Columnists: Hans Nilsson, Fourfact

Published on: 17 Jan 2017

Admit it - we are lousy making business

We in the energy efficiency community are continuously complaining that people do not understand how good energy efficiency is and that people (also known as customers or users) do not understand how good our product – i.e. energy efficiency – is. In the worst case we are smirking at them thinking (but not saying aloud) that they must be stupid. The problem for all of us is that this is an unusually complex market and we are still searching for that right “sales approach.”

So, too often we show our frustration. In our defence we could say that we have been thoroughly indoctrinated for many years. Several economists have argued that there is no “market failure” that needs correction and therefore there is no need to change rules or regulations. The Market will in due time make sure that the customers will, guided by price signals and with sufficient information, make the optimal decisions. If they then still do not want to embrace energy efficiency it will be because they do not prefer (read “want”) energy efficiency – and that’s it!

Some have even argued that it would be unethical to “force” people into using energy efficiency when they obviously don’t want it. If we continue to do so we may not see paradise but be doomed to fire and brimstone when the bassoon calls and Armageddon is near.

So we have hesitated. Maybe to save our eternal souls and maybe for not raising the anger of economists with good reputations and long CVs. But still!?

Some of the more daring have argued and managed to establish EEOs (Energy Efficiency Obligations) as a way to engage energy utilities as partners in business. In a report from RAP (Regulatory Assistance Project) it has been shown that the difference between the cost for a saved kWh and the supplied kWh in Denmark is 26 (twenty six!) times! Doesn’t that indicate that there are huge profits to make?

Okay, Denmark is Denmark but surely it must be comparably profitable in our own countries. And even if Shakespeare has his suspicions about rotten things in Denmark their energy policies seems rather healthy.

And does that not indicate that we, forgoing such opportunities, may have stayed ideologically untainted and saved our souls but also that we sacrificed business opportunities? Maybe we have to learn from outgoing President Obama when he recently said that US businesses have increasingly seen the financial benefits from cutting carbon through greater energy efficiency.

The outgoing president has also detected that energy efficiency is a great driver for jobs and he has argued so in a recent article in the Science Magazine. This argument shows that he as a responsible politician has understood about the multiple benefits. We also do but we have not been good in conveying it to customers and decision-makers. Again one of the reasons is that we have been under influence and it is time to break loose.

Maybe there are other economists than those who are whispering in the ears of politicians. There is a brand called the “business economist”. They know quite a bit about how to make business and they are not bad people. Maybe we should seek more advice from them? And make more business exploiting energy efficiency and – as a side product – save the world!?


Other columns by Hans Nilsson