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

Barriers Drivers
Economic &
technical
Up-front capital cost Energy and cost savings

Hidden costs - Other benefits -

management time maintenance costs

Technology risk Enhanced asset value

Lack of information and Reputation, brand and

skills Behavioural & compliance
organisational

Ignorance and inertia Workforce satisfaction

 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 703710
Thanks for listening