ...... 21
Figure 2-5. The Fourth Industrial Revolution and the New Energy Industry ...... 22
Figure 2-6. Structural Changes in the Energy Market ...... 23
Figure 2-7. Fostering the Energy Sector in Response to the Fourth Industrial Revolution and Energy Transition (1) ...... 24
Figure 2-8. Fostering the Energy Sector in Response to the Fourth Industrial Revolution and Energy Transition (2) ...... 25
Figure 2-9. Example of the Convergence of Fourth Industrial Revolution Technologies in the Energy Sector...... 26
Figure 2-10. Patent Applications Filed for AI Technologies for Renewable Energy Incorporation .... 28
Figure 2-11. Operation and Management of AI-based Renewable Energy Power Plants ...... 29
Figure 2-12. Examples of Technologies Applied to Smart and Digital Factories ...... 30
Figure 2-13. Doosan Heavy Industries and Construction: ...... 31
Figure 2-14. Example of Improved Efficiency through BEMS Technologies...... 33
Figure 2-15. HEMS Concept Map Provided by a Korean Home Appliance Company ...... 33
Figure 2-0-16. Electricity Consumed by Major Household Appliances ...... 35
Figure 2-17. ABB Digital Transformer ...... 38
Figure 2-18. Expanded Application of Minimum Efficiency System for Electric Motors ...... 39
Figure 2-19. Prospects of Integrating Fourth Industrial Revolution Technologies with Devices Subject to Energy Efficiency Management ...... 40
Figure 2-20. Business Model of Smart Home Development Phases ...... 42
Figure 2-21. Energy Efficiency of a Building (Example) ...... 47
Figure 3-1. Energy Guide Label ...... 51
Figure 3-2. Energy Star Label ...... 51
Figure 3-3. Energy Star “Most Efficient” Label ...... 52
Figure 3-4. Examples of Clothing Washers with the Energy Star “Most Efficient” Designation ...... 53
Figure 3-5. China Energy Label (CEL) ...... 55 Figure 3-6. Eco-friendly dishwasher tablets ...... 58
Figure 3-7. Information Displayed on an EU Energy Label ...... 59
Figure 3-8.EU Energy Label Before and After Revision(clothes washer label used as an example) .. 60
Figure 3-9. Search Results for One-Door Refrigerators on the Topten Website ...... 61
Figure 3-10. Examples of Japan’s Energy Efficiency Labels ...... 65
Figure 3-11. Japan’s Uniform Energy Saving Label ...... 66
Figure 3-12. Breakdown of Electricity Consumption by Average Energy-Using Products in China (2011) ...... 69
Figure 3-13. Example of a Smart Thermostat ...... 71
Figure 4-1. Overview of the Three Main Energy Efficiency Management Programs in Korea ...... 76
Figure 4-2. Energy Efficiency Labeling and MEPS Processes ...... 78
Figure 4-3. Former Energy Efficiency Labels and Current Energy Efficiency Labels Introduced in 2007 ...... 82
Figure 4-4. Application Procedure for the High-efficiency Appliance Certification Program ...... 86
Figure 4-5. Achievements of Energy Efficiency Management Programs for Major Appliances ...... 90
Figure 4-6. Improved Energy Efficiency of Air Conditioners ...... 90
Figure 4-7. Improved Energy Efficiency of Refrigerators ...... 91
Figure 4-8. Improved Energy Efficiency of Washing Machines ...... 91
Figure 4-9. Improved Energy Efficiency of Drum Washing Machines ...... 92
Figure 4-10. Improved Energy Efficiency of Televisions ...... 92
Figure 4-11. Improved Energy Efficiency of Rice Cookers ...... 93
Figure 4-12. Efforts Undertaken by Presidential the Committee on the Fourth Industrial Revolution to Make Industries “More Intelligent” ...... 99
Figure 5-1. Selection Process for IPMVP Energy-saving Calculation Options ...... 104
Figure 5-2. Structure of a General LEAP Module ...... 107
Figure 5-3. TIMES Reference Energy System ...... 109
Figure 5-4. CGE Analysis Procedure ...... 110 Figure 5-5. Step-by-step Structure of the Proposed Energy Efficiency Policy Assessment System 111
Figure 5-6. U.S. California Energy Efficiency Statistics Website ...... 112
Figure 6-1. Expansion of IEC Energy Efficiency Measurements and Standards from Electric Motors to Electric Motor Systems ...... 115
Chapter 1. Introduction
Improving energy efficiency has emerged as a critical issue in global energy policies today. It is not only emphasized as a solution to issues associated with global climate change, but also as a measure to strengthen the industrial competitiveness of individual nations. As energy continues to be used by an increasing number of devices and facilities, it is becoming more critical than ever to save energy and to improve energy efficiency and energy efficiency management.
In addition to strengthening their energy efficiency management systems, developed countries are improving their economic efficiency and investing in energy reduction by increasing tax benefits and grants (subsidies) for purchases of and investments in high energy-efficient products and facilities. The EU, for example, has set a mid- term goal of reducing its energy consumption by 20 percent, down from its 1990 levels. In addition, it has been strengthening its energy efficiency management system and policies to expand the distribution of high energy- efficient products, recently introducing the Energy Efficiency Obligation Schemes (EEOS) for energy suppliers. Japan has similarly set a goal of lowering its energy consumption by at least 30 percent by 2030 and has implemented strong energy efficiency management and energy saving measures (Jaekyu Lim et al., 2013, p. 77).
The Fourth Industrial Revolution and the Internet of Things (IoT) have given birth to smart energy-using devices and facilities,1 and with the expanded application of the IoT, it is now possible to remotely monitor and control many of these devices and facilities. Artificial intelligence (AI) and data analysis via cloud computing are also enabling the optimization and automation of these devices and facilities. Going forward, we can expect smart devices/facilities to continue to develop rapidly, as they increasingly feature optimized energy use and real-time energy use monitoring functions based on ICT software, hardware (sensors, communication, etc.), and other advanced control and management technologies.
Despite these advancements, there is also a possibility that the use of smart devices will increase overall electricity consumption. Many of the newly launched products featuring a variety of IT functions consume a large amount of energy, leading to changes in electricity demands and product market environments. Through the
1 For the purposes of this study, “smartization” is defined as the integration of the core technologies of the Fourth Industrial Revolution with energy-using devices and facilities, and all energy-using smart devices and facilities are collectively referred to as smart devices. digitalization of electronic appliances and the development of IT technology, energy-using devices are expected to continue to evolve into smart devices. The advent of the IoT has also accelerated technical innovation and device-to-device connections, leading to the rapid networking and systemization of energy-using devices. This, in turn, has resulted in the development of energy cloud systems and the birth of dynamic platforms that combine technology and services. The proliferation of Fourth Industrial Revolution technologies can be seen as both increasing and decreasing electric power demands. Smart devices, such as sensors and IT communication devices, increase power consumption, while the optimization of operation through the use of smart devices decreases power consumption.
This study aims to proactively establish directions for the development of energy efficiency management in the age of the Fourth Industrial Revolution. The policy direction suggested by this study is largely twofold. First, given the convergence trends that characterize Fourth Industrial Revolution technologies and energy-using devices, it is necessary to update related policies and institutions to increase the effectiveness of energy efficiency management. Second, it is necessary to propose strategies to apply Fourth Industrial Revolution technologies to energy-using devices in such a way that it raises the effectiveness of energy efficiency management.
Ex-ante and ex-post assessments of the impact of technological progress on the effectiveness of energy efficiency management are needed to design realistic and effective policies. It is also important to establish directions for policy improvement by analyzing the tangible results of the policies that are already in effect. Unfortunately, even though energy-using devices are increasingly being systemized as the Fourth Industrial Revolution gains greater momentum, there is not any one systemin place that allows us to conduct a comprehensive assessment of the impact of energy policies. Therefore, this research also aims to design a model for assessing the impact of energy policies that reflects changes in energy-using devices and device usage amidst the Fourth Industrial Revolution. For the purposes of this study, “policy impact” refers to the effect of policies on energy reduction.
This study was conducted over a three-year period. In the first year, we focused on proposing directions for reforming relevant policies and institutions to increase the efficiency of the energy management system. We evaluated the impact and significance of technological developments, convergence, and changing market conditions in terms of energy efficiency management as they relate to the energy-using devices of the Fourth Industrial Revolution. Next, we suggested ways to improve policies to increase the effectiveness of existing institutions. We also established an energy policy assessment system and operated the system for three years (for the entire duration of our study). To create this system, we spent the first year of our study examining models and methodologies of energy policy impact analysis. After choosing an optimal model, we designed our own system based on the model and used it for the remainder of this study.
In the second and third years of our study, we developed strategies to raise the effectiveness of energy efficiency management, focusing primarily on the increased convergence of Fourth Industrial Revolution technologies. Properly analyzing the proliferation of Fourth Industrial Revolution technologies requires both an understanding of the supply side, from the perspective of suppliers who produce energy-using devices, and an understanding of the demand side, from the perspective of consumers who use such devices. In the second year of our study, we focused on the supply perspective and proposed ways to accelerate the development of energy-using devices and the convergence of Fourth Industrial Revolution technologies and to create an optimal ecological environment where such technologies can be applied. More specifically, we conducted reviews and created a dynamic platform to economically and effectively accelerate the systemization and networking of energy-using devices. We then used the analytical model of energy policy impact we developed in the second year of our study to assess the effectiveness of energy technologies—focusing on how energy-using smart devices applied with Fourth Industrial Revolution technologies affect energy use within individual systems. Throughout our study, we refer to our analytical model as the “technological assessment model.” This model prioritizes systems that incorporate smart energy-using devices.
In the third year of our study, we focused on the demand perspective and explored measures to expand the distribution and use of energy-using devices and systems applied with Fourth Industrial Revolution technologies (i.e. smart devices). One measure explored was the creation of a market for new technologies and smart devices based on the introduction of a targeted efficiency system. Along this same vein, we also explored different business models for practical energy reduction through the comprehensive management of consumer smart devices and/or systems. In terms of our technological assessment model, we took the model we developed in our second year and, in our third year, expanded it to include an assessment of energy demand at the national level and the impact of energy efficiency management policies. We have named this expanded model our policy “impact model”; this model also focuses on the increased utilization of smart energy-using devices.2
This paper, which focuses primarily on our first year of research, consists of six chapters. Chapter 1, the Introduction, describes the necessity and purpose of our research. Chapter 2 discusses how Fourth Industrial Revolution technologies are applied to energy-using devices and facilities. The chapter begins by explaining the significance of the major concepts presented in this study. Next, this chapter examines the trends of convergence technologies—which integrate the main features of energy efficient devices and core Fourth Industrial Revolution technologies—as well as international trends in the standardization and certification of Fourth Industrial Revolution technologies. Chapter 3 uses overseas case studies to examine the impact of Fourth Industrial Revolution technological convergence on energy efficiency management. This chapter begins by analyzing the current status and achievements of energy efficiency management systems in major countries. Next, it analyzes the impact of the Fourth Industrial Revolution on the effectiveness of energy efficiency management and the response of major countries to this impact. Chapter 4 analyzes the status and performance of the energy efficiency management system of the Republic of Korea (hereinafter referred to as Korea) and examines Korea’s response to the Fourth Industrial Revolution in the energy sector. Chapter 5 provides a comparative analysis of the methodologies used to assess the impact of energy policies with consideration to technological changes. The results of the comparative analysis are then used to create an efficient analytical model, which incorporates the characteristics of Fourth Industrial Revolution technologies. Lastly, Chapter 6 presents policy implications based on analyses from the previous chapters.
Chapter 2. Application of Fourth Industrial Revolution Technologies
Section 1. Energy Efficiency and the Significance of the Fourth Industrial Revolution
1. Literature Review
Ingil Kim (1997), Seongin Lee (2011), and Jeongmin Yu et al. (2012) conducted research on energy efficiency management systems. Kim (1997) conducted a comparative analysis of energy efficiency management systems and their operation in Korea and foreign countries and analyzed the economic impact of Korean energy efficiency standards and management system. In terms of methodology, Kim calculated the technical potential of savings (TPS) and used the measures of maximum technical potential (MTP) and economic potential (EP) (Ingil Kim, 1997, p. 84).
Seongin Lee (2011) focused on making improvements to the statistics system, which is often used to assess energy efficiency management systems. To do this, Lee assessed statistical data from different institutions on various energy-using devices and reviewed logging cycles, announcement periods, study periods, study methods, and study categories. After completing his analysis, he used his data to create comprehensive statistics for the products he reviewed. Finally, he created a statistical database management system to effectively manage his comprehensive statistics, in an attempt to improve the energy efficiency management system (Seongin Lee, 2011, p. 5).
Jeongmin Yu et al. (2012) analyzed the energy efficiency management systems of the United States, European Union, and Japan, and proposed measure of improvement for Korea’s energy efficiency management system. This study focused heavily on qualitative analyses, such as literature reviews and interviews with experts, as well as market and technological data for devices subject to energy efficiency management (Jeongmin Yu et al., 2012, p. 2). In addition, this study used results derived from the IEA’s assessment of energy efficiency management systems, analyses of the energy use environment in Korea and abroad, and analyses of energy efficiency management systems in foreign countries to propose a comprehensive energy efficiency management system. It also suggested advancement of the proposed system, systematic energy efficiency management, and the establishment of an effective implementation system as measures to enhance the energy system (Jeongmin Yu et
2 In Korea, energy use is divided into five major sectors—industrial, transportation, household, commercial, and public. However, energy demand management policy, which is discussed in greater detail in Chapter 5, uses a different classification system, in which the five areas are industry, transportation, structures, devices, and infrastructure. This study examines classification systems that adequately reflect the characteristics of Fourth Industrial Revolution technologies and develops an assessment model that targets the areas of fastest technological advancement. al., 2012, pp. 218–219).
Seongin Lee et al. (2017), Jinyoung soh (2017), Seongin Lee et al. (2016), and Jaewan Jeon et al. (2017) conducted research that focused on the impact of Fourth Industrial Revolution technologies on the energy sector. Seongin Lee et al. (2017) analyzed future trends to explore expected changes in the energy consumption structure. In his study, Lee and his research team focused on population, technology, and economic industries as they relate to Fourth Industrial Revolution technologies, and examined potential changes in the energy consumption structure. After analyzing different factors of structural change and the ways in which these changes spread, Lee and his team used qualitative and quantitative approaches to complete a comprehensive analysis of each area of impact. Overall, Lee and his team used a minimalistic approach to analyze the structure of the energy consumption mix.
Jinyoung soh (2017) conducted a comprehensive analysis of the impact of the Fourth Industrial Revolution on the energy supply and demand system and the energy industry and proposed response measures at a national level. So’s study named intensified digitization, the convergence of Fourth Industrial Revolution technologies, and the transition to a decentralized energy supply system as driving factors behind the shift toward an intelligent energy system. In an effort to accelerate this shift, So proposed strategies and policy tasks—such as the research and development of intelligent energy technologies, creation of a basis for the proliferation of intelligent energy technologies, and creation of proper energy market conditions—to promote innovation and startup investments.
Seongin Lee et al. (2016) proposed strategies to expedite ICT-based energy demand management. Lee’s study emphasized the importance of an appropriate legal and systemic infrastructure to support Big Data as well as the necessity of an IoT ecosystem to boost ICT-based energy demand management technologies. In terms of making preparations for the IoT era, Lee et al. (2016) emphasized both the necessity of safety measures to protect personal information and governance to promote the proper sharing and use of personal information (Seongin Lee et al., 2016, pp. 117–118).
Jaewan Jeon et al. (2017) analyzed the impact of the Fourth Industrial Revolution on major Korean industries. They particularly examined structural changes in energy use in the manufacturing industry and the ripple effect caused by these changes. Using the Simple Average Parametric Divisia Method 2 (AVE-PDM 2), Jeon et al. analyzed the impact of the Fourth Industrial Revolution on energy efficiency in the manufacturing sector from 1998 to 2015 with a focus on the petrochemical, primary metal, nonmetallic mineral, and mechanical industries (Jaewan Jeon et al., 2017, p. 72). Jeon and his team also performed a structural decomposition analysis of energy consumption factors and energy intensity to assess improvement in energy efficiency.
Seongin Lee et al. (2014) and Seonghui Shim et al. (2014) conducted studies on assessment models applied to energy efficiency policies. In their study, Seongin Lee et al. (2014) developed methodology to analyze energy- saving effects in the public sector and policies that commonly affect residential, commercial, and industrial sectors. Using a comprehensive model called the Global Change Assessment Model (GCAM), Lee et al. analyzed the impact of the widespread use of LED lights and high-efficiency devices in the public sector (Seongin Lee et al., 2014, p. 61). GCAM is a model used to explore the effects of and responses to global change in terms of the economy, energy systems, agriculture, land use, and climate change. The model compares the efficiency of different technologies and allows researchers to select proper technologies and energy supplies (Seongin Lee et al., 2014, p. 62). Lee et al. analyzed data from the 2007 Energy Consumption Survey and created different LED light and high-efficiency heater scenarios. They then used the GCAM to estimate the energy effects, including the energy reduction amounts and costs, of each scenario.
Seonghui Shim et al. (2014) assessed the effects of energy demand management policies using the KEEI-2012 model, a policy effect assessment model developed based on the Long-Range Energy Alternatives Planning System (LEAP). The study provided business-as-usual (BAU) energy demand estimates from 2013 to 2017, the same period covered by the 5th Framework Plan for Energy Use Rationalization, and established scenarios for energy demand management policies to analyze the policy effects, especially the energy savings potential, of each scenario.
2. Definition of Energy Efficiency
Energy is the power input to produce desired energy services, such as heating, lighting, and/or motion.3 The
3Gillinghamet al. (2009, p. 1), as cited by Kim Ji-hyo et al. (2015, p. 5). definition of energy efficiency varies slightly by researcher and by organization, but fundamentally, it is the ability to use less energy, in terms of the ratio of input to output, to perform the same task (Seongin Lee et al., 2013, p. 79). The U.S. Environmental Protection Agency (EPA) defines energy efficiency as “using less energy to provide the same or an improved level of service to the energy consumer” (EPA, 2007b, p. 2–1). The International Electro technical Commission (IEC) defines energy efficiency as “the ratio or other quantitative relationship between an output of performance, service, goods, or energy, and an input of energy” (IEC, 2017, p. 3). In addition, the IEC states that there are several ways to achieve energy efficiency: 1. Use less energy to achieve the same outcome (higher efficiency); 2. Use the same amount of energy to achieve a better outcome (higher efficiency); and 3. Improve the conversion of primary energy into usable energy, including electricity, through the use of more efficient technologies (reduction of primary energy waste).
Depending on the input and output factors, energy efficiency can be classified as technological, physical, or economical. Technological energy efficiency refers to the ratio of the amount of energy service provided to the amount of energy input. Physical energy efficiency is the ratio of the amount of services or goods produced to the amount of energy input, and it is expressed in terms of energy intensity, which is measured by quantity of energy per product unit. Economic energy efficiency is defined as the ratio of the amount of money used to produce goods and services to the amount of energy input and is expressed by energy intensity, which, in this case, is measured in terms of the value added (Seongin Lee et al., 2013, p.79).
Energy conservation is often used synonymously with energy efficiency, but the two have distinctly different meanings. Energy conservation is defined as the “absolute reduction in energy demand compared to a certain baseline”(Linares and Labandeira, 2010, p. 573) and can include using less of a resource even if it results in a lower service level(EPA, 2007b, p. 2–1).Setting a thermostat lower or reducing lighting levels are examples of energy conservation. By doing these and similar things, it is possible to conserve energy and improve physical and economical energy efficiency without improving technical energy efficiency.
3. Significance of the Fourth Industrial Revolution
A. Basic Concept and Definition of the Fourth Industrial Revolution
The Fourth Industrial Revolution, which was the main focus of the World Economic Forum held in Davos in January 2016, is defined as “a new era built on the digital revolution (Third Industrial Revolution) and driven by technological convergence that dissolves the boundaries between physical space, digital space, and biological space” (Jinha Kim, 2016, p. 47). An industrial revolution refers to a phenomenon in which qualitative change occurs in productivity through the wide spread availability and popularization of technologies. The First Industrial Revolution began in the eighteenth century in England. In the First Industrial Revolution, the invention of the coal-powered steam engine and the cotton gin led to the mass industrialization of the textile industry and other manufacturing industries, resulting in improved economies of scale and increased productivity.
The Second Industrial Revolution, which began in the early twentieth century, was characterized by mass production, led by the expanded use of petroleum and electricity. Once factories had a stable supply of electricity, they began applying the Ford production system and scientific management based on time-motion studies; these changes led to unprecedented, rapid improvements in productivity.
The Third Industrial Revolution began in the second half of the twentieth century and was spearheaded by computer- and internet-based informatization. Although productivity increases during the Third Industrial Revolution were not as noticeable as in the first and second industrial revolutions, this revolution led to the rise of global IT companies. With the expansion of various services provided by IT companies, an information sharing and distribution system was established. The term the Fourth Industrial Revolution, which has widely been used in recent years, appeared as a central theme of the World Economic Forum held at Davos in late January 2016 and spread rapidly across Korea when the Go match between AlphaGo and Lee Sedol was held in Seoul in March of the same year.
Figure 2-1. Meaning of the Fourth Industrial Revolution
Source: Presidential Committee on the Fourth Industrial Revolution (2017, p. 3)
“An intelligence revolution based on hyper connectivity, enabled by digital technologies such as artificial intelligence and Big Data”
1st Industrial 2nd Industrial 3rd Industrial 4th Industrial Revolution Revolution Revolution Revolution
18th century Late 19th to early Late 20th century Present~ 20th century
Agent Steam engine Electricity Computer and AI, Big Data, and internet other digital technologies
Change Mechanization Industrialization Information Intelligence
An industrial revolution is an artificial phenomenon caused by the innovative development of certain widely- used technologies. In order to promote relevant policies throughout the economy and society, it is first necessary to gain a clear understanding of the causes and changes of industrial revolutions.
Germany’s Industrie 4.0 can be viewed as the initiative that introduced the Fourth Industrial Revolution to the world. Industrie 4.0 began in 2011 as part of Chancellor Angela Merkel’s industrial policy, which aimed to establish smart flexible manufacturing systems by integrating ICT systems in conventional factories in the manufacturing sector and connecting production facilities via digital networks. Unlike in South Korea, manufacturing represents a large proportion of Germany’s industries. Therefore, in order to create new growth engines for the struggling European industrial sector, it was necessary for Germany to come up with a strategy (Industrie 4.0) to strengthen and boost manufacturing. The continuous development of technologies, such as artificial intelligence (AI) and robots, that are expected to have a significant impact on our daily lives, has vitalized discussions on the Fourth Industrial Revolution.
Figure 2-2. Discussions on the Fourth Industrial Revolution
Source: Seokgwan Kim et al. (2017, p. 6)
Germany’s Industrie 4.0 Discussions on AI, robots, and job loss
-Launched in 2011; started the discussion on the -Frey and Osborne (2013): 47% of total US Fourth Industrial Revolution employment in high-risk categories -Movement to upgrade Germany’s manufacturing -Brynjolfsson and McAfee (2014) The Second sector through the use of ICT Machine Age -Automation, optimization, customization, and -Martin Ford (2015) Rise of the Robots reshoring using cyber-physical systems (CPS)
WEF Executive Chairman Schwab’s theory on the Fourth Industrial Revolution (January 2016)
-Application of Germany’s Industrie 4.0 to all industrial sectors and birth of the “Fourth Industrial Revolution” -Proposal of26 promising technologies and products as drivers of the Fourth Industrial Revolution, and citation of present-day changes as examples of the revolution -Speed, range, depth, and system shock cited as evidence of the progression of the Fourth Industrial Revolution
AlphaGo ‘shock’ Proliferation of the Counterarguments term “Fourth Industrial (March 2016) Revolution” -Rifkin: Only an extension of the Third Industrial Revolution (technological continuity) -Gordon: No distinct change in productivity; difficult for ICT technologies to make an impact greater than the inventions of the Second Industrial Revolution
A real-life example of the application of Fourth Industrial Revolution technologies is the Siemens factory in Amberg (EWA, Electronics Work Amberg). Siemens used an investment of 0.2billion Euros to attach sensors to all of the machines in its electronics plant, create a network of linked machines, and develop its own software platform to monitor and analyze information in real-time. This digitalization led to an extremely low defect rate in the Siemens manufacturing sector of just 11 defects per 1 million items produced(0.0011%) as well as a 40- fold increase in the factory’s productivity(Jingi Choi, 2018, p.62).This Siemens factory, where automation has now reached 75 percent, can manufacture around 1,000 product variants, catering to the needs of various customers.4Of course, huge investments must be made to install these types of facilities, develop related systems, and educate and train workers. However, Siemens’ preemptive digitalization of its manufacturing industry has become a great example for other industries and countries to follow. In fact, Siemens’ Amberg factory is visited and benchmarked on an annual basis by prominent figures from a variety of business sectors (Hangu Park et al., 2017, p.48).
The Fourth Industrial Revolution is also characterized by the wide accessibility and advanced use of Big Data, which refers to all types of information that can be created and transmitted through the spread and application of the IoT (Internet of Things). Through its promotion of technological convergence and innovation, the Fourth Industrial Revolution is now bringing about qualitative changes that enhance productivity and improve people’s lives.
Since the major technologies of the Fourth Industrial Revolution emerged during the Third Industrial Revolution, some view the Fourth Industrial Revolution as an extension of the Third Industrial Revolution. However, while the Third Industrial Revolution witnessed the birth of the digital age and the simple expansion of networks through the manufacturing of related IT products, the Fourth Industrial Revolution has given birth to ICT technologies. These technologies are deeply affecting the factories and workplaces where the first and second industrial revolutions occurred, and they are spawning intelligent factories and workplaces that are based on the collection and analysis of an exponentially increasing amount of information.
B. Core General-Purpose Technologies of the Fourth Industrial Revolution
The Fourth Industrial Revolution is expected to lead to an unparalleled paradigm shift by building on the digital revolution triggered by the Third Industrial Revolution and bringing about the convergence of various industrial sectors. Klaus Schwab, who first introduced the concept of the Fourth Industrial Revolution, identified three megatrends driving the Fourth Industrial Revolution: physical technologies, digital technologies, and biological technologies. However, there are many different perspectives on the major technologies driving the Fourth Industrial Revolution, as can be seen by examining different areas related to knowledge and information processing.
It is easier to understand the driving technologies of the Fourth Industrial Revolution by organizing them into a structural hierarchy. On the macroscopic level are the megatrends described by Klaus Schwab, expressed as “digital transformation,” which refers to how different parts of society are becoming digitalized through ICT, which increases productivity and generates new businesses. On the microscopic level are core general-purpose technologies, which include elementary technologies that are applied in real life. These technologies, such as AI, IoT, cloud computing, Big Data, and mobile/5G technologies, can be integrated with various applicable technologies in different fields to bring about new technological innovation and industry revival. These core technologies are different from other technologies that have limited applicability and/or uncertain potential, such as virtual reality (VR), augmented reality (AR), drones, blockchains, and 3D printing technologies (Yunjong Jang et al., 2017, p. 56).
Figure 2-3. Core General-Purpose Technologies of the Fourth Industrial Revolution and Applicable Sectors
4Siemens website (https://www.siemens.com/press/en/presspicture/index.php?view=list&content=&tag=2016-11-ewa), accessed on October 25, 2018.
Source: Presidential Committee on the Fourth Industrial Revolution (2017, p. 5)
바이오 Biotechnology 지능형금융 Smart finance 정밀의료 Precision medicine 스마트시티 Smart cities 맞춤형교육 Personalized education 유전자가위 Genetic scissors 스마트복지 Smart welfare 웨어러블 Wearables 스마트환경 Smart environment 신소재 New materials 스마트에너지 Smart energy 신재생에너지 Renewable energy 스마트공장 Smart factories 3D프린팅 3D printing 지능형로봇 Intelligent robots 로봇틱스 Robotics 무인항공기 Drones 지능형센서 Intelligent sensors 자율자동차 Autonomous cars 블록체인 Blockchains 스마트국방 Smart defense 기초과학 Basic science 스마트유통 Smart distribution
The first core technology of the Fourth Industrial Revolution is the Internet of Things (IoT), which brings internet connectivity to everyday objects. This concept has evolved from what used to be known as ubiquitous sensor networks (USN) or machine-to-machine (M2M) technologies. For the implementation of this technology, physical objects are embedded with sensors to automatically gather data and select and identify significant information based on the collected data without human intervention. The IoT refers to a connected ecosystem that enables human-to-things and things-to-things communication via a common language and includes all services that can be provided through the hyper-connectivity of things and technologies.5
Mobile/5G technology, the second core technology of the Fourth Industrial Revolution, refers to wired and wireless communication technology, or two-way communication channels, where additional data generated through the combination and analysis of IoT data is freely transmitted and disseminated. Mobile/5G technology connects smartphones and other wireless devices and enables information exchanges and various other data services. Korean and foreign wireless service operators are steadily increasing their network capacities to meet growing telecommunication demands and rapidly increasing data usage.
The official name of 5G (fifth generation cellular network technology) adopted by the International Telecommunication Union (ITU) at ITU Telecom World, held in October 2015, is IMT-2020 (International Mobile Telecommunication-2020).Unlike 4G technology, which operates at frequencies below 2 GHz, 5G
5 This paragraph is a paraphrased summary of studies conducted by Yunjong Jang et al. (2017), pp. 56–62, and Hangu Park et al. (2017), pp. 65–70. technology uses ultra-high frequencies of around 28 GHz, providing a maximum download speed of 20 Gbps and a minimum download speed of 100 Mbps (compared to the maximum data download speed of 300 Mbps for 4G technology). Additionally, 5G can transmit data to a million IoT devices within one square kilometer. Given these specifications, 5G technology is necessary for the realization of the IoT, which requires that devices exchange a huge amount of data with a central server without any connection issues.6
Wired networks are more secure than wireless networks, but in the current mobile environment, where the core characteristic of most devices is mobility, 5G and other wireless communication technologies are growing more important, and the trend is to integrate both wired and wireless networks and use them to supplement each other.
Cloud computing, the third technology of the Fourth Industrial Revolution, refers to the environment and services through which data is collected using a communication network, stored in a central location, and analyzed through a core infrastructure and computer systems. With cloud computing, users pay a fee and in exchange, can access and use IT resources on an as-needed basis without having to separately purchase each resource. This kind of technology is highly compatible with the new sharing economy, which continues to expand throughout society, as evidenced by the popularity of services such as Airbnb and Uber. The world’s first cloud services were limited to software as a service (SaaS) applications, such as Gmail and Dropbox, but later expanded to include servers and storage, infrastructure as a service (IaaS), which provides network infrastructure, and platform as a service (PaaS), which provides platforms to customers for developing, running, and managing applications.7
As outlined above, cloud computing provides users with necessary services and resources, which are stored in a distant, central location. Cloud computing is related to, but different from, fog computing, an architecture that employs decentralized resources at the edge of a network to quickly provide necessary services. Fog computing also offers comprehensive services by accessing the cloud on an as-needed basis (Hangu Park et al., 2017, p.77).
The fourth core general-purpose technology is Big Data, which refers to data sets that are too large or too complex to be dealt with using traditional, data-processing application software. According to Gartner, Inc., a global IT research firm, Big Data is defined as “high-volume, high variety, high-velocity, and high veracity information assets” (Hangu Park et al., 2017, p.81). In today’s modern world, the whole process of data generation, storage, processing, and servicing must occur quickly and accurately. This has led to the introduction and use of Big Data.
Big Data technology is used to derive patterns from a plethora of data. Certain patterns identified through data analysis can be of great value and lead to numerous business opportunities. Extracting valuable information from huge amounts of data requires data collecting and processing technologies that have clear analytical goals and the use of semantic analysis and visualization technologies (Hangu Park et al., 2017, p.99).
