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Including non-energy benefits in investment calculations in industry - empirical findings from Sweden
Linköping University, Department of Management and Engineering, Energy Systems. Linköping University, The Institute of Technology.
Linköping University, Department of Management and Engineering, Energy Systems. Linköping University, The Institute of Technology.
Energimyndigheten, Sweden.
Linköping University, Department of Management and Engineering, Business Administration. Linköping University, Faculty of Arts and Sciences.
2014 (English)In: ECEEE Industrial Summer Study, 2014: Retool for a competitive and sustainable industry, 2014, p. 711-719Conference paper, Published paper (Refereed)
Abstract [en]

The threat of increased global warming accentuates the need for reducing anthropogenic emissions of GHG (Green House Gases). Improved energy efficiency in industry represents one of the most important means of reducing this threat. Furthermore, improved energy efficiency and cutting energy costs may be key factors for individual enterprises’ long term survival and success because of increased environmental legislation and rise of energy prices. Despite the fact that extensive potentials for improved energy efficiency exists in industry, a large part remains unexploited explained by the existence of various barriers to energy efficiency. The research on barriers is well-developed and regards the non-investment of cost-effective technical measures that improve energy efficiency. In these studies, the actual investment decision is the analysing variable. However, if one extends the system boundary, there are indications that not only the actual reduction of energy cost but also other potential benefits should be taken into account in energy-efficiency investments. Including such factors, named non-energy benefits (NEBs), in the investment calculation mean the investment may have a considerably shorter pay-back period. The aim of this paper is to study if NEBs are considered and measured in energy-efficiency related investments in Swedish industry, and to study factors inhibiting the inclusion of NEBs in investment calculations. Results of this study indicate that NEBs seems to exist in the Swedish industrial companies participating in this study, but only few of the mentioned NEBs were included in investment calculations, explained by among other factors, the hidden cost of monetizing the NEB.

Place, publisher, year, edition, pages
2014. p. 711-719
Series
Industrial Summer Study proceedings, ISSN 2001-7979, E-ISSN 2001-7987 ; 2014
Keywords [en]
non-energy benefits (NEBs), investment decision-making, barriers, energy efficiency investments, multiple-energy benefits
National Category
Energy Systems
Identifiers
URN: urn:nbn:se:liu:diva-110580ISBN: 9789198048247 (print)ISBN: 9789198048254 (electronic)OAI: oai:DiVA.org:liu-110580DiVA, id: diva2:746789
Conference
ECEEE 2014, Industrial Summer Study: Retool for a competitive and sustainable industry, June 2-5, 2014, Arnhem, The Netherlands
Projects
Välgrundade energirelaterade investeringsbeslut - hur, och på vilka grunder kan energi bli en strategisk fråga för svensk industri
Funder
Swedish Energy Agency
Note

Finansierat av Energimyndigheten och Institutionen för ekonomisk och industriell utveckling, Linköpings universitet. 

Available from: 2014-09-15 Created: 2014-09-15 Last updated: 2019-04-11Bibliographically approved
In thesis
1. The Non-Energy Benefits of Industrial Energy Efficiency: Investments and Measures
Open this publication in new window or tab >>The Non-Energy Benefits of Industrial Energy Efficiency: Investments and Measures
2016 (English)Licentiate thesis, comprehensive summary (Other academic)
Abstract [en]

Improved industrial energy efficiency is viewed as an important means in the reduction of CO2 emissions and climate change mitigation. Various energy efficiency measures for improving energy efficiency exists, but even evaluated as cost-effective, there seems to be a difference between the energy efficiency measures that theoretically could be undertaken and which measures that actually are realised. On the other hand, industrial energy efficiency measures might yield extra effects, denoted as non-energy benefits, beyond the actual energy savings or energy cost savings.

Based on interviews and a questionnaire, results showed that the Swedish industrial firms studied had observed various non-energy benefits. However, few of the non-energy benefits observed were translated into monetary values and included in investment calculations. Results indicated that this non-inclusion could be explained by lack on information on how to measure and monetise the benefits, but even if not translated into monetary values, some of the non-energy benefits were sometimes used qualitatively in investment decisions. The utilisation of the benefits seemed to depend on the type and the level of quantifiability among the perceived benefits.

