At the moment, most decisions about energy efficiency come down to how much energy is saved. But there’s so much more at play. For example, for low income individuals, energy savings are far more valuable than to someone on a higher income. So how do we make sure our energy efficiency decisions reflect more than just how many watts were saved?
Valuing all energy efficiency activities by the watts or Gj saved may be seriously understating the actual value of each energy efficiency activity.
Recognising worth outside of energy savings may lead to more focused business cases, rebates, grants and incentive programs.
These other values are measurable but may vary depending on circumstance. There’s also likely to be more than one additional benefit.
Here are some reasons why the worth of watts saved varies according to context:
- Financial sensitivity – low income individuals, cost sensitive and high energy usage businesses will value the cost savings potential of energy efficiency highly. These savings flow through to everything from health outcomes, balance sheets, to jobs.
- Time of usage – energy use is “peaky” depending on time of day and climate, putting pressure on availability and generation. This means that the reduction in energy that correlates with peakiness has more value.
- Demand response (DR) – an efficient chiller, airconditioning or water pump with DR capability may be controlled remotely and energy use reduced when required to avoid peak events or distribution constraints.
- Distribution capacity pressure – where there are lengthy transmission networks or network capacity is physically constrained, it’s possible to avoid brown outs or costly upgrades by reducing energy use in those areas.
- Generation quality – many remote areas use energy from large diesel generators heavy in emissions and requiring refilling from afar (which means even more emissions).
- Market transitioning – where there is a danger of a long tail to an old technology or a messy transition that may involve dangerous waste, it’s beneficial to manage the transition closely (for example, a fluorescent tube replacement).
- Industry transition – setting up manufacturing and/or service for new technology can restrain a transition to new and better appliances until there is enough support.
There are sure to be other important benefits to be considered but if we accept that the upgrades that deliver a reduction in energy become more valuable as above, the metrics in use should be altered.
Decisions can then be made ensuring the most appropriate and valuable energy efficiency upgrades are delivered first.
Some governments recognise that energy savings mean more to low income individuals
Governments provide funding, grants, rebates and schemes to help energy efficiency, renewables and more recently storage but these policies rarely reflect anything beyond the watts that are saved.
In state energy efficiency schemes, there are a variety of multipliers and discounts that would allow other benefits to be recognised. For example, a justifiable increase in the value of an activity that enables demand response or reduces peaks in evenings will encourage more uptake in this space.
One thing governments do accept is that there is an additional importance of watts saved for low income people, but there is rarely additional value reflecting that acceptance.
There are a few examples, but not many, and applied inconsistently. For example, Energy Queensland has applied a value to savings in capacity constrained areas by providing a rebate by postcode.
We need an energy efficiency value matrix
The publication of a decision matrix including these alternate sources of value will probably help management make decisions. They may not be considering or even aware of these benefits unless these are made available from a credible organisation.
The issue is how to gain the consensus or undertake the measurements to build the matrix on which the values can be applied. It may be worse to create the matrix, which is open to attack and criticism from all angles of bias, than have the current situation where the values are rarely applied.
While we can generally agree that a thousand watts of savings for low income is more valuable than the equivalent activity in more affluent areas, how do these then compare to those in remote or network constrained areas?
Difficult, but certainly not impossible.
It makes my head spin, but why not at least try? If successful, the outcome would be that “energy efficiency plus” activities would be delivered as a priority, and we would all be better off.
Bruce Easton is the founder and chief executive of Ecovantage.
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