The business case for energy efficiency should be simple: the cheapest unit of energy is the one you do not use.
In spite of this, why is hard to get energy efficiency and energy reduction projects underway?
According to the International Energy Agency (IEA), energy efficiency is the only energy resource possessed by all countries.
Globally, we are making progress on energy intensity – it’s just that we aren’t making enough progress as fast as we need to do.
According to the IEA:
- Global energy intensity improved by 1.8% in 2015 (2014 = 1.5%).
- Emerging and developing countries reduced intensity by 2.5%, doing better than developed countries who managed 2%.
- China is the best performer, with a reduction of 5.6%.
Although this is good, we need to have an annual improvement in energy intensity of 2.6% globally to meet our climate goals.
A 2.6% improvement doesn’t seem challenging. At an individual and organisational level, why is it that we can’t easily meet that target?
The problem is that globally is that more than 70% of energy usage is not covered by any form of energy efficiency performance requirement.
Two-thirds of buildings built do not have to comply with codes or standards.
In these situations, market forces determine what gets done, and people will quite often go for the cheapest option, which may not always be the most efficient.
For example, India is the third largest energy user in the world and installs a staggering amount of solar panels.
As it gets richer, however, it is also installing more air-conditioning, and so its energy demand is rising faster than the amount of new clean generation being installed.
Large projects face large challenges
Governments and policy makers want to meet climate change targets in the quickest and easiest way possible.
That is why they focus on large projects, such as the Hinkley C nuclear plant. The idea is that it will deliver both a substantial amount of secure energy and have a lower carbon impact, helping the UK government meet its targets faster.
The public debate and scrutiny, however, can be intense. It takes a long time to get such projects approved and underway.
In organisations, large energy efficiency projects that involve high capital costs, longer payback times than core business options, or the need to enter into long term agreements with third parties can face several hurdles.
You need to put together business cases, have them reviewed by panels, go through approvals processes before they are eventually accepted or denied.
Governments know this, and that is why much policy focuses on creating new infrastructure.
It is easier to get people to do something new from scratch than it is to have them fix an existing situation.
The solution may lie in a concept called ‘the aggregation of marginal gains’
Doing small things better regularly adds up over time.
This method can be traced back to the Austrian chess player Wilhelm Steinitz, who applied an ‘accumulation of small advantages’ to gain a positional advantage in his play and became the first official world chess champion in 1886.
The most current example of this approach is how Sir Dave Brailsford transformed British Cycling and the performance of Team GB in the Olympics.
His basic idea was that if you broke down all the activities involved in winning cycling races into their component parts and then made a 1% improvement in each of those components, then the gains would add up to a significant amount.
Another example is Mazda’s 1 gram strategy.
What they do is look for ways to save just 1 gram in weight from each component of the car.
The Mazda2 weighs a little over a tonne and this low weight means that Mazda can use less expensive transmission technology, making the car more affordable, more efficient and requiring less materials to build.
At the same time, the lighter car makes for a agile and nimble ride – keeping Mazda’s ‘zoom-zoom’.
Is a 1 kWh strategy the answer?
Instead of focusing mainly on large projects, perhaps applying a 1 kWh strategy is the way to get significant energy reductions in organisations.
In Europe, with two years to go before mandatory energy audit reports for large organisations have to be done for the second time, energy managers should look at the small changes they can make every day.
Look at every component of how your organisation uses energy, and see if you can shave just 1% off that.
There are 200 working days in a year. If you asked each person to work from home just 1% of that time – 2 days a year – what impact would that have on the fuel consumption associated with commuting?
If you have 5,000 lights that are on all the time, what would removing 1% of them, or 50 lamps, do to your operations?
What would a 0.5 degree change in your setpoint for heating or cooling do to your building’s need for electricity?
How would removing one printer in a hundred affect the way in which your business worked?
How would replacing one desktop in every hundred with a laptop impact your staff?
We ignore small wins too often because they don’t seem worth the effort.
The point, however, is that the “long tail” of small wins could get you to where you need to be in terms of energy efficiency without stumbling at all the hurdles that are associated with large projects.
The ‘aggregation of marginal gains’ strategy has worked in fields as diverse as sport, automotive manufacturing and healthcare.
There is no reason why it shouldn’t work across industry and business in general.