interdisciplinary analysis of successful implementation of ... · 1.3 strategic aspects ... 101...

Wuppertal,Vienna,KarlsruheKiel,Copenhagen

February 1998

Interdisciplinary Analysisof Successful Implementationof Energy Efficiency in the industrial,commercial and service sector

Contract JOS3-CT95-0009(1.1.1996 to 31.12.1997)

Final Report

Volume I - Final Report

Research funded in part byThe European Commissionin the framework of the Non Nuclear Energy Programme JOULE III

Projectleader:Prof. Dr. Peter Hennicke, Dipl. Wirt.-Ing. Stephan Ramesohl

Wuppertal Institute for Climate Environment Energy (WI), WuppertalDipl. Wirt.-Ing. Stephan Ramesohl, Dr. Claus Barthel, Prof. Dr. Peter HennickeDipl. Ök. Christiane Becker, Dipl. Phys. Frank Merten

Energieverwertungsagentur e.V. (E.V.A.), ViennaDipl. Ing. Otto Starzer, Waltraud Schmid M.A.

Fraunhofer Institute for Systems and Innovations Research (FhG-ISI), KarlsruheDipl. Volksw. Katrin Ostertag, Dipl. Soz. Edelgard Gruber, Dipl. Volksw. Thomas Frahm

Institute for Psychology (IfP), Christian-Albrechts University, KielPriv. Doz. Dr. Friedemann Prose, Dipl. Psych. Christoph Clases

Institute of Local Government Studies (AKF), CopenhagenDr. Mikael Togeby, Lenette Gjesse, Jacob Klok

with contributions ofDipl. Biol. Alain Schili, Amstein&Walthert AG, ZurichDr. Eric Bush, Bush Energy, FelsbergSwitzerland

Admin

Aus technischen Gründen konnten einige Grafiken und Tabellen nicht eingebunden werden. Sie können diese gerne bei der E.V.A. (Otto Starzer, [email protected]) anfordern.

Contents

CONTENTS .........................................................................................................................1

LIST OF TABLES ............................................................................................................ IV

LIST OF FIGURES ............................................................................................................V

LIST OF ABBREVIATIONS .......................................................................................... VI

CHAPTER 1 BACKGROUND, OBJECTIVES AND BASICPHILOSOPHY.......................................................................................................1

1.1 Background ....................................................................................................................2

1.2 Objectives........................................................................................................................4

1.3 Strategic aspects .............................................................................................................5

1.4 The underlying philosophy - a basic notion of change and policyintervention ............................................................................................................6

1.4.1 Measures of rational energy use are a process ..........................................................................................6

1.4.2 Success criteria..........................................................................................................................................7

1.4.3 Work hypotheses.......................................................................................................................................8

1.5 Basic Framework .........................................................................................................12

CHAPTER 2 ANALYSIS OF SUCCESSFUL COMPANIES.......................................14

2.1 Presentation of company case studies .......................................................................142.1.1 Selection of case studies..........................................................................................................................14

2.1.2 Overview of sectors and measures covered by the case studies ..............................................................15

2.1.3 Overview of company case studies .........................................................................................................15

2.1.4 Four examples of company cases............................................................................................................17

2.2 The methodological framework for the cross-case analysis of successfulimplementation of energy efficiency in SME ....................................................31

2.3 ‘Moving targets’: Fostering factors across all actor levels.......................................332.3.1 Individual Actors.....................................................................................................................................35

2.3.2 Internal Company Interaction..................................................................................................................36

2.3.3 External Actors .......................................................................................................................................36

2.3.4 Basic Conditions ....................................................................................................................................38

2.4 Model of change: Analysis of structural and dynamic characteristics ofthe successful implementation of energy efficiency in SME............................40

2.4.1 Culture, history and the key event: Which pre-conditions prepare the grounds for energy

efficiency measures in SME and where does the triggering impulse come from?.......................... 42

2.4.2 Initiation and decision of an energy efficiency project: What makes the initiative go on and

how does it come to a positive decision?........................................................................................ 48

2.4.3 Conception and Realisation: What makes the realisation of energy efficiency measures work?............ 50

2.4.4 Evaluation and Continuity: What makes the efficiency process go on?.................................................. 51

2.5. Different types of success ...........................................................................................572.5.1 Rating the cases ...................................................................................................................................... 58

2.5.2 Factor analysis ........................................................................................................................................ 59

2.5.3 Clustering................................................................................................................................................ 60

2.5.4 The dynamic of the types of success - Can the companies choose their “style”?.................................... 63

2.6 Conclusions – Implications of the cross-case analysis of SME for policy-making ..................................................................................................................64

CHAPTER 3 ANALYSIS OF PROGRAMMES ............................................................66

3.1 Presentation of Programmes ......................................................................................67

3.2 Exemplary policy cases ...............................................................................................693.2.1 Impulse programme RAVEL.................................................................................................................. 69

3.2.2 The Danish CO2 Tax .............................................................................................................................. 72

3.2.3 ECOPROFIT .......................................................................................................................................... 75

3.2.4 „Energy efficiency partnership“ of PESAG - An energy audit and consultancy scheme by a

regional utility................................................................................................................................. 78

3.3 Cross-Analysis of Programmes ..................................................................................813.3.1 Initiation of Programmes ........................................................................................................................ 82

3.3.2 Conception and Implementation of Programmes.................................................................................... 83

3.3.3 Evaluation and Continuity of Programmes............................................................................................. 86

3.4 Conclusions ..................................................................................................................87

CHAPTER 4. CONCLUSIONS AND RECOMMENDATIONS FORPOLICY-MAKING.............................................................................................92

4.1 Introduction .................................................................................................................92

4.2 General philosophy.....................................................................................................93

4.3 Design of policy measures ...........................................................................................954.3.1 The starting point - key events, their impacts and role............................................................................ 96

4.3.2 How to make energy efficiency important - Getting the top management's commitment ...................... 97

4.3.3 How to keep action going - Company learning and organisational changes.......................................... 99

4.3.4 How to benefit from external relations - Formation and improvement of networks as an

element of market transformation .................................................................................................100

4.3.5 The role of financial instruments..........................................................................................................101

4.3.6 Marketing and management of policy programmes .............................................................................102

4.4 Policy recommendations............................................................................................1034.4.1 Bringing energy on the agenda of top management ..............................................................................104

4.4.2 Increasing qualification and cooperation of energy service market actors by "Impulse

Programmes".................................................................................................................................105

4.4.3 Promotion of energy and environmental management systems............................................................106

4.4.4 Networks for the promotion of energy efficiency ................................................................................107

4.4.5 The role of utilities...............................................................................................................................109

4.5 The relation between selected policy instruments and types of (successful)companies ...........................................................................................................110

4.6 Implications for R&D policy.....................................................................................113

4.7 Transferability of conclusions to Southern European countries..........................1144.7.1 Country-specific features ......................................................................................................................114

4.7.2 Comments on general findings..............................................................................................................114

4.7.3 Comments on recommendations ...........................................................................................................116

CHAPTER 5 FINAL REMARKS ..................................................................................118

REFERENCES.................................................................................................................121

ANNEX I OVERVIEW OF CASE STUDY RATINGS ...............................................125

ANNEX II OVERVIEW ON MURE DATABASE RETRIEVAL..............................131

IV

List of Tables

Tab.1.1: Criteria for successful industrial energy efficiency activities and related programmes....................... 7

Tab. 2.1: Company case studies according to types of energy efficiency measures and sectors

covered...................................................................................................................................... 16

Tab. 2.2: Overview of company case studies................................................................................................... 18

Tab. 2.3: The four types of success.................................................................................................................. 61

Tab. 3.1: Overview of programme cases ......................................................................................................... 67

Tab. 4.1: Impact of selected policy instruments on different types of success............................................... 112

Tab. A 1: Rating of all company case studies on the eight variables............................................................. 127

Tab. A 2: The four types of success............................................................................................................... 130

Tab. A 3: Policy measures for SME in the industrial and tertiary sector from the MURE database

according to types and actors .................................................................................................. 131

Tab. A 4: Selected measures from the MURE database ................................................................................ 132

V

List of Figures

Fig. 1.1: Macro-economic optimum of total costs of energy supply and energy efficiency...............................3

Fig. 1.2: Traditional linear and static understanding of barrier related energy policy......................................10

Fig. 1.3: The two-dimensional basic framework..............................................................................................12

Fig. 2.1: Matrix of fostering factors for cable producer (No.1)........................................................................23

Fig. 2.2: Matrix of fostering factors for tourism enterprise (No. 37) ...............................................................25

Fig. 2.3: Matrix of fostering factors for chipboard manufacturer (No.7) .........................................................28

Fig. 2.4: Matrix of fostering factors for a galvanization firm (No.3) ...............................................................30

Fig. 2.5: Overview of phases of analysis and inputs for policy discussion.......................................................33

Fig. 2.6: Overview of major fostering factors summarised over all cases........................................................34

Fig. 2.7: Model on Internal Company Interaction during the course of a RUE measure..................................41

Fig. 2.8: Overview of culture, history and key events......................................................................................43

Fig. 2.9: Overview of the stage of ‘Evaluation and Continuity’.......................................................................51

Fig. 2.10: Interrelations between different forms of external interaction.........................................................57

Fig. 2.11: Clustering of company case studies in the two-dimensional framework .........................................61

Fig. 2.12: Clustering of company case studies in relation to the original eight variables.................................62

Fig. 4.1: Integrative, cyclic and dynamic policy understanding of the InterSEE project..................................95

Fig. A 1: Average rating of all companies on the eight variables...................................................................126

Fig. A 2: Clustering of company case studies in the two-dimensional framework ........................................129

Fig. A 3: Relation of the four types of success to the initial eight variables ..................................................130

VI

List of abbreviations

AMS Arbeitsmarktservice

CA change-agent

CHP combined heat and power production

CM change-manager

DM decision-maker

E2000 Energy 2000 action programme (CH)

EMAS environmental management and auditing scheme

EMS energy management system

EnR European Energy Network

EP external partner

EPO Environmental Protection Office

GHG green house gases

HVAC heating, ventilaton, air conditioning

IEA International Energy Agency

LEH low energy house

PR public relation

R+D research and development

RAVEL Rationelle Verwendung von Elekritzitätefficient use of electricity

RTD research and technical development

RUE rational use of energy

SME small medium sized companies

VDI Verein Deutscher Ingenieure / German engineer society

InterSEE - Final Report

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Chapter 1 Background, Objectives and Basic Philosophy

The following study represents the final report of the project „Interdisciplinary Analysis ofSuccessful Implementation of Energy Efficiency in the Industrial, Commercial and ServiceSector“ (InterSEE), undertaken within the socio-economic research area of the JOULEprogramme. InterSEE analyses the successful implementation of energy efficiencymeasures in small and medium-sized enterprises (SME) of less energy intensive sectors bycarrying out case studies of successful companies as well as of policy programmesproviding the ground for these activities. The findings of the analysis result in policyrecommendations, aiming to improve energy efficiency of SME within the target sectors.

The following overview should serve as a reader's guideline through the InterSEE report:

Chapter 1 presents the background of InterSEE (1.1), the main objectives of the study (1.2)and reflects its strategic aspects (1.3). A basic notion of change (1.4) explains the relevantterms success and successful companies in relation to energy efficiency and introducesfirst working hypotheses, which serve as a common basis throughout the study. Themethodology of qualitative research (1.5) gives insight into the common interview conceptand the basic framework, both used as a foundation for the empirical case studies.

Chapter 2 highlights one core part of the study - the analysis of successful companies. Theselected company case studies and their main features are presented (2.1). Based on theframework for the cross-case analysis (2.2), major fostering factors supporting the imple-mentation of energy efficiency measures in SME are identified and discussed (2.3). As amain result of the cross-case analysis a model of change is introduced (2.4), which is com-plemented by the presentation of different types of successful companies (2.5). Chapter 2concludes with implications of the cross-case analysis for policy-making (2.6).

Chapter 3 puts its emphasis on the analysis of policy cases. The selected policy cases andprogrammes (e.g. legal measures or programmes providing the ground for the implementa-tion of energy efficiency in SME) are presented (3.1) and some examples illustrated ingreater detail (3.2). The cross-case analysis of programmes points out programme featuresof general importance, taking into account also their historical development (3.3).Conclusions (3.4) summarise the major implications for the design and management ofpolicy strategies.

Chapter 4 derives the conclusions out of the analysis of the company and policy cases. Itpresents the derived general philosophy of the InterSEE findings (4.2), discusses theimplications of lessons from the empirical analysis for the design of policy measures (4.3)and translates them into policy recommendations for improving energy efficiency in SME(4.4). The impact of selected policy instruments is discussed (4.5) with regard to thevarious types of success derived in Chapter 2. The study closes with a discussion of theimplications for further R&D activities (4.6) and with an analysis of the general transfera-bility of the conclusions to Southern Europe (4.7).

Final remarks in Chapter 5 conclude the Final Report.

Chapter 1 - Background, Objectives and BasicPhilosophy

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1.1 Background

The European Union has taken a clear strategic position related to the 1997 Conference ofthe Parties to the UN Framework Convention on Climate Change in Kyoto (Commission1997d). These goals and positions suggest a reduction of energy consumption andemission of greenhouse gases (GHG), which will be the subject of the discussions in 1998.

In contrast to the defined reduction goals, there is strong evidence that a „business asusual“ approach would by no means meet these targets1. Distinct additional energy policymeasures will be necessary to achieve the energy and environmental goals of the EuropeanUnion (Commission 1997b). In this regard, an important contribution are activities topromote and increase energy efficiency in the end-use sectors. In industry, as one of thesesectors, autonomous energy efficiency improvements have been and will continue to beachieved as a result of technical progress, resulting in a decrease of energy intensity.Nevertheless, considerable further reductions of energy consumption and GHG emissioncan be obtained2 and should be stimulated by appropriate policy measures, because

• a wide range of energy efficiency technologies is readily available but not exploited;

• a large potential of cost-effective measures is still untapped due to a variety of barriers;

• increases in energy efficiency result in higher competitiveness.

Generally, there is an enormous discrepancy between the pertinent potentials and the actualimplementation, and an extensive array of "no regret options" can be found. This isparticularly true for small and medium-sized enterprises (SME) in less energy intensivesectors3 of the economy to which the project InterSEE devotes its efforts. More often, alack of information and motivation, financial restrictions as well as market imperfections4,rather than technology deficits, result in an insufficient degree of rational use of energy inthis category of energy consumers. If these aspects remain neglected, a systematicalunderestimation of the contribution of demand-side efficiency options and their impact onCO2 mitigation would take place, causing wrong conclusions for the European energy andclimate policy strategies.

In order to optimise the energy system in terms of emissions and costs, therefore all diffe-rent options both on the energy supply-side and on the demand-side should be systemati-cally compared on the basis of long-run marginal costs within the boundaries of nationaland international CO2 abatement targets. Based on neo-classical macro-economics, a leastcost optimum has been reached for a given level of energy related utility when themarginal costs of energy supply equals the price of energy and at the same time the

1 cf. Commission 1992; IEA 1994b; WEC 1993; WEC 1995; Krause et al. 1996; WWF 19972 cf. Hennicke 1996, Bradke et al. 1996, de Beer et al. 1994, Enquete 1995a, Hofer/Schnitzer 1992, Wuppertal

Institut/Öko-Institut 1995, de Almeida 1994, RAVEL 1992, Togeby/Larsen 1995, Togeby/Pedersen/Lorenzen 1990,Norgard/Viegand 1992, IEA 1987, Öko-Institute 1992

3 The definition "less energy intensive" is understood as low priority of energy costs compared to other cost issues(on average, energy represents 1 - 3 % compared to turnover).

4 DeCanio 1993, Energie und Klima 1990, Enquete 1995b, Gruber/Brand 1991, IEA 1995, Sanstadt/Howarth 1994,Krause et al. 1993


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marginal costs of energy conservation (see Fig. 1.1). As long as the marginal costs ofconserving energy are less than generating and supplying energy, it is more beneficial forthe users and for society to invest in energy efficiency.

Fig. 1.1: Macro-economic optimum of total costs of energy supply and energy efficiency

At this point, the concept of supply curves can make a valuable contribution (Hennicke,Seifried 1996, Öko-Institute, Wuppertal Institute 1995). As a baseline for policy-making,from the supply curves a (macroeconomically defined) least cost mix of energy optionssatisfying a given demand of energy services can be derived. Energy services are under-stood as integrated and comprehensive solutions, combining advanced energy technologiesand necessary services (e.g. energy audits, management schemes, financing) in order toserve the customer's need for warm/cold buildings, process heat, power, communication,illumination, etc. Supply curves of conservation potentials represent a screening toolcontributing to define the goals of an integrated energy policy, because they indicate thesize and the structure of a market for cost-effective energy services (NegaWatt market).

In order to provide an estimation of possible quantitative dimensions of such a market forenergy efficiency, the results of bottom-up scenario analyses of the IPSEP study for thefive largest European countries are briefly sketched (France, Germany, Italy, theNetherlands and UK, representing roughly 3/4 of the electricity use in the EU). At thismoment IPSEP, presents the most comprehensive end-use-scenario analyses available forthese countries, and an appraisal of the relative investment costs of a climate protectionstrategy (Krause et al. 1996). The results of the IPSEP study fit in well with the assessment


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of the German Enquete Commission (1990, 1995) and German LCP case studies (e.g. LCPcase study Hannover, Wuppertal Institute, Öko-Institute 1995).

Looking detailed into the electricity sector, the IPSEP study arrives at the followingresults: the absolute savings in the Min-Cost-Scenario compared to the business-as-usualcase for the EU-5 region would be 20-50 billion ECU per year by 2020 (net of all invest-ment costs). The net present value benefit of fully implementing the electrical efficiencyresources in the 1995-2020 period is about 140-260 billion ECU: „These demand-sidebenefits are two to four times larger than the anticipated benefits from liberalisingEuropean electricity supply markets. If both reform opportunities are combined, economicbenefits would be three to five times larger than those from the supply-side restructuringalone“ (Krause et al.1996, p.iii). The main reasons for these striking differences comparedto DG XVII-scenarios are due to different estimates about the potential and the cost-effec-tiveness of efficiency options. Following a "bottom-up"-approach the IPSEP study looksclosely into more than disaggregated 90 end-uses and 240 efficiency techniques.

Starting from this "conventional wisdom of bottom-up analyses", however, theassessment of techno-economical potentials has to be extended by the socio-economicanalysis of real adoption processes, barriers and resulting policy options. Answershave to be found to the questions: Why are these potentials not automatically implementedby real markets, what barriers must be removed at what costs, and which boundaryconditions, market structures, policy instruments and actor constellations contribute tohigher energy efficiency and to the development of functioning energy service markets.

1.2 Objectives

With respect to the mentioned scope of demand-side orientated energy policy, the prevai-ling "mainstream" philosophy of barrier removal appears to be insufficient to stimulate alarge scale exploitation of cost-effective efficiency potentials. Reflecting a rather mechani-cal and static thinking (see 1.4.3), many complex real world interdependencies and influ-ence factors are neglected. In order to compensate this deficiency, the InterSEE projectaims to develop a new interdisciplinary, dynamic and cyclic perspective for the Europeanenergy and climate policy. Therefore, InterSEE provides in-depth qualitative socio-economic analyses of successful activities in the field of energy efficiency in small andmedium-sized enterprises (SME). The focus is put on the empirical investigation ofpositive examples - i.e. on individual company success stories and well functioningenergy efficiency programmes. Accordingly, the project does not add further analyses ofobstacles to the long list of existing barrier studies, but starts from the contraryperspective:

What can be learned from existing "success stories" about an effective removal ofbarriers? Are the experiences of these success stories transferable and how can thedesign, organisation and implementation of policy programmes be improved in order tostimulate energy efficiency activities in SME?


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The main objective of the project is to increase the knowledge about energy savingactivities in SME and to indicate opportunities for policy-makers and energy efficiencymarket actors to stimulate and to foster the implementation of energy efficiency measuresand the related demand for energy services. More specifically, the project aims

• to provide insight into the underlying internal and social change process of efficiencymeasures (a better understanding);

• to formulate policy implications related to crucial determinants, interdependencies andpatterns of implementation processes (a new philosophy);

• to derive recommendations for the design of policy instruments and appropriate mixesincluding socio-economic marketing and market transformation strategies (a newstrategy).

InterSEE undertakes an interdisciplinary approach, combining techno-economic variableswith socio-economic and psychological perspectives. To achieve this goal, InterSEE

• identifies the main actors involved in the realisation of measures,

• differentiates between successive phases of successful implementation processes,

• identifies and characterises typical fostering factors and their successful combinations,

• develops an interdisciplinary "model of change" to highlight typical patterns of socialinnovation and change,

• and, finally, elaborates policy recommendations on how to foster energy efficiencymeasures in SME by interdisciplinary mixes of instruments.

The results will be discussed with regard to the specific situation of SME and the relatedcontext of (regional) actor constellations and energy service market conditions. In thisrespect, InterSEE will contribute to a more differentiated perception of distinct segmentsof the rather inhomogeneous target group "industry".

1.3 Strategic aspects

InterSEE follows a qualitative approach and generates implementation orientated know-ledge and expertise on change and realisation processes. The study has thus to be seen inthe context of stimulating innovation and adoption of advanced (energy) technologies inSME, reflecting the discussion of strategic goals of the proposed 5th FrameworkProgramme (Commission 1997c).

In view of the future orientation of energy policy in Europe (White Paper on Energy,Commission 1995a), InterSEE complements top-down assessments of aggregated theo-retical potentials and policy options on the one hand, and detailed bottom-up studies onthe manifold efficiency opportunities on the other hand, by an in-depth qualitativeanalysis of real implementation processes.

The identification and empirical backing of policy options for the exploitation of yetuntapped potentials for energy conservation and CO2 reduction will reveal the true poten-


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tial for an active energy policy. Especially by combining extensive bottom-up analyseswith in-depth socio-economic research on implementation processes, powerful argumentsfor intensified demand-side policy engagement can be derived.

The strategic value of in-depth socio-economic research for demand-side strategies resultsfrom a principal difference between energy supply and demand-side structures: comparedto supply-side policies, demand-side efficiency strategies involve a much broader scale ofactors, technologies and types of investments. Equipment and machinery are typicallymuch more differentiated, decentralised and connected to non-energy related investments(e.g. extension of production capacity or buildings). Furthermore, demand-side activitiesoften involve many actors from different backgrounds, and in many cases there is a lack ofestablished communication and cooperation structures. For these reasons, demand-sideoptions are far more connected to behavioural, socio-economic and psychological determi-nants than supply-side options. Hence, the bottom-up orientated strategy for an interdisci-plinary research of change and innovation offered by InterSEE represents an useful andindispensable complement of top-down orientated macro-economic strategies whichinvestigate the overall techno-economical consistency of policy mixes. In combination,both approaches will open new perspectives and possibilities for synergies improving thequality of scientific support to the Commission’s energy policy-making.

1.4 The underlying philosophy - a basic notion of change and policyintervention

1.4.1 Measures of rational energy use are a process

InterSEE takes the following assertions as a normative starting point:

• successful realisation of energy efficiency is the result of consecutive operational deci-sions and actions forming an ongoing process in time rather than the result of an isola-ted and instantaneous event;

• enterprises are seen as a social system rather than an individual agent.

For that reason, implementation processes not only depend on influence parameters of asingle decision-maker but also from a sequence of interactions between various actorsinvolved. Therefore, social and organisational aspects of change processes are emphasisedthroughout the analysis and related questions are:

Energy efficiency measures are implemented only if energy efficiency is on the top ofthe company’s agenda, i.e. it becomes an issue for collective action. This includes thecrucial aspect that energy normally receives little priority of entrepreneurs and mana-gers due to its marginal cost share compared with other cost driving factors (e.g.personnel costs). The pertinent question is: „What makes energy efficiency important?“

The outcome of decisions is strongly influenced by individual preferences, decisioncriteria and procedures chosen by the various actors, which have to develop towards


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higher energy efficiency. The pertinent question is: „How can energy efficiency relatedlearning be initiated?“

The implementation process transforms decisions into activities, which mandates thecooperation of internal with external actors. The pertinent question is: „What kind ofexternal relations are favourable for the realisation of energy efficiency measures?“

Within the InterSEE case studies the investigated energy efficiency activities consist ofvery different projects. These projects include large-scale and long-term investments suchas change of process technology, as well as small scale measures being realised in veryshort time (e.g. fitting of a compressed air system). It was the aim of the empirical analysisto extract general process variables from the large variety of measures of rational use ofenergy (RUE)5, which allow the identification of similar implementation patterns as inputfor policy-making.

1.4.2 Success criteria

It is the objective of the study to gain insights into the decisive interactions and basicconditions of successful energy efficiency activities in SME. For that reason, InterSEEselected positive examples, i.e. only company cases where "something has been done".The underlying criteria on how to define "success" are the common framework ofreference on which the preliminary estimation of a case's success is based. The definitionof qualitative indicators allows the integration of the social and organisational dimension,broadening the perspective and preparing the interdisciplinary analysis of influence factors.Obviously, not all the criteria will be applicable in all cases and it is unlikely that any realexample will match the ideal type. However, the success criteria reflect the common logicbehind all these positive examples, in spite of their specific differences.

Tab.1.1: Criteria for successful industrial energy efficiency activities and related programmes

Quantitative indicators of successReduction of energy consumption and CO2 emissions

Cost effectiveness of measures

Qualitative indicators of success

(Intrinsic) motivation of company actors and decision-makers has been increased

Supportive infrastructure for actors within the firm has been created

Motivation on the level of the firms or institutions has been created or increased

Interaction of the firm with external agents has been improved

Supportive external surroundings for the acting firm have been created or improved

5 From now on, the expressions measures of rational use of energy (RUE measures) and energy efficiency measuresare used synonymously.


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1.4.3 Work hypotheses

The impact and scope of energy policy intervention on the one-side and market drivendevelopments on the other side are heavily debated with respect to the coming liberalisa-tion of the European energy markets and the requirements of an effective climate policy.This discussion can be roughly characterised by two contrasting positions - "traditionalmarket optimists" vs. "green policy optimists" - which reflect two different views on theimplementation of energy efficiency in industry:

One the one hand it is argued that:

• Energy efficiency investments are mainly triggered by the internal economic impulseof the single market actors.

• Economic variables (especially energy prices) are the most decisive determinants forenergy efficiency investments.

• If liberalised from policy intervention, energy markets automatically enforce theexploitation of cost-effective potentials - apart from a few exceptions there are noopportunities for "win-win constellations".

• Due to the interrelation between technical progress, general investment activity andenergy efficiency, any economic policy stimulating general investments through dere-gulation, tax reductions, low interest rates, etc., represents the most effective and thussufficient strategy for energy policy.

• In most cases policy intervention diminishes the entrepreneural scope for action andthus shows a counterproductive impact.

• Due to their superior performance, all cost-effective technologies automatically diffuseinto the market, thus additional larger gains in end-use energy efficiency can only beexpected by innovative break-through technologies, which require significant technicaland financial R&D efforts.

• Low energy prices are the major strategic political goal in order to strengthen theperformance and competitiveness of the European industry.

On the other hand, it is stressed that:

• A wide range of cost-effective energy efficient technologies exists which have to beidentified, analysed and described in detail in order to push the broader market intro-duction of available efficient solutions.

• In many cases, the implementation of cost-effective RUE measures (no regret options)is hindered by a broad range of barriers which can be eliminated by specific policyinstruments.

• Due to structural insufficiencies and imperfections of the energy markets, policy inter-vention is needed to stimulate the exploitation of win-win constellations.


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• Due to the multitude of obstacles, a combination of global instruments (e.g. taxes) withactor and barrier specific bundles of instruments promises an improved impact on thetarget group.

• The manifold profitable but unrealised RUE measures represent an opportunity to cutcosts in SME and thus improve the firms' competitiveness. At the same time, thesepotentials represent a promising and still untapped market for energy efficient techno-logies and services. Utilities can benefit from these new business chances (win-win-constellations) when progressing from pure final energy suppliers to integrated energyservice providers.

• Although a profitable field of action, energy receives only little attention by the SMEmanagement compared to other cost factors or core business related issues. Thus, moti-vation campaigns based on economic arguments and improved economic incentives(e.g. by an ecological tax reform) are helpful, but insufficient to trigger energy savingmeasures.

Although contradictory in many aspects, both perspectives are influenced by a comparablemechanical and technocratic understanding of energy policy and a simplistic view on thefunctioning of "energy markets" (see Fig. 1.2 next page). Based on a rather linear andstatic perception of incentive-impact-relationships, energy efficiency is seen as the resultof a strictly economically orientated decision (Is the RUE measure profitable: yes or no?)which is affected and sometimes blocked by basic conditions and barriers (Weber 1997,Jaffe, Stavins 1994, Velthuijsen 1997, Gillissen et al. 1995). In this context, the necessarydiscussion about appropriate and effective policy strategies and instruments is oftenreduced to a limited categorisation and confrontation of general concepts ("command andcontrol" vs. "market orientated").


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Fig. 1.2: Traditional linear and static understanding of barrier related energy policy

unspecifiedtarget group

Technical Potential

Economic Potential

Barrier

PolicyInstrument

Implementation

Ramesohl, WI 1998

At this point, the InterSEE project can make a contribution to the political debate byproviding in-depth empirical knowledge on successful energy efficiency activities in SME.The research is based on empirical evidence and research experience that has previouslybeen acquired by the authors in a wide range of practical studies in the field of energyefficiency and related barriers. This background leads to the basic assumption that:

A multitude of win-win constellations exist but remain unexploited due to hinderingeconomic, social, organisational and socio-psychological factors, and due to the absenceof functioning energy service markets.

In this context energy policy intervention is needed to disseminate the positive experiencesand innovations from single success stories to larger target groups. Especially in the firstphase of creating a market for energy services, the input of programmes and instruments isnecessary to overcome the existing barriers for dissemination, to connect suitable marketpartners and to stimulate the demand of SME for energy services. Especially the latter is ofgreat importance, because up to now the new business of energy services is mainly drivenfrom the energy service providers but the demand and general acceptance of the firms forbuying energy services instead of only energy has not grown in correspondance. It can beexpected that corresponding to the growth of the energy service markets, policy interven-tion can be reduced. In this respect, InterSEE starts from a more dynamic understanding ofenergy policy-making from which a second basic thesis can be derived:


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Socio-economic marketing and instrument mixes strengthen the demand for energyservices by stimulating social learning, communication and cooperation between actorsin the energy service market. If supported by an modification of structural basicconditions fostering energy service providers, a self-dynamic process of energy servicemarket transformation can be expected.

Taking the mentioned arguments of the current policy debate implicitly into account, thediscussion of the empirical results will be undertaken with regard to the following basicresearch questions and related hypotheses:

• What are the decisive influence factors which determine the realisation of RUEmeasures in SME and thus affect the demand for energy services?

The assumptions are that

generally, energy efficiency is not an "objective per se" but has to be seen in abroader context of environmental concern;

the poor degree of rational use of energy results from implementation deficitsrather than from technology deficits (e.g. non-availability of technical solutions);

implementation processes are not exclusively determined by economic variables -such as cost-benefit ratio or payback time - but also by social and organisationalfactors. Thus increased energy efficiency results both from changes in investmentpractice and from changes in organisational structure and behaviour.

• What is the importance of socio-economic and socio-psychological factors for therealisation of energy efficiency measures?


social innovations within the enterprise are necessary preconditions for successfuland lasting implementation of energy efficiency;

companies represent social systems which are influenced by networks of internaland external interrelations and interactions. Key actors within these social networks- i.e. opinion leaders and multiplicators - are instruments for stimulation, realisationand diffusion of efficiency activities;

SME in less energy intensive industries often lack sufficient technological andorganisational know-how and the personnel resources to implement efficienttechnologies on their own. Therefore intensified cooperations between internal andexternal actors play a strong and supportive role in successful implementationprocesses.