The last core technology of the Fourth Industrial Revolution is artificial intelligence (AI), a term that was first coined in the 1950s. Devices installed with AI technology are able to emulate and mimic human intelligence and use data and make decisions on their own. Although this technology has been around for a long time, it emerged as a core general-purpose technology of the Fourth Industrial Revolution thanks to the proliferation of deep learning, a machine learning method newly developed in 2012, and the evolution of the computing environment in connection with Big Data technology. Machine learning can be defined as a “statistical process wherein the rules and processes of existing data are analyzed for systems to learn from and to predict future data.” Deep learning is a more advanced type of machine learning that involves Artificial Neural Networks (ANNs). In deep learning, systems can use the given data to create their own system/program parameters unsupervised, instead of following the parameters designed by humans.8
4. The Fourth Industrial Revolution and Energy
A. A Paradigm Shift in Energy
Around the year 2000, more and more people began to recognize the severity of the many different crises resulting from climate change. This increased recognition led to a paradigm shift in the energy sector, as people
6 This paragraph is a paraphrased summary of the study conducted by Korea Business News TV’s Industrial News Team (2016), pp.100–121. 7 This paragraph is a paraphrased summary of the study conducted by Yunjong Jang et al. (2017), pp.62–66. 8Summary/paraphrase of the study conducted by Hangu Park et al. (2017), pp.100–108. started moving away from the reckless generation and use of energy and began placing a greater emphasis on environmental protection and conservation. Under the old Kyoto Protocol paradigm, only developed countries were required to adopt response measures; under the 2015 Paris Climate Agreement, however, participation in environmental response measures was expanded to include most countries.
Under the Paris Agreement, countries around the globe agreed to limit the world’s average annual temperature increase to just 1.5 degrees Celsius above ‘pre-industrial’ levels and pledged to engage in long-term efforts to achieve this goal. The Paris Agreement and Kyoto Protocol have the same aim of limiting global warming, but unlike the Kyoto Protocol, the Paris Agreement holds all participating countries accountable for reducing their emissions. As a nation that has quickly evolved from a developing country to a developed country, Korea also has a responsibility as a member of international society to reduce its emissions.
Along with these changes in environmental standards worldwide, the global energy paradigm is also shifting its focus from stable energy supply and strong industrial competitiveness to environment-friendly generation and efficient energy use. This shift toward eco-friendliness and a low carbon energy paradigm is necessary to reduce greenhouse gas (GHG) emissions, identified as the main cause of global warming. Renewable energy, energy storage, electric vehicles, and other new businesses and business models are now being emphasized as effective ways to reduce GHG emissions. Evolving energy industries, combined with technological developments, are expected to bring changes to the whole industrial and competitive system to include a greater diversity of energy producers and consumers.
Although the United States withdrew from the Paris Agreement, the global energy market is still transitioning, focusing heavily on the reduction of fossil fuels and the increased use of eco-friendly energy. The EU and China, in particular, are pursuing efforts to meet Paris Agreement targets. There are also movements in the United States at the state level (though not at the federal level) to abide by the Paris Agreement. As the importance of energy transition continues to be emphasized worldwide, Korea is also creating and following a roadmap for energy transition to promote changes in the country’s energy portfolio.
Figure 2-4. Plans for Energy Portfolio Transition in South Korea
Source: Ministry of Trade, Industry, and Energy (2017a, p. 2)
2017년: 총 15.1GW 2017: 15.1 GW total 신규(2018-2030): 총 48.7GW New (2018–2013): 48.7 GW total 2030년 : 총 63.8GW 2030: 63.8GW total 폐기물 Waste 바이오 Biomass 수력 Water 풍력 Wind 태양광 Solar PV
B. The Fourth Industrial Revolution and Energy Innovation Through the use of the core general-purpose technologies of the Fourth Industrial Revolution—IoT, mobile/5G, cloud computing, Big Data, and AI—manufacturing and ICT innovations and service solutions are being integrated in various fields. The integrated manufacturing environment requires a lot more energy than traditional manufacturing, especially considering that all the equipment—from the sensors attached to the machines to the network equipment needed to facilitate communication between the sensors and systems to store and analyze generated data—use electricity as a power source. Given these and other considerations, the Fourth Industrial Revolution is expected to increase future electricity demands. Mass electricity supply is also needed to power the equipment necessary for blockchain technologies. These technologies are closely related to cryptocurrency mining, which has become a big social issue in recent years.
The rise in the number of sensors and devices that require electricity is expected to drastically increase energy consumption in the industrial sector, and Fourth Industrial Revolution technologies are expected to cause a paradigm shift in the existing market structure and business models, not only in terms of demand, but also in terms of supply. A comprehensive structural change is expected to occur in the whole energy industry, from the supply of energy to the operation of energy-consuming devices and the provision of energy-related services.
Previous industrial revolutions have been characterized by the emergence of new energy sources, such as coal, petroleum, and electricity, as well as productivity increases. However, instead of the emergence of a completely new energy source, the Fourth Industrial Revolution is expected to bring changes by integrating and combining existing energy technologies with innovative technologies in ICT, chemistry, bioengineering, and related areas.
The proliferation of eco-friendly and distributed energy sources, coupled with the integration of energy and ICT technologies, is expected to lead to the creation of new markets and changes in the existing structure. The electricity sector, in particular, has changed dramatically throughout each of the previous industrial revolutions. This sector is also expected to play a central role in meeting the increased demands for electricity in the new production and supply environment of the Fourth Industrial Revolution.
Figure 2-5. The Fourth Industrial Revolution and the New Energy Industry
Source: Ministry of Industry, Trade, and Energy (2017b, p. 100)
IoT, AI, 빅데이터 IoT, AI, Big Data 친환경에너지타운 Eco-friendly energy town 에너지자립섬 Energy Island 신재생에너지 Renewable energy 전기차 Electric vehicles 제로에너지빌딩 Zero-energy buildings
Global IT companies have already detected and are preparing for some of the aforementioned changes that are quickly spreading through the energy sector. Google now operates one of the world’s largest solar farms, located in a desert, and has invested USD 1 billion in the renewable energy sector. Apple entered the renewable energy business with the launch of Apple Energy and is pursuing an electric vehicle project as well. Softbank, an Asian conglomerate, is also actively investing in renewable energy generation projects.
In the energy sector, the term Energy 4.0 is commonly used to refer to the convergence of energy and related industries as well as the digitalization of energy. The term is a nod to Germany’s Industrie 4.0, which ushered in the era of the Fourth Industrial Revolution. Following Energy 1.0 (the pre-oil era), Energy 2.0 (the oil era), and Energy 3.0 (the renewable energy era), Energy 4.0 is now reaching beyond the simple use of renewable energy (Korea Railroad Research Institute, 2017, p. 11). Significant changes in the Energy 4.0 era include the emergence of “prosumers,” who both produce and consume electricity, leading to the establishment of a distributed and horizontal supply system rather than a top-down, vertical one. This type of horizontal system enables the smarter use of energy and increases the number of opportunities to improve energy efficiency.
Figure 2-6. Structural Changes in the Energy Market
Source: Korea International Trade Association (2018, p. 4)
과거 Past 중앙집중형에너지시스템 Centralized energy system 에너지송전망 Energy transmission network 가정 Households 공장 Factories 에너지공급망 Energy supply network 상업용빌딩 Commercial buildings
미래 Future 분산형에너지시스템 Distributed energy system (clean energy, at the local government level) (클린에너지, 지자체규모) 태양광발전 Solar PV power 스마트빌딩 Smart buildings 스마트홈 Smart homes 주택용열병합(CHP) 발전 CHP generation for homes 풍력발전 Wind power 스마트공장 Smart factories 스마트빌딩 Smart buildings 지역열병합(CHP) 발전 Local CHP generation 저장 Storage
With the increase of core Fourth Industrial Revolution technologies, it is becoming possible to manage multiple distributed sources more effectively. Therefore, many developed countries are changing their electricity networks and electricity market systems from existing one-directional operation to two-way or multi-directional operation.
The term IoE (Internet of Energy) has emerged as well. IoE refers to an ICT-based energy infrastructure that uses sensors and data collection and analysis functions to effectively connect the whole power grid and new energy market. This concept also includes intelligent demand response and distributed resources, such as renewable energy resources. The IoE is not only applicable to power generation but also to transmission and demand, and is realized through hyper-connectivity, from energy production to supply and demand.
Figure 2-7. Fostering the Energy Sector in Response to the Fourth Industrial Revolution and Energy Transition (1)
Source: Ministry of Industry, Trade, and Energy (2018, p. 12)
Establishment of the IoE (Internet of Energy)
1. Generation 2. Transmission and 3. Distributed energy transformation sources
-Weather, location, power -Introduction of the net -Allowance of small-scale generation data +AI generation system SCADA* distributed resource transactions → Renewable energy supply Present: individual control and → Creation of electricity prediction rate↑ monitoring of substations brokerage and related services Prediction error rate Expected improvements: real- (Q&M) time monitoring and control of - Demonstration programs for the whole power grid * Revision of the Electric 2,500 solar PV power plants Utility Act - Establishment of a next- generation DAS* network that -Designation of pilot projects allows the automated control and and detailed system (second half restoration of the power supply of the year) Distributed resources Brokers Exchange
Pilot future energy system: Smart city
- Integrate innovative energy supply and demand management Eco-friendly supply models at the city level Solar PV, smart grid, etc. →Introduce and demonstrate new infrastructure, technology, business models, etc. Smart demand management High-functioning AMI, National DR (demand resource trading market), etc.
C. Fourth Industrial Revolution Technologies in the Energy Sector
The energy sector of the future will be characterized by the smart management of demand and the optimization of supply to meet demand, achieved through the technological convergence of the core general-purpose technologies of the Fourth Industrial Revolution and existing energy technologies. This approach to meeting demand through convergence is expected to change the overall market structure.
Figure 2-8. Fostering the Energy Sector in Response to the Fourth Industrial Revolution and Energy Transition (2)
Source: Ministry of Industry, Trade, and Energy (2018, p. 13)
Proliferation of New Energy Services Using AICBM
1. Big Data-based Services 2. V2G (Vehicle to Grid) 3. Use of Electric Vehicle Infrastructure -Establishment of a Big Data -Demonstration projects for -Diversification of services and platform (first half of the year) connecting and using the power payment systems by linking EV network of EV-stored electricity charging to telecommunications -Reorganization of related systems (second half of the year) * Elementary technologies, such companies as bi-directional onboard charging (OBC) *Ex.) Bundle pricing, point reward payments, advertisements, Service creation - Establishment of a V2G service etc. system Real-time notification services -Expansion of the obligatory * Rate system, power sales installation of EV chargers in new (usage/consumption regulations, etc. houses and buildings (second half patter/prices, etc.) of the year) Energy efficiency consultation Establishment of the 6th Framework Plan for the Rationalization of Energy Use → Creation of new markets through ICT-based smart demand management +derivative services, etc.
In the Age of the Fourth Industrial Revolution, innovation will not be strictly limited to the production and supply of energy. Instead, it is highly likely that the whole energy sector will be organized and operated using a different kind of system. Data collection and repairs of energy infrastructure and major facilities, such as transmission towers and nuclear power plants, will be managed by drones and robots. Additionally, machine learning and other technologies will be applied to large amounts of data created in real time through energy management systems (EMS) for electricity, drastically improving the prediction and optimization of energy and its supply.
In the consumption sector, an optimal operation schedule will be created and automatically applied to minimize energy costs for each factory, building, and home, based on the electric devices used and their usage patterns. In these and other ways, technological convergence and application will be used to achieve things we have yet to imagine, completely transforming the paradigm of the energy industry and related industries.
Figure 2-9. Example of the Convergence of Fourth Industrial Revolution Technologies in the Energy Sector
Source: Korea International Trade Association (2018, p. 3)
머신러닝 기반의 예측시스템이 에너지 공급과 수요 피크 시간대를 예상하고 불규칙적인 재생에너지의 공급을 안정화
Machine learning-based prediction system predicts peak times for energy supply and demand and stabilizes the irregular supply of renewable energy.
드론과 마이크로로봇을 이용하여 시설의 결함을 발견,예측하고 전력생산의 중단이나 방해 없이 시설관리
Drones and microrobots identify and predict facility defects/malfunctions, allowing for the seamless management of facilities without having to suspend or disrupt power generation.
센서와 머신러닝 기능이 풍력생산을 극대화하기 위해 시시각각으로 풍향 및 다른 환경 변화에 따라 세팅을 변경
Sensors and machine learning technology maximize wind power generation by adjusting plant settings every hour, responding to changes in the wind direction and other environmental factors.
머신러닝 기능이 탑재된 스마트와이어를 예상하여 실시간 전력공급이 가능하고 각 건물설비의 성격 및 그리드용량에 맞게 에너지 공급 최적화
Using smart wires with machine learning functions, it is possible to supply electricity in real time and to optimize energy supply, with consideration to the characteristics of buildings and grid capacity. 문제해결 및 시설관리는 최소의 전문가 인력이 담당하며 모든 관련 기록은 자동으로 분류되고 저장됨
Only a small number of expert staff is needed to handle problems and facility management, and all related records are automatically organized and stored.
현장관리자는 실시간으로 정보 업데이트를 받아 대응시간이 짧아지고 정전으로 인한 영향 최소화
Field managers receive information updates in real time, which reduces the amount of response time needed in the case of a power disruption and minimizes the impact of blackouts.
인공지능 콜센터는 고객의 서비스 이용기록을 바탕으로 고객의 니즈를 예상,분류하고 전기세 납부와 연체 가능성 등을 조기 알림
Based on customer power usage records, the AI call center predicts customer needs and notifies customers of bills and late payments.
스마트미터 데이터와 머신러닝은 소비자의 에너지 사용패턴,기후,다른 요소 등을 고려하여 맞춤형 서비스 제공
Smart meter data and machine learning provide services tailored to each customer, taking into consideration each customer’s energy use pattern as well as climate conditions and other factors.
In Korea, the number of technologies that are being integrated with IoT in the renewable energy sector is constantly increasing. The application of the core general-purpose technologies of the Fourth Industrial Revolution for the purposes of data measurement, analysis, and information exchange in the energy distribution sector is expected to transform the entire energy industry as a whole. By incorporating some of the aforementioned technologies, Korea will be able to reduce its reliance on the current centralized energy supply, which will reduce the volume and associated costs of electricity transmitted via power lines.
Figure 2-10. Patent Applications Filed for AI Technologies for Renewable Energy Incorporation
Source: Korean Intellectual Property Office (2018, p. 4)
Figure 2-11. Operation and Management of AI-based Renewable Energy Power Plants
Source: Taehwan Yun (2017, p. 11)
태양광모니터링/제어시스템 Solar PV Monitoring and Control System 인버터 Inverter 태양광발전소 Solar farm 실시간 DB Real-time database 기본 DB Standard database 태양광발전량(1초단위) Solar energy production (per second) 실시간전압/전류/역율/전력품질 Real-time voltage, current, power factor, and power quality 시스템 DB System database 인버터효율관리 Inverter efficiency management 인버터전압/전류/온도등의정보 Inverter information, including voltage, current, and temperature 인버터제어(양방향-Reset, up-date) Inverter control (bi-directional: reset, update) PV 전압/전류/온도 (블록별, 개별) PV voltage, current, and temperature (per block, per panel) 주변환역 DB Macro-environment database 경사면일사량센서 Solar radiation sensor for tilted surfaces 수평면일사량센서 Solar radiation sensor for level surfaces 외부온도 Outside temperature 주변습도 Ambient humidity 구름상황 Cloud cover
인공지능(AI)를활용한발전소관리운영 Management of power plant using AI 고효율및최적상태유지 Maintenance of high efficiency and optimized conditions 발전량/전력판매가격예측 Prediction of power generation volume and price 태양광운전최적화로발전효율극대화 Maximization of power generation efficiency through the optimized operation of solar panels 최고가실시간전력판매로수익의극대 Maximization of profits by selling power at top prices in realtime
Once it becomes possible to collect and analyze data in real time using the IoT, Korea will be able to optimize the operation of its solar and wind farms to more effectively respond to different weather conditions and other environmental factors, thereby maximizing usage efficiency and minimizing changes to its power systems.
5. Major Technological Changes in the Power Demand Sector
One the one hand, the growth of manufacturing as a service industry, the expansion of data-intensive industries, and the integration of technologies such as cloud computing, Big Data, and AI are expected to increase energy intensity and overall electricity demand. On the other hand, technological innovations in the energy demand sector are spurring integration trends, centered on energy management systems (EMS), and are promoting optimization and the efficiency of general energy use. An EMS is a system that allows for the visualization and optimization of energy flow and usage. This type of system is being applied in various areas, including homes (HEMS), buildings (BEMS), factories (FEMS), and communities (CEMS), which are the highest and most comprehensive EMS unit. The current trend of optimization and emphasis on efficiency is expected to act as a force to reduce energy demand.
A. Factory Energy Management Systems (FEMS)
Factories in the industrial sector represent more than half of Korea’s total energy consumption. So, in order for Korea to ensure the efficient distribution of energy nationwide and reduce related costs, it is necessary for factories to monitor the operation of their facilities and their energy supply and demand patterns, making changes as needed. Smart factories, which have emerged as an important topic of the Fourth Industrial Revolution, promote process automation and the enhancement of quality management and productivity through the application of ICT, thereby reducing energy and production costs. In order for a factory to effectively operate as a smart factory, sensors attached to factory equipment and devices must be able to collect (cloud) various types of information via a 5G network in real time. In addition, the factory must be able to identify any signs of malfunctions, using Big Data, and establish relevant response systems, using AI, to maintain the quality of its products and processes. Furthermore, the factory must also establish a proper technological basis, such as EMS, for the optimal management of its energy load.
Currently, many companies in Korea and overseas are accelerating their development and practical application of technologies for the FEMS market. The increased application of FEMS is expected to reduce energy use in all industrial areas and improve efficiency, which will ultimately reduce production costs and greatly increase productivity.
Figure 2-12. Examples of Technologies Applied to Smart and Digital Factories
Source: Seokhyeon Yu (2017, p. 20)
Automation Digitization Automation of Monitoring of Digitization of Predictive facility production facilities production status production plan management
Automation of Tracking and Digitization of work Smart energy equipment quality checks management of orders management production materials
Sophisticated digital- Digitization of quality Big Data quality based EHS information management
Location-based heavy machinery allocation
Figure 2-13. Doosan Heavy Industries and Construction:
IoT Integration and Software Development for Power Plants
Source: Seokhyeon Yu(2017, p. 15)
Minimized combustion Minimized soot Reduced combustion Reduced turbidity in tuning blowing loss furnaces Reduced nitrogen oxide Reduced oxocarbon Multi-type coal Maximum load combustion operation
Reduced operation time Tuning technology Frequency follow Minimized throttle loss Minimized combustion Reduced minimum Power cutback Load following ability air load costs operation
Load follow Optimal stop
More specifically, by applying some of the aforementioned technologies, it will be possible for factories to comprehensively control work processes and regulate general peak loads through the real-time monitoring of not only their energy use but also their patterns of electricity, water, and gas use. In addition, it will also be possible to automatically control energy use by zone or facility according to a fixed schedule, or save power using motion sensors installed in employee lounges.
The application of these technologies is expected to lead to a gradual increase in the number of smart factories, as well as improvements in production efficiency and the quality of manufacturing processes. In particular, if the inefficient lighting and facilities currently installed in factories are replaced with IoT-integrated, high-efficiency devices, factories will be able increase their IoT connectivity and optimize their energy efficiency.
Table 2-1. Smart Factory Changes made by Companies in Korea and Abroad
Company Changes and effects
∙Application of industrial IoT at production sites; optimization of process and facility GE management through Big Data analysis ∙Reduced defects and errors, planning time, and costs ∙Conducted preliminary inspection of production processes and real-time facility management using the IoT Intel ∙Applied to certain products on a trial basis and saw reduction of USD 3 million in annual production costs ∙Real-time connection between high-efficiency automation facilities and systems ∙Achieved the production of multiple (1,000) product varieties with a high yield (defect rate of Siemens 0.001%) ∙Reduced energy consumption by 30% ∙Pursued manufacturing innovations through government support and industrial-educational cooperation Adidas ∙Introduced industrial robots and established an automated production and customized shoe production system ∙Advanced the existing JIT (Just in Time) system to comprehensively manage parts suppliers, Toyota logistics companies, and information for its total supply network LS ∙Created smart production lines to achieve complete automation, from the supply of parts to Industrial assembly, testing, and packaging Systems Source: Samjong KPMG Economic Research Institute (2017, p. 13)
B. Building Energy Management System (BEMS)
In the building sector, which accounts for about a third of Korea’s total energy demand, buildings are now being transformed into smart buildings through the development and integration of BEMS technology, which aims to minimize costs through efficient energy management and the analysis and adjustment of usage patterns. BEMS promotes the optimal and efficient management of buildings by attaching measuring equipment to energy- consuming machines, including cooling and heating facilities, electric outlets, lighting, and various other devices, and connecting them to a communications network. These technologies help reduce GHG emissions and ensure proactive responses during blackouts and other situations. They also promote efficient energy consumption, which not only reduces costs but also provides a better working environment to improve business efficiency.
Figure 2-14. Example of Improved Efficiency through BEMS Technologies
Source:Son Jang-ik (2017, p. 4)
In Korea, research and development on buildings and related technologies is conducted in three major areas— load reduction, high efficiency facilities, and control and operation. Since the main type of energy used in BEMS is electricity, various technologies that focus on reducing energy consumption in buildings are currently being developed.
C. Home Energy Management System (HEMS)
HEMS is an energy management system for general households. It is highly valued as a platform that not only reduces energy but also provides various services to customers. Since HEMS is so versatile, telecommunication companies as well as construction companies that build apartment complexes are focusing their energies on developing related technologies and expanding the HEMS market.
Apartment complexes represent a high percentage of all housing types in Korea. They often consist of a number of dwellings, common facilities used by all residents, and stores. In addition, resident communities are often formed within a single apartment complex. These factors create an environment that allows for the easy application of energy demand technologies. In particular, unlike other groups of buildings, each apartment complex operates using a single electricity supply system, which makes it easier to identify energy consumption patterns for individual households. Korea is already standardizing AMIs and protocols for HEMS.
Figure 2-15. HEMS Concept Map Provided by a Korean Home Appliance Company
Source: Lee Sang-bong (2017, p. 5)
Cloud-based smart energy service platform
Energy management solution
System/solar cell Energy consumption optimization/cost minimization
Connection with various energy eco-systems Smart appliances IoT products Electric vehicles
Connection with various energy platforms
HVAC * Solution Analysis of usage patterns
HEMS integration fundamentally creates a more pleasant living environment and increases the daily convenience of building residents. However, the widespread application of HEMS requires even greater technological advancements than are currently available, as IoT and AI technologies must be integrated into household appliances. Home appliances in Korea and abroad are currently being developed with HEMS in mind.
As previously mentioned, HEMS technologies are rapidly growing in line with ICT innovations in the Fourth Industrial Revolution era, and business models are changing to expand the scope and types of services provided, based on the visualization and analysis of information.
D. Improvements in Device Efficiency and Environmental Friendliness
Factory operators and managers need an environment that allows them to make decisions to achieve energy optimization and to identify and analyze necessary information provided by relevant devices. To better meet this need, most facilities and machines are being transformed into smarter versions of themselves that can be connected via networks and carry out interactive communication. Currently, devices are being used that can collect data and monitor energy use for smaller facilities, such as houses and individual buildings, and standards for such devices are being created. In this way, infrastructure is being established all around the world to improve consumption efficiency in the energy sector.
Chapter 2. Convergence Trends of Fourth Industrial Energy Technologies and Energy-Using Devices
1. Devices Subject to Energy Efficiency Management
A. Changes in the Technologies of Major Devices Subject to Energy Efficiency Management
Major home appliances that have integrated core technologies of the Fourth Industrial Revolution are now the subjects of energy efficiency management. With the exception of gas heat pumps, gas boilers, and similar heating systems, most devices subject to energy efficiency management are powered by electricity.
Figure 2-0-1. Electricity Consumed by Major Household Appliances
Source:Munseon Choi(2016, p. 47)
세탁기 Washer 냉장고 Refrigerator 에어컨 Air conditioner 선풍기 Electric fan 전기밥솥 Rice cooker 컴퓨터 Computer 청소기 Vacuum cleaner 기타 Other
In Korea, eight major household appliances, including TVs and refrigerators, represent over 60 percent of all household electricity use. The home appliances that account for the largest amount of the nation’s annual household electricity use are electric rice cookers (23.9%), refrigerators (16.8%), TVs (7.7%), and air conditioners (6.6%) (Munseon Choi, 2016, p. 47).
For the purposes of this study, we selected 12 home appliances that are subject to energy efficiency management, with consideration to their energy usage and connectivity with the core technologies of the Fourth Industrial Revolution. We then studied examples of how Fourth Industrial Revolution technologies are applied to these appliances. The 12 home appliances reviewed as part of this study are: TVs, refrigerators, air conditioners, washers, vacuum cleaners, air purifiers, electric rice cookers, computers, LED lamps, gas boilers, transformers, and electric motors.
1) TVs
OLED (Organic Light Emitting Diode) TVs and QLED (Quantum Dot Light Emitting Diode) TVs are the latest models of TVs fiercely competing in the ultra-large-scale, high-definition TV market. OLED TVs transmit electricity to organic compounds that emit light without backlight, and QLED TVs improve the screen resolution of LEDs by inserting a film of quantum dots between an LCD (Liquid Crystal Display) panel and an LED backlight.
Samsung Electronics’ 2018 QLED TV is equipped with Samsung’s AI platform Bixby and IoT application SmartThings, which allows users to control their TV using simple voice commands in addition to refrigerators, air conditioners, and other IoT devices. LG Electronics has also added its AI platform ThinQ, which provides services using voice recognition, to its major TV, refrigerator, air conditioner, washer, and vacuum cleaner product lines.
Table 2-1. Energy Efficiency Ratings for AI/Traditional TVs
Product Type Screen size (cm) Energy efficiency rating UHD 163 1 QLED 163 4 OLED 163 4 Source: Created by the author using the detailed specifications for each product.
The 2018 OLED and QLED TVs, equipped with AI voice recognition, have a Tier 4 energy efficiency rating, while UHD (ultrahigh definition) TVs, made without any Fourth Industrial Revolution technologies, have a Tier 1 rating. The reason the latest OLED and QLED TVs are less energy efficient is because they are made using new technologies that improve screen resolution and TV quality.
2) Refrigerators
Anything used as a hub, which is needed to create a smartphone environment, must be connected to a variety of IoT products and remain on at all times. This is why Mieleuses refrigerators as smart home hubs. The latest smart refrigerators use voice recognition to input information about food ingredients and to manage expiration dates. People can even use their smartphones to view the contents of their refrigerators and have their refrigerators automatically order ingredients for delivery as needed.
3) Air Conditioners
An air compressor, a major part of any air conditioner, moves at a certain speed and turns off when the ambient temperature reaches a certain set temperature. Since the air compressor turns on and off so frequently, conventional air conditioners consume a lot of energy. The motor speed of an inverter air conditioner, however, is controlled automatically, which means that the air conditioner can maintain a set air temperature all day long without any additional action by the user. Many air conditioners are also being installed with AI, one of the core Fourth Industrial Revolution technologies. AI-powered air conditioners can be operated by voice command, using voice recognition technology, and can even learn user behavior patterns to maintain a preferred optimal temperature and humidity. Users can also operate these types of air conditioners remotely using their smartphones and IoT system. This function is particularly helpful for when someone leaves their home without turning off the air conditioner, but it can also be used to check the air conditioner’s refrigerant and/or electricity use. Since the user is keenly aware of the status of the air conditioner, maintenance and repairs are much easier.
4) Washers Much like refrigerators and air conditioners, washers are also being released that are installed with AI voice recognition software. These washers determine the amount of humidity and/or fine dust in the air based on weather information collected via the IoT, and automatically control the speed of the spin cycle or the number of rinse cycles.
5) Vacuum Cleaners
Cordless vacuum cleaners have been released that are equipped with a variety of sensors and self-propelling technology that allows them to move in the direction of the user, greatly improving convenience. Robot vacuum cleaners are also on the market that can clean floors even where there is no one home. In the past several years, robot vacuums have begun to replace conventional vacuums thanks to recent improvements in suction force and the addition of AI technology.
AI technology allows vacuum cleaners to identify spaces in a house and carry out different types of cleaning activities depending on the space. This technology also enables the vacuum cleaner to identify spaces that have already been cleaned to engage in “smart cleaning.” Robot vacuum cleaners can recognize user voice commands through the IoT and smartphones. Thanks to these and other developments, robot vacuum cleaners are expected to be intimately connected to the smart home market in the near future.
6) Air Purifiers
The latest models of air purifiers have “dust collecting hybrid filters,” which use static electricity to powerfully suck in dust. These purifiers have a drastically longer lifespan than conventional air purifiers and can even remove fine dust and germs from their own filters without the need for chemicals. Air purifiers today can be controlled by smartphone through the IoT and are also equipped with automatic purifying functions that detect the level of indoor pollution, turn the air purifier on when a high level of pollution is detected, and automatically turn it off when the air quality is good.
7) Electric Rice Cookers
Electric rice cookers have evolved from those using an electrical plate to those that apply induction heating (IH) technology, in which metal coils are wrapped around the inner pot to increase thermal efficiency. Compared to conventional rice cookers, where only the bottom of the inner pot is heated by the electrical plate, IH rice cookers cook rice more quickly and with less nutrient loss. Recently, companies have been conducting research on rice cookers using the IoT. Cuchen has developed a rice cooker that can be remotely controlled using a smartphone, and Cuckoo has developed a rice cooker that allows the real-time exchange of information about the cooker, also via smartphone.
8) Computers
The application of AI technologies to computer products is a relatively recent development. HP and Acer have released computer products featuring Amazon’s AI platform Alexa. In 2018, HP released a desktop computer model with wireless charging and built-in Alexa voice assistance functions. Acer as well has developed a laptop model with built-in Alexa functions.
9) LED Lighting
LED lighting devices are susceptible to flickering and/or glares. LED lights are used for general lighting, traffic lights, emergency exit lighting, and for other purposes, but because of their low illumination intensity, they are mainly used in homes and small offices instead of in big offices or industrial facilities. Recently, LED dimming systems have been developed and connected to wireless networks so that users can remotely control the brightness of LED lights using their smartphone, iPad, or computer.
10) Gas Boilers for Home Use
Gas boilers are household devices that consume a lot of energy. Recently, a condensing boiler was developed that users can control from outside their homes using a smartphone or IoT system. These new boilers are equipped with AI learning functions that analyze the consumer’s boiler usage and utilize this information to create an optimized indoor environment. Boiler AI systems also provide real-time error notification services when the boiler breaks down.
11) Voltage Transformers
Many countries around the world, including the United States, have implemented energy efficiency systems for transformers that can raise and lower voltage for electricity and distribution. In Korea, in July 2012, transformers were newly classified as devices subject to energy efficiency management. This means that general transformers and high-efficiency transformers must now meet minimum energy efficiency and standard energy efficiency requirements.
As electrification has swept across the world, the demand for power transmission and distribution has increased along with the steady rise in power consumption. Global power transmission and distribution networks are expected to increase in the future, leading to the expansion of transformer facilities and the increased construction of substations. The intelligent operation of international standard IEC 61850-based digital substations will enable the collection of useful information and facilitate error prediction and prevention measures. With the increased number of substations, it will also be possible to incorporate and utilize collected information for a variety of different purposes.
Figure 2-2. ABB Digital Transformer
Source: ABB website (http://new.abb.com/news/detail/4425/abb-launches-the-worlds-first-digitally- integrated-power-transformer),accessed on November 7, 2018
Much like other devices and appliances, transformers are also integrating the IoT technologies of the Fourth Industrial Revolution. ABB, a leading company in this area, has developed and released a digital transformer equipped with real-time monitoring and communication functions, which has led to improvements in safety, reliability, and efficiency and has reduced environmental impact. These advancements not only allow users to manage the quality of the electricity supply, but also to diagnose and prevent errors and breakdowns through consistent monitoring, thereby improving the efficiency and reliability of the entire electricity supply system.
