Paving the Way for more energy efficiency – Insights from the Energy Efficiency Report 2013

The time is right. The Energy & Strategy Group at the Polytechnic University of Milan issued its 2013 Energy Efficiency Report in December. This report examined the topic of energy efficiency in Italy through an analysis of the market and the players involved, with the objective of identifying and quantifying the business opportunities stemming from it. These opportunities concern the big energy consumers, where any cost reduction brings an immediate increase in operating margins. These opportunities also impact manufacturers of equipment, plants and system integrators: an industry branch where Italy has a solid tradition of expertise.

The ISO 50001 certification may be seen as a dual opportunity. On the one hand, it avoids the obligatory energy audits required by the soon to be transposed 2012/27/EU Directive. On the other hand, it encourages businesses to become aware of their own energy consumption profile and to set up a strategy for continuous improvement in energy efficiency. That is why in October 2013 there were 168 ISO 50001-certified companies in Italy, as opposed to 24 in the previous year. That is a 600% increase. Nevertheless, the gap between Italy and Germany is still huge. In October 2013 there were 2,234 ISO 50001-certified companies in Germany, also thanks to a system of incentives that provided tax breaks or energy fee discounts for certified companies. Considering the fact that Italy‘s Gross Domestic Product (GDP) is 40% smaller than Germany‘s, it becomes clear how much work there is still to do in Italy in terms of ISO 50001 certification.

That is why FIRE (Italian Federation for Energy Efficiency) has, for some time, requested targeted incentives for ISO 50001-certified businesses as a foundation for a serious energy efficiency policy that would avoid “palliative” legislative measures (such as the purported “Energy Eater Decree” of April 5, 2013) which do not address the root problem. The report estimates that ISO 50001 will create a projected business turnover of between € 50 million and € 100 million for certification support consultancy services alone.

Omitting residential construction and concentrating on industrial applications, the report analyzes the energy features of the most important industries, assessing possible efficiency improvement interventions and their impact on margins (see Figure 1). As is made clear in Figure 1, the report estimates that through the adoption of energy efficiency solutions, energy costs can be reduced between 3% and 25%, which potentially can increase margins between 1% and 27% depending on the industry.

EnMS in Italy - Imapct on EBITDA margin

Figure 1: Impact of efficiency interventions on energy costs and gross operating margins (EBITDA margin), considering the most energy-intensive industries.

This is especially interesting for the paper, glass, ceramics, brick and steelmaking industries. However, what are the expected payback periods? Payback periods are estimated depending on whether incentives will be used or not and if the replacement of existing plants is to be voluntary or forced. Figure 2 shows payback periods considering incentives, in the event of forced replacement due to obsolescence or the breakdown of existing plants and equipment.

EnMS_Italy_PayBackPeriod

Figure 2: Payback periods for the major industrial sectors expressed in years.

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