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• How should policy actors design and organise instruments and programmes forstimulating further success stories and a transformation of an energy service market?


policy measures have to be part of integrated strategies consisting of actor specificbundles of policy instruments combined with economic and social marketingstrategies;

the integration of key members of the target groups into the conceptualisation andimplementation of efficiency programmes increases the acceptance andeffectiveness of the measures.

1.5 Basic Framework

During the course of analysis, the diverse and complex amount of empirical data had to bestructured and condensed. The basic understanding of successful implementation of energyefficiency in industry (see 1.4.1) can be characterised by two key dimensions - the dimen-sion of time (i.e. the different phases of an implementation process) and the dimension ofactors (i.e. internal/external actors, their interaction and basic conditions). With respect tothese two crucial categories of influencing factors, a basic framework was introduced inorder to pre-structure the empirical work and to prepare the analysis (see Fig. 1.3).

Fig. 1.3: The two-dimensional basic framework


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The first dimension (different phases of an implementation process) represents the courseof the implementation process over time with the following phases:

• the time before initiation (before energy efficiency or energy conservation is placed onthe company’s agenda);

• the key event(s) (the triggering impulse which generated the idea of increasing energyefficiency);

• the (strategic) initiation (development of concrete efficiency measures and projects outof the first idea);

• the decision (to dedicate financial and personnel resources to the project);

• the concrete realisation;

• the time after the implementation (in which the continuity of effects has to be ensured).

The distinction between the respective phases is ideal-typical, the actual process beingneither a straight line nor strictly rational. Implementation can fail and stop at any of thesuggested phases or fall back to earlier ones. However, the distinction provides a firstreduction of complexity and serves as a concept for the investigation of paths of imple-mentation processes in time and in relation to the specific and often changing involvementof actors from different levels.

The second dimension (different levels of actors) represents actors and basic conditionsinside and outside a company. On the internal company level individual actors and internalcompany interactions are distinguished. For individual actors, three different roles can beidentified which can be taken by different or, in some cases, even the same persons6:

• the decision-makers, who bear the core responsibility for the business in general andhence also for the efficiency measures (e.g. general manager),

• the change managers, who are entrusted with the task of driving and controlling theprocess of change with respect to energy efficiency (e.g. technical manager),

• the change agents, who take on the job of concrete realisation of an efficiency measure(e.g. technical staff),

The level of internal company interaction deals with general internal matters and grouprelations inside the company. Actors outside the company can be differentiated accordingto their respective interaction with the company. The basic framework distinguishesbetween external partners or (social) networks (e.g. similar firms, customers, consultants,energy suppliers, energy efficiency service suppliers, all kind of interest groups) andgeneral basic conditions (e.g. legal, economic or political conditions, energy policymeasures, energy efficiency programmes).

6 This classification will be found throughout the whole report and the following abbreviations will be used:decision maker DM; change manager CM, change agent CA; external partner EP

Chapter 2 - Analysis of Successful Companies

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Chapter 2 Analysis of Successful Companies

It was one major objective of the InterSEE project to gain insights into industrial changeprocesses in relation to the rational use of energy (RUE) in SME (see 1.2). In the secondchapter the results of an interdisciplinary analysis of the qualitative empirical companycase studies are presented. First, an overview of the sample of selected company casestudies with their main features is given (chapter 2.1). In order to provide an impression ofthe multidimensional characteristics of real implementation processes, four examples ofcompany cases are highlighted. Based on the framework for the cross-case analysis(chapter 2.2), an overview of major fostering factors7 is given, followed by a discussion offindings with respect to all actor and time levels (chapter 2.3). As a core result of the cross-case analysis a ‘model of change’ is introduced (chapter 2.4), describing the structural anddynamic characteristics of successful implementation of energy efficiency in SME. Thepresentation of different types of successful companies (chapter 2.5) tries to explain thedifferent ways how SME work with energy efficiency. Chapter 2.6 concludes with impli-cations of the cross-case analysis for policy-making.

2.1 Presentation of company case studies

2.1.1 Selection of case studies

In the analysis, emphasis was put on small and medium enterprises (SME) in less energyintensive industry or service sectors8 in relation to energy efficiency.

This target group can be characterised by the existence of a wide range of untapped energyefficiency potentials and the importance of cross-sectoral technologies, i.e. energy techno-logies which are not related to specific production processes. Examples are lighting,heating, cooling, compressed air. Furthermore, RUE measures are hindered by low finan-cial incentives due to relatively and absolutely low energy costs, and by typical barriersdue to insufficient efficiency know-how and missing personnel capacities to built them up.

It was the principal objective to examine company cases where RUE measures have beenundertaken, i.e. emphasis was explicitly put on successful implementation of energy effi-ciency measures (see also 1.4.2 for success criteria). It has to be stressed that the projectdid not aim to provide a representative analysis in a statistical sense. Due to the focus onqualitative aspects of successful processes, the goal of reaching a comprehensive coverageof sectors and RUE measures was of only secondary importance. Nonetheless, the resul-ting sample of 33 industrial and commercial enterprises, which served as a basis for the

7 In the context of success stories, "fostering factors" are defined as endogeneous as well as exogeneous factors, whichhad a positive impact on the implementation process of energy efficiency measures.

8 The company case studies include a few larger firms which do not fall under the common definition of small andmedium sized enterprises (250 employees). However, due to their relevance for SME e.g. as part of self-organisednetworks joining many smaller enterprises, the examples remained in the sample.


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company case studies, shows a broad differentiation of sectoral and technical features.9

The given heterogeneity of examples was a helpful contribution to investigate the similari-ties as well as the differences between the various cases in relation to the respective basicconditions, company cultures, individual and joint activities.

Special attention was given to the examination of interactions between the internalcompany activity and the role of external actors constituting the social and economiccontext of the energy system. Therefore, the sample includes RUE measures involvingindustrial and commercial enterprises, public authorities (federal, regional, local), publicinstitutions, energy agencies, public and private utilities, industrial associations,consultants, universities, and standardisation institutions.

2.1.2 Overview of sectors and measures covered by the case studies

Table 2.1 gives an overview of the sectors and types of energy efficiency measures invol-ved in the 33 company case studies10 undertaken (see tab. 2.1 next pages). All in all, theInterSEE company case studies cover 10 technical and 4 organisational groups of RUEmeasures realised in 11 different sectors. The technical measures applied most frequentlyin the 33 case studies are in the areas of heat recovery, control systems, motors and drivesand heating systems. The area of energy book-keeping (e.g. energy management systems)is the major organisational measure undertaken.

The sectors involved range from the rather ‘process-orientated’ industry (e.g. metal manu-facturing, paper) to trade and service - including tourism - and present generally less ener-gy-intensive branches, i.e. energy costs are of minor importance compared to other costfactors such as labour. The majority of companies are in the area of iron, metal andengineering (11 firms), however this sector still covers a huge variety of sub-sectors.Besides the food industry (5 firms), the other cases are more or less evenly distributed.

2.1.3 Overview of company case studies

During the course of the following analyses, frequent reference will be made to singlecompany cases. In order to allow an orientation on the features of the empirical basis, amore detailed overview of the various company case studies and the realised energyefficiency measures is given (see Tab. 2.2).

9 Beside the case study firm itself, additional companies and institutions were interviewed when they played animportant role during the process (e.g. utilities providing audits, suppliers etc.). Additional interviews were carriedout to investigate the policy cases presented in Chapter 3. All in all, 63 firms and institutions were studied with a farlarger number of actors involved and interviewed (158). A documentation of company case studies can be found inInterSEE Final Report Volume III.

10 During the course of data processing, the case studies were numbered from 1 to 38. The gap to 33 results from thecases 14, 23, 24, 26, 27, which present network coordinators/members and suppliers, not considered as companycases. The numbers refer to the presentation of case studies in table 2.2, and are consistent throughout the wholereport, helping the reader to easily identify and distinguish the cases.


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Tab. 2.1: Company case studies according to types of energy efficiency measures and sectors covered(The numbers identify the single case study as listed in the next Tab. 2.2)


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Table 2.2 on the next page presents the companies’ business, the number of employees andthe yearly turnover (columns 1, 2). All major energy efficiency measures considered forthe single case study are listed and described by economic (investment costs, paybacktime) and technical (energy savings) information (columns 3, 4, 5). The indicated paybacktimes represent values which the companies perceived as the actual rate of return for theirinvestments. They are based on total investment costs and not on additional investmentcosts ("energy efficient" versus "normal" technologies) and thus are in general overestima-ted. All data are derived from the case study interviews and from company-specific infor-mation material. Especially economic data are strongly dependent on the company’sinformation and thus not always complete.

Energy savings are indicated in percent (%) and usually related to the total energyconsumption of the company, otherwise it is mentioned separately (e.g. electricity 10%,solar 60%, system 30%). Interestingly, data for the quantification of success (e.g. energyand cost savings) were in many cases not available (n.a.), e.g. it was too difficult tomeasure the resulting energy savings because of a simultaneous production increase.

Payback times mentioned are in about 2/3 of the cases below 3 years, representing mainlymeasures in the areas of waste heat recovery, motors and drives, lighting, compressed air,load management or boilers. The investigated installations of CHP systems had higherpayback times of about 5 years. Payback times of 10 years or above were only found in thecase of a solar heating system and a CHP system with absorption refrigerating machine.

In column 6 the relevant actors involved in the realisation of energy efficiency measuresare listed. The last column indicates whether the company participated in a specificprogramme. If possible, information on subsidies is included, divided into fundings forconsulting (C) and into investments subsidies (I).

2.1.4 Four examples of company cases

It was the objective of the empirical work to observe and understand the history, the courseand the determinants of implementation processes of RUE measures. Through interviewswith actors involved, internal and external factors of influence could be identified andisolated. They have been structured in a matrix of fostering factors following the two-dimensional framework of time (process stages) and actor levels (see 1.5.2). The followingfour examples illustrate, that RUE measures can be realised from various backgrounds bytaking different paths. In this regard, the examples represent four different types of successas they are discussed later (see chapter 2.5).


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Tab. 2.2: Overview of company case studies


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Tab. 2.2: Overview of company case studies (cont’d.)


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Tab. 2.2: Overview on company case studies (cont’d.)


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Tab. 2.2: Overview on company case studies (cont’d.)


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Example 1: A cable producer (case 111) - Type "High profile"

The company is a medium-sized cable producer with about 190 employees. Since the1920’s the company has been owned and managed by the founder family. Having oncestarted with the production of telephone cables, the firm has been facing an increasedcompetition on the cable market which has forced it to concentrate on special applications.Focusing on customised solutions and service, a distinct niche strategy is followed. Thefirm is renowned for high quality cables especially for dynamic applications such as lifts orproduction roboters.

The process of implementing energy efficiency in the company gained momentum mainlydue to its engagement in the eco-audit process (EMAS) during the last three years. In thepast, efficiency measures were hardly undertaken. If at all, activity was a passive reactionto an unusually high energy bill or a sudden breakdown of equipment like the replacementof inefficient electric drives by modern efficient technology. Until three years ago, asystematic approach to looking for improvement potential was totally missing. Since 1993,the company has been following an implementation orientated trial and error approach,consequently looking for its own solutions and emphasising the integration of staff into therealisation. Several projects which reduce energy consumption have been realised, e.g. theextended retrofit of the lighting system in the main production area with a reduction of 250MWh/a (ca. 80% of former consumption). In 1995, the company gradually started to installmeasuring units and introduced a general principle that every new or retrofitted machinegets its own measuring device. The next major step will be the establishment of an electricenergy management system.

Findings

The owner and company leader can be characterised as having an outstanding social andentrepreneurial responsibility, so that ecology became a central paradigm for his decision-making. Energy saving activity is perceived as another step towards taking social andglobal responsibility. The personal attitude of the company leader has a strong influence onthe organisational culture and the related motivation of the staff.

The company had very unsatisfying experiences during the ISO 9000 certification process.Here, an external consultant helped to achieve the certification, but the internal actors hadnot been integrated into a lasting change process. For this reason the management decidedto choose an alternative approach for the EMAS concentrating on visible and direct results,even if the preparation time for certification took longer. The EMAS provided the first ideaand structure on how to analyse the company’s energy situation and on how to addresshidden potentials systematically. Improvement potentials have been analysed step by stepand than tackled immediately. Due to this close interaction between analysis and realisa-tion, all participants have had direct feedback on results and experiences. Furthermore,organisational structures have been established with the objective to integrate the staff at

11 The numbering refers to Tab. 2.2 on page 18


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the worker level. It has been expected that this participation would contribute to the EMASphilosophy taking roots in the staff´s attitude.

The relevant actors received lasting support by management eliminating personal risks.They had the necessary freedom to act and to try new paths, and were provided supporteven in cases of failure. The planning and realisation of the implementation were fullydecentralised.

This firm belongs to a group of six regional companies forming a small circle of pioneerenterprises and actors. The heterogeneity of the members in terms of size and branch allowa fruitful exchange of experiences and gave several valuable inputs to the internal impro-vement process. Furthermore, the company was participating in a pilot project of theGerman engineer society (VDI), which aims to develop an experience-based handbooksupporting SME during the EMAS procedure. This fostered the EMAS implementationprocess by providing access to methodology and expert know-how. A distinct culturalfeature of the firm is the external orientation and the permanent search for contacts,impulses and ideas at many workshops and information events. The company has verygood relations to a regional university, and for the introduction of the EMAS two studentswere responsible project leaders. During the first phase of the project this had the advan-tage that the risk of wasting time and money on external expertise was minimised bycommitting a student.

Fig. 2.1: Matrix of fostering factors for cable producer (No.1)


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Example 2: A tourism enterprise (case 37) - Type "Top-down promotor"

The investigated hotel/restaurant is a family-run business, taken over by the present owner18 years ago. The hotel is situated at about 1,600 metres above sea level in the middle of anature reserve. It offers special services for families (“family hotel”) and caters to a largevariety of sports interests (partly in a special pavilion owned by the hotel). The companyemploys 24 staff members and has a turnover of 1,4 million ECU per year. In his capacityas the owner, CM is also responsible for energy matters.

In 1992 a 24-square-metre solar collector for hot water and heating in the staff quarterswas installed as part of the re-building of the staff dorms. Costs for purchasing andinstalling the solar energy system amounted to 21,600 ECU (subsidy of 3,600 ECU). Thecalculated payback time according to savings amounts to 15 (with subsidies 12.5) years.Due to the perfect location (11 months of sun) fuel oil consumption could be reduced bymore than 60%.

In 1994 the hotel’s sports pavilion was built within three months as a low-energy-building.Moreover, the building includes a modern building control system to operate lighting,heating, all motors for the swimming pool and sauna, as well as cooling. The system islinked to a personal computer at the hotel main office. When the sports pavilion was built,preparations were made for another solar heating system. The use of low-energy-buildingtechnologies led to only a minimal increase in investment costs compared to a ‘normal’building. The control system and computer equipment cost 12,200 ECU. Despite the addi-tion of two buildings, energy costs have remained stable.

Findings

The hotel’s owner (change manager/decision-maker, CM/DM) was the driving forcebehind all activities. H hase always been fascinated by solar technology. About 10 yearsago he had the idea to install solar collectors in his hotel. Since then he has been lookingfor reference systems at other hotels and residential buildings. About 8 years ago the hotelfaced for the first time tariff adjustments by the regional power utility. This was when thehotel’s electrician installed the first peak load monitoring advice.

For all the energy efficiency measures, enlargement plans prepared the ground for theaction (e.g. the re-building of the staff dorms for the installation of the solar collectors).The idea for the wooden low-energy house came from CM himself, the driving factorhaving been the short construction time of three months required for a wooden building. Itwas the electrician who had the idea to install also a new building control system.

Planning for the re-building of the staff quarters was done by the owner himself, the solarcollectors being part of it. No use was made of any consulting or cost calculation services(e.g. regional energy agency). For the new construction of the sports pavilion CM chose anexperienced architect, a specialist for modern wooden buildings and modular buildingsystems. The electrician provided all data for the control system. He had learnt about thenew technology via a leading electronic company. The project now gave him an opportu-nity to build a pilot facility.


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Generally speaking, environmental protection is of great significance for both the companyand the region, whereas cost savings and image enhancement were of secondary impor-tance. High energy costs had never been a burning issue for CM, because energy costs areminimal in relation to turnover. Being a member of a ‘hotel information exchange group’,he furthermore knew that the energy bill was not too bad in comparison with other hotels.One member of this group, an ‘energy freak’, was already operating a solar energy systemhimself. Additionally, none of the measures were geared to fulfil a concrete expectationfrom outside and in CM’s eyes investment costs are always an argument against energyefficiency measures. The low-energy-building option did not cause any significant costincrease compared to a ‘normal’ house. Besides obvious cost reasons, the building controlsystem was mainly installed to make operation less labour-intensive.

The owner considers the realised energy efficiency measures to be a success and sees hisexpectations fulfilled. To explore further energy conservation options, CM has entered hishotel in the ECOPROFIT Bregenzerwald programme, an initiative for the regional touristsector. The next major proposed investment is the construction of a skiing hut. CM’s ideais to install a wood-pellets fuelled heating system, since neither oil nor gas are availableand pellets are easy to transport. In spite of the success, marketing of the realised measureswas of minor importance. The regional energy agency has visited the systems. There issome information about the solar array in the hotel brochure (under the heading of“Economy and Ecology”), in addition to an item about the consistent at-source wasteseparation.

Fig. 2.2: Matrix of fostering factors for tourism enterprise (No. 37)


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Example 3: A Manufacturer of Chipboards (No. 7) - Type "The technical solution"

The company produces chipboards for the furniture and construction industry. It is settledin Denmark and has 53 employees, working in five shifts. In 1990 the company was takenover by a Danish concern. The company is a small production unit (50,000 m3/ year), withthe management and the administration placed at the concern. The yearly costs for energyare around 600 thousand ECU.

The energy issue came on the agenda in 1989, as the company was offered a freeelectricity audit. The audit was performed by a research institute, the local electricityutility and a firm of advising engineers. After the take-over in 1990, the company slowlystarted to realise the most profitable projects mentioned in the audit report. Apart from thefree electricity audit in 1989 the company has not received subsidies in relation to energyefficiency. Due to the rise in the Danish CO2 tax, the company had a second – self-financed – electricity audit in 1993. The company is not yet certified, but the concern isplanning to get an environmental certification.

The energy activities are seen as a means to save money. In 1993, the company invested ina computerised energy-accounting system. The energy-accounting system is a tool forknowing at which processes and at what time of day the energy is used. This way thecompany can minimise the energy consumption and plan in relation to the Time-Of-Day(TOD) electricity prices. By planning after TOD the company can minimise the use of themost energy-intensive processes in the hours where the electricity is most expensive, andthis way plan in relation to the electricity utilities’ variation in electricity prices. Besides,the economic benefit the company has reached by planning in relation to TOD the energy-accounting system has resulted in energy conservation, e.g. in relation to compressed airand by adjustment of the motor size used for different machines.

The motivating factor for the company to start working with energy was the importance ofreducing production costs as much as possible to improve their competitiveness. Theenergy-accounting system has been a useful instrument for reducing the company’s energyexpenses, and it has also been helpful for the Change Manager (CM) to document energyconservation for the concern, when they should approve investments.

Findings

The company’s work with energy has a technical character, and CM is the only persondirectly involved in working with the energy issue. His technical background gives him theexpertise to practise, and he sees it as a challenge to find new technical solutions todecrease the energy consumption. He is both change manager and change agent, becausehe is in charge of the overall decisions and the practical changes in relation to energyconservation. The work is part of his hobby, and it is due to CM that the energy issue is onthe agenda, and that the company has reached successful results in relation to the issue.


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His work with energy started with an interest in the company’s energy consumption. Thelocal electricity utility read the meters at the company every half-hour, and as CMconstantly asked for the measurements, the utility encouraged him to contact a softwarecompany and to have an energy-accounting system developed. CM is handling the workwith energy alone at the company, but he is in current contact with an energy adviser(External Agent, EA), who was involved in the preparation of the first and second energyaudit. EA and CM have inspired each other in working with the energy issue. Otheremployees have played a practical role by reading manual meters, but they have not beeninvolved in how to work with the energy issue. No organisational changes have been madein relation to the work with the energy issue. The fact that employees work in shifts ismentioned as a barrier to involving the foremen in the work with energy.

The cooperation between CM and EA continues and it brings both CM and EA acontinuing inspiration in working with the energy issue. For example, the EA finds thecompany’s work with energy so interesting that he will use it as a positive example atother companies. The continuing cooperation (around 10 years) between CM and EA hasadvanced from an earlier solely technical character also to contain a social character. Whendeveloping the special software the software firm (Technical Supplier, TS) has mainlyinfluenced the company in a technical way, but during the process there has also been asocial transfer of know-how from TS to CM in relation to treating the energy issue.

As the company is a small production unit and both the company and the concern value theenergy issue from an economic perspective, there is an economic limit to how muchmoney it is profitable for the concern to spend on CM’s work with the energy issue. If thecompany’s work with the energy issue shall continue, it is important that CM staysinterested, and the concern can contribute to this by giving room and resources to continuethe work. Whether the concern will make this priority depends on how isolated it views theexpenses for CM’s work with the issue. The company is a positive example for theconcern, and it has e.g. implemented the same kind of energy-accounting system. In thisperspective the concern gets economic savings because it does not have to invest moneyitself in developing a data gathering system. As the concern plays a financial role in thecompany’s work with the energy issue, the energy-accounting system makes it easier todocument energy conservation, which the concern demands if it shall support investmentsat the company. The transfer of know-how from CM to the concern has both a technicaland social character. A kind of social learning takes place when CM continuously informsthe concern of how he works with the energy issue.


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Fig. 2.3: Matrix of fostering factors for chipboard manufacturer (No.7)

Example 4: A galvanization firm (No.3) - Type "The starters"

The galvanization firm is located at the edge of the Black Forest in Baden-Württemberg.The company was established in 1922 and has been owned by the same family ever since.Today, it has 36 employees and an annual turnover of about 2.5 million ECU. Thecompany specialises in different types of galvanization processes.

Energy as a subject appeared on the agenda of the company in 1992. Due to its location ina prevailingly residential quarter, the company was confronted with technical limitations ofelectricity supply, emissions and waste water. Since 1989, the head of the company hadtried to buy an estate in an industrial quarter in the town for relocation but the communityfailed to make a suitable estate available. With the decision to abandon relocation and tofind a solution at the existing location, the company head realised that the crucialhindrance for further development was the capacity of the transformator and the cables,which limited the amount of available electricity and which was a hindrance to furtherinvestments. Thus, the technical regime was the decisive argument for prompting thoughtsabout an energy concept. Reducing electricity demand seemed to be the most cost-effectiveway to solve the problem and to make further investments possible.

The company's energy concept includes a large number of technical measures and a cata-logue of behaviour rules in case the limits of the electricity supply should be reached. Thetechnical measures are: energy management system, optimisation of temperature of thegalvanic baths, lighting optimisation, new efficient air compressors with heat recovery,


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multiple use of process water, cooling and building insulation. The company spent about350,000 ECU on the planning and implementation of the concept and realised an overallpayback time of 2-3 years. The firm received no subsidies. The energy concept yields areduction of annual electricity consumption by 300 to 350 MWh (about 25 %) and of fueloil consumption by 15,000 to 20,000 l (about 33 %). Besides costs and energy savings, italso contributed to a decrease in wastewater, to an improvement in product quality andworking conditions.

Findings

At the beginning of the process considered, the galvanization firm maintained a well-established relationship with an external electrician. He was normally consulted in mattersof heat control and electrical installation. As the electrician is a knot of a larger network ofactors working on energy, he was able to find an engineer specialised in energy efficiencyand to arrange a first meeting between the owner and manager and the engineer. From thispoint of time (1992), the company was also linked to this energy specific network.Nevertheless, the network connections are restricted to the links to the electrician on theone hand and to the engineer on the other.

The owner and manager did not establish any particular organisational units to plan theenergy concept. It was managed alongside the normal business. All machine operatorswere involved where necessary, and the owner and manager transmitted some informationabout the energy concept during the daily work to the employees. It was during this phasethat the owner and manager changed his management style from an authoritarian approachto a more dialogue-based communication, which helped to overcome fears and objectionson the side of the employees. From a technical point of view, the automation of the coreproduction processes fostered the implementation of the energy concept, especially of theenergy management system.

The most important input of the engineer was knowledge based on his experience and oninformation provided by technology suppliers. The role of the electrician changed from theusual workman tasks to those of an advisor and mediator between the company actors andthe external engineer, fostered by his extensive technical knowledge about the electricalinstallations in the company’s buildings. This holds for the initiation, decision and realisa-tion phases.

According to the statements, the relationship between the company and the utility can beconsidered as continuing, but only activated if necessary, e.g. for negotiations about elec-tricity meters. As the utility behaved in a non-cooperative way and reacted phlegmatically,this relation is judged to be hindering rather than fostering. The owner and manager andthe engineer both point out that utilities should play a more active role in energy effi-ciency, e.g. by giving impulses or by arranging contacts between firms and consultants.

Although the company was not planning other energy efficiency measures at the time ofthe interviews (September 1996), the relationship to the external engineer has not beenbroken because the original social relationship has been strengthened by the addition of atechnical link. Using on-line connection, he controls the data of the energy management


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system and gives feedback to the company. This can be taken as a favourable starting-point for an ongoing involvement of the company in an energy specific network. Shouldthe need arise, the influx of new ideas and know-how seems to be possible this way.

This case shows in a typical manner the important role of changes in production techno-logy or firm relocations for lending the energy subject a higher priority inside a firm. Asthe company has no internal expertise on energy efficiency, it is the well-established rela-tionship to the external electrician that works as a channel for the influx of energy effi-ciency knowledge provided by a specialised consultant. On the internal side, the wholeprocess is dependent to a high degree on the owner and manager. He is the moving powerduring all phases of the process. Since customers transferred the information about energysavings into demands for price reductions, the case shows the general difficulty in"market-to-market" relations in developing a "green image".

Fig. 2.4: Matrix of fostering factors for a galvanization firm (No.3)


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2.2 The methodological framework for the cross-case analysis ofsuccessful implementation of energy efficiency in SME

InterSEE contains many different case studies, each of them with its individual context andhistory. In order to gain the desired in-depth knowledge about specific determinants andconditions of real processes without neglecting the need for general evaluation andtransferable conclusions, the empirical analysis of the single case studies has to meet twocore requirements:

• the specific characteristics of each single example have to be accounted for

• and the results of the analyses have to be made comparable.

Regarding the first aspect of covering the specific characteristics, the qualitative researchstrategy of InterSEE focusses on three guiding principles. First, the complexity of theorganisational context that leads to different paths of implementation processes isdescribed (contextual perspective). Second, successful implementation of energyefficiency is seen as a social process in time with different stages; the various elements ofthe process - from its history, the key events, up to its concrete realisation and continuation- are specifically addressed (process perspective). Third, the different actors involved, andtheir individual ways of perceiving the different steps of an implementation process areidentified, interpreted and evaluated (intersubjective perspective).

With regard to the second need of general comparability, a concept for the interviewprocedure was derived. It served as a common orientation for the interviews and theempirical case studies in order to guarantee common standards of data collection andprocessing. It follows the underlying assumption, that characteristic similarities of processpatterns are partially independent from techno-economical categories such as sector or sizeand consisted of three parts:

Part A covered quantitative data concerning the company and the realised energyefficiency measures.

Part B questioned qualitative data along the whole implementation process of theenergy efficiency measures. This part is structured by a defined range of core subjectsaccording to the basic framework (see 1.5) and was used as a common guideline for theinterviews with actors involved in the process.

Part C is an additional questionnaire which encouraged the interview partners to sumup their personal experiences after the interview was carried out. This part was notanalysed separately but served as an additional source of information.

Every company case represents an extensive and detailed history of RUE in the respectivefirm due to the multitude of actors, basic conditions and influencing factors. In order toreduce complexity and to come to general conclusions and policy implications, the prevai-ling factors driving the process had to be identified and analysed12. In a first step, the

12 For the applied methodology of qualitative socio-economic research see Glaser, Strauss 1967, Kleining 1982,Mayring 1990, Lamnek 1993


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interviews (mostly 2 or 3 interview partners for each company) were condensed by isola-ting significant core statements (examples: see text boxes in chapter 2.4). From the resear-chers’ perspective, these core statements describe crucial experiences and judgementsabout the context and the energy efficiency measures expressed by the interview partner.

In a further step, the core statements have been screened for fostering factors and impulsessupporting the implementation of energy efficiency. Based on the two dimensions of actorrelations and process phases, the fostering factors of the cases are categorised by a matrixof fostering factors (see examples for company cases in chapter 2.1.4) which opens thepossibility to search for similarities and differences between cases of different origin andnature. During the cross-case analysis, the following steps were carried out:

• Putting the analysed cases together, all sets of fostering factors have been compared bylooking for similarities and differences.

• A pool of fostering factors for each of the cells of the matrix was assembled from allthe cases. This pool generates an overview of dominating fostering factors which canbe targeted and influenced by policy-making ("moving targets"), see section 2.3.

• For each of the cells, a hierarchical set of categories was derived.

• In the next step, the categories and sub-categories of each cell have been analysed withrespect to their interdependencies and their impact on the scope of policy intervention("model of change"), see section 2.4.

Reformulation of process stages

In the course of data analysis it turned out to be useful to join the stages of ‘time beforeinitiation’ and ‘key event’ and to discuss them as a whole. There are some companies inwhich the actors interviewed are not able to point out a single key event but describe thedevelopment of energy efficiency activities as a slow and incremental process. Othercompanies actually point out key events for their activities in energy efficiency, but theimpact of the triggering situation is often closely linked to the ‘time before initiation’, e.g.the company’s history, the already established company culture, and the surroundingmilieu. In both cases one can not identify the time of an absolutely new beginning.Efficiency projects do not start from scratch, but are strongly influenced by the givensituation.

Additionally, the stage of ‘strategic initiation’ and the ‘decision process’ have beenmerged. Empirical evidence suggested that the single decision act can not be separatedfrom the previous preparation phase, where firm preliminary decisions concerning criteria,data, measurements and cooperation are taken.

This led to a reduced set of four process stages which will be introduced and discussed inthe subsequent chapters (see 2.4):

• the company’s culture, history and the key events,

• the internal initiation and decision,

• the conception and realisation, and


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• the evaluation and continuation of activities.

In addition to the process orientated analysis and the resulting model of change (2.4), thedifferent paths to successful implementation of RUE measures are studied from theperspective of company types (see. 2.5). The rough differentiation between four typicaltypes of success represents a first segmentation of the target group of SME. For thereader's orientation, an overview of the following sections of Chapter 2 is given (Fig. 2.5).

Fig. 2.5: Overview of phases of analysis and inputs for policy discussion

2.3 Moving targets decisive fostering factors

2.4 Model of change - General patterns of social processes - Interdependencies of influence factors - Conditions for interaction with external actors

2.6 Conclusions Policy implication

2.5 Types of success Rating of case studies factor analysis clustering of cases 4 types of success

Case studies empirical material Core statements

2.3 ‘Moving targets’: Fostering factors across all actor levels

The main issues from all cases for each actor level are summarised according to the wholematrix of fostering factors13 (see fig. 2.6), which can be called "moving targets". Thisconcept refers to elements of the process that are either in motion or that are to be movedin order to support energy efficiency in SME. At this stage, the presentation remainsdescriptive and gives an overview of the factors of positive influence. Later in section 2.4.the process elements are described as possible starting points for policy intervention.