12) Three Phase Induction Motor
Mostly used in factory machines and facilities rather than in households, three phase induction motors, powered by a three-phase AC source, are another product that consumes a huge amount of electricity. The international standard IEC 60034-30, which specifies energy-efficiency classes for these types of motors, was first implemented in the 1990s all around the world and has continued to be expanded ever since(Doyeon Kanget al., 2017, p. 101). Recently, efforts have been made to apply Fourth Industrial Revolution technologies to the motors to minimize maintenance and repair costs and to improve operational efficiency. Technologies are also being applied to detect potential problems in advance and to improve factory system optimization and asset management. With the application of IoT technologies, which involves attaching sensors or using built-in technology, factories can now maintain a high level of total productivity and monitor products in real-time and effectively manage product lifecycles. Improvements in monitoring allow factories to detect and respond to breakdowns more quickly, and improved lifecycle management gives factories more information to determine the optimal replacement time for each motor produced.
Figure 2-3. Expanded Application of Minimum Efficiency System for Electric Motors
Source: Doyeon Kang et al. (2017, p. 101)
2002년 4개국시행 2002: Implemented in 4 countries 2009년 10개국시행 2009: Implemented in 10 countries 2011년 42개국시행 2011: Implemented in 42 countries 삼상고효율유도기(54% 보급) High-efficiency three phase induction motor (54% usage) 상상고효율유도기(54% 보급) High-efficiency three phase induction motor (54% usage) 일반효율유도기(87% 보급) Conventional three phase induction motor (87% usage) 삼상프리미엄급고효율유도기(~150kW) Premium high-efficiency three phase induction motor (up to 150 kW) 단상고효율유도기확대예정 Single phase induction motor
13) Appliance Convergence
With the rapid increase in the number of single-person households in recent years, home appliance companies are releasing new products that are not only smaller in size but are also able to perform multiple functions that previously required the use of several separate devices. These companies are also developing smart appliances using AI and the IoT and connecting home appliances via a single network.
The latest models of electric fans, which also have air purifier functions, provide a unique value compared to conventional fans. These days, air conditioners do more than just cool the air and are equipped with heater, air purifier, and dehumidifier functions. Vacuum cleaners have similarly joined the ranks of convergent appliances, with companies releasing models that combine cordless and robotic technologies.
B. Prospects for Integrating Core Fourth Industrial Revolution Technologies and Energy-using Devices
With the digitization of electronic appliances and the advancement of ICT technologies, devices that are subject to energy efficiency management are quickly becoming smarter. However, with the exception of a few devices armed with the latest technologies, the majority of existing devices subject to energy efficiency management have not yet been integrated with core Fourth Industrial Revolution technologies. In the future, most home appliances are expected to become smart appliances that integrate IoT and other core Fourth Industrial Revolution technologies.
For devices subject to energy efficiency management, the first type of technological convergence is typically the integration of smartphones and the IoT. This type of convergence emerged early on in the Fourth Industrial Revolution. Although these types of devices are not equipped with AI technology, users can control their devices or home appliances with their smartphones through the IoT. This type of technological convergence is currently being applied to rice cookers, air purifiers, and other devices.
The second type of technological convergence with core Fourth Industrial Revolution technologies is the integration of mobile, IoT, and AI technologies. Due to its addition of AI technology, this type of convergence is considered a “step up” from the first convergence type. This type of convergence can be seen in the latest TVs, refrigerators, air conditioners, washers, computers, LED lights, dryers, vacuum cleaners, and air purifiers.
The AI platforms that are currently being applied to major home appliances in Korea are capable of speech recognition and simple conversations. AI speakers, which are used as smart appliance hubs, are the most representative products of the second type of technological convergence. IT-related companies, such as telecommunication companies and electronic product manufacturers, have recognized the importance of AI services in future business and are actively conducting research and development and making other investments in this area. In Korea, a total of 10,000 AI speakers were distributed in 2016; this number increased to one million in 2017. It is expected that by 2018, three million (15%) of all households in Korea will be equipped with AI speakers (Nasmedia, 2018, p. 19). Amazon, a leader in the AI speaker market, released the AI speakers Echo Show and Echo Spot in 2017, which are equipped with shipping and video call display functions.
The third type of technological convergence of core Fourth Industrial Revolution technologies is the integration of AI, IoT, Big Data, and cloud technologies. Some companies specializing in smart homes, smart factories, and other smart buildings have reached the initial stages of this convergence type, in which Big Data collected from smart devices or workplaces over a long period of time is processed through AI to create highly intelligent and optimal systems. Big Data that has been collected from smart devices or workplaces can be processed using an individual computer or using a cloud, which involves the use of external data storage and computers.
The fourth type of technological convergence is the integration of core Fourth Industrial Revolution technologies, including AI, with other technologies. In the future, core Fourth Industrial Revolution technologies will be partially or completely converged and integrated with other technologies such as robotics, 3D printing, and blockchains.
For devices that are subject to energy efficiency management, technological convergence with core Fourth Industrial Revolution technologies may take different forms, depending on the type of device and/or its year of manufacture. For example, premium washers produced in the last year are typically equipped with AI, IoT, mobile, and/or other core technologies, while older washers are not equipped with such technologies.
Figure 2-4. Prospects of Integrating Fourth Industrial Revolution Technologies with Devices Subject to Energy Efficiency Management
Source: Created by the author.
IoT AI AI AI + + + + Mobile IoT IoT IoT + + + Mobile Mobile Mobile AI Big Data AI + Big Data Cloud + Big Data Cloud IoT + + Cloud Big Data + + Other technologies Cloud
Introductory Phase Growth Phase Maturing Phase Final Phase
Devices: Electric rice TVs, refrigerators, air Home appliances Energy efficiency cookers, air purifiers conditioners, washers, management devices dryers, vacuum cleaners, microwaves, dehumidifiers, LED lighting, computers
In order to identify the energy reduction and ripple effects of introducing Fourth Industrial Revolution technologies to related industries, it is necessary to first predict the changes in energy consumption, market size, and market share resulting from technological convergence and the integration of core Fourth Industrial Revolution technologies.
With the development of AI technologies, future devices subject to energy efficiency management are expected to quickly evolve into smart energy devices. Due to the characteristics of ICT technology, the development of core Fourth Industrial Revolution technologies is expected to rapidly progress, with future AI technologies moving from simple speech recognition, conversations, and device monitoring to the active optimization of different systems.
2. Examples of Energy-using Devices Integrated with IoT-based Technologies
A. Smart Homes
1) Overview of Smart Home Systems
Smart homes are intelligent systems wherein devices subject to energy efficiency management, such as home appliances, as well as household water, electricity, heating, and cooling systems, are connected via the IoT and controlled remotely using smartphones. In smart homes, energy-using devices are integrated with core Fourth Industrial Revolution technologies, such as AI, IoT, cloud computing, Big Data, and mobile technologies.
Figure 2-5. Business Model of Smart Home Development Phases
Source: Ministry of Trade, Industry, and Energy (2017b, p. 37)
Smart Home
Creation Phase Integration Phase Expansion Phase
Smart TV Optimization and automation Smart city (Big Data+AI) Smart washer Smart healthcare Smart refrigerator Smart city Smart air conditioner
Monitoring/control Connection to external platforms
Smart home technology was first introduced in the market in the 1980s under the name “home automation.” In the 1990s, with the development of the internet and network technologies for connecting devices, “home automation” evolved into “home networks.” Even more recently, the development of wireless networks, communication modules, sensors, and smart terminal units and the application of advanced AI, IoT, and Big Data technologies have led to the emergence of “smart homes,” in which the home functions as a highly intelligent unit.
Home appliances are rapidly becoming smarter, and products applied with AI technologies are being released in the market one after another. As a result, home appliances have become the key elements of smart homes. In the future, smart homes will move beyond this integration phase—which focuses on optimized systems integrated with highly advanced AI, Big Data, and cloud technology— and emphasize connectivity with other platforms, such as smart cities, smart healthcare, and other systems(Ministry of Industry, Trade and Energy,2017b, p. 37). A smart home ecosystem consists of IoT communication enabled devices and platforms and smart home services and requires a wired/wireless network connection. Smart home devices can be categorized into sensors, actuators, gateways, IP (internet protocols), cameras, semiconductors, and equipment. Products featuring these devices can similarly be categorized into: home appliances, such as TVs, with internet communication function; systems, such as surveillance and security systems or lighting, heating, and cooling systems; and smart products, such as healthcare equipment with built-in smart functions.
Smart home platforms are central to smart homes; a platform is needed to connect all of a smart home’s devices and contents. Since additional platform services are typically provided by the service provider that originally developed the platform, global IT companies, home appliance companies, and communication companies are all racing to develop their own smart home platforms. Currently, smart home services largely consist of home appliances that provide additional network-based services. Home appliance companies are steadily developing appliances with built-in AI technology, while telecommunication companies are applying communication functions to surveillance cameras, security terminal units, smart light bulbs, smart thermostats, and other non- home appliances.
2) Major Areas of Applicability for Smart Home Systems
In the past, areas of applicability for smart home technologies were limited to home automation, HEMS, and home security. More recently, however, these areas have expanded to include home entertainment and home healthcare. With the increased focus on safety and disaster prevention in the household sector, the demand for surveillance cameras has increased significantly. Over the years, as IoT technologies began to expand and surveillance technologies advanced, surveillance cameras began to be used as IoT hubs in the home. Recently, companies have begun to attach sensors not only to surveillance cameras but also to other devices, such as home appliances, to provide safety and disaster prevention services. Some of these devices include robot vacuum cleaners and TVs.
HEMS optimally control energy devices at home and provide information, including energy use, to the consumer, aiming to reduce energy use and minimize energy costs. As solar power generation, ESS, other distributed energy resources, and electric vehicles are increasingly incorporated into the household sector, different types of HEMS will continue to emerge.
3) Smart Home Cyber Security Systems
“Security” has emerged as one of the most important issues of the IoT age—not just home security but also cyber security, which aims to protect the massive amount of data constantly being exchanged worldwide. Recently, even home appliances have been hacked. Most of the data from IoT-connected devices is unencrypted when it is transferred to local networks or a cloud. Therefore, IoT-connected thermostats, door locks, smart light bulbs, energy management devices, and smart hubs are susceptible to even the most basic cyber security threats. Another big problem that plagues smart homes is that there is a lack of cyber security regulations for the IoT.
In cases in which the service provider collects and manages basic information—such as energy consumption data and other information—for IoT-connected homes via home automation or HEMS, there is a possibility that the user’s personal information could be leaked or they could be vulnerable to other risks.
4) Market Size for Smart Home Systems
In Korea, the size of the smart home market increased from KRW 8.6 trillion in 2014 to KRW 10.1 trillion in 2015, representing an increase of 17.8 percent. The market is expected to continue to grow and reach KRW 21.2 trillion in 2019. In 2015, market values in the smart home sector were: KRW 5.8 trillion for TV and home entertainment, which represented 57.5 percent of the total smart home market; KRW 3.1 trillion for appliances integrated with convergent technology (30.4%); KRW 752 billion for smart home security (7.5%); KRW 355 billion for home automation (3.5%); and KRW 117.9 billion for smart green homes (1.1%).9
9ETNEWS website: (http://www.etnews.com/20160205000066, last accessed on Nov 6, 2018) B. Energy Impact of Smart Homes
1) Factors that Increase Energy Use in Smart Homes
Smart homes are made up of smart appliances, smart thermostats, smart outlets, smart lighting devices, sensors, actuators, gateways, and HEMS. The electricity consumption of a smart home depends on the application of its smart devices and systems.
Table 2-2. Standby Power Use of Devices in the Smart Home Sector
Category Device Standby Power (W) Smart LED light bulbs 1.0 Smart lighting Gateways 1.6 Gateways 1.7 IP cameras 2.2 Home automation Mains connected sensors 0.6 Mains connected actuators 1.0 Appliances 0.4 Smart devices Gateways 1.6
Source: EDNA (2016, p. 5)
Processing Big Data from various smart devices in a smart home system using AI and other technologies may require a significant increase in power consumption in communication network, server, data center, and ICT infrastructure. According to an analysis of the demand for standby power by device, as forecasted by EDNA (2016, pp. 5-7), the demand for standby power worldwide will increase by 20 percent annually from 2015 and reach 46 TWh by 2025, which is the equivalent of Portugal’s total power consumption in 2012.10
In our analysis, we compared, for example, the electricity consumption of a refrigerator equipped with Fourth Industrial Revolution technologies, such as IoT and AI technologies, and a conventional refrigerator of the same capacity and estimated the increase in energy consumed by the smart refrigerator. According to their respective energy efficiency rating labels, the smart refrigerator consumed 29.4 kWh of electricity per month, and the conventional refrigerator consumed 26.4 kWh of electricity per month. The difference between the energy consumption of the two refrigerators (3 kWh/month) can be viewed as the amount of increase in standby power between a conventional refrigerator and a smart refrigerator.
Table 2-3. Energy Consumed by Refrigerators in Korea
Energy efficiency Energy consumption Product type Capacity (ℓ) rating (Kwh/month) AI refrigerator 838 2 29.4 Conventional refrigerator 838 1 26.4 Source: Created by the author using detailed specifications for each product.
10 However, this analysis only focused on increases in standby power with the introduction of IoT devices and did not take into account the energy reduction effects of such devices (EDNA, 2016, p. 7). 2) Energy Reduction Effect for Smart Home Systems
The ACEEE (2018) analyzed the energy reduction effect of smart home technologies on dishwashers, washers, refrigerators, lighting devices, smart outlets, smart thermostats, smart blinds, and HVACs in the United States.
It is possible to reduce energy costs by using smartphones to remotely operate IoT-connected home appliances, such as dishwashers, washers, dryers, and refrigerators, in the off-peak hours, when energy consumption rates are low. For example, in the case of refrigerators, the ACEEE noted that home appliance manufacturers claim that installing a camera may result in energy savings by reducing the need to open and shut the refrigerators door(ACEEE, 2018, p. 7).However, this does not take into consideration the fact that energy consumption may increase with the addition of an LCD screen, camera, or other IoT-connected device, and overall, the ACEE did not make any comprehensive conclusions on the energy cost reduction effects of smart refrigerators using demand response (DR).
Table 2-4. Energy Reduction Effects of Smart Home Technologies
Device End use Energy reduction(cost) Home Dishwasher 5–9 % reduction in energy costs* appliance Home Washer 4–7 % reduction in energy costs* appliance Home Dryer 4–7 % reduction in energy costs* appliance Home Refrigerator 2–4 % reduction in energy costs* appliance Electronic TV Inefficient appliance LED lighting Lighting Inefficient (compared to Energy Star) 7–10 % reduction in energy used for cooling Smart thermostat HVAC 6–8 % reduction in energy used for heating Smart HVAC HVAC 10% reduction in energy use Smart water heater Hot water 15% reduction in energy use Air Smart air conditioner 2–3 % reduction in energy costs* conditioning HVAC 11–20% reduction in energy used for heating/cooling Smart blinds &lighting 3% reduction in energy used for lighting 16–20 % reduction in energy use (standby power interruption for devices) Smart power strip Plug load 25–50 % reduction in energy use (standby power interruption for peripheral devices) 10–13% reduction in energy use (technology) Various HEMS 4–12 % reduction in energy use systems (change in user behaviors) Source: ACEEE (2018, pp. 26–27) Note: *Reduction of energy costs due to DR and load shifting
Smart lighting devices using LED bulbs can reduce power consumption by 7 to 27 percent through the remote or automatic control of operating hours and lighting levels. However, in terms of the energy reduction effect of LED bulbs, smart lighting devices have a lower energy reduction effect than Energy Star lighting devices. The introduction of smart thermostats, smart plugs, smart HVACs, smart water heaters, and smart air conditioners can considerably reduce energy consumption when heating or cooling homes. Smart blinds reduce energy consumption associated with home cooling and heating, as well as lighting. Plug load savings for smart power strips range from 16 to 20 percent for Tier 1, which cuts standby power, and 25 to 50 percent for Tier 2, which reduces the standby power of devices in the home environment. An HEMS also has the potential to reduce energy consumption by 10 to 13 percent, depending on its application of smart technologies, and by 4 to 12 percent through feedback and consumer behavioral changes.
Section 3. Technology Standardization and Certification Trends for Energy-Using Devices
This chapter examines international standardization trends related to the Fourth Industrial Revolution and energy efficiency and analyzes recent standardization trends and international standardization conformity evaluations. This chapter also reviews the response of Korea to these trends and draws out policy implications.
1. Necessity of Policy Implementation and the Standardization of Energy Efficiency
A. Necessity of Energy Efficiency Standards
Standardization is a strategic tool often used by companies to dominate the international market in the early stages of a product or technology and is implemented as a measure to maximize and diversity a company’s profits, using patented technology (Telecommunications Technology Association, 2009, p. 6). It also plays an important role in the energy sector. Recently, many people in the energy sector have been trying to determine the exact role standardization will play in energy transition. Energy and environmental experts expect that energy efficiency improvements and renewable energy technologies will continue to have great importance during the global energy transition. However, in order for these technologies to thrive in self-sustainable markets through industrialization and cost reduction, it is imperative that proper technological criteria and standardized systems be set in place.
However, there are many barriers that hinder the wide adoption of high energy efficiency technologies and devices, despite their benefits. These barriers can be largely classified as market, financial, information and awareness, regulatory and institutional, and technical. 11The International Electrotechnical Commission (IEC) defines the seven barriers to energy efficiency as follows: 1. Lack of awareness of savings potential; 2. Inadequate information about performance efficiency; 3. Lack of widely used metrics for performance efficiency; 4. Focus on the performance of individual components rather than the energy yield or consumption of complete systems; 5. Perceived low rate of return on investments (lack of system-oriented approach); 6. Tendency to focus on lowest initial costs rather than life cycle cost; and 7. split incentives between the user and investors in energy efficiency. Standardization—which typically includes concrete definitions of energy efficiency as well as performance measurements and energy efficiency assessments—can provide the measures and tools needed to overcome some of these barriers (IEC, 2017, p. 4).
B. Energy Efficiency and the Role of International Standards12
There are five key things to consider when discussing the roles of energy efficiency standards. First, international energy efficiency standards have the role of setting a baseline. In order to improve energy efficiency outcomes, it is necessary to measure the energy consumption of the energy-using device, system, or process by gathering measurements, collecting data, and conducting analyses, as well as by conducting testing and Verification processes. Second, international standards also make it easier to improve energy efficiency, not only at the device level, such as for manufacturing equipment or related processes, but also at a system level. Third, international standards do not specify minimum efficiency values but rather support testing and certification, including labeling, and energy efficiency classes or classifications (etc.). Fourth, international standards establish the reliability, consistency, reproducibility, and comparability of energy efficiency technologies. International standards are defined with the help of numerous experts from all around the world. These international standards for energy efficiency are then accepted by countries around the world, and each country adopts the international standards as a basis upon which to form its own national and industrial certification through conformity assessment. Lastly, international standards are used for conformity assessment. The International Organization for Standardization (ISO) and IEC’s international standards are adopted and used by testing laboratories around the world to test and certify the energy efficiency of all types of energy-using devices, technologies, and systems. Many of these laboratories also participate in the ISO and IEC’s conformity assessment systems.
11 For specific examples of these barriers, refer to IEA (2010, pp. 35–36). 12This section is a paraphrased summary of IEC (2017, p. 4). 2. International Standardization and Certification Trend
A. International Organization for Standardization (ISO)
The ISO recognizes the importance of energy efficiency and renewable energy in the energy sector and is currently working with members of the ISO network—who are world-renowned experts in their respective fields—to create standards for energy efficiency and renewable energy. Improving energy efficiency and increasing the use of renewable energy are considered some of the most important measures that must be adopted to meet the world’s growing energy demand and to counter the effects of climate change. In this regard, ISO international standards are expected to contribute significantly to achieving the United Nation’s sustainable development goal of providing “affordable and clean energy for all.”
ISO standards represent the international consensus on best practices and solutions for specific technologies, products, and services in energy efficiency and renewable energy. In addition, ISO standards help organizations reduce their energy consumption and adopt renewable energy technologies. They also ensure interoperability, which encourages the transition to renewable energy sources, and promote the creation of markets for innovations that address the global energy challenge (ISO, 2016a, p. 4).
The ISO develops and implements diverse international standards for the energy sector. Of these standards, the ISO 50001 series, ISO’s energy management system (EMS) standard, is the most widely used. International standards for buildings have already been significantly developed, and even in terms of energy, there are standards for all sorts of building-related elements such as building design, partial systems, and individual parts. Figure 2- 21 below represents the energy performance of single building, whose thermal properties and individual construction materials of a building frame (walls, roof, and basement) are calculated using ISO’s international standards (ISO, 2016b, p. 10). This figure illustrates how international standards can reduce energy costs and improve energy efficiency.
Figure 2-6. Energy Efficiency of a Building (Example)
Source: ISO (2016b, p. 10).
Developing and implementing standards for the energy performance of ICT devices and home appliances is a key part of reducing energy consumption. The ISO/IEC 30314 series aims to improve energy efficiency by linking ICT products and home appliances with industrial products and processes. As part of this, the ISO is developing and implementing standards to improve the performance and effectiveness of machines and equipment, including refrigeration and air-conditioning systems, automation systems, industrial fans, and air and gas cleaning equipment (etc.). B. International Electrotechnical Commission (IEC)
Since recognizing the importance of energy efficiency in 2007, the IEC has been applying energy efficiency considerations to existing IEC Standards and other standards under development by analyzing energy efficiency, verifying energy efficiency improvement methods, and setting energy efficiency goals for electric products and systems. IEC’s dozens of technical committees working together to develop international standards in electricity generation, distribution, and its use by countless devices and systems (IEC, 2017, p. 6).
Table 2-6 shows different categories and aspects of energy efficiency according to the IEC. The IEC’s approach to the standardization of energy efficiency focuses on systems rather than on specific technologies or equipment. This means that the IEC aims to improve energy efficiency in terms of entire system performance as opposed to simply calculating the energy efficiency of individual system parts and adding everything together. In general, according to current research, the efficiency gains of a system are much higher than that of its individual parts (IEC, 2017, p. 7).
Table 2-5. Categories and Aspects of Energy Efficiency as Defined by the IEC
Energy efficiency category Energy efficiency aspect Define terminology Define system boundaries within the scope for EE Energy Efficiency Key Performance Indicators: EE KPIs Energy baseline Adjustment factors, static factors Reference applications Definition of energy efficiency Reference load profiles
Reference control strategies
Define test methods Measurements methods Measurement of energy Measurements plans efficiency Calculation methods
Define classes
Energy audits Assessment of energy Benchmarking methods efficiency Energy efficiency investment evaluation Energy management system Design criteria guidelines Develop application guidelines Improvement of energy Apply best practices efficiency Reduce overall losses Reduce standby losses Interoperability Dissemination of energy Communication efficiency Standardized data format Qualification of energy efficiency services Measurement infrastructure Source: IEC (2017, p. 5).
In Korea, energy efficiency ratings for electric motors, which are based on IEC standards for energy efficiency management devices, have already been applied. The IEC System of Conformity Assessment Schemes for Electrotechnical Equipment and Components (IECEE) has developed a global testing scheme for electric motors to promote the distribution of energy efficient motors around the world (IEC, 2017, p. 14). For buildings, the IEC has standards for automated heating and cooling (IEC, 2017, p. 18). For lighting, IEC International Standards apply to lamps and lighting equipment used in homes, medical facilities, offices, airports, theaters, stadiums, and along roads and streets. IEC International Standards also apply to lights used for cars and transportation as well as for electronically activated switches and sensors (IEC, 2017, p. 20). For consumer goods, IEC standards address the energy efficiency of appliances such as dishwashers, laundry appliances, freezing appliances, and many more. These standards provide the basis for measuring and testing the performance and power consumption of home appliances, thereby contributing significantly to improving the energy efficiency of consumer goods (IEC, 2017, p. 22).
3. Recent Energy Efficiency Standardization Trends in Korea
A. Overview
For many years, Korea implemented various systems for the standardization and certification of energy efficiency developed by the Korea Agency for Technology and Standards (KATS), Korea Testing Laboratory (KTL), and Korea Energy Agency (KEA). However, the lack of testing baselines and standards for new technologies led to a long series of trials and errors whenever a new technology emerged in the market.
Smart appliance technology in Korea is currently limited to the development of technologies and products at the level of demand management and the establishment of energy management systems (EMS) for apartment complexes. As a result of these limitations, standardization for smart appliances is only in the early stages. The Korean government is planning to distribute smart meters to all general homes by 2022 as part of its Fourth Industrial Revolution strategy; however, in terms of distribution, infrastructure, investment size, and public acceptance, the realization of this plan remains to be seen.
Therefore, in order to develop and integrate smart devices in homes and appliances into a smart system through the establishment of a smart grid infrastructure, which is the basis of the Fourth Industrial Revolution, we need a smart energy platform and framework that can incorporate AI technologies. In order to realize this, it is necessary for Korean institutions—namely KATS, which oversees all standardization tasks in Korea, KEA, the organization in charge of energy efficiency, and the KTL, the organization that develops industrial technology standards—to divvy up their roles to develop standards and certification systems for energy efficiency technologies, products, and systems, for the easy and seamless application of the technologies of the Fourth Industrial Revolution.
B. Standardization of Energy Efficiency in the Era of the Fourth Industrial Revolution
Currently, the KTL participates in the IEC and the development of international energy efficiency standards for energy facilities, devices, products, and systems. Experts on energy efficiency standards from the KTL and other Korean experts from related areas are monitoring the IEC’s discussions on international standards as well as the development and industrialization of energy efficiency technologies in order to gauge the direction for Korea’s policies on energy efficiency. In this regard, the IEC plays a very important role, and related government organizations, such as KATS, are actively encouraging the IEC’s participation in the development of Korean industries and the improvement of Korea’s energy efficiency policies.
The KEA has also established a mirror committee in Korea for the ISO TC 301. The committee participates in international conferences hosted by ISO, monitors discussions related to energy management and savings, and is actively involved in developing national standards (drafts) in the energy management sector and creating a national response system.
Chapter 3. Institutional Effects of the Fourth Industrial Revolution
This chapter examines the potential effects of the widespread distribution of Fourth Industrial Revolution technologies on national energy efficiency management systems and the ways major foreign countries respond to those effects.
Section 1. Status and Achievements of Energy Efficiency Management in Major Countries
1. Status of Energy Efficiency Management in Major Countries
A. United States
The energy efficiency management system of the United States is largely divided into Minimum Energy Performance Standards (MEPS) and energy labeling, which is further divided into Energy Guide and Energy Star labels. MEPSwere first created by the Energy Policy and Conservation Act of 1975 (EPCA 1975) and were revised by the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007.13The original EPCA 1975 provided standards for only 13 appliances, but the Department of Energy (DOE) currentlyprovides energy efficiency standards for over 60 products (Table 3-1). Of these products, 90 percent represent home energy use, 60 percent represent commercial building use, and 30 percent represent industrial energy use.14
Table 3-1. U.S. Minimum Energy Performance Standards (MEPS)
Product Standard Product(s) category Battery chargers, boilers, ceiling fans, central air conditioners and heating pumps, clothes dryers, clothes washers, computer and battery backup systems, conventional cooking products, dehumidifiers, direct heating Consumer equipment, dishwashers, external power supplies, furnace fans, furnaces, products furnace products, manufactured housing, microwave ovens, miscellaneous refrigeration, pool heaters, portable air conditioners, refrigerators and freezers, room air conditioners, set-top boxes, televisions, and water heaters Air-cooled unit air conditioners and heating pumps, automatic commercial ice makers, circulator pumps, clothing washers, commercial packaged boilers, commercial and industrial air compressors, computer Minimum room air conditioners, dedicated outdoor air systems, dedicated pool Energy pumps, distribution transformers, electric motors, evaporative cooling units, Commercial Performance fans and blowers, packaged terminal air conditioners and heating pumps, and industrial Standard pumps, refrigerated beverage vending machines, refrigeration equipment, products (MEPS) single package vertical air conditioners and heating pumps, small electric motors, unit heaters, variable refrigerant flow air conditioners and heating pumps, walk-in coolers and walk-in freezers, warm air furnaces, water- cooled unitary air conditioners, water heating equipment, and water-source heating pumps Ceiling fan light kits, certain lamps, compact fluorescent lamps, fluorescent lamp ballasts, general service fluorescent lamps, general service Lighting incandescent lamps, general service lamps, high-intensity discharge lamps, products illuminated exit signs, incandescent reflector lamps, light emitting diode lamps, luminaires, metal halide lamp fixtures, torchieres, and traffic signal modules and pedestrian modules
13 DOE website: (https://www.energy.gov/savings/federal-appliance-standards),accessed on October 22, 2018. 14 DOE website: (https://www.energy.gov/eere/buildings/appliance-and-equipment-standards-program), accessed on November 1, 2018. Plumbing Commercial pre-rinse spray valves, faucets, showerheads, urinals, and products water closets (flush toilets)
Source: DOE website: (https://www.energy.gov/eere/buildings/standards-and-test- procedures),accessed on November 1, 2018.
In an effort to improve energy efficiency and provide efficiency-related information to consumers, the United States made energy labeling a legal requirement when it passed the EPCA 1975. The first appliance labeling rule was enacted in 1979 and was implemented by the Federal Trade Commission (FTC) starting in 1980. In 2007, the FTC introduced EnergyGuide labels, which provide information on energy consumption as well as yearly energy costs. An EnergyGuide label lists the appliance’s make and model number, size, key features, and estimated yearly operating costs along with the cost range of similar models. EnergyGuide labels are affixed to only 12 appliances (clothing washers, dishwashers, refrigerators, freezers, televisions, water heaters, window air conditioners, room air conditioners, central air conditioners, furnaces, boilers, and heating pumps).15
Figure 3-1. Energy Guide Label
Source: FTC (2018, p.11).
The Energy Star label is a voluntary program that was introduced in 1992 by the DOE and the U.S. Environmental Protection Agency (EPA) in an effort to reduce energy consumption in general households and industrial sectors. The program was established to promote the production of appliances whose energy efficiency meet and surpass MEPS requirements and covers over 70 different types of products, including household appliances, office equipment, lighting, and data center equipment. Energy Star labels aim to provide simple and objective information to consumers and industries to help people make rational, informed choices about their energy consumption.
Figure 3-2. Energy Star Label
15FTC website: (https://www.ftc.gov/tips-advice/business-center/guidance/energyguide-labeling-faqs-appliance- manufacturers),accessed on December 20, 2018.
Source: Energy Star website: (https://www.energystar.gov/products?s =meg), accessed on November 1, 2018.
Since 2011, energy-efficient products marked by outstanding performance and efficiency have been granted the “Most Efficient” Energy Star label. The Energy Star “Most Efficient” designation is given to a small number of products in each Energy Star product category16with outstanding energy efficiency (for televisions, the top five percent in terms of highest energy efficiency). Products designated “Most Efficient” are calculated as reducing average energy consumption by between 20 and 60 percent.17
Figure 3-3. Energy Star “Most Efficient” Label
Source: Energy Star website, (https://www.energystar.gov/products/most_efficient),accessed on November 1, 2018.
Consumers can easily check the products that have received the Energy Star Most Efficient designation by visiting the Energy Star website (energystar.gov), and the information appears as seen in Figure 3-4. Products that bear the Energy Star label must meet all relevant EnergyGuide criteria. The guiding principles of the Energy Star program have been also adopted by the European Union, Canada, Iceland, Japan, Lichtenstein, Norway,
16Energy Star product categories include clothing washers, refrigerators, dryers, dishwashers, ventilating fans, boilers, central air conditioners, air source heating pumps, dehumidifiers, furnaces, geothermal heating pumps, ceiling fans, computer monitors, vertical slider windows, horizontal sliders, etc. 17Energy Star website: (https://www.energystar.gov/products/most_efficient),last accessed on November 1, 2018. Switzerland, and Taiwan.18
Figure 3-4. Examples of Clothing Washers with the Energy Star “Most Efficient” Designation
Source: Energy Star website, (https://www.energystar.gov/most-efficient/me-certified-clothes-washers/), accessed on November 1, 2018.
