The Promotion of Energy Efficiency Services. A survey among electricity companies

Transcription

1 The Promotion of Energy Efficiency Services A survey among electricity companies

2 The Union of the Electricity Industry EURELECTRIC is the sector association representing the common interests of the electricity industry at pan-european level, plus its affiliates and associates on several other continents. EURELECTRIC s mission is to contribute to the development and competitiveness of the electricity industry and to promote the role of electricity in the advancement of society. EURELECTRIC s Full Member structure is based on national representation, via the national electricity association, where such a body exists, or the leading electricity enterprise in each country. Currently there are 33 Full Members, including all 27 EU Member States, current applicants negotiating to join the European Union, plus other European OECD countries. Membership is enriched by European and International Affiliate Members representing the electricity industry across the rest of Europe, in the Mediterranean basin and on other continents, and by Business Associate Members from other sectors with stakeholder links to or interest in the electricity industry.

3 Table of Contents Overview: Survey Topics and Findings 02 Research Design 03 Section I Supplier Companies 04 I.a. Activities provided 04 Q.1 How would you define your involvement in promoting energy efficiency services? 04 Q.2 What are (or would be) the main drivers in promoting energy services? 04 Q.3 What activities do you provide to your customers? 05 I.b. Future perspectives 06 Q.4 Do you see business opportunities in these sectors today? And in a long-term perspective (next 5-10 years)? 06 Q.5 The prospect of being a one-stop-shop in channelling energy services represents: 08 Q.6 Will smart meters allow your company to promote more energy services to your customers? 08 I.c. Barriers 09 Q.7 From your experience, how relevant are the following barriers? 09 Customers 09 Services 10 Regulation 11 I.d. Policy Measures 12 Q.8 Which of the following horizontal policies would help to reduce barriers to the promotion of energy efficiency services? 12 Q.9 Which of the following policies targeting specific activities would help to reduce barriers to the promotion of energy efficiency services? 13 Section II Distribution Companies 14 II.a Activities provided 14 Q. 1 How would you define your involvement in promoting energy efficiency services? 14 Q. 2 What are (or would be) the main drivers in promoting energy services? 14 Q.3 What activities do you provide to your customers? 15 II.b. Future perspectives 16 Q4. Do you see business opportunities in these sectors today? And in a long-term perspective (next 5-10 years)? 16 Q5. The prospect of being a one-stop-shop in channelling energy services represents: 17 Q6. Will smart meters allow your company to promote more energy services to your customers? 18 II.c. Barriers 19 Q7. From your experience, how relevant are the following barriers? 19 Customers 19 Services 20 Regulation 21 II.d. Policy Measures 22 Q.8 Which of the following horizontal policies would help to reduce barriers to the promotion of energy efficiency services? 22 Q.9 Which of the following policies targeting specific activities would help to reduce barriers to the promotion of energy efficiency services? 23 01

4 Overview: Survey Topics and Findings 1: Available at org/publicdoc.asp?id= In its recently published policy paper More is Less The Role of Electricity in Energy Efficiency, EURELECTRIC has called for the need to boost the market for energy efficiency services. 1 In addition to the policy paper, EURELECTRIC has also run an energy efficiency survey among electricity companies across Europe, with the aim of directly assessing the degree of activities provided, the barriers faced and the opportunities that might arise. In particular, the survey tries to address some of the most fundamental questions: Are electricity companies interested in providing energy efficiency services to their customers? If so, what are the main drivers of this interest? Which services do they provide and to which class of customers? Moreover, what kind of barriers are they confronted with and how relevant are they? Which policy measures would contribute most in order to lift these barriers? Based on the results of the survey, the following conclusions on activities, barriers and necessary action can be drawn: Activities provided The survey shows that, across Europe, electricity companies are already promoting energy efficiency services. Moreover, there is an overall expectation that this business could grow in the next 5-10 years, if the market for energy services properly develops and barriers are removed. Most of the activities provided are already considered as part of companies core business, while new services are developing particularly in energy management systems and programmes rewarding efficient products. Both suppliers and distribution companies have an interest in providing energy efficiency services: the different regulatory frameworks under which they operate, based on the distinction between the competitive and the regulated segments, determine different drivers, incentives and scopes of action. Further work would be needed to identify best ways to create business opportunities for both actors that would complement each other s role in helping customers to improve energy efficiency. Barriers faced One of the main barriers faced is customers lack of awareness. Electricity companies are already engaged in marketing and awareness raising activities, but more support is needed from other stakeholders. Even if they are aware of energy efficiency services, customers nevertheless display a surprising lack of interest. High transaction costs and access to capital seem to be the most critical aspects that need to be tackled, next to enabling stronger price signals. The high costs and risks related to the delivery of energy efficiency services are also seen as important obstacles. Uncertainty surrounding regulatory support, often caused by conflicting policies, represents an additional source of difficulties in promoting energy efficiency services. Policies needed Participants identified the following measures as areas on which policymakers should focus in order to overcome most of the barriers identified: Financing schemes to support energy efficiency programmes Promotion of energy management programmes Measures directly addressing the decision-maker (e.g. property owners) Demand-side programmes Best practice sharing Specific measures would also be needed to particularly promote Optimisation of daily use Audits Monitoring Energy performance contracting Training 2 The Promotion of Energy Efficiency Services

