How to overcome barriers to energy efficiency in industry?
How to overcome barriers to energy efficiency in industry
Energy efficiency and energy management plays a great role to reduce operational cost and increase profit but in the early stages of implementation, it faces some technical and financial barriers that need to be tackled to smoothly build the required efficient energy management system and gain the required benefits.
In this article we will discuss briefly some of those barriers and propose the solutions to overcome them according to good practice followed in this field.
In the previous articles we described how you can build energy management system in the industrial plant in seven steps.
Barriers refer to all obstacles that prevent financially and technically feasible energy efficiency measures from being implemented
The success of any energy management system depends on the full support, level of knowledge and awareness of all related stockholders.
This level of knowledge will be the real solution for any financial or technical barriers to energy efficiency and energy savings commonly faced by companies.
For example, initiatives for measurement of baseline energy use and emissions, energy auditing, and guidance for identifying opportunities can help reduce barriers related to lack of information and technical expertise.
In the below table we will show some of the important barriers and their proposed solutions:
- Financial barriers
1.1 Wrong perceptions that investments in energy efficiency projects do not meet financial criteria within companies.
1. Management representative and energy manager shall update top management regarding energy assessment results and cost reduction achievements to correct those perceptions.
2. Energy action plan shall start with implementing low CAPEX and quick win opportunities revealed from energy review process.
1.2 Investments impose too high risk due to lack of familiarity with energy-savings projects relative to core business projects and difficulty in predicting future energy prices.
1. Energy manger will prepare the required business case showing the expected energy savings, cost reductions and return on investment based on actual energy prices.
2. Accurate energy review will eliminate any risk and present real evaluation for the expected energy savings.
3. All possible associated risks will be identified by energy team evaluation sessions before taking any business case to the implementation phase.
1.3 Businesses like to use capital and resources to grow and expand their business. When they want to reduce costs, they want to do so without spending too much capital.
Companies will often only fund projects with an 18-month to two-year payback or less, unless it has a productivity or growth outcome as well.
1. The energy policy to show the targets of the energy management system as to keep production rates with minimum energy consumption.
2. Energy team to consider quick wins opportunities first and involve top management in the results.
3. The gained profit can be utilized to fund medium or high capital investment projects (Energy projects could be self-funded on the long run).
2. Market, information, behavioral and organizational barriers
2.1 Energy prices and taxes are subsidized in some countries in the industrial sector and therefore companies may not pay the full cost of their energy use and have less incentive to reduce consumption.
1. In some cases government provide incentives for energy saving projects and this will justify the feasibility of these projects.
2. This case will be eliminated in the future as in most of the cases the energy prices are increasing worldwide and all companies shall consider the realistic future case in the feasibility analysis of energy saving opportunities.
3. Delaying energy saving projects will increase their future required capital cost so it is better to consider it in the nearest chance.
2.2 Transaction costs and effort are required to find out about the costs, benefits and energy-saving options; these costs can act as a deterrent to making changes and investments within a company’s operations.
Proper role and responsibilities distribution in the energy team and related stockholders will increase the awareness between stuff and boost energy saving efforts.
2.3 Companies have limited knowledge and access to information about new and existing energy saving technologies.
1. Proper energy saving awareness training and campaigns will increase over all awareness and increase stuff participation.
2. Equipment’s life-cycle assessment to be considered in the evaluation for any new equipment or technology rather than the cost only.
2.4 Companies may perceive technical and operational risks of implementing energy efficiency projects due to unfamiliarity with energy-reducing technologies and practices relative to core business projects.
Energy team to consider best practice and proven technologies in their energy saving projects to eliminate any hidden risks.
2.5 Energy efficiency improvement is not a major driver for most companies; instead companies focus on their core activity such as production expansion or improvement.
1. Energy team to implement effective energy management procedures in all company activities from purchasing to operations.
2. Having a representative from top management and staff from all of the different functions of the company participate in the energy management system administration and implementation can overcome organizational, behavioral and institutional barriers by creating transparency and facilitating communication on the management of energy resources.
2.6 Professional and functional boundaries within the organization limit the collaboration required to identify and support energy efficiency. (For example, staff who pay the energy bills are different from staff who procure energy-using equipment, who again are different from those who maintain equipment)
1. Integrated terms of reference of the energy team that consist of all related stakeholders will overcome those boundaries and increase synergies.
2. Managerial aspects related to EnMS, in particular culture will, acceptance, recognition and leadership are important factors in organizational change.
3. External barriers
3.1 Uncertainty caused by future technologies and potential unknown regulations and other policy developments (creating uncertainty for the optimal timing of adoption of new technologies).
1. Energy team shall coordinate with related governmental bodies to align the company energy policy with them for any future national targets.
2. The international bench-marking will identify any gaps and support energy team efforts to update and improve energy performance.
3. Well established base line will help the company to identify where they located comparing to other similar plants.
3.2 Lack of expertise and skill of external energy auditors and other energy service providers which can also prevent companies from maximizing energy efficiency.
1. Competency development and training in energy efficiency is a part of the energy policy objectives and energy management system.
2. Energy awareness campaigns will improve stuff energy efficiency awareness.
● Reporting results of assessments to the board can adjust senior management perceptions that no cost effective savings will result and lead to decisions making in favor of energy efficiency project implementation. Similarly, having top management articulate the company’s energy policy and goals will lead to staff becoming more proactive and involved in raising energy issues and offering suggestions for improvement.
● Improving a company’s capabilities in energy data collection and analysis can reduce the perception that energy efficiency benefits are relatively insignificant relative to other core business concerns (assessments and audits done poorly can reinforce that position).
● Life-cycle costing of products and equipment can encourage the purchase of more energy efficient technologies, help overcome information and financial barriers, and priorities new investments.
Please provide your opinions and feedback about those barriers you faced if any to share experiences.
thanks and best regards.