2012 State of the Industry: Global Energy Efficiency Indicator

Forecast: Watch for a continuing global increase in interest in energy efficiency, motivated by incentives and public image concerns in addition to energy cost savings. While interest is strong and savings targets are common, barriers lie in the path.

In its fifth year, the Energy Efficiency Indicator survey by Johnson Controls, Inc. (Washington, DC) shows a global increase in interest in energy efficiency, motivated by incentives and public image concerns in addition to energy cost savings. While interest is strong and savings targets are common, barriers lie in the path. This analysis of nearly 4,000 responses reveals a set of four attributes shared by those organizations that are leading the way in clean energy implementation.

The Energy Efficiency Indicator (EEI) is the fifth annual survey of global executives and building owners responsible for energy management and investment decisions in commercial and public-sector buildings. The survey tracks their priorities, practices, investment plans, and financial evaluation criteria to understand the projects they are implementing, the drivers of action, and the barriers they face.

In 2011, the survey reached a record number of nearly 4,000 respondents targeting 13 countries on six continents and was offered in eight languages. This survey was conducted anonymously online during five weeks in March-April 2011.

This survey was administered by the Institute for Building Efficiency in partnership with the International Facility Management Association (IFMA), the Urban Land Institute (ULI), and 30 strategic partners around the world. The Institute for Building Efficiency is an initiative of Johnson Controls that provides information and analysis of technologies, policies, and practices for efficient, high performance buildings and smart energy systems around the world.

IFMA is the world’s largest and most widely recognized international association for professional facility managers, supporting more than 19,000 members in 78 countries. The ULI is a research and education organization with members in 95 countries, representing the entire spectrum of land use and real estate development disciplines working in private enterprise and public service. Survey respondents came from a variety of sectors and roles. To qualify to participate, respondents needed to:

• Have budget responsibility for their organizations’ facilities
• Be involved in reviewing energy usage and/or have authority to make their organizations’ facilities more efficient

ENERGY EFFICIENCY DRIVERS
In every market, the EEI survey results showed an unmistakable growth in interest in energy efficiency. Seven in ten executives said energy management was extremely important or very important to their organizations.

Each year, the Energy Efficiency Indicator survey asks participants to name the top drivers for pursuing energy efficiency in their organizations. Not surprisingly, energy cost savings remains the single biggest driver around the world. Eight in ten respondents expected energy prices to increase, and the global average expected price increase was 11 percent (see Figure 4).

• Incentives such as government grants and utility rebates were cited in 2011 as the second most important driver of energy efficiency – up significantly in importance from 2010 as a way to help fund energy efficiency projects.

• Enhanced brand or public image was the third most important driver of energy efficiency. One leading symbol of branding and public image is the pursuit of green buildings, and interest in such buildings doubled from 2010: Four in 10 respondents in 2011 indicated that they had a certified green building. Respondents reported growing interest in green building certification and approaches and, for the first time, certification efforts were more prevalent in existing than in new buildings.

• Other notable drivers for pursuing efficiency included greenhouse gas emissions reductions, energy security, and government policy.

Three-fourths of organizations surveyed had carbon or energy reduction goals, or both, and about one-in-four had made those goals public. For helping to achieve carbon reductions, building energy efficiency again ranked as the top strategy.

Expectations of new policies remained constant year over year. In North America, 39 percent of respondents said new energy efficiency and climate policy was very likely in the next two years, while in China, 80 percent of respondents regarded new policy as very likely.

BARRIERS TO ENERGY EFFICIENCY INVESTMENTS
Although executives recognized the importance of energy efficiency, and many believed there were cost savings opportunities, they reported significant barriers to pursuing investment. Barriers ranged from organizational structure, to technical capacity, to financial considerations.

The relative importance of different barriers varied, depending on the organization and regions of the world where respondents operated. The EEI survey identified five key barriers to energy efficiency investments:

• Lack of awareness of opportunities for energy savings.
• Lack of technical expertise to design and complete projects.
• Lack of certainty that promised savings will be achieved.
• Inability of projects to meet the organization’s financial payback criteria.
• Lack of available capital for investment in projects.

The first two barriers in the path to pursuing efficiency, awareness and technical expertise, were reported as the greatest barriers in India (31 percent) and China (28 percent). Later barriers such as meeting return on investment criteria and finding capital ranked highest in North America (59 percent) and Europe (49 percent).

ENERGY TECHNOLOGY PRIORITIES AND DEPLOYMENT
Despite these barriers, executives around the world reported pursuing an average of 8.9 energy efficiency improvement measures in the past year. Common measures included switching to more efficient lamps and ballasts, installing occupancy sensors, tuning up control systems and educating occupants.

Factors that made deployment of these technologies and efficiency improvements possible appeared to include economies of scale, as shown in the chart below. Respondents with larger facilities reported having accomplished more energy projects than those with smaller facilities.

However, scale is not the only relevant factor. Several attributes emerged when examining those respondents reporting above average rates of energy investments. These additional solutions and enabling conditions are discussed below.

SOLUTIONS AND OPPORTUNITIES
There is a wide variation in performance between otherwise comparable organizations when it comes to energy improvements adopted. The survey revealed that certain attributes were shared by those that implemented more energy efficiency projects versus those that completed fewer. To explore these connections, a series of correlation analyses were performed with the EEI 2011 dataset, cross-tabulating several areas of interest and comparing against energy-saving measures adopted in the past year. These analyses provide clues to how decision makers may be overcoming key barriers to energy efficiency investments.

The analysis suggests four key practices of organizations that were more likely to pursue energy efficiency improvements. These organizations:

• Established energy or carbon reduction goals
• Measured and analyzed energy usage data monthly or more frequently
• Added resources through hiring, repurposing or retraining of staff, or sought external support from consultants or other service providers.
• Used external financing sources for projects.

The greater the number of practices implemented, the greater the number of improvement measures implemented. Organizations that reported they had set reduction goals, analyzed energy data frequently, added internal or external resources, and used external financing were found to implement four times as many improvement measures as those who did not report those four organizational characteristics.

SUMMARY: ENERGY EFFICIENCY INDICATOR SURVEY FINDINGS
Markets are moving toward energy efficiency. Energy continues to be a strong priority for organizations around the world, driven by cost savings, incentives and public image.

Decision makers continue to face barriers to pursuing energy efficiency. These include organizational barriers such as lack of awareness of savings opportunities and lack of technical expertise to evaluate opportunities, technical challenges such as difficulty assessing whether projects’ promised savings will be achieved, and financial barriers including projects’ inability to meet internal “hurdle rates” and lack of capital to invest in projects.

There are common success factors among organizations more likely to invest in energy efficiency projects. Organizations that set goals, analyzed energy data more frequently, deployed more internal/external personnel resources, and leveraged external capital implemented more energy efficiency improvement measures than organizations lacking those characteristics.

2011 Johnson Controls, Inc. 444 North Capitol St., NW Suite 729, Washington DC 20001, www.johnsoncontrols.com.