Environmental Report

"XP Power has always placed great emphasis on minimising the impact its activities have on the environment."

Environmental Committee

XP Power has always placed great emphasis on minimising the impact its activities have on the environment. This was formalised with the establishment of our Environmental Committee in 2009. The committee immediately set a goal of becoming the leader in our industry in addressing the effect our operations have on the environment. This will both ensure we fulfil our corporate social responsibility obligations and present a major business opportunity in its own right as customers around the world look to improve their own environmental performance through the adoption of new, more efficient power conversion products. Significant progress has been made during 2010.

80% of Revenues now covered by ISO 14001

The Group's key sites have long maintained policies and practices to reduce energy and material consumption whilst also recycling wherever practicable. A number of our key sites have also gained the ISO 14001 Environmental Certification demonstrating our commitment to environmental responsibility. Our US sites have now also attained ISO 14001 Environmental Certification meaning that 80% of our revenues are now covered by this standard.

Electronic Industry Citizenship Coalition (EICC)

The Electronic Industry Citizenship Coalition (EICC) is an industry organisation of leading electronics manufacturers which promotes an industry code of conduct for global electronics supply chains to improve working and environmental conditions. It represents the highest recognised standard for our industry dealing with environmental and corporate social responsibility issues. The code of conduct not only addresses environmental issues but also the treatment of employees and their well being, health and safety and business ethics.

In our 2009 report we set out the objective of achieving EICC Applicant Membership in 2010. I am pleased to report that we became an Applicant Member of the EICC in June 2010. We have adopted the EICC Code of Conduct and are working with our key suppliers to ensure they too are compliant with the Code.

We are actively engaged with the EICC, with XP Power now represented on the EICC's Environmental Sustainability Working Group by Lynne Summers. Lynne is also a member of the associated Water and Training sub-groups.

The Power Conversion Industry

While we have initiatives in place to reduce energy consumption in our operations, recycle and utilise communication technologies to reduce the need for travel, XP Power itself plays an interesting and pivotal role in the energy chain. The power conversion products we design and manufacture are the "bridge" between the electricity utility companies and the consumer, converting the energy from the grid and providing it in a form that can be used by electronic equipment. XP Power is therefore uniquely positioned to make a real contribution to energy efficiency and emission reduction and is leading the power conversion industry in terms of product efficiency.

Historically, electronic power conversion has been a notoriously inefficient process. The original linear transformers still in use today in some sectors are only 50% efficient with half the energy they convert being wasted as heat. XP Power does not operate in this area, specialising instead in modern "switching" techniques, enabled by semiconductor technology, which allow power converters to be much smaller and more efficient. Modern power converters have typical efficiencies of 80%. While this is a major improvement over legacy products, this still represents a 20% wastage. XP Power is therefore committed to developing technologies to reduce such wastage to a minimum.

XP Power and Efficient Energy Conversion

XP Power has consistently raised the bar in terms of power converter efficiency and, as the chart illustrates, has increased the number of high efficiency and low standby power products in its ranges significantly in recent years. (Standby power is the energy consumed by the power converter when the equipment it powers is idle and not operating.)

We are proud, for example, that our CCM250 converter is the most efficient power supply of its type available on the market today, being capable of achieving an impressive 95% efficiency. Moving from 80% efficiency to 95% has dramatic energy saving effects. At 95% efficiency the power converter is wasting 5 times less energy compared to a typical 80% efficient power converter. The aggregate energy saving is staggering when applied to the number of power converters we sell in a single year.

In 2010 we launched 19 new product families with class leading efficiencies, many above 90%, and 9 new product families with low standby power. We have also developed our own "Green Power" criteria for standby power and efficiency for different power converter types.

The technology and components required to push the boundaries of energy efficiency are invariably more expensive but with greater legislative focus on, and public scrutiny of, this area we have evidence that our customers are increasingly willing to pay this premium. The pay-back comes not only in a reduced environmental impact but also results in lower energy bills and superior product design and functionality. Since these new products can be made smaller and our customers have less issue in removing unwanted heat from their equipment, noisy and inherently unreliable fans are often no longer required, for example.