13 This matrix presents an overview of all major identified factors without further order or weighting.


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Fig. 2.6: Overview of major fostering factors summarised over all cases


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2.3.1 Individual Actors

Internal company key actors are responsible for the initiation, realisation and continuationof efficiency projects in SME. As such, internal company key actors represent a decisiveknot in the complex network of internal and external company relations. Observationsfrom the case studies are:

• If the key actor is at the same time the decision-maker (this very often holds for thesmaller SME), his pro-environmental attitude and especially an innovative understan-ding of management represent fostering factors for efficiency projects. In this case, thetopic of energy efficiency receives higher priority which helps to overcome the crucialbarrier due to the overcharged time budget of SME executives.

• In many SME, however, the key actor is not part of top management, e.g. if a foremanor the leader of the maintenance department works as the driving force in the process.In this case, the key actor needs to achieve the commitment of decision-makers and toassure a personal backing for his activities. A certain leeway regarding responsibilityfor action provided by top management enables the key actor to dedicate scarce worktime to the issue and to react quickly to unexpected events and developments in thecourse of a project. The key actor's competence to argue for the project (e.g. by refer-ring to positive external examples/internal experiences, by providing persuasive cost-benefit-analyses, by integrating external partners in the negotiations with top manage-ment, etc.) is a strong fostering factor especially in the stage of project initiation.

• For the continuation of efficiency activities in the companies, the key actor and otheractors involved in the project are the source of new impulses for proposing new areasfor action. Often, the key actor takes over the task of summing up the results achievedin a project and communicates the benefits and experiences inside the company.

• For the continuation of activities in energy efficiency the key actor contributes to theinternal stabilisation of new routines. He does so by helping to turn innovative activi-ties into routine practices. For long-term success it seems to be important that the keyactor helps to build up a self-supportive infrastructure, because the whole processbecomes very vulnerable if the activities of key actors are only loosely connected to theorganisational structures and are dependent exclusively on their own personalengagement.

• The internal company activities in energy efficiency are strengthened if the key actorcommunicates results outside the company (e.g. in associations, lectures, media). Therecognition of successful activities outside the company fosters the motivation of thekey actor and shows him that he is on the right track. Additionally, the multiplicationof the experiences contributes to the diffusion of innovative energy efficiency activitiesto other companies.


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2.3.2 Internal Company Interaction

Concerning the level of social processes of interaction and communication betweendifferent actors inside SME, the following elements could be found which havecontributed to the successful implementation of energy efficiency:

• Inside the SME a general motivation to become active in the field of energy efficiencyhas to be created. Therefore opportunities in terms of energy efficiency have to beperceived by actors within the SME. As an important background variable, a companyculture that is characterised by an innovative pioneer’s attitude serves as a fosteringfactor because in this case internal actors generally tend to look for new possibilitiesmore actively.

• SME start their work in energy efficiency if "the right people meet on the rightoccasion", i.e. if generally motivated actors are confronted with e.g. changes inorganisational structure, technical problems or constraints in the production process.The unexpected necessity to act helps to get energy efficiency on the agenda.

• The initiation of an efficiency project can be seen as the start of a social learningprocess of the company. Contributing to the continuity of activities, the learningprocess is fostered by the feedback of successful interim steps during the realisationand of the outcomes at the end of the project (summative evaluation).

• The active involvement of staff is an important possibility for fostering the internallearning and diffusion of efficiency activities. Staff-orientated organisational measures(such as internal trainings of staff, regular work groups, suggestion contests, proposalsystems) and the use of multiple internal company communication channels (personaland informal face-to-face communication, newsletters, information meetings, etc.) helpto create possibilities to talk about the energy issue.

• The end of one measure opens good opportunities to become the beginning stage of anew RUE project, e.g. because the existing motivation and experience can be used andthe internal efficiency related know-how has increased.

2.3.3 External Actors

From the policy perspective, a very important result is that in all of the case studiesexternal actors played a crucial or even the most important role for the implementationprocess. This observation indicates the need for an active demand-side efficiency policy:

• In the time before initiation of an energy efficiency project external actors play thedecisive role in bringing the issue on the agenda. In most of the cases the initialimpulse came from outside the company. The first kick can be divided betweenexternal demands (brought to the company by authorities, customer expectations, etc.)and external opportunities (offer of energy audit, participation in a pilot project, etc.).


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• One type of company used already existing external contacts in a new way - nowfocusing on energy efficiency. In this case, a fostering factor is that SME are able toassess the reliability and trustworthiness of the external partner in advance based onprevious experiences. Other companies received external impulses from actors withwhom they had no or only limited contact until then. Here, new contacts have beenestablished due to the activity of external actors, e.g. in the context of programmeactivities or by an offer of utilities for energy services such as audits.

• If regular external exchanges of experiences with other companies exist, thesemeetings or workshops serve as a chance to communicate the benefits of energyefficiency as a cross-sectional issue. The communication of business experiencesamong companies enables a comparison of performance (e.g. benchmarking of energyefficiency related key figures) and pioneers give impulses to followers to imitatesuccessful improvements.

• A suitable tool to sharpen the awareness of potentials and get negotiations on concreteprojects going are energy audits. Professional energy audits help companies to obtain adetailed overview as a concrete first step to prepare a decision for efficiency projects. Itis an important fostering factor if the external partner proposes concrete alternativesolutions or a hierarchy of projects that can later be realised step by step. All SME inthe sample that have made an audit received (partial) subsidies for this.

• External partners help to legimitise and push the proposed project inside the company,especially in cases where the key actor does not belong to top management (see 2.3.1).

• At the stage of initiation when different possibilities and technical solutions areinvestigated, the technology suppliers play an important role. SME tend to stick to theirtraditional suppliers as the cooperation is often characterised by a long-termrelationship. At the same time technology suppliers do not necessarily provide the mostadvanced energy efficient equipment. Consultants or the exchange with othercompanies help to put a certain pressure on the supplier to find more energy efficientsolutions. With external advice SME also overcome insecurity concerning thereliability of innovative technical solutions and unknown suppliers which helps toestablish new promising supplier relations.

• External partners play a fostering role along the whole process until the end ofimplementation. After initiating a RUE measure in the realisation of efficiencyprojects, external actors help to coordinate the activities of the different actors involvedand to transfer know-how inside the companies (e.g. by qualification through trainingon the job). The basis for this share of work is a trustful relationship between thecompany and its external partners. The integration of external partners into a commonproject team helps to communicate the state of affairs in the project and to initiate amutual learning process.

• The extension of energy efficiency related contacts in the course of the implementationis an important fostering factor for the continuation of activities. The perceiveddifficulties and costs in getting access to reliable information and know-how for furtherRUE projects decrease for SME that have built multiple and lasting external relations.


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• The formation of an efficiency related company network is contributing to thestabilisation and continuation of activities inside participating SME. The network doesnot have to be concerned with efficiency only because any network in which efficiencyis a "natural" topic (e.g. as important part of environmental protection in industry) alsoserves as a fostering factor and opens the possibility for further synergies.

2.3.4 Basic Conditions

The impact of basic conditions on the implementation of RUE measures in the case studieshas to be analysed from two perspectives. On the one hand, a direct effect of policy-making on the firm could be observed e.g. as a result of (green) regulations or financialincentives. On the other hand, the crucial role of external actors described in the previousparagraph indicates the scope for policy to improve the basic conditions of the SMErelated energy efficiency activities of the group of external actors.

Concerning the direct influence of basic conditions on energy efficiency activities, thefollowing observations were made with regard to (green) regulations and fiscal incentives:

• In some SME a public debate about environmental protection or energy efficiency inindustry showed up as a general motivational factor along the whole process ofimplementation. In this context energy efficiency activities can be used by thecompany to improve the public image, which is often a motivation for companiesworking in debated areas (e.g. PVC).

• The anticipation or confrontation with legal regulations help to get energy efficiencyon the agenda. Often, environmental regulations trigger energy efficiency in a quiteindirect way. SME that face regulations e.g. in ecological areas such as waste or watermanagement or have to comply with standards in working conditions find their way toenergy efficiency by discovering synergies between those different areas. Supported bysufficient information by external partners SME often discover an unknown costeffective solution as a chance to start energy efficiency projects14.

• The example of the CO2-tax in Denmark provided a fostering background for energyefficiency in SME especially when connected with further support. The tax served as atriggering impulses for SME to care about energy. Those companies that face CO2-taxes and at the same time learn about possibilities to reduce or even totally avoid thetax payment, e.g. through an audit - in a second step - also learn about the wide rangeof benefits connected with energy efficiency.

• Energy specific economic basic conditions, for example an increased energy bill due torising energy prices or looming tariff adjustments, helped to trigger efficiency activitiesinside the SME because suddenly energy becomes an issue for top management. Suchchanging economic basic conditions have been especially relevant if the company facesstrong competition.

14 cf. Holm et.al 1994


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The impact of financial incentives differs with respect to audits and investments:

• Financial incentives for consultancy (e.g. (partly) subsidised energy audits) have turnedout to be both a triggering factor and a supportive means for concrete projects even ifthe access to sufficient financial means was not a decisive hindrance for most SME ofthe sample. Subsidies for audits present additional convincing arguments for a positivedecision to prepare an energy efficiency project. They relieve the risk of investing timeand money without knowing the future benefit of the action (Karl 1994). In connectionwith the active engagement of an external actor (see above), (partially) subsidisedaudits represent a very important fostering factor.

• Contrary to the financial support for energy audits, subsidies for investments (e.g. inenergy efficient technology or facilities) seemed not to be the decisive impulse to startthinking about RUE measures. Rather they can be seen as an additional fostering factorduring the preparation of an energy efficiency project which has been initiated andundertaken anyway. Due to the importance of monetary cost-benefit-relations as thebaseline for the final decision, in many SME subsidies are of great (psychological)importance for convincing key actors that energy efficiency deserves attention,especially if top management is concerned.

Further relations of RUE measures to policy instruments could be found with regard toawards and eco-management systems:

• Environmental awards or efficiency related competitions work as an incentive for SMEto present their achievements to the public and to continue with energy efficiencyactivities. Especially for firms acting in consumer orientated sectors, awards andcompetitions are suitable for external image improvements and serve as a platform forpublic acknowledgement (especially when connected with regional concern). Anadditional benefit can be the exchange of experiences between participating companies(see external actors above). Limitations for image campaigns have been found in inter-industrial supply chains, which are dominated by price and quality selection.

• European-wide certification procedures such as EMAS or ISO 14001 ff. have shown tobe a fostering factor for SME of remarkable importance. Many of the case studycompanies received or are planning to undertake an EMAS/ISO 14000 certification,which boosted the search for and the implementation of RUE measures. Environmentalmanagement systems provide the specific advantage that they are not only focusing onpure techno-economical variables of implementation, but also stress the importance oforganisational requirements and social processes. As such, the EMAS helps to fosterinternal company changes towards long-term achievements in energy efficiency and tothe continuation of activities.

The crucial role of external actors for the implementation of energy efficiency measures inSME underline the strategic importance of an active energy policy which is dedicated toimproving the basic conditions for these intermediate agents such as utilities, consultants,network coordinators, energy agencies, etc. In the company case studies, three main areasof influence could be identified:


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• The observed engagement of utilities, especially concerning (free) energy audits andconsultancy, results from various backgrounds. Motives for action were responsibilityfor local economic and climate policy, threatening regulation and preparation for thecoming competition on the European energy markets.

• In some cases, the initiatives of consultants were triggered by utility or public financedaudit schemes. Regarding the supportive role of consultants during the whole of theimplementation process, the often long-lasting cooperation and the related follow upprojects, a "door opener" function of energy audit subsidy schemes can be stated withrespect to energy service markets.

• The cooperation of companies in SME networks and work groups was partiallysupported through public funding or policy programmes. Although primarilydepending on the initiative of the members, policy support especially concerning thecoordination and marketing of activities, fosters the performance and dissemination ofnetworks.

At this point, a first finding can be formulated: considering the decisive impact of externalactors on the companies' RUE measures, the political and economic basic conditions arefar from being sufficiently developed because a large scale dissemination of the evaluatedsingle success stories cannot be expected. In this respect, the observations made in thecompany case studies support the assumption, that energy policy should put emphasis onthe transformation of energy service markets and on the improvement of fostering basicconditions. The results of the following - more detailed - analysis of implementationprocesses and the discussion of the policy case studies in Chapter 3 will take this findinginto account.

2.4 Model of change: Analysis of structural and dynamiccharacteristics of the successful implementation of energyefficiency in SME

The previous section 2.3 gave an overview of the main actors involved in theimplementation process of RUE measures, identified characteristic process stages andpointed out typical fostering factors. With regard to the first objective of the project asdefined in 1.2 (to gain a better understanding), a first answer was given to the question"What are the process relevant factors?". In the following section 2.4, a second answer willbe given to the consecutive questions "How are these factors interrelated"? and "What arethe means, chances and restrictions to induce further success stories by externalimpulses?". With regard to the findings of section 2.3, the analysis will not only beundertaken from the perspective of public policy-makers. The opportunities for potentialenergy service providers to address SME in order to stimulate the demand for energyservices will be reflected, too.

Starting from the single case study findings, it is necessary to develop a common frame ofreference and to extract general conclusions. At this point it can be stated that the


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implementation of energy efficiency in SME is not at all a pure economic decision process,exclusively depending on energy market price relations. As stressed by the findings insection 2.3, human interactions within the social system of the firms as well as the multiplecooperations between internal and external actors turned out to be decisive parameters.

For that reason, a model of change15 is presented that describes structural and dynamiccharacteristics of successful implementation processes of increasing energy efficiency inSME. Considering the identified relevance of socio-economic parameters, the perspectivetaken is that of an ongoing social process involving the interaction of different actorsinside the companies. In this view, the process develops from an initial stage that can becharacterised by an individual company culture with a distinct history over several steps ofproblem-solving, to a stage where the evaluation and continuation of an energy efficiencyproject is possible on the basis of the experiences made by the different actors. Figure 2.7presents an overview of the four sections of the implementation process in a circle - orrather spiral-like form - of individual and organisational activity.

Fig. 2.7: Model on Internal Company Interaction during the course of a RUE measure

Taking into account that successful energy efficiency projects change the status of internalcompany interaction e.g. by positive experiences with unfamiliar technologies, the laststage at the same time represents the first stage for further activities. A new RUE projectwill benefit from altered organisational conditions or better data on energy consumption.

15 The model is complete in the sense that it considers all the fostering factors found in the database. However, nosingle case in the study will include all the elements of the model. Partial deviation will be the rule. The model is not‘normative’ because it only describes what has been found in the empirical cases on a general and abstract level.Neither the model is an ‘ideal’ model because it represents only the empirically found fostering factors.


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In this respect the figure above represents one ‘internal company learning loop’ in relationto energy efficiency projects. This view does not imply that implementation is alwaysstraightforward and following a rational plan. In practice, realisation tends to beincomplete and to have unexpected side effects. Plateaus, stops and fall backs to earlierstages are possible.

Considering the basic problem for policy-making, to start energy efficiency related activityby external impulses, the first and the last stage of the implementation of RUE measuresrepresent decisive starting points for intervention. The beginning and the end of theinternal learning loop gain importance either as a stage where energy efficiency activitieshave to be triggered or where the continuation of RUE measures has to be assured to reacha long-term success. Therefore these stages will be intensively discussed in relation to theinternal company processes.

In the following parts, the main features of the model will be discussed and those fosteringfactors highlighted that have shown to be relevant across several cases. Core statementsthat focus on and highlight the content of the different parts of the model will be shown inextra boxes at the end of each subchapter and introduced by keywords that refer to centraltopics discussed in the analysis. A reference to the company and the type of actor is madefor each statement.

2.4.1 Culture, history and the key event: Which pre-conditions prepare thegrounds for energy efficiency measures in SME and where does thetriggering impulse come from?

In this section the fostering factors that contribute to the take up of energy efficiencyactivities in the case studies will be discussed (see fig. 2.8 next page). At the end of thedescribed first stage the process has reached a point where energy efficiency has become atopic on the internal company agenda and first considerations about concrete measuresstart.

Internal company interaction

The analysis has clearly shown that existing social processes of interaction andcommunication between different actors inside SME have significantly contributed to theinitiation of RUE measures. The ways techno-economic and social variables are perceivedis closely connected to the specific cultural background of the single companies and theattitudes of single actors.


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Fig. 2.8: Overview of culture, history and key events

Remark: The concept of self-efficacy points out that people tend to realise a certain behaviour when they anticipate orperceive sufficient control concerning the consequences of the behaviour. For the implementation of energy efficiency inSME this means that internal company actors have to be convinced that they will be able to initiate, manage and finish aRUE measure successfully (Bandura 1977a, Aijzen, Fishbein 1980, Aijzen 1991).

As a first aspect, different company cultures produce different pre-dispositions forinnovations16 in energy efficiency. The manner in which energy efficiency is practicallyturned into action is a question of interrelation between individual activities and culturalparameters (e.g. style of leadership, corporate identity).

As a second element, determinants of behaviour can be divided into situational factors andbehavioural dispositions:

Situational factors (key events) that trigger energy efficiency are on the one handproblematic situations within the companies (need to cut costs, technical problems, etc.)and on the other hand specific opportunities for investments that occur in relation tostructural changes within the companies (e.g. enlargement of facilities, new company site,new personnel or management etc.).

16 In the context of the analysed implementation processes, the term "innovation" is used as a category if the introducedRUE measures represent a qualitative new way of treating energy by the case study companies. This new way ofperceiving energy and using energy efficient technology can be "new" in relation to the history of the specificcompany (unfamiliar terrain) and in relation to other companies (front runner of the branch or region). The InterSEEproject analyses the subjective perception of risks, efforts and know-how requirements, which influences thebehaviour of the company actors. In this understanding, an innovation can take place even if "low technology" isimplemented which represents state of the art to other firms, regions or sectors.


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Concerning the behavioural dispositions a positive attitude towards the environment andthe idea of energy efficiency certainly represents a fostering factor. But it seems to be evenmore important that the relevant actors perceive enough self-efficacy, i.e. they think that ‘itcan be done’ (see remark to Fig. 2.8). For the implementation of energy efficiency in SMEthis means that internal company actors perceive to have sufficient resources and know-how to cope with the challenges brought about by the projects, and that they will be ableeither to avoid or to overcome possible difficulties and inconveniences in the course ofimplementation. Factors strongly influencing the feeling of self efficacy are: financial andespecially time resources inside the company, support by top management for key actorson lower levels, energy related know-how, experiences with energy efficiency and theavailability of data (key figures) on energy consumption inside the company.

One important consequence holds both for policy-makers and for energy service actors:SME companies can not be seen as identical elements of a homogeneous target group. Bycontrast, they represent social entities with their own character, which provokes differentreactions to the same external impulse or incentive (see 2.5 and 4.5). Thus, external actorsshould not only put emphasis on the content of a policy instrument or service offer butconsider the conditions of perception by the target group. With respect to these settings,beside a general need for marketing, the target for policy interventions can be seen inachieving influence on the firm's general motivation to work on RUE. In the short term,policy influence will be restricted to measures affecting the perceived self-efficacy ofactors (e.g. provision of information, finanical resources). Cultural and behaviouraldeterminants, however, are more likely to be altered through indirect and long-term effectsof policy instruments (see 2.4.4 and 2.5), which implies a dynamic understanding ofpolicy-making (see 4.3).

CORE STATEMENTS:

Company culture„For 15 years we have an ecological company philosophy. The focus was not only on fulfilling the given legal

requirements but to do more than the laws demand and to do it on our own initiative.“ Company 23 - DM17

Determinants of behaviour - situational factor„The new construction/re-building of the staff dorms provided the impetus for the construction of the solar array.“Company 37 - DM/CM

General motivation to act„In this situation, CM hoped to implement a package solution capable of solving the energy supply problems of the hotelfor years to come. Moreover, an annex to the hotel was planned, and this and other future projects were to proceed from asound basis.“ Company 30 - CM EP

17 In all the text boxes with core statements, the abbreviations of Chap. 1.5.2 will be used: decision maker DM; changemanager CM, change agent CA, external partner EP


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Individual key actors

In each of the case studies a key actor (mostly only one) was found who was personallymotivated and engaged in the issue of energy efficiency. The commitment and theimpulses of individual key actors inside the company are especially needed in the earlystages of the implementation of RUE measures. In SME mainly two differentconstellations were found which should be differentiated. The key actor

• is legitimated to decide on taking up energy efficiency activities (e.g. as arepresentative of the top management or the company owner himself). In this case, thedecision-maker is either the same person as the change manager or a very close contactexists between both of them.

• has no formal power of deciding on the energy efficiency measures. In this case, keyactors will have to convince the top management to proceed with their efforts toimprove energy efficiency.

If key actors are representatives of the top management, the interview partners oftendescribe them as innovative and open for new ideas. Key actors often follow a specificmanagement philosophy that is driven by ethical concerns. In this context they perceiveactivities in energy efficiency as part of the social and ecological responsibility of theircompany and look to improve the company’s public image. In some cases the personalattitudes of key actors explicitly refer to a high value of the environment.

In other cases, however, key actors who are at the same time decision-makers tend to stressan economical point of view. They are aware of energy efficiency as a means of cuttingcosts and gaining economical benefits. In this respect, a distinction of company typesbetween cost driven and value orientated could be found and will be discussed (see 2.5)

If the key actor is a representative of the middle or lower management, e.g. a foreman incharge of technical maintenance, his involvement can be additionally driven by professio-nal pride and the objective to reach technical excellence. Further motives for involvementmay stem from a personal interest in energy efficiency (key actor as an ‘energy freak’) orprofessional ambitions (improvement of position inside the company, career, etc.).

It is an important fostering factor if the key actor has technical skills in general andspecific energy efficiency related know-how, e.g. due to previous experiences. Apart fromhis individual dispositions, his self-efficacy is strengthened by existing external contactsand activities that are a source of inspiration and positive feedback. Informal, privatecontacts, but also active involvement of key actors in associations and environmentalgroups trigger activities inside the company.

As a special feature of the prevailing flat hierarchy in SME, management tasks areconcentrated on a small number of executives. The resulting broad array of responsibilitiesopens good conditions for decision-making. At the same time, however, scarcity of timerepresents a very important limiting factor for taking up energy efficiency projects.

From these considerations, a simple condition for any external intervention can be derived:policy instruments and especially energy service offers are likely to be ignored if internal


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key actors are not attracted and the commitment of top management cannot be achieved.These findings underline the need for marketing and the establishment of personal contactsto the target group. For the promotion of energy efficiency, a broad array of arguments willhelp to meet the personal profile of interest (see 2.4.2).

CORE STATEMENTS:

Entrepreneural Philosophy„Image building is possible and successful. In the long run we expect and believe in advantages. We want to be a firmhaving a clean record and demonstrate this. I really want to improve the image of entrepreneurship in the public.“Company 1 - DM

Attitudes„Furthermore it is my opinion that one has to adapt to the surrounding society. Here the trend is to be more careful aboutusing too much energy. It is the same with the environment. There is no use in messing things up. Our resources arescarce.“ Company 11 - DM

Efficiency-related self-efficacy„CM’s excellent computer skills were decisive in persuading the company not to opt for a simple standard version of theload monitoring system but to go for a more sophisticated edition. Thanks to his prior knowledge, CM needed hardly anytraining to operate the device.“ Company 32 - EP

External contact„The company wasn't absolutely clear about what they went into. I had good personal relations to CM as an effect of thequality project we had finished. This was the sustainable element for our cooperation. He dared to go along, because hesensed that we could carry him through.“ Company 5 - EP

External Actors

Involved external partners can become crucial driving forces in the early stages of theimplementation process of RUE measures. In the case studies, consultants, utilities, othercompanies, associations, (local) authorities, actors from energy efficiency programmes,research institutes, and technology suppliers were identified to be the most importantpartners:

The case studies show that it is a fostering factor for energy efficiency if SME are alreadyactively engaged in an interchange of information and know-how with other companies.In the context of such an exchange of experiences, a process of social comparison (e.g.compare data on energy consumption) evolves which questions the taken-for-grantedroutines. An additional fostering impact of regular exchanges between companies is thedissemination of positive examples and models of successful activities in energyefficiency. The exchange not only provides information but also leads to new expertcontacts of single companies to engineers, consultants, suppliers, and utilities (see alsochapter 2.4.4).

However, in most of the company cases external partners actively contacted the firm andoffered their support. Technology-specific ideas or general proposals for energy analysesserve as supportive inputs by external actors. This happens either in the course of a normalacquisition practice by consultants or in the context of recruiting participants for energyefficiency programmes. The supportive input consisted of ideas and concrete suggestions(e.g. for energy audits, the introduction of energy management and accounting systems,


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CHP facilities). External actors not only trigger energy efficiency activities but may alsosupport the companies by providing information and energy specific know-how, assuringthe availability of energy data, and provide resources in terms of money, time and staff.

The important role of external actors as sources of the first impulse has a twofold policyimplication: first, the firm’s internal economic interest to cut costs alone is often notsufficient to trigger the exploitation of cost-effective saving potentials. An activeinvolvement of policy and energy service market actors is needed to start RUE measures,most of which are ex post perceived by the firms to be a success. Second, compared topolicy actors, energy service providers have better possibilities to get the importantpersonal contacts to the internal key actors (see previous paragraph). Furthermore, they canprovide an extensive array of services (audits, planning, technical support, training,coaching, monitoring) to support the RUE measures. As a consequence, energy policyshould put special emphasis on fostering basic conditions for external actors.

CORE STATEMENTS:

Company already has regular external exchange with other companies„In 1992 a colleague within the forum of supermarket operators while discussing business experiences told CM about thepotentials of reducing electricity bills and hence energy consumption in grocery shops by cutting down on lighting andrefrigerating costs. This information, coupled with the knowledge that the energy consumption of the considered outletwas certainly too high, prompted CM to look into energy efficiency measures.“ Company 31 – CM

Process of social comparison„The enterprise has been part of a group of some 20 construction companies which have been providing counselling foreach other for about 15 years. Thanks to the exchange of information within that group, the company is well informedabout innovations in the field. A number of German companies are working similar market segments, which has allowedthe company to compare, for instance, materials use or insurance payments.“ Company 35 - CA

External partner contacts company„The local electricity utility wrote and asked if we were interested in having an energy audit. I must admit that I put theletter away until our local electrician came and suggested that we had an energy inspection. We were interested in theenergy inspection because our local electrician thought it to be a good idea.“ Company 15 - CA

Supportive inputs: ideas and suggestions„The first idea for a CHP-station was submitted to one of the top managers in 1989 by an engineer who had been abusiness partner of the company for several years.“ Company 2 - CM

Fostering basic conditions

In the first phase, policy intervention should provide stimuli to increase the priority ofenergy efficiency as a topic of action:

A public debate on energy and environmental issues increases the awareness about thenecessity to act and provides the possibility for companies to market their efficiencyactivities and to improve their public image.

Legal regulations in the form of environmental or efficiency standards represent restrictiveguidelines while at the same time fostering a background for companies to care about theirenergy consumption. They draw the attention of decision-makers to the issue of energy asrelevant cost factor and to the unknown economic benefits related to RUE measures.


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Strong competition and market pressure urge single companies to cut costs. In somecompanies energy is seen as a cost factor although its share of total costs is relativelysmall. Energy related changes such as ‘green taxes’ (e.g. CO2-tax), high electricity bills, orlooming tariff adjustments trigger companies in a direct way to start looking upon energyas an area to save money.

In these areas found in the case studies, policy intervention can set signals. The effect ofinstruments and basic conditions, however, is connected to internal (cultural) settings andexternal relations (e.g. available technical support). A public ecological debate for instancepromises to address and encourage especially those companies that already explicitlyfollow a ‘green’ philosophy or for those that work with ‘potentially hazardous’ materialsor processes (e.g. with PVC). Regarding regulation and taxes as another example, SMEoften need external help to discover and exploit the full benefits of the induced changes.

The latter aspect underlines the importance of external actors as already discussed in theprevious paragraph. External actors can serve as multiplicators and agents of policyprogrammes and goals, which emphasises the need of means for establishing, fostering andintensifying external relations. Especially through fostering basic conditions for externalactors (e.g. financing schemes for energy audits), energy policy opens the possibility tojoin policy goals with the business interests of the external actors.

CORE STATEMENTS:

Energy/ environment as a public issue„In the past, we had several really dirty production technologies on this site, including highly toxic chemicals. Due torising awareness, partially due to the media and public concern, we changed technologies or even closed down wholeproduction steps.“ Company 10 - DM

Anticipation of fiscal regulations in combination with external help (CO2-tax)

„Energy was just something you needed, I dare say that they did not think about it. They did not think of green taxes atall. I informed them very carefully about the green taxes. They did not realise that the green taxes would hit them so hard,so it was a shock to them.“ Company 15 - EP2

Market pressure„Because of the economical crisis in 1992, we began to consider and analyse where we could reduce costs, providing anincentive to look for energy. This was a major impulse to start the activity at this time.“ Company 27 - CM

Electricity tariffs„The installation of the energy management system was prompted by the fact that the local electricity utility sent repeatednotices (monthly and, subsequently, weekly and personally) that the earmarked deliveries were no longer sufficient andthat extra peak load have to be purchased. This triggered a search to save energy.“ Company 32 - CM

Availability of subsidised energy audits„The company started to work with energy conservations, because they had a free energy audit (..). At that time theywould not have contacted a consultant and started a serious work with energy conservation themselves. The audit-reportmade them see some possibilities in relation to energy conservation.“Company 7 - EP

2.4.2 Initiation and decision of an energy efficiency project: What makes theinitiative go on and how does it come to a positive decision?

A general motivation to act does not mean that the company actually starts a RUEmeasure. Therefore, a necessary stage is the initiation and decision of a concrete project


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which has to be chosen and promoted within the company. Again, a basic condition forinnovation in energy efficiency is a motivated key actor inside the company who acts as amultiplier of the idea and tries to coordinate the activities.

The key actor has to develop a strategic and social process orientation. Data show that thisis important in three directions: the key player has to contribute to the development ofconcepts for the project (e.g. in interaction with other internal or external company actors),has to try to use or foster positive personal relations (e.g. by a staff-orientated, co-operativestyle of leadership) and to establish an internal coordination structure for the project(working groups, meetings, timing).

During the stage of initiation and decision in favour of an energy efficiency measure,processes of social influence take place in the companies that can result in positiveattitudes towards the project. Within this process of social influence a certain power ofinfluence is exerted on a level of internal company policy (support by top management,building internal lobby for energy efficiency, etc.). If the company is successful inreaching a participation of staff in early stages of a project, this helps to foster the process.The internal information of departments and the persuasion of internal actors (e.g.decision-makers) by presenting positive models or by referring to prior successfulactivities were found to be a means of influencing the promotion of a project.

Influence can be in form of communication about the decisive arguments in favour of theproject leading to an attitude formation concerning the decision criteria (economical,qualitative and environmental arguments). In most cases there exists a mix of motives, i.e.the economic viability of a project was supported by the fact that improvements of productquality, better working conditions, and an improved image were anticipated as outcomes ofthe project. The availability of internal know-how and personnel resources is a furthercontent of the influence. The offer to participate in a programme which as a pilot project issubsidised or to cooperate with research institutions helped key actors inside the com-panies to argue for energy efficiency projects, since these offers helped to minimise theperceived risk and increased the firm’s readiness to invest in their own personnel resources.

