Through a review of the Energy Efficiency Movement’s survey, commissioned by Sapio Research in February 2024, we found valuable insights into energy efficiency investments. The findings are compelling and warrant a closer analysis.
Survey overview
The survey engaged 1,282 respondents, representing a diverse range of companies in terms of size and sector. Participants included owners and managers from various countries across Europe, America, and Asia. The industry representation was as follows:
- Manufacturing: 51%
- Transportation: 16%
- Energy generation: 14%
- Heavy industry: 12%
- Light industry: 7%
Key Insights on Energy Efficiency
Energy costs continue to be a major component of business operating expenses. According to the survey, 24% of annual operating costs for businesses are due to energy usage, a figure that remains consistent with the 23% reported in 2022. Respondents identified rising energy costs as at least a moderate threat to their business profitability. This trend highlights the growing concern among businesses about the impact of energy prices on their bottom line. In this context, investment in energy efficiency plays a crucial role in mitigating these concerns.
Investments in Energy Efficiency
The survey reveals a growing commitment to energy efficiency improvements. A significant 93% of businesses plan to make energy efficiency improvements within the next three years. Currently, 61% of businesses are already investing in making energy usage more efficient, up from 54% in 2022, indicating a 7% increase over the past two years. Nearly three-quarters of the companies surveyed are now investing in moving data to the cloud and conducting energy efficiency audits. We also positively notice that 56% of companies are investing or plan to invest in heat reuse. The figure below illustrates the various energy efficiency measures in which companies are planning to invest or have already invested.
What are the reasons for investing in energy efficiency?
Cost savings remain the primary driver for investing in energy efficiency measures. Over half of all businesses – 52 percent – cite cost savings as the most important reason to invest in energy efficiency, followed by corporate sustainability commitments (48 percent). China ranked third highest for corporate sustainability commitments, after Mexico (65 percent) and Argentina (60 percent). This highlights the importance of regulation in countries where fuel prices are lower to motivate a green economy.
What are the challenges to invest in energy efficiency?
In the evolving landscape of energy efficiency, businesses are increasingly prioritizing improvements to reduce costs and enhance sustainability.
While the potential for energy efficiency advancements is high, businesses may encounter some challenges, with cost being the major barrier:
- Costs: 53% of respondents say that cost is the top barrier to improving energy efficiency, slightly increasing from 50% in 2022.
- Lack of digital skills in the workforce: 30% of the businesses, however this number jumped to 45% for Chinese businesses.
- Workforce being resistant to new technology: 25% of businesses, a number that increased to 37% for Brazilian respondents, and then increased again to 40% of respondents in India.
Good news is that there is also less uncertainty around how to improve energy efficiency. Importantly, workforce resistance has diminished as businesses become more familiar with the energy efficiency process.
Connected to cost being the top barrier to improving energy efficiency, ROI is also a critical factor. Let’s explore this further in the next paragraph.
Expected average ROI from energy efficiency investments
Once barriers are analyzed, it’s crucial to understand the connected concerns of companies. Return on investment (ROI) remains a major issue for businesses regarding energy efficiency investments. The survey revealed that 82% of businesses would be more inclined to invest if the payback period were within five years. In fact, most companies expect ROI within three to five years, rather than the unrealistic expectation of returns in one to two years, especially given the imminent need for such investments.
Businesses are looking for more information from government and 3rd parties
Businesses are seeking more information from governments and third parties to support their energy efficiency initiatives. Many companies still feel that the government does not provide sufficient information on energy efficiency. Although 43 percent of businesses report having sufficient support and information on energy efficiency, in line with the 41 percent who said the same in 2022, there remains a significant lack in clear guidance. This gap seems to affect companies planning to invest in energy efficiency more than those already doing so. Prospective investors are much less likely to have the necessary information compared to current investors.
Globally, businesses that feel they lack adequate information are specifically looking for:
- Clear information on available energy efficiency incentives or rebate programs.
- Information on financing and investment options for energy efficiency upgrades.
- Information and updates on emerging energy technologies and innovations.
Addressing these information gaps can significantly enhance the ability of businesses to make informed decisions and accelerate their energy efficiency investments.
Conclusion
The Energy Efficiency Movement’s survey highlights the growing commitment of businesses to energy efficiency improvements despite the challenges they face. With 93% planning enhancements within three years and a significant increase in current investments, the focus on energy efficiency is getting stronger. However, costs, downtime, and workforce issues remain barriers. Addressing information gaps and offering clear guidance will be key to accelerating these vital investments.
Read the full survey here
For more information on energy efficiency movement, explore their website
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