5 Research Design The data reported in this survey were generated from qualitative research with multiple choice questions on an internet-based survey tool. The survey was carried out during the period November 2010 February 2011 and targeted distribution and supplier companies separately, to reflect the different regulatory frame work under which these two types of companies operate: Supply companies Distribution companies Competitive environment Regulated environment Multiple actors Natural monopoly These differences play a decisive role in defining the scope of activities provided, the drivers and the barriers. For these reasons, responses from the two groups were kept separate. About 110 supplier companies responded to the questionnaire, operating in 28 countries 2 and representing about half of the overall market. On the distribution side, about 60 companies responded, operating in 17 countries and representing about one third of the overall market. 3 The reason for the differing responsiveness lies in the different nature of the two businesses, with suppliers characterised by a stronger presence of multinational companies, while the distribution sector is quite fragmented. An additional reason for not responding to the survey could be the premature nature of the topic for some of the companies approached. Nevertheless, the overall number of responses is quite significant, representing a unique exercise carried out with such an extended geographical scope. Although the two surveys cannot be considered as fully representative, they provide a useful insight into the electricity sector s efforts to provide energy efficiency services for its customers. This report should thus be considered as a contribution from the electricity sector to the debate on how to further promote energy efficiency services. EURELECTRIC would like to thank all those orga ni sations, government officials, academics, NGOs and companies for their feedback, while acknowledging that their contribution should be in no way understood as an implicit agreement of this report s assumptions or conclusions. EURELECTRIC would like to specifically thank: The European Commission (DG Energy) for the feedback provided when drafting the questionnaire and in the stakeholders meeting; The Joint Research Centre (JRC) of the European Commission for the opportunity to present preliminary results at their event and exchanging views with experts from many national governments; The Climate Action Network Europe (CAN Europe), the Conseil européen de la construction d appareils domestiques (CECED), the European Association of Energy Service Companies (eu.esco), the European Federation of Intelligent Energy Efficiency Services (EFIEES), the European Climate Foundation (ECF), the Regulatory Assistance Project (RAP), Hinicio Sprl, and PWR for the active participation in the stakeholders meeting; The team leaders of ChangeBest, the EU funded project aimed at, inter alia, contributing to the development of the energy efficiency services market as part of the implementation of the Energy Services Directive. Their feedback was very encouraging when assessing the results of the survey. 2: Geographical representation in the supplier segment: EU-27 (with the only exception of Malta and Slovenia), Norway, Switzerland and Turkey. 3: Geographical representation in the distributor segment: Austria, Belgium, Czech Republic, Denmark, Finland, Germany, Greece, Hungary, Italy, Norway, Poland, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom. Overview: Survey Topics and Findings Research Design 03

