Elegance: The quality of being pleasingly ingenious and simple; neatness. (Oxford Dictionary)

The economic and environmental advantages of energy efficiency are extremely well documented.  As well as the value of avoided energy use we now recognise the economic and social value of multiple non-energy benefits as diverse as increased productivity, improved health and better learning outcomes.  The case for low energy, high performance buildings, and for retro-fitting existing buildings to achieve high levels of performance is clear.  Furthermore the combination of near zero energy design, local generation through solar PV and demand response technologies mean that we are moving into an age where buildings are becoming prosumers, both producers and consumers, of energy rather than simply consumers.

There is another little explored characteristic of energy efficiency and that is elegance.  In all areas, not only buildings, we have the technology and the know-how to design systems that are highly energy efficient, even energy positive – but we don’t typically use them because we engineer systems using conservative thinking and standard techniques.  These systems are clunky (defined as “solid, heavy and old fashioned”) in their use of materials and energy, much of which is simply wasted.  Think about a conventional UK house, which even though today’s Building Regulations are much improved, is still typically heated by a gas boiler feeding radiators and leaks heat like a sieve.  The ‘boiler’ takes in gas, sets fire to it, and heats water which is pumped around panel radiators which heat up the rooms until a thermostat, often positioned badly and many of which are still based on the technology of bi-metallic strips (invented in the 1830s), and most of which are certainly not “smart” by any stretch of the imagination, detects that the temperature has been reached and sends a signal to turn off the boiler.  The “bang bang” nature of the control leads to imprecise control with overshoots and lags, leading to more wastage.  The construction of the house allows heat to leak away through the structure and via air infiltration, resulting in the consumer having to pay excessive energy bills and creating unnecessary carbon dioxide emissions and local heating effects.

Considering the wider system, the house takes in gas from a gas distribution system which is fed by the transmission system.  Gas is fed into the system having been extracted from under the ground and treated to remove non-methane hydrocarbons and impurities such as carbon dioxide and hydrogen sulphide.  Each of these steps involve massive equipment and capital expenditure, use significant amounts of energy and produce by-products and waste streams.  They can be amazing pieces of chemical engineering but they are not elegant.

Now contrast that clunky system with a house designed to Passive House standards.  It will have very high levels of insulation, higher performance windows and doors, a vapour barrier and a mechanical ventilation system with heat recovery.  It will use 5-10% of the energy of a comparable house built to normal standards.  The residents will feel more comfortable thanks to the internal surfaces having a higher temperature and the absence of draughts.  They will also live in cleaner, healthier air.  Imported energy will be electricity from a decarbonizing grid, (admittedly with all of its own inherent complexities and in-elegance), or in the case of a zero energy building from solar PVs linked to battery systems.

Simply put, as well as a number of other advantages such as low running costs, healthier environment and greater resilience, a Passive House building has elegance; the quality of being pleasingly ingenious and simple; neatness.

It is not only in building design that we see these characteristics.  Many industrial systems use components that are based on primitive engineering such as process water bath heaters, the design of which dates back many decades.  Newer, elegant systems can reduce energy usage by 50% or more.  Internal combustion engine powered cars are miracles of industrial engineering but with their thousands of components and maintenance requirements, albeit much reduced over the years, they appear positively clunky compared to an electric vehicle.

As well as elegance in the final output there is something elegant about a design process itself that seeks high performance with the minimum amount of energy and resources.  It requires real thought and effort compared to producing a standard “off the shelf” design.  It requires thinking about what can be taken away, in the words of Antoine de Saint-Exupéry the French pilot and author; “a designer knows he has achieved perfection not when there is nothing left to add, but when there is nothing left to take away.”  In a similar vein Matthew E. May, a consultant on lean development has said: “The goal of elegance is to maximize effect with minimum means” and that “Elegance is a stop doing something strategy”.  It is time we demanded elegance in design and stopped accepting conventional, clunky, energy guzzling buildings, industrial systems, vehicles and other stuff.

Have a more elegant, more efficient, more effective and healthy 2019.

