The characteristics of industrial energyefficiency. - How do they affect the adoption decision by firms?

Transcription

1 The characteristics of industrial energyefficiency measures - How do they affect the adoption decision by firms? Tobias Fleiter Fraunhofer Institute for Systems and Innovation Research, Karlsruhe Co-Authors: Simon Hirzel, Ernst Worrell Chalmers Energy Conference May , Gothenburg Seite 1

2 Agenda 1. Motivation and objective 2. Literature review 3. Development of classification scheme for EEMs 4. Application to 1. Replacement of electric motors 2. Use of shoe press in a paper mill 5. Conclusions Seite 2

3 Diversity in industrial energy-efficiency measures (EEMs) Replacement of 10kW electric motor in production process Replace clinker kiln by more efficient alternative Use innovative hightemperature superconducting for copper billet heating Replace roller press by more efficient press before end of life Use waste heat from compressed air system for preheating Install control system for lighting Insulate steam pipes Build new production plant Replace electric motor after old motor is broken Reduce compressed air pressure Fix air leakages in compressed air system Train staff to increase awareness towards energy-efficiency Replace single-glazed windows Seite 3

4 Top 10 EEMs in US Industrial Assessment Center audit programme # Description Observations Average Savings Average Cost Average Payback Impl. Rate 1 UTILIZE HIGHER EFFICIENCY LAMPS AND/OR BALLASTS 11,380 $6,016 $12, % 2 ELIMINATE LEAKS IN INERT GAS AND COMPRESSED AIR LINES/ VALVES 7,409 $5,994 $1, % 3 USE MOST EFFICIENT TYPE OF ELECTRIC MOTORS 5,082 $4,840 $11, % 4 INSTALL COMPRESSOR AIR INTAKES IN COOLEST LOCATIONS 4,903 $1,832 $ % 5 UTILIZE ENERGY-EFFICIENT BELTS AND OTHER IMPROVED MECHANISMS 4,003 $3,164 $2, % 6 REDUCE THE PRESSURE OF COMPRESSED AIR TO THE MINIMUM REQUIRED 3,910 $3,809 $1, % 7 INSTALL OCCUPANCY SENSORS 3,556 $2,285 $2, % 8 USE MORE EFFICIENT LIGHT SOURCE 3,413 $6,670 $16, % 9 INSULATE BARE EQUIPMENT 3,363 $6,562 $3, % 10 ANALYZE FLUE GAS FOR PROPER AIR/FUEL RATIO 2,285 $8,981 $2, % Source: Seite 4

5 Motivation, objective and approach Motivation Huge diversity in industry and across EEMs. Studies often treat EEMs as a homogeneous group of measures, while these are extremely heterogeneous in reality, particularly in the industrial sector. Assumption of an average homogeneous EEM restricts policy recommendations Objective Which characteristics of EEMs affect the adoption decision? Develop a classification scheme that allows to compare EEMs and explains why certain EEMs diffuse faster than others. Starting point for developing policies to overcome such barriers Approach 1. Review of literature 2. Derivation of EEM characteristics for classification scheme 3. Apply classification scheme Seite 5

6 Literature review Diffusion of energy-efficiency measures Diffusion of innovations in related fields Payback period (Anderson and Newell 2004) Sectoral applicability (Martin et al. 2000) Degree of technical change (De Beer 1998) Seite 6 End-use (Harris et al. 2000) Initial capial expenditure (Anderson and Newell 2004) Strategic value and non-energy benefits Cooremans 2011) Risk of production disruption (Rohdin etal. 2007, Thollander and Ottosson 2008) priority of energy efficiency (Gruber and Brand 1991, Hasanbeigi et al. 2010) Lack of time/staff (Anderson and Newell 2004, Schleich 2009; Access to capital (Sorrell et al. 2004, Trianni and Cagno 2012 Complexity, Compatibility, Observability, relative advantage, trialability (Rogers 2003) Profitability (Tornatzky and Klein 1982) Competition on supply market (Stoneman 2002) stock Rosegger (1979) Degree of radicalness (e.g. Damanpour 1998, Dahlin and Behrens 2005,..) Additional intangible benefits (Baldwin and Lin 2002, Raafat 2002, Son 1992) Expected future improvements (Van Soest and Bulte 2001, Geroski 200) Organizational VS technical (Andersen 2008, Faucheux and Nicola 2011 ) Component, sub-system, system (Carrillo-Hermosilla et al. (2010), Hellström 2007)

7 Criteria used to develop classification characteristics Relevance The characteristics should affect the adoption decision Applicability The characteristics should be sufficiently general to allow characterization of very different EEMs Specificity The characteristics should be specific enough to be evaluated as concrete and objectively as possible Independence The characteristics should not depend on the adopting firm or other contextual factors to increase comparability among EEMs Distinctness The characteristics should not overlap and be distinct from each other Seite 7

8 Characteristics Attributes Relative advantage Internal rate of return Payback period Initial expenditure Non-energy benefits (< 10%) Very long (>8 years) (> 10% of invest. budget) (5-8 years) (10-30%) (2-4 years) (0.5-10% of invest. budget) (> 30%) (<2 years) (<0.5% of invest. budget) Negative None Small Large Distance to core process Close (Core process) Distant (Ancilliary process) Information context Technical context Type of modification Scope of impact Lifetime Transaction costs Knowledge for planning and implementation Diffusion progress Sectoral applicability substitution (>20 years) System (system-wide effects) (> 50% of in. expenditure) expert Incubation (0%) Process related replacement (5-20 years) add-on (<5 years) (10 50% of in. expenditure) Take-off (<15%) Engineering personnel Saturation (>85%) Component (local effects) Organizational measure Not relevant (< 10% of in. expenditure) Maintenance personnel Cross-cutting Linear (15-85%) er adoption rate er adoption rate Seite 8

