May 26, 2008
ACEEE argues in a new report that Energy Efficiency must be more visible and it is easy to agree. Energy Efficiency is in most policy debates discussed as the counterbalance to more supply but in reality it is more difficult. Energy Efficiency is often foregone because of its invisibility. Which is a pity since energy efficiency is the most profitable and least risky of all investments you can make as the ACEEE report shows (see figure below).
Energy efficiency must be recognised …
The importance of energy efficiency is recognised to a growing extent not the least by use of cost-curves (supply curves for measures) that McKinsey has rediscovered (originally used by Amory Lovins and Clark Gellings in the 80’s) and elaborated for countries and sectors all over the world. These graphs show that there are a lot of measures that have negative costs (!) i.e. that they make the user better-off financially if they are undertaken. And many of these measures are based on technologies for energy efficiency.
But for many of those measures, in particular in industry, they are even better than they look because they also have other properties pertaining to productivity. If those are incorporated in the calculation the supply curves are further skewed to the right, i.e. they make the potentials even bigger. Or if you prefer to say so, make the measures more profitable.
… and commoditised
The companies distributing the goods that transform energy into service (lighting, motive power, heating, cooling) should be more focused on the function than on the technology itself. Yes we have Energy Service Companies (ESCO) and Energy Performance companies (EPC), but this is not enough to reach the entire market and especially to reach the customers that are least equipped to do the necessary calculations and comparisons. When the customer feels comfortable with the offer proposed and have confidence in the delivery, then the market opens. To this end we need to commoditise efficiency.
Acceptance on the market is the key to release the potentials. The resulting efficiency (E) is the product of Potential (P) and the Acceptance (A): E=P*A. And it might be that we have discussed the technicalities (potentials) too much and the acceptance too little. The opponents often claim that there are hidden costs that prevent the potentials from being realised. Search, Transaction, Verification etc. is time consuming and time is money. But if we look more closely to these costs we also find that quite a few of them are related to acceptance and can be substantially lowered with active intervention from many actors, not only government but also trade associations and NGOs.
And YES this is not only profitable – it is also safe!
As promised here is the evidence taken from the ACEEE study mentioned in the beginning.Hans Nilsson