Hope View House

During my visit to Delhi to be a judge for the INSPIRE 2018 event I was privileged to be asked to speak to EESL managers on international developments in energy efficiency. I say privileged because talking to EESL about energy efficiency is like taking coals to Newcastle (as we used to say when there was a UK coal industry), or selling sand to the Middle East or snow to the Eskimos.  EESL’s programmes such as UJALA, smart meters and EVs are massive in their scale, inspirational in their ambition and vitally important for Indian and global development.  The rest of the world has a lot to learn from them.  

Here are some brief thoughts that emerged from my presentation.

Context

To achieve our energy and climate goals we need to greatly ramp up investment into energy efficiency. The recently published 2018 Energy Efficiency Market report highlighted that we need to double the current level of investment into energy efficiency (c.$260 bn) by 2025 and then double it again by 2040.  Although this is ambitious when I look around the world I see a number of emerging trends that make me optimistic that energy efficiency can start to fulfil its huge economic and environmental potential.  For forty years we have known the scale of that potential but also known that the uptake of cost-effective potential remains low.

Energy efficiency technology innovation

Energy efficiency technologies are being deployed across all sectors; buildings, industry, appliances, energy production, transport and information technology and new technologies are appearing.  We don’t actually need new technology to achieve our ambitions, just increasing the rate of application of existing, well proven, cost-effective technology, however innovation is always happening and appears to be accelerating.  The application of IT and big data in particular is an area that is rapidly evolving and has huge potential.  The application of AI, as demonstrated by the use of Deep Mind in Google data centres that saved 40% on already efficient centres highlights the potential.  Another end of the spectrum is the redesign of basic equipment such as process heaters such as those from ProHeat.  Like much of our infrastructure the basic design of process heaters has not changed for decades (or even a century or more) and the technology was designed when energy usage or costs were not considered.  Re-design of basic equipment like process heaters, using thermos-syphon heaters, can save 45% of energy use in very high energy using equipment.

Changing electricity markets

Electricity markets everywhere are changing rapidly with the deployment of renewables, decentralisation and the emergence of prosumers, as well as electrification of transport and heating.  The emergence of the ‘duck curve’ is creating problems for network operators grappling with the need for greater quantities of, and faster responding flexibility.  Distributed energy resources including localised solar, demand response, battery storage, and vehicle to grid solutions will all play large parts in future electricity markets.  If energy efficiency is to exploit this change we need to rethink it and make it measurable, reliable and able to be contracted for.  We also need to recognise that like other distributed energy resources energy efficiency will have different values at different times and in different locations – in highly constrained network areas and at constrained times energy efficiency will have more value.  Technologies like OpenEE enable the measurement and valuation of efficiency as a distributed energy resource.

Changing customer requirements

Another change, or perhaps it is not a change at all, is that most consumers don’t really care about energy efficiency at all. They care about strategic issues like resilience, productivity, health and well being etc. We are only just recognising the importance and value of non-energy benefits which usually are more strategic and more interesting than cost savings.  Non-energy benefits will become increasingly important in preparing better business cases, something that the energy efficiency industry has traditionally been bad at.  Simply justifying efficiency on its payback from energy savings is not enough, we should emphasise the strategic non-energy benefits and sell energy cost savings almost as a side effect.

Growing interest from financial institutions

Over the last five to ten years financial institutions have become interested in energy efficiency and this has to be a good thing.  Having said that efficiency presents many problems to institutional capital including lack of standardisation, lack of scale and lack of capacity within financial institutions. These factors are now being addressed through projects like the Investor Confidence Project and the EEFIG Underwriting Toolkit.

Growing recognition that energy efficiency projects do have risks

It was always said that energy efficiency was very low, or even zero risk.  There is no such thing as a zero risk project anywhere – if you can find one invest in it.  We are finally recognising, and more importantly gathering data on, the real performance of projects which shows, not surprisingly, that some projects over-perform and some under-perform, but in a portfolio the performance is usually good. This recognition and data will enable new financing solutions and insurance products that utilise the portfolio effect and can make financing easier.

Increased activity in financing efficiency

We have many mechanisms for financing efficiency and they can be used for different situations and market places, but there is no silver bullet or need for new ‘innovative financing methods’ (often code for subsidy or grant in some form).  What seems to be true, however, is that to get finance to flow at scale it is necessary to bring together four elements: finance – both risky development finance and low risk project finance; a way of building pipelines of projects; standardisation in project development, documentation and underwriting, and capacity building in the demand side, the supply side and the finance industry.  This is what I call the jigsaw of energy efficiency financing. There are different ways of organising but all successful examples such as EESL, the Etihad Super ESCO and the Carbon & Energy Fund in the UK, bring these four elements together.

