TECO's Eco-Challenge: From High-Efficiency Motors to Clean Energy

TECO built its fortune on electric motors, manufacturing everything from quarter-horsepower motors for small factories to massive 16,000-hp motors for mining and steel making. The company ranks third globally for electric motor manufacture, and this line is the TECO Group's bread and butter, making up half of its revenues.

Electric motors convert electrical power into mechanical energy, making them a simple source of motive power for not just industrial but also commercial and household use, and their power consumption is quite high with such widespread use. According to European and North American researchers, 65-70% of equipment used in industry is driven by electric motors; that is to say, the vast majority of the world's industrial output is motor driven.

"When it comes to saving energy, the electric motor is key to the success of the energy economy," says TECO chairman C. K. Liu. Of every 100 units of energy consumed around the world, 47 are motor-related; therefore to attack the problem we need to start at the motor.

For instance, if you wanted to reduce world energy consumption by 1%, if you turned to the IT industry (which accounts for 2% of the world's energy consumption) they would have to make a huge 50% cut in power use. In contrast, this goal could easily be reached by increasing the efficiency of electric motors by just 2%.

So-called high-efficiency motors are those with reduced power consumption. A standard 10-hp motor has an efficiency of 87%, while a high-efficiency motor's efficiency is 89.5%. This difference reduces energy losses by a fifth.

But there are different standards for high-efficiency motors. For example, according to the four efficiency classes for 10-hp motors defined by the International Electrotechnical Commission, from the lowest class, IE1, to the highest, IE4, the motors of each class are respectively 21%, 15% and 15% more energy efficient than those of the class below.

Lin Hong-hsiang, vice chief executive of TECO's Industrial Motors and Applications Department, says that high-efficiency motors minimize energy loss inside the motor and boost drive efficiency though improvements to internal structural design, changes in coil winding techniques, and the use of high-conductivity copper rods instead of aluminum rods. But due to the high cost of copper, the greater the efficiency, the higher the selling price.

TECO is soon to release a new range of IE4-class super premium efficiency motors. At present motors of this class are produced by only a handful of major manufacturers, and are very costly. But thanks to TECO's newly developed technology-retaining aluminum rods but changing the motor design-the prices look set to be considerably lower than previously expected.

"I believe this will shake up the market," says Liu, stressing that the lower price will help make this motor commonplace, contributing to energy and carbon reduction. Patents for this groundbreaking technology are currently pending.

Motors for use in electric vehicles are another major new development. TECO is working with a company in mainland China to produce functional electric vehicles, such as carts for transporting goods on factory floors. The company is expected to manufacture over 100,000 car motors.

As for the appliances and air conditioning units that make up 30% of the TECO Group's business, Liu focuses on a star energy-saving device, the universal inverter (frequency converter) used to provide "variable frequency drive" (VFD) in major appliances (air conditioners, refrigerators, washing machines, etc.), with flexible combinations of components used for different products and markets.

The inverter's function is to make adjustments according to appliance load, regulating the operation of compressors and motors to reduce energy consumption.

For example, when there's a large difference between indoor temperature and the temperature set by the user, the compressor of a VFD air conditioning unit will operate at high speed until the set temperature is reached, and then it will slow down, rather than constantly running at the same speed, or stopping and re-starting. And washing machine motors can operate according to laundry load, using only the power that's needed.

"A certain level of technical know-how is needed for accuracy of electronic control and signal transmission in inverters," says Liu. This is a major niche for TECO, which has become adept at manufacturing VFD air conditioners.

Air conditioners are the most power hungry of all household appliances. Over a decade ago, the industry started selling VFD A/C units (saving 35% in power), and now nearly 100% of A/C units in Japan have VFD. About 40% of A/C units in Taiwan today have VFD, and in China the corresponding figure has increased to 40% from 10% over the past few years amid an energy-saving trend. But there's still plenty of room for improvement.

Liu assesses that it will not be easy for TECO to enter the mainland China A/C market since they don't have the recognition of national brands Haier Global or Hisense, but they see a "blue ocean" in the area of VFD.

A major brand will no doubt design and manufacture inverters on its own, but it will only be able to include them in their own products. For the majority of appliance makers with insufficient technical expertise, inverters are a key component they must buy from elsewhere, and TECO happens to fill this need: the manufacturers can purchase TECO-made inverters for use with compressors they make themselves, or they could buy fully integrated inverters and compressors from TECO.

As for refrigerators and washing machines, major manufacturers consider these not to have high power consumption (0.3-0.5 kWh per hour), and so do not offer variable frequency drive. But TECO, expecting energy-saving standards to become increasingly stringent, has put a great deal of effort into developing inverters for these two types of appliance.

Since TECO does not make refrigerator compressors, it will only sell inverters, launching a trial run in the European and North American after-sales markets. In the future, any brand of refrigerator can have one added for an extra US$50, both reducing electricity bills and saving the planet. There is estimated to be a market of at least 10 million units.

In contrast, due to the special nature of their motors, washing machines require the VFD inverter to be sold in combination with the motor. With such technical difficulties, TECO is still in the midst of research and development.

On March 23, TECO unveiled its two-megawatt-class wind turbine as part of the next wave of the company's long-term operations.

"After becoming chairman in 2007, I spent a year pondering how to create NT$100 billion of wealth for the company," says Liu. According to his assessment, there is low market demand for high-priced heavy motors (one unit selling for tens of millions of NT dollars), whereas competition is severe in the low-priced household appliance market. So he chose wind-generated power, because it is centered around TECO's core technology and also accords with the "green energy" trend, with good prospects for the future.

Liu explains that wind power requires integration of generator technology, which has a high threshold, and since TECO has experience manufacturing high-horsepower generators for aviation and mining, the company has the technology and experience to hit the ground running.

"There are two major threads in current wind turbine technology: permanent-magnet synchronous generators and permanent-magnet direct-drive generators. The two are in competition, and we do not know which will come out ahead," says Liu. The few major wind turbine manufacturers in the world each concentrate on only one of these two technologies, but TECO is working on both, giving the company a great advantage. Since a wind turbine has a service life of about 20 years, for a wind farm operator to purchase both types of generator and run them concurrently helps spread risk.

Liu announced at the product launch that they have already received orders for nearly 100 units at a per-unit price of NT$100 million, for a sure sale of NT$10 billion. As for manufacturing these units, TECO began production in Texas in 2008, followed by its Taiwan plant in Zhongli and mainland China plants at Wuxi, Jiangsu Province, and Zhangzhou, Fujian Province, achieving a total output that ranks Taiwan the world's eighth largest nation in terms of large-scale wind turbine manufacturing capacity.

"Our next step is to build offshore wind turbines," says Liu excitedly. Taiwan is not exactly a latecomer in offshore wind generators, because nobody yet knows who will come to the fore with the key high-temperature superconductor technology. TECO is actively discussing cooperation with the world leader in this technology-American Super Conductor-and if everything goes well, TECO will have the chance to manufacture the world's first 10 MW offshore wind turbine (current units are rated at 3.5-5 MW), becoming the leader of the pack in this field.

"Considering a market scale of 7,000 offshore wind turbines in the Taiwan Strait, given that one such turbine sells at NT$300 million, prospective business volume is in the range of NT$2 trillion," says Liu. This is not just a major business opportunity, but also a demonstration of Taiwan's prowess, well worth industrial cooperation and government investment of resources.