Are we running out of energy efficiency?

Based on a Discussion Webinar, Friday 20 June 2008

Improving energy efficiency has been a constant concern ever since the oil crisis of the seventies. Today, it is seen as one of the solutions for mitigating climate change and improving energy security. Many numbers for energy saving potentials circulate, but how realistic are these? Despite the current high oil price, energy efficiency improvements these days are not as big as they were during the first oil crisis. Why is energy efficiency so hard to pursue? Have we really exhausted the energy savings potential? And, if not, which technical or economic potential is still available?

These and other questions were addressed during a Discussion Webinar on 20th June 2008. The following are a few of the major points from that discussion.

Decreasing energy consumption, or increasing energy services?

Since the seventies, the demand for energy services in Europe has risen dramatically. Energy consumption did not follow this trend and has been rising at a much slower pace.

You can look at this in two ways. The optimist will say that energy efficiency did its job to avoid a dramatic increase in energy consumption. The pessimist could say that energy savings were merely used to increase the amount of energy services, and not to decrease final consumption.

This last phenomenon is called Rebound Effect. Rebound Effect occurs when energy efficiency of an energy service improves, but then people react by using more of this service.

It is not easy to measure a complex phenomenon such as Rebound Effect precisely. A study by the UK Energy Research Centre calculated that the long-term Rebound Effect for personal transport, space heating, and space cooling is less than 30% of the energy saved through efficiency improvements. In general, most studies estimate the rebound effect to be between 20 to 30%, i.e. the Rebound Effect is real, and significant, but the bulk of savings from energy efficiency improvements result in real reductions in energy demand.

Energy efficiency in buildings

The webinar participants seemed to agree on the fact that we are not running out of energy savings potential in the building sector. In the housing stock, large savings can be achieved with concepts such as ‘low energy houses’ and ‘passive houses’, which largely eliminate the energy consumption for heating. Those concepts, currently seen as advanced, should become mainstream solutions in the building sector.

Regarding cooling, there is a large saving potential in the office building sector.

Concerning electrical appliances, considerable savings could be achieved by a faster elimination of old technology that is not even close to being efficient (e.g. old refrigerators in the basement, old washing machines and so on).

An important barrier to harvesting these potential savings is that it requires both technical measures and a behavioural change. More effort should be dedicated to the latter.

The European Performance of Buildings Directive is a good start to make companies reflect on the energy expenditure of their workplace and, if possible, choose a more energy efficient building. The certification system that goes along with this stimulates building owners to make energy efficiency efforts to attract tenants. However, several webinar participants were sceptical about whether the rules of this directive will be sufficiently policed to be effective.

Industrial motor systems

Also in industrial motor systems, there is a high energy savings potential left – ECI calculated the annual savings potential in the EU to be 202 billion kWh. The technology to realise this potential is available on the market and it is cost efficient. An important remark here is that for maximum savings, the motor system as a whole should be considered and not just the motor itself.

One problem is that a large part of this savings potential is in motor systems which are already in use; motors have a long life span and there is always certain reluctance in changing a working process. The phenomenon of ‘split budgets’ is another major barrier; the departments that could invest in efficient motor systems are often not the same as the ones who would profit from the lower energy costs.

Energy efficiency is labour-intensive

Both in buildings and in industry, improving energy efficiency is a hard and continuous effort which is often labour-intensive. This is another major barrier. There is a shortage of people with the right technical competence to point out and implement energy savings measures.

Industrial plants cannot hire enough engineers to properly implement and maintain energy efficient technology.

Concerning energy efficiency in buildings, qualified experts are lacking to implement the European Performance of Buildings Directive.

Energy efficiency as a best maintenance practice

Another drawback of energy efficiency is that it is nor very glamorous, nor very visible. You cannot cut a ribbon to inaugurate an energy efficiency measure like you can do for the inauguration of a new wind park. Investors want visibility and large dividends, some qualities energy efficiency projects are often lacking.

In many cases, it is even difficult to demonstrate the cost savings that can be made, as for small installations or when the energy consumption is low, people do not go for a lifecycle cost analysis.

And for larger installations, it is often difficult to make a business case for energy efficiency measures. Suppose a maintenance engineer goes for an investment in energy efficient technology. How can he prove the next year that this choice has really yielded to the company? Maybe the energy consumption went up instead of down because there was more production, or because it was a hotter summer or a cooler winter.

A good strategy to promote energy efficiency could be to leave aside the direct cost benefit analysis and to promote it instead as a best maintenance practice. Or one step further, to simply promote good maintenance for the sake of energy efficiency.

Maintenance associated with an effective asset management strategy could be a very powerful tool towards both energy efficiency and competitiveness. It would mean lower operating costs as well as fewer outages of production lines attributed to technology faults.

Good examples exist

To counterbalance the rather pessimistic point of view of the webinar, it is important to remind that a lot of good case stories regarding energy efficiency improvements exist. The energy savings of heavy industry in Japan mentioned in the webinar are just one such example of a success story.

The underlying thought from the discussion webinar is that there is a huge remaining potential for energy efficiency improvement across all sectors, not only in particular niches.

Growing energy needs and an increasing use of energy services have only increased opportunities. Energy savings make more and more sense.

However, there is also the feeling that, despite soaring oil prices, energy is still too cheap! The oil shock of the 70s has delivered high benefits because it was about scarcity of supply, which is not the case currently! Even the mounting pressure of the climate change threat seems not to be an incentive strong enough to pursue energy efficiency.