As previously mentioned, one of the characteristics of the U.S. energy efficiency management system is that it covers a number of commercial and industrial electronic products. As seen in Table 3-2, in addition to household appliances, energy programs in the U.S. cover electronic products and appliances for commercial and/or industrial use, such as commercial dishwaters, commercial ovens, and commercial water heaters; these products are listed in a separate program category. Energy labels in the U.S. also include one type of smart device applied with Fourth Industrial Revolution technologies. Currently, only smart thermostats are included in the list of products that can earn the Energy Star, but the increasingly widespread distribution of smart devices will inevitably lead to the inclusion of more such devices in the Energy Star program. Energy labels used in the U.S. also cover products other than appliances. For example, residential windows, doors, skylights, roof products, seal and insulate, and other building products can each be awarded the Energy Star designation. Air conditioners—another type of product eligible for the Energy Star—are further subdivided into different types, such as central air conditioners, window air conditioners, and room air conditioners. Lastly, Energy Star is a voluntary program that, in the past, was used by participating manufacturers to police each other’s compliance with energy standards(Hirayama et al., 2008, p. 115).
Table 3-2. U.S. Energy Efficiency Labels and Target Products
Country Label type Target products Boilers, central air conditioners, clothing washers, dishwashers, United EnergyGuide Mandatory freezers, furnaces, heating pumps, pool heaters, refrigerators, States (comparative) televisions, water heaters, and window air conditioners
18Energy Star website, (https://www.energystar.gov/index.cfm?c=partners.intl_implementation),accessed on December 20, 2018. Appliances: air purifiers, clothing washers and dryers, commercial clothing washers, dehumidifiers, dishwashers, freezers, and refrigerators Building products: residential windows, doors, and skylights, roofing products, sealing and insulation Commercial food service equipment: commercial dishwashers, commercial fryers, commercial griddles, commercial hot food storage units, commercial ice makers, commercial ovens, commercial refrigerators and freezers, and commercial steam cookers Electronics: audio/video, digital media player, set-top boxes, signage displays, slates and tablets, telephones, and televisions Heating and cooling: air-source heating pumps, boilers, central Energy Star air conditioners, commercial boilers, ductless heating and cooling, Voluntary (assurance) furnaces, geothermal heating and cooling, light commercial heating and cooling, room air conditioners, smart thermostats, and ventilation fans Lighting: ceiling fans, decorative light strings, light bulbs, light fixtures Data center and office equipment: computers, data center storage, enterprise servers, imaging equipment, large network equipment, monitors, small network equipment, uninterruptible power supplies, and voice over internet protocol (VoIP) phones Other: electric vehicle supply equipment (EVSE), laboratory grade refrigerators and freezers, pool pumps, vending machines, water coolers, water heaters, commercial water heaters, heat pump water heaters, high efficiency gas storage water heaters, solar water heaters, and whole home tankless gas water heaters Source: FTC website: (https://www.ftc.gov/tips-advice/business-center/guidance/energyguide-labeling-faqs- appliance-manufacturers#products; https://www.energystar.gov/products), accessed on November 1, 2018.
B. China
China’s energy efficiency standards include the Minimum Energy Performance Standards (MEPS) and the China Energy Label (CEL), which are growing increasingly important as the nation seeks ways to its reduce energy intensity and carbon dioxide emissions. China first implemented MEPS in 1989, and currently the country has energy efficiency standards that cover 64 products, including appliances and equipment for commercial and industrial use, and a mandatory energy labeling program that covers 35 different products (Zhou & Khanna, 2017, p. 1).
China’s energy efficiency policy and goals are clearly stated in its 13th Five-Year Plan for Economic and Social Development (2016–2020). In this plan, the Chinese government states that it will promote society-wide energy conservation and make comprehensive efforts to promote energy conservation in industry, construction, transportation, public institutions, and other areas. In addition, the government promises to launch various projects to upgrade boilers, furnaces, lighting products, and electric motors and also to recover waste heat and use it for household heating. Through these and other measures, the plan adopted by China seeks to promote the wide use of energy-saving technologies and products.19
In addition to these efforts, the Chinese government has also launched the “100, 1,000, 10,000” energy conservation initiative. This initiative puts the top 100 energy consuming enterprises in China under national regulation, the top 1,000 energy consuming enterprises under the regulation of their respective provincial-level governments, and 10,000 high energy consuming enterprises under the regulation of lower-level governments for the purpose of effectively managing the energy conservation and efficiency of different companies (CCCPC, 2016,
19China’s SolarStar PV News website, (http://guangfu.bjx.com.cn/news/20141224/576124.shtml),last accessed on November 1,2018. p.122).
China also implemented the Energy Efficiency Leader Scheme in 2015 to provide incentives to energy-efficient “leaders,” or manufacturers and brands that exceed specific energy efficiency benchmarks set by the CEL. The Chinese government regularly updates the categories of most energy-efficient appliances, energy-efficient firms, and energy-efficient public institutions.20The scheme involves seven Chinese government agencies, including the National Development and Reform Commission, the Ministry of Finance, and the Ministry of Industry and Information Technology.
Since MEPS only require a minimum level of energy efficiency, it was necessary for China to implement additional policies and institutions to greatly improve its energy efficiency.21 The government realized that unless it could increase consumer awareness of energy-efficient products, it would be difficult to achieve the cost reduction benefits associated with economies of scale and access technological development(Zhou & Khanna, 2017, p. 3). Since consumer awareness and education about energy efficiency education in China is somewhat lacking, consumers tended to prefer products that had low initial costs but consumed a large amount of energy. As a result, the demand for energy efficient products was low, which in turn deterred manufacturers from developing and producing such products. To overcome this barrier, China introduced the China Energy Label (CEL) in 2005. Since then, the CEL has been expanded and, as of the end of 2015, now covers 16 types of home appliances, 6 industrial products, 10 commercial and office products, and 3 lighting products. The CEL helps consumers compare the energy efficiency of different products by assigning each product an energy efficiency grade, ranging from Grade 1 (products with the highest energy efficiency) to Grade 5 (or Grade 3 for some product categories, signifying the lowest level of energy efficiency).22
Figure 3-5. China Energy Label (CEL)
Source:China Dictionary website: (http://chinadictionary.net/china-energy-label/), last accessed on November 1, 2018.
제품제조업체 Product manufacturer
20IEA website, (https://www.iea.org/policiesandmeasures/pams/china/name-147487- en.php?s=dHlwZT1lZSZzdGF0dXM9T2s), last accessed on November 1, 2018. 21IEA website,(https://www.iea.org/policiesandmeasures/pams/china/name-30289- en.php?s=dHlwZT1lZSZzdGF0dXM9T2s,&return=PG5hdiBpZD0iYnJlYWRjcnVtYiI-PGEgaHJlZj0iLyI- SG9tZTwvYT4gJnJhcXVvOyA8YSBocmVmPSIvcG9saWNpZXNhbmRtZWFzdXJlcy8iPlBvbGljaWVzIGFuZC BNZWFzdXJlczwvYT4gJnJhcXVvOyA8YSBocmVmPSIvcG9saWNpZXNhbmRtZWFzdXJlcy9lbmVyZ3llZmZ pY2llbmN5LyI-RW5lcmd5IEVmZmljaWVuY3k8L2E-PC9uYXY-), accessed on November 1, 2018. 22China Dictionary website,(http://chinadictionary.net/china-energy-label/),accessed on November 1, 2018. 제품모델넘버 Product model number 레벨1 Grade 1 고효율등급 High energy efficiency 저효율등급 Low energy efficiency 에너지효율 Energy efficiency 전원이꺼져있을때에너지사용량 Standby energy consumption (in watts) (단위는와트) 국가기준번호 National standards number
From 2009 to 2012, China operated a national subsidy program for 17 appliances (air conditioners, clothing washers, televisions, lighting products, and certain types of industrial equipment), where subsidies were provided to qualifying product models rated Grade 2 or higher in terms of their energy efficiency. In 2014, China introduced a pilot CEL QR code to provide more information about products to consumers, manufacturers, and market supervisors. On June 1, 2016, a new version of the CEL was introduced that officially incorporated the QR code (Xia et al., 2017, pp. 10–13). Despite these new developments, however, China still faces several policy and technical barriers to effectively ensuring CEL compliance. Some of these barriers stem from the fact that the CEL does not mandate independent verification of the energy efficiency levels stated by companies, and there is always the risk that manufacturers will claim that their products are more energy efficient than they really are. Exaggerated energy efficiency is a major weakness of the CEL program, as it erodes consumers’ confidence about a product’s reliability and energy performance. The CEL program is also plagued by other challenges resulting from the weak legal basis, unclear responsibilities, lack of information, and inefficient monitoring systems associated with the program (Zhou & Khanna, 2017, p. 4).
Table 3-3. Products Subject to the China Energy Label
Product Effective date 1 Domestic refrigerators Mar 1, 2005 / Mar 1, 2010 / Oct 1, 2016 2 Room air conditioners Mar 1, 2005 / Jun 1, 2010 3 Domestic clothing washers Mar 1, 2007 / Oct 1, 2013 4 Air conditioner units Mar 1, 2007 5 Self-ballasted fluorescent lamps Jun 1, 2008 / Oct 1, 2013 6 HPS Jun 1, 2008 7 Chillers Jun 1, 2008 / Jan 1, 2017 8 Three-phase asynchronous motors Jun 1, 2008 / Sep 1, 2012 9 Domestic gas water heaters Jun 1, 2008 / Oct 1, 2016 10 Variable speed air conditioners Mar 1, 2009 / Oct 1, 2013 11 Multi-split air conditioners Mar 1, 2009 12 Storage water heaters 13 Domestic induction appliances Mar 1, 2009 / Jan 1, 2015 14 Computer monitors 15 Copiers, printers, and fax machines Mar 1, 2009 / Jan 1, 2012 / Jan 1, 2015 16 Electric rice cookers 17 AC fans Mar 1, 2010 18 AC contactors 19 Air compressors 20 Transformers Nov 1, 2010 21 Fans 22 Flat-screen televisions Mar 1, 2011 / Oct 1, 2013 23 Domestic microwave ovens Mar 1, 2011 24 Digital television receivers Jan 1, 2012 25 Remote condensing unit freezers Sep 1, 2012 26 Domestic solar water heating systems Sep 1, 2012 27 Microcomputers Feb 1, 2013 28 Range hoods Jan 1, 2015 29 Heat pump water heaters 30 Domestic gas cooking equipment 31 Commercial gas cooking equipment 32 Water source heating pumps Dec 1, 2015
33 Lithium-bromide absorption chillers
34 Self-ballasted LED lamps Oct 1, 2016 35 Projectors Source: CELC website, (http://www.energylabel.gov.cn/nxbs/display.htm?contentId=89 ad1b22d4be441e994de9a5fef9cb63), last accessed on November 1, 2018.
C. European Union (EU)
1) Ecodesign
Currently, the European Union (EU) implements a mandatory Ecodesign Directive and complementary energy labeling regulations as part of its energy efficiency policy. The Ecodesign Directive (2009/125/EC), whose highest priority is to reduce the negative environmental impact of product life cycles at the product design stage, aims to protect the environment and secure resources by improving energy efficiency. Created to improve the energy efficiency of energy-using products, such as home appliances, the Ecodesign Directive covers about 40 product groups that are responsible for about 40 percent of all EU carbon dioxide emissions and provides product-specific regulations based on sales volume and environmental impact.23 The Ecodesign Directive, originally established as a standard proposal unifying the different design standards of EU member countries, was revised in2009 to expand the directive’s scope from energy-using products (EuP) to energy-related products (ErP)that have an indirect effect on energy consumption.24
The Ecodesign Directive, enacted by the European Commission (EC), provides the regulations and legal framework necessary for products manufactured and sold in the EU or imported from overseas. Specific technical requirements are detailed in the directive’s Implementing Measures, also drafted by the EC, and each implementing measure addresses specific ecodesign requirements for individual product groups. In order for a product to be granted the CE mark, it must meet all mandatory requirements outlined in the Ecodesign Directive. All energy-using and energy-related products imported, marketed, or sold in the EU must bear the CE mark, and only then are these products guaranteed legal access to the markets of EU member countries.25
23YGP, (http://ynpglobal.com/2013/02/eu-ecodesign-strategy), last accessed on October 31, 2018. 24KOTRA Overseas Market News,(http://news.kotra.or.kr/user/globalBbs/kotranews/4/globalBbsDataView.do?setIdx=243&dataIdx=130233),last accessed on October 31, 2018. 25Compliance in Advanced and Supporting System (COMPASS) website: (https://www.compass.or.kr/know.do?command=view&idx=5776EFF8-CF5A-42DA-90E4- The Ecodesign Directive was first adopted in 2005 and has been implemented through a series of working plans, from Working Plan 2009–2011 and Working Plan 2012–2014 to the current Working Plan 2016–2019.26
Table 3-4. Priority Product Groups for the Ecodesign Directive
Phase Product group Notes Heaters/water heaters, vacuum cleaners, computers (computer servers), tumble dryers for household use, ventilation units, electric motors, televisions, lighting Product groups have been products (LED products, fluorescent lamps, etc.), selected and preparatory 2005to2008 refrigerators and freezers, simple set-top boxes, studies have been completed; complex set-top boxes, industrial fans, dishwashers regulations implemented for household use, clothes washers for household use, starting in 2009. power consumed in standby and off-mode for home appliances/office equipment, water pumps, etc. Product groups have been Ecodesign Air conditioners and fans, game consoles, coffee selected and preparatory Working Plan machines, domestic and industrial ovens, large air studies have been completed; 2009–2011 conditioners, etc. regulations implemented starting in 2012. Window products, steam boilers, power cables, enterprise servers and data storage equipment, smart Priority product groups appliances, wine storage appliances, and water-related Ecodesign products Working Plan 2012–2014 Positive displacement pumps, heating controls, lighting controls/systems, fractional HP Conditional product groups motors(<200MW), and thermal insulation products for buildings Commercial refrigeration, compressors, windows, welding equipment, professional washing machines, Ecodesign dryers and dishwashers, enterprise servers, data Working Plan storage and auxillary equipment, water-related 2016–2019 products,smart appliances (preparatory study (in progress) ongoing), lighting controls/systems (preparatory study ongoing), industrial and laboratory furnaces and ovens, power cables, and steam boilers Source: Created by the author, using data from EC (2016) and YGP(http://ynpglobal.com/2013/02/eu- ecodesign-strategy),accessed on October 20, 2018.
The EU’s ecodesign regulations have improved energy efficiency and increased environmental awareness, not only in technology-related industries but across all industries. For example, increased interest in eco-friendly dishwashing tablets, which can be used in most European dishwashers for home use, led to such a drastic rise in the total sales of Ecover dishwasher soap tablets that, at one point, the company’s sales surpassed the sales of all other dishwasher detergents sold by Unilever, a major player in the dishwasher detergent market.27
Figure 3-6. Eco-friendly dishwasher tablets
2BF8FB4147E9&pageNum=1&subNum=1),last accessed on October 17,2019. 26EC website, (http://ec.europa.eu/growth/industry/sustainability/ecodesign_en),last accessed on October 20, 2018. 27YGP(http://ynpglobal.com/2013/02/eu-ecodesign-strategy), last accessed on October 31,2018.
Source: TESCO website,(https://www.tesco.com/groceries/en-GB/products/271574003), last accessed on November 10, 2018.
2) EU Energy Labels
Much like other major countries, the EU also implemented an energy labeling directive to increase the distribution of energy-saving products. Under the EU’s energy label system, the energy efficiencies of different appliances are rated on a scale from A+++ (highest efficiency) to G (minimum efficiency). The energy label requirements for individual product groups are laid out in the Energy Labelling Regulation (2017/1369). Manufacturers can use various labeling tools to create their own energy efficiency labels. Figure 3-7isan example of an EU energy label, which displays information about the label operator, energy efficiency class, energy consumption, product capacity, noise, and other things.28
Figure 3-7. Information Displayed on an EU Energy Label
28For specific details of each information displayed on EU energy labels, refer to Hwang Eun-ae (2012, pp. 69–71).
Source: Hwang Eun-ae (2012, p. 70).
라벨운영주체 Label operator 에너지소비효율등급표시 Energy efficiency class 연간에너지소비량 Annual energy consumption 제품용량 Product capacity 제품소음도 Noise
Recently, the development of a greater number of high energy efficiency products has led the European Commission (EC) to revert back to the original A to G labeling scale. Previously, the members of the European Parliament had voted to change the scale of energy efficiency labels.29 Figure 3-8shows the energy label currently in use, and the new energy label that will be used starting in 2019, based on the original grading scale. The major differences between the current label and the new label are: 1. Energy efficiency classes have been reduced from 10 to 7,as seen in part 2. Symbols have been replaced by text to provide consumers with more detailed information, as seen in part ①; .30 ②; 3. Requirements for each category have been explained in detail, as seen in part③; and lastly, ecofriendly certification has been included to provide additional information about the productFigure 3-8.EU Energy Label Before and After Revision(clothes washer label used as an example)
29In June 2017, the members of the European Parliament (MEPs) voted to change the EU energy label energy efficiency scale for appliances (from an A+++ to D scale to an A to G scale). Voting closed with 535 (out of a total 678) in favor, 46 opposed, and 79 abstaining. The A to G scale was implemented in the EU from the mid-1990s to 2009. The EC decided to revert back to this original scale, amidst criticisms that the A+++ to D scale may be misleading to consumers, who may believe that an A class appliance is one of the most efficient on the market, when in fact it may be one of the least efficient. The original scale was reintroduced to reduce discrepancies between product energy ratings in the energy labeling program and actual product performance. 30Sunyeong Bae (2018, pp. 4–5).
Source: Sunyeong Bae (2018, p. 4).
3) EU Energy Star
The EU Energy Star program began in 2003, following an agreement between the EU and the US to coordinate efforts for the energy labeling of office equipment. The program was managed by the European Commission (EC) and the US Environmental Protection Agency (EPA). Products that met the energy efficiency guidelines of the program were required to display the Energy Star label (Kim Tae-jung, 2013, p. 88). The EU-US agreement for this program expired in February 2018, and the EU Energy Star program is no longer in effect.31
4) Topten ACT
The Topten ACTis a program that aims to promote the purchase of energy-efficient, energy-using products within the European market. It identifies the top energy-efficient products in 16 European countries and provides information tailored to the consumers of each nation. The most energy-efficient home appliances, lighting products, office equipment, vehicles, and other product groups are selected and released with official labels, and selection criteria are posted on the website, independently from manufacturers and retailers.
The Topten ACT receives funding from the EU’s Horizon 2020 research and innovation program (Grant Agreement No. 649647) and also receives support from energy, environment, and consumer organizations as well as research institutions. The Topten Act project involves 17 partners in 16 European countries and is coordinated by the ADEME (Agence de l' Environnement et de la Maîtrise de l' Energie).
Figure 3-9is a screenshot of the search results for one-door refrigerators on the Topten website. Consumers who wish to purchase a one-door refrigerator can see the energy efficiency of different products and can also compare the specifications of two or more products. As seen in Figure 3-9, the Topten website provides information on product brand, model, electricity costs, energy class, energy efficiency index, energy consumption (kWh/year), and countries where the product is available.
Figure 3-9. Search Results for One-Door Refrigerators on the Topten Website
31ECwebsite(https://ec.europa.eu/energy/en/energy-star), accessed on October 20,2018.
Source: Topten website, (http://www.topten.eu/english/household/refrigerator_inbuilt/ 1-door.html),last accessed on October 24, 2018.
D. Japan
Similar to the US and EU, Japan implements an energy labeling program, called the Top Runner Program, to increase the distribution of energy-saving products.
1) Top Runner Program
The Top Runner Program in Japan differs somewhat from the general energy efficiency standards set in other major countries. The program sets standards for energy conservation (high energy efficiency) as stipulated in the Energy Conservation Law32, based on the value of the most energy-efficient products in the market, and induces the development of future technologies. Under this program, the most energy efficient products on the market at the time of standard establishment become the standards for high energy consuming products, and any product that does not meet these standards within a given amount of time is taken off the market. Manufacturers who are not able to achieve target efficiency within a given amount of time are given advice, public announcements, recommendations to improve their performance. The Top Runner Program, which targets manufacturers and importers, was first introduced with the drastic revision of the Energy Conservation Law in 1998, following the third session of the Conference of Parties to the UNFCCC (COP3) in 1997.33
Table 3-5. Changes in the Target Products of the Top Runner Program
Year Products
32The official name of the Energy Conservation Law is the “Law Concerning the Rational Use of Energy.” 33Ministry of Economy, Trade and Industry (2017, p. 8), (In accordance with the Third session of the Conference of Parties to the UNFCCC (COP 3), which was held in Kyoto in 1997, drastic amendments were made in 1998 to the Energy Conservation Law.) Passenger vehicles (gasoline, diesel),air conditioners, lighting equipment, 1999 TVs, copying machines, computers, magnetic disk units, freight vehicles Initial years of (gasoline, diesel), VCRs, electric refrigerators, and electric freezers implementation Added Space heaters (gas, oil), gas cooking appliances, gas water heaters, oil water in 2002 heaters, bidets, vending machines, and transformers
Added in 2006 Electric rice cookers, microwave ovens, and DVD recorders
Added in 2009 Routers and switching units
Multifunctional devices (copying machines), printers, and electric water Added in 2012 heaters (heating pump-type water supply systems)
1. Passenger vehicles2. Air conditioners 3. Lighting equipment and lighting equipment that uses fluorescent lights as a main light source 4. TVsets 5. Copying machines 6. Computers 7. Magnetic disk units 8. Freight vehicles 9. Video cassette recorders 10. Electric refrigerators 11. Electric freezers 12. Current targets, as of Space heaters 13. Gas cooking appliances 14. Gas water heaters 15. Oil water 2017(32product groups) heaters 16. Electric toilet seats 17. Vending machines 18. Transformers 19. Electric rice cookers 20. Microwave ovens 21. DVD recorders 22. Routers 23. Switching units 24. Multifunction devices 25. Printers 26. Heating pump-type water heaters 27. AC motors 28. Self-ballasted LED lamps 29. Insulation materials 30. Sashes 31. Multi-paned glazing 32. Showcase units
Source: Created by the author, from Status of added equipment for top-runner system, (Ministry of Economy, Trade and Industry website: http://www.enecho.meti.go.jp/category/saving_and_new/saving/data/111102tokuteikiki-tsuika.pdf),last accessed on October 31, 2018.
In addition to domestic energy-using devices, the Top Runner Program also includes office and industrial goods, as well as thermal insulation materials. Currently, there are 29 types of product groups (620 manufacturers) and three types of construction materials (18 manufacturers) included in the program.
Compliance with Top Runner Program standards is measured by the average efficiency of the product, and manufacturers must check whether the weighted average efficiency of the products sold within the target fiscal year meets the current standards. Under this system, all the products from a single manufacturer do not have meet the standard values, as long as the average value of products in the same category—based on the value of selling products with higher efficiency—meet program standards. This system flexibility allows manufacturers to produce high energy efficiency as well as other goods for a variety of market needs. Manufacturers that comply with program standards are rewarded in the form of promotion, as devices and equipment that meet the program’s energy efficiency standards are subsequently promoted through Japan’s labeling program, which complements the Top Runner Program. Labels include information such as the product’s estimated electricity cost, energy- saving functions, and energy rating (on a scale of 1 to 5 stars), which signifies the appliance’s energy efficiency compared to similar products in the market. On the other hand, manufacturers that do not comply with program standards are penalized, as the Japanese government uses the name-and-shame approach to disclose and shame businesses and brands for not complying with energy efficiency standards (Seonghui Shim et al., 2010. p. 23).
2) Japan’s Energy Labeling Program
Japan uses an energy labeling program to complement the Top Runner Program and to promote the sales and distribution of energy-efficient products. The energy labeling program in Japan is comprised of two types of energy labels: Energy Saving Labels and Uniform Energy Saving Labels. The energy labeling program in Japan was introduced in August 2008, according to Japanese Industrial Standards (JIS). Under this program, manufacturers must display on product labels whether their product meets the Top Runner standards stipulated by the Energy Conservation Law. 34 This labeling system helps consumers compare the energy efficiency performance of different products.
The Energy Saving Label was adopted to introduce the idea of energy efficient products to consumers. Of the 31 product groups in the Top Runner Program, labeling is available for 22 products.35This labeling shows the product’s national target achievement rate (i.e., whether it meets Top Runner standards) and helps consumers compare the energy efficiency levels of different products.
Table 3-6. Target Products for the Top Runner and Energy Labeling Programs
Targets of the Top Runner and Energy Labeling Programs Energy-saving Estimated annual Multi-stage rating Top Runner Program Labeling Program electricity costs system Passenger vehicles Air conditioners ● ● ● Lighting Lighting equipment for ● ● ●※ equipment fluorescent (using only lights fluorescent Self-ballasted lights as main lighting source) fluorescent ● ● lights TVs ● ● ● Cameras Electronic calculators ● Magnetic disk units ● Freight vehicles VCRs ● Electric refrigerators ● ● ●※ Electric freezers ● ● ●※ Space heaters ● Gas cooking appliances ● ●(fuel usage) Gas water heaters ● ●(fuel usage) Oil water heaters ● ●(fuel usage) Electric toilet seats (bidets) ● ● ● Vending machines Transformers ● Electric rice cookers ● ● Microwave ovens ● ● DVD recorders ● ● Routers ● Switching units ● Multifunction devices (copying machines) Printers Electric water heaters (heating ●
34Ministry of Economy, Trade and Industry (2017, p. 9). 35Japan’s energy labeling program website (www.eccj.or.jp/labeling),accessed on November 10, 2018. pump-type water supply systems) AC motors ● Self-ballasted LED lamps ● ● Insulation materials Sashes Multi-paned glazing Showcase units Source: Ministry of Economy, Trade and Industry (2017, p. 10)
Notes: Highlighted cells indicate products covered by the labeling system for retailers (*limited to lighting equipment for fluorescent lightsfor household use).
The Energy Efficiency Label Mark (Figure 3-10) comes in one of two colors: green, which indicates that the product complies with energy conservation standards, and orange, which signifies that the product does not meet such standards. The percentage value shows the energy efficiency rate of the product compared to Top Runner standards. The higher the percentage, the higher the energy efficiency of the product. The date under the main Energy Efficiency Label Mark is the target fiscal year in which the target must be met. The Law Concerning the Rational Use of Energy (Energy Conservation Law) stipulates the years in which the targets must be met for each product category. The number on the right-hand side of the label indicates the product’s annual energy consumption, i.e., how much energy the product consumes over the course of one year.
Figure 3-10. Examples of Japan’s Energy Efficiency Labels
Source: Translated by the author from Japan’s Energy Efficient Product information website (https://seihinjyoho.go.jp/frontguide/pdf/guide_seihinjyoho.pdf),accessed on October 15, 2018.
쇼에네성마크 Energy Efficiency Label Mark
쇼에네기준달성률 Achievement percentage of energy conservation standard
에너지소비효율 Energy consumption efficiency 연간소비전력량 Annual energy consumption
목표년도 Target year
목표년도 2012년도 Target year FY2012
Introduced in 2006, the Uniform Energy Saving Label features a multi-level rating system and requires retailers to provide information, such as expected electricity costs and other pertinent information, to consumers. The label’s multi-level rating system indicates the energy-saving performance of the product in question using a scale of one to five stars (five being the highest).With the increase in online sales of household appliances, retailers promote the use of energy-saving appliances through the internet, and list all the information displayed on the label in their product descriptions displayed online.36
Figure 3-11. Japan’s Uniform Energy Saving Label
Source: Translation of“Chapter 5. Label Display Program for Retailers” from the Information section of Japan’s Energy Efficient Product website (https://seihinjyoho.go.jp/frontguide/pdf/guide_seihinjyoho.pdf), last accessed on October 11, 2018.
이라벨을작성한년도를표시 Year the label was created Non-CFC 전기냉장고는 Non-CFC 마크를표시 Non-CFC mark for non-CFC electric refrigerators 다단계 평가 Multi-level rating system - Rating of the energy-saving -시장 제품의 쇼에네(고에너지효율)성능이 높은 순에 performance of products offered in the market on 따라 별 5개부터 1개까지 표시 a scale of one to five stars (one being the lowest and five being the highest); -최상의 기준을 달성하고 있는 제품이 몇 개몇 별 - Arrows under the star rating, indicating
36Official website of the Uniform Energy Saving Label System, (http://www.seihinjyoho.go.jp), accessed on October 3, 2018). 이상인가를 명확히 하기 위해, 별 아래의 마크에 최상의 the extent to which the product complies/does not comply with the Top Runner standards 기준달성, 미달성의 위치를 명시 쇼에너지라벨 EnergySaving Label - Energy Efficiency Label Mark, which -쇼에네성마크, 쇼에네기준달성률, 에너지소비효율, indicates the product’s level of energy savings 목표년도를표시 and annual electricity consumption 연간계략적전기요금 Expected annual electricity costs - Indicator ofenergy efficiency level in - terms of annual energy consumption 에너지소비효율(연간소비전력량등)을알기쉽게표시하기위 - Expected electricity cost, calculated 해연간계략적전기비용을표시 using the new expected electricity price (JPY 27 per 1 kW, including tax) set by the Home Electric -전기요금은, Appliances Fair Trade Conference 공익사단법인전국가정전기제품공정취급협회 “신전기요금계략단가”에따라 1kW당 27엔(세금포함)으로산출 (계략적전기요금은사용조건이나전력회사등에따라다릅니 (The expected electricity cost may vary depending on the usage conditions and electricity 다.) company.) (사용기간 중의 환경부하를 배려해, 쇼에네 성능이 높은 (Please choose a high-efficiency product in consideration of the environmental load during 제품을 선택하세요.) the usage period.) 2018년도판 2018 Version 내일을 위해 Non-CFC Non-CFC for a better tomorrow 이 상품의 쇼에네 성능은? What is the energy-saving performance of this product? 쇼에네기준달성률 100%미만 Energy conservation performance of less than 100% 100% 이상 100% or more 쇼에네기준달성률 Percent achievement of energy conservation standard 연간소비전력량 Annual energy consumption 목표년도 2021년도 Target year FY2021 브랜드명 Manufacturer name 기종명 Model name 이 제품을 1년간 사용할 경우 계략적 전기요금 Expected annual electricity cost
2. Achievements of Energy Efficiency Management in Major Countries
In the United States, the total energy consumption of the residential sector increased by 45 percent over the course of 47 years, from 13.766 quadrillion Btu in 1970 to 19.969 quadrillion Btu in 2017 (EIA 2018, p. 35). This increase can be attributed to the drastic rise in the number of households and the gradual increase in the size of living spaces during this time. The number of households in the US rose by approximately 99.1 percent from 1970 to 2017,37while the average living space per household rose by about 22 percent from 1980 to 2009(EIA, 2015, p. 4). However, even though total energy consumption in the residential sector increased, it increased by a smaller percentage than did the number of households and average living space. This lesser percentage can be explained
37US Census website: (https://www.census.gov/data/tables/time-series/demo/families/households.html),last accessed on November 3, 2018. by the fact that the improved energy efficiency and performance of home appliances helped reduce the overall energy consumption increase (Nadel et al., 2015, p. 4). According to the EIA (2015, p. 1), the aggregate energy intensity per household and per square foot declined by 24.2 percent and 43.1 percent, respectively, during this same time. Energy use per household declined by about 10 percent despite the increase in the number of households, average living space, and number of energy-using devices (Nadel et al., 2015, p. 7).
In the consumption sector, total energy consumption rose by only 6.8 percent over 47 years, from 29.628 quadrillion Btu in 1970 to 31.645 Btu in 2017(EIA, 2018, p. 35). The structural transition of the industrial sector from a manufacturing focus to a service industry focus had a huge impact on limiting the industrial sector’s energy consumption, as did improved energy efficiency in the manufacturing, steel, and other high-energy-intensity industries. Forexample, in the aluminum industry, a total of 81 trillion Btu of natural gas and 183 trillion Btu of electricity was consumed in 1997, but these figures are expected to decrease to 60 Btu and 153 Btu in 2020, respectively(EPA, 2007a, p. 3–7),representing a 19 percent decrease in energy consumption.