Conclusions

As all the trends described above continue to emerge and grow, the huge global energy efficiency resource in all sectors will become easier to exploit and investment levels will grow, resulting in energy use and cost reductions beyond the standard, official forecasts, as well as bringing the many valuable non-energy benefits.

Steve Fawkes, Managing Partner, EnergyPro, receiving thanks for being part of the INSPIRE 2018 judging panel from Shri R.K. Singh, Hon’ble Minister of Power, New & Renewable Energy, (I/C), Govt. of India.

At the recent IEA Energy Efficiency Conference EnergyPro contributed to a side meeting The Role of Energy Efficiency in Europe’s Flexibility Agenda.  The session was designed to discuss new business models and technologies that enable efficiency to contribute to flexibility.  In particular we, along with Matt Golden, focused on OpenEE which enables utilities, network operators and programme managers to meter the effect of energy efficiency in time and location. This technology is now being applied in a growing number of US states to measure and value the impact of energy efficiency programmes and enable pay for performance programmes, where payment is directly related to energy savings rather than based on capital spent or deemed savings.

There is much talk about the barriers to fully utilising the massive potential for cost-effective energy efficiency but a fundamental problem is that there is no market for energy efficiency, only various diverse markets for stuff that we hope save energy.  Functioning markets need standardised units, standardised contracts, known risks and liquidity – and energy efficiency traditionally has none of these.  OpenEE provides the standardised units through its open source calculations – it is a weights and measures system for energy efficiency.  Once you can measure and reward the effect of energy efficiency measures you can enable any technology and target programmes more effectively.  Everyone know that the electricity market is changing rapidly, as diverse and distributed energy sources increase the need for flexibility will increase even further and OpenEE enables network operators to treat energy efficiency like any other distributed energy resource.

With the rapid changes in energy markets and technologies our traditional views of energy efficiency have to change, if they don’t we will still be lamenting the under-utilised cost-effective energy resource in another forty years as we have done for the last forty years.  This means energy efficiency should be treated like other energy sources and be allowed to compete on a level playing field in a functioning market. This means energy efficiency will have different values in different places and different times.  It means developers need to recognise and capture the various sources of value at different levels; host and distribution system.  It means developers will need to use more standardised ways of developing and documenting projects.  It means we will have to use standard contracts like PPAs to buy negawatt hours and PPAs are financable instruments, this will open up new ways of financing efficiency.

It is time to build a functioning market for energy efficiency.

The programme for the event can be found here.

Last week I attended the “Smart Finance for Smarter Lighthouse Cities” seminar which brought together cities, investors and others working on the Sharing Cities Lighthouse project.  This project brings together six cities across Europe with the ambitious aim of triggering €500 million of investment into smart city solutions and engaging with 100 cities.  The interactive day was very productive.

The first question asked was “what does smart finance for smart cities mean?”.  My answer was that it is finance that comes with the other pieces of the jigsaw that are essential to ensure a continuous flow of financeable deals, i.e. assistance to develop pipelines of bankable projects (“project development assistance”), capacity building for customers, project developers and the finance community, and standardisation that enables aggregation.  The experience in energy efficiency is that finance alone (i.e. project finance) is not enough, there is no point just having finance for projects – that is what I call “dumb finance”.  There is a wall of money seeking bankable projects, particularly projects with green credentials.  I think the smart cities domain is in the same place.

Bankable projects have to be developed and that requires both skills and resources, technical, financial and managerial.  Such skills are always in short supply, technical skills of all sorts are particularly in short supply at the moment, even in basic energy systems and particularly in emerging areas like smart cities.  Furthermore cities everywhere lack resources, smaller cities have enough problems managing existing infrastructure let alone developing new projects, a problem made much worse by a decade or so of austerity.  Somehow we need to build development skills, capacity and resources. Investors and financial institutions looking to deploy capital into smart infrastructure really need to address this problem which ultimately, in the absence of grants will mean accessing some high risk equity type capital.  Perhaps cities, financial institutions and governments can come together to share and build resources through projects like Sharing Cities.  We look forward to working with the project.