9 Application to example EEMs EEM Description Specification Energy-efficient electric motor (IE2 motor) Replacement of IE1 by IE2 motor Typical industrial application: 20 kw rated power, 3000 annual running hours, replacement of broken motor Shoe press Improves dewatering in drying section of paper machine It is installed in an existing paper mill undergoing a major retrofit. Source: Andirtz AG Seite 9

10 Energy-efficient electric motors (IE2) Energy-efficient electric motor (IE2) Relative advantage Characteristics Internal rate of return Payback period Initial expenditure Non-energy benefits (< 10%) Very long (>8 years) (> 10% of invest. budget) (5-8 years) Attributes (10-30%) (2-4 years) (0.5-10% of invest. budget) (> 30%) (<2 years) (<0.5% of invest. budget) Negative None Small Large Distance to core process Close (Core process) Distant (Ancilliary process) Information context Technical context Type of modification Scope of impact Lifetime Transaction costs Knowledge for planning and implementation Diffusion progress Sectoral applicability substitution (>20 years) System (system-wide effects) (> 50% of in. expenditure) expert Incubation (0%) Process related replacement (5-20 years) (10 50% of in. expenditure) Take-off (<15%) add-on (<5 years) Engineering personnel Saturation (>85%) Component (local effects) (< 10% of in. expenditure) Maintenance personnel Cross-cutting Organizational measure Not relevant Linear (15-85%) Seite 10 er adoption rate er likelihood of adoption er adoption rate

11 Shoe press in a paper mill Shoe press Relative advantage Characteristics Internal rate of return Payback period Initial expenditure Non-energy benefits (< 10%) Very long (>8 years) (> 10% of invest. budget) (5-8 years) Attributes (10-30%) (2-4 years) (0.5-10% of invest. budget) (> 30%) (<2 years) (<0.5% of invest. budget) Negative None Small Large Distance to core process Close (Core process) Distant (Ancilliary process) Information context Technical context Type of modification Scope of impact Lifetime Transaction costs Knowledge for planning and implementation Diffusion progress Sectoral applicability substitution (>20 years) System (system-wide effects) (> 50% of in. expenditure) expert Incubation (0%) Process related replacement (5-20 years) (10 50% of in. expenditure) Take-off (<15%) add-on (<5 years) Engineering personnel Saturation (>85%) Component (local effects) (< 10% of in. expenditure) Maintenance personnel Cross-cutting Organizational measure Not relevant Linear (15-85%) Seite 11 er adoption rate er likelihood of adoption er adoption rate

12 Comparison (IE2 motor VS shoe press) Energy-efficient electric motor (IE2) Shoe press Characteristics Attributes Characteristics Attributes Relative advantage Internal rate of return Payback period Initial expenditure (< 10%) Very long (>8 years) (> 10% of invest. budget) (5-8 years) (10-30%) (2-4 years) (0.5-10% of invest. budget) (> 30%) (<2 years) (<0.5% of invest. budget) Relative advantage Internal rate of return Payback period Initial expenditure (< 10%) Very long (>8 years) (> 10% of invest. budget) (5-8 years) (10-30%) (2-4 years) (0.5-10% of invest. budget) (> 30%) (<2 years) (<0.5% of invest. budget) Non-energy benefits Negative None Small Large Non-energy benefits Negative None Small Large Distance to core process Close (Core process) Distant (Ancilliary process) Distance to core process Close (Core process) Distant (Ancilliary process) Information context Technical context Type of modification Scope of impact Lifetime Transaction costs Knowledge for planning and implementation Diffusion progress substitution (> 50% of in. expenditure) expert Incubation (0%) replacement System (system-wide effects) (>20 years) (5-20 years) (10 50% of in. expenditure) Take-off (<15%) add-on (<5 years) Engineering personnel Saturation (>85%) Component (local effects) Organizational measure Not relevant (< 10% of in. expenditure) Maintenance personnel Linear (15-85%) Information context Technical context Type of modification Scope of impact Lifetime Transaction costs Knowledge for planning and implementation Diffusion progress substitution (> 50% of in. expenditure) expert Incubation (0%) replacement System (system-wide effects) (>20 years) (5-20 years) (10 50% of in. expenditure) Take-off (<15%) add-on (<5 years) Engineering personnel Saturation (>85%) Component (local effects) Organizational measure Not relevant (< 10% of in. expenditure) Maintenance personnel Linear (15-85%) Sectoral applicability Process related Cross-cutting Sectoral applicability Process related Cross-cutting er adoption rate er likelihood of adoption er adoption rate er adoption rate er likelihood of adoption er adoption rate Seite 12

13 Conclusions The characteristics of EEMs affect the adoption decision The characteristics and their respective attributes show the large diversity existing among EEMs. The six discussed examples demonstrate that the proposed classification scheme can indeed help to gain a better under- standing of the adoption process If used to compare EEMs, it helps to systematically explain why certain EEMs diffuse faster than others. It can provide a basis to identify suitable policies to increase the adoption rate. It might also explain why certain EEMs are effectively addressed by a policy, while the same policy fails to address other EEMs. However, it does not replace an in-depth evaluation of policy options. Seite 13

14 Contact Tobias Fleiter Fraunhofer Institute for Systems and Innovation Research Breslauer Str Karlsruhe, Germany Phone: Thank you for your attention! Read more Fleiter, T.; Hirzel, S.; Worrell, E. (2012): The characteristics of energy-efficiency measures - a neglected dimension. Energy Policy, 51 (0), pp Fleiter, T.; Schleich, J.; Ravivanpong, P. (2012): Adoption of energy-efficiency measures in SMEs - An empirical analysis based on energy audit data from Germany. Energy Policy, 51 (0), pp Seite 14