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A Study on Mid- to Long-Term Development Directions for Energy Efficiency Management in the Age of the Fourth Industrial Revolution (1/3)

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A Study on Mid- to Long-Term Development Directions for Energy Efficiency Management in the Age of the Fourth Industrial Revolution (1/3) 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,
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