Getting excited about the mass adoption of Light Emitting Diodes (LEDs) seemed a perfectly reasonable response to projections for the market in 2013 until a colleague pointed out that he could think of little else that would as surely send him to sleep. The comment reminded me of the quote from Scotland’s national bard Robert Burns. In the final verse of his ode ‘To a Louse’ he appeals for some power to give us the gift ‘to see ourselves as others see us’. It may indeed be that my colleague sees me as an energy efficiency nerd…
But if there is a time to be ‘nerdish’ about energy efficiency, then it is now. Even the UK’s Prime Minister David Cameron, who until now has kept his interest well-hidden, confessed his enthusiasm for energy efficiency as a key plank in the UK’s future competitiveness. ‘Far from being a drag on growth, making our energy sources more sustainable, our energy consumption more efficient, and our economy more resilient to energy price shocks – those things are a vital part of the growth and wealth that we need,’ he said in a recent speech.
It is not just my colleague who does not find energy efficiency exciting. A survey by the UK’s Department of Energy and Climate Change (DECC) found that only 30% of UK householders have given a ‘lot of thought’ to saving energy in the home, with just under half giving it a ‘fair amount’ of thought. We might anticipate that this will change in the UK, and indeed across Europe as a whole as a result of the implementation of the EU’s Energy Efficiency Directive. This legislation, which entered into force in December 2012, requires: Member States to submit national plans to promote energy efficiency, energy distributors or retailers to save 1.5% per annum in energy sales from 2014-2020 and even requires 3% of the floor area of central government building to be renovated annually.
Clearly these measures represent a significant opportunity for companies that provide products and services that help companies, institutions and householders save energy; hence in part, our excitement over the rapidly expanding market for highly efficient LED lighting technology. But perhaps a less widely appreciated impact has been on the power and gas market across Europe. A recent research note from HSBC1 highlighted this issue, estimating that the Energy Efficiency Directive (EED) could reduce the EU’s heating energy demand by 6-12% by 2020 with a further 2-3% of the remaining demand being met by renewable sources of heat (for example Combined Heat and Power).
This picture is mirrored in the electricity markets as well. On 31 January 2013, the French grid operator RTE stated on its website that it expects electricity demand to lag GDP (it has traditionally moved in line with or ahead of GDP) on energy-efficiency measures. German power demand was reported to have declined by 1.4% in 2012, against a rise in GDP of around 1%. Clearly these reductions – combined with the impact of greater renewables on the grid – are causing real pain for companies in these markets.
Energy efficiency – who said it was boring!
1 EU Power Generators: CO2 + EED = trouble, HSBC, 6 February 2013
