31/01/2018

ENERGY EFFICIENCY MARKET INSIGHT

We took some time to read through the latest IEA (International Energy Agency) report on Energy Efficiency  2017 analysing the main trends, drivers and indicators of this evolving market.

Energy Efficiency can be described as the most available and affordable energy resource for any country around the world, the only resource that does not depend on geographical aspects but is most of all manged by policies that have the power to encourage and facilitate the exploitation of this resource and by technological advances that can improve its application in different sectors, from everyday life to industrial facilities.

Today energy efficiency is running at two different speeds: effective technological developments continue to be made, even with the fall of energy prices, but country governments and institutions trudge to keep the pace with this fast-growing trend.

Today over 68% of the global final energy use remains uncovered by policies and in 2016 policy action registered a further slowdown gaining only 1.4% due to previous policies already in action. Compared to the previous 4 years the increase has been really week and the preliminary data for 2017 point to a further small increase in policy strength.

Along with energy efficiency policies also energy utility obligation programmes stalled in 2016. Globally the number of programmes grew from 12 in 2005 to 45 by 2016, the percentage of energy use covered by obligation programmes grew from 1.7% in 2005 to 18.3% in 2016, but during this last year there has been no increase, no new obligation programme was started. Greece and Latvia have began a new programme in 2017 and Croatia has announced a new programme to be launched shortly. Only three new programmes in the three years.

On the other hand primary energy demand per unit of gross domestic product(GDP) has decreased 1.8% in 2016, this means that the world is able to produce more GDP for each unit of energy consumed. In 2016 this productivity bonus was equal to 2.2 trillion USD, twice the size of the Australian economy.

Moreover, in 2016 the world has used 12% less energy than it did since 2000, more or less it is the equivalent of the energy consumed by the European Union in one year. Energy efficiency improved 13% from 2000 to 2016, and about half of this global improvement has been made from IEA member countries.

Taking a closer look at the industrial sector, the situation is definitely fast growing too. Global energy productivity (GVA) increased over 40%, while energy intensity globally fell by 30% from 2000 to 2016. In the major industry sub-sectors energy intensity decreased by 15% in the basic metal manufacturing and by 20% in the non-metallic minerals, mainly cement manufacturing. These improvements in energy efficiency reflect the technological advances accomplished to enhance clean energy systems, as the growing application of energy management systems to monitor energy use or the installation of waste heat recovery systems to exploit disposal heat for energy production.

In particular the waste heat recovery(WHR) systems market size reached about 45 USD Billion in 2016 and is expected to reach 65.87 USD Billion by 2021. The major end-use industries for WHR systems are petroleum refining, metal production, chemical, paper & pulp and cement, that is expected to grow about 9% from 2016 to 2021. Also glass industry is rapidly growing, in 2016 the WHR market share from this sector accounted for over 8%.

The rapid industrialization along with rising focus to reduce environmental impact and the effort of the industrial sector to reduce overall operational costs seem finally aligned to propel waste heat to power technology applications; very good news to read for us.

Another good news is that global investment in energy efficiency also grew 9% from the 231 USD billions in 2016, keeping the positive trend of the recent years. Energy Efficiency today represents 13.6% of the 1.7 USD trillion invested in the entire energy market.

Energy Efficiency investment is mostly self-financed for the industrial sector. For this reason also green banks are playing an important role for energy efficiency investment and clean energy projects, between 2015 and 2016, the amount of green bond issuance allocated to energy efficiency more than doubled, from USD 8.5 billion to USD 18 billion, to reach 22% of the green bond market.

Take a look at our infographic for some highlights from the report

Source: IEA International Energy Agency

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