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Behaviour Change programmes in SMEs
1. Energy efficiency is smart business -
audits, energy management and the
power of case studies
15 FEBRUARY 2013 – IEA DSM TASK 24 WORKSHOP
2. What is EECA?
Energy Efficiency and Conservation Authority (EECA) - implements
Government priorities in energy efficiency, energy conservation,
renewable energy
Work to improve energy choices across all sectors of the economy
Operate using grants, information, research, regulation, and
partnerships with industry and the private sector.
Deliver advice and funding to
– households through ENERGYWISE brand; and
– business through EECA Business brand.
3. Approach
Focus: economic and achievable energy efficiency potential; cost-
effective use of renewable energy
Identify the potential: lighting, HVAC, refrigeration, process heat,
motor systems, compressed air, business transport
Understand barriers to natural uptake: knowledge, time, money
Design and deliver cost-effective programmes to address barriers:
Raise market awareness and demand (information programmes)
Enhance industry capability (training programmes)
Fast track uptake of efficiency projects (financial assistance)
4. A portfolio approach to programme delivery
Interlinking interventions designed to:
raise market awareness and demand (information programmes);
enhance industry capability (training programmes);
fast track uptake of efficiency projects (financial assistance)
A successful
programme is rarely
based on one
intervention
6. Programme portfolios
Project Funding Capability Information
Grants programme Training the influencers Providing information that is
relevant and useful
Technology-specific audit Technology providers
grants and specifiers EECA Business website
Energy management Energy service Audit standards
grants providers NABERSNZTM
Design grants Operations, Best practice guides
Project grants engineering and Quality schemes
Feasibility study grants maintenance Case studies
managers
Facilities managers
7. Case Study – Energising Business
A programme for small to medium-sized businesses 2009-2012
Target: deliver 15GWh of annual savings at cost of 4c/kWh
Based on successful interventions with Plastics and
Tourism industries
Potential: 74PJ annual use; >250,000 businesses;
saving 10-20% of energy costs; means around $400M
saving over 8 yrs
Barriers: energy is not a priority; lack of time; financial
constraints; lack of knowledge (and others)
Proposed intervention:
A subsidised package of energy assessment and
implementation measures to targeted businesses to
deliver actual energy savings.
Delivered through third party providers: energy service
companies, energy auditors, industry associations
8. So what happened?
Industry association was the most successful in terms of uptake
Large providers didn’t perform as expected.
Smaller providers were successful one-on-one, but could
not reach many businesses (less than 0.02% of the
250,000 SMEs in the market)
One smaller provider had some success sticking to one
industry – the wine growing industry.
The industry association was the most successful.
Over 80 businesses signed up over 2 years
Some participants have achieved a 40% saving on their
total energy costs.
First year total of 175MWh saved, year 2 savings
expected around 1GWh
9. What was different about this programme?
A year long education and support programme delivered through an
industry association, as well as the energy assessments and
implementation of energy saving measures
A trusted advisor – businesses belonging to the association already
trusted it to give them good advice
Peers/competitors – businesses in the same association are often
competing
Workshop based – a group learning environment involving all the
businesses in the programme
Led from the top – CEO involvement is mandatory for the first
workshop
Ongoing mentoring – ‘homework’ in between workshop sessions and
regular phone contact to check progress
Something to show for it – ‘EcoWarranty’ or ISO14001 certification
10. So what did we learn?
Group learning through workshops,
and ongoing support through
mentoring, plus the attraction of a
‘label’ at the end of the programme
were what made this provider’s
programme more successful
Industry associations provide a more homogenous group of stakeholders
that can more easily benchmark each other against their peers.
Industry associations are closer to their members and will be seen as
trusted advisers looking out for their members’ interests.
Programmes that allow participants to share their learning experiences,
and/or compete with their peers, are more successful than those that
operate in isolation.
Must engage at highest level or an organisation.
11. What are we doing differently now?
Industry sector programmes in place with other industry associations or very
large corporations
12. Summary
Go for groups!
SMEs are notoriously hard to reach; using industry associations
or peer groups is more effective than one-on-one engagement.
Managing groups of stakeholders together within a peer group
allows for group learning and peer pressure to incentivise a
changed behaviour.
Start at the top and don’t let go – senior management
involvement at the start and ongoing contact and support in the
form of mentoring is important to reinforce the actions being
taken.