This thesis has also explored energy efficiency measures and non-energy benefits for a specific industrial energy-using process – compressed air. A literature review on energy efficiency in relation to compressed air systems revealed a large variation in which measures that could be undertaken to improve energy efficiency. However, few publications applied a comprehensive perspective including the entire compressed air system. Few non-energy benefits of specific energy efficiency measures for compressed air systems were identified, but the study provided insights into how non-energy benefits should be studied. This thesis suggests that energy efficiency and non-energy benefits in compressed air systems should be studied on specific measure level to enable the observation of their effects. However, the studies also addressed the importance of having a systems perspective; the whole system should be regarded to understand the effects of energy efficiency measures and related non-energy benefits.

Place, publisher, year, edition, pages
Linköping: Linköpings universitet, 2016. p. 64
Series
Linköping Studies in Science and Technology. Thesis, ISSN 0280-7971 ; 1760
Keywords
Industrial energy efficiency, energy efficiency measures, energy efficiency investments, non-energy benefits, compressed air
National Category
Energy Systems
Identifiers
urn:nbn:se:liu:diva-131831 (URN)10.3384/lic.diva-131831 (DOI)9789176856727 (ISBN)
Presentation
2016-10-28, ACAS, A-huset, Campus Valla, Linköpings universitet, Linköping, 12:29 (Swedish)
Opponent
Supervisors
Funder
Swedish Energy Agency
Available from: 2016-11-09 Created: 2016-10-10 Last updated: 2019-10-29Bibliographically approved
2. Non-Energy Benefits of Industrial Energy Efficiency: Roles and Potentials
Open this publication in new window or tab >>Non-Energy Benefits of Industrial Energy Efficiency: Roles and Potentials
2019 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

Climate and environmental targets place significant requirements on energy efficiency and improved industrial energy efficiency is viewed as one of the most important means of reducing CO2 emissions and mitigating climate change. Even though efforts have been undertaken to improve energy efficiency there is still the potential for further improvements to be made. The potential is a result of that proposed energy efficiency improvement measures are not implemented, even if judged as cost-effective.

Besides improving energy efficiency, the implementation of energy efficiency improvements in industrial firms can generate additional beneficial effects: so-called non-energy benefits. Examples of non-energy benefits are: improved productivity, lower operation and maintenance costs, a better work environment, decreased waste and fewer external effects, such as lower emissions. This thesis has investigated the roles and potential of non-energy benefits in decisions on energy efficiency improvements from three perspectives: energy efficiency measures, energy efficiency investments and energy management activities.

The results of the studies presented in this thesis demonstrated that different types of non-energy benefits were observed in various areas within industrial firms due to the energy efficiency measures, energy efficiency investments and energy management activities they have implemented. Studying energy efficiency measures and investments revealed that implementing one single energy efficiency measure or investment can generate several non-energy benefits. The studies also uncovered a relationship between the non-energy benefits, i.e. chain reactions of primary, secondary and further effects, in which one benefit can generate other types of benefits. Consequently, some non-energy benefits were observed immediately after the implementation of energy efficiency measures, direct effects, while others were perceived later on, indirect effects. Furthermore, extending the perspective by including energy management activities led to the recognition of novel non-energy benefits.

The results of this thesis demonstrated that non-energy benefits were seldom acknowledged in decisions on energy efficiency improvements. However, the non-energy benefits’ character, diversity and relations among them enabled opportunities for the non-energy benefits to be included in decisions on energy efficiency in various ways. For instance, based on the results of these studies, monetised non-energy benefits could be included in investment calculations contributing to cost-effectiveness, while certain effects that are difficult to measure and quantify could be utilised qualitatively in investment evaluations as extra arguments, or, if important to the firm, as objectives for making the investment. Hence, depending on their type, non-energy benefits seemed to have different roles in decisions on industrial energy efficiency improvements.

