Columnists: Hans Nilsson, Fourfact

Published on: 21 Feb 2017

When preparing a war it would be a good idea to have an army

Energy efficiency spells jobs! We know that and we can prove it. Energy Efficiency spells environment, prosperity, sustainability, security and a whole lot of other things.

But Energy efficiency is also underutilised. The IEA says that even by 2035 between 60 and 80% of the available efficiency potential will not be realised. We have to go to war to liberate the captured and imprisoned potential!

The fundamentals of this have been known for quite some time and the campaign for energy efficiency have been on for decades. Why are we then so slow to take the “enemy” ground? One explanation could be that we are talking to the wrong people about the wrong things! The army we need seems to be too scattered and too disorganised.

  • We get a clue about why when looking into the labour statistics from US Department of Energy and from Environmental Entrepreneurs, E2. The DOE numbers show that there is a strong growth in the energy efficiency sector and the E2 report shows that most of the jobs are in small companies – SMEs. “The majority of energy efficiency establishments are small businesses. Just over half report one to five employees, and an additional third report six to 24 workers. There is a small proportion of medium-sized establishments, and very few firms with more than 100 employees.” they write.
  • The same pattern is shown in a British study called  “Installer Power” where the say that energy efficiency is provided by “…micro businesses working at a very local level, getting their work  through social and neighbourhood networks and personal recommendation, with benefits to the  tradesperson as well as the customer in terms of avoidance of both time-wasting and other risks”

These pieces of evidence show that the major actor in delivering energy efficiency to the vast majority of users is very small companies who mainly serve their local markets. They are platoons in the army that every now and then attacks the inefficiency but they are easily fought back and retreat to more familiar grounds away from the front-line. Their customers often want a quick fix to an immediate problem and do not have the time and the money to go into something bigger, like energy efficiency improvements.

How can we engage them to exploit the huge potential? How can we form an efficiency army out of these “guerrilleros”? Have we even really tried?

Dynamics of inertia

Instead of calling on these forces we are trying to bribe the “enemy”, demoralise them and infiltrate their ranks (to continue the militaristic metaphor).

  • Instead we are talking to the customers/users using economic rational arguments. We say that they should be incentivised to ask for the energy efficiency improvements. As if it should be necessary! The difference between the levelised cost to save a kWh and the price of the same kWh is 3-15 times according to studies from the International Energy Agency and even higher in Europe when looking at the programmes for Energy Efficiency Obligations (under the Energy Efficiency Directive). How much more incentive do you need beyond saving 10 times what you pay? - Bribes do not work very well on wealthy recipients.
  • Instead we are asking for technologies to be smart(er) and ask for new innovations that should deliver energy efficiency without bothering the user or requiring craftsman skills. Smart meters, smart grids, apps, connected devices, internet of things, etc., etc. Do not bother - just “plug and play”! At least till the next hacker attack!  Demoralising does not work when the means provided have dubious functions.
  • Instead we demand and prefer renewable fuels now when they are getting cheaper. Maybe we do not have to save and bother with all details in lighting, insulation, ventilation, window glazing, speed drives and the task of “optimising” the pieces to function together? Maybe renewables have finally reached the old dream we had about nuclear – too cheap to meter! Just use as much as you please. - Infiltration is not necessary with friendly entities such as renewables.

All these options are in different ways representing a dream of automatic and painless fulfilment of our secret wishes.[1] The alternatives mentioned rather represent a desperate avoidance of the need to take real action and engage in the real battle. And it shows the desperate lack of political courage to join forces with the real market actors. “Do not interfere with the market,” the politicians are told by textbook economists. “There is no market failure”, they say.

So policy makers prefer to look in other directions. Why should we bother when the market does not respond? These micro-enterprises seem to be deaf for our political temptations! We have provided them all sorts of incentives! There is support for energy audits, there are grants for different technologies, and there are information campaigns to name but a few. What more could they ask for?

One of these micro-entrepreneurs even had the nerve to say “You mean to tell me that I'm going to a house, test its energy, put my name to a legal document that contractors and surveyors are going to read and I get paid £50? - You're in cloud cuckoo land.”[2]

Boots on the ground

These small companies are hard-working, honest people who may not necessarily respond to the clever instruments developed to provide incentives. These companies may not even be focused on growth and profit but rather to secure the business and to develop their reputation and their customers’ appreciation.

But are we talking to them at all? Or are we having a dialogue with a mirror and a fantasy of how the society works? A fantasy that comes out of textbooks in economy! Textbooks in which people behave economically rational but have little knowledge about humans (and humanity)!

It is time to step up to the realities and engage in the real fight together with the real soldiers. The micro-business!

It is they we have to incentivise rather than the customers. It is they we have to gather in networks for their companies to work together with colleagues to deliver more comprehensive solutions to the customers. Efficiency and renewables wrapped together in package deals. It is their innovations in business-models that need to be developed and not only the technologically smart ones however tasty they may be.

It is you that is the soldier in this army!

[1] A bit of Erica Jong’s; “Pure no-guilt, no-baggage sex, a dreamlike encounter where “zippers fall away like rose petals”.

[2] SevernWye Energy Agency and University of Leeds, Installer Power – The key to unlocking low carbon retrofit in private housing, September 2015, page 24

The views expressed in this column are those of the columnist and do not necessarily reflect the views of eceee or any of its members.

Other columns by Hans Nilsson