In the commercial sector, total energy consumption rose by about 116.1 percent over 47 years, from about 8.346 trillion Btu in 1970 to 18.037 Btu in 2017(EIA, 2018, p. 45). This increase seems to have been partially impacted by the increase in the number of commercial buildings and average floor space.38However, energy consumption per square foot only rose steadily up until 2003, at which point it took a downward turn (Nadelet al., 2015, p. 19). This decrease can be attributed to the improved energy efficiency of lighting, heating, ventilation, and air conditioning (HVAC) devices, which consume the most amount of energy in commercial buildings. Improvements in the energy efficiency of these products occurred as a result of new construction regulations for HVAC, the strict application of these regulations, and the development of related technologies.39
Such improvements in energy efficiency and energy conservation have also had a positive effect on the economy. In 2015, the avoided cost of energy for Texas, achieved through energy efficiency programs, was 5.32 cents per kWh. State law in Texas requires that companies use this value plus an annual escalation rate of 2 percent as a basis to calculate their avoided cost of energy. With this 2 percent annual escalation, experts predict that the avoided cost of energy in Texas will increase to 7.16 cents per kWh by 2030(Baatz, 2015, p. 8). Investments in energy efficiency also create jobs. It is estimated that, in the United States, every USD 1 million spent on energy efficiency supports approximately 20 jobs(ACEEE, 2011, p. 1).Considering that every USD 1 million spent in the general economy creates an average of 17 jobs, investments in energy efficiency create slightly more jobs than investments in other areas(ACEEE, 2011, p. 1).
Improvements in energy efficiency also have a positive effect on energy security. An analysis of energy trade in the US conducted as part of this study showed that energy imports reached 12 quadrillion Btu in 1983and peaked in 2007 at 35 quadrillion Btu, after which they decreased to about 23 quadrillion Btu (EIA, 2018, p. 61). More specifically, the US imported about 33 percent of its total petroleum; this increased to about 67 percent in 2006(EIA, 2018, p. 61). However, this dependence on petroleum imports decreased to about 44 percent by 2014, due to the economic recession, increases in energy production, and improvements in energy efficiency(EIA, 2018, p. 61).40In addition to having a positive effect on energy security, improvements in energy efficiency also lead to the reduced use of fossil fuel energy, which in turn reduces environmental pollution. Burning fossil fuel results in the generation of carcinogenic toxic gases, such as sulfur dioxide (SO2), sulfur trioxide (SO3), and nitrogen dioxide (NO2). Decreasing the consumption of fossil fuel reduces these and other environmental pollutants and also reduces carbon dioxide (CO2) emissions, a known culprit of climate change. The U.S. industrial sector produced 1.415 billion tons ofCO2emissions in 2017, which is a 22.4 percent decrease from the recorded high of 1.824 billion tons in 1997(EIA, 2018, p. 215).
As for China, the household appliance market has been growing at an extraordinary pace due to the rising
38According to the EIA’s 2012 survey, the number of commercial buildings rose by 13 percent from 2003 to 2012, and the average floorspace increased by 21 percent during the same period. EIA website(https://www.eia.gov/consumption/commercial/reports/2012/buildstock/?src=%E2%80%B9%20Co nsumption%20%20%20Commercial%20Buildings%20Energy%20Consumption%20Survey%20(CBECS)- b4), last accessed on November 1, 2018. 39EIA website, (https://www.eia.gov/consumption/commercial/reports/2012/lighting/), last accessed on November 1,2018. 40The decrease in US petroleum import dependence is attributed not only to improvements in energy efficiency but also to the development and increased production of unconventional fossil fuels, such as shale oil. national income level, rapid urbanization, and the desire of people to improve their quality of life(Zhou et al., 2011, p. 1). The demand for residential electricity grew at an annual average rate of 11.9 percent between 1990 and 2015.41In 2011, China officially became the largest electricity consumer in the world, and experts predict that China’s electricity demand will continue to grow at an annual rate of 6 percent up until 2020, and then at the rate of 2 percent up until 2035(IEA, 2012, p. 181).
In 2011, China’s total electricity demand was 4.96 trillion kWh, of which 3.24 kWh was consumed by 22 types of major home appliances, lighting equipment, cooking appliances, and other devices(CNIS, 2012, p. 6).The amount of electricity consumed by small and medium three-phase asynchronous motors, commercial unit air conditioners, and room air conditioners is illustrated in Figure 3-2—these devices account for the largest percentages of electricity consumption in China. Therefore, improving the energy efficiency of these products can be an effective measure for reducing energy costs and environmental pollutants. Improved energy efficiency can also lead to improvements in indoor living conditions and productivity within commercial buildings.
Figure 3-12. Breakdown of Electricity Consumption by Average Energy-Using Products in China (2011)
Source: CNIS (2012, p. 6)
According to the China National Institute for Standardization (CNIS), the total electricity savings of households reached 18.86 billion kWh following the implementation of China’s energy efficiency management system (CNIS, 2012, pp. 7–8). The implementation of the system also led to a reduction of 14 million tons of carbon dioxide. In its 11th Five-Year Plan, China aimed to implement an energy efficiency policy that would reduce the nation’s energy intensity by 20 percent, down from its 2005 level, by 2010. 42 In its 12th Five-Year Plan, China strengthened its energy policies and set a goal of reducing its energy intensity by 40 to 45 percent, down from its 2005 level, by 2020.
Japan as well has seen great improvements in energy efficiency, particularly in the machinery equipment sector, through its Top Runner Program. For example, the energy efficiency of passenger vehicles with gasoline engines rose by 74.4 percent between 1996 and 2012, while the energy efficiency of air conditioners rose by 30 percent from 2001 to 2012. Originally, the Top Runner Program only targeted energy-using products, but not non-energy- using products. However, non-energy-using products that contribute to improving the energy efficiency of homes and buildings were added to the program as an additional measure for energy savings in the public sector.43
Section 2. Institutional Effects and Response Trends of Major Countries
1. The Effects of the Fourth Industrial Revolution on Energy Efficiency Management
41China Statistical Yearbook, (http://www.stats.gov.cn/tjsj/ndsj/2015/indexeh.htm), last accessed on November 1,2018. 42Website of the Chinese Central Government(http://www.gov.cn/english/2006-03/23/content_234832.htm), last accessed on November 1, 2018. 43In 2013, Japan revised its Law Concerning the Rational Use of Energy and expanded the Top Runner Program to include construction materials. Energy-using devices continue to evolve to conform to the convergence trends of Fourth Industrial Revolution technologies. Devices are connected via the IoT and systemized and are also connected to mobile devices, which enables real-time monitoring and remote control of devices. Data generated in real time is accumulated in a cloud, and through the application of technologies such as AI and Big Data analysis, it is becoming increasingly possible to automatically control and optimize energy consumption.
This kind of technological evolution is expected to have a number of significant effects on energy efficiency management. First, various sensors will be used to generate efficiency-related information in real-time in an actual usage environment, instead of through theoretical experiments, making it possible to acquire quality data with a greater degree of practical application. Additionally, sensors and other Fourth Industrial Revolution technologies will be able to collect a greater amount of information, since it will be possible to collect data by the hour or minute. Existing energy efficiency management systems are based on energy efficiency data collected while testing energy-using products in a lab environment, and energy efficiency is managed by product group. Once these management systems are put into place, relevant products maintain their place in the system without any additional assessment of efficiency until the product group is removed from the system or the system itself is rendered obsolete. However, with the advancements of the Fourth Industrial Revolution, it is becoming possible to design energy efficiency management systems based on more accurate information, and to accurately assess and improve the cost effectiveness of products throughout the implementation process.
Second, consumers will be able to check the efficiency-related information of individual products or systems in real time. This, in turn, will enable various policy tools to be designed to induce behavior changes in users of energy-using devices. Prior to the Fourth Industrial Revolution, it was only possible to induce user behavior changes through promotional or educational measures. In years past, diversifying the information shown on monthly electricity bills to induce consumer behavior was considered relatively innovative. In the future, when consumers are able to directly monitor various types of energy-use information and easily and instantaneously adjust their consumption patterns, systems and policies that encourage behavior changes are expected to be more effective.
Third, the role of service providers will become more important in energy efficiency management, particularly with the development and increased distribution of automatic controls for system optimization. In terms of BEMS and FEMS, actual energy reduction can only be achieved when the generated information is analyzed and used for optimization. Unfortunately, at the present time, major providers are only in the initial stages of system optimization. Actual energy management will only be possible once service providers are able to provide consultations for the optimization of energy management services. Expanding the role of service providers in this way will help increase the effectiveness of energy efficiency management as a whole.
Fourth, while energy efficiency management is currently designed for the management of individual energy- using products, it is expected that energy management will soon become more complex as more energy-using devices are incorporated into relevant systems. For example, future energy efficiency management will have to take not only individual devices within a system into consideration but will also additional devices necessary for system building and operating (such as sensors), devices that are part of the IoT, and the energy spent on optimization and automated control. Optimization reduces energy consumption, but the additional devices needed to build and operate an optimized system increase energy consumption. As a result, any management system that neglects to take these types of additional devices into consideration can actually end up reducing the energy efficiency of the whole system.
Lastly, once an optimized system is created for energy-using devices that incorporate automatic control and other Fourth Industrial Revolution technologies, it will be possible to increase the effectiveness of energy efficiency management by enacting policy measures that encourage system user rather than consumer behavior changes. This potential shift in policy direction stems from the fact that it will be possible to optimize systems without changing consumer behavior. Given these considerations, it is important to establish policies that focus on: technological development for systemization, market creation to improve initial technological acceptance, and the reduction of production costs.
2. Responses by Major Countries
A. United States
Smart thermostats, which use Fourth Industrial Revolution technologies, are already included in the United States’ Energy Star certification.44Smart thermostats are thermostats connected via Wi-Fi and automatically adjust indoor temperatures. In order to earn an Energy Star, individual thermostats must pass field data verification. On average, Americans spend about USD 900, or half of their total annual energy costs, on heating and cooling their homes. Smart thermostats are expected to significantly lower these costs.
The EPA added smart thermostats to its list of target products for Energy Star certification on December 23, 2016, and soon after, Nest’s Nest Learning Thermostat became the first smart thermostat to earn the Energy Star label. In order for a smart thermostat to earn the Energy Star label, both its hardware and software must meet all relevant Energy Star criteria, and these criteria are set using field data, not experimental data. By deliberating with stakeholders, including smart devices in its program, and using real-life data to establish standards, the EPA incorporating ideas that it considers helpful to customers, industries, and/or the environment into its energy efficiency management.
Figure 3-13. Example of a Smart Thermostat
Source: Energy Star website, (https://www.energystar.gov/products/heating_cooling/smart_thermostats),accessed on November, 1, 2018.
When not connected to a service provider, a smart thermostat functions as a basic thermostat. When a smart thermostat is connected, it allows the user to set a schedule depending on his/her own energy usage patterns and can work with utility programs to prevent brownouts and blackouts. It also gives some form of feedback about the energy consequences of the thermostat’s settings as well as information about energy consumption, such as monthly run time. In order to earn an Energy Star, these smart thermostats must meet the temperature accuracy and standby power criteria shown in Table 3-7.45
Table 3-7. Energy Star Criteria for Smart Thermostat Devices
Parameter Performance requirement
Static temperature accuracy ≤ ±2.0 F
⁰
44Energy Star website,(https://www.energystar.gov/products/heating_cooling/smart_thermostats), accessed on November 1,2018. 45Energy Star website, (https://www.energystar.gov/products/heating_cooling/smart_thermostats/key_product_criteria),accessed on November 1, 2018. Network standby average power consumption ≤ 3.0 W average
Time to enter network standby after user interaction (on device, remote or ≤ 5minutes occupancy detection)
Source: Energy Star website, https://www.energystar.gov/products/heating_cooling/smart_thermostats/key_product_criteria),accessed on November 1, 2018).
In order to prove that their devices meet all relevant energy-saving criteria, smart thermostat service providers use software provided by the EPA to analyze and combine hundreds of data points, using this information to calculate national savings metrics for heating and cooling. As shown in Table 3-8, in order for a smart thermostat to be Energy Star-certified, it must meet the energy-savings criteria for reduced cooling and heating system runtime, and heat resistance for heating pump installations.
Table 3-8. Energy-saving Criteria for Smart Thermostats
Parameters Statistical measure Performance requirement
Lower than a 95% confidence interval ≥ 8% Annual reduction in run time limit of the weighted national average and heating Within the 20th percentile of the weighted ≥ 4% national average
Lower than a95% confidence interval of ≥ 10% Annual % run time reduction, the weighted national average cooling Within the 20th percentile of the weighted ≥ 5% national average
Average heat resistance for National mean of 5 F outdoor Requirements yet to be heating pump installations) temperature bins from 0 to 60 F determined ⁰ ⁰ 자 S Source: Energy Star website, (https://www.energystar.gov/products/heating_cooling/smart_thermostats/key_product_criteria)las t accessed on November 1, 2018).
Energy Star criteria for smart thermostats are determined by device performance in real life rather than in a lab. As a result, the method used to qualitatively determine the value of Energy Star smart thermostat energy reductions for the consumer is closely related to the method used to quantitatively determine energy reduction. The EPA and its stakeholders have worked together to develop a method to test the efficiency of smart thermostats (both in terms of products and services) for cooling and heating. In this testing method, a sample of test homes is selected, and service providers use software provided by the EPA to analyze a year’s worth of data collected from the sample homes. The results of this testing process are then submitted to an independent organization for verification.46
46Energy Star website,(https://www.energystar.gov/products/heating_cooling/smart_thermostats/key_product_criteria),accessed on November 1, 2018. B. Europe
The EU recently conducted a preparatory study on the application of ecodesign to smart appliances (Lot 33). The study, which was conducted in eight sessions from June 2015 to October 2017, aimed to analyze the technical, economic, market, and societal aspects of the broad introduction of smart appliances. The second phase of the study, conducted in September 2016, explored the applicability of ecodesign to electric vehicles, and expanded the regional scope of the study to include Norway, Switzerland, and Lichtenstein. This part of the study was followed by a stakeholder meeting, held in September 2017.47During the meeting, which focused primarily on defining the concept of “smart,” stakeholders proposed various policies, such as a policy approach to smart devices, and discussed the ripple effects of smart devices on the economy. According to a report presented at the meeting, a “smart” device is any device that increases efficiency by addressing “demand side flexibility.” In other words, smart devices optimize consumption patterns by adjusting their energy consumption indirect response to external stimuli (i.e. hourly energy prices, control signals, etc.).48
This quick, direct response to demand leads to changes in electricity consumption patterns and is what gives smart devices their flexibility. Electric products can be divided into three groups based on their degree of flexibility.
The first group of products is characterized by a high degree of flexibility as well as numerous convenience and performance features. This group includes dishwashers, washing machines, washer-dryers, buffered water heaters, radiators, boilers, heating pumps, circulators, and residential and non-residential air conditioners and battery storage systems.
The second group consists of products that provide slightly less flexibility than the products in the first group. This group includes tumble dryers, refrigerators, freezers, extraction fans and heat recovery ventilators, and low- power air handling units and chargers.
The last group consists of devices and equipment that have the potential to be flexible in the case of an emergency, such as electrical hobs, ovens, hoods, and vacuum cleaners and lighting.
Smart devices and their flexibility allow them to support different energy systems in a variety of ways. Smart devices can improve user convenience by setting an optimal daily schedule and can prevent the reduction of renewable energy in systems with limited power transmission capacities.49
The EU Ecodesign Working Plan 2016–201950calls for a separate track for IoT products and emphasizes the need to fully take into account the economic potential of such products, particularly mobile devices and smartphones(EC, 2016, p. 8).Considering the uncertainties of future IoT market development, it is very difficult to reliably estimate the real-life savings potential of IoT products. Additionally, IoT product sectors are still rapidly changing, and this has raised questions about the suitability of the ecodesign and energy labeling processes, which take an average of around four years to complete. Furthermore, the Working Plan emphasizes the need to carefully consider the impact of the increased connectivity of products and the advent of smart devices in both homes and industries, as well as the impact of these developments on energy efficiency as a whole.
C. Japan
Japan has been using the IoT to promote smart energy efficiency management in various fields, such as factories, construction, and vehicles. In factories, Japan uses the IoT and connected sensors to measure, diagnose, and analyze production facilities, facilitate flexible production, and conduct preventive maintenance work, thereby decreasing energy intensity. Furthermore, new electricity retailers have been participating in the expansion of private sector-led services. This increased participation has been spurred by the wide adoption of smart meters in
47ECwebsite. (http://www.eco-smartappliances.eu/Pages/presentations14-09.aspx),last accessed on October 20, 2018. 48EC website, Study on the Main Findings and Scope of Phase 1 and Phase 2, ),last accessed on October 20, 2018. 49EC website, Study on the Main Findings and Scope of Phase 1 and Phase 2, (http://www.eco- smartappliances.eu/Documents/01%20Scope%20of%20the%20follow-up%20study.pdf),accessed on October 20, 2018. 50EU Ecodesign Working Plan 2016-2019, (https://ec.europa.eu/energy/sites/ener/files/documents/com_2016_773.en_.pdf),last accessed on October 31, 2018. Japanese homes (expected to be installed in all homes by 2024), the increased use of setting and control commands for all devices in the home, and the liberalization of the retail electricity sector (Korea Institute of Energy Research, 2016 p. 12). Given that energy-saving business models are emerging in all areas, it is extremely important to establish infrastructure for the collection, use, and provision of Big Data and other information on energy management.
D. IEA
ICT-connected devices consume energy in a different way than conventional devices, and therefore it is necessary to conduct research to develop new types of policies for their management. The sales of ICT-connected devices are increasing worldwide, and these devices are already changing the way people lives their daily lives. These connected devices can communicate with one another and also have functions that can control energy consumption; as a result, they are creating increased opportunities for energy services and energy savings(IEA, 2017, p. 55).These types of devices are quickly penetrating the market. Gartner, a research firm, estimates that there are 4 billion connected devices installed worldwide (as of the end of 2016), and expects an additional 1 billion installations in 2017.51
The IEA established the Connected Devices Alliance (CDA), an alliance of government organizations in charge of energy efficiency management in member countries, and developed design and policy principles for the energy efficiency of connected devices as follows. Table 3-9lists the CDA design principles for energy efficient ICT- connected devices, and Table 3-10lists relevant policy principles.
Table 3-9.CDA Design Principles for Energy Efficient ICT-connected Devices
1. “Networked device design should follow standards-based communication and power management protocols to ensure compatibility and interoperability and should take advantage of standards and protocols that actively support energy efficiency.
2. Networked devices should not impede the efficient operation of a network.
3. Network-wide energy efficiency optimization should be a key development consideration. Network power management should coordinate with individual device power management techniques to achieve network optimization.
4. Connection to a network should not impede a device from implementing its internal power management activities.
5. Networks should be designed in such a way that legacy or incompatible devices do not prevent other networked devices on the network from performing effective power management activities.
6. Networks and networked devices should have the ability to scale power levels in response to the degree of services required by the system.
7. Edge devices without networking functionality should enter network standby, if appropriate, after a reasonable period of time when not in use. Edge devices with networking functionality should provide power management capabilities for each function consistent with the function’s role within the network.
8. Networking and networked infrastructure devices should, when the work load allows, autonomously minimize power consumption.
9. Consumers should be informed about, and have control over, device power management, including any impact on the energy consumption of the device and any dependent devices as well as changes to the user experience.
51Gartner website,“Gartner Says 8.4 Billion Connected ‘Things’ Will Be in Use in 2017, Up 31 Percent From 2016,” Gartner, Stamford, Connecticut, (www.gartner.com/newsroom/id/3598917),last accessed on October 18, 2018. 10. The design and operation of networked devices should be compatible with, and promote the positive effects of, using consumer electronics and information and communication technology (ICT) to enable energy to be used more efficiently, often referred to as ‘intelligent efficiency.’”
Source: IEA (2016, p. 1).
Table 3-10. CDA Policy Principles for Energy Efficient ICT-connected Devices
1. “Governments and industries should seek harmonized policy approaches that benefit the global marketplace for consumer and commercial technology products and services, and that enhance the productivity and efficiencies achieved via networks.
2. Policy, including government procurement and best-practice sharing, should support continued device, network, and intelligent efficiency innovation.
3. Energy efficiency requirements should be technology neutral. Policy should take into account the different capabilities and performance of networked devices.
4. Policy should neither impede the functionality of networked devices nor efficiency of the network nor impair device or network security.”
Source: IEA (2016, p. 2).
Chapter 4. The Status and Response of Institutions in Korea
In this chapter, we will assess the status and achievements of Korea’s energy efficiency management and response to the broad distribution of Fourth Industrial Revolution technologies.
Section 1. Status of the Energy Efficiency Management System in Korea
1. Overview of Korea’s Energy Efficiency Management System
After the second oil shock in 1979, the Korean government enacted the Energy Use Rationalization Act to lay an institutional foundation for improving energy efficiency. There are now a number of support policies and programs, based on this legislation, that complement Korea’s energy efficiency management system, which is the foundation of the nation’s energy efficiency policies. The Energy Use Rationalization Act was an improvement on the previous Heat Management Act and came to include not only heat efficiency and safety management but also policies that promoted the rational use of energy by energy source and/or demand sector (Lee Seong-geun et al., 2008, p. 38).
Since energy is consumed via energy-using devices and facilities, using high efficiency products is a fundamentally important measure that must be adopted in order to conserve energy. Korea’s energy efficiency management system, which forms the basis of national regulations on energy efficiency and the provision of information and incentives, plays a key role in inducing the technological development, production, and widespread use of high energy-efficiency products. This system helps transform the market by encouraging the manufacturers and importers of energy-using products to develop high energy-efficiency technologies and to promote the production and sales of high-efficiency products. One key characteristic of this market transformation is that it seeks to reduce and remove market barriers so that the market can reach a point where no government intervention is needed, and high-efficiency products can continually be introduced and distributed throughout the market. The Energy Efficiency Labeling and Standard (EELS) and the Minimum Energy Performance Standard (MEPS), which form the core of energy efficiency management in Korea, are considered very successful and useful energy efficiency improvement programs both in Korea and abroad.
Figure 4-1. Overview of the Three Main Energy Efficiency Management Programs in Korea
Source: Korea Energy Agency website (http://www.kemco.or.kr/web/kem_home_new/ener_efficiency/machine_01.asp),accessed on November 10, 2018.
Date of establishment: 1996(voluntary program)
- An efficiency guarantee program that certifies products that exceed a certain efficiency standard, instituted to boost the distribution of high-energy-efficiency equipment and materials > Voluntary certification program -Certification of facilities and devices with significant energy-saving effects to create an initial market and promote the broad introduction of such devices >Loans for facility funding and tax exemptions >Preferential purchasing policy for public institutions to purchase high-energy-efficiency equipment and materials > Preferential purchasing policy for the procurement of high-energy-efficiency equipment and materials > Incentives for installing high-energy-efficiency products, etc.
> Certification mark for high-energy-efficiency equipment and materials> High-energy-efficiency equipment and materials
Date of establishment: 1992(mandatory program) - A mandatory program requiring manufacturers to affix energy efficiency labels (rating the produce from Grade 1 to 5 in terms of its energy efficiency)to products that consume a lot of energy and are widely used. The program was introduced in an effort to promote the production and technological development of high-energy- efficiency products and to induce consumers to purchase energy-saving products. - A program that encourages the production and sales of energy-saving products from the production (import) stage by prohibiting the production and sales of products that do not meet MEPS.
-Energy Efficiency Label >Energy Efficiency Grade >Monthly energy consumption >Annual energy cost
>CO2emission per hour Date of establishment: 1999(voluntary program) * Made mandatory in August 2008
-Promotes the reduction of standby power use by electronic products and the widespread use of products with a low level of standby power consumption. - An energy-saving mark (voluntary) is affixed to products that meet the government’s standby power reduction standards, while a caution mark (mandatory) is affixed to products that do not meet such standards. -Product with outstanding low standby power use >Voluntary label >21products -Product with high standby power use > Mandatory label >16products
2. Status and Standards of Energy Efficiency Labeling in Korea
Since 1992, Korea has actively engaged in energy efficiency management for products that consume a large amount of energy. The Energy Efficiency Labeling and Standard (EELS) and the Minimum Energy Performance Standard (MEPS) form the basis of the energy efficiency management system in Korea. EELS is a mandatory program for the manufacturers and importers of products covered by the program. The legal basis of the EELS is the Energy Use Rationalization Act and its Enforcement Decree and the public notice of the Ministry of Trade, Industry and Energy (2017d), titled “Regulations for the Treatment of Products under Energy Efficiency Management.” About a decade ago, Korea’s Public Procurement Service also enacted the “Standards for the Purchase of Energy Consuming Products” (Public Procurement Service Official Order No. 1242, April 8, 2004), which instituted a preferential purchasing policy for products with the highest energy efficiency grade (Grade 1).
The EELS consists of two programs: Energy Efficiency Labeling, which requires manufacturers to display the energy efficiency rating (Grade 1 to 5) for high energy-consuming products that are widely used, and the MEPS, in which the government prohibits the production and sales of products that do not meet the energy efficiency standards set by the government. The purpose of the EELS is to help consumers easily identify and purchase high energy-saving products and to induce manufacturers and importers to produce and import energy-saving products. Under the EELS, manufacturers (of Korean goods) and importers (of imported goods) are required to:
① attach to their products, mandatorily submit a report on their product’s energy use, and meet the MEPS. an Energy Efficiency Label ② ③The mandatory Energy Efficiency Label displays the energy efficiency grade of the products (from Grade 1 to 5), assigned to the product based on its energy efficiency and/or use. Grade 1 products are 30 to 40 percent more energy efficient than Grade 5 products. Once a product has been tested, the product manufacturers and importers are obligated to submit the testing results. The production and sales of products that do not meet Grade 5MEPS qualifications are fundamentally prohibited.
The MEPS, which provides the minimum standards for energy efficiency, aims to discourage the use of low energy efficiency products and to promote the technological development of high energy efficiency products by manufacturers. Under the MEPS, which is a mandatory program, all manufacturers (of Korean goods)and importers (of imported goods) are required to: products and report the results, attach an MEPS label to their products, and Manufacturers①test or importers the energy who failefficiency to report of theirtheir testing results or provide false testing② results are fined up to KRW 5 million and③ are stop fined the up domestic to KRW production20 million if and their sales products of products do not meetthat dothe not MEPS. meet MEPS criteria.
The manufacturers and importers of EELS target products must test the energy efficiency of their products through an institution officially designated by the Minister of Trade, Industry and Energy (Energy efficiency management testing institute) and display the resulting energy efficiency grade or energy efficiency level on their products. They also must submit the test results, provided by the energy efficiency management testing institution, to the Ministry of Trade, Industry, and Energy. Advertisements for the relevant product must also include the product’s energy efficiency rating or level.
Figure 4-2. Energy Efficiency Labeling and MEPS Processes
Source: Korea Energy Agency website (http://www.kemco.or.kr/web/kem_home_new/ener_efficiency/machine_01.asp),last accessed on November 10, 2018.
생산(수입)업체 Manufacturer (importer) Label must be attached at the date of manufacture 표시시시기:제조일자기준 효율관리시험기관 Energy efficiency management testing institute Only certified companies are permitted to conduct 승인업체는자체시험가능 testing 한국에너지공단 Korea Energy Agency 소비자 Consumer 시험의뢰 Testing request 성적서발급 Issuance of performance report 결과통보 Notification of testing results 제품신고 Filing of product report
Currently (as of November 2018), there are 23 target product groups for EELS, which is applied to domestic products as well as imports. In principle, target products must satisfy both the MEPS and the criteria for energy efficiency grades. There are 18 product groups that are required to meet both the MEPS and the criteria for energy efficiency grades, and 11 product groups covered only by the MEPS. The target product groups of the MEPS in Korea mainly consist of home appliances. In the future, it will also be necessary to apply the MEPS to energy- using equipment in the industrial and commercial sectors. The United States, for example, manages energy efficiency by applying the MEPS both to energy-using devices in the home and energy-using equipment in the commercial (building) and industrial sectors.
Table 4-1. Target Products for the Energy Efficiency Labeling and MEPS Programs
Product Energy Efficiency Labeling MEPS 1. Refrigerators ○ ○ 2. Kimchi refrigerators ○ ○ 3. Air conditioners ○ ○ 4. Washing machines ○ ○ 5. Hot and cold water dispensers ○ ○ 6. Rice cookers ○ ○ 7. Vacuum cleaners ○ ○ 8. Air cleaners ○ ○ 9. Domestic gas boilers ○ ○ 10. Electric cooling and heating equipment ○ ○ 11. Commercial refrigerators ○ ○ 12. Gas water heaters ○ ○ 13. Window sets ○ ○ 14. TVs ○ ○ 15.Multi-split heating pumps ○ ○ 16. Dehumidifiers ○ ○ 17.LED lights (internal converter) ○ ○ 18. LED lights (external converter) ○ ○ 19. Electric fans ○ 20. Incandescent lights ○ 21. Fluorescent lights ○ 22. Self-ballasted fluorescent lights ○ 23. Electric ranges ○ 24. Electric stoves ○ 25. Electric heaters ○ 26. Adaptors and chargers ○ 27. Set-top boxes ○ 28. Three-phase electric motors ○ 29. Transformers ○ Source: Created using information from the Korea Energy Agency website (http://www.kemco.or.kr/web/kem_home_new/ener_efficiency/machine_01.asp),last accessed on November 10, 2018.
When manufacturers and importers sell products covered by the EELS, they must display all information as stipulated by the “Regulations for the Treatment of Products under Energy Efficiency Management,” and attach the label in a clearly visible area.
Table 4-2. Label Information and Placement by Product Group
Required label information (energy efficiency rating and Product group Label placement related information) Monthly electricity consumption, capacity, Refrigerators CO2emissions per hour of use, annual energy cost, Front energy efficiency rating Monthly electricity consumption (including freezer Kimchi operation), capacity, CO2emissions per hour of use, Front refrigerators annual energy cost(including freezer operation), energy efficiency rating Monthly electricity consumption (for multi split home Front or side (side only if the units, including the operation of wall-mount units), whole front is covered by a rated cooling capacity, CO2emissions per hour of use, vent/grille and a label cannot Air conditioners annual energy cost(for multi split home units, including be attached) (For split units, the operation of wall-mount units), energy efficiency the label should be attached to rating the indoor unit) Electricity consumption per 1 kilogram, amount of Washing water used per 1 kilogram load, CO2emissions per load Front or top machines of laundry, annual energy cost, energy efficiency rating Front or side (side only for Relative energy consumption, capacity, Hot and cold products 60cm in height or CO2emissions per hour of use, annual energy cost, water dispensers less, where the label cannot be energy efficiency rating attached to the front) Energy consumption per one-person serving, Front, top, or side electricity consumption per cooking/warming cycle, (side only for products Rice cookers CO2emissions per hour of use, annual energy cost, where the label cannot be energy efficiency rating attached on the front or top) Cleaning efficiency, fine dust emissions, Vacuum cleaners CO2emissions per hour of use, annual energy cost, Front or top energy efficiency rating Electric fans Airflow efficiency, MEPS compliance Base or stand Front or side Electricity consumption per 1 square meter, standard (side only for products Air cleaners area of use, CO2emissions per hour of use, annual where the label cannot be energy cost, energy efficiency rating attached on the front) Incandescent Light efficiency, MEPS compliance Whole packaging lights Fluorescent Individual packaging and Light efficiency, MEPS compliance lights whole packaging Self-ballasted Individual packaging and Light efficiency, MEPS compliance fluorescent lights whole packaging Three-phase Full-load efficiency, rated output/pole count, Front electric motors CO2emissions per hour of use, annual energy cost Domestic gas Heating efficiency, gas consumption, heating output Front boilers (condensing output), energy efficiency rating Adaptors and MEPS compliance Front or top chargers Monthly energy consumption for cooling, monthly Front or side (side only if the energy consumption for heating, rated cooling capacity, whole front is covered with a Electric cooling rated heating capacity, CO2emissions per hour of vent/ grille and a label cannot and heating cooling, CO2emissions per hour of heating, monthly be attached to the font) (For equipment energy cost for cooling, monthly energy cost for split units, the label should be heating, energy efficiency rating attached to the indoor unit) Monthly electricity consumption, capacity, Commercial CO2emissions per hour of use, annual energy cost, Front refrigerators energy efficiency rating Indicated thermal efficiency, gas consumption, Gas water heaters Front energy efficiency rating Efficiency (50% load), primary/secondary voltage, Transformers Side closest to the nameplate constant, capacity Heat transmission coefficient, air tightness (amount Window sets of air infiltration and rating), frame material, glass, Front energy efficiency rating Front or back (back only for products where the label cannot be attached to the front. When the label is placed on the back of the product, the Electricity consumption per , electricity manufacturer or the importer TVs consumption in operation, CO2emissions per hour of must provide the seller with a use, annual energy cost, energy efficiency separate information sheet that includes the product’s energy efficiency rating and annual energy cost that can be displayed for sales purposes.)
