The invisible good that you can’t be without.

ACEEE argues in a new report that Energy Efficiency must be more visible, and it is easy to agree. Energy Efficiency is discussed in most policy debates as the counterbalance to more supply, but in reality it is more difficult than that. 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 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 there are a lot of measures that have negative costs (!), i.e. that they make the user financially better off if they are undertaken, and many of these measures are based on technologies for energy efficiency.

However, 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, make the measures more profitable.

…and commoditised

The companies distributing the goods that transform energy into services (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 not 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 releasing the potential. 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 (or potential) too much and the acceptance too little. The opponents often claim that there are hidden costs that prevent the potential from being realised. Search, transaction, verification etc. is time consuming, and time is money, but if we look more closely at 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 governments, 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 at the beginning.