From the external (policy) perspective, the following crucial aspects can be derived:

• the RUE project has to be accepted by top management as well as by the relevant staff,which demands explict communication and argumentation work

• energy efficiency is mostly not a topic by itself and a broad range of arguments has tobe used in order to convince internal actors on different levels, depending on theirdistinct and personal interests

• energy efficiency projects have to be promoted by an appealing presentation

• external actors can strengthen the position of internal promotors significantly


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CORE STATEMENTS:

Key Actor„The most important factor is that there is a person pushing the idea, the right person who can be in any position. Thisperson should not only make just one attempt to place the idea, but he has to keep on by caring about the daily hassle,trying to collect all relevant actors.“ Company 9 - DM

Strategic Orientation„The company leader's personal backing allowed us to establish ourselves in the company as a somehow accepted unit butseparated from normal production business. We had all the freedom we needed to experiment. There was no pressure fortime or results and we always had one hundred per cent support and backing by the company leader.“ Company 1 - CA

Process of Social Influence„We told the people, that they will have to face a wave of changes. Their job will not be the same afterwards - but theywill have a job with 100% security. This created the necessary trust in the positive result of change. You have tocommunicate security, otherwise the staff is ruled by fear.“ Company 10 - DM

2.4.3 Conception and Realisation: What makes the realisation of energyefficiency measures work?

In the early stages of the conception and realisation of an energy efficiency project, theprocess of goal setting and the development of an implementation plan prepare the groundfor a strategic approach during the realisation. Concrete targets and the documentation ofgoals and realisation schedules help to monitor the process later. A testing phase orinternal demonstration project for energy efficiency help to minimise the perceived riskand increase the feeling of self-efficacy.

During the concrete implementation organisational changes help to support a project(decentralisation of responsibilities, project team). Key actors are of importance again atthis stage as they may help to foster the internal communication and social interaction inrelation to the project (regular discussions of measures or widespread internal informationof employees). The case studies show that a detailed monitoring of activities by installingmeters, measurements and controlling of consumption, do not only lead to theidentification of energy efficiency potentials but also represent the base for a detailed andconvincing feedback of success (in internal newsletters, meetings, etc.): several feedbackloops during the realisation allow to inform on interim results. The feedback of a positivedevelopment in turn contributes to an increased motivation to continue. Additionally, thefeedback communication may help to spread the idea inside the company and in somecases lead to the diffusion of activities to other areas of environmental protection.

As a consequence of policy-making, one goal of support can be seen in assuring thevisibility of results through monitoring and in strengthening the key actor’s capability tocope with daily problems (know-how and access to external resources).


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CORE STATEMENTS:

Goal Setting„When we started, we simply wrote down what we were doing. The next step was to work towards the standards. Howwe do it now is the basis for how we do in the future. First the goal was to live up to the standards. “ Company 5 - CM

Test and Improvements„Because of scepticism about the reliability of the estimated savings, the company made some tests by replacing a coupleof motors. After the successful tests they continued to follow the recommendations in the report.“ Company 7

Implementation and Feedback„The core team comes together once a week for a meeting to discuss above all any current problems on the sites(personnel and equipment planning), but also any new ideas as they come up. This allows the team to talk about andaddress difficulties in dealing with innovation quickly. Minutes of the meetings are taken.“ Company 35 - CA

2.4.4 Evaluation and Continuity: What makes the efficiency process go on?

The last stage of the successful implementation of RUE measures represents a very crucialstep. If the different actors involved in the development enforce each other, the last stagerepresents the first stage for further activities in energy efficiency (or environmentalprotection in a broader sense) (see fig. 2.4). In this case the company can enter into a newlearning circle and a long-term success is in sight. An overview of the main domains ofinfluence for this stage of ‘Evaluation and Continuity’ is given in figure 2.9.

Fig. 2.9: Overview of the stage of ‘Evaluation and Continuity’


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Internal Company Interaction and Individual Actors

First of all, the success of the project has to be documented and communicated to give afeeling of success to all actors involved. The most important criteria of success perceivedex post by the case study actors are cost reductions, improved product quality and betterworking conditions. This feeling of success improves the image of RUE measures, whichserves as a new starting point for further activities (see 2.4.1).

But not only the subjectively perceived success is important. Data show that actors alsoneed improved conditions for further action inside the company. Due to a change ofattitudes (energy cost and environmental awareness due to broader information and know-how) new norms and ways of treating the energy issue evolve. Self-efficacy for furtheraction is increased by training and a better knowledge of energy aspects of the productionprocess gained during the implementation. On the organisational level, a modification ofresponsibilities (e.g. decentral energy contacts) supports the feedback on consumption fordifferent departments and thus shows the relevance of energy efficiency for the company.Thus, actors are motivated and able to identify new opportunities and to start action.

As an area for policy contributions, an internal development which is called a ‘learningcompany’ in terms of energy efficiency (and environmental protection) can be described:

• On the level of individual actors inside the company the feedback of success and theperception of improved conditions for further action increase the identification withenergy efficiency activities (e.g. pride about the process quality) and lead to a higherinterest in the subject. Due to positive experiences, an innovative milieu for energyefficiency is developed in the course of the implementation, which can be characterisedby an openness of decision-makers for new ideas and risk taking. The willingness ofstaff to take the initiative themselves is fostered by an increased energy awareness(enhanced motivation of top management), leading to plans for follow-up measures.

• On the organisational level, these companies tend to strive for excellence in energyefficiency and identify new fields of action in the area of environmental protection ingeneral. A changed corporate identity in relation to the treatment of energy and theenvironment evolves - also affecting the external relations, e.g. to business partners(use of achievements in negotiations, image campaign), customers and suppliers.

CORE STATEMENTS:

Feeling of success„Economically speaking, the success of the energy efficiency measure is reflected in the reduced gas and electricity bills.Moreover, the energy unit no longer poses any problems. People are often amazed, asking when the plant will start upoperation because no smoke can be seen escaping from the chimney. No complaints of guests have been voiced since thesystem started operating.“ Company 30 - CM

Improved conditions for further action"Another positive side-effect has been that the project has also enhanced energy awareness on the part of themanagement. Even CM himself has become more sensitive to energy concerns (e.g. the significance of regularmaintenance on the energy consumption of the unit)." Company 33 - EP

The learning company„The handling of energy issues by the staff has changed. They are now putting up requests and suggestions themselves.“Company 16 - DM


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External Actors and Frame Conditions

The case studies show that the question whether a company proceeds with energyefficiency or not in this field is closely linked to the question: What do the company’sexternal relations look like in terms of energy efficiency? Three main domains of exchangewith external actors or basic conditions could be identified that stabilise the process andencourage internal company actors to keep energy efficiency on the agenda, thereforecontributing to the continuity of activities:

• the process of modelling and diffusion,

• a fostering exchange with the company’s stakeholders,

• a networking of companies.

The three processes that describe different ways of interaction with external actors, mayoverlap in everyday practice. However, they should be considered separately as each ofthem leads to specific policy implications. In the following, the main outcomes concerningeach type of external relations is presented. The interrelations between the differentprocesses will be highlighted afterwards (see figure 2.9).

Modelling and Diffusion

With regard to the leading question of how to spread successful activity from singlesuccess stories to a broader target group, a process of modelling18 and diffusion has to takeplace at the end of successfully implemented energy efficiency measures. Throughcommunication of experiences and the detailed demonstration of practical examples thecompany can serve as a positive model for other companies. This role is important to reachconcrete impacts because it corresponds to the follower's need for orientation and real-lifeexamples. In order to disseminate positive models, the process of diffusion needs suitablecommunication channels for diffusion that may for example be provided by a publicrelations campaign. The marketing of energy efficiency measures, e.g. as a sign of productquality or ecological orientation, requires a presentation platform that allows the companyto receive public recognition of its activities. Such a platform can be provided by awards inthe context of public competitions. Data also show that informal and personal face-to-facecontacts between representatives of different companies work as a very important channelof diffusion. Most of the successful cases also had visitors of other firms in their facilities.

From the policy perspective, a twofold impact is of interest: the process of diffusion ofideas, activities, and results not only shows other companies possibilities of how toimprove energy efficiency and encourage them to adopt or imitate the successful measures,it also has a positive influence inside the successful companies themselves. Therecognition of its own activities outside the company also has a fostering influence on thecontinuity of activities inside the company as it serves as an additional source ofmotivation to go on.

18 The concept of modelling refers to the psychological learning theory by Bandura (1977). Models serve as anincentive to imitate the related behavior - especially if the person or company that acts as a model is associated withpositive evaluations and connotations.


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CORE STATEMENTS:

Public relations„In four newspaper articles, the public was informed about our innovation and the ETA-award won in a regionalcompetition. The award is mentioned in our company brochure and we used it at a presentation. Energy efficiency hasbecome a selling argument.“ Company 19 - CM

Impact as positive model„There have been visits from all sorts of places, large companies and public organisations. I have personally held aboutone hundred lectures around the country.“ Company 5 - CM

Imitation by other companies„After the company´s successful cooperation with the electricity company, the parent company has also bought softwarefor an energy accounting system, at the same supplier as the company.“ Company 7 - CM

Fostering exchange with the company’s stakeholders

The exchange with stakeholders was identified as a second domain that contributes to thecontinuity of energy efficiency activities within the company. Here the company is lookedupon as the centre of external relationships that fosters the energy efficiency activities.Data show that authorities, customers, business partners, consultants, and utilities are themost important stakeholders.

In most of the case studies a lasting relationship to consultants was identified as animportant fostering factor for the continuation of energy efficiency activities. If the contactto consultants is kept after the implementation of an energy efficiency measure, thecompany has easy access to specialised know-how if ideas for further improvements arise.Vice versa, the consultant can easily contact the company to offer new products or servicesor use it as a model for other firms.

If companies experiences improved relations to its customers or business partners due tothe energy efficiency activities, this represents a positive external feedback which fostersthe willingness of internal actors to proceed on the road of energy efficiency.

In some of the cases the energy efficiency activities lead to positive improvements in thecompany’s relation to the authorities. This holds especially for those companies that wantto demonstrate that they are far ahead of legal regulations.

Utilities also contribute to the continuation of activities by an extension of their energyefficiency services as a means for opening up ecologically and economically promisingmarkets.

With regard to the exchange with stakeholders, a task for policy-making can be seen incontributions to maintain, intensify and explore existing links of the SME to externalpartners. In order to achieve self-supporting relations, special interest has to be given to anoverlap of interest concerning professional chances (e.g. new cost effective investments) orqualitative goals (e.g. improving environmental quality of the region).


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CORE STATEMENTS:

Lasting relations to consultant„I sometimes use the company as an example when I tell about changes which organisations may undertake. For instanceI have had companies visiting the halls to see the lighting system. It is easier for the companies to understand theinvestment if they see the investment in reality, rather than seeing it at a movie or in brochures. I always use examplesfrom a gold mine like the company, you might as well use the experiences.“ Company 15 - EP1

Improved relations to customers and business partners (e.g. suppliers)„Guests staying at the hotel are informed of the energy efficiency projects. There has been no special advertising as yet,but there are plans to produce a public service brochure and put up signboards in the proposed annex.“ Company 30 - CM

Positive relations to authorities„We invite the authorities to be in contact with us. If we have a problem, it will be easier to find a solution or to get e.g. alicence when they know us already. Also they see that we are doing several things to protect the environment. Theinvitation of authorities is a kind of philosophy of our manager.“ Company 25 - CA

Support by utilities„Meanwhile things have changed. The utility has become more open, which is evident from the fact that the company hasnow been granted a quadruple tariff, which had hitherto been impossible. (..) The energy utility, together with anothercompany, has put counselling and energy management systems on its list of services.“ Company 32 - CM

Networking of companies

The third, most sophisticated domain for assuring continuity on the level of interactionwith external partners is the networking of companies. In this case the external contacts arenot only activated during a certain stage of implementation, but turned into a stableframework or infrastructure.

At the beginning of such a process the extension of energy efficiency related contacts wasoften observed. The fostering exchange with stakeholders turns into a stable contact andcommunication between companies that are interested in learning from each other in thefield of energy efficiency. The most common form of network building was the externalexchange of experiences. In all of the case studies in which network building occurred, thecompanies established regional contacts through cooperation in work groups. Theexchange with other companies provides a chance for the transfer of know-how by adetailed description of practical cases. In some cases the exchange of experiences focusedon specific topics (e.g. on CHP or EMS), but in most cases the external working groupscovered a broad range of topics dealing with environmental protection in industry orgeneral production issues. In these cases energy efficiency is one topic among others.

A significant precondition for good cooperation is trust in the external partners. As therepresentatives in the regional working groups are mostly the companies’ change managers(CMs), an external working group provides an opportunity for them to exchangeexperiences with others that face similar problems in their daily work. This leads to aprocess of identification that contributes to a trustful cooperation.

With regard to network formation, policy-making has to take the strong personal characterof network relations into account. Due to the fact that trust and open cooperation canhardly be enforced, the major influence of policy intervention can be expected from anindirect stimulation and financial support of network formation (see 4.4). Processes of


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network formation were found when a certain stable infrastructure was established forcompanies that were interested in energy efficiency. This infrastructure can support thecoordination and management of initiatives (e.g. organisation and moderation of workgroups) and foster exchange of information and experiences through extension ofcommunication links (e.g. newsletters or as a very advanced approach to provide an eco-information-system on the internet).

CORE STATEMENTS:

Contact and Communication„We have informal contacts with other firms. Some firms from the region plan energy saving measures and come to visitour site for an exchange of experiences and for discussion.“ Company 18 - CM

External exchange of experiences through cooperation in work groups„A regional group has been established to exchange experiences with issues related to environmental management. Wehave a very close, fantastic cooperation. We meet every 2 months and it is astonishing that everyone can learn fromeveryone else in spite of the differences in branch, size and organisation. We can provide the experiences of staffintegration, others have perfect technical management systems.“ Company 1 - DM

Trust and identification„The experiences with cooperation in the groups are very positive, there is no feeling of competition between theenvironmental managers, it is more like belonging to the same family. It is the same work, the same problems, creating anopen atmosphere for a trustful flow of ideas and advises.“ Company 10 - EP

Network formation„The three core ideas of the Model Hohenlohe (regional network) are: solving common problems together, to be open forcooperation and new ideas, to learn from each other. (..) Every firm has to be a pioneer for a special problem, that meansthere are ten firms and each has a problem. If one firm takes the pioneer role to solve the problem, the others can profit bythe experiences.“ Company 24 – DM-CM

Interrelations between different forms of external interaction

Compared to the process of modelling and fostering the exchange with stakeholders, theprocess of network formation shows ways of opening the process of diffusion into multipledirections. In a network of firms different types of relations overlap (fig. 2.10 next page).

Each company - as a ‘knot’ in an energy efficiency related network - can serve at the sametime as a sender, recipient and/or multiplier of energy efficiency related information. In anetwork companies serve as possible resources of know-how for other companies and atthe same time use the network to get quick access not only to information but also to newpartners for cooperation. Using the network channels, companies can obtain informationon suppliers of other companies. Vice versa, suppliers can use the network to enlarge theiraccess to companies that are interested in energy efficient technology. As a networkprovides possibilities of sharing resources, it can not only help the single company toreduce transaction costs, but also to reduce risk (e.g. when choosing an adequate supplierand/or a suitable technical or organisational solution).

But the network not only provides links from one firm to another firm's stakeholders thatrepresent potentials for activation, it also represents a source for processes of modellingand diffusion. Ideas and activities are not only communicated and adopted inside thenetwork. Single companies also serve as positive models and give important impulses forbusiness partners and other companies that are not part of the network itself.


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Fig. 2.10: Interrelations between different forms of external interaction

2.5. Different types of success

Starting from the common feature, that all case study firms have undertaken energyefficiency measures, the 33 company cases (see 2.1) are different in many ways. Fourcountries, eight industrial sectors, three service sectors, and a variety of company sizes arerepresented. Also, the degree of success varies from case to case, i.e. cost effective RUEmeasures are realised to a different extent by the respective companies. The empiricalanalysis, however, has shown similar and general features of the implementation processeswhich have been discussed in the previous section 2.4. In order to determine the significantdifferences concerning the process priorities and characteristics, in this chapter differenttypes of success are developed - or more precisely: different ways of how SME areworking with energy efficiency. This includes different ways to understand and to organiseenergy efficiency measures. The idea is to extract information from the empirical materialin order to develop a market segmentation of companies, which can be used to deriveguidelines for the design of policy mixes (see 4.5).


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The procedure undertaken included the following steps:

• Definition of eight variables describing important features of the RUE activities.

• Each case is rated on the selected variables.

• The information is analysed by use of factor analysis to compress the eight variablesinto a smaller number of dimensions. Two dimensions were found.

• Based on the new constructed dimensions the cases are clustered by grouping nearbycases into types. Four distinct types are found and described.

Although this procedure is more ‘quantitative’ orientated than other parts of the analysis,the segmentation takes its starting point at the qualitative information about each case. Amore detailed information on the procedure can be found in Annex 1.

2.5.1 Rating the cases

Based on the knowledge about the company cases, eight variables are defined and focushas been put on two points:

• What has been important for the process in relation to the work with energy efficiency?

• Where have differences been found among the cases?

According to the research approach, concentration was put on organisational and humanfactors. Formal differences (e.g. company size, energy intensity and sector) are neglectedwhich has proven to give interesting new results19.

The selected eight variables are:

A. Strategical orientation and commitment of top management in relation to energyefficiency. (Low (1) to High (5)).

B. Energy efficiency and environmental activities. (Energy isolated or integrated).

C. Internal know-how in relation to energy efficiency. (Low to high).

D. Dependence on an internal key actor. (High to low).

E. Perception of the benefits of energy efficiency. (Narrow to broad).

F. Active involvement of staff in energy efficiency. (From none to high degree).

G. Lasting integration of external support. (Low to high).

H. Dependence on external stimuli. (High to low).

19 InterSEE was encouraged by the work of The Tavistock Institute et al. developed in the SORGET project,undertaken parallel with the socio-economic research area of the JOULE programme. SORGET found thatorganisational issues often overshadowed the formal differences. For example several less energy intensivecompanies are much more active in relation to energy efficiency than others, which in a technical sense shouldperceive stronger incentives for these activities (SORGET - ‘Social and organisational issues in the adoption ofadvanced energy technologies in manufacturing’, Project Deliverable 3, The Tavistock Institute, London, 1997)


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To each variable a scale from 1 to 5 is defined (see Annex 1). The research team has ratedeach company on these eight variables by using all interviews and other information fromeach company case. When contradictions appeared, the assessment was made from theoverall impression of the process. For the variables, a normative orientation (‘5 is best’)can be questioned: e.g. is it “best” to involve staff (variable F) or is it “best” for allcompanies not to be dependent on a key actor (variable D)? The idea of this procedure it tofind several distinct ways of working with energy efficiency, so the normative orientationof the scales must not lead to the conclusion that solutions other than maximum ratings areinferior.

Many combinations of the eight ratings are possible for successful companies (see Tab.A.1 in Annex 1). A combination of eight maximum ratings (eight times ‘5’) can beconsidered as a special combination (case 12 and 25). At this point, however, it has to bestated clearly that the orientation of the ratings does not indicate that such companies arethe ideal company. This study is mainly descriptive, so the intention is not to judge thedifferent company styles. By contrast: if a company has realised many energy efficiencyprojects, it should be regarded as successful. On their way to success practical reasons,different history or management styles lead to a variety of possible and reasonablesolutions. This is supported by the result that five cases received an average rating below 2(case 2, 11, 15, 29, and 32). Three of these companies have one rating of 3 or more -indicating one area of strength - which seems to be sufficient when being supported by anappropriate environment. The policy implications of this result will be discussed later(4.5).

2.5.2 Factor analysis

A factor analysis has been used to compress the material (Kim, Mueller, 1978). Thecompression is the result of a shift from the original eight variables to fewer newdimensions, describing the common underlying structure. In the beginning, the eightvariables were intuitively constructed to extract as much information as possible out of theempirical material. Each of the eight variables adds information on the types of success,but the variables are correlated which indicates the existence of an underlying structure(see Annex 1). In order to describe this general structure, after a first one-dimensionalsolution, a final two-dimensional solution is constructed in a way that the dimensions areindependent (no correlation between the axis). Both dimensions have the same importancein relation to capturing the original variation. The two dimensions can be seen as ‘soft’(organisation) and ‘hard’ (capacity) aspects of energy efficiency:

The first dimension describes the political and non-technical issues related to energyefficiency. In short, it is called the organisation of energy efficiency. It is constructedfrom the six variables:


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A: Commitment by top management

B: Energy efficiency and environmental activities

E: Perception of benefits of energy efficiency

F: Active involvement of staff

D: Dependence on an internal key actor

H: Dependence on external stimuli

It describes the way energy efficiency is treated by the top management and in broad termshow energy efficiency is understood (Related to environment? What are the benefits?).Also, the dimension describes what/who is needed to make the process continue (Areexternal stimuli needed? Is the process dependent on the internal key actor, or: Is the staffactively involved?). Within this new dimension, the variables are logically related to eachother:

• e.g. the group A, B and E: a company where the management has a strategicalperspective on energy efficiency is likely to promote a broad understanding of thebenefits, and is likely to work with both energy and environment - environment mightbe the background for the strategical orientation;

• and another group F, D and H: they might all reflect a strategy of robustness; energyefficiency must improve and cannot be dependent on few actors.

The second dimension is labelled capacity for energy efficiency. It includes twoimportant aspects of maintaining a capacity for energy efficiency - internal and externalknow-how. This dimension captures the technical aspects of energy efficiency and ismainly constructed by the following two variables:

C: Internal know-how on energy efficiency

G: Lasting integration of external support

2.5.3 Clustering

In figure 2.11 all cases are shown, based on the calculated value for the two dimensions.Also, the one dimension solution from the factor analysis is shown (as the broken line).Along this line the most important variation is found. It can be interesting to notice that themost common variation includes a balance in the soft and the hard aspects of energyefficiency. The cases are grouped into four clusters - or types of success. The clusters havebeen found by grouping cases in the two ends of the broken line: type 1 in the upper part(■ ) and type 4 in the lower part (● ). The middle group has been divided into two parts:those below the line (type 2, ▲) and those above the line (type 3, +). The structure isrepeated and simplified in table 2.3.


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Fig. 2.11: Clustering of company case studies in the two-dimensional framework

Each of the clusters is considered as a valid and practical type of success. Cases close tothe borders can contain characteristics of one or more types. To understand the individualcharacteristics of each types labels for the four types are suggested. These labels representa compressed version of the richness within the cases.

It is not surprising that Type 1 companies have success with energy efficiency. This typeof success can be called high profile (the advanced or the frontrunners). These companiesscore high values on both dimensions and represent a type of company where highpriorities for energy efficiency are seen in all areas. Few companies can do this. Thesecompanies have often been “advanced” in areas other than energy before they started towork with energy (e.g. environment as an argument to customers (case 5) or workingsafety for the internal staff (case 4)). The cases 28 and 35 are both companies whichworked their way through to EMAS and ISO 14.001.

Tab. 2.3: The four types of success

Soft dimension: Organisation of energy efficiency

Variables: A, B, E, F, D, H

High value Low value

Hard dimension:

Capacity for energyefficiency

Variables: C, G

High value Type 1: High profile.

cases: 12, 25, 4, 8, 28, 35, 9, 18,1, 5

Type 3: The technical solution.

cases: 6, 7, 34, 20, 17, 38, 10

Low value Type 2: The top-down promoter

cases: 36, 37, 21, 30, 22, 16, 19,33

Type 4: The starters.

cases: 31, 11, 29, 15, 13, 2, 3, 32

The numbers refer to the cases in Tab. 2.2


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In Type 2 the soft aspect is prevailing. This type can be called the top-down promoter. Itcan be the result of a decision by top management to put more weight on energy efficiencywhich has not yet been transformed into technical capability. The background can be thatthe decision is new or that the company has difficulties in building up the technicalcapabilities. This is the case for a small company or for companies with no tradition forinternal know-how on non-core areas. Often, experiences for establishing continued accessto external resources are missing, too. The hotel cases 30, 36 and 37 are typical companiesfor energy efficiency related decisions without know-how and experiences for the energyrelated non-core areas.

In Type 3 the technical capacity is sufficient enough to carry the success through. Thistype can be called the technical solution.. For example in cases 6 and 7 the internal keyactor has built up both internal know-how and good external links, while in case 34 thecompany relies completely on the support of the external partner. In these cases the topmanagement’s commitment in energy efficiency is often limited (accepting) and theprocess only keeps on rolling because of the credible proposals from the engaged keyactor.

Type 4 companies have low values on both the ‘soft’ and the ‘hard’ dimensions.Companies of this type can be called the starters. This type only realises very cost-effective energy efficiency measures and depends on external stimuli (e.g. case 29, 31).

In figure 2.12 the four types are related to the original eight variables. For convenience thevariables are reordered so the six variables related to the first dimension are shown first,followed by the two variables (C and G) related to the second dimension. The four profiles(high-high, high-low, low-high and low-low) can be found, and it can be observed that thetypes 2 and 3 are closely related.

Fig. 2.12: Clustering of company case studies in relation to the original eight variables


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2.5.4 The dynamic of the types of success - Can the companies choose their“style”?

During the course of the analysis, each company is considered as successful, regardless ofhow they have organised the work with energy efficiency. The type 1 companies are themost advanced, but this should not be considered as the best way to organise energyefficiency for all companies. With regard to the distinct characteristics of the types, thepolicy relevant questions arise:

• How and to what extent can particular strengths of firms be fostered by politicalintervention?

• By what means can new areas of competence and engagement be activated?

In many of the cases the development of RUE measures is described over a period of fiveor more years. From these observations, the general impression is that the changedynamics related to the type of success is very limited. The type of success is closelyrelated to the general company culture. Several cases show signs of conflicting sub-cultures which might be the start for a shift in culture. However, such a shift cannot easily“be decided” by top management but has to develop over time as new staff enters the sceneand as new working methods become new routines.

As a consequence of this understanding the individual company cannot freely choose itstype of success, and policy-making cannot enforce a certain path of cultural development.Companies with a tradition of openness, involvement of staff and a broad perception ofenvironment and economy, would not develop into a Type 3 firm ("technical solution"),but would begin the energy activities as a Type 1 company ("the advanced"), e.g. likecases 4 and 5. The same dynamic is expected for a company with a “technical” culture,which is likely to follow a Type 3 trajectory. Companies with a general company culture orphilosophy of staff involvement may discover activities in relation to energy andenvironment as another suitable area to practise and support the existing philosophy. Inthis cases, the way energy efficiency is organised has grown out of the generalorganisation. Other reasons – far from the energy issue – have formed the way in whicheach company organises its production and information flows.

As a metaphor (with reference to individuals) the four types of success can be seen as“lifestyles”. In marketing strategies the lifestyles are regarded as given and thecommunication is formed to fit the characteristics of the target group, e.g. by usingarguments stressing fashion, high-tech or tradition. Communication is seldom used tochange the lifestyles. The same probably applies to the different types of success. In theshort term it is only realistic to form the communication in a way that it is relevant for thetarget group. In this perspective, the role of policy instruments should be to address eachtype of company appropriately, as policy instruments seldom have the continuity andintensity to change the culture of companies.


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The findings of this Chap. 2.5 can be briefly summarised as:

• Companies can follow different paths to realise RUE measures successfully

• Firms are characterised by one or several areas of particular strength. If an appropriateenvironment is given, the case studies suggest that one area of strength can besufficient to reach success.

• The type of success and the related development of energy efficiency activities isstrongly determined by cultural aspects and can hardly be affected by direct policyintervention (see 2.4.1)

• At least in the short term, policy-making has to accept the various company types asgiven, urging the adoption of policy strategies and mixes to the specific features oftarget groups and related segments (see 4.5).

2.6 Conclusions – Implications of the cross-case analysis of SME forpolicy-making

The analysis of the empirical company case studies identified decisive variables andstructures which are influencing the implementation of RUE measures in SME. For energypolicy, a primary conclusion has to be seen in the fact that energy efficiency activities aretriggered and influenced by a broad range of fostering factors, involving multiple actorsinside and outside the firm. Rather than treating energy as an isolated decision variable, theidentified energy related socio-economic processes (2.4 for details) have to be looked uponas target processes for policy-making that are to be addressed systematically.

Especially in the first stage when the idea of RUE measures is born and in the last stagewhen continuity of action is concerned, opportunities exist for an active energy efficiencypolicy to stimulate new success stories on a broader level. The direct impact of policyinstruments and basic conditions, however, is limited. One reason is that the neededprocess of energy related change is strongly influenced by the culture already establishedin SME, which can hardly be altered in the short term. Furthermore, the start of RUEmeasures is often related to occasions such as breakdowns or enlargement investments.Hence, it is crucial, that energy policy addresses such opportunities to increase energyefficiency by preparing the ground and providing assistance which allows SME to benefitfrom these chances.

For that reason, special attention should be given to the fact that the implementation ofenergy efficiency depends to a great extent on the external relations of SME. Externalpartners transmit and amplify policy and market signals and elaborate opportunities forRUE action in SME. Thus the creation of fostering basic conditions for energy serviceactors represent a central domain for energy policy-making.

As guidelines for policy-making, which will be discussed in chapters 3 and 4, thefollowing principle conclusions can be drawn:


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• In the case studies a combination of fostering factors was always found consisting ofinternal and external company influences. Therefore, mixes of policy instrumentsadressing various parameters over all process stages promise a fostering impact oninternal activities.

• Key actors inside the companies play a crucial role and have to be addressed andmotivated by policy intervention. The impact of policy programmes depends on howfar a commitment of top management and motivation of staff to work on energyefficiency can be achieved.

• In most cases energy has minor economic importance and is not a topic per se. In orderto increase the perceived priority of RUE measures have to be promoted by a broadmix of motives and arguments.

• For most SME the implementation of energy efficiency represents an innovation in thesense that it produces new patterns of behaviour inside the company. Insecurity has tobe overcome by clear, concrete and convincing proposals for action. External stimulithus have to indicate options for RUE measures (know what to do) and to increase theinternal capacity for action (know-how to do).

• The learning company was used as a metaphor to describe an ongoing process ofgaining lasting motivation and knowledge related to energy efficiency. The objectiveshould be to make energy efficient behaviour an integral part of everyday practice inthe targeted companies.

• In most cases external impulses are needed to trigger activities in energy efficiency.The integration of external support, especially in form of continued external networksserved as a means to legitimise energy efficiency activities inside the SME.

• The investigation into the structural characteristics of different implementationprocesses has shown a typology of successful implementation processes of RUEmeasures in SME. It was stated that these types refer to different company cultures,which developed over time. These ‘company styles’ are not easily changed bymanagement or outsiders in a short term perspective. Policy-making thus has to beaware of the resulting segmentation of target groups. Communication and interventionschemes have to be adapted, e.g. by provison of policy mixes.

The in-depth investigation and understanding of real world social processes in the casestudies has to be taken as a serious starting point for policy discussion (see Chap. 4). If alook at policy-making for energy efficiency is taken from the point of view of socialmarketing, a first very important step has been taken to develop a marketing strategy: theanalysis of target processes and a first segmentation of target groups.

Chapter 3 - Analysis of Programmes

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Chapter 3 Analysis of Programmes

The success of companies working with energy efficiency is, as the preceding analysisshows, dependent on different internal factors like company culture, technical capability orthe social integration of energy efficiency. However, since companies as social unitsinteract with their settings, external conditions including policy programmes directly orindirectly influence the process of implementing energy efficient technology or ofestablishing energy efficient behaviour.

In this study, policy programmes and activities orientated to the SME target group wereincluded mainly for two reasons20:

• From a pragmatic point of view, the programmes were used as a starting point for theidentification of potential company cases in the phase of field research, looking atfirms with successes in energy efficiency that participated in energy efficiencyprogrammes.

• In order to get a deeper understanding of programme design and management, out-standing and/or successful programme approaches for SME were sought. However, theselection criterion for the programmes was mainly their success with respect to theircontribution in the selected firm cases rather than their success in absolute terms.

Given these pragmatic and research-orientated reasons, it becomes clear that the sample ofprogramme cases should neither be considered as representative for energy efficiencyprogrammes on the European level nor as the „most successful“ available programmetypes in the strict sense21.