Electricity consumption, CO2emissions per hour of Electric heaters Front use, monthly energy cost
Electricity consumption, CO2emissions per hour of Electric stoves Front use, monthly energy cost Cooling and heating efficiency, rated cooling capacity/rated heating capacity, heating capacity in a cold climate area Multi-split (-15 ), CO2emissions per hour of use, energy Front of the outside unit heating pumps efficiency rating (for cooling-only units: integrated cooling℃ efficiency, rated cooling capacity, CO2emissions per hour of use, energy efficiency rating) Moisture removal efficiency, measured moisture Dehumidifiers removal capability, CO2emissions per hour of use, Front monthly energy cost
Electricity consumption per kilogram, CO2emissions Electric ranges Front, top, or side per hour of use, annual energy cost Electricity consumption in active standby mode or Set-top boxes Front, top, or side electricity consumption in passive standby mode Light efficiency, input of electricity, CO2emissions LED lights Individual packaging and per hour of use, light source color, energy efficiency (internal converter) whole packaging rating
LED lamps Light efficiency, input of electricity, CO2emissions Individual packaging and (external per hour of use, light source color, energy efficiency whole packaging converter) rating Source: Created by the author based on the Ministry of Trade, Industry and Energy’s(2017d) “Regulations for the Treatment of Products Under Energy Efficiency Management” [Appendix 1]and [Appendix 7].
On May 23, 2007, the Korean government officially revised the design of its energy efficiency labels, which are mandatorily affixed to products covered by the government’s energy efficiency management programs in order to help consumers more easily identify high-efficiency products. With this revision, the government reduced its energy labels to only two: the Energy Efficiency Rating Label, which rates the energy efficiency of products from Grade 1 to Grade 5, and the Energy Efficiency Label, which is affixed to products that satisfy the MEPS but are difficult to categorize into energy efficiency grades.
Figure 4-3. Former Energy Efficiency Labels and Current Energy Efficiency Labels Introduced in 2007
Former labels
Kimchi refrigerators, (Refrigerators) (Domestic gas boilers) Freight vehicles freezers, washing machines,fans, vacuum (Air conditioners) (Rice cookers) cleaners, hot and cold water dispensers, dishwashers,passenger vehicles, lighting equipment, etc.
New labels
Kimchi refrigerators, freezers, washing machines, Three-phase electric motors fans, drum washing machines, vacuum cleaners, hot and cold water dispensers, dishwashers, Freight vehicles fans,dishdryers, passenger vehicles, lighting (domestic gas boilers) equipment, etc. (refrigerators, air conditioners, and rice cookers)
Source: Press release of the Ministry of Trade, Industry, and Energy’s (May 23, 2007), “Revised Official Notice on the Regulations for the Treatment of Products under Energy Efficiency Management: Change in the Design of the Energy Efficiency Rating Label.”
Starting from July 1, 2009, manufacturers and importers of goods covered by the energy efficiency management system were required to display energy efficiency rating and carbon dioxide (CO2) emission information on product labels. With these changes, Korea became the first country in the world to adopt an energy efficiency management system that requires information aboutCO2emissions resulting from product use to be displayed on energy efficiency labels.
3. Status of the e-Standby Program
In 1999, Korea also started implementing the e-Standby Program, which began with the voluntary participation of manufacturers. The purpose of this program, which is still in operation today, is to encourage manufacturers to produce products with a “sleep mode” to minimize the use of power during standby mode. The program was first introduced to save energy by encouraging manufacturers to voluntarily produce and distribute products with low standby power that meet government standards. In 2010, it was made mandatory for all new products to use a maximum of only 1 watt of power while in standby. The legal basis for the operation of the e-Standby Program is Article 18 (Designation of Products Subject to the Reduction of Standby Power) and Article 19 (Designation of Products Subject to the Warning Signs of Standby Power) of the Energy Use Rationalization Act, as well as the Regulations for the Operation of the e-Standby Power Program (official notice issued by the Ministry of Trade, Industry, and Energy).
“Standby power” refers to the electric power consumed by electronic appliances when they are not performing their primary functions or when they are switched off but still plugged in (Lee Seong-geun et al., 2008, p. 127). During the first several years of the program, efforts to minimize standby power were made through a voluntary agreement between the government and participating manufacturers.
In November 2004, the Korean government officially announced its “1-Watt Initiative,” which aimed to limit standby power use to only 1 watt by 2010 through the support of technological development and distribution. In July 2005, as a follow-up to the initiative from the previous year, the Korean government established a roadmap to reduce standby power titled “Standby Korea 2010,” which aimed to reduce the standby power for major electronic devices used in South Korea to 1 watt or less by 2010. The roadmap consisted of three phases: Phase 1(2005–2007), which focused on voluntary promotion and participation in the initiative; Phase 2 (2008–2009), which was a preparatory phase for transitioning to a mandatory system, in which some products were required to have standby power of no higher than 1 watt; and Phase 3 (2010~), in which all targeted products were required to have a standby power of no higher than 1 watt. The roadmap outlined the mandatory requirements for new products to have a maximum standby power of 1 watt starting from 2010. More specifically, the roadmap purposed to increase the distribution rate of products with a maximum of 1 watt of standby power from about 22 percent in 2004 to 40 percent by 2010 and 80 percent by 2020 (Lee Seong-geun et al., 2008, p. 128).
In 2008, Korea became the first country in the world to require that a warning label be attached to television sets that do not meet government standby power reduction standards. The number of products subject to this warning label increased from one (television) in 2008 to seven in July 2009 and 12 additional in July 2010. Since then, televisions (July 1, 2012) and set-top boxes (January 1, 2015) have been transferred to the Energy Efficiency Rating Label program, and videos (March 13, 2014) were also taken off the list of products subject to the standby power warning label (Korea Energy Agency,2018a, p. 261).
Table 4-3. Expansion of Products Subject to the Standby Power Warning Label
Date of implementation Target products August 28, 2008 (1product) TVs* Computers, monitors, printers, multifunctional devices, set- July 1, 2009 (6products) top boxes, and microwave ovens Fax machines, copy machines, scanners, audio systems, DVD players, radios, door phones, corded/cordless phones, bidets, July 1, 2010 (12products) modems, Home gateways, videos** *TVs (July 1, 2012). Set-top boxes (January 1, 2015) were moved to the Energy Efficiency Rating Label System. ** Videos (March 13, 2014) were excluded from the list of products subject to the e-Standby Power Program. • Korea Energy Agency (2018a, p. 261).
Under the e-Standby Power Program, products (mainly office and home appliances) with a long standby time that do not meet standby power reduction standards are required to display a (mandatory) warning label. Products with a long standby time that do satisfy standby power reduction standards are encouraged to display a energy saving label (voluntary) in an effort to encourage the use of sleep mode and the reduction of standby power. There are currently (as of August 2018) 21 products that are subject to the e-Standby Power Program, including computers and automatic power saving devices. Of these products, 16 products, such as computers, bidets, and modems, are required to display warning labels if they do not meet the government’s standby power standards.
Table 4-4. Products Subject to the e-Standby Program
Products with “Outstanding Products required to display a Standby Power Reduction Standby Power Warning Label Capabilities” (mandatoryreporting and (voluntary reporting and Product labeling) labeling)
1. Computers ○ ○ 2. Monitors ○ ○ 3. Printers ○ ○ 4. Fax machines ○ ○ 5. Copy machines ○ ○ 6. Scanners ○ ○ 7. Multifunctional devices ○ ○ 8. Home gateways ○ ○ 9. Audiodevices ○ ○ 10. DVD players ○ ○ 11. Radio cassettes ○ ○ 12.Microwave ovens ○ ○ 13. Door phones ○ ○ 14. Corded/cordless phones ○ ○ 15. Bidets ○ ○ 16. Modems ○ ○ 17. Hand dryers ○ 18. Servers ○ 19. Digital converters ○ 20. Wired/wireless broadband routers ○
21. Automatic power saving devices ○
Source: Created by the author using information from the Korea Energy Agency website (http://www.kemco.or.kr/web/kem_home_new/ener_efficiency/machine_03.asp),last accessed on November 10, 2018.
4. Status of the High-efficiency Appliance Certification Program
Korea operates the High-efficiency Appliance Certification Program, which is similar to the Energy Star Program in the US. Through this program, high energy-efficiency and energy-saving appliances are tested by officially recognized testing institutes; upon completion of the tests, manufacturers are then able to attach High- efficiency Appliance labels to their certified appliances before selling them. This program promotes the distribution of guaranteed high-efficiency products by certifying and labeling appliances that meet or exceed certain energy-efficiency standards. Implemented in December 1996, the program is operated under the Regulations on the Promotion of High Energy-efficiency Machinery, Equipment, and Materials (Official Notice of the Ministry of Trade, Industry and Energy) and based on the High-efficiency Appliance Certification Program as well as Article 22 (Certification of High-efficiency Machinery, Equipment, and Materials) and Article 23 (Post Management of High-efficiency Energy Machinery, Equipment, and Materials) of the Energy Use Rationalization Act.
Table 4-5. Selection Process for Target Products of the High-efficiency Appliance Certification Program
Procedure Notes
Call for public participation ↓ Submission of proposals Year-round ↓ Primary evaluation (relevant experts) Open evaluations ↓ Secondary evaluation (relevant experts) Open evaluations ↓ Preliminary selection of target products ↓ Use of research services when Drafting of technical standards necessary ↓ Gathering of opinions through the internet or public meetings Gathering of opinions on technical standards, testing ↓ categories, etc. Submission of revised proposals ↓
Revision of proposals ↓ Implementation
Source: Ministry of Trade, Industry, and Energy (2017c, p. 10), [Appendix 1].
The High Energy-efficiency Appliance Certification program is a voluntary program in which manufacturers or importers voluntarily apply for certification provided by the Korea Energy Agency (KEA). The program, which aims to create an initial market for new high-efficiency products, also offers various incentives for qualifying products, and is run in conjunction with a grant program and mandatory purchasing program, which aims to promote the widespread distribution of high-efficiency products throughout the market. Target products are regularly inspected, and those that do not meet program standards are removed from the list of certified products or moved to different programs, such as the EELS or the MEPS(Jeongmin Yu et al., 2012, p. 39).
Manufacturers and importers who would like their products to be high-efficiency certified, can have their products tested at a designated testing institute using different technical standards and measurement methods. Official notice of the product testing results must be submitted online within 90 days of testing. Documents that must be submitted to the KEA for certification are: product performance results issued by a designated testing institute, certification application, and documents on efficiency. Once all the required documents have been submitted, the KEA conducts① a fair evaluation and issues certificates for the products that meet all relevant② standards. ②other pertinent
Figure 4-4. Application Procedure for the High-efficiency Appliance Certification Program
Source: Korea Energy Agency (http://www.kemco.or.kr/web/kem_home_new/ener_efficiency/machine_02.asp,accessed November 3, 2018).
Testing institute Test request Company Application Korea Energy applying for (fee) Agency Test results certification Fair evaluation Issuance of certification -Immediate review of application and request for - Application accepted upon payment supplementary materials, if necessary - Certification registration and issuance –Create a technical report and review submitted materials
Currently, the High-efficiency Appliance Certification Program covers 21 types of appliances, organized into four categories. In the past, the program included a lot of lighting equipment (22 types of products in 2016), but currently, electric facilities, boilers, and heating and cooling systems are the main products submitted for certification.
Table 4-6. Target Products of the High-efficiency Appliance Certification Program
High-efficiency Appliance Certification
(Total:21products in 4 categories)
Lights Lighting equipment LED lights (4 product types) ①LED exit lights ②LED modules for signs ③ ④ Uninterruptible power supply Inverters ①Pumps Electric facilities ②Centrifugal fans (8product types) ③Turbo blowers ④Demand controller ⑤Energy storage systems (ESS) ⑥Electric vehicle chargers ⑦ ⑧ Commercial gas boilers Centrifugal chillers and screw chillers ①Direct-fired absorption chillers Boilers, cooling and heating systems ②Temperature and humidity chambers (7product types) ③Gas heat pumps ④Gas hot water vacuum boilers ⑤Hot water driven absorption chillers ⑥ Insulation materials ⑦Airtight, super-insulated doors (2product types) Heat blocking window films ① Source: Korea Energy Agency (2018a, p. 256).②
The Korean government operates a number of support programs, including loan, tax reduction, and exemption programs, installation grants, and preferential purchasing programs for government and public institutions. These programs are designed to firmly establish the initial market for high-efficiency certified products and encourage their widespread use.
Table 4-7. Support Programs for Certified High-efficiency Appliances
Program Support provided ∙(Financial support): loans from the Energy Use Rationalization Fund(Ministry of Trade, Industry, and Energy, Official Notice No. 2017-612) ∙(Tax reduction):companies that invest in energy- saving facilities by using high-efficiency machinery, Loans and tax reductions for facility funding appliances, and materials receive a 1 percent tax reduction (3 percent for “middle-standing” companies and 6 percent for SMEs) off of their income or corporate tax for the fiscal year((Article 25(2) of the Restriction of Special Taxation Act)) ∙Public institutions are required to preferentially purchase certified high-energy products or Grade 1 High-efficiency preferential purchasing program energy efficiency products (Regulation on the for public institutions Promotion of the Rational Use of Energy for Public Institutions, Ministry of Trade, Industry, and Energy, Official Notice No.2017-203) ∙ Adherence to energy-using product purchasing High-efficiency preferential purchasing for standards(Public Procurement Service Order No. 1680, government procurement January 21, 2015) Grants for the installation of certified high- ∙Grants for the installation of certified high- efficiency products efficiency products(LED lights, inverters, etc.) Source: Created by the author using information from the Korea Energy Agency website, (http://www.kemco.or.kr/web/kem_home_new/ener_efficiency/machine_02.asp),accessed November 3, 2018.
Section 2. Evaluation of the Performance of Korea’s Energy Efficiency Management System
1. Achievements of the Energy Efficiency Labeling and Standard Program
The Energy Efficiency Labeling and Standard (EELS) program requires that widely used energy-using products display mandatory labels that rate their energy efficiency on a scale of 1 to 5; under the program, the production and sales of products that do not meet MEPS are banned. The MEPS implemented as part of the EELS are currently the strongest measure stipulated by the Energy Use Rationalization Act. Since its initial implementation in 1992, the EELS program has led to a noticeable improvement in the efficiency of equipment and facilities. Korea’s home appliances are some of the most efficient in the world, particularly its refrigerators, air conditioners, washing machines, and televisions. The Korean government continues to reinforce the MEPS and energy rating grades to improve the distinction between different grades and help consumers choose high- efficiency products. Additionally, the government is also promoting the sales of Grade 1 products by combining the Energy Efficiency Labeling and Standard Program with the public procurement service system. The effects of this combined policy approach have been recognized both in Korea and abroad and are also referenced by Korean and foreign research studies.
In its “Achievements of Appliance Energy Efficiency Standards and Labeling Programs: A Global Assessment in 2016,”52 the International Energy Agency (IEA) stated that the energy efficiency of major appliances has improved at an annual average rate of around 3 to 4 percent, which is about 2.5 to 3 percent higher than the annual underlying rate of technology improvement (0.5 to 1 percent).
Table 4-8. Research Results on the Improvement of Energy Efficiency in Applicable
Yearly change in % Appliance Country Time Period Source Price Efficiency EU- Bertoldi and Atanasiu (2007) 1996–2004 - -3.3 Washing 15 machines CECED (2003)b EU 1994–2002 - -4.5
52Refer to IEA 4E(2016, p. 3). Dale et al. (2002) USA 1983–2001 -2.4 -0.9 1993–– EES (2006) AUS -2.6 -1.3 2005 Laitner et al. (2004) USA 1980–1998 -3.4 - EU- Waide (2001)c 1996–1998 - -2.5 15 Weiss et al. (2010) NL 1969–2003 -2.1 -1.5 Bass (1980)d USA 1950–1961 -2.3 - Bass (1980)d USA 1950–1974 -2.2 - Laundry dryers EES (2006) AUS 1993–2005 -1.1 -0.7 Laitner et al. (2004)d USA 1980–1998 -3.2 -
Laitner et al. (2004)e USA 1980–1998 -2.9 -
Weiss et al. (2010) NL 1968–2007 -3.8 -2.3 Bass (1980) USA 1947–1968 -2.0 - Dishwashers Bass (1980) USA 1947–1974 -2.0 - Ennen (2006)b, f EU 1998–2004 - -5.1 Ennen (2006)b,g EU 1998–2004 - -6.0
Weiss et al. (2010) NL 1964–2008 -1.2 -2.4 Bass (1980) USA 1922–1940 -2.6 - EU- Bertoldi and Atanasiu (2007)f 1993–2005 - -4.3 15 Bertoldi and Atanasiu (2007)b EU 1993–2004 - -4.5 CECED (2004)b, h EU 1999–2003 - -3.5 Dahlman (2007) AUS 1993–2005 - -3.9 Dale et al. (2002) USA 1980–2001 -2.5 -4.6 Refrigerators EES (2006) AUS 1993–2005 -1.7 -4.6 ECCJ (2006) JPN 2001–2005 -15.1 -5.1 Laitner et al. (2004) USA 1980–1998 -3.2 - Schiellerup (2002) UK 1992-1999 -6.3 -3.9 Schiellerup (2002)i UK 1992-2000 - -3.4
EU- Waide (2001)c, j 1994-1998 - -2.3 15
Weiss et al. (2010)k NL 1970-2003 -1.5 -1.9 Weiss et al. (2010)l NL 1970–2003 -1.1 - EES (2006) AUS 1993–2005 -2.5 -3.3 Freezers Laitner et al. (2004) USA 1980–1998 -5.3 - Schiellerup (2002)k UK 1992–1999 -5.1 -3.1 Schiellerup (2002)l UK 1992–1999 -5.0 -5.6
Source: IEA 4E (2016, p. 18).
Although Korea’s EELS program has been in been in operation for 25 years, for many years, it was difficult to quantify the achievements of the program due to limited access to related resources. Every year, the program’s achievements and performance were measured only in terms of the improved efficiency of products that were recognized as “highly efficient” by the Korea Energy Agency. In 2017, to remedy this relative lack of information, the KEA conducted an internal report, calculated the average efficiency of five major appliances(based on the nation’s strengthened efficiency standards and the number of products sold over the past 10 years), and analyzed energy efficiency trends. According to this analysis, for air conditioners, energy efficiency rose by an annual average of 6.1 percent over the past decade; for refrigerators, by 2.7 percent; for washing machines, by 5.0 percent; for drum washing machines, by 5.9 percent; for TV sets, by 4.1 percent; and for rice cookers, by 1.7 percent.
A simple average of the energy-efficiency improvements of these six appliances shows that energy efficiency improved by an annual average of 4.2 percent.
Figure 4-5. Achievements of Energy Efficiency Management Programs for Major Appliances
Source: Internal research materials from the Korea Energy Agency (KEA).
연평균효율개선(%): 6대제품단순평균연평균 Annual average improvement of energy efficiency 4.2% 개선 (%): Simple annual average of 4.2 percent improvement for six types of major appliances 전기냉방기 Air conditioners 전기냉장고 Refrigerators 일반세탁기 Washing machines 드럼세탁기 Drum washing machines 텔레비전수상기 TV sets 전기밥솥 Rice cookers
The weighted average cooling capacity (KW) of air conditioners rose by 6.8 percent, from 4.4 in 2007 to 4.7 in 2016, while the weighted average efficiency (KWh/KW) rose by 43.0 percent, from 121.1 in 2007 to 69.0 in 2016.
Figure 4-6. Improved Energy Efficiency of Air Conditioners
Source: Internal research materials from the Korea Energy Agency (KEA).
전기냉방기(연평균 6.1% 효율개선) Air conditioners (6.1 percent annual average improvement)
가중평균효율 Weighted average efficiency
가중평균정격냉방능력 Weighted average cooling capacity
The weighted average net volume (L) of refrigerators rose by 2.5 percent, from 532.8 in 2007 to 546.2 in 2016, while the weighted average efficiency (KWh/L) rose by 22.1 percent, from 0.77 in 2007 to 0.60 in 2016.
Figure 4-7. Improved Energy Efficiency of Refrigerators
Source: Internal research materials from the Korea Energy Agency (KEA).
전기냉장고(연평균 2.7% 효율개선) Refrigerators (2.7 percent annual average improvement)
The weighted average load capacity (kg) of conventional washing machines rose by 31.7 percent, from 10.4 in 2007 to 13.7 in 2016, but the weighted average efficiency (KWh/kg) improved by 37.1 percent, from 2.78 in 2007 to 1.75 in 2016.
Figure 4-8. Improved Energy Efficiency of Washing Machines
Source: Internal research materials from the Korea Energy Agency (KEA).
일반세탁기(연평균 5.0% 효율개선) Washing machines (5.0 percent annual average improvement)
The weighted average load capacity (kg) of drum washing machines increased by 40.2 percent, from 10.2 in 2007 to 14.3 in 2016, while the weighted average efficiency (KWh/kg) rose by 42.1 percent, from 2.78 in 2007 to 1.75 in 2016.
Figure 4-9. Improved Energy Efficiency of Drum Washing Machines
Source: Internal research materials from the Korea Energy Agency
드럼세탁기(연평균 5.9% 효율개선) Drum washing machines (5.9 percent annual average improvement in efficiency)
For televisions, the weighted average square root of the TV screen area rose by 13.7 percent, from 0.60 in 2012 to 0.68 in 2016, while the weighted average efficiency (KWh/square root) improved by 15.3 percent, from 167.8 in 2012 to 142.2 in 2016.
Figure 4-10. Improved Energy Efficiency of Televisions
Source: Internal research materials from the Korea Energy Agency (KEA).
텔레비전수상기(연평균 4.1% 효율개선) TV sets (efficiency improved by 4.1 percent annual average improvement in efficiency)
The weighted average cooking capacity (per serving) of rice cookers fell by 6.6 percent, from 8.31 in 2011 to 7.76 in 2016, but the weighted average efficiency (KWh/kg) improved by 8.0 percent, from 23.74 in 2011 to 21.84 in 2016.
Figure 4-11. Improved Energy Efficiency of Rice Cookers
Source: Internal research materials from the Korea Energy Agency (KEA).
전기밥솥(연평균 1.7% 효율개선) Rice cookers (1.7 percent annual average improvement in efficiency)
These results showed a trend of the increased sales of Grade 1 (highest efficiency) products and the decreased sales of Grade 5 (lowest efficiency) products. Table 4-9 shows the total sales and percentage of sales energy per grade in each product group, from 2011 to 2016. In 2016, kimchi refrigerators showed the largest percentage of Grade 1 sales within their product group (94%), followed by televisions (76%), rice cookers(76%),drum washing machines (51%),air conditioners (49%),multi-electric heat pump systems (47%),refrigerators (46%),domestic gas boilers (31%),washing machines (21%),window sets (21%),water dispensers (19%),commercial refrigerators (17%),gas water heaters (13%),dehumidifiers (9%),and air cleaners (6%).
Table 4-9. Sales of Appliances by Energy Efficiency Rating Percentage by energy rating Amount sold Product Year Grade 1 Grade 2 Grade 3 Grade 4 Grade5 (count) 2011 47% 3% 3% 6% 40% 2,062,187 2012 48% 4% 6% 7% 35% 1,904,737 2013 13% 35% 19% 8% 25% 1,848,631 Refrigerators 2014 20% 41% 20% 8% 12% 1,746,898 2015 34% 36% 17% 6% 7% 1,745,919
2016 46% 30% 13% 6% 5% 2,380,843 2011 81% 14% 3% 1% 1% 1,011,907 2012 92% 5% 1% 0% 1% 957,046 2013 60% 31% 7% 0% 2% 895,579 Kimchi refrigerators 2014 73% 24% 2% 0% 1% 779,824 2015 89% 10% 0% 0% 1% 1,033,940 2016 94% 4% 0% 1% 1% 1,099,540 2011 40% 0% 1% 1% 58% 1,177,109 2012 32% 0% 1% 1% 66% 817,428 2013 72% 1% 0% 1% 26% 1,774,396 Air conditioners 2014 58% 1% 0% 0% 41% 1,401,131 2015 49% 0% 0% 2% 49% 1,220,861 2016 49% 4% 3% 1% 44% 1,846,695 2011 90% 9% 1% 0% 0% 1,001,467 2012 89% 9% 0% 1% 0% 1,005,663 2013 2% 85% 4% 0% 9% 1,075,740 Washing machines 2014 6% 87% 5% 0% 1% 1,154,719 2015 18% 75% 6% 0% 1% 947,680 2016 21% 74% 4% 0% 0% 1,432,664 2011 28% 54% 18% 1% 0% 580,276 2012 23% 55% 20% 2% 0% 601,634 2013 13% 67% 17% 2% 0% 564,870 Drum washing machines 2014 24% 68% 5% 3% 0% 562,607 2015 56% 36% 3% 5% - 255,675 2016 51% 44% 4% 1% - 642,119 2011 15% 20% 27% 35% 3% 1,163,794 2012 19% 16% 34% 24% 7% 983,902 2013 9% 26% 38% 22% 5% 849,210 Water dispensers 2014 7% 27% 47% 16% 2% 655,722 2015 17% 33% 35% 14% 1% 894,400 2016 19% 35% 32% 13% 1% 909,506 2011 44% 17% 30% 10% 0% 3,821,049 2012 66% 19% 15% 0% - 3,243,385 2013 39% 14% 36% 7% 4% 3,120,149 Rice cookers 2014 66% 12% 14% 5% 3% 3,448,554 2015 78% 8% 10% 2% 1% 3,645,566 2016 76% 9% 10% 3% 2% 3,946,006 2011 0% 23% 68% 4% 6% 1,517,462 2012 0% 14% 74% 4% 8% 1,359,167 2013 0% 9% 76% 6% 10% 1,106,345 Vacuum cleaners 2014 0% 20% 63% 7% 9% 1,517,525 2015 0% 19% 73% 6% 2% 1,200,479 2016 0% 10% 68% 10% 11% 1,214,292 2011 0% 31% 68% 1% 1% 398,662 Air cleaners 2012 0% 35% 64% 0% 0% 241,379 2013 0% 52% 47% 0% 0% 305,823 2014 1% 41% 57% 0% 0% 298,696 Air cleaners 2015 3% 64% 30% 2% 1% 537,488 2016 6% 66% 24% 2% 1% 938,016 2011 11% 0% 64% 23% 2% 1,112,832 2012 15% 0% 77% 7% 1% 1,281,045 2013 23% 0% 0% 77% 0% 1,246,557 Domestic gas boilers 2014 30% 0% 0% 70% 0% 1,276,502 2015 40% 0% 0% 60% 0% 1,605,053 2016 31% 0% 0% 69% 0% 1,423,766 2011 74% 7% 6% 8% 6% 222,203 2012 82% 6% 3% 5% 4% 273,664 2013 77% 17% 1% 0% 5% 274,285 Cooling and heating systems 2014 82% 13% 1% 0% 3% 374,623 2015 14% 34% 48% 1% 3% 219,812 2016 56% 18% 16% 10% 0% 574,525 2011 12% 21% 19% 46% 2% 29,977 2012 11% 21% 33% 34% 1% 33,195 2013 4% 9% 54% 28% 5% 35,754 Commercial refrigerators 2014 8% 9% 74% 8% 2% 25,338 2015 14% 6% 56% 20% 4% 46,569 2016 20% 10% 58% 7% 5% 80,850 2011 4% 0% 93% 4% 0% 90,103 2012 8% 0% 91% 1% 0% 37,674 2013 7% 0% 93% 0% 0% 43,906 Gas water heaters 2014 10% 1% 90% 0% 0% 49,121 2015 16% 0% 84% 0% 0% 38,993 2016 13% 0% 87% 0% 0% 56,912 2012 13% 8% 51% 25% 3% 835,214 2013 15% 9% 58% 17% 1% 1,280,392 Window sets 2014 11% 20% 36% 31% 2% 2,714,793 2015 18% 39% 31% 12% 0% 2,702,859 2016 21% 44% 24% 11% 0% 2,902,028 2012 97% 2% 0% 1% 0% 1,858,502 2013 34% 27% 33% 6% 0% 2,784,824 Televisions 2014 79% 10% 5% 6% 0% 2,972,832 2015 80% 11% 5% 4% 0% 2,624,940 2016 76% 12% 7% 4% 0% 2,990,241 2012 96% 4% 0% 0% 0% 44,239 2013 5% 34% 41% 19% 2% 52,450 Multi-electric heating pump 2014 39% 35% 26% 0% 0% 54,206 systems 2015 44% 49% 7% 0% 0% 48,936 2016 47% 51% 2% 0% 0% 49,490 2012 33% 40% 27% 0% 0% 572,409 2013 90% 5% 5% 0% 0% 1,305,564 Dehumidifiers 2014 93% 5% 1% 0% 0% 1,433,033 2015 94% 4% 2% 0% 0% 636,834 2016 9% 40% 49% 2% 0% 742,283 Source: Korea Energy Agency (2018b, pp. 238–246).
2. Achievements of the e-Standby Power Program
In 1999, with its implementation of the e-Standby Power program, Korea became the first country in the world to establish and implement a program for the labeling of standby power. Currently (as of October 2018), there are 21 product groups that are subject to the program’s Outstanding Standby Power Labeland 16 product groups that are subject to its Standby Power Warning Labeling. The program’s Standby Power Warning Labels have been particularly successful. In 2010, the Korean government also implemented Standby Korea 2010, a policy aimed at limiting standby power to 1 watt. This policy led to the reduction of the average standby power for home appliances, from 3.66 watts in 2003 to 1.74 watts in 2016(Korea Energy Agency, 2018a, p. 262).
A total of 13.66 million products with Outstanding Standby Power labels were sold in 2016. Together, these products that use less standby power represent a 429 GWh reduction in the amount of annual electricity and a 199,759tCO2 reduction in greenhouse gas emissions.
Table 4-10. Sales and Energy Savings of Outstanding Standby Power Products (2016)
Energy Outstanding Energy Greenhouse gas reductions standby power reductions per Energy saved emissions Appliance per product products sold per year (TOE) reductions year (KWh) (tCO2) (kWh) (1 product) Computers 9.5 3,410,060 32,421,117 7,457 15,086 Monitors 3.2 2,503,742 7,980,569 1,836 3,713 Printers 110.3 501,558 55,333,800 12,727 25,747 Fax machines 72.7 8,480 616,734 142 287 Copy machines 103.1 1,724 177,770 41 83 Scanners 19.9 22,698 452,678 104 211 Multifunctional 219.2 937,461 205,482,725 47,261 95,611 equipment Automatic power 2.1 1,398,774 2,947,162 678 1,371 saving devices Audio devices 2.6 360,178 929,138 214 432 DVD players 3.4 46,184 155,506 36 72 Radio cassettes 2.5 49,169 120,463 28 56 Microwave ovens 7.3 916,927 6,707,815 1,543 3,121 Door phones 24.1 1,301,676 31,342,543 7,209 14,584 Corded/cordless phones 40.4 703,853 28,447,224 6,543 13,236 Bidets 31.7 1,418,000 44,921,851 10,332 20,902 Modems 67.9 - 0 - 0 Home gateways 71.9 32,179 2,312,721 532 1,076 Hand dryers 19.7 9,329 183,749 42 85 Servers 280.0 31,209 8,740,984 2,010 4,067 Digital converters - - - - - Wired/wireless routers 3.9 9,833 38,038 9 18 Total 13,663,074 429,312,590 98,742 199,759 Source: Korea Energy Agency (KEA)(2018b, p. 256).
3. Achievements of the High-efficiency Appliance Certification Program
The Korean government operates several support programs to promote the wide use of high-efficiency products; these programs include grants, programs for the preferential purchasing of high-efficiency products for government use and the mandatory use of high-efficiency products in public institutions, funding, and grants to cover product testing fees. As of December 2017, a total of 24,318 product models from 1,616 manufacturers had been registered and certified as high-efficiency appliances. The types of products that are subject to the High- efficiency Appliance Certification Program are listed in Table 4-11.