EECA is a government agency which works to improve energy efficiency and increase the use of renewable energy in New Zealand. We work across all sectors – homes, businesses, industry and the public sector. The tools we use are regulation, incentives such as grants, information and peer pressure to change behaviour, and industry development to grow the capability and capacity of new sectors. We provide funding for home insulation and heating retrofits, and for business energy efficiency projects. We run a information and media campaigns on energy efficiency, and we run programmes to improve the energy efficiency of products, appliances and vehicles, through regulation, and labelling such as Energy Star. Much of our work is around energy efficiency, but alongside that we also encourage the uptake of renewable energy, both large and small scale and both existing technologies such as hydro, geothermal and wind and emerging technologies such as marine energy. EECA’s belief is that while looking to maximise renewables, the demand side is at least as important as the supply side. The contribution energy efficiency can make to the demand/supply balance is vitally important.
EECA’s approach is all about focus. Identify the areas with the biggest potential and opportunities for renewable energy Understand the barriers to greater uptake Design and deliver cost-effective programmes that address these barriers Where are the areas with the biggest potential? Technical potential, economic potential and realisable potential Businesses use a total of about 520PJs in energy. Studies commissioned by EECA and the Commission showed that about 68PJs of this can be saved economically, and when you put a ‘real world’ view over this, we reckon there’s about 58PJs that can be realistically be saved by NZ businesses – that’s worth about $2bn a year. (PJ = about 278GWh (278000MWh – 278,000,000KWh) Average NZ house uses about 8500KWh per year.) 1PJ worth around $35M). Understand the barriers? So, why don’t businesses do this rationally? (‘barrier’ is really just a fancy word for why businesses don’t do things) Consistently, the barriers are lack of information/knowledge, lack of capability (whether that is internal in terms of time + resources, or external in terms of service provider expertise) and easy access to capital. Design and deliver cost-effective programmes that address these barriers. We have information programmes that are intended to raise market awareness and demand for energy management services; We provide financial assistance to help NZ businesses break their capital investment hurdle and ensure the fast uptake of efficiency projects; and We provide training programmes to enhance industry capability and to increase the capacity and capability of business sector to embrace energy efficiency & renewables. Our programmes are set up to be interlinking because a successful programme is rarely based on one intervention alone. [If needed] Industrial: Compressed air; Pumps and Fans systems; Process hot water and steam systems; Refrigeration systems; using renewable energy – e.g wood waste Commercial Buildings: Lighting, HVAC, Building management systems, commercial refrigeration Business Transport: Driver training, SAFED, Fleet audits, Fuelsaver, labeling, vehicle management tools, information
So, given these barriers, our programmes are designed to address them. Our programmes are set up to be interlinking because a successful programme is rarely based on one intervention alone. We have information programmes that are intended to raise market awareness and demand for energy management services; We provide financial assistance to help NZ businesses break their capital investment hurdle and ensure the fast uptake of efficiency projects; and We provide training programmes to enhance industry capability and to increase the capacity and capability of business sector to embrace energy efficiency & renewables. More specifically... [next slide]
So if we do all of that right, over time, we should see the emphasis shift from project funding and capability-building, to more information-based programmes as the size of the naturally occurring uptake increases.