The company case studies discussed in the previous Chapter 2 indicated possibilities toinfluence the implementation of RUE measures in SME, i.e. information concerning thecontent of policy programmes was derived. In this chapter, the analyses of programmecases will provide answers to the leading question "What are the fostering factors andorganisational structures that support the set up and implementation of effective energyefficiency policy programmes?". Hence, conclusions are drawn from the socio-economicperspective on the policy programme organisation and design. Both parts contribute to thediscussion of policy recommendations in the following Chapter 4.

In this chapter an overview of the analysed programme cases will be presented,characterising the sample briefly (3.1). The sample is also put in the context of theEuropean energy efficiency policy by contrasting it with the respective information of theMURE-database. In a further step (3.2), four programme cases will be depicted pointingout different approaches in a typical manner: the RAVEL programme as an example forelaborated training, information and motivation approaches; the Danish CO2-tax as amacroeconomic instrument; the EcoProfit-case as an initiative on the level of local

20 A documentation of policy programme cases can be found in InterSEE Final Report Volume IV.21 For an international overview see e.g. Kraemer, Stjernström 1997, IEA 1994a


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authorities; and the PESAG’s "Energy efficiency partnership" case as a utility-basedactivity.

The cross-analysis of all 15 programmes included in this study (3.3) stresses fosteringfactors for programme success that are common to the majority of analysed cases andwhich, therefore, are considered to be of general importance for policy-makers.Theanalysis is based on interviews with different programme actors and on programmedocuments and studies. It follows the concept of qualitative social research similar to theone applied to the company cases. and is structured by an actor-orientated view on thedifferent phases of programme design and implementation. Finally, conclusions as tosuccess factors for programmes and policy implications are presented (3.4).

3.1 Presentation of Programmes

In total, 15 programmes were investigated (see table 3.1). They are located in fourcountries - Denmark, Austria, Switzerland and Germany - on a national or regional level.The Danish and Swiss cases are mainly national programmes, whereas the Austrian caseand the German ones are mainly regional. All programmes are targeting SME, although insome cases SME are only one target group among others (e.g. RAVEL, Energy Agencies).The selected sample of programmes and activities shows a broad variation concerningprogramme types, impact mechanism and levels of action, which constitutes a core featureof integrated energy policy-making. Only a comprehensive array of measures andinitiatives will involve all important actors and influence factors which are needed for abroader stimulation of success stories.

Tab. 3.1: Overview of programme cases


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As to financing and management of the programmes, there are utility programmes (e.g.Free Electricity Audits, Stadtwerke Herten), private initiatives (Model Hohenlohe),government policies (Danish CO2-tax) and a wide range of public-private partnerships. Asa first message it can be stated, that innovative energy policy does not necessarily dependon large and long-lasting public spending. Within incentives schemes characterised bybusiness opportunities through competition, "carrot and sticks" for markettransformation22, mutual assistance between SME or image gains, an effective engagementof firms and external actors such as utilties, suppliers or consultants can be achieved. Evenif some of activities are triggered and financially supported by energy policy in thebeginning, most of them require little and in the long run decreasing public funding.

Almost all programmes represent a mix of different elements. The most frequent elementis information and motivation. An exception is the Danish CO2-tax, where an informationcampaign preceded the introduction of the tax. The aspect of training is a core element ofthe regional Austrian Ecoprofit-programme and of the national RAVEL-programme.Training as a complementing element is used in three programmes. Consulting for SME asthe second major element is in five cases a core element and in four cases a supportingelement. The self-commitment of participating firms is a core element in four programmes.

Other elements like standards, legislation, financial incentives, fiscal instruments and R&Dare of minor importance for this sample of programmes. This corresponds to the basicsocio-economic approach applied in this study, which is concentrating on actors and socialrelations on the micro-level of the firm and its setting. The dominating programmeelements as mentioned above reflect and underline the importance that external actors mayhave for the successful implementation of energy efficient technology in companies. Inthis context it is especially noteworthy that all programmes used subsidies or rebates onlyin combination with a self-commitment e.g. to implement all profitable measures identifiedin an energy audit.

As a retrieval (mid of 1997) in the MURE-database23 shows, there are 79 differentEuropean energy efficiency programmes or activities targeting at SME in the industrial andtertiary sector. The most frequent types of intervention are financial aids (32%),information (28%), technical assistance (11%) and legislation (9%) (see Tab. 3.3 and 3.4in Annex 3 of this report). Out of the 15 programmes included in this study, only 4 occurin the MURE-database. One reason is that some countries (like Switzerland or Austria) arenot or not yet included in the database, another is that for the included countries the

22 Market transformation seeks to bring about permanent enhancements in the markets for targeted energy efficiencyproducts and services. The objective of market transformation is to achieve a high level of market penetrationwithout relying on the continuing use of rebates or incentives. Market transformation holds promise as a way ofachieving significant efficiency improvements by encouraging the production and consumer acceptance of new,highly-efficient products (Bonneville Power Administration 1997)

23 Source: MURE (Mésure d'Utilisation Rationelle de l'Energie): Database for RUE-Measures, The MURE Database -General Overview and Main Features. Developed by ISIS (Rome), March Consulting (Manchester), INESTENE(Paris), FhG-ISI (Karlsruhe) within the framework of the SAVE-programme of the EU(DG17).


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database is not complete, i.e. not all existing measure are presented24. Facing the currentincomplete information about energy efficiency programmes and activities in the Europeancountries, a judgement whether the programme sample of this study is representative of thewhole range of activities is not possible. However, compared to the documented state ofpolicy programmes with priority on financial aids, the sample provides a view oninnovative activities with stronger socio-economic focus.

3.2 Exemplary policy cases

3.2.1 Impulse programme RAVEL

Structure and brief history of the Swiss energy policy

Its dependency on oil and securing the supply thereof dominated the Swiss energy debatein the 1970s and 1980s. In 1989 the Swiss Parliament voted in favour of theimplementation of an programme called Buildings and Energy aiming at the efficient useof electricity (RAVEL), retrofitting of buildings (IP BAU) and promoting renewableenergy sources (PACER). One year later another decisive change took place in theevolution of the Swiss energy policy. On the occasion of a referendum the Swiss electorateadopted a constitutional amendment authorising the Federal Government to pursue anational energy policy aimed at achieving certain goals, such as energy efficiency and aneconomical and environmentally compatible energy supply. At the same time, the Swisselectorate adopted a moratorium on licensing new nuclear power plants until 2000, butrejected a proposed phase-out of nuclear power. This gave rise to the birth of theEnergy 2000 action programme (E2000) supporting the programme „Buildings andEnergy.

These action programmes have met with great interest in the neighbouring countries ofSwitzerland. The majority of Swiss course concepts and materials already exist in threelanguages (German, French and Italian), but the distribution to other countries of Europehas been very limited to date. However, initial findings from various regions of Germanyare extremely encouraging and indicate that the concept and content of these actionprogrammes could become a valuable energy-policy tool in other countries of Europe too.

RAVEL impulse programme

The impulse programme RAVEL (Rationelle Verwendung von Elektrizität / efficient useof electricity) was launched in 1989 and continued until 1997 (RAVEL 1996). Switzerlandspent a total of 16 million ECU on RAVEL. Its main goal was to give impulses to useelectricity more efficiently by research, training, further education and PR activities.

24 In the 1997/98 phase of the database-modelling, energy efficiency programmes of Austria, Sweden and Finland areintroduced into MURE, and the information about programmes of the countries already included is intended to becompleted by the end of 1998.


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More than 500 specialists from the private economy, the electricity sector and universitieswere active within the framework of the RAVEL projects as project managers or lecturers.Courses and conferences were sponsored by trade and energy associations, industry, andthe architecture and building technology sectors.

The management structure of the programme consisted of three levels:

1. the Federal Office of Economic Affairs as the principal;

2. the commission (comprising representatives from industry, the electricity andconstruction sectors, and other federal offices) decided on programme content as wellas budget questions; and

3. the programme management team planned and organised the programme.

The programme management team comprised seven specialised technical sections andthree supporting sections, which analysed non-technical obstacles and assisted thetechnical sections with implementation.

Broad variety of impact mechanisms

Impulse programmes cannot be limited to further education and to the impact of coursesand books, but must incorporate a broad variety of additional factors and impactmechanisms. Depending on the situation, the important functions of impulse programmesinclude preparing a knowledge basis, triggering discussion processes within circles ofspecialists (and thus attaining consensus), distributing knowledge via standards, furthereducation of specialists and professional developers, and media work for decision-makers.

The impulse-programme principle - From specialised to widespread knowledge

The distribution of RAVEL competence was always carried out according to the impulse-programme principle: in a given area of electricity use, a small team of specialists providedRAVEL with advanced knowledge and devised a suitable method of implementation inorder to bring this knowledge to as broad a specialised public as possible25. Around 500innovative project managers and lecturers studied the material, beneficially incorporatedthe findings into their own professional activities and processed them into furthereducation modules. More than 1,000 colleagues of these innovators were able to co-operate in these activities and benefit from them. The next step motivated more than 5,000specialists to acquire a new foundation for their proficiency with over 12,000 courseregistrations. As a result, it was possible to reach core groups within the various sectorswhich have a significant influence on electricity consumption, and these groups were largeenough to bring about a distribution of new knowledge within their own sector.

25 e.g. RAVEL 1991, 1992, 1993a, 1993b


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Important products of the RAVEL programme are:

The RAVEL library

A series of publications entitled ”RAVEL materials” was prepared at an early stage of thedistribution of knowledge process, and contained some 60 volumes. The RAVEL librarycomprises 122 volumes with a total of 14,000 pages. All in all, an accumulated 47,000copies of the various publications have been sold, and 120,000 copies of 32 additionalpublications have been distributed free of charge.

Energy cocktails

The RAVEL programme to launch cyclical evening events – energy cocktails – throughoutSwitzerland from 1994 onwards (Bush 1996). The main goal of energy cocktails is todemonstrate the financial investment potentials in the energy sector, and thus to stimulatethe market in the individual regions. Participants at these cocktails include both principalsand persons carrying out the projects. In the industrial environment, these includemanagement staff, technical managers, energy specialists, development engineers andmarketing specialists, and on the project execution side, mainly suppliers, planners andconsultants.

Industry and building technology guidelines for ordering competence

The most important contents of these have been summarised for the attention of decision-makers, investors, principals and managers. One of the main aims is to assist the targetgroups with their ordering procedures: formulation of orders according to the objectives ofRAVEL, evaluation of offers, verification of performance using benchmarks, developmentof indicators, methods and instruments for those ordering, by means of which energyefficiency could be secured (including procedures for requests for tenders and controls)

Management skills for engineers by computer-aided energy management games

Experiences in industry have shown that many sound solutions to energy problems do notfail for technical reasons, but rather because engineers are often unable to sufficientlyexplain the advantages of their proposals from a management viewpoint. With the help ofcomputer-aided training and management games, engineers are taught entrepreneuralthinking and how to sell RUE proposals correctly to top management.

RAVEL in initial education

The RAVEL impulse programme provided knowledge concerning efficient use ofelectricity for specialists, and much of the knowledge has been brought closer to a broadpublic via the media, courses and seminars. Schools, too, now benefit from this material,and a teaching tool has been developed by energy experts in collaboration with teachersand a publisher of teaching aids.


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Assessing the impacts of RAVEL

The impacts of "soft" measures such as impulse programmes are extremely difficult toquantify, but the number of course participants, sales figures for brochures, etc., and thenumber of associations which have helped promote the programme, provide a roughindication of the wide range of impacts:

• With comparable building volumes and comfort requirements, the annual investmentcosts for buildings in the services and industry sectors are around 200 to 300 millionSwiss francs lower today than they were before RAVEL was launched.

• Practically all medium-sized and large-scale building technology planning offices inSwitzerland were either involved in the development of RAVEL further educationcourses, or make use of them.

• At vocational schools and technical colleges, lecturers are in the process ofincorporating RAVEL findings into their syllabuses. 5 technical colleges organiseRAVEL energy cocktails and use these events for purposes of technology transfer.

• Both of Switzerland’s Federal Institutes of Technology (in Zurich and Lausanne) haveprocessed the subject of efficient energy use by electric motors into a research andeducation subject.

• The electricity industry is making use of the effects that constructive recommendationsconcerning efficient use of electricity have on its image, and is offering a broad varietyof products.

• RAVEL has tried out a variety of innovative forms of implementation andorganisation, and these findings are already taking effect in other governmentprogrammes.

3.2.2 The Danish CO2 Tax

In 1993, Denmark introduced a minor CO2 tax on trade (service sector) and industry. In1995, the Danish Parliament adopted a package of new measures in order to conform to theenvironmental targets concerning reduction of CO2 and SO2 emissions (MoF 1995, Ezban,Tang, Togeby 1995). Between 1996 and 2000 the tax is due to increase considerably and anew SO2 tax is going to be introduced. The new CO2 package can be characterised by:

• The effective level of taxation is the highest in the world for industry.

• The revenue is recycled by lowering the non wage costs of labour.

• The level of taxation depends on the purpose of the energy use. Three types of energyuse are defined. When companies use the same energy source for different purposes,several meters are required within the company.

• Companies with energy-intensive processes get a tax reduction if they enter anindividual agreement with the Danish Energy Agency. For these companies theeconomic instrument is combined with an administrative one.


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The System

The Danish CO2 tax scheme is not coordinated with the EU or EU Member States.Therefore, the structure is designed to protect the competitiveness of the energy-intensivecompanies. Energy use is divided into three categories: Space heating, light processes andheavy processes. Heavy processes comprise several energy-intensive processes, e.g.melting, concentration and drying in relation to the production of cement, mineral wool,condensed milk, and sugar. Heavy processes account for 33% of all energy used in tradeand industry. The remainder is divided between light processes (60% of total energy use)and space heating (7%).

The vast majority of the Danish companies will pay a two-level tax: this constitutes a hightax on energy used for space heating. In the year 2000 the high tax will amount to 150-200% of the energy cost (depending on the type of energy) and a lower tax on energy usedfor light processes will amount to 20-30% of the energy cost. In the majority of smallcompanies electricity consumption is defined as a light process, and the consumption ofoil, natural gas, or district heating is used solely for space heating. When this is the case,no extra meters are needed.

The energy intensive companies will pay a low tax on heavy processes. Furthermore,companies may enter an agreement with the Energy Agency and pay a lower tax for heavyor light processes. It is expected that 200 individual companies and many greenhouses willenter an agreement.

Implementing a Five-Level Tax Scheme

The different levels of tax require a categorisation of energy use which adds to the costs ofadministration and control. The cost of installing the required meters is borne by thecompanies. Partially, the costs of meters were perceived as unreasonably high in relation totheir utility, but the installing of more energy meters also has positive effects: a moredetailed energy accounting was made possible by the new meters.

As a result of the high tax on energy used for space heating, many companies (also thosewith no agreement) have replaced electric space heating with cheaper (both energy priceand tax) energy source, like natural gas or district heating. Also, the sulphur tax hasmotivated a general shift towards oil with low-sulphur content.

The difference in tax levels (between space heating and other end uses) can have anegative effect. Companies may be tempted to manipulate the specification of the energyuse in order to reduce tax payments. For examples process heating used for space heatingshould be taxed, but the diffusion of such arrangements is difficult for the authorities tocontrol. Also, companies may invest too much in reducing energy consumption related tospace heating, and too little in reducing energy consumption in heavy processes in relationto the economically efficient level.


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Recycling of Revenue

The extra revenue collected from the 1996-2000 tax increase will all be recycled to tradeand industry. In the transition period 1996 to 1999, subsidies will be allocated forinvestment in energy savings. From the year 2000 all revenue will be recycled by loweringa labour-related tax paid by employers.

Estimated Effects

The Ministry of Finance estimates that the package will reduce the emission of CO2 fromtrade and industry by 4.6% of the total Danish CO2 emissions by the year 2005. Thisrepresents a significant contribution to the national target of reducing emissions of CO2 by20% in relation to their 1988 levels by the year 2005. The tax on space heating and thecombined tax and agreements in relation to the heavy processes are expected to have thelargest effect, given their contribution to current levels of energy consumption.

Since the tax is gradually phased in over a five-year period, companies have time to adaptto the new tax rates, and their possibilities of undertaking energy-saving investments at theappropriate juncture – i.e. when existing capital equipment is replaced – are improved.

The CO2 tax is a tax reform shifting the tax burden from labour to energy. Since allrevenue is recycled, the macroeconomic effects are likely to be small. Based on modelcalculations the Ministry of Finance has estimated an increase in employment of twothousand people in the year 2000 due to the shift in tax structure. For most sectors the gainor loss will be less than 0.5% of the value added. Individual companies may gain or losemore. How the balance for the individual company is between the new tax and the lowercost for labour is a question of the energy consumption per employee, divison of energyconsumption between three types of energy use, and whether an agreement has been made.

History

The history of the Danish CO2 tax on trade and industry covers a period of three differentgovernments. One core feature to be pointed out here is that the complicated tax structure,with five levels and agreements for the energy-intensive companies, has only resulted insmall distributional effects for the majority of the companies. In general, the companies’gains and losses are balanced. This feature has been important for the political decision toimplement the tax.

Due to the government’s effort to prove that their policy was economically responsible, itwas also an important feature for them that the tax did not cause loss of competiveness. Acombination of different factors made it possible to pass a bill increasing the actual CO2tax level on trade and industry without losing jobs. A bill imposing a small CO2 tax ontrade and industry was already in effect. A concern for climate changes and commitmentsto different targets also helped the tax through Parliament, where a “green” majoritysupported the idea of shifting the tax load from labour to unrenewable resources.


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Compared with other models of taxation negotiated in 1994, this model has the advantagesthat both the gains and the losses for individual companies are minimised and spread. Onlyfew companies will suffer big economic losses. Many companies will have minor gains.Furthermore, this model has the advantage of not causing a rise in unemployment.

Findings in the Danish Case Studies

In the Danish case studies from six non energy-intensive companies, the CO2 tax has beena motivating and supporting factor to start or continue working with the energy issue. Butonly in one of the six companies the CO2 tax has been directly mentioned as a decisivefactor for the company’s work with energy conservation. The following external factorsare named as decisive arguments in favour of the various decisions in relation to energyconservation: energy prices, subsidies, the anticipation of upcoming regulations (CO2 tax)and an advantageous contract with the local electricity utility.

For several of the six companies, the tax has been a motivating factor for the companies togo through an electricity audit. One company had only limited knowledge about thestructure of the tax, or how the CO2 tax would effect them. When the consultant from theutility described how the tax would influence them, they realised most of therecommended projects immediately.

3.2.3 ECOPROFIT

The programme ECOPROFIT is an ECOlogical PROject For Integrated environmentalTechnology focusing on pollution prevention, with efficient use of energy as one of itselements. Its global objectives are to strengthen the economic situation of companies byintroducing pollution prevention, and with that to improve the ecological situation of aregion towards a sustainable regional development. ECOPROFIT is based on a three-waypartnership comprising the participating companies, a consulting group and the Graz localauthorities. The chief co-ordinator is the Environmental Protection Office (EPO) of theCity of Graz, the chief consultant STENUM.

The programme addresses all companies of the city of Graz (Austria), irrespective of sizeand branch. It provides “help for self-help” education, how to integrate pollutionprevention into the companies’ business, and assists companies in exploring their ownbusiness from a different angle, so that continuous advances may be made. Furthermore, itaims at creating a pollution prevention network among the companies.

The origins of ECOPROFIT date back to 1991 when five companies in Graz (printing andcar repair shops as well as trade establishments) joined the project. At that time the focuswas laid on in-depth analyses of the companies material flows mainly investigated by theconsultant. In 1993 the programme was organised for the first time on a workshop basis,providing “help for self-help” education including supporting consultancy and casestudies. Finally, in 1994-95 ECOPROFIT Graz was launched with a revised andstandardised education programme, which continues to be at the core of the currentECOPROFIT programme.


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At present, the number of participating companies stands at about 50. EPO first focused onthe larger businesses, all of which are ECOPROFIT companies by now. While in the earlystages most of the companies were from the manufacturing sector, the present participantsinclude for the most part service businesses. The character of the programme currentlylimits the number of ECOPROFIT newcomers to 15 per year. EPO’s objective is toincrease the number of companies to 100 by the year 2000.

Programme Elements

ECOPROFIT has been conceived as a one-year programme:

The basic ECOPROFIT programme consists of nine workshops taking place each month.Usually the workshop participants are the staff members responsible for environmental orwaste management issues. Each of the workshops is structured to include a feedbacksession to go through the homework of the last workshop, an information block, aninteractive phase and a final discussion. Between workshops, the companies have to collectand prepare company-specific data for the workshops, so that they are in a position toimprove their situation and implement pollution prevention. The company remains intouch with the consultants who continue coaching the company throughout the duration ofthe workshops. One aim of ECOPROFIT lays on the realisation of measures which allowimmediate implementation to see directly some first success. While larger companies havespecial waste management and environmental protection officers, this cannot afforded byfor smaller businesses. Therefore a scaled-down version of the workshop programme hasbeen developed for very small businesses, which allows participants of small companies tobenefit from the same methodology. Furthermore, it allows the trainers to deal with bothlarger and smaller companies within the same framework.

The workshop programme concludes with the conferring of the ECOPROFIT award by theCity of Graz. In order to receive the award, companies must document their environmentalachievements and include them in an environmental programme for the following year,outlining the improvements to take place. The award is conferred for one year. Monitoringis done by the ECOPROFIT commission which comprises all relevant institutions in Graz.

The companies who participated earlier, together with STENUM and the City of Graz,form a sort of ECOPROFIT club. They meet four times a year and address current issueswhich have been surveyed preliminarily among the businesses (e.g. preparation of EMAS).Former companies are also integrated in the basic programme, with presentations of theirwork. The innovation pool provides additional funds for the companies, enabling them toafford additional consulting. Consultancy is ensured by STENUM or other specialisedconsultants.

Advertising of companies and programme resources

Due to the time commitment needed by the companies, special attention must be attachedto acquiring new participants. The most successful approach for acquiring new participantshas been through direct contact as well as by word of mouth of already participatingcompanies.


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During the pilot phase, the City of Graz set aside about 22,000 ECU. Meanwhile, the cityspends close on 220,000 ECU annually on ECOPROFIT. So far, the City of Graz hasinvested a total of some 730,000 ECU in the programme. Added to this are the course feespaid by the companies. The participating companies pay between 1,386 ECU and 4,380ECU, depending on their size. If one also included the working hours invested by thecompanies, their contributions would total approximately 585,000 ECU every year. For thefirst time this year the AMS (Arbeitsmarktservice) grants subsidies for participatingcompanies by accepting the courses as further training of employees. The subsidy islimited to 66% of the company’s costs.

Evaluation of results

In 1996 the 29 participating companies identified 460 measures, 55% of which with anamortisation period of less than 2 years. 20% of the measures refer to the companiesenergy consumption. Overall, 1996 the following savings were achieved by all of thecompanies which received the City of Graz award: 2,341 tonnes of raw and ancillarymaterials, 183 tonnes of solvents, 389 tonnes of residual wastes; 591 tonnes of hazardouswastes; 435 tonnes of paper; 210 tonnes of recyclables, 171,650 m3 of water; 5,08 GWh ofelectricity, 13,09 GWh of heat, 1,1 million m3 of natural gas, 70 tonnes of oil. From thecompanies' point of view a participation in ECOPROFIT also means to gain certainty inenvironmental legislation, to prepare for coming legal requirements as well as for an Eco-Audit certification.

The EPO, on the other hand, has used the ECOPROFIT experience in formulating theobjectives of its “Ökostadt 2000” (Eco-city 2000) environmental programme. ECO-PROFIT has also had an effect on the economic master plan adopted by the City of Graz in1996. According to the plan, Graz is to become an “eco-cluster”, an “eco high tech” centre.In 1996 the City of Graz was one of five cities that received the „European SustainableCity Award“.

As from the programme actors' point of view, the success of ECOPROFIT is attributed onone hand to the programme design, especially the active involvement of the localauthorities and the active role of the companies during the programme and, on the otherhand, to the motivation of the programme actors as well as of the participating companieswhich identify with ECOPROFIT. Furthermore the diversity of participating companies interms of sectors and sizes supported mutual learning and networking among the differentcompanies.

All programme actors learned about the importance of networking as an element of theprogramme, of the award for increasing identification with the programme activities, aswell as of the necessity for quick and visible success by integrating measures which allowimmediate implementation. Furthermore, it has been found that the provision of data andtools for data analysis, etc. is not sufficient. Continuous external impetus is needed to keepthe topic on the companies’ agendas.


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Future efforts and transferability of ECOPROFIT

For the future the programme actors will continue to think about making the programmemore flexible. As one step they will promote computer-aided modules for data analysis toimprove the systematic thinking imparted by the programme and to reduce the timerequired for programme participation. Concerning energy efficiency, additional effort willbe made to integrate energy data in the companies’ controlling and profit calculations.

Although the specific combination of programme actors, local authorities, consultants andcompanies has been quite different, experience has shown that the programme, in itscurrent structure, is well capable of being transferred to other cities and regions. Since1994, ECOPROFIT has also been successful in four Austrian cities outside Graz. WithECOPROFIT Bregenzerwald and Lower Austria the programme developed further fromthe communal to the regional level. In each case the initiative came from the local actorsand has been supported by the programme actors in Graz. Within the framework of theUNIDO/UNEP National Cleaner Production Centre activities, the approach has also beenstarted in three regions of the Czech and Slovak Republics and in the cleaner productioncentre in Porto Alegre in Brazil.

To ensure the quality of imitation programmes the swift spread of ECOPROFIT initiativeshas prompted the City of Graz to register ECOPROFIT as a trademark. In future, aprogramme may be called ECOPROFIT only if the local authority is involved in theprogramme to provide the networking across different sectors of society which is seen tobe crucial to the long-term success of the programme.

3.2.4 „Energy efficiency partnership“ of PESAG - An energy audit andconsultancy scheme by a regional utility

PESAG is an electricity utility with 363 employees in a rural area in eastern North RhineWestphalia. In 1997, they supplied about 2.220 GWh electricity to their 370,000customers. Apart from few small sized motor package systems for CHP (combine heat andpower production), PESAG does not have any power generation capacities on its own, i.e.it is serving as a pure regional distributor.

Background

In the last years, PESAG´s business strategy can be characterised by a continuousreorientation of business philosophy. With regard to the liberalisation of the Europeanenergy market, PESAG has been expecting increasing pressure of competition, demandinga restructuring of the traditional electricity supply business. Especially in the field ofindustrial customers, increasing emphasis has been put on after-sales services, energyefficiency service and consulting activities in order to gain a close relationship to the localclientele. This focus on the (industrial) demand-side is understood as a major pillar of thecorporate philosophy, joining economic business goals with a strong identification with theregional economy and an ecological responsibility concerning climate protection andresource efficiency.


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Energy Efficiency Partnership

The core element of the strategy is the „Energy Efficiency Partnership“, an energyefficiency consulting initiative addressed to the regional industry with special regard toSME´s in cooperation with the Westfälischen Umweltzentrum (WUZ) (Köllinger,Schwarze, Navratil 1998). The WUZ was founded as an independent consultant institutionby various technical faculties of the regional university, in order to intensify thecooperation with (regional) industry and public partners. The cooperation between PESAGand the WUZ is characterised by a share of tasks, with PESAG playing the centralcoordinator and the WUZ contributing to the consulting body, based on permanentengineering staff combined with a students' work-force within a scheme of diploma theses.

In the beginning, both partners were approaching rather unfamiliar terrain so that somepilot projects had to be carried out in order to gain experience with industrial energyaudits. These first audits were offered for free to the firms, but meanwhile energy auditshave to be paid by the companies in order to cover expenses for the supervision ofstudents, metering equipment, materials, etc. Although some of the regional consultantswere fearing subsidised competition at dumping cost, the energy efficiency partnership hasgained broad acceptance in the scene mainly due to two reasons. First, the target group ofSME represents so far a rather unattractive market segment for professional efficiencyconsultants due to a misbalance of fixed costs compared to low total savings. Second, theenergy audits indicate profitable opportunities for investment in energy efficienttechnologies, requiring professional planners and suppliers. To this regard, the "EnergyEfficiency Partnership" serves rather as a "door opener" than as a competitor.

The "Energy Efficiency Partnership" is characterised by comprehensive support for SMEin questions of rational energy use. Based on energy audits giving an overview of theenergy status quo of the company's processes, buildings and equipment, the initiativeprimarily aims to provide the firm an integrated optimisation concept which allows agradual implementation while considering the limited resources of SME. In addition toefficiency consulting, PESAG offers the possibility for technical and management supportduring the implementation phase.

To an increasing extent, research, development and demonstration in the field of electronicenergy management projects are undertaken, trying to introduce innovative energy controltechnologies in the small and medium industries. Within these cooperations with regionaltechnology suppliers and university research institutes, PESAG is taking on the role of thecentral coordinator. Two examples should illustrate the impact of the „Energy EfficiencyPartnerships“ on implementation in firms:

• The first example is a medium-sized company in the field of plastic recycling. Takingthe occasion of a move to another location, PESAG performed an energy audit pointingout the possibility to substitute all space heating and warm water energy demand bywaste heat from the extruder machines. Encouraged by this positive experience, newR&D projects in the field of electronic energy management based on of local operatingnetworks (LON) have been initiated by PESAG and performed by regional suppliers.


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• In another case of successful implementation of energy efficiency, PESAG supportedthe refurbishment of an electric foundry, combing decentral melting pots withelectronic energy management and control systems. At this moment, another project isrunning concerning R&D and investment in a highly innovative eloxal process, aimingto achieve a threefold reduction in energy comsumption compared to state of the artequipment.

As a result of the first 15 projects, energy costs of industrial customers could besignificantly reduced and in some cases major investments in energy supply (e.g. heatingsystem) could be avoided. Through the audits, a total potential of 2 GWh electricity and 12GWh heat had been realised by the end of 1997, leading to a reduction of CO2-emissionsof 3,700 t CO2 per year.

After the first successful pilot projects, the initiative has been gaining momentum andPESAG has set up an organisational structure for industrial and service consulting withgrowing personnel capacities. Increasing emphasis is put on a marketing initiative toattract the attention of the regional industry. For the years to come, PESAG plans tointensify the industrial consulting engagement addressing nearly all SME in the area.Furthermore, they are trying to develop similar initiatives for commerce, service andpublic institutions, e.g. covering all hospitals in the area.

The projects already finished and their results indicate that PESAG´s business strategy ofan energy efficiency consulting initiative is a success concerning changing businessphilosophy, realising energy- and cost savings on the customer side, serving environmentaland climate responsibility, and in establishing close relationships with the regionalclientele.

The following conclusions can be drawn:

• A successful establishment of an energy consulting initiative needs the creation of asupportive internal infrastructure. Permanent backing and commitment of top-management, the scope for action and growing personnel capacities strengthens theprocess and the internal position of the key actors. A gradual integration of the newbusiness strategy in existing structures helps to create such an infrastructure. Theunderlying continuous organisational change reflecting the anticipated new marketconditions receives the support and backing of the staff and their union, which havebeen involved in designing and implementing of measures. This participative effort hassignificantly reduced internal resistance and frictions.

• The purposeful selection and realisation of pilot studies allows experiences to begained in the new business field and an increase in the multiplication impact. Personalcontacts and confidential relations to executives of the pilot companies are importantelements for a successful marketing of the energy efficiency partnership.


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• A close contact to the regional university makes it possible to benefit from technicalresearch and to offer low expense audits, being a convienient argument for cooperationfor the companies. The cooperation fosters a multilateral flow of information,experiences and know-how with benefits for all participants. Additionally, the practicalexperience increases the quality of students' education, qualifying the graduates forenergy related tasks in industry.

