Multiple energy efficiency benefits
Almost all capital expenditure requires a financial return. But, with energy efficiency projects, ABB sees finance as only part of the story. Moreover, they estimate investing in energy efficiency generates multiple energy efficiency benefits, adding up to 50% more added value, plus energy savings.
Most companies have a hurdle rate that defines the lowest rate of return they will accept. This is often translated into a payback period, for example twelve, or eighteen months. A return lower than this means a project risks rejection.
According to ABB’s Jukka Tolvanen, the information comes from work done by the International Energy Agency. It took over a two-year period and involved three hundred international specialists. They considered the benefits of clean technologies contributing to industries and society. They published their results in The IEA book ”Multiple Benefits of Energy Efficiency”. Of these, he selected his top three findings, and commented:
Productivity gains generate 40 to 50 percent more added value on top of energy savings. This is easy to believe based on his own experiences with customers. With ABB energy saving tools it is easy to estimate savings through high efficiency motors and speed control. In contrast, multiple energy efficiency benefits (non-energy benefits) are harder to estimate – we have witnessed this a lot with customers highlighting these. IEA is now giving numbers and determining various additional benefits of energy efficiency.
Shorted payback period
By evaluating other benefits, projects with an estimated payback of three to four years can have a one-year payback period. This is good news! We have learnt that in different industries payback times need to be very short for the investments to get approved. With an approach of multiple benefits, it is easier to meet these tough targets.
Expand the scope of LCA (Lifecycle Cost Assessment) frameworks. This idea is linked to ABB’s R&D agenda as well. Ten years ago, energy efficiency research we had a very narrow focus to improve drive functionality. Now however, we have systems and EE is a part of optimal reliability and preventive maintenance – they all are indispensable components of EE. With services assessing further energy saving potential in your facility enables timely decision-making. With the rise of the Industrial Internet of Things (IIoT), it is becoming increasingly easy to connect industrial devices to the cloud. This enables significantly faster implementation of new, energy-efficient solutions.
Recent blog posts