Industry – New Standards for easier Investments in Energy Efficiency

Finance

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11 September 2017

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Rod Janssen

Check Recording Introduction Webinar: new protocols for industrial energy efficiency projects

Sound familiar?  

When was the last time you walked on a factory floor or read an audit report or talked to a plant’s energy manager? Did you notice that some things were left unsaid? Did you notice that the elephant in the room hampered the company’s competitiveness? Did you know there was even an elephant lurking in the background?  

I’m sure you’re confused?  Well, we’re all confused to a greater or lesser extent. It is baffling that there is so much cost-effective potential to reduce our energy consumption and yet it is not happening, certainly not to the extent that will significantly improve the company’s competitive position. This concern is not new. Policymakers and many others have struggled for many years – even decades – to understand this phenomenon of inaction.  Market barriers have been analysed, policy instruments have been evaluated, business leaders have been questioned.  

The 2015 final report from the Energy Efficiency Financial Institutions Group states:  “Energy efficiency has clearly contributed positively to EU industrial competitiveness, enabling companies to proactively manage energy price increases in Member States and retain export shares, yet experts believe that many of the completed measures are just the ‘low hanging fruits’ (with relatively short payback times) assessed on narrow measures of economic pay-back without considering the wider benefits of energy efficiency investments: The untapped energy efficiency potential remains great.”

What are the gaps?

We know about the potential and we know about the impact we want – for individual companies and for our economies as a whole. There is that gap that needs to be filled. That gap does not need to be illusive.  There are ways to address it. That gap includes several concerns: financing, confidence in the technologies, confidence in the entire transaction phase including the relationship between the client, the developer and the source of financing.  

Financing and Implementation  

There are two aspects of this that I would like to focus on with respect to this process that the Investor Confidence Project Europe, a project funded by the European Commission, is addressing.  

What is ICP Europe and what can it do to encourage more investments?  

The Investor Confidence Project Europe is designed to remove many of the complications and risks in improving your company’s energy performance. It ensures that the process of choosing what to do, how to do it and how to finance it is standardised, giving you assurance. It can help senior management better understand energy efficiency from a strategic perspective because it does remove risk.  

ICP brought to Europe to develop a system to give confidence to all active stakeholders. There are still concerns that investing in energy efficiency is risky. ICP is designed to chang.e that. ICP started with investments in buildings and is now broadening the scope to include industry, district energy and street lighting through a two-year project funded by the European Commission.  

The concept of ICP is relatively simple to understand. A potential project in a factory or a district heating system, for example, is identified. Someone has to do the necessary calculations to determine the viability. Someone has to be identified to install it (often the same organisation). And some organisation needs to fund it. What this project does is standardise the procedures so that all players gain confidence in the system. The factory owner is happy. The developer/auditor/installer is happy. The financial institution is happy. There are protocols in place and third party monitoring to ensure everything is done correctly. The protocols are developed by interested experts and not by commercial interests.  

The project will work with all of those involved in the project cycle from owners through to project developers and verifiers. They all have a key role to play.     

How does it work?  

Ensuring the confidence in the process through a certified protocol  

Key to success, however, is in ensuring there is technical integrity throughout the entire process. To ensure that the protocols are robust, technical forums are being set up to review the draft protocols and provide important technical input to their development.  

The existing ICP protocols cover three types of energy efficiency project (Large, Standard, Targeted) in buildings. There is a need for a similar standardized, best practice approach for industrial energy efficiency projects. We are using the structure of the buildings protocols (below) as a basis for developing the industrial protocols, ensuring that we retain a familiar and comprehensive process and vocabulary while making adaptations for more complex industrial environments.  

The plan is to include within the scope of the protocol all Energy Conservation Measures (ECMs) associated with building services or utility energy use. For process energy use, we propose to include only ‘common’, non-specialist ancillary ECMs, which do not require industry specific knowledge to develop or implement. For example, motors within process equipment would be within scope but ovens, kilns, furnaces or endo/exothermic reactions are not. This is indicated in the following diagram.

There is a technical forum, which includes experts from throughout Europe, who are currently reviewing the details of the elements of the protocols. It is essential that the protocols are as robust and credible as possible.  

What we need from you: join Technical Forum  

It’s not too late to join Technical Forum  

To develop such protocols, we are obviously relying on the input from energy efficiency experts such as the energy efficiency networks. Therefore, we would like to invite you to join our Technical Forum to review and comment on the development.  

First drafts will be sent around in September 2017 – so there is still time to join.  

In case you are interested, please just register via http://europe.eeperformance.org/technical-forum.html.  You can also contact me anytime under Rod.Janssen@ee-ip.org.  

Full timing

  • 14.09.2017 Technical Forum 1h webinar, discussion early draft                               
    (join and register via http://europe.eeperformance.org/technical-forum.html)
  • 18.10.2017 Technical Forum member receive first draft of protocol
  • 25.10.2017 2nd Technical Forum 1h webinar, discussion draft 1
  • 29.11.2017 3rd and final Technical Forum 1h webinar
  • 04.12.2017 Industry protocol release and start of application phase (pilot projects in Europe)             

For your information, there will be further technical forums on street lighting and district energy starting in early 2018. If you are interested in those, please contact us.  

So, let’s keep talking. Let’s remove some of the confusion and get more serious about implementing energy efficiency measures in industry.  We have a lot to do.

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About the Author

Rod Janssen is the President of Energy Efficiency in Industrial Processes (EEIP).