• The identification with the region and the resulting close relations between variousdifferent partners are of paramount importance for the success of the energy efficiencypartnership. This case underlines the special opportunities and chances for regionalutilities to foster energy efficiency in industry within networks on the municipal andregional level. Especially for SME, a close relation to their local energy supplier canserve as a starting point for successful action. An energy market competition focusingonly on the level of energy prices instead on reducing the customers yearly energy billis likely to threaten these networks. Regarding the multiple benefits for theenvironment, regional development and innovation policy, favourable basic conditionsto foster utility engagement on the regional level represents a high priority field ofenergy policy.

3.3 Cross-Analysis of Programmes

The cross-case analysis of programmes presented in this chapter is based on the analysis ofthe single programme studies, and thus points out programme features which areconsidered to be of general importance. Despite the large variety of programmes that areincluded in the cross-analysis, a number of issues and features have emerged as fosteringfactors that are relevant and similar in the majority of policy cases. Some examples wherethese features are most pronounced are given for each feature. The analysis is structuredfrom the perspective of crucial phases for the design and implementation of programmes:

• the phase of initiation,

• the phase of conception and implementation,

• the phase of evaluation and continuity,

and from the perspective of the „human dimension“, looking at

• individual programme actors (persons and institutions) and the interaction betweenthem

• interaction with the target group SME

• basic conditions for individual and social action

The issues related to the target group are the same as in the analysis of company cases buthere they are discussed from the perspective of the programme actors. The fosteringfactors identified on the other two actor levels also show some similarity with the results ofthe analysis of success stories on the firm level. It has to be kept in mind that programmeactors represent individuals acting within organisations. Thus, most of the general featuresof internal change processes discussed in 2.4 can be found in policy-making institutions aswell.


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3.3.1 Initiation of Programmes

Energy efficiency programmes or activities are the outcomes of social processes based oninformation and communication between actors, leading to valid agreements aboutobjectives, procedures and means. From the actor perspective, on which the focus is,individuals are decisive as initiators in the early phases of programme design. Forexample, the coming-up of the Stromforum was mostly dependent on one key person inthe Ministry of Economics of Baden-Württemberg. Personal contacts of the key actor ofthe utility and the regional university fostered the initiation of the PESAG programme.Since individuals as a rule also act as members of organisations, it is necessary todifferentiate between individuals and organisations as to their readiness to act andwillingness to take the initiative.

• On the one hand, innovative approaches for an energy efficiency policy can depend onindividuals who are characterised by a particular perception of environmentalproblems. In contrast to other persons, for these individuals such problems lead toconcrete efforts aiming at a reduction of the environmental burden. This kind ofcommitment is often linked to a key event like the Chernobyl explosion in 1986 andfinds a direct expression in public interest groups, e.g. the one that contributed to thefoundation of the Model Hohenlohe. As for example the Stadtwerke Herten caseshows, the success of individual actors as a driving force for programme initiatives isdependent on the actor´s ability to build up powerful coalitions with access toresources (personnel link of utility key actor with dominating local party). The specialconditions of the social surrounding may be a limiting or enabling factor for suchefforts.

• On the other hand, the programme cases show that organisations launching an energyefficiency programme or activity do not necessarily have environmental or energysaving goals with high priority. For example in the case of the German eta-competitiona strong motive for its establishment was the fear about tendencies of equating energyconservation with electricity conservation; the competition should contribute to animproved image of electricity. In the PESAG case, the utility offers energy efficiencyservices to its industrial customers not only due to one of its organisational goals(ecological responsibility), but also in order to strengthen the ties to the customers inface of the coming liberalisation of the energy markets. It becomes clear that themotivation for energy efficiency programmes on the level of organisations is likely tobe linked to self-interest and to non-environmental objectives.

As to political institutions, a combination of environmental and economic objectives ischaracteristic for energy efficiency programmes. It seems to be promising for theacceptance both on the side of programme recipients and of voters. The cases show thatthis combination is valid on the level of local and national policy. Ecoprofit for exampleshall contribute to an improvement in the companies' economic situation and to a relieve ofthe strained ecological situation of the region. The Danish CO2-tax was launched not onlyin order to reduce CO2-emissions but also in order to reduce labour costs by shifting thetax burden from labour to energy.


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Apart from individual actors and organisations with commitment to energy efficiency,certain „external“ conditions can contribute to a successful initiation of energy efficiencyprogrammes. On the one hand, predecessor programmes may serve as examples and mayallow the use of experiences for the design of a subsequent programme. E.g., the Ecoprofitprogramme was partially based on the experiences with the Prepare programme, and theStromforum programme took over some elements of the already existing Swiss RAVELprogramme. On the other hand, social or political pressure can foster the willingness toact. E.g. the decision of the Danish utilities to offer free electricity audits was pushed bythe political threat of intervention if the utilities did not act on their own on a reduction ofelectricity consumption.

For the initiation of energy efficiency programmes this means that

• in terms of motivation and publicity, it is important to pay attention to the fact thatboth on an individual and organisational level energy efficiency often is embedded inthe broader field of environmental concern,

• the priority of energy efficiency can rise if it is linked to other organisational orpolitical objectives, especially to the self-interest of the actor,

• the use of examples can reduce search costs for promising actions and can be supportedby the international diffusion of programme designs and elements,

• political or social pressure can foster the readiness to act.

3.3.2 Conception and Implementation of Programmes

In the phase of conception and implementation of programmes three broad areas ofsimilarities in fostering factors have emerged:

• networking and cooperation

• incentives and commitment

• changing the basic conditions.

In the first area - networking and cooperation - the use of existing networks and theestablishment of new networks will be distinguished. Thus, in the PESAG case themarketing of the programme used the channels and contacts of the regional Chamber ofCommerce, the regional energy agency and professional associations in order to reach thetarget group. Associations were also decisive in the programme Stromforum inestablishing the contact to potential programme participants on the firm level. The SwissE2000 programme used the wide network established in the course of the RAVELprogramme, including research institutions, practical experts, training institutions,associations, and political institutions. Another example is noteworthy - the selectedenergy agency in the new federal states, because it used a network almost totallyindependent from energy issues (i.e. the contacts of ordinary business consultants) to gainaccess to potential clients.


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On the other hand, many of the represented programmes have as one or even the main goalto establish new networks related to energy efficiency issues, where such has beenmissing or malfunctioning. Examples here are the Ecoprofit „club“, the DanishAssociation for Energy and Environment, the Model Hohenlohe, the Stromforum orPESAG with respect to the creation of jointly-implemented projects. It is generallymentioned in these cases that socialising and informal activities are an important part inthe progress of establishing such networks, since good personal contacts are the basis ofmutual support and the identification with the issue of the network.

Some categories of institutions have emerged as specific cooperating partners that wereimportant for the programmes’ success. First, the cooperation with publicadministrations is a core element in Energy 2000, Ecoprofit, and the Model Hohenlohe.Often relations between industry and public administrations are tense because they regardeach other as opponents with conflicting interests in the field of command-and-controlpolicies. The cooperation has eased this relation by providing a deeper understanding ofthe mutual problems and has helped to increase the acceptance of command-and-controlpolicies (e.g. pollution limits). Intensified communication helped to simplify authorisationprocedures through better preparation of applications. Second, different kinds of researchinstitutions (universities, polytechnics, sector specific research institutions etc.) have beenmentioned as important cooperating partners, e.g. in the Stromforum, in the PESAG-programme. In some of the cases this input of know-how was even granted for freethrough the help of the commitment of advanced students. Another example of such „in-kind“ contributions from cooperating partners can be found in the Stromforum, whereutilities provided in-depth energy audits for free. Hence, cooperation may also serve as ameans of extending programme resources. To achieve such commitment it is especiallyimportant to integrate the cooperating partners early and respect their self-interests e.g.when defining goals and measures.

Besides this special importance of some specific institutions, involving many actors in abroad cooperative approach was also mentioned as a fostering factor. This includes theintegration of institutions which are already active in the field, e.g. chambers of commerce,and which might otherwise regard new programme initiatives as competition and a threator critique to their own activities (Ecoprofit). In RAVEL and in the Stromforum the salientbenefit of this approach is that it provides important learning effects not only in the targetgroup but also on the level of the partners cooperating in the programme implementation.The cooperative platform acts as a „Clearing-House for Knowledge“ between the targetgroup, the partners for programme implementation, the multipliers, programmecoordinators and the project sponsors. This aspect may be especially relevant forprogrammes aiming at the diffusion of know-how.

The second broad area of similarities in fostering factors is linked to issues of incentivesand commitment. As a first step, firms have to be convinced to participate in aprogramme. Often scepticism and resentments against RUE on the side of the firms haveto be overcome. Successful strategies for this have been: the creation of trust by providingconcrete quantitative figures on saving potentials from pilot projects (PESAG); theexclusive focus on profitable RUE measures, which provide a financial benefit for the firm


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(Stromforum); or making the programme well-known by putting it under the auspices ofinstitutions that are highly respected in the industry such as the Ministry for EconomicAffairs (Stromforum).

Once negative attitudes towards the programme are overcome, additional incentives willbe needed to make firms actually participate. The perceived economic benefits to thefirms are often a decisive argument to accept a programme offer and start RUE measures.To this regard, financial incentives as one element of a mix increase the attractiveness of aprogramme. As discussed with respect to the single success stories in Chapter 2, especiallysubsidies for audits and consultancy show a positive impact. In some cases such financialbenefits to the firms were actually linked to a commitment from the side of the firm. Forexample, only if firms commit themselves to the implementation of all profitable measuresthat are identified in an energy audit, will they receive a tax reduction (the Danish CO2-tax-scheme for energy intensive industries) or will they be chosen as a model project andreceive a subsidy to an in-depth energy audit (Stromforum). A problem of this deal is theasymmetry of information in determining the profitable potentials, since industry as onenegotiating partner will generally be better informed on costs etc.

Another incentive can be created through positive image effects resulting for the firm (eta,E2000, Ecoprofit) or for individuals (Danish Association of Energy and Environment).This image effect is mostly linked to the voluntariness of the participation. On thecontrary, no image effect will result if the firms simply have to comply with newregulations. This circumstance has been used as a lever for achieving „voluntary“ action bythreatening regulations in the case of passiveness. The free electricity audits in Denmark,for example, are due to a political threat for more far-reaching measures or regulation. TheSwiss target values are another example in case: industry preferred the setting of targetvalues over compulsory minimum standards. It should be added that in this latter casethere is not only a „stick“ but also a „carrot“. In a combined supply-push and demand-pullapproach, policy-makers not only exert pressure on product development towards energyefficiency, but at the same time the firms benefit from new market opportunities created bythe label for such products.

Traditional programmes often end once a firm has found the right RUE measure and startsimplementing it. However, in several programme case studies it is stressed thatcontinuous support of the firm throughout the implementation fosters not only thesuccess of single measures but also the continuity of RUE efforts. Follow-up contactsprovide continuous external impetus and keep the energy issue on the agenda, e.g. in thecase of the Danish free electricity audits and Ecoprofit. They also provide a basis forcontinuous input of information and advice as in the case of the energy agency. Byassuring the successful outcome of the momentary RUE efforts they foster motivation andfurther commitment to energy efficiency on the side of the firms and allow feedback fromthe firms to the programme actors for further improvements of the programme.

The third broad area of similarities in fostering factors is linked to issues of changing thebasic conditions for SME. In many of the analysed programmes, e.g. those aiming atcreating a network, participation of the SME in the programme is not identical with theimplementation of RUE measures. Rather the programme aims at providing a supportive


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framework for such measures. One important mechanism through which this support maybecome effective is to establish a platform for the exchange of experiences and a sortof bench-marking process that is triggered when programme participants start comparingtheir energy performance amongst each other. This competitive element creates a creativepressure among the participants for RUE solutions. Such a mechanism is set to work e.g.in Ecoprofit and the working groups within the Energy Management Model. A similarmechanism was prevalent in the negotiations on the Swiss programme on target values forelectricity consumption: no firm wanted to admit to not being able to meet the targetvalues if a competitor had declared their feasibility. As a basis for such competitiveprocesses it is necessary to establish indicators of energy efficiency. This was done forexample in the SIA 380/4 by developing an electricity efficiency indicator for buildings.The SIA recommendation actually builds on a similar kind of competitive mechanism forthis indicator to become effective in terms of implemented RUE measures.

Compared to other business performance criteria, energy efficiency performance is stilllargely a hidden feature of a firm. This inhibits the exchange of experiences on energyissues: firms with experiences relevant to another firm’s problems cannot easily beidentified. A major contribution to energy efficiency of programmes, such as the eta-competition or Model Hohenlohe, is to highlight energy consumption and make RUEactivities visible and hence allow a more targeted and intense exchange of experiences.Mostly sector specific approaches are chosen for this purpose, e.g. in the ModelHohenlohe. This allows the participants to tackle common specific problems on a concretelevel. However, in the case of Ecoprofit the success of the programmes is partly due tosector-overlapping working groups. In the case of very comprehensive subjects, such as anEco-Audit this approach helps to concentrate on the common core of the problems as wellas on strategic and methodological issues, rather than getting lost in technical sectorspecificities. In addition it provides a transfer of experiences from one sector to anotherand hence new impulses for RUE.

3.3.3 Evaluation and Continuity of Programmes

Energy efficiency programmes are related to specific objectives and impact mechanisms.The cases show that in order to judge the effectiveness and efficiency of a programme, astep of control about the results at the level of recipients as well as at the level ofprogramme performance is necessary. Evaluations need time and money, which is notavailable in every case. Thus, apart from systematic evaluation approaches, the personalexperiences of the programme actors serve as a source for judgements about impacts aswell (e.g. Model Hohenlohe).

The outcomes of programme evaluations offer the possibility to change the programmedesign in the case of dissatisfying results or of unused potentials for effectiveness. Anexample for a programme modification is the Free Electricity Audit in Denmark, wheresome of the utilities (as the programme actors) began to offer additional services to thecompanies, aiming at an improved realisation of recommendations for energy efficientmeasures. For the Swiss Energy 2000 programme, an annual report shows problem areasand weak points as identified in the various evaluations and presents conclusions for


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changes and follow-up programmes. It thus seems that especially for long-termprogrammes, a parallel evaluation is useful in order to check further instruments andoptions during the course of the programme.

A critical item is the definition of suitable evaluation criteria. For example the eta-competition that is intended to transfer a gain of image to the participating firms showsthat in the case of „soft“, non-physical impacts an evaluation of results can be difficult orimpossible. Therefore, programmes including the objective of implementing „hard“ energyefficient technology are likely to refer primarily to quantitative measurement orestimations of savings (e.g. Free Electricity Audit, Ecoprofit), although this kind ofprogrammes has qualitative impacts such as a changed consciousness of energy efficiencyor new forms of communication as well.

Apart from aspects of programme modification and optimisation, evaluations may haveother impacts on the level of programme actors. First, successes can enhance themotivation of the programme staff (e.g. eta-competition). Second, successes are animportant legitimation of programme activities to legislative institutions with decision-making power about funding (e.g. Ecoprofit). Third, successes can be used in order toimprove the public image of the programme and/or the organisation responsible for theprogramme performance (e.g. Energy 2000). The examples show that it is useful to closelylink evaluations with marketing and publicity strategies.

Furthermore, a feedback of positive results to the programme participants may alsoenhance their satisfaction and readiness for further actions as to energy efficiency. Forexample, both the Model Hohenlohe and the Ecoprofit programme are using thepresentation of successful cases in order to provide positive reinforcement to the respectivecompany and to spread the information to other potential participants.

It can be concluded that the evaluation of programmes both on the level of participants andof programme management is substantial for an impact- and success-orientatedprogramme steering. It allows the identification of weak points and the introduction ofmodifications and - in the case of success - contributes to an enhanced motivation of thedifferent actor groups and stabilises the legitimation of the programme.

3.4 Conclusions

The analyses of policy cases have identified fostering factors which contribute to theinitiation and effective implementation of policy programmes. Central conclusions couldbe drawn with regard to the following aspects:

• Organisational understanding of policy-makers

The discussion of the organisational background of policy initiatives emphasised thefact that "policy-makers" cannot be seen as an impersonal entity, acting at someabstract level. By contrast, it is helpful to consider them - similar to companies - associal systems which are influenced by networks of internal and external interrelationsand interactions (especially ministries or utility programmes, e.g. PESAG).


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Concerning the fostering factors within and among programme implementinginstitutions, similarities to the fostering factors on the firm level can be observed,which should be taken into account to understand the relevant decision-makingprocesses and the working mechanisms. This organisational understanding of policy-makers is not trivial and stresses two policy implications:

First, in terms of programme success it is not sufficient only to concentrate on thecontent of policy programmes in the sense of an instrumental debate (e.g. investmentsubsidies vs. information brochures). Any concept of an instrument mix - even ifperfectly adapted to the target group characteristics - threatens to miss its impact whenthe final implementation is hindered by motivational, organisational or communicationproblems of the responsible actors. As a consequence, design of instruments andorganisation of programme activities are inseparabel parts of effective policy-making(e.g. RAVEL or Ecoprofit).

Second, the perspective of policy-makers as social institutions opens a way toovercome the simplistic confrontation of public policy-maker vs. private agents. Mostof the innovative policy examples are characterised by actor coalitions from differentinterest groups which contributes to the effectiveness of programmes. Especially forstrategies of market transformation, policy goals and business interests can be easilyjoined in terms of a win-win constellation (e.g. RAVEL, PESAG, Target values).

• Analysis of target groups and market mechanisms:

It is necessary to have a precise concept of the target group of a programme, whichcan be based on the experiences of successful preceeding programmes. However, thisconcept should not be too narrow and should allow several subgroups. Especially theactor network of the companies - associations, technology suppliers, consultants,utilities, etc., represents an important pool of target groups as part of an indirectintervention. In addition, programme elements should not only be directed at individualtarget subgroups but also at the interaction between them. Generating cooperationamong the various players - from manufacturers to users, developers to suppliers,legislators to providers of finance - and improving the relation with authorities, utilitiesand other firms can enable companies to „help themselves“ without further directprogramme support (e.g. Model Hohenlohe, PESAG).

• Actor coalitions

Another important factor of success is the integration of cooperation partners intothe solution- and consensus-seeking processes (e.g. associations, multiplicators,technology suppliers, consultants, planners, authorities, standardisation bodies), e.g.Ecoprofit, E2000, RAVEL. Their specialised know-how and research and developmentfacilities can be used very effectively for finding solutions. If the players concerned arealready incorporated into the process of formulating objectives, they are moremotivated to employ their own know-how and financial resources, and thus enlarge theprogramme’s resources. The cooperation partners - rather than the target groupmembers themselves, as assumed in the initial work hypotheses - also serve torepresent the target group’s interests and perspectives in the conception andimplementation of efficiency programmes, which contributes to increased acceptance


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and effectiveness of the measures. As a positive side effect, which can be veryimportant in size, learning effects on the side of the cooperation partners can beachieved, e.g. increasing the efficiency know-how of suppliers or consultants. Thiseffect should be recognised and enhanced more explicitly in programme designs.

Networks of programme implementing actors - i.e. programme organisers andcooperating partners - have several advantages for programme success. First, on thecompany side opportunities for RUE measures arise at different points of time: wheninvestments have to be made anyway, programmes should make use of these situationsand opportunities. Ergo, the actors that the company would normally turn to forsupport (e.g. suppliers, planners, utilities etc.) must be able and motivated to advise thecompany on related RUE issues and programme offers. Second, the company caseshave shown that often the initial impulse for RUE or for programme participationneeds to come from outside the firm, e.g. from traditional partners such as theelectrician or consultants. From this point of view it is useful to integrate these actorsinto the programme in order to get additional channels of access to the firm. Third, thepositive image of partners such as associations, universities or further educationinstitutions can be highly beneficial to the image of the programme.

• Actor-specific bundles of instruments:

The analysis of the company cases as well as of the policy cases emphasises the factthat a wide range of supporting inputs (e.g. demonstration projects, consulting,financial incentives and awards) offered by various external actors stimulate andsupport RUE measures in SME. The paramount role of external partners for taking upcost-effective efficiency projects underlines the need for energy policy intervention -the manifold fostering factors describe the extensive scope for policy-making. For thatreason, any policy debate limited to a confrontation of general instrument types("command & control" vs. "market orientated") completely misses the point. Bycontrast, it is necessary to combine multiple instruments within the programme andto amplify their impact by synergies between policy initiatives on all European,national, and regional policy levels (e.g. the Danish CO2-tax scheme, RAVEL,Ecoprofit, Stromforum). The empirical results show clearly why this is desirable:Companies express a need for support throughout the process of realising a RUEproject. This continuity can most likely be achieved by a combination of differentprogramme elements which are fitted to the different phases of the implementationprocess offered by various actors.

• Argumentation in terms of the incentive structure of the target groups:

Ecology, reduction of CO2 emissions, energy efficiency, etc., are targets which need tobe embedded in more specific benefit categories, because general argumentation withreferences to monetary or ecological benefits mostly does not concern the target groupsdirectly enough. The identification of suitable benefit categories is a central part of thetarget group analysis which has to be undertaken before the programme design starts.For example, property managers would like to know-how they can offer their investorsmore satisfaction or how they can cut the number of complaints by tenants. Managerswould like to recognise the benefits for the successful operation of their companies;


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employees wish for better career opportunities. As a consequence, programme designshould not only focus on the content of the programme message but also on its"packing", i.e. the language, examples and illustration used for promotion (e.g.RAVEL, PESAG, Model Hohenlohe). Additionally, the subjective context ofperception by the firm has to be taken into account, e.g. current economic situation, thehierarchical status of the addressee, aspects of the firm’s internal micro-policy etc.

Related to the promotion of energy efficiency, indicators and communication ofenergy efficiency performance represents a promising field of policy action (e.g. SIA380/4, Target values/Labelling). Using market mechanisms for the commodities"energy efficiency" and "energy services" require that these commodityies are made„visible“ so that they can be specified and compared. An important aim of policy-making via indirect intervention is, thus, to provide salient and easily available figures- in analogy to energy costs in energy intensive firms. These are necessary to ensurethat energy efficiency issues are reflected in the daily decision-making processes (e.g.Eco-profit). The indicators must be simple and available at the right time, e.g. in thecontext of a purchasing or refurbishing decision, to allow their easy communicationwithin the company and vis-à-vis external partners (suppliers, consultants etc.). Inaddition, indicators are necessary for companies to be able to compare themselves toothers and to create competition, e.g. within a benchmarking process (e.g. EnergyManagement Model, Association for Energy & Environment). Standardisation and thedefinition of key values calls for a process in which specialists are able to reachagreement. Only on the basis of a consensus will the defined indicators gain acceptanceand have an impact on the market.

• Public relations and image promotion:

The acceptance of programme elements benefits from a positive programme image,which can be promoted through conferences, PR activities and high quality ofprogramme services. For the firm’s positive image, positive effects of programmeparticipation can be used to win their interest. Publicity for their energy efficiencyactivities contributes to making their success visible. This has turned out to be animportant basis for the continuity of energy efficiency efforts within the company aswell as for imitation effects through other companies or subsidiaries.

• Financial instruments

The empirical analysis of success stories and policy programmes indicated, thatfinancial incentives have been one (often not the most important) fostering factoramong others. For a broader stimulation of RUE activities in SME, however, financialinstruments represent a useful element of instrument mixes, which trigger energyefficiency measures (see. 4.3.5). With respect to the transformation of energy servicemarkets, financial instruments provide first impulses to strengthen the demand forenergy services (e.g. Free Electricity Audits) and to develop the offer (e.g. support ofnetworks, third party financing schemes etc.). This integrated approach, however, doesnot necessarily requires large public funding. As mentioned above, the integration ofvarious partners into programmes provides access to additional resources and enablesthe benefit from synergies. Additionally, energy policy should provide the first


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stimulus for a market transformation by generating fostering basic conditions forenergy service actors, and in line with a developing self-dynamic of the markets thepolicy involvement can be then reduced. Thus even in times of restricted publicbudgets, a large scope for policy-making exists. The empirical findings underline, thatto a great extent innovative energy policy can be seen as a communicative,organisational and cooperative challenge.

The derived social and organisational perspective on programme implementationcorresponds to the cyclic and dynamic policy understanding introduced in section 1.4.3.Rather than being a mechanical and linear enforcement of instrument-impact schemes,effective and innovative policy-making can be described as cooperative and ongoingactivities with developing roles and involvement of different actors. Within this context,the concept of social marketing can make an useful contribution to the promotion ofenergy efficiency in SME and the related stimulation of success stories. Social marketingis defined as "the design, implementation and control of programmes calculated toinfluence the acceptability of social ideas" (here: energy efficiency connected withenvironmental concern) (Kotler, Zaltman 1973)26. The concept provides a structure for theprogramme design which is characterised by a gradual and cyclic process consisting of thephases of analysis, concept elaboration (targets, programme structure and organisation,marketing mix), development and refinement of measures, implementation, evaluation andfeedback.

26 For an evaluation of successful policy programmes targeting the household sector based on the concept of socialmarketing see "Interdisciplinary Analysis of Implementation Opportunities of an Energy Conservation and ClimateProtection Policy", Wuppertal Institute, Fraunhofer Institute, Institute for Psychology, 1997.

Chapter 4 - Conclusions and Recommendations for Policy Making

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Chapter 4. Conclusions and Recommendationsfor Policy-Making

4.1 Introduction

The analysis of company cases (Chapter 2) and programme activities (Chapter 3) inAustria, Denmark, Germany and Switzerland has shown a variety of fostering factors thatcontribute to the successful implementation of energy efficiency in SME. The fosteringfactors have been categorised and condensed to important dimensions of success and ageneral understanding of successful implementation processes. In this chapter, theempirical findings will now be translated into concrete recommendations, raising thequestions:

• What should company actors and their external partners take into account in theplanning and initiation of energy efficiency activities and stimulation of the demand forenergy services ?

• What can be learned from the analysis of the successful processes in relation to thedesign of strategies increasing energy efficiency in SME?

The study provides a new framework for policy-making through linking policy guidelinesto a broader understanding of successful implementation. Policy recommendations havebeen selected according to their identified positive impact on efficiency activities in SMEand on the transformation of energy service markets. The general philosphy is presented insection 4.2, followed by conclusions concerning the design of policy programmes (4.3).Concrete policy recommendations to stimulate the implementation of RUE measures inSME and to strengthen the demand of energy services are derived in section 4.4. Therelationship between selected policy instruments and types of (successful) companies (4.5)and the implications for R&D policies (4.6) are discussed. A review of the transferabilityof conclusions to Southern European countries (4.7) concludes the chapter.

The policy recommendations presented have to be interpreted in the context of the study,and the sample of successful cases cannot be used to give a full representation of barriersand obstacles. Accordingly, the set of policy recommendations is dominated by featureswhich have been found in the observed successful processes. Other factors and policyinstruments than those described here can also contribute to successful implementation ofenergy efficiency. A comprehensive and detailed assessment of the full range of policyinstruments, however, was beyond the goal and scope of this study.


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4.2 General philosophy

The empirical findings from Chapter 2 and 3 emphasise that successful implementation ofenergy efficiency is characterised by multiple factors of influence and their interrelations.The realisation of a RUE measure cannot be seen as a single and purely market driveneconomic decision act, but requires the initiation and management of an energy relatedsocial process in the firm, involving various internal and external actors. From thisprocess-orientated analysis the following cornerstones of a policy philosophy can bederived:

Implementation of energy efficiency as a process of (social) innovation

The realisation of energy-efficiency activities in the firm can be compared with a processof innovation in general27. Innovation always means a (partial) restructuring of establishedhabits and routines which are taken-for-granted in everyday practice. Engagement inenergy efficiency requires that new patterns of behaviour evolve - both at the level of theindividual actor and at the general organisational level. Accordingly, innovation isunderstood as a change of social, communicative and organisational features which fostersthe taking up of efficient energy technologies.

Supporting the learning company

To reach a lasting change towards energy efficiency, it has to develop gradually from aninnovation to energy efficiency to a routine practice. Individual measures of RUE cannotbe seen as separate to everyday company activities but have to be integrated into aprocess-orientated strategy of company development and learning. In order to support thelearning company in terms of energy efficiency, policy intervention should establish anarray of subsequent learning circles, based on the creation of an organisationalinfrastructure for energy efficiency, the processes of social influence, and the activation ofself-efficacy28 inside the companies.

27 In the context of the analysed implementation processes, the term "innovation" is used as a category if the introducedRUE measures represent a qualitative new way of treating energy by the case study companies. This new way ofperceiving energy and using energy efficient technology can be "new" in relation to the history of the specificcompany (unfamiliar terrain) and in relation to other companies (frontrunner of the branch or region). The InterSEEproject analyses the subjective perception of risks, efforts and know-how requirements, which influences thebehaviour of the company actors. In this understanding, an innovation can take place even if "low technology" isimplemented which represent state of the art to other firms, regions or sectors.

28 The concept of "self-efficacy” describes how company actors know what to do in relation to energy efficiency andhow they feel confident of being successful in their activities ("it can be done"), see Chap. 2.4.


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Establishment of supporting milieus through networks and energy service markets

Reflecting the paramount role of external actors for the realisation of RUE measures andeffective implementation of policy programmes, the links of company actors to externalpartners have to be strengthened through efficiency-related (regional) networks. Networkformation includes inter-firm links in workgroups, interaction of SME with externalpartners and cooperations between external actors in the field of energy efficiency.Networks provide the possibility of finding additional resources through cooperation withother actors and of enabling synergetic effects. The network can encourage the exchange ofexperience and know-how, and provide multiple channels for the diffusion of innovation inenergy efficiency29. Generally, the overall perspective should be to initiate aself-supporting process that overcomes a critical mass of participating actors and firms.

In this regard, network formation represents a central element of energy service markettransformation: the empirical findings indicate that an increased demand for energy-efficient technologies and services can be expected through efficiency-related networks,dissemination of best practice and positive experience, and by development and diffusionof professional energy efficiency know-how, e.g. in work groups30.

Dynamic understanding of policy-making

Resulting from the identified restrictions to direct policy intervention in crucial internalconditions for RUE (e.g. company culture), the stimulation and support of a fosteringsurrounding through functioning energy service markets has to be seen as a strategic goalof energy policy-making. The estimated impact of policy instruments should not only bejudged by its expected immediate effect on the firm’s decision-making. Additionally, thelasting "echo" of intervention in terms of individual and collective behaviour as a decisivedeterminant of future activity should be taken into account. Even if the present impact of apolicy strategy is expected to be low or cannot be quanitified (e.g. in the case of animpulse programme, see 3.2), a wide range of positive effects on the lasting treatment ofenergy issues in the company and within networks is possible. Hence, an integrated cyclicand dynamic approach of policy-making represents a useful and empirically backedcontribution to energy policy (see fig. 4.1). Contrasting the linear and static approachsketched in 1.4.3, it consists of

29 Cultural settings, "perverse incentives" and innovation barriers hindering the dissemination of energy efficientequipment can be found among technology suppliers, too (oversized machinery promises higher profits or businessas usual planning represents less effort etc.). These barriers have to be tackled simultaneously by energy policy e.g.through standards, labels, target values or technology procurement. Through intensified network exchange andincreasing competition on the energy service market, learning effects can be expected for the technology suppliers,too.

30 For the fostering impact of (regional or sector) networks and cooperation see e.g. Aulinger 1996, Sydow 1992,Bierter, Binder 1993


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• strategies to influence today's energy consumption of SME by direct supportiveintervention of policy instruments and external actors into energy related companyactions (removal of barriers)

• and strategies to change today's basic conditions, actor relations, and internal companystructures and capacities in order to generate fostering situations for tomorrow's energyactivities (stimulation of self-supporting energy service markets).

