making “step changes” in energy efficiency building on experienced success
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Making “Step changes” in energy efficiency Building on experienced success. Hans Nilsson Chairman of the IEA DSM-Programme FourFact AB www.fourfact.com. Energy-use in the IEA-11. 160. Hypothetical energy use without savings. 140. Additional energy use with - PowerPoint PPT PresentationTRANSCRIPT
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Making “Step changes” in energy efficiency
Building on experienced success.
Hans NilssonChairman of the IEA DSM-Programme
FourFact ABwww.fourfact.com
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Energy-use in the IEA-11
Source: 30 years of energy use in IEA countries
Actual energy use
20
40
60
80
100
120
140
160
1973
1980
1985
1990
1995
1998
Ex
ajo
ule
s
49%49%
Hypothetical energyuse without savings
1975
AUSDEKFINFRAGERITAJAPNORSWEUKUS
20%
Additional energy use with1973 intensity = Energy saving
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The rise in welfare depends more on energy efficiency improvements than on
growth in energy use!
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Energy efficiency – The most important means to reduce GHG
1
2
3
4
5
Source: The IEA EnergyTechnology Perspectives, 2006
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The best way to satisfy a growing need for energy services
Time
Demand
System capacity
+ 1 kWh
-1 kWh
Should be the cheaper of the two options:More supply or less demand
AB
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Difference in Electricity Investment in the Alternative vs. Reference Scenario
2003-2030
Additional investments on the demand side are more than offset by lower investment on the supply side
-2 000
-1 500
-1 000
- 500
0
500
1 000
bil
lio
n d
oll
ars
(200
0)
Difference
Additional demand-sideinvestment
Efficiency measures Avoided supply-side
investment
Generation
Transmis-sion
Distribu-tion
Source WEO 2004
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Energy Efficiency is the cheapest resource
Negative Costs!
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The curse of the Energy Efficiency
• Energy Efficiency is invisible
• Energy Efficiency is not a Product, but a characteristic (with products in comparison)
• Energy Efficiency is delivered in many small packages
• …..and on different occasions
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LARGE-SCALE ENERGY EFFICIENCY
“Mandating” Market Acceptance
StandardsAgreedactions
Delegated
Actions Commitments
Price-responsivecustomers
“Commoditise” for Non Price-responsive
e.g. VoluntaryAgreements;TechnologyProcurements
e.g. Muni-cipalities Planning;FEMP
e.g. White Certificates
e.g. ESCO; Labels, Branding e.g. Taxes;
DR (elasticity)
e.g. MEPS;Top-runner;Energy Star
But there are several means
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Market Transformation
Product Performance
Market Penetration
Base case
Preferred Case
NEW
MORE
LESS
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Market Transformation
Product Performance
Market Penetration
Base case
Preferred Case
TechnologyProcurement (TP)
Aggregatedproc. (AP)& Labels
Standards& Directives
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Means for accelerated diffusion
Diffusion curve
Time after introduction
Technology Procurements,Demonstration
Feed-in tariffs,Certificates,Campaigns
Labelling,Training
Comprehensiveadaptablestrategies
Join
t Res
earc
h on
a)Te
chno
logi
es
b) M
arke
t res
pons
e
(Res
ult =
Pot
entia
l * A
ccep
tanc
e)
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The (textbook) market
Flow of goods
Relation
Actor
Influent
User
SUPPLIER
Price
Quantity
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The (real) market
Wholesale
Retailer
IInstaller
Owner
Service
Consultant
Subsupplier
Flow of goods
Relation
Actor
Influent
Authority
User
SUPPLIER
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Energy Efficiency has multiple dividends
• Employment• Industrial development• Poverty alleviation• Holds back prices in supply• Reduces pressure on
supply reserves
• Cost• Environment/Climate
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Energy Efficiency is the first step on the road to sustainability
Supply
High Density (e.g. fossil, nuclear)
Low Density (e.g. solar, wind, bio)
End-
Use
of E
nerg
y
High Efficiency (Low Intensity) e.g. CFL and LED lighting; Adjustable speed drives
UNECONOMICAL
SUSTAINABLE
Low Efficiency (High Intensity) e.g. Incandescent lamps, Direct electrical heating
PRESENT SYSTEM
HARDLY FEASIBLE
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Thank you!
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EXTRA MATERIAL
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1. The learning investments have to be covered and recovered
• Learning investments are not subsidies IF they can be anticipated to yield future profit
• Someone has to start the process
• It takes TIME to reach break even
• The investments might be HUGE
Cumulative Sales
Pri
ce Challenging New TechnologyA
BC
Learning investments
…and ditto profit
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4. There is always someone to share the bill
• (I) Government and companies that have a “first-mover” interest
• (II) Private sector (users) who have a worse alternative
• (III) Private sector (users) who have an interest in showing leadership
Cumulative Sales
Pri
ce Challenging New Technology
Willingness to payon niche markets
I
IIIII
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INDIA150 GW
Break-even 1$/W
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General Market Segmentation
• Innovators (Enthusiasts)• Early Adopters
(Visionaries)• THE CHASMTHE CHASM• Early Majority
(Pragmatists)• Late Majority
(Conservatives)• Laggards (Sceptics)
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General Market SegmentationDiffusion curve
Time after introduction
Ad
op
tio
n o
f iin
ova
tio
n
Innovators (2.5 %)
Early adpoters (13.5%)
Early Majority (34%)
Late majority (34%)
Laggards (16%)
"Take-off" in the region 5%-15% of the market
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Accelerated diffusionDiffusion curve
Time after introduction
Ad
op
tio
n o
f iin
ova
tio
n
Innovators (2.5 %)
Early adpoters (13.5%)
Early Majority (34%)
Late majority (34%)
Laggards (16%)
Accelerated diffusion
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Cumulative Sales
Pri
ce
IncumbentTechnology
Challenger
Willingness-to-pay inChallenger Niche Markets
A
B CD
Government and industry (R&D)
A’
Positioning companies (capitalising)
Customers withHigh alternativeCosts (incumbent+)
Lead users(capitalising) “Chasm-crossers”
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New paradigms – Distributed Generation
Source: Distributed Generation In Liberalised Electricity Markets. OECD/IEA 2002
Bypass congestion
Reduce losses
Enables use
Stimulatescompetition
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28
Potential
Marketpotential
EconomicPotential ( individual)
Technicalpotential
EconomicPotential ( societal)
Time
1.ReduceTransac-tion costs
2. Improve Credibility,Organise
3. ImproveSupplierslearning
4.Improve technology
Result (Efficiency) = Potentialtechn.;time. * Acceptancetime; exposure
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29
TO MEASURE SUCCES
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Electricity in Finland