Power converters consume energy while they are in standby mode. There are currently around 1.5 billion external power supplies in the USA alone, accounting for 6% of the US national electricity bill. If left unchecked it is believed that this figure could quickly rise to 30%. In 1992 the US Environmental Protection Agency laid down voluntary guidelines relating to energy consumption of single output external power converters which became the Energy Star program. The California Energy Commission declared these requirements would be mandatory from 1 July 2006. The US Congress has enacted further legislation setting out mandatory requirements for power converters which came into effect on 1 July 2008. The European Union has also produced a Directive relating to energy efficiency of power converters which came into effect on 1 January 2009. XP Power aims to exceed rather than merely meet these standards and will continue to raise the efficiency bar.

"XP Power aims to exceed these industry standards and will continue to raise the efficiency bar."

Energy Efficiency in Hospitals

During the year we commissioned a study with Inekon Energy Efficiency Consulting in Germany. Inekon catalogued and analysed the power conversion products used in a typical hospital in Stuttgart to understand the efficiencies and the standby power consumption. Some of the findings of this study are as follows:

Over 1,000 power converters were deployed in the medical equipment used in the hospital, consuming 306 MWh per year. The average efficiency of the power converters used in this equipment was only 77% so 23% of the input power is wasted. Few of these power converters contained any functionality to reduce power consumption while in standby mode.

In comparison, XP Power's most efficient medical power converters are up to 95% efficient and have low standby power functionality. Inekon has estimated that the hospital in question could reduce its power consumption by up to 32,500 kW hours per year, or 11% from medical devices, if the equivalent XP Power converters were used. This represents CO2 emissions of 18.6 tons and substantial ongoing cost savings. The energy wasted would be reduced by almost half!

Efficiency improvement, standby reduction and peak load reduction adds up to a 13.3% reduction of electrical energy costs for medical equipment. When considering these additional factors energy wastage is reduced by nearly 60%!

With this compelling data, XP Power now has evidence to convince our customers of the benefits of incorporating more high efficiency power converters into their products. The pay back periods for the end users of high efficiency power converters is extremely short.

"XP Power is on a mission to develop smaller products that waste less energy, consume less physical material and avoid the use of hazardous substances."

Performance of Our Kunshan Manufacturing Facility

The Chinese Government has set a target of reducing carbon emissions per unit of GDP by 40% to 45% over the period from 2005 to 2020. The attached graph shows the three month moving average of our Kunshan facility's CO2 emissions per unit of revenue. We consider we are ahead of these reduction targets. Further improvements to the targets are encouraging greater efforts and innovative ideas and action by XP Power.

While we gain natural efficiency as the capacity utilisation of the facility improves, we have also implemented other initiatives such as the use of low energy lighting, improving the energy efficiency of the air conditioning and reducing significantly the power consumed during the burn-in of our products. Burn-in is a process where power converters are run at elevated temperature under load to assure their reliability. This process by its nature can consume a significant amount of power. We have designed our own electronic burn-in loads so we can recycle 50% of the power that is used during this process.

Harmful Substances

European legislation on the Reduction of Hazardous Substances (RoHS) came into effect in 2005. This legislation limited the levels of certain substances in products, including lead. Although the legislation is applicable only to products sold in Europe, XP Power took the decision that all of the products we design and manufacture should be compliant. This was not only good for the environment but good for our business.

In summary, XP Power is on a mission to develop smaller products that waste less energy, consume less physical material and avoid the use of hazardous substances.

Vietnam Facility - The Most Environmentally Friendly in the Industry

In December 2010, we started construction of our new Vietnamese manufacturing facility which is due for completion early in 2012. This facility will be the most environmentally friendly power converter manufacturing facility in the world. The building will meet the Gold rating of the BCA Green Mark requirements which are standards set by the Singapore Building and Construction Authority for non-residential buildings in tropical climates. This covers not only energy efficiency of the building but also water efficiency, environmental protection, indoor environmental quality and other green features and innovations.

A photovoltaic solar panel array will help provide power to the facility and rain water will be collected for use within "grey water" systems in the building.

High efficiency air conditioning systems will be deployed and energy saved through an efficient building envelope.

Next Steps

XP Power will continue to lead the industry in addressing the effect it has on the environment. We will achieve this by:

• Continuing to lead the field in the development of high efficiency power conversion technology and encourage our customers to use these types of converters; and
• Challenging, encouraging and helping to educate our staff, customers and suppliers to adopt practices that reduce the energy and resources consumed.

I am confident that these initiatives will not only benefit the environment but will help us and our customers to grow our business and increase the value of our Group.

"The Vietnam factory will be the most environmentally friendly power converter manufacturing facility in the world."

 

David Hempleman-Adams

Chairman
Environmental Committee

 

 

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