6 Section I Supplier Companies I.a. Activities provided Q1 How would you define your involvement in promoting energy efficiency services? Already promoting energy services Considering promoting energy services Wishing to promote services, but regulatory framework creates too may obstacles to act Wishing to promote services, but not allowed by the regulatory framework Not interested Q2 promoting energy efficiency services 17% 0% 2% 0% 81% No respondent indicated having no interest in promoting energy efficiency services. The majority of respondents eight out of ten declared that their companies were already involved in the promotion of energy efficiency services. 17% declared that their companies were in the process of considering the promotion of energy efficiency services. Should their assessment be positive, virtually all participating companies would be delivering energy efficiency services to their customers in the near future. The remaining respondents pointed to the regulatory framework as creating too many obstacles, thereby preventing companies from actively promoting energy efficiency services. What are (or would be) the main drivers in promoting energy services? Customers loyalty / retention Improve image / brand Expand business in new areas Avoid penalties Positive regulatory incentives No real driver in promoting energy services 4% main drivers 1% 1% 8% 31% 86% of the responses indicate mainly commercial reasons for promoting energy efficiency services (31% cite customer loyalty/retention, 29% want to expand business into new areas, 26% want to improve their image/brand). This outcome seems to suggest that the promotion of energy services is a side-effect of the liberalisation of electricity markets, and can be seen as part of customer-care services or as a tool for attracting new customers. Other 29% 26% 12% mentioned the regulatory framework as one of the main drivers, either due to positive regulatory incentives (8%) or the need to avoid penalties (4%). It is worth noting that, in both cases, none of the respondents indicated these items as the exclusive reason for promoting energy services. Instead, they were always coupled with other commercially-driven activities. 04 The Promotion of Energy Efficiency Services

7 Q3 What activities do you provide to your customers? Most of the activities provided involve energy management services and marketing/awareness raising. Together they account for about 66% of all activities (65 to 71%). While the former has a predominant role in industrial and public administration segments, the latter is more relevant in addressing residential customers and SMEs. Financing activities provided to customers* Products rewarding energy savings account for almost 25% of overall services, while financing accounts for about 10%. With regard to financing, it should be noted that the type of financing differs substantially among the different sectors. Promotion of public incentives tends to prevail vis-à-vis residential customers and, to a lesser extent, SMEs, while third party financing seems to be mostly used within the industrial sector. Pre-financing and co-financing are also promoted, but their role appears rather marginal, probably reflecting difficulties such as access to capital, risk-management and risk-sharing for both sides (suppliers and customers). Energy management services Marketing / Awareness raising Products rewarding energy saving Other None Residential - Retail SMEs - Retail Industrial - Retail Public administration - Retail * Bars show summary responses to further subcategories not included in the graph. Section I Supplier Companies 05

8 I.b. Future perspectives Q4 Do you see business opportunities in these sectors today? And in a long-term perspective (next 5-10 years)? The overall picture shows that suppliers are involved in providing energy efficiency services, but that this involvement is still at an early stage and that big potentials remain to be exploited. Nevertheless, there is an overall expectation that this business could grow in the next 5-10 years, if the market for energy efficiency services develops properly and barriers are removed. Respondents today see low or no business opportunities for a significant share in all sectors (about 44-50% of total volume, depending on the sector segment). The option average volumes was seemingly used as the default option for most respondents, which could be interpreted as showing that some activities are carried out, but are difficult to quantify. A high volume of services today is mainly provided in the residential segment (20%), followed by industrial customers (17%), with SMEs and public administration lagging behind (13-14%). It should be noted that high volumes of services do not necessarily correspond to high business volumes, which depend on the type of activities provided. In a more long-term perspective (5 to 10 years), there is an overall expectation of growing activities in all sectors. The share of respondents expecting to provide low or no volumes drops significantly, to the range of 24 to 30%. Higher volumes are particularly expected in the residential sector. Services provided to the public administration should also develop significantly, while the industrial sector would maintain its positive trend. Services to SMEs would also improve, although they would probably still remain more difficult to assess in comparison to the others. Taking into account the answers for Q.3, which showed that marketing and awareness raising activities and, to a certain extent, products rewarding energy savings are part of the suppliers core business, it would be fair to expect a growth in the promotion of energy management services and of products rewarding energy savings (if not already part of the core business). Financing could also be an area of growing activity, but would very much depend on national framework conditions. 06 The Promotion of Energy Efficiency Services

9 residential - today SMEs - today industrial - today public administration - today 20% 11% 13% 5% 17% 9% 14% 9% 35% 34% 39% 43% 41% 33% 41% 36% residential - next 5-10 years SMEs - next 5-10 years industrial - next 5-10 years public administration - next 5-10 years 4% 13% 22% 0% 22% 29% 6% 13% 28% 6% 13% 42% 41% 56% 52% 53% (Almost) None Low volumes Average volumes High volumes Section I Supplier Companies 07