PROJECT FUNDING Technology specific audit grants – base level and investment level. Compressed air systems, pump and fan systems, steam and hot water systems, and industrial refrigeration. up to 40% or $20,000 Project grants – implementing energy efficiency and renewable energy projects; up to 40% or $100,000 per site. Feasibility study grants - targeted at large-scale bioenergy or geothermal proposals. This may be in either an industrial or commercial setting - for example, supplying process heat for manufacturing or production; or space heating for a complex or facility. Uup to 40% of the cost of the feasibility study, up to a maximum of $20,000 CAPABILITY PROGRAMMES We need trained and capable people to deal with specific processes and systems EECA has agreements with the University of Waikato (UoW) and the Energy Management Association (EMANZ) covering a range of services to provide information and develop service provider skills on motor systems efficiency in New Zealand industry. These include: Training of operations, engineering and maintenance managers on the fundamentals that drive compressed air, pump and fan systems efficiencies and related opportunities to reduce energy and other operating costs; Advanced level instruction of service providers such as auditors and design and consulting engineers on the efficient design and operation of compressed air, pump and fan systems; INFORMATION PROGRAMMES The development and maintenance of audit standards for compressed air, pump and fan systems for use by auditors skilled in those technologies. Best practice guides – process heat - improving energy efficiency in boilers, steam systems, hotwater systems and process heating. Also – motor replacement policy guide. Quality schemes - Quality certified motor rewind workshops - EECA supports the independent certification of motor rewind workshops to ensure quality rewinding and protect New Zealand's motor stock through high quality rewinding EECA Business website – a number of good quality case studies
Potential SMEs accounting for around 74 PJ (21%) of the business sector’s annual energy usage. There are over 250,000+ small/medium size businesses in New Zealand (98% of all business) and increasing numbers of them are seeing value in adopting sustainable practices. EECA estimates that these SMEs have the potential to save $400 million over the next 8 years in energy costs. EECA’s experience shows that most businesses could save 10 - 20% of their energy costs: 5-10% through simple low-and no-cost changes (payback of 1 year or less); and a further 5-10% savings with some investment. Barriers: Intervention: A grant available to small and medium sized businesses to assist them to overcome knowledge barriers by providing expertise, costings and advice across the business’s operation, and resource and financial barriers by part-funding scoping/audit, project management, equipment, and implementation costs in pursuit of energy efficiency gains and carbon emission reductions. Includes business transport. Available to small and medium sized businesses with an annual per site energy spend up to $300,000. Up to 33% of cost to identify and implement initiatives with payback periods between 18 and 36 months (can be an average across projects). Funding is capped at 10% of annual site energy spend. Other criteria is that the total project cost of savings must be less than 8 c/kWh. Coordinated by energy management service providers and industry associations. No specific strategy for wind down/handover of programme.
Large providers were chosen because they were expected to have the scale to deliver a more mass-market type programme. However, they found the transaction costs of dealing with SMEs to be prohibitive – they preferred to deal with larger customers. Remaining Energising Business contracts to lapse at the end of December 2012 Energising Business was launched in 2010 to support primarily SMEs and was expected to deliver 15GWh of annual energy savings. After a significant underspend towards the end of the 2011/12 financial year, 7 of the 11 service provider contracts were terminated, leaving three remaining that were extended to 30 December 2012, and a fourth, with the EMA Northern, that was extended to 30 June 2013. Following further underwhelming performance since June 2012, we do not intend to further extend the contracts with EIS, Demand Response and Power Solutions Ltd. As such, these contracts will terminate on 30 December 2012. It is intended, however, that EECA Business continue to support the EMA Northern’s EcoSmart Business programme for a further year due to the comparative success of this programme. We intend to move this arrangement towards one more consistent with the other industry sector programme approaches (for example, Retailers’ Association, Print NZ and Textiles Association). We can then market this programme as one of our industry association programmes rather than the sole contract left under Energising Business. This will have the effect of closing the Energising Business programme. Since the programme started, excluding the successful EMA Northern programme, only 19 energy assessments have been completed so far, and only 7 energy saving implementation projects have been completed through the programme delivering a total of around 16 MWh. The Energising Business programme has not performed in terms of realising the objectives EECA had for it – it simply has not had the level of mass market penetration that EECA hoped for. It is therefore not productive for us to continue to offer this programme. In terms of providing support to SMEs going forwards, the Commercial Buildings Programme has no minimum energy spend limit that would limit access to the programme and a stepped level of documentation required to be providing by service providers commensurate with the level of grant funding. Service providers also have the ability to support multiple organisations through one project application in order to reduce transaction costs for them. In the industrial area, SMEs are assisted through the AERS programme and the Motor Systems programme. The Products programme also provides benefits for SMEs. In addition, the Industry Sector programmes (such as those with the Retailers’ Association, Print NZ, EMA Northern etc referred to above) all provide a more cost effective way for EECA to assist SMEs, using the common stakeholder groupings and communication channels that come with being members of an industry association.
Programmes have the following characteristics: Customised for the sector or business Build on existing business processes or sustainability programmes Contract for a savings target in order to focus on implementation of identified savings opportunities Likely to include benchmarking for businesses in a sector or business units within a group Use a technical expert to help identify savings opportunities and write best practice guides
