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Making “Step changes” in energy efficiency Building on experienced success. Hans Nilsson Chairman of the IEA DSM-Programme FourFact AB www.fourfact.com. Energy-use in the IEA-11. 160. Hypothetical energy use without savings. 140. Additional energy use with

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making step changes in energy efficiency building on experienced success

Making “Step changes” in energy efficiencyBuilding on experienced success.

Hans Nilsson

Chairman of the IEA DSM-Programme

FourFact AB

www.fourfact.com

energy use in the iea 11
Energy-use in the IEA-11

160

Hypothetical energy

use without savings

140

Additional energy use with

1973 intensity = Energy saving

49%

120

100

20%

Exajoules

AUS

DEK

FIN

FRA

GER

ITA

JAP

NOR

SWE

UK

US

80

60

40

Actualenergy use

20

1975

1973

1980

1985

1990

1995

1998

Source: 30 years of energy use in IEA countries

the rise in welfare depends more on energy efficiency improvements than on growth in energy use
The rise in welfare depends more on energy efficiency improvements than on growth in energy use!
energy efficiency the most important means to reduce ghg
Energy efficiency – The most important means to reduce GHG

5

1

2

3

4

Source: The IEA Energy

Technology Perspectives,

2006

the best way to satisfy a growing need for energy services
The best way to satisfy a growing need for energy services

System

capacity

Demand

+

1 kWh

B

A

-

1 kWh

Should be the cheaper of the two options:

More supply or less demand

Time

difference in electricity investment in the alternative vs reference scenario 2003 2030
Difference in Electricity Investment in the Alternative vs. Reference Scenario 2003-2030

1 000

500

Efficiency

measures

Avoided supply-side

investment

Difference

0

Generation

Additional demand-side

billion dollars (2000)

investment

Transmis-

sion

- 500

-1 000

Distribu-

tion

-1 500

-2 000

Additional investments on the demand side are more than offset by lower investment on the supply side

Source WEO 2004

the curse of the energy efficiency
The curse of the Energy Efficiency
  • Energy Efficiency is invisible
  • Energy Efficiency is not a Product, but a characteristic (with products in comparison)
  • Energy Efficiency is delivered in many small packages
  • …..and on different occasions
but there are several means
But there are several means

LARGE-SCALE ENERGY EFFICIENCY

“Mandating”

Market Acceptance

“Commoditise”

for Non Price-

responsive

Delegated

Price-

responsive

customers

Standards

e.g. MEPS;

Top-runner;

Energy Star

Agreed

actions

e.g. ESCO;

Labels, Branding

e.g. Taxes;

DR (elasticity)

e.g. Voluntary

Agreements;

Technology

Procurements

Actions

Commitments

e.g. Muni-

cipalities

Planning;

FEMP

e.g. White

Certificates

market transformation
Market Transformation

Market Penetration

Preferred Case

Base

case

MORE

NEW

LESS

Product Performance

market transformation1
Market Transformation

Market Penetration

Preferred Case

Aggregated

proc. (AP)

& Labels

Base

case

Technology

Procurement (TP)

Standards

& Directives

Product Performance

means for accelerated diffusion
Means for accelerated diffusion

Diffusion curve

Joint Research on

Technologies

Market response

(Result = Potential * Acceptance)

Labelling,

Training

Comprehensive

adaptable

strategies

Feed-in tariffs,

Certificates,

Campaigns

Technology

Procurements,

Demonstration

Time after introduction

slide14

The (textbook) market

SUPPLIER

Flow of goods

Price

Relation

Actor

Quantity

Influent

User

slide15

The (real) market

SUPPLIER

Subsupplier

Wholesale

Flow of goods

Retailer

Authority

Relation

IInstaller

Actor

Owner

Influent

User

Consultant

Service

energy efficiency has multiple dividends
Employment

Industrial development

Poverty alleviation

Holds back prices in supply

Reduces pressure on supply reserves

Energy Efficiency has multiple dividends
  • Cost
  • Environment/Climate
slide18

Thank

you!

1 the learning investments have to be covered and recovered
1. The learning investments have to be covered and recovered
  • Learning investments are not subsidies IF they can be anticipated to yield future profit
  • Someone has to start the process
  • It takes TIME to reach break even
  • The investments might be HUGE

Challenging New Technology

Price

A

Learning investments

…and ditto profit

B

C

Cumulative Sales

4 there is always someone to share the bill
4. There is always someone to share the bill
  • (I) Government and companies that have a “first-mover” interest
  • (II) Private sector (users) who have a worse alternative
  • (III) Private sector (users) who have an interest in showing leadership

Challenging New Technology

Price

I

Willingness to pay

on niche markets

II

III

Cumulative Sales

slide22

INDIA

150 GW

Break-even 1$/W

general market segmentation
General Market Segmentation
  • Innovators (Enthusiasts)
  • Early Adopters (Visionaries)
  • THE CHASM
  • Early Majority (Pragmatists)
  • Late Majority (Conservatives)
  • Laggards (Sceptics)
general market segmentation1
General Market Segmentation

Diffusion curve

Laggards (16%)

Late majority (34%)

Adoption of iinovation

Early Majority (34%)

"Take-off" in the region

Early adpoters (13.5%)

5%-15% of the market

Time after introduction

Innovators (2.5 %)

slide26

Government and industry (R&D)

Positioning companies (capitalising)

Challenger

A

A’

Willingness-to-pay in

Price

Challenger Niche Markets

Incumbent

B

C

Technology

D

Customers with

High alternative

Costs (incumbent+)

Lead users

(capitalising)

“Chasm-crossers”

Cumulative Sales

new paradigms distributed generation
New paradigms – Distributed Generation

Reduce losses

Bypass congestion

Stimulates

competition

Enables use

Source: Distributed Generation In Liberalised Electricity Markets. OECD/IEA 2002

slide28

Result (Efficiency) = Potentialtechn.;time. * Acceptancetime; exposure

Potential

Technical

potential

4.

Improve

technology

Economic

Potential (

societal)

3.

Improve

Suppliers

learning

Economic

Potential (

individual)

2.

Improve

Credibility,

Organise

Market

1.

Reduce

potential

Transac-

tion

costs

Time