Table 4-11. Product Groups Subject to the High-efficiency Appliance Certification Program
Number of manufacturers Number of product models Products 2012 2017 2012 2017 Automated lighting control systems 6 7 8 8 Heat recovery ventilators 44 54 282 805 Gas boilers for commercial and building use 10 13 182 246 Pumps 16 32 419 987 Centrifugal chillers and screw chillers 4 6 37 75 Uninterruptible power supply 12 22 72 239 Ballasts for metal halide lamps 39 33 214 207 Ballasts for sodium vapor lamps 25 18 103 80 Inverters 6 7 162 164 Automatic temperature control systems for heating 31 18 44 41 systems LED traffic lights 61 35 403 235 Multifunctional switchgear systems 13 9 36 36 Direct-fired absorption chillers 10 10 120 176 Single phase induction motors 2 0 4 0 Ventilators 5 9 19 61 Centrifugal fans 21 35 226 456 Submersible aerators 1 1 7 3 Metal-halide lamps 35 31 157 147 High-performing reflectors for high-intensity 59 39 180 122 discharge (HID)lights Oil-fired water boilers 2 2 4 6 Oil boilers for commercial and building use 1 2 8 10 Turbo blowers 5 7 16 26 LED exit lights 12 12 210 197 Temperature and humidity chambers 10 14 35 52 LED module power supply converters 19 8 41 16 Airtight, super-insulated doors 15 9 37 12 Regenerative burners 0 0 0 0 Gas heat pumps (GHPs) 1 4 2 50 Energy storage systems (ESS) 0 1 0 1 Demand controllers 0 5 0 6 LED modules for signs 0 3 0 3 Heat blocking window films 0 11 0 35 Gas vacuum water boilers 0 4 0 124 Hot water driven absorption chillers 0 7 0 87 Electric vehicle chargers 0 3 0 3 Lighting equipment* 250 249 988 1,104 LED lights* 486 896 2,807 18,498 Total 1,201 1,616 6,823 24,318 * As of November 29, 2017, lighting equipment was consolidated from nine product groups (encased and fixed LED lights, LED safety lighting fixtures, LED street lights, LED floodlights, LED tunnel lights, LED sensor lights, ultra-constant discharge lamps, PLS lighting, and electrodeless fluorescent lamps) into one group (lighting equipment). Similarly, LED lights were consolidated from multiple product groups ((LED lights with internal converters, LED lamps with external converters, LED tube lamps (external converters), and LED replacement lamps for fluorescent lamps (internal converters)) into one group (LED lights).
Source: Korea Energy Agency (2018b, p. 258).
The sales of certified high-efficiency products (for products certified as of December 2017) increased steadily from 6.09 million in 2012 to 10 million in 2014 and 11.78 million in 2016. The sales of automatic temperature control systems for heating, ventilators, and LED lights have risen recently. The KEA, which oversees the High Efficiency Appliance Certification Program, has estimated that 635,000 TOE of energy was saved and 1.29 million tCO2 was reduced in 2016 through the certification program (Korea Energy Agency, 2018a, p. 258).
Table 4-12. Progress of the Sales of Certified High Efficiency Appliances (count)
2012 2014 2016 Automated lighting control systems 91,390 101,636 42,972 Heat recovery ventilators 110,186 224,440 149,991 Gas boilers for commercial and building use 557 643 745 Pumps 22,015 39,963 40,358 Centrifugal chillers and screw chillers 112 70 68 Uninterruptible power supply 1,440 3,971 2,148 Ballasts for metal halide lamps 610,186 448,802 62,712 Ballasts for sodium vapor lamps 53,885 25,517 28,080 Inverters 3,558 8,409 1,007 Automatic temperature control systems for 732,127 624,150 1,090,498 heating LED traffic lights 179,399 174,654 129,595 Multifunctional switchgear systems 24 149 0 Direct-fired absorption chillers 286 164 297 Single phase induction motors 0 4,533 0 Ventilators 109,563 137,979 630,387 Centrifugal fans 11,506 14,592 12,514 Submersible aerators 93 43 0 Metal halide lamps 150,186 150,813 102,700 Highly reflective reflectors for high-intensity 108,726 55,083 13,632 discharge (HID)lamps Oil-fired water boilers 914 875 790 Oil boilers for commercial and building use 0 0 0 Regenerative burners 0 0 0 Turbo blowers 270 117 12 LED exit lights 426,228 432,476 545,937 Temperature and humidity chambers 517 617 378 LED module power supply converters 18,692 44,321 30,619 Airtight, super-insulated doors 102,202 185,564 114,649 Gas heat pumps (GHPs) 250 4,529 5,856 LED modules for signs 0 27,035 37,000 Heat blocking window films 0 2,593 2,571 Gas vacuum water boilers 0 112 378 Demand controllers 0 1,119 975 Energy storage systems (ESS) 0 0 0 Hot water driven absorption chillers 0 0 93 Electric vehicle chargers 0 0 0 Lighting equipment 1,746,434 3,876,851 6,047,148 LED lamps 1,615,197 3,781,434 2,688,629 Total 6,095,877 10,373,298 11,782,765 Source: Korea Energy Agency (2018b, pp. 260-261).
South Korea’s High Efficiency Appliance Certification Program is similar to the United States’ Energy Star Program. The government not only provides information on certified high efficiency appliances but also has instituted various support programs, such as rebates and mandatory use of certified appliances in public institutions. The certification program is assessed to be useful for increasing the use of high efficiency appliances and accelerating technological development. Once certified high efficiency products become widely available in the market, they are moved to the Energy Efficiency Labeling and Standard Program. Since these programs are useful for improving the efficiency of energy-using products and devices and also for fostering related industries, it is necessary for the government to integrate and organically manage the selection of the products, operation of the programs, and related support programs for wide distribution of high efficiency appliances. In addition, it is important to approach these programs more strategically in order to foster high-efficiency product industries and induce the production and distribution of high-efficiency products.
Section 3. Korea’s Response
1. The Fourth Industrial Revolution and the Energy Industry
As part of this study, an examination was conducted of the basic policy direction for addressing the Fourth Industrial Revolution proposed by the Presidential Committee on the Fourth Industrial Revolution (2017) in the second half of 2017. This examination showed that the committee’s goals are to strengthen the competitiveness of major industries and create new industries; the committee aims to achieve these goals by establishing infrastructure and markets for related technological development, implementing policies to support startups, and revising relevant regulations. As part of the committee’s agenda, core general purpose technologies will be applied across the economy, including the manufacturing sector, mobility sector (automobile, drones, ships, etc.), energy sector (including small-scale and decentralized renewable energy), logistics and distribution sector, and agriculture and fisheries sector. Through these efforts, together with the promotion of industrial reform, the committee aimed to make industries “more intelligent” and increase their value-add.
Figure 4-12. Efforts Undertaken by Presidential the Committee on the Fourth Industrial Revolution to Make Industries “More Intelligent”
Source: Presidential Committee on the Fourth Industrial Revolution (2017, p. 13).
Digital revolution of the Smart vehicles Future energy manufacturing industry
Smart factories, Advanced automotive vehicles, Smart power supply and efficient development/supply of advanced development of next-generation power consumption using AI manufacturing robots, drones, and leading autonomous manufacturing service platforms ship technologies Small-scale, decentralized renewable energy supply
Promotion of smartization in the Solution to problems such as Fostering of new industries in manufacturing sector traffic congestion and accidents smart energy
Smart logistics and distribution Smart agriculture and fisheries
Expansion of smart logistics centers, establishment Development of AI smart agriculture and fish farms, of automated smart ports and virtual shopping malls, smart agriculture robots, and supply and demand etc. prediction system for agricultural produce and fishery products
Improvement in smart logistics and distribution Increase value-add by utilizing data and robots efficiency
In particular, smart technologies can be used in public sectors to promote citizen welfare and safety and to protect environment and can be instrumental in resolving social problems. These technologies can also pioneer major service markets, eventually expanding and advancing the social safety net to advance society as a whole. An examination of the direction of recent energy policies in Korea shows that the nation is now focusing on strengthening the safety standards of energy facilities, laying the foundation (in the form of systems and institutions) for eco-friendly energy supply and demand, and expanding energy welfare. It is highly likely that the core general purpose technologies of the Fourth Industrial Revolution will be essential to helping Korea achieve its energy goals (Presidential Committee on the Fourth Industrial Revolution, 2017).
2. Status of Energy Policy Related to the Fourth Industrial Revolution53
In Korea, the New Energy Industry Policy is playing a central role in the digitalization of the energy sector and
53This section is a paraphrased summary of Yunjong Jang et al. (2017) pp. 859–863. the convergence of Fourth Industrial Revolution technologies. The term “new energy industry” refers to any problem-solving industry that is helping to effectively resolve major issues in the energy sector, such as climate change, energy security, and demand management (Inter ministerial group, 2015a, p. 2). The New Energy Industry Policy mainly involves the distribution of eight new industry business models54as well as government support for the introduction of advanced metering infrastructure (AMI), FEMS and BEMS, demonstration projects for smart grids, and the establishment of energy big data platforms.
The Korean government currently operates three main projects to support the new energy industry. The first is the New Energy Industry Infrastructure Project, which focuses on making FEMS and BEMS more widely available. Through this particular project, the government provides partial grants to cover the costs of installing systems that integrate ESS and other EMSs in industrial, commercial, and residential facilities.55 The second project, the New Energy Industry Financial Support Project, offers long-term, low-interest loans to companies that promote businesses in the new energy industry involving the use of new technologies and ICT. The third project is the Regional New Energy Industry Growth Project, through which the Korean government supports, in the form of fund matching, new energy business models devised by local governments (Korea Energy Agency, 2018a, pp. 275–281).
Ever since the Smart Grid Demonstration Project officially began in Jeju in December 2009, Korea has made consistent efforts to boost the establishment of smart grids through various plans and the revision of relevant laws.56 In its First Smart Grid Implementation Plan, the Korean government developed four main categories— systemic improvements, market creation, technological development, and infrastructure establishment—to propose measures to boost the implementation of smart grids (Inter ministerial group, 2012, pp. 13–14). This plan proposed the establishment of key infrastructure for smart grids, including AMIs, electric vehicle chargers, and ESS, and contained organizational elements to promote the systematic development of power-related IT technologies and related plans.
The Korean government also announced a plan, implemented in two phases, aimed at fostering Big Data related to energy (Ministry of Trade, Industry, and Energy, 2016b, pp. 1–2). The first phase of the plan focuses on vitalizing the new energy industry by collecting data owned by public organizations in the electric power sector, including the Korea Electric Power Corporation (KEPCO), power plants, and Korea Power Exchange, through the distribution AMI. The collected data is then provided to relevant parties through a Big Data platform named “Power Big Data Center.” The second phase of the plan focuses on expanding targeted forms of energy to gas and thermal energy, starting in 2017. Additionally, the second phase not only aims to provide the data collected via AMI through the Power Big Data Center but also information about the operation of energy sources managed by the Korea Gas Corporation. In terms of AMIs, the plan aims to first distribute power AMIs and later expand AMI distribution to include gas AMIs and to promote businesses that utilize these AMIs.57
Of the eight business models of the new energy industry, the one that is the most directly related to energy efficiency management is demand response, in which market participants can generate profits by selling the power they save at the power exchange. In 2016, the Korean government allowed demand response transactions for those with solar PV power generation facilities and, in 2018, revised the Electricity Utility Act to establish the legal framework needed to create a small-scale power brokerage market. These changes led to an increase in the number of market participants and resource capacity. However, currently, in the power brokerage market, transactions are centered on standard demand response (DR), which targets large-scale factories and buildings. In order to vitalize the market even more, it is necessary to diversify the types of market participants and encourage their active
54The 8 new industry business models include: demand response transaction, integrated ESS service, energy independent island, electric vehicles, utilization of thermal discharges from power plants, solar panel rental, zero-energy building, and eco-friendly energy town. 55As part of the FEMS Supply Project, the Korean government supported the establishment of Cloud FEMS at the National Industrial Complex at the Ansan Smart Hub in 2014, as well as the establishment of FEMS to expand green ICT in the steel industry and the establishment of FEMS for environmental facilities in factories. As part of the BEMS Supply Project, the government established networked BEMS (N-BEMS) for the integrated management of IT-based buildings and regions and distributed other types of EMS. 56This includes the establishment of the “National Roadmap for Smart Grids” (January 2010), the enactment of the Smart Grid Construction and Utilization Promotion Act (May 2011), and the establishment of the First Smart Grid Implementation Plan (July 2012). 57The Korean government plans to invest a total of KRW 2 trillion by 2022 to supply 20 million power AMIs and 16 million gas AMIs (Ministry of Trade, Industry and Energy, 2016a, p. 4). participation. Although a small-to mid-sized DR market was created in 2017 and the types of participants were diversified in 2018 via a national DR pilot project, continued efforts are needed to boost market participation. It is time for the Korean government to actively consider establishing more advanced business models and/or providing more incentives. Ultimately, it is necessary to encourage energy efficiency management based on economic feasibility by not only invigorating brokerage transactions that make use of virtual power plants (VPP),58 blockchain technology, or other Fourth Industrial Revolution technologies, but also by stimulating the P2P service industry.
Chapter 5. Designing a Policy Assessment Model with Technological Progression Considerations
Section 1. Overview of Energy Demand Management Policy in Korea
In terms of energy statistics in Korea, final energy consumption in the power mix is categorized into five different groups—industrial, transportation, residential, commercial and public sectors. However, in terms of energy demand for management policy, a different system is used to categorize final energy consumption; these groups are used in order to reflect the characteristics of various policies. Based on preliminary research and review, Kim Ji Hyo et al. (2015, p.49) proposed the following five categories—infrastructure, industrial, transportation, building, and equipment—as the sectors of final energy consumption. Of the five different categories of final energy consumption in the power mix, energy consumption in the residential, commercial, and public sectors tends to be focused largely on buildings, so in this study, we integrated these three groups into the single category of “buildings.” In addition, due to the importance of infrastructure in demand management policy, we classified infrastructure as its own group, and equipment as its own group, since many energy-using devices and facilities are commonly used in the commercial sector and in buildings.
The Korea Energy Agency (KEA) conducted a study on the status and performance of its major policies and programs that focus on energy and the reduction of greenhouse gases. The results of this study were published in the Korea Energy Agency Handbook (Korea Energy Agency, 2017), and this publication also uses the same classification system as in Kim Ji Hyo et al. (2015, p. 49). According to the handbook, there are a total of 57 major energy demand management policies and programs,5922 of which are in the industrial sector; of these 22 programs, nine are for buildings; four are for transportation; five are for equipment; and 17 are for infrastructure.60
In terms of the relationship between policies and systems, the targets and effects of various energy demand management policies are not mutually exclusive or independent. This means that if the demand reduction effect of individual policies and systems is calculated separately and then combined, there will be some degree of overestimation, as there is a lot of overlap. For example, the contents of the target management system (TMS) and emissions trading, which are key measures to manage energy demand and reduce greenhouse gases, overlap with the contents of the Funding and Tax Reduction Program, Investments in Energy-saving Facilities Policy, Mandatory Energy Diagnosis Program, Outstanding Power-saving Workplace Certification Program, Energy Consumption Reporting Program, and Green Credit Support Program for Large Enterprises and SMEs. Some of these policies and systems aim to help companies and building owners subject to the TMS or emissions trading to fulfill their obligations more easily. The Accompanied Growth Program in Energy for large enterprises and SMEs, the Green Credit Support Program for Large Enterprises and SMEs, and the Support Program for Target Management for SMEs and Middle-standing Enterprises are representative policies and programs that support SMEs and middle-standing enterprises that are subject to the TMS and help them meet their targets more easily.
Some policies and programs apply only to a single sector of final energy consumption, while others apply to multiple categories. For example, the Average Vehicle Energy Efficiency Program and the Tire Energy Efficiency and Rating Program only apply to the transportation sector; the Review Program for Building Energy-saving Plans and the Building Energy Efficiency Rating Certification Program only apply to the building sector; and, the Outstanding Power-saving Workplace Certification Program and the Energy Supporter Program only apply to the
58A virtual power plant is a power plant that aggregates the capacities of small distributed energy resources into a single energy profile. 59For specific details and achievements of policies and systems, refer to Korea Energy Agency (2017). 60Policies and programs related to the establishment of infrastructure include those proposed in “Chapter 7: Establishment of the Infrastructure for Reducing Greenhouse Gases” and “Chapter 8: Communication and Consensus” (promotion and education), of the Korea Energy Agency Handbook (Korea Energy Agency, 2017). industrial sector. The emissions trading scheme and the TMS, however, are programs that apply to both the industrial and building sectors. The Energy Efficiency Labeling and Standard Program, the High Efficiency Appliance Certification Program, and other policies and programs in the equipment category also apply to both the commercial and building sectors.
The main effects of energy demand management policies—i.e., the reduction of energy demand—can be achieved through changes to individual facilities and/or equipment or through changes in energy consumption behavior, or both. In some cases, certain policies and programs facilitate the seamless implementation of other policies and programs, and in other cases, policies and programs have an effect across multiple categories. In the next section, we will take these various characteristics into consideration and examine the methodologies used to calculate the amount of energy saved by energy demand management policies.
Section 2. Methods for Analyzing the Effects of Measures Designed to Reduce Energy Demand
1. Equipment and facilities: IPMVP
One method used for energy saving measurement and verification is the International Performance Measurement and Verification Protocol (IPMVP), developed in 1997(Seongin Lee et al., 2014, p. 19). There are different four measurement and verification (M&V) methods prescribed by the IPMVP, as outlined in Table 5-1, and each option uses a different measurement method and energy-saving estimation method.61Generally speaking, the energy- saving effect is calculated by measuring the energy consumption prior to the implementation of the energy-saving measure, which becomes the reference value, and subtracting the energy consumption after the implementation of the measure from the reference value. In addition to the energy-saving measure(s), other factors that influence energy consumption—such as the number of workers, use of buildings and facilities, and temperature changes— are taken into consideration to adjust the energy savings as necessary.
Table 5-1. Four Measurement and Verification (M&V) Options for Energy Conservation Using the IPMVP
M&V Option Category Contents
∙Savings are determined through the use ofpartial Measurement and measurements or existing data. Option A verification ∙Field or short-term measurements (conservation measure) Calculation of energy ∙Engineering calculations using measurements or savings existing data.
∙Savings are determined through the use ofshort-term or Measurement and continuous measurements. Option B verification ∙Monitoring of performance and operation factors (conservation measure) Calculation of energy ∙Engineering calculations using measurements savings
∙Savings are determined by measuring energy use at the Measurement and Option C whole building or facility level, using measurement data verification from energy suppliers. (components or whole facility) Calculation of energy ∙Analysis of energy consumption using techniques from savings simple comparison of utility bills to multivariate
61For more information on the M&V methods prescribed in the IPMVP, refer to Lee Seong-in et al. (2014). regression analysis
Measurement and ∙Savings are determined through the simulation of the Option D verification energy use (components or whole facilities). (components or whole facility) Calculation of energy ∙Energy simulation/modeling: utility billing data or savings end-use metering.
Source: EVO (2012, pp. 17–18), as cited in Seongin Lee et al. (2014, p. 23).
The IPMVP provides guidelines, as seen in Figure 5-1, to help researchers select a suitable option for calculating energy savings. These guidelines take into consideration whether the effects of the energy-saving measure are being influenced by other external factors, whether measurements can be taken directly, whether there are composite factors that affect energy savings, and whether baseline data is available. Options A and B focus on the performance of specific energy conservation measures (ECMs). When the energy use of systems affected by each ECM can be calculated using measurements from some parameters, Option A is used; when measurements from all parameters are needed, Option B is used. Options C and D are used when the performance of specific ECMs cannot be measured, and therefore, energy savings must be assessed at the whole-facility level. Option C is used when it is possible to secure measurement data, and energy savings are largely compared to the random or unexplained energy variations seen at the whole-facility level. Option D uses computer simulation to predict facility energy, and it is used when energy consumption either prior to or after the application of an ECM needs to be simulated.
Figure 5-1. Selection Process for IPMVP Energy-saving Calculation Options
Source: EVO (2012, p. 33)
2. Education and Promotion
Energy demand management policies that have relatively small budgets but are still able to have a great impact typically use educational and promotional campaigns and other measures to change the awareness and behavior of energy consumers, resulting in energy savings. However, these changes vary in scope and depth depending on the individual consumer, and they also vary in duration, occurring temporarily, intermittently, or continuously. As a result, it is difficult to quantify or assess the effects of behavior-based policies and programs via engineering calculations or computer simulations. Instead, there are two main methods used to assess the effectiveness of behavior-based efficiency programs: survey-based evaluations and experimental design evaluation(Mahone et al., 2011, p. 28).
Survey-based evaluations involve extracting a sample of participants in behavior-based energy demand management programs using statistical sampling methods and estimating the effects of the program through surveys. However, it is not easy to verify through survey techniques whether a participant’s behavior or actions have changed as a result of the program, and therefore, it is important to exercise caution in the survey design stage as well as in the data interpretation stage. Experimental design evaluations use control and treatment groups. The program being assessed is implemented to varying degrees in each group, and the differences between the two groups are statistically estimated.
3. Energy-economy Models
There are cases in which it is necessary to determine the policy effects of multiple demand management policies. For example, setting target demands in the process of establishing national plans, such as for the Energy Framework Plan or the Framework Plan for the Rationalization of Energy Use, involves creating scenarios that compare available energy demand management policy measures, calculating energy savings for each scenario, and setting target demand based on the calculation results. Target demands for legal plans such as the Regional Energy Framework Plan are also set using similar methods, and specific energy demand management policy measures are designed to meet those targets. There are also cases in which relevant policies must be comprehensively analyzed in terms of final energy consumption of certain types of energy. The Power Supply Framework Plan, for example, involves the analysis of electricity from among all the different energy types. In these and similar cases, analyses must be conducted not only on individual technologies, or individual technology sets, but also in consideration of demand and the total energy supply and demand. These cases may also need to take economic factors and other factors that have an impact on supply and demand into consideration.
Factors that determine energy supply and demand can be largely divided into two categories: market factors and technological factors. Depending on which type of factor will primarily be used to determine energy supply and demand, either a bottom-up or top-down energy economic model can be used. The bottom-up model specifically identifies and uses technological potential and energy supply technologies within the economy to determine the direct and indirect costs of various alternative technologies and their effect(s) on energy supply. The top-down model is used to determine energy demand using aggregate economic indicators, such as income and price elasticity, only taking into consideration the usable technologies that have been adopted by the market (Jaekyu Lim et al., 2013, p. 98).
The IPCC (2001) prescribes models—such as input-output models, macroeconomic models, computable general equilibrium models (CGE), dynamic energy optimization models, integrated energy-system models, and partial forecasting models—for analyzing the performance of energy-saving policies and greenhouse gas reduction policies (Jaekyu Lim , 2013, p. 95). In this section, we compared the three models that are often used to assess the impact of energy policies in Korea: the LEAP (Long-range Energy Alternatives Planning System) model and the TIMES (Integrated MARKAL-EFOM System) model, which are both bottom-up models, and the top-down CGE model. We also analyzed the working principles, strengths, and weaknesses of each model and selected the models that are the most suitable for assessing the effects of the energy efficiency policy presented in this study.
A. Review of Major Methodologies
1) LEAP
LEAP(Long-range Energy Alternative Planning System) is a tool centered on scenario analysis that was developed by the Stockholm Environment Institute(SEI)for the analysis of energy policy and climate mitigation (Jaekyu Lim et al., 2013, p. 104). In LEAP, scenarios are developed based on inclusive information about energy consumption behavior, reflecting assumptions about the economy, population, and certain costs. Using LEAP’s relatively elastic data structure, it is possible to develop scenarios with different combinations of energy consumption behaviors and technologies. This allows for the mid- to long-term forecast and analysis of energy supply and demand in targeted areas and countries. Given these considerations, LEAP can be effectively used as a policy analysis tool to study the impact of and problems related to energy-related policies, programs, investments, and measures implemented at the physical, economic, and environmental level.
Using LEAP scenarios, researchers can draw out business-as-usual (BaU) implications and forecast energy supply and demand in relation to various policies and programs. Once the forecasted results for each scenario have been calculated, the results can be used to analyze the impact of individual or comprehensive policies and programs.
LEAP consists of three different modules: economy modules, energy modules, and environment modules. Exogenous variables—energy consumption, energy transition and supply, which determine energy demand and supply, as well as a series of processes that determine greenhouse gas emissions and air pollution—are subsequently organized under these main modules (Seongin Lee et al., 2009, p. 38). Figure 5-2. Structure of a General LEAP Module
Source: Jaekyu Lim et al. (2013, p. 106).
Energy consumption, greenhouse gas emission, and energy saving policies
Environment Energy module Economy module module
1996 IPCC Final energy Transition Economic Research and emission activity households guidelines
Industrial Generation Gross Domestic PopulationNumber of Product (GDP) Residential Heat generation households Industrial Days of cooling/heating Commercial City gas structure production Transportation Value added Power Public/other transmission Energy price anddistribution Industrial characteristics
Total energy Energy consumption and greenhouse gas emissions
Each module uses different methods for calculation depending on its characteristics (Jaekyu Lim et al., 2013, p. 107). For example, any one of three methods can be selected to determine final energy consumption. The first method, known as “activity analysis,” is used to determine final energy consumption by calculating the activity level and amount of energy consumed per activity (or energy intensity), using the following formula:
[formula]
Energy demand = activity level X energy intensity The second method, “stock analysis,” is used when energy consumption heavily depends on the lifespan or “stock” of energy-using devices. In this method, final energy consumption is calculated by analyzing the stock of devices and the energy intensity per device, using the following formula:
[formula]
Energy consumption = stock of energy-using devices X energy intensity per device
The last method, transportation analysis, is used for calculating energy consumption in the transportation sector. In this method, energy consumption is calculated by multiplying the number of motor vehicles per model, fuel economy, and annual mileage, using the following formula:
[formula]
Energy consumption = number of motor vehicles X annual mileage X fuel economy
LEAP is advantageous because it is allows for the easy analysis and assessment of energy policy ideas and plans without the use of a separate analytical model. LEAP also has a preinstalled database, called TED (Technology and Environmental Database), and unlike other bottom-up models, it allows for the calculation of greenhouse gas emissions based on changes in energy supply demand and by sector and technology (Seongin Lee et al., 2009, p. 40). However, unlike macroeconomic models, LEAP cannot be used to analyze the effects of policies on GDP, employment, and other economic variables. It also cannot automatically generate optimum or market-equilibrium scenarios for analysis(Jaekyu Lim et al., 2013, p. 104). Another thing to note is that, for LEAP, the quality of the data input into each equation has a huge impact on the results (Seongin Lee et al., 2009, p. 40).
2) TIMES
The TIMES (The Integrated MARKAL-EFOM System) 62is an economic model that is typically used for generating regional, national, multi-regional, or global energy systems. It provides a technology-rich basis for estimating energy dynamics over a multi-period time horizon (Loulouet al., 2016, p. 9). Generally, this model considers the whole energy sector, but it is possible to generate models using individual types of energy, such as electricity or regional heating, when necessary.
The TIMES is a bottom-up model with specifically defined energy supply technologies, and it analyzes the impact of the introduction of various alternative technologies on energy supply and demand (Jiwoon Ahn, 2014, p. 24). Final demand, including energy demand, is treated as an exogenous variable, and the energy supply used to meet demand is determined by the model. The TIMES estimates energy and service demands and determines how other factors influence how these demands are met.
The TIMES energy economy is made up of producers and consumers of products and services such as energy carriers, materials, energy services, and emissions. The model assumes perfect competition, and the result is a supply-demand equilibrium that maximizes the net total surplus, which is the sum of the producer surplus and consumer surplus. However, researchers can also deviate from the model’s assumptions of perfect market competition by introducing limits to technological penetration as well as constraints on emissions, exogenous variables, oil prices, and other variables. Market imperfections can also be introduced in the form or taxes and/or subsidies.
The TIMES energy economy consists of three types of entities. The first is technologies (also called processes), which are the physical facilities, vehicles, or devices that transform commodities into other commodities. Mining processes and import processes are also included in this group, as well as activities that transform energy into demand services, such as conversion plants that produce electricity, energy-processing plants such as refineries, and end-use demand devices such as cars and heating systems. The second entity is commodities, which consist of energy carriers, energy services, materials, monetary flows, and emissions. A commodity is generally produced through one or multiple process(es) and is consumed by other process(es). The last entity is commodity flows, which are links between processes and commodities. The difference between a commodity flow and a commodity
62The development of TIMES was inspired by two bottom-up energy models: MARKAL (Market Allocation Model) and EFOM (Loulouet al., 2016, p. 9). is that a commodity flow is attached to a particular process and represents one type of input/output within a process. For example, electricity is a commodity, but electricity generated in a certain area at a certain time, during a certain period, using a certain type of wind turbine is a commodity flow.
Figure 5-3 shows the general structure of a TIMES model for a hypothetical single-energy service demand, namely residential heating. The figure shows three end-use heating technologies—gas, electricity, and oil—as energy carriers (commodities). These energy carriers are produced by other technologies, represented in the figure by one gas plant, three electricity-generating plants, and one oil refinery.
Figure 5-3. TIMES Reference Energy System
Source: Loulouet al. (2016, p. 19).
3) CGE Models
Computable general equilibrium (CGE) models are top-down models that are typically used for analyzing the impact of various energy or climate change policies. CGE models use comparative static analyses to assess policy impact (Böhringeret al., 2003, p. 2). Operating under the assumption that consumers and producers are making optimal rational choices to minimize costs and maximize utility, CGE models use data from the base-year economic structure to determine functions and constraints (Oh In-ha, 2011, p. 66). Once calibrated, these general equilibrium economic systems allow for diverse shock experiments. Therefore, in cases of external shock, such as seen in the implementation of regulations and/or policies, CGE models can simulate the macroeconomic impact of the shock by comparing the new equilibrium with the existing one.
CGE models build upon the general equilibrium theory, which uses the analysis of equilibrium conditions to determine the impact of behavioral assumptions on rational economic agents (Böhringeret al., 2003, p. 2). CGE models assume that the economy is made up of representative producers and consumers, and present an economic structure linking agents that use production and utility functions by entering different commodities and other input factors(Oh In-ha, 2011, p. 66). Under this type of model, a general equilibrium equation cannot be viewed as a mixed complementarity problem (MCP). The term “mixed” here refers to the mix of inequation and equation, and the term “complementarity” refers to the mutual relaxation of system variables and conditions. As a result, CGE is more advantageous when there is a clearly modeled regime shift between various alternative economic activities or constraints, such as discrete prices or the volume of commodities. In an MCP, the price function is derived by minimizing the costs for producers, and the expense function is derived by minimizing the cost for consumers. These two functions are then used to derive the demand function for commodities and other factors (Gyeongyeop Jo, 2014, pp. 18–19). Figure 5-4 illustrates the five main steps used to construct and implement a CGE model. In the first step, the policy issue must be carefully studied to derive the appropriate model design and required data. The second step involves using economic theory to lay out key economic mechanisms. The third step involves formulating data and the analysis model and also includes setting up an alternative policy or instruments to induce change, based on the reference situation (i.e., the defined scenario). The fourth step uses calibrations and computer simulations to create a new policy equilibrium. The last step of the process is the interpretation of the results.
Figure 5-4. CGE Analysis Procedure
Source: Böhringer et al.(2003, p. 17).
B. Selection of an Optimal Energy-Economy Model
In this study, we examined the LEAP, TIMES, and CGE models to determine which one was the most suitable for assessing the impact of energy demand management policy. A suitable model must have a flexible framework that can analyze technology-based programs as well as behavior-based programs. Given this need for flexibility, the TIMES was eliminated as the most appropriate model for analysis because it is optimized only for technological programs, not behavioral programs. Even when analyzing technology programs alone, it is important to review each model to see if it has the flexibility needed to analyze each specific supply technology within the system as well as multiple supply technologies for programs that are not focused on specific technologies, but rather on businesses or buildings, such as the Target Management Program or the Zero-energy Building Certification Program.
