Taking Stock – 40 years of Industrial Energy Audits
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Transcript of Taking Stock – 40 years of Industrial Energy Audits
40 years of industrial energy efficiency audits - what have we learned?
Peter Mallaburn
IEA DSM University
December 10th 2014
Introduction
The usual health warnings … and a thank you
• Focus – industrial energy efficiency audits, although set in a much broader policy context
• Definition – “industry” actually means all non-domestic sectors, excluding transport
• This is meant as a signposting guide, not a blueprint, or an instruction manual
• Most of this is published, some is still quite new, and some is based on personal experience
• Thanks to the eceee and Energifonden for supporting the underlying research
Agenda
• Introduction
• Policy context
• History of audit programmes
• Rationale - what are audit for?
• Setting up audit programmes - some pointers
• Impact – what makes a good audit programme?
• The future of audits
Policy context
Emission reductions – UK is currently on target…
…but there is an 83MtCO2e policy gap in 2025
From “Meeting Carbon Budgets – 2014 Progress Report to Parliament”: UK Committee on Climate Change, July 2014
Many counties are struggling to deliver reductions
• Moving beyond “low lying fruit” is hard
• Deployment of renewables is costly or politically sensitive
• Austerity is scaling down subsidy programmes
• Governments are reviewing their policies and programmes
• Transport and domestic sectors are very difficult
• Industrial programmes are back on the agenda
Industrial audits have always been popular
• Easily the most cited programme type in the literature
• Most countries have them, many for as long as 40 years
• Our understanding of how they work is mature and relatively uncontroversial
• Audits make sense in most jurisdictions and political contexts
• Audits are now mandatory in the EU for larger organisations
History of audit programmes
The Oil Shocks of 1973 and 1978
Early programmes - 1973 to 1983
• First programs began in 1974 in the US, Europe and Japan
• Focused on technologies: • Grants for plant and equipment
• Opportunity assessments
• Best Practice programmes
• Research and demonstration
• Technology roadshows
• Some significant programmes • 1974 - £400m (2014 prices)
• 1977 - £2.8bn
The rise of energy management – 1983 to 1997
• Focused on companies
• Covered both technical and organisational drivers
• 5 Steps: • Commit
• Review
• Plan
• Implement
• Monitor
• Emergence of energy management as a distinct profession
The rise of climate change – 1988 to 20XX
• 1988 – scientific and political consensus develops around climate mitigation
• Consumers begin to demand green products and services
• 1994 – Triple Bottom Line
• 2002 – Carbon Trust begins Carbon Management
• 2004 – Performance indicators eg Carbon Disclosure Project, Plan A, carbon reporting
• 2014 – Carbon Bubble
Rationale - what are audits for?
Audits are seen as change management programmes for energy
• Significantly less energy is saved than is cost effective – the “energy efficiency gap”
• Energy intensive companies tend to behave rationally – they manage energy as a controllable cost
• But for most companies energy costs are not “core business” and are not actively managed
• This can be addressed by influencing the drivers and barriers of change
Barriers and drivers of energy efficiency
• Up-front capital cost
• Hidden costs -
management time
• Technology risk
• Lack of information and
skills
• Ignorance and inertia
• Energy and cost savings
• Other benefits -
maintenance costs
• Enhanced asset value
• Reputation, brand and
compliance
• Workforce satisfaction
Economic & technical
Behavioural & organisational
Barriers Drivers
Audits programmes help to overcome barriers and exploit drivers
• Secure senior level, strategic commitment to reduce energy use over time
• Carry out an organisation-wide review of energy use and the capacity to manage it
• Benchmark energy performance against peers and competitors
• Provide cost effective, practical recommendations and accounting advice
• Provide a structured programme of implementation, monitoring and review
Setting up audit programmes – some pointers
Patrick Thollander and Jenny Palm “Improving energy efficiency in industrial energy systems” Springer 2013
Common features of audit programmes
• A policy objective
• A library of information and market data
• A delivery agency
• A network of auditors and advisors
• A programme of support and/or subsidy
• Account management and CRM
Preparation
• Understand your target sector – barriers, risks and drivers, technology base, investment models, compliance
• Segment the market: • Size of business • Energy bill • Degree of leverage – eg networks
• Decide on degree of subsidy – free or co-funded? • Sort out data issues in advance
• Data needs and sources • Energy utility data and IP
• Decide what success looks like • Absolute vs relative measures • Input vs output measures
Procurement
• Appoint a delivery agent • Decide on in-house or external • Agree KPIs and review process
• Build an auditor network • Scope out skills and capacity • Embed standards and CPD
• Professional account management • CRM, call centres etc
• Develop programme collateral • Information, advice, software • Sources, eg technology companies, utilities • Crowdsourcing – 2degrees network
Impact - do they work?
Do audits work?
• Yes – they are popular for a good reason
• However implementation rates are rarely above 50%, and can be as low as 20%
• There are wide variations between measures... • Technologies and behavioural change
• 100% subsidised and cost-shared
• …and between different types of organisations • Public, private, large, small
• Reputational drivers and risk
Why?
• Barriers and drivers are interconnected • Finance is rarely the only barrier
• Reputational drivers are under-exploited • Retail, defence and financial services
• Skills and experience are usually missing • Both in the organisation and the auditor network
• Companies rarely ask for what they need • Grants versus loans
• Subsidy vs cost-sharing
What makes a good audit programme?
• Operational flexibility – responsive to changing market and political circumstances
• Strong market intelligence – sector, organisation, individual
• Exploit synergies – investor pressure
• Exploiting local networks
• A credible and well-resourced auditor network
• Some degree of compulsion
• Some degree of cost sharing
The future of audits
The future of audit programmes
• Audits began as stand-alone, programme management tools
• The rise of climate change has changed their role from measuring energy use to assessing risk and value
• They are now part of larger, more sophisticated policies and programme such as Long Term Agreements
• But organisations still implement less than half of cost effective measures that audits reveal
• So what are we doing wrong?
Energy efficiency “framing”*
• Audits are all about identifying practical, cost effective energy efficiency measures
• We are getting very good at this, but it is still too hard for most organisations to actually do
• Does the burden of change lying too heavily on the energy-using organisation?
• Should we encourage the technology supply-side industry to help it improve the energy efficiency “offer”
• There are some early signs that this is beginning to happen…
*Hans Nilsson and Charlotte Ruhbaum, eceee Industrial Summer Study proceedings 2014, pp 703–710
Thanks for listening