Fig. 4.1: Integrative, cyclic and dynamic policy understanding of the InterSEE project

specifictarget group

successfulimplementation

feedbackdiffusion

demand forenergy services

programmeincentives& offers

Analysis oftransferability

policyinput

strategiesfor barrier

removal

frame conditionsfor energy service

market transformation

energyservicemarket

energyservice

offer

economic & social

marketing

Ramesohl, WI 1998

4.3 Design of policy measures

In this section, the main lessons learned from the empirical analysis with regard to thedesign of policy instruments and strategies are described. The focus will be put on themajor impact areas of measures and the question of how to gain influence on theimplementation process of energy efficiency in SME. Here, the discussion takes a generalperspective in presenting concepts, opportunities, conditions and limitations for external


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policy-making on internal processes. More concrete recommendations for policy actionwill be made later in section 4.4.

4.3.1 The starting point - key events, their impacts and role

At the beginning of a process, the company is exposed to key events, which stimulate thekey actor (change manager) to think about energy efficiency and to initiate the planning,decision and implementation process. This reaction is influenced by the existing context ofpersonal motivation, experience, energy related know-how and organisational conditions.With a closer look at the key events observed in the case studies, several types, levels andstrengths of stimuli can be distinguished.

• Internal stimuli: Action with impact on energy efficiency can be pushed by business-related problems (breakdowns, insufficient quality, competition, scarcity of resourcesetc.) and opportunities (re-investment, new personnel, change of ownership or manage-ment, shift of product or process, move to new location etc.). These factors can hardlybe directly influenced by energy policy but have to be used as occasions for policyintervention.

• External stimuli: There are energy-related means of pressure (regulation, priceincreases etc.), incentives (subsidies, funds, awards, support etc.) and positiveexamples (information, best practice cases etc.). Here, energy policy can give directimpulses.

Arousing events can be differentiated with regard to the flexibility of reaction in time.Problems and pressure stimulate a mandatory response and search for options, because theinternal reaction and creation of ideas cannot be delayed without directly threatening thecontinuity of business. In contrast to this, opportunities, incentives and positive examplescan be seen as an offer which the firm can ignore or postpone without any negative short-term impact on the business. Following this basic structure, some lessons for energypolicy-making can be derived from the analytical findings:

• Confronted with problems or pressure, the firm does not have the choice whether to actor not - but the question is whether the actors take the initiative to select an energy-efficient alternative. This underlines the influence of a general motivation andawareness of energy efficiency, positive experience with the implementation ofefficiency measures and sufficient technical and managerial know-how. Unpreparedcompanies are likely to react to problems and pressure with limited and inadequatesolutions (lost opportunity for selection).

• Opportunities due to internal structural or personnel change represent a favourableoccasion for changing habits and routines. They could foster the initiation of energy-efficiency measures, but without necessarily enforcing them. Unprepared companiesare likely to react to opportunities by letting them pass by without taking the chance tostart an activity (lost opportunity for action).


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• Due to the low priority of energy issues in the target group, the impact of positiveexamples and incentives on the readiness to act is far less straightforward comparedwith problems and pressures. With the possibility given to ignore the stimulus, theinternal actors have to take a deliberate decision to take up the idea and to benefit frompolicy support. To come to that decision, the external input has to be perceived as achance to increase energy efficiency and to gain (manifold) benefits, which are worththe effort. Unprepared companies are likely to react to incentives by ignoring them(lost opportunity to reduce efforts).

Taking into account these conditions for starting RUE measures, three major tasks forpolicy strategies can be defined:

• to make energy efficiency important as an issue for company action in order to increasethe firm's vigilance to use their chances,

• to keep energy related action within the SME going and to increase the possibility, thatin the future opportunities to increase energy efficiency will be used,

• to foster external relations helping the SME to identify and use opportunities foraction.

4.3.2 How to make energy efficiency important - Getting the top management’scommitment

The empirical findings of InterSEE show that:

• The internal change manager (CM) is often placed within (technical) middlemanagement (production manager, technical staff). In these cases policy-making isconfronted with an internal actor constellation characterised by a motivated andcompetent key actor with limited decision power, who often has to gain support andcommitment by a decision-maker (top management) what is much less attracted by theproject.

• If the commitment of top management cannot be achieved during the project, theactivity is threatened to fail. In order to achieve top management support, suitablearguments and an adequate presentation of the proposal have to be prepared by theinternal key actors.

• Decision-making in SME is highly personalised. Top management functions areconcentrated on one single or very few individuals, who are making decisions on thebasis of informal priorities and criteria rather than on institutionalised decisionprocedures. As a special case, some change managers are also the decision-makers (insmall companies).

These aspects underline the importance of establishing energy efficiency as a topic formanagement. The argumentation for energy efficiency as a relevant and positivecontribution to business performance has to combine pure economic considerations with


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additional benefits. Due to the low priority of energy many profitable proposals31 aredismissed too early when assessed only from the narrow perspective of energy costs . Inabsolute terms the economic surplus is often regarded as too small. It is a challenge forpolicy-making to design a communication and promotion strategy which integratesdetailed and convincing economic arguments into a comprehensive argumentation ofbenefits, focusing on the firm’s multi-dimensional aspects of competitiveness. Due to thefact that energy efficiency is not perceived as a topic per se, it has to be linked to otherissues. At this point, energy efficiency has to be communicated and promoted as a coreelement of the broader concept of eco-efficiency. Beside a higher motivational appeal, themore comprehensive assessment of material flows, water and waste reduction, etc., opensthe possibility for synergies and further cost reductions. Here, energy policy actors shouldstrive for a more intensive cooperation with environmental and innovation policies, whichoften is hindered by an administrative separation of organisations and responsibilities.

Special emphasis should be placed on promoting energy efficiency as a quality indicatorfor management performance. Technical excellence, innovation and capability forcommunication, product quality, work safety and an environmentally sound production,together with low energy costs, should be the parameters for an integrated optimisation ofthe company. Trying to argue in terms of the incentive structure of the target group (see3.4) it has to be emphasised that

• energy costs - even if they are small in relation to the turnover - have quite somerelevance in relation to the profit;

• additional (financial) side-effects have to be taken into account (e.g. less insurance,higher product quality, improved work environment, image gains, higher motivation ofstaff, lower operating and maintenance costs, better relation to authorities etc.);

• especially organisational measures such as energy and environmental managementsystems, controlling and efficient communication structures foster the continuousimprovement of production processes, which can be a precondition forcompetitiveness. In this way energy efficiency can be a quality indicator for technicalmastership and managerial performance;

• the increase of unexpected costs can be reduced by good planning and by using theresults from similar projects in other companies.

For these reasons, energy policy strategies have to be founded on a mix of argumentswhich try to address a broad range of interest and motives. In addition to higher acceptanceby the target group, synergies between different objectives contribute to higher motivationand commitment of policy-makers and programme staff (3.3.1) and help to establishenergy efficiency and climate protection as an important policy issue.

31 cf. Neumann et al. 1987, Gillissen 1995, Velhuijsen 1995, Krause 1993


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4.3.3 How to keep action going - Company learning and organisational changes

Reflecting the dynamics of policy-making (see 4.2), policy intervention has to be designedin order to contribute to lasting internal changes and learning processes. The followingtopics promise a lasting and fostering effect on the treatment of energy issues:

Visibility of energy consumption and efficiency gains

The information and data on the energy situation and efficiency potentials have to be madevisible, touchable and understandable, because energy is often perceived as an abstract,technical and complex issue. Thus, the promotion of energy efficiency has to take care ofappropriate visualisation of impacts and benefits in order to get the addressee’s attention,understanding of and identification with the topic. This is supported by the observedaffinity of some internal actors to certain equipment like solar modules, CHP or computerbased energy control systems (e.g. cases No. 6, 30, 32, 37).

Individual qualification

Energy-related qualification and training increases the internal know-how and contributesto higher motivation and confidence of staff. As the empirical findings emphasise, theseindividual learning processes represent a crucial determinant for continued action (see2.4.4). Energy policy should provide target groups specific training programmes and linkthem to other instruments such as audit, consultancy and financial incentives.

Energy-related organisational structures

In order to foster (new) efficiency activity, positive experience from successful energy-saving projects can be used to improve the organisational conditions. New rules of conductwith energy, energy responsibilities, broad involvement of staff, effective communicationstructures as well as internal rewarding of suggestions contribute to an institutionalisationand strengthening of energy-efficiency activities within the company (e.g. cases No. 4 and5). The identification and visualisation of energy costs per department or productionprocess represents a strong incentive for the organisational units to get active.

Energy policy should stimulate and support the introduction of energy delegates, energyteams and circles, or all other forms of internal reorganisation. Formal responsibilities,however, have to be vitalised by a corresponding company culture, leeway to act, topmanagement support and sufficient resources. Regulative attempts to enforceorganisational changes without hierarchical backing incorporate the risk that onlysuperficial adaptations without further impacts on action take place.

To a certain extent, energy-efficiency investments can be realised without participation andinvolvement of staff. However, integration of (relevant) staff members into the planning,preparation and implementation of efficiency measures are needed in the case ofbehavioural measures (integrated energy management, good housekeeping etc.). Active


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involvement reduces internal resistance to the project and opens the possibility ofadditional creative input from the people on the spot.

The need to achieve an impact on internal structures emphasises once more the importanceof top management’s commitment, good personnel (network) relations, educationprogrammes and an adequate design and promotion of energy management schemes.

4.3.4 How to benefit from external relations - Formation and improvement ofnetworks as an element of market transformation

From the analysis, four types of network relations could be derived:

• Links to regular (business) partners such as traditional suppliers, consultants

• Energy and environment-related links to policy-makers, utilities, energy agencies,research institutions or (local) authorities

• Links to other companies within branch associations, regional chambers, (self-)-organised work groups

• Key actors’ personal membership in associations, clubs or parties.

The contact to a competent and trustful partner from the beginning to the end of themeasure turned out to be one of the most important driving forces for successful projects.These relations, however, often result from individual and coincidental constellations dueto the absence of an institutionalised and working energy service market. Thus, energypolicy should increase the probability that SME gain access to suitable partners whichoffer a comprehensive bundle of energy services. To overcome the hurdle of lack of man-power and know-how suppliers, utilities or consultants should combine information withconcrete proposals and service offers for the whole range of planning requirements(technical information, energy analysis, data gathering/controlling, project management,contacts to authorities, application for funding/subsidies etc.). Starting points for thedevelopment of energy service networks are:

• Cooperation with external actors is often built on existing contacts to traditionalpartners. Personal links and trust are main elements for lasting connections which areemployed for new projects, because energy efficiency competence and reliability canhardly be assessed by a SME.

• Many external links of SME are strongly influenced by regional partners. Due to therelated travel effort or dominance by larger firms, national platforms such as branchassociations can be less suitable for addressing SME company actors than regional orlocal connections.

• In many cases, the adoption of efficient energy technology is characterised more byimitation than by invention of new solutions. In this context, pilot and demonstrationprojects gain special importance in two directions. Pilot projects allow to develop andtest innovative technologies not yet taken by the target group itself. Also, the positive


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example provides the necessary proof for feasibility and reliability which is needed toconvince reluctant decision-makers.

• Insufficient internal workforce and time in the stage of planning are perceived as thehindrance to tackling efficiency projects. This can be overcome by provision ofexternal expertise (acceleration of planning) and manpower (outsourcing, cooperation)through external actors.

• Results and positive experience should be communicated to external partners, toother firms of the target group and to the general public (see 2.4.4). The positiveimpact is twofold. First, the presentation of a firm's own activity stimulates positivefeedback, increasing internal motivation. Second, the company's own activity can serveas a positive example to other companies, contributing to imitation effects.

• External relations and networks, however, might have negative impacts, too. Contra-dictory targets and information can complicate the promotion of energy efficiency aswell as strong links with high impact on attitudes, and behaviour might preserve struc-tures and cultures.

4.3.5 The role of financial instruments

Regarding the role of financial instruments, the empirical findings suggest an ambivalentrole. A general evaluation of their impact or instrumental efficiency was beyond the scopeof this study, because the results are affected by the bias of the sample focussing onsuccess stories. Some conclusions for policy-making, however, could be drawn:

Access to capital was of no great importance to most of the studied successfulcompanies. Once the decision to implement a certain measure of reasonable andmanageable size was taken, most companies found ways to finance it. If energyefficiency receives priority, normal business conditions seem to offer a suitable leewayto finance efficiency investments.

Due to missing knowledge, experience and confidence, SME hesitate to engagethemselves in the initiation of efficiency measures. For that reason, external fundingfor energy audits, analyses and planning (free or cheap consultants) is perceived asbeing very helpful to overcome the reluctance to invest internal manpower.

Subsidies for (technical) investments seemed to have a strong psychological effectbesides improving the concrete profitability. Often, in economic terms, the measureswould have been profitable anyway, but the subsidy was perceived as a signal tomanagement confirming the usefulness of the proposal.

Third party financing and performance contracting combine the financing ofefficiency measures with an outsourcing of the total project management from theanalyses over planning to installation of equipment. According to the type of contract,even operation and maintenance are undertaken by the efficiency specialist. The caseof energy savings financed by contracting illustrated the benefits resulting from such acomprehensive offer (case No. 34).


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In general, application schemes for subsidies and funding are judged to be toobureaucratic and not manageable by SME. Thus, most SME show little enthusiasmabout applying for funds, but external partners can facilitate the procedure bycoordinating the paperwork.

Taking these aspects into account, stand-alone financial instruments in terms of subsidiesand grants seem to be less appropriate to be used as a direct lever to initiate and influenceenergy efficiency activity in SME. Offers for financing, however, complementsophisticated bundles of services by combining technology input, access to specialisedknow-how, and operation and maintainance assistance e.g through performancecontracting packages.

Financial support can enable and foster external actors to provide adequate support toSME’s, improving the external milieu for energy efficiency activities, e.g. through grantsand funds providing venture capital, and assets for innovative energy efficiency providersand third party financing modells.

Compared to direct subsidies for investment, a high impact can be expected from financialsupport of network and communication infrastructure. Especially on the regionallevel, synergies can be expected between energy and environmental policy, generalinnovation and technology strategies and regional economic development, representing anappealing field for joint policy action.

4.3.6 Marketing and management of policy programmes

The current situation on energy service markets is characterised by an insufficientlydeveloped activity of the demand-side actors. Existing energy service providers experienceSME as an ignorant and passive target group which can hardly be addressed. Therefore,from the perspective of policy programmes and energy service providers, a crucial hurdleis to get in touch with a SME company and stimulate action for the first time. Oncemeasures have been successfully implemented and cooperation has taken place for a while,the access to follow-up activities is easier to get. Policy strategies should try to span alonger period and to establish lasting contacts to participants, promising lower transactioncosts for stimulating the target group the next time ("economy of repetition"). Thediscussion of the different types of success in Chapter 2.5 has shown that the target groupof SME represents a heterogeneous, but nonetheless structured sample of company types,which underlines the need for a market analysis and segmentation of the target group.

As discussed in detail in Chapter 3, policy-making thus has to acknowledge the need for aprofessional programme management, corresponding to a closed cycle of socialmarketing (WI, ISI, IfP 1997, Prose 1994, Novelli 1984). This cycle can be structuredinto the phases of market analysis and segmentation, design and implementation ofinstrument mixes, and evaluation of results, which should fit into the improvement andmodification of measures. Programme management thus has to be responsible for the

• Analysis of target groups and market mechanism


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• Design of actor specific bundles of instruments

• Recruitment of a wide array of cooperation partners

• Design of target group specific marketing and PR campaigns

• Establishment of supportive networks

• Evaluation and controlling of activities and programme performance

Policy programmes have to be built gradually and based on preceeding activities. Suitablestarting projects have to be followed by adequate monitoring and evaluation, feedback andcommunication of (interim) results, and measures to enforce the spread and follow-up ofactivities. Often neglected, feedback and dissemination of positive results play animportant role to convince actors to continue and to encourage others to start action.

Policy-making as well as energy service providers have to keep in mind that the targetgroup cannot be reached in one stroke, but has to be opened gradually. Throughaccumulation of contacts, activity and positive experience, a programme can gainself-dynamic. As a consequence for the strategic policy planning the programme shouldlast for a sufficiently long time (e.g. 5 yrs). One or two-year programme schedules are inmany cases not compatible to the basic conditions of the target group. If the continuity ofpolicy is not fulfilled by using lasting programmes, but by a series of programmes, theyshould build on each other. In this way companies may perceive the programmes as acontinued effort.

4.4 Policy recommendations

In this section, the policy implications discussed above will be translated into policyrecommendations for improving energy efficiency in SME. The suggestions made willfocus on the most important areas as they emerged from the empirical findings and theconsiderations in the previous section 4.3. The recommendations will mainly be based onthe promising and successful features of the companies and programmes observed in thecase studies, and partially completed by other examples not originating from the empiricalsample. With regard to the concept of social marketing (see 3.4), the recommendation canbe seen as elements of the marketing mix. They are targeted to the central question how tostimulate energy efficiency measures in SME as a means to strengthen the demand-side ofenergy service markets. Recommendations are made for the following topics:

• bringing energy on the agenda of top management;

• increasing qualification and cooperation of energy service market actors;

• introducing energy and environmental management systems;

• establishing energy service-related networks;

• the role of the utilities.


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4.4.1 Bringing energy on the agenda of top management

Special events adapted to business customs such as receptions provide a suitableframework for information and motivation of company executives (see Ecoprofit). The"energy cocktails" within the RAVEL programme serve as an example (3.2), how tosuccessfully establish a tradition of efficiency receptions, combining concrete informationon specific energy issues with the social event of assembling the relevant scene (Bush1996).

The single firm should be actively targeted by special agents, representing the"salesmen" of national or regional policy programmes. These agents have to approach thefirms actively, trying to stimulate the participation into motivational measures orefficiency programmes (see "Energy weeks"). The ETSU’S "Mobile Seminar Unit"32 isanother example (not from the sample) on how to reach the target group of SME byplacing a mobile information centre within business parks. The idea is to catch themanagers in the early morning "before the first crisis of the day" and to bring them toparticipate in concise and specially designed crash seminars, communicating the essentialtopics of energy efficiency. If the executives find the seminar appealing opportunity forfurther contacts is given.

Top management requires hard data to judge proposals, so energy policy should increasethe internal knowledge of energy flows by supporting energy audits, monitoringschemes, and environmental management and controlling instruments:

• National and European regulation and standard setting should strive for mandatorymeters in new energy equipment or building parts with a high energy consumption.

• Energy audits should be performed to gain orientation on the consumption structureand patterns.

• National and regional bodies together with industrial associations should developenergy-efficiency indicators and benchmarking systems at the level of branches orareas. When arguing for top management commitment, internal and external actorswould benefit from comparisons with the branch average or with best practice,providing valuable information about the energy-related position of the firm33.

• Energy-related financial support of investment through loans, subsidies or rebatesshould be accompanied by monitoring devices.

Additionally, special management training should be offered to internal technical staff toincrease their argumentative power towards top management (see RAVEL, Ecoprofit, 3.2).

32 ETSU, Energy Technology Support Unit, Harwell Didcot (UK)33 The COmLUX programme of the German Association of Mechanical Equipment Manufacturers collects energy-

related key parameters of member companies in a database. From this pool, benchmark figures for sub-groups withcomparable products are derived (VDMA 1995).


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Besides general knowledge on economic argumentation, this includes the presentation ofsuitable quantitative indicators, graphs and illustrations.

4.4.2 Increasing qualification and cooperation of energy service market actors by"Impulse Programmes"

The empirical findings stress the importance of activating internal key actors by increasingtheir motivation, know-how and confidence in the feasibility of action (self-efficacy). Forthat reason, national and regional policy-makers should introduce market transformationprogrammes for rational use of energy following the Swiss and German RAVEL examples(see RAVEL, 3.2, RAVEL 1996, EA NRW 1996). These programmes are targeted atexploiting and stimulating market potentials for efficiency technologies and services inorder to strengthen competitiveness in future markets, following the impulse programmeprinciple: Experts prepare specialised seminars which provide the necessary backgroundknowledge, ensuring that it is both practice-orientated and didactically sound. Thisincludes course documentation, checklists, software tools, etc. These seminars are thenoffered to professional associations and further education institutions, so that they are ableto reach the various target groups within the framework of their well-established andwidely accepted further education channels. A distinct feature of the impulse programme isto generate cooperation among the various energy service market players, frommanufacturers to consumers, developers to suppliers, legislators to providers of finance,and specialists to the general public. The following factors and criteria have proved to beimportant for defining and optimising programmes:

• Clear definition of desired modification of behaviour and market transformation

• Analysis of target groups and market mechanisms

• Incorporation of market players into the solution- and consensus-seeking processes

• Standardisation, simplification, formation of key values of energy efficiency

• Argumentation in the value concepts of target groups

• PR and image promotion for the programme

• Dealer marketing

• Product advertising for courses and documentation

The implementation of impulse programmes as a new type of energy-policy tool in othercountries of Europe is a demanding process. The cooperation model involving the state,the economy, and professional and industrial associations is an unusual one in manycountries; the impacts and benefits of information and further education as soft measuresare difficult to quantify in terms of energy units, money or jobs. Impulse programmesshould not represent competition to existing successful organisations, rather they shouldset out to incorporate and network them. This applies both with respect to the solution oftechnical questions (definition of standards, quality criteria, etc.) and to the process of


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implementation. By working together with further education institutions and professionalassociations, it is a great deal easier to reach the various target groups.

4.4.3 Promotion of energy and environmental management systems

The empirical findings confirm the important role of energy-management systems as aninstrument to systemise and institutionalise energy-consumption control and efficiencymeasures (cf. IVA 1997). In many of the investigated success cases, energy and environ-mental management systems have already been or will be introduced soon. The relatedmeasures provided valuable data on energy consumption, established organisational struc-tures for energy efficiency and fostered exchange with external partners and other firms.Therefore, energy policy should seek to strengthen the role of energy modules in eco-management schemes. At European level, special attention should be given to the plannedmodification of the European eco-management and auditing scheme EMAS (1993):

• In order to increase the acceptance by the international business community, theEMAS and ISO 14000 should be harmonised as much as possible without looseningthe European standards. At an international level, e.g. together with IEA work groups,the role of energy management should be refined and strengthened. Additionally, thetarget group should be expanded to all service and public sectors.

• For utilities, eco-management activities should no longer be restricted to supply-sidemeasures (e.g. up-grading of power stations). Demand-side activities such as energyand ecological services have to be integrated into a comprehensive eco-managementapproach and thus to be accepted within the EMAS (Wüstenhagen 1996).

• The formal structure of the EMAS should be adapted to the specific requirements andrestrictions of SME in order to reduce their bureaucratic burden. For small businesses,certain exceptions from documentation might be possible. The promotion of EMAShas to be accompanied by dissemination of best practice and supportive coachingoffers, reducing the SME's effort. Utilities could integrate EMAS consultancy into theirservice offer to industry.

• The striking imbalance of acceptance of EMAS within the EU calls for an increasedmarketing and promotion effort, especially in Southern Europe34 (see 4.6). EMAS hasto be presented as an opportunity for the company to improve its managementperformance, to cut costs and to improve image. Pilot and demonstration projects,handbooks and checklists specially dedicated to SME, workshops and intensive PR ofsuccess stories contribute to a higher acceptance and reduce the efforts of participation(Brennecke, Krug, Winkler 1997, HMWVL 1995).

• Eco-management should be strengthened by linking it to other topics (product quality,innovation policy, organisational development etc.) and rewarding effective and

34 In August 1997, among 1009 registered sites 749 are located in Germany, 74 in Austria and 62 in Sweden, but only 4in Spain, 3 in Ireland and Belgium and none in Italy, Portugal and Greece; EMAS 1997.


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provable industrial and commercial ecological engagement through policy incentivessuch as appropriate regulatory relief. Additional incentives can be received from banksand insurances, e.g. which acknowledge the lower environmental risk through lowerpremiums.

4.4.4 Networks for the promotion of energy efficiency

The cooperation of SME with external actors turned out to be the main driving force ofsuccessful projects (see 2.3, cf. IET 1995). Consequently, energy policy has to work at alllevels to establish and foster links between internal company actors and suitable externalpartners (Commission 1995c). Main goals for policy stimulation of network activities are:

Establishment of network relations in order to avoid lost opportunities

External relations should be used to avoid lost opportunities (as mentioned in 4.3.4): inorder to realise integrated solutions, i.e. optimising the firm’s energy system as a whole,any planned enlargements or technical changes require that the companies contact varioussuppliers, planners and specialists. In many cases, these contacts result from coincidentalrelations and are insufficiently coordinated. Therefore, existing links and partners shouldbe mobilised in the sense of an "alert system" in order to identify and exploit theopportunity for energy efficiency projects. Especially utilities, consultants, planners andelectricians should maintain and use their regular contacts to their industrial andcommercial customers in order to get to know about investment plans early enough toinfluence decisions. Through energy analyses and information, they should point at savingopportunities, differences between best and worst cases, and at classic mistakes. This offerand the taking up of a coordinator’s role has to be seen as a service to intensify customerlinks and to create new markets for energy-efficiency services. The important role ofprofessional multipliers (consultants, planners, architects, etc.) underlines the need forprofessional qualification programmes, improving the specific efficiency knowledge andthe ability to realise integrated system’s solutions through cooperation of differentspecialists (see 4.4.2). Furthermore, the regional network "fishing" for companies can befostered by financial support for coordination and dissemination, e.g. through a regionalenergy agency. Here, additional offers can include local or regional groups for jointevaluation of the planning quality of comparable investments or buildings (e.g. officebuildings of banks or insurances).

A special role can be seen for those external actors who are more or less automaticallyinvolved in any investment transaction, but without specific efficiency know-how, such asbanks or authorities. Taking their insufficient capacities into account, an active role inpushing energy efficiency can hardly be expected. However, in cooperation with a centralcoordinating actor such as the (regional) energy agency, the utility or a network initiative,a simple procedure could be developed: With the help of a brochure, package, check-list,etc., which is handed out as routine, e.g. for certain credit applications, information can be


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given about the risk of making mistakes, the chance of realising profitable and efficientsolutions and about contact points for further support.

Standardisation and dissemination of planning methods and basic know-how

Especially with regard to construction, a regulation concerning efficiency standards andplanning procedures (e.g. recommendation on planning methods SIA 380/4)35 provides avaluable framework to avoid inefficient solutions and to enforce cooperation of all relevantplanners and suppliers involved in sub-tasks. This process is supported by provision ofimplementation-orientated basic information such as handbooks, check-lists for planning,(internet) databases of energy-related key figures (kWh/sqm). As a measure not related tonetworks, adequate regulations governing charges and fees for construction tasks shouldprovide incentives for the right dimensioning of equipment and integral planning ofsystems (HOAI 1988, 1995), which has a positive influence on the construction process.

Establishment of working groups for dissemination and process support

Networks at the local and regional level as well as branch-specific groups play animportant role in stimulating and maintaining energy-efficiency activity in SME (2.3, cf.IET 1995). Especially at the beginning and in the phase of continuity, external relationshave a strong fostering influence through dissemination of best practice and positiveexamples (see 2.4.4). Three different types of dissemination were found:

• External actors promoting concepts and technical solutions for higher energyefficiency which have a political or commercial interest, such as suppliers,consultants, energy agencies, policy programmes etc.: The proposals have to meet the(branch) specific requirements of production or business, and have to be backed byconvincing hard technical and economic data. They should provide an overview andcomprehensive knowledge on the full range of efficiency options, but the resultingconcepts stemming from external partners have to concentrate on concrete andmanageable measures, fitting into the SME’ scope of action. Here, a distinct marketingeffort is required to reach the target group as mentioned in 2.3 and 3.3.

• Pilot projects (demonstration projects) realising innovative solutions with publicsupport: The (partial) subsidising of R&D can create an incentive for SME to engage ininnovative projects which incorporates a high technical risk. Especially pioneers can bestimulated to tackle ambitious challenges beyond their financial scope. However, pilot

35 SIA 380/4 focuses on the field of HVAC (lighting, air-conditioning, ventilation) (SIA 1995, 1996). Its main area ofinfluence with regard to electricity consumption is the services sector, but it also applies to analogous areas in thefields of commercial and industrial buildings. SIA Recommendation 380/4 is a new tool for measuring, assessingand optimising electricity consumption in buildings. It is addressed to everyone concerned in the planning of a newbuilding or the retrofitting of an existing one: building owners, architects, planners of technical householdinstallations and the operators of the building. The core element of this Recommendation is the standardisedrepresentation of the electricity consumption, which permits an interdisciplinary co-ordination with verifiable qualityrequirements. The method according to SIA 380/4 can be applied at varying stages of the project - preliminary study,pre-project stage, project stage and execution. A more detailed description of the SIA 380/4 can be found in VolumeII (Documentation of policy case) of the InterSEE Final report


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projects may incorporate the problem that subsidised solutions have littleargumentative power to SME actors, who are looking for the imitation of profitablesolutions from practice. Therefore, policy programmes supporting pilot projects andR&D have to put high priority on the dissemination and marketing of results and thestimulation of imitation processes. In this context, the evaluation of programmesuccess has to focus on the number of subsidy-free imitations by SME rather than onthe number of publicly financed pilot projects.

• Diffusion of positive examples by network contacts: As discussed in 2.4.4, theinterrelations between companies represent a very important source for ideas andconcepts. The positive example of a competitor, a neighbouring firm or a regionalcontact often gave the decisive kick to start action. Due to the bilateral character ofnetwork relations, the company itself can serve as a convincing model for furtheraction, stimulating the imitation of activities and adoption of results by other SME.

This very important issue of dissemination of best practice among SME can beeffectively addressed by (self-)organised work-groups. Joining experts from othercompanies, work-groups represent an effective instrument to exchange practicalexperience, new ideas and solutions for implementation problems (Modell Hohenlohe1997, Schili 1996, Bürki 1990). The empirical findings emphasise the positive impact of acentral coordination, providing the schedule of meetings and tasks, keeping contacts toactors and fostering the continuation of action (see Ecoprofit, Modell Hohenlohe). In thisregard, energy policy should support network initiatives by:

• financial aid for coordination and organisation

• funds for the integration of external expertise of network's own innovation projects

• funds and instruments for PR and marketing of service offers and successful results

• support in establishing links to further actors and networks, e.g. universities,technology centres, etc.

• support of evaluation and dissemination projects.

4.4.5 The role of utilities

The distinct role of utilities has to be discussed in great detail within the context of theestablishment of energy service markets within the common European market for energyand the planned Commission's RPT-directive36. A comprehensive analysis of this complexissue was beyond the scope of this project, but it has to be stated that the economicincentives to sell and consume energy have to be replaced by incentives to sell integratedpackages which maximise the service content and minimise the input of final energy. Therelated transformation of current energy supply markets to economic and ecologically

36 cf. Commission 1995b, Hennicke 1996, Hennicke, Seifried 1996, European Parliament 1996


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sound integrated energy service markets will be fostered by a demand-side orientatedregulative framework37.

Special attention should be given by policy-makers to the large opportunities for utilities topromote and support energy efficiency in SME. Compared with other actors, utilities aresuitable key players to offer the integrated service packages of energy audits, consultancy,financial incentives such as rebates and third party financing, as well as projectmanagement and marketing. In this regard, the findings underline the valuable role ofmunicipal and regional utilities as a cornerstone within regional networks. The closenessof actors and manifold social links foster the common identification with (regional orlocal) policy goals, resulting in stronger social, regional and environmental responsibilityof the utility.

Hence, the liberalisation of energy markets should be carefully assessed with regard to itsimpact on the integrated macroeconomic optimisation of energy supply and energy-efficiency options. In this context, the liberalisation debate should not be restricted to thelevel of industrial energy prices, but should focus on how to reduce the annual energy billof the industry companies. The empirical findings emphasise that especially SME benefitsignificantly from comprehensive efficiency services including information, audits,consultancy, project management, financial incentives and marketing support. Europeanenergy policy has to assess very carefully to what extent promising utility initiativesthreaten to disappear or are fostered by careful re-regulation.