10 Q5 The prospect of being a one-stop-shop in channelling energy services represents: A business opportunity An unnecessary burden Haven t assessed yet costs / benefits 0% 11% Nearly all respondents (89%) consider being a one-stop-shop as a business opportunity, while a small minority (11%) would have to assess costs/benefits before taking a formal view. Not one respondent considered one-stop-shops as being an unnecessary burden, thus demonstrating the sector s overall positive attitude towards such an idea. 89% Suppliers could thus be identified as particularly suitable players for building partnerships with services providers (e.g. banks, carpenters, refurbishing companies, etc.). Such partnerships would enable suppliers to provide all necessary information to their customers and to tailor energy efficiency measures to their customers needs. Q6 Will smart meters allow your company to promote more energy services to your customers? Yes, and we re already developing strategies / products Yes, but we still need to develop strategies / products No, as it will be someone else s business No, as smart meters do not play any substantial role in promoting energy services 47% 2% 2% 49% Almost all participants (96%) share the view that smart meters will be a tool for better engaging with their customers and developing new products. It would be fair to expect that, with a wider roll-out of smart meters in the very near future, the share of companies already developing strategies/ products would grow to cover almost the entire spectrum of electricity companies. It should also be noted that the impact of smart meters, in terms of improving energy efficiency, would depend very much on related applications and reward mechanisms. 08 The Promotion of Energy Efficiency Services

11 I.c. Barriers Q7 From your experience, how relevant are the following barriers? Customers A large majority of respondents felt that customers tended to lack awareness and, even when informed, interest in energy efficiency services. High transaction costs and access to capital seem to be the major factors preventing customers from taking action, even when well-informed. lack of awareness 5% 27% 18% lack of interest 5% 23% 23% lack of confidence 7% 9% Low energy prices are also seen as one of the main barriers to promoting energy services. While this does not mean to suggest that an increase in energy prices will be the solution, low energy prices certainly do not bring energy efficiency services to the highest level of customers attention and could explain their lack of awareness and interest. 50% 49% 44% 40% It is also worth noting that participants are split in their assessment of the lack of customer confidence, with nearly equal numbers regarding the issue either as less relevant or as more relevant than other barriers (40% and 44% respectively). With electricity companies in the past predominantly regarded as not trustworthy, it seems that companies efforts to strengthen relations with their customers are beginning to deliver some benefits in terms of confidence building. high transaction costs 9% 35% 18% access to capital 0% 29% 30% 30% low energy prices 5% 25% 38% 40% 41% Not really an issue More relevant than others Less relevant than others Absolutely crucial Section I Supplier Companies 09

12 Q7 From your experience, how relevant are the following barriers? high costs (material, equipment, labour) 13% 2% 33% high risks (due to e.g. invested capital, long-term obligations, ownership, etc.) 19% 4% 38% high entry barriers (e.g. capital, expertise, regulatory obstacles, etc.) 11% 2% Services High costs (e.g. material, equipment, labour), and high risks (due to e.g. invested capital, long-term obligations, ownership, etc.) seem to be the predominant barriers when it comes to providing energy efficiency services. 52% lack of skilled workforce 11% 20% 39% 40% insufficient commitment from other relevant stakeholders 7% 20% 47% High entry barriers (e.g. capital, expertise, regulatory obstacles, etc.) are also an issue, although to a lesser extent. This probably also reflects differences in local realities, particularly in cases where electricity companies are discriminated against or even prevented from providing energy efficiency services. The lack of a skilled workforce and insufficient commitment from other relevant stakeholders are also recognised as barriers by some, although a significant number of respondents do not share this view. This might be explained by the fact that companies have already started developing their own training programmes with the local workforce, as poor work would affect their image vis-à-vis their customers. Some might even have started in-taking energy services-related businesses, eliminating the need to rely on an external workforce. 33% 38% 31% 40% Not really an issue Less relevant than others More relevant than others Absolutely crucial 10 The Promotion of Energy Efficiency Services

13 Q7 From your experience, how relevant are the following barriers? Regulation For well over half of respondents, regulatory barriers appear to be less relevant than the other barriers outlined above. One reason for this somewhat surprising outcome could be the fact that respondents tended to be managers working within the given national regulatory framework, where they are already used to the many contradictory regulatory provisions stemming from conflicting national and local legislation. insufficient policy support / regulatory uncertainties 18% 15% 27% implementation of conflicting policies 9% 16% non-energy-related regulatory barriers (accounting, administrative, fiscal, legal) 13% 17% Respondents are also divided on the issue of insufficient policy support and/or regulatory uncertainties, which probably prevent the delivery of energy saving activities with medium to long payback times. 31% 36% 48% 26% 44% Not really an issue More relevant than others Less relevant than others Absolutely crucial Section I Supplier Companies 11