I was glad to see that Amory Lovins returned to the subject of the size of the energy efficiency resource in a recent paper in Environmental Research Letters[1].  Amory mentions the oil and gas resource and reserve analogy that I wrote about again in May. The energy efficiency resource, just like other resources, is really found in the minds of people and the scale of the energy efficiency resource, just like oil and gas, is defined by our ways of thinking about them.  Amory says in one of his brilliant phrases; “energy efficiency resources are infinitely expandable assemblages of ideas that deplete nothing but stupidity – a very abundant if not expanding resource”.  My PhD back in the early 1980s, “The Potential for Energy Conserving Capital Equipment in UK Industry”, examined the viability of Gerald Leach’s 1979 Low Energy Strategy for the UK[2] and came to the conclusion that such a future was possible (in industry) even though it involved an improvement in energy efficiency of c.30%.  As I have written about before[3], we have practically achieved that future – a future that back then was regarded as impossible by the energy industry, the government and most analysts at the time.

My view is that the potential using proven technology, current economics and “standard thinking” about energy efficiency is always about 30%.  Thinking about energy efficiency in a different way using the integrative design techniques long pushed by Amory and others, but still not widely adopted, increases the size of the economic potential to much higher levels, maybe 60-70%.

As is often the way several ideas or conversations come together at once.  I am currently reading “Zeronauts”[4] by environmental business guru John Elkington.  It highlights the power of the idea of aiming for zero – zero energy, zero emissions, and zero environmental impact and highlights leaders who have worked to turn this idea into reality.  Totally zero may not be possible in a particular situation but it is a powerful organising idea that opens up what may be possible.  If leaders and decision makers don’t set a target and simply accept for instance a building built to building regulations, the potential efficiency resource remains unidentified and unexploited.  Setting a target of zero energy may not actually result in zero but it certainly expands the way the design team and others think.

At the AECB’s recent conference, which was held in a community centre built to Passive House standards, I visited some Passive Houses and the Passive House technology is another example of how the mind defines the resource.  Passive House is a technology, a combination of thinking and physical technologies, that enables the construction of a house that uses much less energy than a house built to building regulations, as well as delivering better comfort.  If all new housing was built to Passive House standards the energy saving compared to houses built to code would be immense but most developers don’t even consider it, either because they don’t know about it or they believe it will cost more, or they don’t trust it.  It takes leadership, stepping out of the norm, to specify a Passive House design as well as persistence often in the face of opposition.

Many large new developments are now being built with district heating to meet planning regulations.  It would be much more cost-effective to simply build the development to Passive House standards, thus eliminating the need for district heating with all of its central plant pipes, heat exchangers and control systems, all of which have on-going maintenance requirements. But again, unless leaders and decision makers consider the possibility, as well as the benefits, that potential energy efficiency resource will not be exploited, locking in unnecessary energy use and complexity for many years or even decades.

To make another connection, this week I participated in the first Advisory Council meeting of the Horizon 2020 funded project, M-Benefits[5]. This important project is developing tools to help decision makers incorporate multiple non-energy benefits into decision making about energy efficiency projects. As I have said before, these non-energy benefits such as health, well-being, productivity, better learning outcomes etc., are far more strategic and therefore far more interesting to decision makers than simple energy cost savings.  We need to focus selling efforts for low energy solutions on those benefits and regard energy (& consequent energy cost savings) almost as a bonus. Doing so will lead to better business cases, higher rates of approval for projects and higher investment into energy efficient solutions.

So for any situation, industry, commerce, domestic, or transport, we can continue to think about the energy efficiency resource in the old way – and we will achieve significant economic and environmental gains, or we can change the way we think about it, aim for zero, insist on integrative design and value non-energy benefits and we will achieve far more, far more than the mainstream views on what is possible.

[1] http://iopscience.iop.org/article/10.1088/1748-9326/aad965

[2] https://www.amazon.co.uk/Low-Energy-Strategy-United-Kingdom/dp/0905927206

[3] https://onlyelevenpercent.com/surprise-you-are-living-in-a-low-energy-future-almost/

[4] https://www.amazon.co.uk/Zeronauts-Breaking-Sustainability-Barrier/dp/1849713979

[5] https://www.mbenefits.eu