This thesis contributed with a comprehensive approach by investigating energy efficiency improvements and the related non-energy benefits through three perspectives. By combining the results from each perspective, the view on industrial firms’ decisions on energy efficiency improvements was widened. In this thesis it is concluded that the potential of non-energy benefits in decision-making on industrial energy efficiency improvements lies in the utilisation of all types of non-energy benefits and to consider all the roles that non-energy benefits may have. By utilising knowledge on non-energy benefits along with their roles observed in relation to previous implementations of energy efficiency improvements, non-energy benefits can impact decisions on new implementations.

Abstract [sv]

Effektivisering av industrins energianvändning ses som ett av de viktigaste redskapen för att minska koldioxidutsläppen i syfte att mildra klimatpåverkan och nå uppsatta klimat- och miljömål. Konkurrens och resursbrist driver industrin till att effektivisera och kopplingen mellan energi och tillverkningsprocesser i företagen betyder att energieffektivisering är av vikt då den även bidrar till effektivisering generellt inom företaget. Trots detta genomförs inte alla föreslagna åtgärder även om de är kostnadseffektiva, vilket gör att det finns en potential till ytterligare industriell energieffektivisering.

Förutom energibesparing och energikostnadsbesparing kan implementering av energieffektiviserande åtgärder även ge ytterligare positiva effekter för företaget, så kallade mervärden (eng. non-energy benefits), exempelvis i form av ökad produktivitet, ökad livslängd för maskiner och utrustning, förbättrad arbetsmiljö samt minskad mängd utsläpp och avfall. Denna avhandling har studerat mervärdens roller och potential i beslut kring energieffektiviserande åtgärder och investeringar samt energiledningsaktiviteter.

Resultaten visade att implementering av energieffektiviserande åtgärder och investeringar samt energiledningsaktiviteter gav flera olika typer av mervärden observerade på olika nivåer och inom olika delar av verksamheten i industriföretag. Genom att studera mervärden ur flera perspektiv synliggjordes nya typer av mervärden samt att implementering av en enstaka energieffektiviserande åtgärd kan generera ett flertal mervärden av olika typ. Vidare sågs även samband mellan olika mervärden, dvs att ett mervärde gav upphov till ett flertal andra mervärden.

Resultaten av dessa studier visade att användningen av mervärden vid beslut kring energieffektivisering begränsas av att många mervärden är svåra att mäta och kvantifiera. Trots att många mervärden var svåra att värdera i pengar och inkludera i investeringskalkyler, visade resultaten att mervärden ibland användes kvalitativt i investeringsunderlag som extra argument. Om mervärdet var av stor vikt kunde det till och med anses vara del utav syftet med en energieffektiviserande investering. Detta visade på mervärdens olika roller beroende på deras karaktär samt hur viktiga de ansågs vara för företaget.

Denna avhandling har studerat energieffektiviseringar och relaterade mervärden ur tre perspektiv. Genom att kombinera resultaten från varje perspektiv erhölls en bredare syn på beslut kring energieffektivisering. Resultaten i denna avhandling visade att mervärden kan bidra på olika sätt i beslut kring energieffektiviseringar beroende på deras olika roller samt att mervärdens potential i sådana beslut beror på om och hur mervärdens olika roller beaktas och används. Genom att använda kunskap om mervärden och deras olika roller som observerats i samband med tidigare energieffektiviserande implementeringar, kan mervärden bidra till att påverka beslut vid planering av nya energieffektiviserande implementeringar.

Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2019. p. 114
Series
Linköping Studies in Science and Technology. Dissertations, ISSN 0345-7524 ; 1980
National Category
Energy Systems
Identifiers
urn:nbn:se:liu:diva-156297 (URN)10.3384/diss.diva-156297 (DOI)9789176851067 (ISBN)
Public defence
2019-05-29, ACAS, Hus A, Campus Valla, Linköping, 10:15 (Swedish)
Opponent
Supervisors
Available from: 2019-04-25 Created: 2019-04-11 Last updated: 2019-04-30Bibliographically approved

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Nehler, ThereseThollander, PatrikOttosson, Mikael

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