14 I.d. Policy Measures Q8 Which of the following horizontal policies would help to reduce barriers in the promotion of energy efficiency services? horizontal policies 60% According to the respondents, the top four policy measures needed to reduce barriers for energy efficiency services, chosen by 60% of participants, are: Financing schemes to support energy efficiency programmes Promotion of energy management programmes Measures directly addressing the decision-maker (e.g. property owners) Best practice sharing 15% 25% A second group of measures, favoured by 25% of respondents, would help to unlock the market for energy services: Permits with efficiency requirements Demand-side programmes Improvement in quality criteria for energy services 0% 5% 10% 15% 20% Financing schemes to support energy efficiency programmes Promotion of energy management programmes Measures directly addressing decision-makers (e.g. property owners) Best practice sharing Demand-side programmes Permits with efficiency requirements Improvement in quality criteria for energy services Tradable certificate schemes (e.g. White Certificates) Tenders/procurement incorporating efficiency conditions Mandatory renewables The least relevant policies are: Tradable certificate schemes (e.g. White Certificates) Tenders/procurement incorporating efficiency conditions Mandatory renewables 12 The Promotion of Energy Efficiency Services

15 Q9 Which of the following policies targeting specific activities would help to reduce barriers to the promotion of energy efficiency services? Almost three quarters of respondents identified the following 5 specific measures as most relevant to reducing barriers: Optimisation of daily use Audits Monitoring Energy performance contracting Training policies targeting specific activities 71% Other policies addressing third party financing, mandatory energy savings plans, mobility management and mandatory inspection follow as options, though less predominantly. 25% There does not seem to be much overall support for policies implying mandatory actions when too prescriptive, as in the case of mandatory inspections. By contrast, there is a slightly stronger support for mandatory energy saving plans, which includes more flexibility regarding their implementation. 0% 5% 10% 15% 20% Audits Monitoring Optimisation of daily use 4% Energy performance contracting Training Third party financing Mandatory energy savings plan Mobility management Mandatory inspection Section I Supplier Companies 13

16 Section II Distribution Companies II.a. Activities provided Q1 How would you define your involvement in promoting energy efficiency services? Already promoting energy services Considering promoting energy services Wishing to promote services, but regulatory framework creates too may obstacles to act Wishing to promote services, but not allowed by the regulatory framework Not interested promoting energy efficiency services 22% 0% 8% 6% 64% About two thirds of participating DSOs responded that they were already promoting energy services, while 22% were still considering this opportunity. 8% of respondents wish to be involved in providing energy efficiency services, but feel that the regulatory framework is preventing them from doing so. A small but significant number of respondents (6%) declared themselves to be uninterested in promoting energy efficiency services probably because they do not consider this to be a field of action for their business. Q2 What are (or would be) the main drivers in promoting energy services? Customers loyalty / retention Improve image / brand Expand business in new areas Avoid penalties Positive regulatory incentives No real driver in promoting energy services Other 6% 8% 20% 3% main drivers 7% 26% Nearly one third of DSOs see the improvement of their image/brand as a clear reason to promote energy efficiency services. As DSOs are typically identified with the process of grid maintenance, their eagerness to use this opportunity of strengthening their image and improving relations with customers is certainly understandable. Improving the relationship with their customers is thus unsurprisingly seen as the second main driver for promoting energy efficiency services (26%). The possibility of expanding the business into new areas is also considered a relevant factor (20%), thus demonstrating the potential that energy efficiency services offer to extend the scope for business activities. 30% As was to be expected from a regulated sector, positive regulatory incentives and the need to avoid penalties also represent relevant, though minor, drivers. 14 The Promotion of Energy Efficiency Services

17 Q3 What activities do you provide to your customers? Most of the activities provided involve energy management services and marketing/awareness raising. Together they account for about three quarters of all activities. Interestingly, energy management services seem to be offered fairly equally to all sectors, with a small predominance of residential customers who are also targeted the most when it comes to marketing/awareness raising activities. Other activities are promoted much less: products rewarding energy savings account for about 15-20% of overall services provided, while financing accounts for not more than 10%. Financing Energy management services Marketing / Awareness raising activities provided to customers* Products rewarding energy saving Other None Residential - DSOs SMEs - DSOs Industrial - DSOs Public administration - DSOs * Bars show summary responses to further subcategories not included in the graph. Section II Distribution Companies 15

