Decentralized Energy

13 Oct 2020

Energy Efficiency Post Covid-19

13 Oct 2020  by   

Energy efficiency can improve the economic competitiveness of countries and businesses, as well as reducing greenhouse gas emissions and improving the quality of life.

Energy efficiency and transition investments are expected to boost economies over the 2021-23 post Covid-19 recovery phase and create a wide range of jobs through stimulus measures that can accelerate positive ongoing trends.

The International Energy Agency (IEA) says that energy efficiency can play a vital role in economic recovery from the impact of the COVID-19 pandemic. According to the Paris-based intergovernmental organization, more efficient use of energy could generate an untapped source of fuel, larger than fossil and renewable energy sources combined.

Energy efficiency can improve the economic competitiveness of countries and businesses, as well as reducing greenhouse gas emissions and improving the quality of life. The challenge, according to IEA projections up to 2035, is that as much as two-thirds of the energy efficiency potential are likely to remain untapped.

In 2019, renewables and other energy transition-related technologies attracted investments worth USD 824 billion. In the 2021-2023 post Covid-19 recovery phase, the analysis conducted by the International Renewable Energy Agency (IRENA) shows that such investments should more than double to nearly $2trn and then continue to grow to an annual average of $4.5trn in the decade to 2030.

Numerous industry trends have placed energy efficiency (EE) at a pivotal crossroads. To remain a central link in the system, it's critical that utilities think about EE programs differently and modernise the experience to succeed in the new, customer-centric environment.

There is an immediate need to create more value out of programs due to a regulatory and business mandate for utilities to do more with less.

Utilities must be prepared for the new, future business model as self-generation methods — from battery storage to electric vehicles — are eliminating a complete dependency on utilities.

The relationship between customers and utilities has fundamentally shifted, driven by consumerisation and technology advances.

Together, these overarching shifts culminate in a myriad of challenges facing utilities today. Fortunately, there are solutions for deriving greater value from EE programs and allowing industry stakeholders to better understand the full impact they can deliver in driving the industry forward.

Paving a sustainable path to the future requires understanding and building on the achievements of our past. It's clear that early EE programs laid an important foundation for where the industry is today.

By fostering the accessibility of efficient technologies — while driving energy reductions — the first class of programs encouraged consumer adoption of energy alternatives while demonstrating significant value in terms of regulatory compliance, cost and lost-margin recovery, and shareholder incentives.

Utilities have helped to bring down the cost of energy efficient products and services for consumers and businesses through the rebates and incentives provided through highly regulated demand-side management programs.

As a result of their investment and commitment to energy efficiency over the years, utilities have established a two-way communication flow with their customers that has enabled customers to save both money and energy.

But today's energy providers are facing the challenge of turning yesterday's progress into tomorrow's success. This undertaking will require that utilities understand where, and how, they can create more value, as well as ways they can connect EE to future business models — all while maintaining relevance to digital-age customers in an on-demand world.

The GCC per capita energy consumption is ominously rising, the last decade alone having registered an average of 22% increase. In 2008, each person in the GCC countries consumed on average 9.650 TWh of electricity against a global average of 2.782 TWh and a Middle East average of 3.384 Twh.

In UAE, energy usage has grown at an annual average of 4% over the past six years, with projections that it will increase to 5% through 2020. Overall electricity consumption has more than doubled in the past 10 years, at a pace that will be difficult to provide for over the long term.

“One relatively straightforward measure to slow the growth of energy consumption is a sustained energy efficiency strategy. Such a strategy could lead to substantial reductions in consumption and could be implemented swiftly and at relatively little expense,” says Saeed Mohammed Al Tayer, MD and CEO of Dubai Electricity and Water Authority (DEWA).

“Reducing overall energy consumption would safeguard the UAE’s energy reserves, reduce the energy bills of end-users, help utilities manage their infrastructure constraints, and reduce potential subsidy burdens on UAE governments.”

Many governments in other regions have already begun crafting policies that promote, and in some cases, mandate energy efficiency measures. These initiatives spur more sustainable building design, hybrid vehicles, low-consumption appliances, and more renewable energy sources. Such policies are still in the inception phase in the GCC, yet governments will need to take more action soon if they are to meet the energy sustainability challenge.

One area that is gaining traction is building efficiency, commonly referred to as “green” or “sustainable” construction, in reference to structures that are designed and built with improved energy efficiency as a key design constraint. The concept aims to reduce the environmental impact of buildings and to improve the well-being of their occupants.

The UAE already has a range of building efficiency measures in place. For example, in Abu Dhabi, a program called Estidama, Arabic for sustainability, regulates the design, construction, and operation of buildings through phased approvals. Estidama also uses an assessment scale called the “Pearl Rating System,” which measures the sustainability performance of villas, buildings, and communities.

In Dubai, the government has issued a set of green building regulations and specifications that cover planning, the use of resources, materials, and waste. Notably, the regulations are intended to improve the sustainability performance of buildings throughout their entire life cycles, from design through construction, operation, and ultimate tear-down.

In 2013, the Dubai Electricity and Water Authority (Dewa) created Etihad ESCO to make Dubai a leading example of energy efficiency for the region and the world. As a Super ESCO (Energy Service Company), it enables the energy performance contracting market in Dubai by developing energy efficiency projects targeting more than 30,000 buildings. Etihad ESCO aims to jumpstart the creation of viable performance contracting market for energy service companies by executing building retrofits, increasing penetration of district cooling, building capacity of local ESCOs for private sector and facilitating access to project finance.

The Dubai ESCOs market is already providing new business opportunities for joint ventures, international partnerships as well as engage UAE national entrepreneurs through a diversified supply chain from financial institutions, technology providers and equipment manufacturers to service providers across the project development, management and reporting stages.

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