Top-down CGE models analyze changes in the level of economic activity and changes in economic activity driven by policy and the resulting reduction of greenhouse gas emissions (reduction in energy demand).63However, energy demand management policies focus primarily on influencing energy use by changing the energy-use behaviors of economic agents or technologies, rather than changing economic activities. Therefore, top-down CGE models are not suitable for assessing the energy efficiency policy system or calculating policy impact.
LEAP models, however, are suitable for the type of analysis needed in our study, because they allow for the detailed analysis of changes in energy consumption and greenhouse gas emissions, driven by reduction policies that lead to changes in the decision-making of economic agents (Jaekyu Lim et al., 2013, p. 102). Moreover, LEAP is a policy analysis tool that can be used to simulate the physical, economic, and environmental effects of energy policies, programs, investments, and behaviors. As a result, we selected LEAP as the most suitable tool
63Refer to Jaekyu Lim et al. (2013, p. 99). for creating an energy efficiency policy assessment system.
Section 3. System Created for Energy Policy Impact Analysis
1. Structure of the Energy Efficiency Policy Assessment System
We needed to design a system for assessing energy efficiency policy that could be used to analyze the impact of these: individual facilities and devices, behavioral changes spurred by educational and promotional programs, and comprehensive impact of multiple energy efficiency programs. To create a basis for this assessment system, we first created a database of various data input. Once we had an energy technology database, containing the technological characteristics of individual facilities and devices, and a user behavior database, containing period- of-use and load patterns, it was possible to perform engineering calculations to determine the amount of energy used and conserved by individual facilities and devices. The resulting database, containing information on the amount of energy conserved by facility/device enabled us to calculate the energy-saving effect(s)of energy efficiency policies and programs targeting such facilities and devices. Our energy use behavior database can be used as a basis for calculating the energy-saving effect of policies or programs that induce behavioral changes. Given our topic of study, it was also necessary for us to design an energy-economy model that included both individual devices and behavioral changes. Figure 5-5illustrates the conceptual structure of the energy efficiency policy assessment system we designed based on the aforementioned consideration. Programs that only target devices and facilities fall under the category of “facility and device programs.” Ex-ante reductions for each device or facility can be calculated using information on technological properties and user behavior for each facility and device. Based on these ex-ante reductions, it is possible to estimate the expected energy reductions of any program. Actual energy reductions achieved through program implementation can be calculated using the IPMVP options, and the verified reduction effect becomes an ex-post reduction. Using this process, data related to technological properties, costs, and user behavior, acquired through measurements, provides feedback to technological properties (energy technology database) or behavior information (user behavior database), allowing for the databases to be continually updated.
Figure 5-5. Step-by-step Structure of the Proposed Energy Efficiency Policy Assessment System
지역/국가통합효과분석 Regional/national integrated effect analysis 설비/기기공급통계 Facility/device supply statistics 에너지정책DB Energy policy database 프로그램별절감효과 Energy savings per program 계측DB, Billing DB 등 Measurement database, billing database, etc. 설문, 실험등 Surveys, experiments, etc. 설비/기기대상프로그램이행 Implementation of facility/device programs 행태변화프로그램이행 Implementation of behavioral change programs 설비/기기별절감량DB Energy savings per device/facility database 에너지기술DB Energy technology database 사용행태DB User behavior database
Certain policies target whole buildings or businesses without identifying any specific devices or facilities. The Target Management System, Emissions Trading Scheme, and Zero-energy Building Certification Program are examples of this type of policy, as are educational, promotional, campaign, and other policies that are aimed at inducing changes in consumer behavior. These policies often result in improvements in technological energy efficiency (i.e. in the form of switching to high- efficiency appliances or devices), or as improvements in physical or economic energy efficiency, (wherein consumers save energy without any improvements in technological efficiency).When these two types of effects (technological vs. behavioral) can be distinctly separated, IPMVP options can be used to calculate the improvements in technological energy efficiency, while survey-based assessment or experiment design assessment can be used to measure the impact of energy-saving behavior. The information acquired on technological properties and user behavior, achieved through these assessments, can be used as feedback to update the energy technology database and the user behavior database.
The analysis of integrated regional/national effect requires the use of an energy-economy model. Individual energy efficiency policies and programs target specific devices and facilities, and the number of devices and facilities are determined based on a budget. However, the ex-ante assessment of the impact of national or regional policies requires separate supply statistics for devices and facilities in the target region.
The state of California in the United States has a well-established system for assessing the impact of energy demand management policies. The state government has developed and provides database information on the energy of different facilities/devices according to each energy-saving program. As seen in Figure 5-5, these databases are maintained over a long period time and are updated annually. The California Public Utilities Commission (CPUC) calculates ex-ante savings when facilities and/or devices under specific energy demand management policies are replaced with high-efficiency versions, and provides the results of these calculations through DEER(Database for Energy Efficiency Resources), which is accessible through the READI(Remote Ex- Ante Database Interface).64The CPUC also operates the California Energy Efficiency Statistics data portal, which provides information of the effects of energy demand management programs implemented by investor-owned utilities (IOUs) as well as information on the gross energy savings, demand reduction, GHG emissions reduction, and cost efficiency of each program.65This database is updated every quarter based on the information submitted by IOUs. The CPUC calculates the ex-ante energy savings per device and ex-post energy savings and cost effectiveness of each program and uploads this information onto databases. The database is regularly updated by the commission through the continuous assessment and improvement of the performance of different policies implemented in California.
Figure 5-6. U.S. California Energy Efficiency Statistics Website
64DEER website,(http://www.deeresources.com/index.php/deer-versions/readi),last accessed October 16, 2018. 65 California Energy Efficiency Statistics website,(http://eestats.cpuc.ca.gov/Views/EEDataLandingPage.aspx), last accessed October 16, 2018.
Source: California Energy Efficiency Statistics website, (http://eestats.cpuc.ca.gov/Views/EEDataPortal.aspx),last accessed October 16, 2018.
2. Reflection and Use of Fourth Industrial Revolution Technologies
As mentioned previously, Fourth Industrial Revolution technologies are expected to be increasingly used to connect and systemize energy-using devices via the IoT, enabling the real-time monitoring and remote control of different facilities/devices, and eventually evolving in the direction of autonomous control and the optimization of energy consumption. In line with this movement, energy efficiency-related policies, created using quality information generated in real time, can be used to improve overall energy efficiency. Although policies that induce changes in energy-using behaviors are more important in the initial stages of the Fourth Industrial Revolution, policies that focus on supply systems are expected to increase in importance once autonomous control technologies have been perfected that can optimize energy use.
With the systemization of energy-using devices, policies are expected to become more complex. Therefore, systems for assessing the effects of energy efficiency policies should be able to reflect the characteristics and direction of Fourth Industrial Revolution technologies and their related policies. First, energy technology databases and user behavior databases should be flexibly designed to quickly reflect data measured in real time and be updated accordingly. In terms of technological characteristics, in the past, data was collected in laboratories; however, technology is evolving and data is increasingly collected in the field and through the use of sensors in the user environment. Databases must be able to adapt to these changes and be updated regularly. In this same way, in the past, user behavior data was mainly dependent on surveys and engineering estimates; in the future, this type of data will be increasingly gathered from the user environment. Since user environments are not uniform, it is important to establish databases that can gather and link data from various user environments.
Second, the assessment of energy savings at a system level, not just for individual facilities/devices, will become increasingly important with the progression of the Fourth Industrial Revolution. Even though energy savings still focus primarily on individual devices, in the future, it will be important to assess the net energy savings achieved through optimization. This can be done by taking into consideration energy increases resulting from the additional of autonomous control devices and other devices that needed to operation the total energy system of the future.
Third, the assessment of energy savings stemming from behavioral changes must reflect the effects of the continuous flow of data. In the past, data provided to consumers was updated only once or infrequently at best; however, in the future, consumers will face a continuous and diverse flow of information provided in real time. As a result of these data trends, different behavioral patterns are expected to emerge in more dynamic and diverse ways. Lastly, the topic of behavioral changes is ultimately expected to be merged into the area of system optimization. As explained earlier, in the autonomous control phase, which is the last phase of the convergence of Fourth Industrial Revolution technologies, systems will be able to optimize energy use and save energy without consumers directly controlling the systems.
As we’ve examined so far, designing an energy efficiency management system in an environment characterized by the broadening application of Fourth Industrial Revolution technologies and the systemization of energy-using devices requires taking net energy savings into consideration in order to minimize the risk of policy failure. Therefore, assessing energy efficiency policies will become even more important in designing energy efficiency management systems in the future. It is our hope that the assessment systems developed annually as part of this project can be used as a basis of analysis for designing a rational and effective energy efficiency management system to better help Korea prepare for the age of Fourth Industrial Revolution. In addition, we aim to use our research to analyze the performance of the current energy efficiency management system and use our analysis results to develop and improve the system.
Chapter 6. Policy Implications
In this study, we examined the core technologies of the Fourth Industrial Revolution and their impact on energy efficiency, as well as the trends of energy-using smart devices and improvements in energy efficiency. We also examined the energy efficiency management programs implemented in Korea and the responses to the Fourth Industrial Revolution seen both in Korea and abroad. This chapter will provide a comprehensive review of the results of our analysis and draw out policy implications.
First, with the rapid evolution of the Fourth Industrial Revolution, a paradigm shift is required for energy management policy and related systems. The improvements seen in society, based on science and technology, are not necessarily in proportion to the scientific and technological advancements actively being achieved. Technological improvements can only be effectively implemented in a society when the society creates an environment that easily accepts and applies such technologies, allowing the relevant technologies to be widely used and broadly applied to various fields. Therefore, no matter how advanced certain technologies are, their use is limited if society is not yet ready to accept them. It is clear that the Fourth Industrial Revolution, the effects of which are currently spreading throughout society, must be accompanied by social changes. The energy sector, in particular, deeply affects our daily lives, and, in the future, our energy patterns are expected to become more eco- friendly and highly efficient. Therefore, energy must be seen not only from the perspective of individual energy- using devices or facilities, but rather at a system level. The energy management paradigm in buildings (including residential buildings), factories, cities, and industrial complexes will eventually undergo a shift. At the present time, it is necessary to review the various programs and regulations currently being implemented to ensure that technological development in the energy sector is headed in the right direction and promotes the seamless convergence of the energy sector with other technologies and industries. In the past, industrial revolutions began when countries readily shed outdated paradigms and accepted and adopted new paradigms. In this same way, it is important for Korea to depart from its existing framework and promote a paradigm shift in the energy sector marked by communication and openness.
Second, we must standardize digitalized energy-using devices and technologies and lay a foundation to expand current efficiency management policies, adopting a whole system approach instead of targeting individual devices. The International Organization for Standardization (ISO) is developing, implementing, and distributing various international standards for energy efficiency. Major standards include the Energy Management System (EnMS) ISO 50001 series and Energy Performance of Buildings (EPB) ISO 52000 series. In addition, the ISO has formed a joint technical committee (ISO/IEC JTC 1/SC 39: Improving the Energy Efficiency of ICT Products and Technologies) to develop standards for IT and technical committees. These committees are being formed for the development of standards related to industrial products and processes, including ISO/TC 117 (Fans), ISO/TC115 (Pumps), and ISO/TC 184 (Automation Systems and Integration).The International Electrotechnical Commission (IEC) is also promoting energy efficiency standards for integrated equipment and systems related to power generation, transmission, and consumption. By supporting a system approach instead of focusing on individual technologies and/or devices, the IEC is also developing new standards for integrated technologies through the collaboration of technical committees. For electric motors, one type of major energy-using device, the IEC has expanded its energy efficiency measurement methods and standards from electric motors to electric motor systems.
Figure 6-1. Expansion of IEC Energy Efficiency Measurements and Standards from Electric Motors to Electric Motor Systems
Source: IEA 4E (2015, p. 2).
Recently, the ICE established the Advisory Committee on Energy Efficiency (ACEE) within the Strategic Management Board (SMB)to handle energy efficiency issues commonly experienced by different technical committees and to provide guidelines for energy efficiency standardization, as well as for the coordination and adjustment of related activities. The ACEE recommends, promotes, and supports a systems approach to the standardization of energy efficiency. Compared to other developed countries, Korea is only in the initial stages of setting a direction for the standardization of energy efficiency and related technologies and products. Therefore, in order to support its transition to a new smart industry, it is necessary for Korea to build an acceptable and intelligent energy framework for home appliances and smart devices through the application of AI technologies. Decentralized ultralight demand management protocol is a basic protocol (i.e., Internet TCP/IP) that can be used for this framework, and once it becomes an international standard, it is expected to create a profound ripple effect in the industry.
Third, smart devices and IoT devices should be included in the energy efficiency management system, and the management system should shift its focus away from individual devices to the overall system. Electronic appliances are becoming digitalized and combined with IoT technologies, and energy-using products are also expected to become smart products. Smart thermostats, smart outlets, and individual monitoring and control devices can now display energy consumption information, and it is now possible for consumers to directly monitor their own energy use. Meters, communication devices, and other basic components of IoT technologies consume greater amounts of standby power than their conventional counterparts. In the future, the rapid increase of IoT products is expected to result in a rise in power consumption, making it even more important to effectively manage the energy efficiency of Fourth Industrial Revolution devices.
Table 6-1. Standby Power for Smart LEDs and Home Automation Devices
Gateway needed? Communication Standby power ID/Manufacturer method (W) Smart LED bulb 1/A No Wi-Fi 3.0 Smart LED bulb 2/B No Bluetooth 0.8 Smart LED bulb 3/C No Bluetooth 0.7 Smart LED bulb 4/D Yes ZigBee 0.8 Smart LED bulb 6/E Yes ZigBee 0.4 Smart LED bulb 8/F Yes ZigBee 0.6 Gateway 5/D _ Wi-Fi 1.4 Gateway 7/E _ Ethernet 1.7 Gateway 9/F - Ethernet 1.7 Gateway 10/G - Wi-Fi 3.3 Gateway 11/H - Prop. wireless 1.8 Gateway 12/J - Ethernet 1.7 Gateway 13/K - Ethernet 1.2 Actuator 14/K Yes 6LoWPAN 0.4 Actuator 15/J Yes Prop. wireless 1.0 Actuator 16/J Yes Prop. wireless 0.6 Actuator 17/J Yes Prop. wireless 0.5 Actuator 18/F No Wi-Fi 1.5 Actuator 19/L No Ethernet 3.6 Actuator 20/M No ZigBee! 0.6 Actuator 21/N - Ethernet/Wi-Fi 2.6 4.1 Camera 22/F No Wi-Fi 2.4 ∼ Camera 23/O No Wi-Fi 2.1 Source: EDNA (2016, pp. 20–21).
The digital devices and major devices that are necessary for maintaining a system network consume a fair amount of standby power. Although gateways are the only products currently covered under the e-Standby Power Program implemented in Korea, it is also necessary to include smart thermostats, smart outlets, smart lighting equipment, sensors, actuators, and other major smart home devices in the e-Standby Power Program to minimize energy consumption. Korea’s current Energy Efficiency Labeling and Standard Program targets individual products and devices. However, it is also necessary to introduce an energy efficiency rating system for smart home systems to maximize energy efficiency in the residential sector. In order to promote the widespread introduction and use of smart homes, consumers must be provided with sufficient information about the net profits that can be gained by installing a smart home system. This type of information can only be secured by using reliable measurement methods that accurately identify a smart home system’s energy consumption in real life. To increase information reliability, an energy efficiency rating system for smart home systems should be introduced once other prerequisites, such as the standardization of smart homes and energy savings effect, have been met. A smart home system consists of a variety of technologies and methods, and new technologies are continuously emerging, making it even more important to establish standards that can be applied to all smart homes. The standardization of smart homes must also be extended to include the standardization of demand response programs, which, in the future, can be applied to the residential sector; standardization should also be expanded to include electric vehicles. Generating power for homes using PV or renewable energy and selling the surplus energy can create a series of complex problems; therefore, it is also necessary to establish technological standards that take all related factors into consideration. At a systems level, it is also necessary to expand energy management to buildings, factories, cities, and industrial complexes.
Fourth, energy efficiency criteria should be created for products that use smart technologies. The distribution of smart devices with ICT technologies is rapidly growing. Markets and Markets (2015)66predicted that the smart device market will be valued at USD 37.2 billion by 2020and grow at an annual rate of 15.4 percent from 2015 to 2020. According to this same forecast, smart homes and smart kitchens are expected to play a vital role in the smart appliances ecosystem. As the appliance product and equipment markets continue to rapidly change, major countries around the world are accelerating their efforts to establish regulations on the energy efficiency and performance of smart appliances. In 2016, the United States added smart thermostats to its list of appliances covered by the Energy Star Program and proposed standards for their energy efficiency and performance. Google Nest’s smart thermostat subsequently became the first smart thermostat ever to earn the Energy Star label. The Energy Star Program, which is jointly run by the EPA and the DOE, is a voluntary program. The US DOE also enforces mandatory energy efficiency regulations, and the fact that the DOE is currently conducting research on
66Markets and Markets website, (https://www.marketsandmarkets.com/Market-Reports/smart-appliances- market-8228252.html),last accessed November 11, 2018. the regulation of the energy efficiency of smart appliances/equipment is expected to bring about considerable changes. The EU is also conducting research to implement efficiency regulations for smart devices through its mandatory energy efficiency policy, Ecodesign. The IEA has also established the Connected Device Alliance (CDA), which consists of government organizations in charge of energy efficiency in member countries, to propose energy efficiency principles and performance standards for smart devices. Korea, however, is lagging behind other advanced countries in its efforts to establish energy efficiency standards for smart appliances. It is imperative for Korea to begin researching and discussing the establishment of efficiency standards for smart appliances.
Fifth, the scope of energy efficiency management policies should be extended to cover buildings and industrial equipment, not just home and office appliances. In 2009, the EU replaced its Ecodesign Directive (targeting energy-using products, or EuP) with the Eco-related Products Directive (targeting energy-related products, or ErP). While the Ecodesign Directive only applied to products that directly consumed energy, the new directive also applies to products that directly and indirectly affect energy consumption. As a result, bathroom fixtures, such as faucets and showers, windows, and other products that do not use energy but indirectly affect energy consumption, are included on the list of products subject to efficiency regulations. Currently, as of 2018, the ErP Directive covers more than 40 products in 25 product groups. The US also has a considerably wide range of products that are subject to energy efficiency standard regulations. The MPS covers over 60 products, which represent 90 percent of the energy used in homes, 60 percent of the energy used in commercial buildings, and 30 percent of the energy used in industrial facilities. These energy efficiency standards not only apply to energy-using devices but also to products that affect energy consumption, such as faucets, showerheads, toilets, urinals, cleaning sprays, and other products that use water. In addition, the US also operates two energy labeling programs, instituted to provide product energy efficiency information to consumers. These programs are the EnergyGuide Program, which is operated by the DOE and covers 12 product groups, and the Energy Star Program, which is operated by the EPA and covers 75 product groups. Japan has also been able to achieve considerable energy savings and is known as having the world’s highest level of energy efficiency regulations for energy-related products. Japan’s Top Runner Program identifies the highest level of energy efficiency for each product group and sets that level as the minimum standard that all products in the same group must achieve within a certain period of time. By setting such high standards, this program aims to eliminate less energy-efficient products from the market. Compared to the EU, US, Japan, and other major countries around the world, Korea applies efficiency regulations to fewer energy-related appliances and materials, and the number of affected appliances/materials is decreasing all the time. From 2015 to 2016, Korea removed nine products—freezers, dishwashers, dish dryers, ballasts for fluorescent light, electric blankets, electric water-heated mattresses, heating boards, electric beds, and electric radiators— from its Energy Efficiency Labeling and Standard Program. The product groups covered by the High Efficiency Appliance Certification Program, which is similar to the Energy Star Program in the US, also decreased from 45 in 2015 to 21 as of August 2018. In order to create a sustainable society by meeting the GHG reduction target and improving energy security, it is important for Korea to more actively introduce energy demand management policies and, particularly, to strengthen the efficiency system for energy-related appliances and materials. It is also necessary for Korea to expand its scope of high-efficiency products that need to be continuously managed as well as apply energy efficiency standards to industrial equipment and appliances. The United States’ MEPS covers 30 percent of industrial energy-using appliances; the EU is continuously expanding the scope of its directive to include industrial products as well, with 40 percent of CO2 emitting products currently covered by the mandatory Ecodesign regulations. Similarly, South Korea must expand the scope of its mandatory energy efficiency standard system to include more industrial products. In 2017, the industrial sector was responsible for 61 percent of final energy consumption; therefore, it is necessary to reinforce energy efficiency regulations for industrial products. In Korea, industrial appliances as well as building facilities and equipment are managed by the voluntary High Efficiency Appliance Certification Program. In the United States, however, 25 industrial and commercial product groups are subject to the mandatory energy efficiency regulation, the MEPS. The EU also includes welding equipment, commercial washing machines, enterprise servers, industrial/laboratory furnaces, office lighting equipment, and commercial refrigerators and freezers in their Ecodesign Directive. Korea should also consider moving many of the products currently under the High Efficiency Appliance Certification Program to the MEPS instead.
Sixth, energy efficiency standards need be adjusted regularly. The EU, United States, and Japan regularly strengthen their efficiency standards. As examined in this paper, Japan’s Top Runner Program is one of the strictest energy efficiency regulations in the world. Since the products with the highest energy efficiency performance set the standard for the product group, the target efficiency value is upgraded automatically with improvements in technologies. As a result, Japan has greatly improved the energy efficiency of its products as well as its energy efficiency technologies. As for Europe, the EC decided to revert from the A+++ to D rating scale back to the A to G scale in June 2017, as the A+++ rating scale was criticized as being too confusing to consumers by granting Grade A to too many products. The new rating system will be implemented in January 1, 2019, and products with the current A+++ rating will be given a B rating, leaving the list of Grade A products empty during the initial phase of the transition. Products will be reevaluated, and the ratings will be adjusted only when 30 percent or more products have received an A rating, or 50 percent or more products have received A or B ratings. Since 2011, the United States has been awarding the Most Efficient Energy Star designation to products with the highest efficiency. This program was designed to help high-efficiency products enter the market quickly by updating the list of most energy efficient products. The EPA reviews the standards for the Most Efficient designation and announces new standards every year. The standards for individual products are set based on the analysis of certified Energy Start products and the DOE’s engineering analysis of the product group. Selected through the application of such standards, the Energy Star Most Efficient appliances are considered to be the best of the best. In 2018, the EPA announced its standards for the 2019 Most Efficient products and added televisions to the list, increasing the number of Energy Star Most Efficient product groups from 13 to 14 (EPA, 2018, p. 1).
As previously mentioned, Japan and the US both have a labeling program for their best energy efficient products. The EU is also making efforts to change its energy efficiency rating scale to reflect the progress in energy efficiency technologies and to help consumers better understand the energy efficiency of the appliances they purchase. Korea needs to consider adopting a high energy-efficiency label program in addition to its current labeling program and/or introducing strong efficiency standards similar to those seen in Japan’s Top Runner Program. In addition, it is important to adjust energy efficiency standards regularly to respond to technological progress. Regular adjustment of such standards is expected to contribute considerably to reducing GHG and energy consumption, and also dramatically improve the technologies applied to energy-using and energy-related devices.
Seventh, it is necessary to provide personalized information to consumers. Major countries operate websites that allow consumers to compare the energy efficiency and performance of different products; this is done in an effort to encourage the consumption of high-efficiency appliances. The EU’s Topten Act provides information for energy-using products that has been customized for each of the 16 participating countries. Consumers who wish to purchase certain products can visit the Topten website67 and search for products by brand, electricity costs, energy efficiency rating, energy consumption (KWh/year), and available country and can also compare the detailed specifications of different products. In 2014, China introduced the use of QR codes as part of its pilot program, in which consumers use QR codes affixed to products to look up detailed information about each product’s energy consumption and functions. In June 2016, China announced a new design for its energy efficiency label, the China Energy Label (CEL) that includes QR codes. In 2012, South Korea also began the operation of a price comparison site for energy efficiency products called Hyoyulbada (literally, “Efficiency Ocean”). Available on the Korea Energy Agency’s efficiency labeling website, Hyoyulbada provides information on products listed by manufacturer and brand. However, due to people’s lack of awareness of the site and its limited accessibility, the website has not been very effective. In order to improve the use of Hyoyulbada, it is necessary for the government to make efforts to improve people’s awareness of the site and increase its accessibility. At the present time, the website is largely inaccessible, particularly when compared to the EU’s Topten website or the QR code on the CEL. It is particularly problematic that search results for Hyoyulbada on Google or Naver do not actually lead to the site or information about how to access the site. Therefore, the government should consider creating a separate website or mobile apps for Hyoyulbada or integrating QR codes on the efficiency labels similar to the CEL. In addition, it is important to provide more specific information for consumers on the efficiency labels. For instance, energy efficiency labels on air conditioners, which account for a large portion of utility bills in the summer, currently display expected monthly and annual electricity costs, but the costs may differ considerably depending on the temperature setting and hours of operation. Therefore, it is necessary to show how the expected electricity cost displayed on the label was derived. Noise level and performance of electric appliances are also important factors that impact energy consumption and consumer satisfaction. The EU and the United States apply energy efficiency standards without impeding product functions and performance. Similarly, it is important to take performance-related factors into consideration when determining energy efficiency standards.
Lastly, since individual monitoring and control devices allow users to monitor the energy use of individual devices, it is important to strengthen efficiency verification systems and provide information that is closer to the actual environment in which the devices are used. With the application of measurement and IoT technologies, it is becoming easier to measure the energy consumption of home appliances, heating and cooling equipment, and
67Topten Program website, (http://topten.eu/) other appliances in real time. However, the significant gap between the energy consumption displayed on the efficiency labels and the actual energy consumption has undermined the program’s credibility. From 2016 to 2017, the EU invested EUR 400,000 over the course of 18 months to conduct an extensive investigation of the energy efficiency of electric and electronic appliances sold in the EU. The survey revealed that a large number of appliances actually consume a lot more energy in reality than the information displayed on their labels. The results showed that televisions, dishwashers, refrigerators, and freezers consumed up to twice the amount of energy than listed on their energy labels. 68The EU expected ecodesign innovations to cut around 9 percent of the EU’s emissions by 202 and 15 percent by 2030, while saving consumers nearly EUR 500 per year in energy costs. However, this survey showed that the goal of ecodesign was to ensure that ecodesign products achieved their expected energy consumption levels under real-world conditions. As a result, people in the EU are arguing that energy efficiency tests for appliances should be reformed to reflect real-world conditions. The difference between the expected energy consumption advertised on energy labels and actual energy consumption has become an important issue in the United States as well. To address this problem, the Energy Star Program adopted a third- party certification program. Manufacturers who wish to have Energy Star labels affixed to their products first need to have the products tested at EPA-recognized laboratories, and the results have to be verified by an EPA- recognized certification body. However, despite such measures, a lot of test results still show differences between the energy consumption displayed on labels and the energy consumption in real-world conditions. According to The Guardian, a 2016 study conducted in the United States showed that energy consumed by Samsung and LG televisions sold in the United States rose by 45 percent in actual conditions outside of testing laboratories. It is necessary to improve the credibility of the information on energy efficiency labels by reflecting energy consumed under real-world conditions in order to secure consumer confidence in Korea’s energy labels and so Korean products sold around the world can maintain their competitiveness.
68 The Guardian website, (https://www.theguardian.com/environment/2017/jun/21/domestic-appliances-guzzle-far-more- energy-than-advertised-eu-survey),last accessed October 26, 2018. References
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Sunghee Shim, Jaekyu Lim, Seongin Lee, Kihyun Park, Taehyun Kim, Jongik Kim, Junhong Ahn, and Jinyeong Kim, 2014, “A study on the establishment of an electricity and energy demand management plan for stable power supply and demand,” Ministry of Trade, Industry and Energy Policy Research Paper, Korea Energy Economics Institute.
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Taehwan Yoon, 2017, “Energy fintech and prosumer service,” Root Energy.
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Seongkeun Lee, and Seongin Lee, 2008, “A study on the reform measures for national energy saving and efficiency improvement promotion system: assessment of energy efficiency in the residential and commercial sectors,” Basic Research Paper 08-10, Korea Energy Economics Institute.
Seongin Lee, 2011, “Research report on the development of statistics on the distribution of energy-using device,” Research paper commissioned by the Korea Energy Management Corporation, Korea Energy Economics Institute.
Seongin Lee, and Jihyo Kim, 2016, “A study on the strategies for promoting energy demand management in connection with ICT-based convergence technologies (year 2),”Basic Research Paper 16-33, Korea Energy Economics Institute.
Seongin Lee, and Changhoon Kim, 2014, “Establishing a national energy saving policy assessment system: policy effect analysis models and methodologies,” Basic Research Paper 14-34, Korea Energy Economics Institute.
Seongin Lee, Changhoon Kim, 2017, “A study on energy demand management strategies and the change in the future technological, social, and economic structure,” Basic Research Paper 17-35, Korea Energy Economics Institute.
Seongin Lee, Myungkyoon Lee, Byeonggeun Hwang, 2009, “A study on the greenhouse gas emissions calculation method for regional industrial sectors using bottom-up models,” Policy Research Paper 09-19, Korea Energy Economics Institute.
Seongin Lee, and Jiyeon Lee, 2013, “Establishment of a national energy saving policy assessment system: policy effect analysis models and methodologies (for industrial and transportation sectors),”Basic Research Paper 13-29, Korea Energy Economics Institute.
Jaekyu Lim, Seongin Lee, Choolim Kim, Kihyun Park, Jihyun Lee, 2013, “Development of strategies for the promotion of mid- to long-term energy demand management policies and energy saving measures per sector,” Ministry of Knowledge Economy Policy Research Paper, Korea Energy Economics Institute.
Yunjong Jang, and Seoggwan Kim, 2017, “Economic and social shock of the Fourth Industrial Revolution and response measures: policy task for the accompanied development of technologies and society,” National Research Council for Economics, Humanities and Social Sciences Future Society Joint Research series 17- 19-01, National Research Council for Economics, Humanities and Social Sciences.
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2. Overseas
ACEEE, 2011, “How Does Energy Efficiency Creates Jobs?”, ACEEE.
ACEEE, 2018, “Energy Impacts of Smart Home Technologies”, ACEEE.
Baatz, B., 2015, “Everyone Benefits: Practices and Recommendations for Utility System Benefits of Energy Efficiency”, ACEEE.
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IEA, 2010, “Energy Efficiency Governance, IEA.
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IEA 4E, 2015, “Energy Efficiency Roadmap for Electric Motors and Motors Systems”, IEA
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ABB website: (http://new.abb.com/news/detail/4425/abb-launches-the-worlds-first-digitally-integrated-power- transformer, last accessed November 7, 2018).
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Seongin Lee
Research Fellow, KEEI
Major literary works and theses
“A study on the calculation of demand management target and performance assessment of the 8th electricity demand supply program,” Korea Electric Power Corporation, 2017.
“A study on the general plan for demand management to address climate change,” Ministry of Trade, Industry and Energy, 2016.
Jinyoung soh
Senior Research Fellow, KEEI
Major literary works and theses
“A study on the economic feasibility of solar and wind power generation in consideration of system stability,” Korea Energy Economics Institute, 2014.
“Analysis of the impact of progressive electricity tariff reform on the renewable energy market,” Korea Energy Economics Institute, 2017.
Basic Research Report 2018-26 A Study on Mid- to Long-Term Development Directions for Energy Efficiency Management in the Age of the Fourth Industrial Revolution (1/3) Printed on: December 30, 2018 Issued on: December 31, 2018 Written by: Seongin Lee & Jinyoung soh Published by: Yongseong Cho Publishing company: Korea Energy Economics Institute (KEEI)
405-11, Jongga-ro, Ulsan, 44543
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Registration issue: Issue No. 7 / December 7, 1992
Printed by: Gathering All Business Solution & Design (051)911-9890
ⓒ Korea Energy Economics Institute 2018 ISBN 978-89-5504- 684-7 93320 *
Copies with any damages or flaws may be exchanged. Price: KRW 7,000
The main contents, such as the policy alternatives included in this study, do not reflect the official opinions of the Korea Energy Economics Institute, but reflect the opinions of the researchers themselves.
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