Multiple benefits of energy efficiency: a practical approach to evaluation

An article written with Livio De Chicchis about a practical approach to the evaluation of multiple benefits of energy efficiency, based on the mbenefits methodology. The general approach is summarised here, together with two case studies in which we were involved.

The article was published on the magazine Process Industry Informer last March.

Multiple benefits are defined as those economic effects generated by an energy efficiency project that go beyond energy savings. Every energy efficiency project can be associated with positive effects, the so-called non-energy benefits (NEBs), and negative ones (non-energy losses). An assessment of these effects by energy managers and technology providers can be important for three main reasons:

  • It adds economic value to the project, improving its economic indicators.
  • Since it requires a more thorough analysis, it allows to operate in a de-risking perspective, reducing the perceived risk associated with energy efficiency.
  • It facilitates the acceptance of energy efficiency projects, since it allows to highlight to decision makers and managers in charge of different departments the effects of the energy efficiency projects that are in line with their specific targets and priorities. 

Considering that the cost of energy efficiency tends to rise over the years, due to the increasing difficulty in introducing additional optimisations, the evaluation of non-energy benefits allows to counterbalance such issue.

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Why some invest in energy efficiency and some don’t?

are there solutions to make energy efficiency more attractive?

That was more or less the question I was confronted with at the Eufores webinar The Green Deal and the National Energy and Climate Plans in Italy. More or less, because the original title stated “if energy efficiency makes business sense, why do some invest, and others don’t”, adding thus that energy efficiency makes business sense, so that the fact the some don’t invest appears even more strange. Let’s see if this is true and what can we do to add people the party that choses to act, with benefits both for him/his company and for us all.

In fact energy efficiency is usually considered cost effective, and that’s the reason why many think it should make business sense. Unfortunately that’s not the case. In my opinion, in fact, the main issue with energy efficiency is that it is unattractive. This is a serious issue, because many of our choices are emotional, not rational, and so unattractiveness wins against cost effectiveness. Nevertheless many invest, meaning that it is not all lost, and that there are options to overcome energy efficiency unattractiveness.

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IoT and energy efficiency in the manufacturing industry

iot source: i-scoop - essential IoT business guide

Climate change requires manufacturing companies to change the way they do business, by re-thinking products and services. Resource efficiency will be a key to success, but an increased cooperation among different business functions is fundamental. IoT, i.e. Internet of things, will be an important enabler and will help companies undergo such challenging transformation. The presentation held at Ponti conference organised by IDM Süd Tirol illustrates some key points and the links with energy efficiency and energy management.

Energy efficiency is the main pillar of the action required to save us and our planet. It is not just an issue of policies, but also the need of a different approach towards the use of energy. It requires manufacturing companies to re-think their businesses, incorporating resource efficiency not only for their sites, but also over all the supply chain. More than that, it means products and services should be re-designed and lower their environmental and social footprint.

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Why investing in energy efficiency

Energy efficiency can be an important driver for the competitiveness of industrial enterprises. My presentation, introductory to the webinar “Energy efficiency implementation in industries: the EU-MERCI approach to Good practices for multi-sector companies”, shows the reasons why energy efficiency should not be considered just as a cost reduction through energy savings, but could provide much more benefits. 

Many times energy efficiency is seen just as an opportunity of cost reduction through energy savings. Either if this is one of the main outcomes, and the most obvious, there are multiple benefits linked to an energy efficiency project, such as improvements in the productivity or the quality of manufactured products, the reduction of risks (energy supply, environmental, safety, etc.), lower maintenance costs and GHG emissions, etc. These additional benefits directly impact the core business and can positevily affect the value proposition and the value chain of a manufacturing enterprise.

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