European industry is interested in energy efficiency improvement projects

Over 80% of companies in the European industrial sector expect an increase in investment in improving energy efficiency over the next three years. The incentive to implement such projects are potential cost savings and increased profits - according to a survey conducted in July-October 2019 by DB Energy and we.conect, the organizer of ener.CON Europe - the largest European conference on energy efficiency in industry. However, limited financial resources and challenges related to assessing the business benefits of projects are a barrier to investments in energy efficiency.

European industry is interested in energy efficiency improvement projects

41% of companies in the industrial sector in Europe expect over 20% increase in investment in improving energy efficiency over the next three years. Almost a third of companies expect a 20-50% increase in investment outlays on energy efficiency projects, and 12% of companies expect an increase in investment expenditure of more than 50%. 41% of respondents indicate that investment outlays will increase, however, by less than 20%. Only 6% of companies talk about reducing investment in energy efficiency.

A similar trend has been observed for at least four years in Poland, where investments in the energy efficiency sector increased during this period by several dozen percent year-on-year, indicates DB Energy. Currently, new, more effective forms of project management and financing, such as EPC or ESCO, are gaining more and more popularity, where we note similar growth rates.

The investment appetite of Polish enterprises is growing after the first accounting period for energy efficiency projects. If, for example, a dairy plant sees more than 20% energy savings and a simple payback period of less than 3 years, then there is no need to justify that investments - says Piotr Danielski, Vice President of DB Energy.

59% of companies indicate that they plan to implement projects in the field of lighting systems, and 53% reduce CO₂ as the main investment directions. Over the next three years, 47% of companies plan energy audits and 41% will focus on developing a more energy-efficient product or service.

In Poland, industry focuses on modernization of compressor and compressed air installations, heat recovery, modernization of cooling installations, use of absorption compressors, investments in cogeneration and trigeneration, modernization of boiler rooms, modernization of drives, lighting, dedusting and ventilation systems and heat recovery. Projects in Poland are eagerly implemented if they generate a return on investment in less than three years.

Potential cost savings and increased profits are incentives for energy efficiency projects

The incentive to implement projects in the field of energy efficiency in Europe are potential savings of energy costs and increased profits - according to the survey. 35% of surveyed companies also indicated growing awareness of the need for sustainable development as an incentive for investment. 29% and 24% of companies, respectively, emphasized regulatory pressure or stricter regulations on energy consumption and CO₂ emissions as incentives for investing in energy efficiency. Only 12% indicated the volatility of energy prices as an incentive to invest in energy efficiency.

In Poland, cost reduction potential is the main motivating factor for energy investments in industry. If we consider that an investment in energy efficiency, usually expensive, pays for itself in three years, then the picture is clear. Annual savings cover 33% of investment costs, after three years the company has it's money back, while in subsequent years it already benefits from significant annual savings. When investment goes by the ESCO model, the company does not have to invest its own resources and usually takes part in savings from the first year, comments CEO Piotr Danielski. In addition, in the energy-consuming industry, energy expenditure accounts for up to 40% of total costs of the company, so if we can reduce energy consumption by e.g. 15%, then we reduce total costs by 6%, increasing in the same time profit by the same amount, adds Danielski.

Limited financial resources are a barrier to investments in energy efficiency

The barrier to investments in energy efficiency for European industry are limited financial resources and challenges with the assessment of business benefits resulting from energy saving projects. 18% of respondents do not see barriers to investments in the area of ​​energy efficiency.

Respondents (42%) indicated the Paris Agreement as the best international and national legal guidelines for the development of investment strategy in the field of energy efficiency. National carbon dioxide reduction targets are another important measure for planning such investment strategies - almost 30% of industry representatives think so. In Poland, tightening regulatory pressure is one of the important factors influencing investment decisions, but financial factors prevail, says DB Energy.

Survey conducted in July-October 2019 by DB Energy in cooperation with @ we.conect @Siemens, @nedap, @vpinstruments and @EDF as part of the #enerCONeurope conference.


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