18 II.b. Future perspectives Q4 Do you see business opportunities in these sectors today? And in a long-term perspective (next 5-10 years)? Over half of DSOs today see predominantly low or no business opportunities both in the residential sector and vis-à-vis SMEs. In contrast, they see high opportunities with regard to the public administration and, to a lesser extent, the industrial sector. The relatively positive result for public administration could be explained by the potential for DSOs to engage with the public administration in long-term agreements. On the other hand, the difficulty in reaching the residential sector could be a result of the lack of direct contacts with their customers. In a more long-term perspective (5 to 10 years), activities are expected to grow in all sectors. The option of providing no services at all becomes almost irrelevant. More business opportunities are expected in particular with regard to the public administration, confirming the ongoing trend, but also with regard to the industrial sector. The situation for SMEs and residential customers is also expected to improve, although for the latter it seems that a large potential would remain untapped. 16 The Promotion of Energy Efficiency Services

19 residential - today SMEs - today industrial - today public administration - today 12% 20% 10% 12% 14% 10% 22% 10% 22% 31% 27% 33% 46% 47% 49% 35% residential - next 5-10 years SMEs - next 5-10 years industrial - next 5-10 years public administration - next 5-10 years 20% 4% 19% 2% 27% 33% 2% 23% 33% 0% 22% 37% 39% 52% 42% 45% (Almost) None Low volumes Average volumes High volumes Section II Distribution Companies 17

20 Q5 The prospect of being a one-stop-shop in channelling energy services represents: A business opportunity An unnecessary burden Haven t assessed yet costs / benefits 31% About 50% of respondents regarded favourably the prospect of becoming a one-stop-shop for customers. In practical terms, DSOs could well be in a particularly good position to act as an access point for customers to access information on their energy consumption and receive independent advice on optimising/reducing their consumption. 20% 49% A substantial number of respondents still has to assess whether this possibility would be worthwhile, while 20% saw it as an unnecessary burden, thus implying that other actors would be better suited for these kinds of activities. Q6 Will smart meters allow your company to promote more energy services to your customers? Yes, and we re already developing strategies / products Yes, but we still need to develop strategies / products No, as it will be someone else s business No, as smart meters do not play any substantial role in promoting energy services 54% 6% 4% 36% An overwhelming majority of participants (90%) believed that smart meters would enable their companies to promote more energy services, although more than half still have to develop appropriate strategies or products. A small but relevant number of respondents, accounting for about 10%, was of a different opinion, considering smart meters irrelevant to their promotion of energy services, either because smart meters would be someone else s business or because they were not seen as suitable for this purpose. Overall, DSOs expressed the view that smart metering would be an important tool to promote new energy services, provided that suppliers/ competitive actors could elaborate attractive strategies/products. 18 The Promotion of Energy Efficiency Services

21 II.c. Barriers Q7 From your experience, how relevant are the following barriers? Customers Respondents identified customers lack of awareness and, even more strongly, their lack of interest as the main barriers in promoting energy efficiency services. 30% lack of awareness 2% 26% lack of interest 0% 24% lack of confidence 11% 15% Analysing the reasons for such a lack of interest, the weak role of energy price signals is perceived as one of the main barriers. In addition, high transaction costs and difficult access to capital also significantly contribute to preventing the uptake of energy efficiency services. 46% 33% Customers lack of confidence in DSOs as energy efficiency services providers, although relevant, does not seem to be of primary importance. This could be explained with the neutral role that DSOs can play as enablers/facilitators of energy efficiency, an element on which to build customer confidence. 42% high transaction costs 30% access to capital 41% low energy prices 23% 2% 41% 17% 9% 30% 7% 28% 30% 34% 44% 35% Not really an issue Less relevant than others More relevant than others Absolutely crucial Section II Distribution Companies 19