4.5 The relation between selected policy instruments and types of(successful) companies

The different company cultures and the corresponding types of success indicate that thereis no exclusive and optimal way to a successful realisation of energy-efficiency measures.Companies differ in characteristics and requirements which underlines the fact thatindustry and even the SME sector cannot be treated as a homogeneous target group.Consequently, policy will not be able to design a suitable "one-size-for-all" programme,but has to develop strategies with distinct profiles and priorities which are adapted to thespecific target group. This requires a variety of programmes and instruments but as well amultitude of actors on all levels in order to address the SME sector appropriately.

In chapter 2.5 four different types of (successful) companies were distinguished. It wasstated that these types refer to different company cultures, which developed over time.Thus companies cannot freely choose their type of success and company styles are also noteasily changed by outsiders. Therefore the role of policy instruments should be to providean appealing mix of instruments as an offer to each type of company, because policy

37 cf. Elser 1993, Elser 1994, European Parliament 1996, Hirst 1994, Hennicke 1996, Krause 1996, WuppertalInstitute, Öko-Institute 1995, 1997


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instruments seldom have the continuity and intensity to change the culture of companies.Thus the segmentation of company types can be used to identify policy instruments whichrefer to the distinct needs of each target group:

Type 1 companies, the high profile, are likely to realise RUE measures on their own.However, they benefit from support and opportunities to continue and develop theiractivities. They well accept subsidies, but a high degree of free riders can be expected forcompanies of this type. Often their focus will be on environmental management and someare very interested in using the activities to develop their image. These companies can beused as demonstration sites. Awards present an effective tool to give these companies thenecessary publicity and to promote their realised measures. Actors from these companiesoften are very active in networks, searching for new impulses and ideas andsimultaneously striving for recognition of their successful engagement, motivating them tocontinue.

For the Type 2 companies, the top-down promoters, offers like energy audits or othertechnical help could give impulses to realise energy efficiency measures. The participationin regular (group) meetings with external partners - e.g. within (regional) networks -increases the willingness to invest in energy efficiency and improves the dissemination ofenergy efficiency related information. Best practice examples may serve as an importantmeans to imitate successful activities. Ready to start action, measures to improve theinternal (technical ) capacities are helpful to realise untapped cost-effective potentials, andservice offers such as third party financing are suitable to overcome internal deficiencies.Due to the missing organisational basis of RUE measures, EMAS can make a valuablecontribution to stabilise the engagement.

The Type 3 companies, the technical solution, are interested in receiving technicalinformation and might benefit from convincing best practice examples. Top managementin these companies is rather passive in relation to energy efficiency, and probably the bestway to develop the soft dimensions is a combination of concrete results and a general“pressure” on the management to foster the idea that energy and environment will becomeincreasingly more important. Subsidies for energy efficiency investments may supportindividual company actors to bring energy efficient solutions on the company’s agenda,but will probably not move top management’s perception of energy efficiency. Key actorsbenefit from personal and technical support by network contacts. The introduction ofEMAS is not very likely due to top managements reluctance, but would compensate themost prevailing deficiencies in terms of energy efficiency organisation.

The Type 4, the starters, mainly get started by convincing energy audits through trustfulexternal partners, i.e. when clear, economically feasible measures based on achievableresults are proposed. They may imitate successful examples, if these are presented througha (regional) network they are part of. Subsidies and taxes represent clear and simplearguments for action but have to be accompanied by external support (e.g. audits andconsultancy). Therefore, subsidies on consulting promise to stimulate activity notundertaken otherwise.


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In all cases practical positive results with energy efficiency can be expected to motivatefurther activities and to develop their organisational and technical capacities.

In table 4.1 the relation between the identified types of success (see 2.5) and selectedpolicy instruments is shown. The marks are based on the expert judgement of the InterSEEteam and show whether each policy instrument is likely to be accepted and to havesignificant impact on the realisation of energy efficiency measures in SME. It has to bekept in mind that the presented different types do not represent a judgement ofmanagement styles nor incorporate an evaluation of the degree of success. In advancedcompanies, too, a wide range of cost-effective RUE measures might remain unrealisedalthough favorable conditions are found.

Tab. 4.1: Impact of selected policy instruments on different types of success

1. High profile 2. The top-downpromoter

3. The technicalsolution

4. The starters

(partially) financedEnergy Audits

- *** * ***

Subsidies forinvestments

* * ** *

Subsidies forconsulting

- ** ** ***

(Local) Networksfor informationdissemination

* *** ** **

Taxes(on CO2 / energy)

* * ** *

Third PartyFinancing

** *** * **

EMAS /ISO 14001

** *** * -

Demonstrationprojects

* ** ** **

Training/ Education(e.g. workshops)

* ** * *

Self-commitment *** ** * -

Motivation/Information (e.g.journals)

* ** ** *

key: *** high impact, ** medium impact, * low impact, - no impact


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4.6 Implications for R&D policy

In Chapters 2 and 3, a broader understanding of the nature and determinants ofimplementation processes within SME have been developed. Besides the implications onthe design and application of policy instruments, which have been discussed in theprevious sections, the following conclusions for European and national research andtechnical development (RTD) strategies can be derived:

• Socioeconomic research can play an important role when investigating the complexinteractions of real processes and should be established as an integrated element ofenergy and environmental research.

• Innovation is an interdisciplinary issue, incorporating a wide range of influencevariables. The invention, development, introduction and promotion of new energytechnologies have to be treated in a broader framework of general innovation. Thisincludes the integration of social aspects of diffusion besides techno-economic featuresinto the evaluation of advanced products.

• Energy policy and research should shift higher priority to activities on the demand-side. Through broad and interdisciplinary projects, joining RTD aspects with issues ofmarketing and market transformation, a higher integration of user requirements - andthus higher acceptance by the target group - can be expected.

• Research policy at European and national level should develop new paradigms andguidelines for the design, management and controlling of RTD projects. Directinvolvement of research staff into the planning and implementation of concepts incooperation with the target group concerned, promises higher applicability andrelevance of research results (concept of action research).

• Financial support should be redirected into the support of soft measures, networks andinstitutional infrastructure than in financing hardware and equipment. As discussed in4.3, appropriately designed networks and communication structures promise a highermultiplication effect than subsidies to single investments.

Taking these findings into account, European and national R&D policy should putemphasis on the integration of technology R&D in market introduction and transformationstrategies. Priority should be shifted from theoretical feasibility studies to practical pilotprojects and evaluations.


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4.7 Transferability of conclusions to Southern European countries

In order to analyse the general transferability of the conclusions of the InterSEE project,the preliminary findings and recommendations were reviewed and critically commented bySME experts of Southern Europe (SE), i.e. Greece, Portugal, Italy. An internationalworkshop was organised in October 1997 in Zürich, to discuss the results.38

4.7.1 Country-specific features

It was beyond the scope of this study to provide an extensive overview of the nationalenergy policies in the Southern European countries, which participated in the review.However, some selected features which seem to be central are highlighted

Greece: In Greece the ‘National Operational Programme for Energy' supports energyaudits with 32 Million ECU for the next two years. Recent studies expect employmenteffects in the field of energy audits and energy management of up to potentially 7,000 jobs.

Italy: A lot of firms are gathered in "productive pools", geographically bound and with astrong specialisation. This specialisation and/or concentration created a natural networkamong firms, which are locally very important for utilities, authorities, suppliers, serviceand financial structures. Enforced by national regulation, large energy industrial consumershave to appoint an energy manager responsible for RUE measures.

Portugal: According to the "Portuguese energy-efficiency regulation" all companies withan energy consumption above 12 MWh/year are obliged to undertake energy audits as wellas to maintain an energy manager. SME belonging to this group have a higher energy-efficiency awareness than SME below 12 MWh/year. The latter group is normally moreconcerned with product development than with energy efficiency.

4.7.2 Comments on general findings

In general, the proposed methodology and the derived findings of the InterSEE projectwere perceived as valid also for the countries of Southern Europe. The mix of fosteringfactors, however, may vary from country to country. It counts also for Southern Europeancountries that the untapped energy-efficiency potentials rather result from animplementation deficit than from lack of technological know-how. The presented modelwith the different implementation phases, continuing repeatedly in a spiralling circle,

38 Following SE experts took part in the reviewing process: Dr A. Efthimiadis (consultant for CRES, Greece), R.Romani and E. Fedele Dell’Oste (ENEA, Italy), J. Costa (CCE, Portugal). The InterSEE team would like to thank the"European Energy Network” (EnR) for the collaboration. The next sections are derived from the national statementpapers provided by the experts (see Volume IV of the Final Report), as well as from the fruitful discussions at theinternational workshop. The statement papers reflect the national aspects regarding energy efficiency in SMEs, butalso the personal experience of the individual expert.


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seems to apply also for the Southern Europe situation. However, it was mentioned thatplateaus, stops and fall backs to earlier stages are rather the rule for SME.

The crucial role of an internal key actor (e.g. production manager) was confirmed and theimportance of top management commitment was stressed by all experts.

Major triggering factors to get energy efficiency on the company’s agenda are externalfactors, e.g. legal requirements (i.e. ecological laws), market/competition and financialpressure (i.e. tariffs). Image improvements as a driving force are in general of lowimportance. It was confirmed that energy efficiency is not an objective per se. Technicaldevelopment within SME is often triggered by what other competing firms are doing. Theinnovation process is mainly an imitating process, aimed at reaching a competitiveadvantage. Thus the role of other similar enterprises is of major importance.

The general motivation to act is often limited to a reaction to key events, depending oninternal resources and the existence of external positive examples. In Portugal, forinstance, a pioneer attitude is only observed in those SME where the "energy managementregulation" is applicable. It was generally recognised that techno-economic factors are stillthe dominating criteria for investment decisions. However, SME management is often notaware of the profitability of energy-efficiency measures, additional benefits areunderestimated and energy contribution to production costs is not known. Thus, inpractice, cost-effectiveness alone is not sufficient to create a self-sustained market forenergy efficiency services.

It was stated that in South European countries (investment) subsidies may be of greaterimportance than indicated in the InterSEE findings, e.g. in Portugal subsidies areconsidered to be one of the major driving forces for the implementation of projects.However, it was also noted that investment subsidies provide mainly higher investmentsecurity, but do not necessarily contribute much to the promotion of energy efficiency.Greek experience, for instance, indicates that firms tend to apply for energy relatedsubsidies in order to cover equipment and installation replacement costs, which haveimmediate investment priorities. Energy-efficiency measures, having low priority, aremostly added to justify the subsidies.

Changes in organisational structure and behaviour are seen as an important, but slowprocess. Portugal, for instance, tries to boost the acceptance of young engineers as traineesin SME, to foster the required change of attitude among the staff. In general, SME areconsidered to be flexible enough to changes, given a change of top management.

All experts emphasised the decisive role of external actors in promoting energy efficiencyin SME. However, it was also mentioned that SME may have reservations against externalactors, due to previous bad experience with consultants. Firms might also be anxious aboutinterference in their production processes.


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In the conception and realisation phases a test period was pointed out to be of extremeimportance to industry, in order to minimise the risk. In Italy, demonstration (pilot)projects are considered very effective in this respect.

For evaluation and continuity in Portugal, for instance, cost reduction, product quality andworking conditions (the latter not fully documented) are among the most important criteriaof success. In Italy sectoral associations could play a big role for the diffusion of energyefficiency. The ‘learning company' may be found more often among those SME havingstrong competition in niche markets (e.g. ceramics).

4.7.3 Comments on recommendations

Measures to create external, and especially legal pressure, are suitable to address SMEalso in Southern Europe (e.g. laws, directives and standards at European level). Externalpressure could be supplemented by long-term agreements. Especially in Italy tariff systemsare seen as a useful tool to create energy-efficiency activities.

Best practice solutions on energy-efficiency measures are also needed in SouthernEuropean countries, but have to be disseminated effectively (promotion of informationprogrammes among staff members of SME).

Financial issues/subsidies: It was agreed that SME want to see the economic advantage ofenergy efficiency (it has to bring benefits), thus the cost-effectiveness of energy efficiencyshould be stressed strongly. From all experts special focus was put on subsidised energyaudits, which may play a major role within comprehensive energy-efficiency activities(incl. targeted information about existing funding possibilities). Contracting models weregenerally supported (not well received from Portuguese industry). Chambers, consultantsand even banks and insurance companies could get involved. It was suggested to put moreemphasis on non-financial indicators, such as marketing trends, competition and others.Energy savings could in general be a precondition for public funding.

EMAS/ISO 14.000 may be too complicated for a big group of SME in Southern Europeand does not contain enough quantitative aspects. Certification reports are too difficult toread and to apply. In Italy, for instance, EMAS was up till now only done by one companyand is considered to be a difficult topic. Norms for ECO Audits, well-developed standardsfor measurement and verification, simple and clear guidelines for conducting ECO/energyaudits, training for auditors, best practice examples are needed.

Due to the need for qualified consultants it was suggested to put emphasis on trainingaspects for external partners (involvement of consultant associations, quality standardssimilar to those for lawyers). Training programmes for staff and top management weresuggested, too, but new suitable training methods are required (how to bring entrepreneursinto an "energy-efficiency classroom"). Training and workshops have to be connected withother items than energy (e.g. environment, industrial accounting, new process plants) to


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become a strong fostering factor. The involvement of young engineers or students ininternal project teams may have big effects on know-how, internal resources andmotivation.

Supporting networks and cooperation are also valid for Southern Europe (e.g. City ofPrato, Italy). ‘Natural' networks between companies, suppliers and consultants areconsidered to be supportive for the exchange of information. The fact that SME are facinga conflict between the willingness for cooperation and the aversion of giving access tointernal data could be bridged e.g. by technological centres.

The importance of quick visible success for continuity was confirmed. Thus simple, buteffective measures (e.g. lighting, peak management) were suggested to be realised first.Imitation behaviour should be used as triggering factor. Energy accounting and monitoringschemes should be promoted strongly.

The importance of external actors was especially pointed out for Southern Europe.Industrialists like to have support all along the project implementation. Quality standardsfor consultants were suggested to ensure professional inputs. Research institutes anduniversities were considered to be of minor importance for South European industrybecause they are too theoretical. From the Greek point of view verification and trust areneeded to generate a self-sustained demand for energy efficiency. Companies investing inenergy efficiency want to know-how much they are saving and how long the savings willlast. However, the costs connected with building trust (e.g. measurement and verificationprotocols) restrict the energy-efficiency potential. Thus economic subsidies for consultantsto develop appropriate tools for verifying energy savings were suggested.

Chapter 5 - Final Remarks

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Chapter 5 Final remarks

It was the objective of the InterSEE project to provide a better understanding aboutsuccessful implementation of energy efficiency in SME, to formulate a new philosophyconcerning the stimulation of RUE measures, and to derive recommendations for thedesign of policy instruments for socio-economic marketing and market transformationstrategies. With reference to the background considerations and work hypotheses sketchedin Chapter 1, the following final remarks conclude the InterSEE report.

Compared to traditional barrier analyses, the InterSEE approach of investigating successfulcases generated a new quality of process understanding. From the view on completedrealisation, it was possible to describe the whole range of influencing factors whichconsists not only of obstacles but as well of barrier-independent fostering factors andcircumstances. Especially social, psychological and organisational determinants for energyefficiency implementation - which are often neglected and underestimated in their impact -could be identified and translated into policy recommendations. In addition, the analysis ofpositive examples allowed to study the dynamic nature of success, e.g. the conditions for adevelopment of an "energy efficiency culture" in SME which starts with simple measuresand continues with rather complex activities such as eco-management. With respect to thepolicy goal of establishing self-perpetuating and progressing energy efficiency activities,policy recommendations were derived which could hardly be obtained from rather staticalbarrier analyses.

However, the selection of success cases represents a rather untypical "positive" deviationfrom the average situation in SME, which has to be kept in mind when interpretating theInterSEE results. Although the findings emphasise that a wide range of cost-effectiveenergy efficiency potentials exist, it has to be stated that a large scale implementation ofthese profitable RUE measures in the SME target group is not automatically enforced byprevailing markets. A broad economic and ecological sound growth dynamic in the areasof energy efficiency technologies and services is still hindered by current frameworkconditions and related barriers. The individual success stories underline that partially thescope for action exists but these single activities will remain insufficient to achieve thechallenging social and political goals of sustainability and climate protection.

To this regard, empirical evidence from the case studies supported the need for an activerole of energy policy concerning the stimulation and multiplication of energy efficiencyactivities, because in most cases external impulses were needed to trigger profitable RUEmeasures. Due to the fact, that implementation is influenced by a broad range of fosteringfactors, involving multiple actors inside and outside the firm, actions to exploit cost-effective potentials do not follow the classic techno-economic approach"technical potential - economic profitability - implementation". The findings underline thattaking up an energy efficiency project requires a motivational and communicativebackground which - apart from a limited number of front runners - is rarely given amongSME under the current situation.

Interdisciplinary Analysis of Successful Implementationof Energy Efficiency in the industrial, commercial and service sector Final Report Volume I

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Taking the identified social and organisational factors into account, it becomes clear thatpolicy approaches restricted to single incentives or barrier instruments, are likely to fail toachieve a broad mobilisation of the SME target group. Thus, external stimulation shouldnot be mistaken as a mechanical top-down application of policy instruments by publicactors. By contrast, energy policy has to recognise the dynamic character of socialprocesses (feedback of results, accumulation of experiences, expertise, confidence,motivation) and the embedding of firm’s activities into networks. The empirical findingsstrongly recommend the integration of cooperation partners into the design andimplementation policy programmes and initiatives (e.g. associations, multiplicators,technology suppliers, consultants, planners, authorities, standardisation bodies). Theirspecialised know-how and research and development facilities can be used very effectivelyfor finding appropriate solutions which contribute to increased acceptance andeffectiveness of the measures. If the players concerned are already incorporated into theprocess of formulating objectives, they are more motivated to employ their own know-howand financial resources and thus enlarge the programme’s resources.

At this point it turns out to be crucial to replace coincidental contacts with regular,manifold, differentiated and intertwined network relations of energy service market actors.Under given basic conditions, however, the links between service providers and SMEtarget groups needed for a broader stimulation hardly evolve. Therefore, the focus ofenergy policy strategies has to be put on a simultaneous improvement of the offer ofappropriate energy service adapted to the specific needs of SME, and a development of thedemand-side of energy service markets. The role of energy policy intervention within sucha market transformation strategy has to be seen as giving the decisive inital impulses tocreate markets for energy services which are currently still hindered by legal, structuraland socio-economic barriers. Energy service actors have to be supported in opening upnew business opportunities by exploiting win-win situations which remain untapped undercurrent conditions. The establishment of working energy service markets would represent asignificant improvement of the scope for energy policy because many of the impulsescurrently given through public motivation, information and qualification programmes, willbe gradually replaced by private economic activity, e.g. in line with acquisition efforts.

The empirical findings, more over, underline that companies take different ways to workon energy efficiency and to realise RUE measures. The InterSEE project identified theneed for a differentiation of the SME target group and related policy strategies. Theanalyses of the company cases as well as of the policy cases emphasise the fact that acombination of incentives and instruments in the sense of "carrots and sticks" offered byvarious external actors stimulate and support RUE measures in SME. Correspondingly,there is no "one-and-only" policy to stimulate SME but mixes of instruments have to beimplemented at all policy levels from the European Union down to the local level incooperation with public and private actors.

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In this context, the empirical analysis of success stories and policy programmes indicatedthat financial incentives have been only one (often not the most important) fostering factoramong others. For a broader stimulation of RUE activities in SME, however, financialinstruments represent a useful element of instrument mixes, which trigger energyefficiency measures.

With respect to the transformation of energy service markets, financial instruments provideimportant impulses to strengthen the demand for energy services (e.g. through subsidisedaudits) and to develop suitable offers (e.g. support of networks, third party financingschemes etc.). This integrated approach, however, does not necessarily require large publicfunding. As mentioned above, the integration of various partners into programmesprovides access to additional resources and enables the benefit from synergies.Additionally, energy policy should provide stimuli for a market transformation bygenerating fostering basic conditions for energy service actors, and in line with adeveloping self-dynamic of the markets the policy involvement can be then reduced. Thuseven in times of restricted public budgets, a large scope for policy-making exists. Theempirical findings underline that to a great extent innovative energy policy can be seen asa communicative, organisational and cooperative challenge.

The derived social and organisational perspective on implementation of energy efficiencymeasures in SME and the role of policy corresponds to the cyclic and dynamic policyunderstanding introduced in section 4.2. Rather than being a mechanical and linearenforcement of instrument-impact schemes, effective and innovative policy-making can bedescribed as cooperative and ongoing activities with developing roles and involvement ofdifferent public and private actors. The empirical findings of the InterSEE projectrecommend that the energy policy debate should not be split by a confrontation betweendirect energy policy intervention against energy market deregulation. By concentrating onthe obstructive interference in private business affairs the danger occurs to ignore crucialbarriers and interdependencies of real world implementation. With emphasis on thestimulation and transformation of energy service markets, energy policy should rather beunderstood as the framework for a fruitful interaction of partners which opens thepossibility to benefit mutually from win-win constellations.


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Annex I Overview of case study ratings

In this Annex I, the procedure for extracting the four types of success (see Chapter 2.5)will be described in greater detail. Starting from the empirical material, the following stepshave been carried out:

1. Development of variables describing issues important for the energy efficiencyactivities. Eight variables are defined.

2. Each case is rated on the selected variables.

3. The information is analysed by use of factor analysis. This procedure is helpful tocompress the eight variables to a smaller number of dimensions. Here two newdimensions are found to contain the most important information.

4. Based on the new constructed dimensions the cases are clustered by grouping nearbycases in types. Four distinct types are found.

A.1 Definition of variables and rating of the cases

Eight variables are found to be important in relation to energy efficiency and have beenselected according to the empirical knowledge about the cases. Focuses have been on:

• What has been important for the process in relation to the work with energy efficiency?

• What differences have been found between the cases?

The selection has been concentrated on organisational and human factors. As anexperiment the formal dimensions are neglected in this procedure and it has proven to giveinteresting new results. The selected eight variables are:

A. Strategical orientation and commitment of top management in relation to energyefficiency.

B. Energy efficiency and environmental activities. Energy isolated or integrated.

C. Internal know-how in relation to energy efficiency

D. Dependence of an internal key actor

E. Perception of the benefits of energy efficiency

F. Active involvement of staff in energy efficiency

G. Lasting integration of external support

H. Dependence on extern stimuli

A ninth variable I (likelyhood of continuity of energy efficiency measures) has beendefined and estimated. As a core feature of the case studies, continuity was judged by theresearchers to gain additional information about the single case. Due to the fact, thatcontinuity is rather a result of the first eight variables than an independent explanationfactor, variable I was not integrated into the factor analysis.

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To each variable a scale from 1 to 5 is defined. E.g. for the variable A: Strategicalorientation and commitment of top management in relation to energy efficiency:

“1. No strategical orientation and no commitment: The company does not have astrategical orientation and the top management is not involved in energy efficiency”

“5. Strategical orientation and commitment: Top management consider an increasingenergy efficiency as needed to fulfill long term goals. The goals can be related to, e.g.market pressure, regulation, or a general philosophy of the company. The company hasa formal long term plan in relation to energy efficiency. The plan is convincing andexamples of concrete actions exist”.

The research team have judged each company on the eight variables, using all interviewsand other information from each company. When contradictions appeared, an assessmentwas made from the overall impression of the process. The rating for all companies arepresented in Tab. A 1.

The average ratings are shown in Fig. A 1. To be useful in the analysis some variationmust exist within each variable. The variation is reasonable (standard deviation is between1.2 and 1.7). The ratings for two of the variables (D: Dependence of internal key actor andF: Active involvement of staff in energy efficiency) are less informative since 2/3 of theratings are given in the two lower values (between 1 and 2). Each company has it’s owncombination of ratings. Only the two companies with maximum ratings have the samecombination (in counting the combinations ratings with factions have been rounded to aninteger). The many combinations show that the material is rich on information.

Fig. A 1: Average rating of all companies on the eight variables


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Tab. A 1: Rating of all company case studies on the eight variables

No. A B C D E F G H I Type Soft Hard

1 5 5 3 3 5 3 4 5 5 1 1,44 0,13

4 5 5 4 4 5 5 4 4 5 1 1,72 0,49

5 5 5 2 4 5 3 3 5 4,5 1 1,89 -0,68

8 5 1 3 2 4 4 4 5 5 1 0,65 0,34

9 5 1 4 1 4 4 5 5 5 1 0,21 1,16

12 5 5 5 5 5 5 5 5 5 1 1,67 1,45

18 3 4 4 3 3 1 3 4 4 1 0,06 0,50

25 5 5 5 5 5 5 5 5 5 1 1,67 1,45

28 4,5 5 4 2,5 3 3,5 4,5 3,5 4,5 1 0,64 0,73

35 4,5 5 4 3 4 4 3,5 4 4,5 1 1,18 0,38

16 1 2 3 2 5 1 1 4 5 2 -0,19 -0,26

19 2 1 3 1 3 1 1 4 5 2 -0,56 -0,41

21 4 5 3 1 3 1 2 3 5 2 0,39 -0,75

22 4 3 1 1 3 2 2 4 4 2 0,52 -1,34

30 4 3,5 1,5 1 3,5 1 3 2,5 2,5 2 0,21 -0,97

33 3,5 2 2 3,5 1,5 2 2 1 2 2 0,04 -1,07

36 5 5 2 1 3,5 1 2,5 3 3 2 0,79 -1,20

37 4,5 4,5 2 1 4,5 1 2,5 3 3 2 0,74 -1,09

6 2 2 5 1,5 2 2 5 4 3 3 -1,26 2,08

7 2 2,5 4 1 2 2 4 4 3 3 -0,98 1,23

10 2 5 5 1 5 1 5 5 5 3 -0,43 1,97

17 1 3 3 3 1 1 4 3 3 3 -1,16 0,92

20 2 4 2 1 3 1 5 1 5 3 -0,89 0,32

34 2 2 2 1,5 3 2 3,5 3 3,5 3 -0,57 0,07

38 2 1 2 1 3 1 5 1 3 3 -1,35 0,44

2 2 1 2 1 4 1 1 1 2 4 -0,49 -1,22

3 2 1 1 1 3 1 5 1 3 4 -1,24 0,03

11 2 1 2 1,5 1 1 1 1 2 4 -0,93 -1,14

13 2 1 2 2 2 3 2 1 2 4 -0,56 -0,69

15 1 1 1 1,5 1 1,5 3 1 2 4 -1,38 -0,49

29 2 2,5 2 1 1 2 1 2 2,5 4 -0,57 -1,06

31 5 1 2 1 1 2,5 2 1 2,5 4 -0,09 -1,37

32 1,5 2 2,5 1 2 1 3 2 2 4 -1,16 0,05

A.2 Factor analysis

The variables are constructed to be intuitive and to extract as much information aspossible. Each of the eight variables adds information on the types of success but thevariables are correlated. All correlation coefficients are positive and 24 of the 28 possiblerelations (8*7/2) are significant on a 10% level (saying that only a 10% change exists forthe relations to be random). The strong correlations indicate the existence of a commonunderlying structure.


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A factor analysis has been used to compress the material. The compression is the result ofa shift from the original eight variables to fewer new dimensions describing the commonunderlying structure. Several analyses have been made (with one and two resultingdimensions). The one dimension captures 50% of the original variation, while the twodimensions capture 63%. The one dimension solution is a simple linear combination of theeight variables, while the solutions with two are more complicated and include othercombinations than just adding the variables. The multidimensional solution are constructedso the dimensions are independent (no correlation).

The equations leading from the eight original variables to the new rotated dimensions are:

1. One dimension model:

Dim1,1 = - 2.7 + 0.12 * A + 0.10 * B + 0.15 * C + 0.11 * D + 0.13 * E + 0.14 * F + 0.09 * G + 0.13 * H.

2. Two dimension model:

Dim1,2 = - 2.5 + 0.09 * A + 0.10 * B + 0.32 * C - 0.16 * D + 0.16 * E + 0.08 * F - 0.30 * G - 0.21 * H.

Dim2,2 = - 1.4 + 0.27 * A + 0.04 * B - 0.12 * C + 0.34 * D + 0.03 * E + 0.30 * F - 0.18 * G - 0.03 * H.

By tradition only dimensions with eigenvalues above 1 are included.

A 3. The two dimensions solution

The two dimensions can be seen as ‘soft’ (organisation) and ‘hard’ (capacity) aspects ofenergy efficiency. The first dimension describes the political and non-technical issuesrelated to energy efficiency. In short it is called the organisation of energy efficiency:

A: Commitment by top management

B: Energy efficiency and environmental activities

E: Perception of benefits of energy efficiency

F: Active involvement of staff

D: Dependence on an internal key actor

H: Dependence on external stimuli

It describes the way energy efficiency is treated by the top management and in broad termshow energy efficiency is understood (Related to environment? What are the benefits?).Also, the dimension describes who is needed to make the process continue (Are externalstimuli needed? Is the process dependent on the internal key actor?)

The second dimension is labelled capacity for energy efficiency. It includes twoimportant aspects of maintaining a capacity for energy efficiency - internal and externalknow-how. This dimension captures the technical aspects of energy efficiency and ismainly constructed by the following two variables:

C: Internal know-how on energy efficiency

G: Lasting integration of external support


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A 4. Clustering

All cases have a calculated value for each of the two dimensions. A cluster analysis hasbeen used to group nearby cases. The method calculates the distance between the cases inthe two-dimensional space, and start by grouping the two cases with the smallest distance.This procedure is continued until a limited number of clusters exist. After someexperiments, it was decided to stop the process at four clusters. A clustering in fourclusters has been found to display some interesting qualities and each cluster is consideredas a type of success.

In figure A 2. all cases are shown, based on the calculated value for the two dimensions.Also, the one dimension solution from the factor analysis is shown (as the dashed line).Along this line the most important variation is found. It can be interesting to notice that themost common variation includes a balance in the soft and the hard aspects of energyefficiency. The cases are grouped into four clusters - or types of success. The clusters havebeen found by grouping cases in the two ends of the dashed line: The type 1 in the upperpart (■ ) and type 4 in the lower part (● ). The middle group have been divided in twoparts: Those below the line (type 2, ▲) and those above the line (type 3, +). The structureis repeated and simplified in table A 2.

Fig. A 2: Clustering of company case studies in the two-dimensional framework

Each of the clusters is considered as a valid and practical type of success. To understandthe individual characteristics of each type labels to the four types are suggested. Theselabels represent a compressed version of the richness within the cases. Cases close to theborders can contain characteristics of one or more types.


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Tab. A 2: The four types of success

Soft dimension: Organisation of energy efficiency

Variables: A, B, E, F, D, H

Low value High value

Hard dimension:

Capacity for energyefficiency

Variables: C, G

High value 3: The technical solution.

The resource mobiliser.

6, 7, 34, 20, 17, 38, 10

1: High profile.

The advanced. The frontrunners

12, 25, 4, 8, 28, 35, 9, 18, 1, 5

Low value 4: The starters. Low profile

31, 11, 29, 15, 13, 2, 3, 32

2: The top-down promoter

36, 37, 21, 30, 22, 16, 19, 33

The numbers refer to the cases in Tab. 2.2

In figure A.3 the four types are related to the original eight variables. For convenience thevariables are reordered so the six variables related to the first dimension are shown first,followed by the two variables (C and G) related to the second dimension.

Fig. A 3: Relation of the four types of success to the initial eight variables


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Annex II Overview on MURE database retrieval

Tab. A 3: Policy measures for SME in the industrial and tertiary sector from the MURE databaseaccording to types and actors

Annex II - Overview on MURE Database Retrieval

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Tab. A 4: Selected measures from the MURE database


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interdisciplinary analysis of successful implementation of ... · 1.3 strategic aspects ... 101...

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