Collaborative Business Frameworks to Accelerate Uptake of Energy Efficiency Measures

These barriers are not specific to ship types or contractual constructs between multiple parties of influence, and are common across the industry. Well known barriers are:

• Misaligned incentives between stakeholders having influence on a ship’s energy efficiency upgrade/ retrofitting i.e. diverging approaches to ships’ technical or operational energy efficiency between ship owner, ship charterer, cargo owners, and technology provider.
• Complicated and challenging performance guarantees across original equipment manufacturers (OEM), shipyards, ship owners and charterers. This is due to the lack of transparency and standardization of the calculation principles for creating accurate business cases and for verification of benefits from energy efficiency measures implemented, and due to poor data quality and sharing practices amongst stakeholders.
• Ambiguity of roles and responsibilities among stakeholders to ensure a continuous optimal performance of energy efficiency measures after its installation and during its operational lifetime.

Validation of ships’ performance at delivery from newbuild yard is reasonably well verified and documented through towing tank tests, computational fluid dynamic (CFD) tests, sea trials and engine shop tests. However, the lack of data quality and transparency about a standardized method for measuring the performance of installed EEMs in-service makes it difficult to create correct and accurate business cases for EEMs as well as to verify the benefits post installation. Consequently, there is no platform for ship owners, charterers, OEMs, cargo owners, and technical managers to share the incentive to accelerate the improvement of an existing fleet’s energy efficiency through retrofits or operational optimization.

The problem described here is not unknown to the shipping industry. It is intermittently addressed either by specialized teams within larger ship owners or charterers, that can drive the required collaboration or by green technology businesses that offer solutions such as fleet screening for emission saving potentials from energy efficiency technologies; propose technical design-solutions, manages or supervising the hardware installations; and/or analysis of the performance of technologies with regards to the most optimal utilization. It is believed that the time is right to elevate best-practices from the few major ship owners, charterers, and green technology businesses into the wider industry and build a new standard adoptable by the many rather than the few. The need to steeply reduce greenhouse gas emissions from international shipping to limit their long-term impact on global warming, combined with the Center’s position as a neutral party in the maritime eco-system creates a unique opportunity for the wider industry to initiate a collaboration aiming to issue best-practices, standards, and business frameworks which they can adopt.

The target output audience are the “followers” and “conservatives” (as described in Figure 2) that need guidance for developing their EE deployment processes.

The project is divided into two phases. Each phase has its own objective.

Objective of Phase 1:

The project will map the current best practice processes of industry “frontrunners” in the energy efficiency deployment process. Through interviews with the Center’s partners, the project aims to identify and describe what is a standard “best practice” process for EE deployment among “frontrunner” stakeholders today. The blueprint will cover the process from screening of a fleet and technology screening to developing ship-specific business cases. This will guide “followers” and “conservatives” on which key elements from this process will they need to include in their strategical decision-making process. In addition, mapping of current best practice process will also help identify gaps and opportunities where the Center can focus on improving and expanding the processes.

Objective of Phase 2:

Develop a generalized step-by-step methodology (blueprint) to guide its user through the process of understanding the energy efficiency improvement potential of their fleet at an adequately detailed level. This understanding will enable them to focus efforts and investments where the energy efficiency abatement cost is the lowest. The blueprint is intended to guide the user in:

• Process initiation from various strategical motivational scenarios and appetite for investment risk, financial and technical uncertainties, and commercial constraints.
• Technology screening process to shortlist an extensive list of potential energy saving devices — bundled into packages depending on ship-specific needs — that yield the desired outcome at the lowest cost.
• Saving estimates from technologies and how they can be translated into in-service savings.
• Potential savings and impact on carbon levies generating expected input for ship specific business cases with a detailed analysis.

The objectives of this project are to collaborate with project partners on:

• researching pre-selected energy-efficient technologies for ships
• creating business cases for energy-efficient investment
• accurately determining the effect of energy-efficient measures on energy supply and demand
• developing a commercial investment-benefit-sharing framework for stakeholders.

The project also aims to establish best-practice procedures in the following areas:

• shared investment structures
• roles and responsibilities of stakeholders (to ensure the potential of EEMs is maximized after implementation and the EEMs are safeguarded against misuse)
• collection of accurate performance data,
• verification of benefits,
• establishment of a financial benefit distribution structure.

The project is divided into three phases. Each phase has its own objective.

Objective of Phase 1

Objective 1 is baselining and benefit tracking. This objective will develop and define a standard / best practice for collection of data, and measurement and evaluation of in-service performance of retrofitted energy efficiency measures which can complement commercial and contractual agreements.

The methodology will capture the improvement impact on the propulsion power, energy demand and energy supply onboard. The measured energy or fuel savings becomes the foundation for the second objective.

Additional output of the objective will be publication of a consolidation of Project Partners’ historical retrofit activities and a documentation of attained energy savings across technology groups and ship types. This will serve as a demonstration of performance of EEMs that becomes a point of reference for the output target group as it comes from an unbiased and neutral party. It will also cultivate trust among the Project Partners in the quality and robustness of the benefit tracking method we develop.

Objective of Phase 2

Objective 2 is the Commercial Frameworks. This objective will explore and design cost-benefit-sharing frameworks that can be used in commercial negotiations between shipowners and ship operators. These frameworks will be complemented by legal performance clauses and addendums that can be included in existing charter party templates such as BOXTIME, SHELLTIME charter, NYPE etc.

The framework will also define roles and responsibilities of stakeholders when it comes to maximizing energy efficiency savings from the technologies.

Additional output of the objective will be thoughts scenarios visualized based on Project Partners’ data on past retrofits, the developed benefit tracking method, and designed cost-benefit-sharing frameworks.

Objective of Phase 3

Objective 3 is the Demonstrator. This objective facilitates theory in practice by planning and initiating a real-life demonstration among partners of the collaborative cost-benefit-sharing framework to upgrade ships or fleets with EEMs.

The Center will take a supportive role and Project Partners will take the lead. Demonstrator monitoring, recording of learnings, and dissemination as required.