22 Q7 From your experience, how relevant are the following barriers? high costs (material, equipment, labour) 13% 2% 26% high risks (due to e.g. invested capital, long-term obligations, ownership, etc.) 13% 4% 34% high entry barriers (e.g. capital, expertise, regulatory obstacles, etc.) 9% 15% Services High costs (e.g. material, equipment, labour) seem to be one of the main barriers in delivering energy efficiency services. High risks (due to e.g. invested capital, long term obligations, ownership, etc.) also play a major role, while DSOs view on high entry barriers (e.g. capital, expertise, regulatory obstacles, etc.) is more evenly split, probably depending on national regulatory frameworks. 59% 49% 39% 37% The lack of a skilled workforce does not appear to play a major role. Taken together with the graph on the commitment from other stakeholders, the reason would seem to be that DSOs tend to rely more on their own resources, rather than on teaming up with other stakeholders. Thus the skills needed to perform the activities would have to be primarily developed in-house. lack of skilled workforce insufficient commitment from other relevant stakeholders 4% 30% 0% 13% 22% 39% 48% 44% Not really an issue Less relevant than others More relevant than others Absolutely crucial 20 The Promotion of Energy Efficiency Services

23 Q7 From your experience, how relevant are the following barriers? Regulation For most respondents, the regulatory framework represents the biggest challenge. Insufficient policy support and regulatory uncertainties are critical for companies acting in regulated markets. For example, energy regulators in several EU member states do not recognise smart meters and smart grid investments in the regulatory asset base of European DSOs. In other member states, regulators follow a narrow approach in their cost benefit analysis of smart meters and smart grids, thereby dismissing the rationale for such capital expenditure. DSOs (who are natural monopolies ) are hence reluctant to invest in smarter grids: they replace the grids, but often do not upgrade them towards what they think is smart. insufficient policy support / regulatory uncertainties 28% 43% 7% 22% implementation of conflicting policies 22% 39% 13% 26% non-energy-related regulatory barriers (accounting, administrative, fiscal, legal) 17% 11% 48% 24% A large majority of respondents (61%) also considers the implementation of conflicting policies as a relevant or even absolutely crucial barrier to energy efficiency services. Not really an issue Less relevant than others More relevant than others Absolutely crucial Non-energy-related barriers do not seem to represent a major issue for most respondents. Section II Distribution Companies 21

24 II.d. Policy Measures Q8 Which of the following horizontal policies would help to reduce barriers in the promotion of energy efficiency services? horizontal policies 58% According to the respondents, the top four policy measures that would help to reduce barriers, chosen by almost 60% of participants, are: Promotion of energy management programmes Financing schemes to support energy efficiency programmes Best practice sharing Demand-side programmes 0% 5% 10% 15% 20% Promotion of energy management programmes Financing schemes to support energy efficiency programmes Best practice sharing Demand-side programmes 24% 18% Improvement in quality criteria for energy services Measures directly addressing decision-makers (e.g. property owners) Permits with efficiency requirements Tradable certificate schemes (e.g. White Certificates) Tenders/procurement incorporating efficiency conditions Mandatory renewables A second group of measures, supported by 18% of respondents, would help to unlock the market for energy services: Improvement in quality criteria for energy services Measures directly addressing the decision-maker (e.g. property owners) The least relevant policies, all cited by only 6% of respondents, were: Permits with efficiency requirements Tradable certificate schemes (e.g. White Certificates) Tenders/procurement incorporating efficiency conditions Mandatory renewables In comparison to the results of the parallel survey of supply companies, the identified top priorities are broadly similar, despite small but significant differences: demand-side programmes play a much more prominent role in DSOs responses, while suppliers focused more strongly on measures directly addressing the decision-maker. 22 The Promotion of Energy Efficiency Services

25 Q9 Which of the following policies targeting specific activities would help to reduce barriers to the promotion of energy efficiency services? Respondents tended to agree that almost all policy measures directly targeting specific activities would be needed to remove current barriers. policies targeting specific activities Both DSOs and suppliers have indicated that mandatory inspections and mobility management measures would be the least desirable among all options assessed. 82% 18% 0% 5% 10% 15% 20% Monitoring Energy performance contracting Audits Optimisation of daily use Training Mandatory energy savings plan Third party financing Mobility management Mandatory inspection Section II Distribution Companies 23

26 Notes 24 The Promotion of Energy Efficiency Services

27 Dé p ô t l é g a l: D/2011/12.205/18

28 Union of the Electricity Industry - EURELECTRIC Boulevard de l Impératrice, 66 boîte 2 tel: + 32 (0) fax: + 32 (0) Brussels contact person: Nicola Rega - nrega@eurelectric.org Belgium website: 26 The Promotion of Energy Efficiency Services Design by - photos: Dreamstime