[29] The EU construction market is a renovation market

‘Another flaw in the human character is that everybody wants to build and nobody wants to do maintenance’, wrote Kurt Vonnegut. Is this the reason why building renovation rates are so low? The Building Performance Institute Europe (BPIE) has found that only 3% of our buildings are highly energy efficient – leaving the other 97% in need of energy renovation before 2050.

The revised Energy Performance of Buildings Directive (published on 19 June 2018) requires Member States to boost the energy renovation of their building stock. An important publication, not to be confused with one of Vonnegut’s metafiction novels.

[28] When you realise you need energy efficiency, it’s already too late

The greenest kWh is the one that is not consumed. It is often also the cheapest kWh: when comparing investment cost into energy efficiency + energy savings with building new power plants + fuel costs. Could energy efficiency act as an alternative to building new power generation capacity?

However, cost-effective and large-scale energy savings are not quick. Long-term planning is needed. If it comes to a point that an electricity system is no longer adequate to fulfill demand, and energy needs to be saved within the coming years, or even current season, many energy efficiency options will be off the table as being too slow (or alternatively too expensive).

[27] Will energy efficiency ever become a natural habit?

Improving energy efficiency requires daily effort, attention to detail and behaviour change. All this accomplishes the relatively small savings that accumulate in the end.

Sometimes the comparison with smartphones is made. These occupy a significant part of our lives. Users accomplish complex tasks with them, e.g. choosing, operating and maintaining a wide variety of apps. However, unlike energy efficiency, they cost money rather than save it. If only energy efficiency could acquire the appeal of smartphones.

[26] From energy efficiency to energy flexibility

Will we have thermal power stations in a low-carbon economy? If so, a number of conditions need to be in place (see [24]). What will be the economic performance of a biogas-fired, combined-cycle thermal power station? How will it compare to the cost of a variable renewable electricity power plant with an energy storage solution?

Today, beyond efficiency, flexibility is key for utilities to be profitable. Capacity remuneration mechanisms are naturally evolving from rewarding base load towards incentivising flexibility in all its forms.

[25] Entrepreneurial business models remain a distant target

The underlying assumptions of on-bill financing are that (1) home-owners and tenants have cost-effective energy-saving opportunities (the ‘energy efficiency gap’), (2) consumers do not have the necessary capital, knowledge or inclination to invest (the ‘finance gap’), and (3) a third party can step in with a standardised product and execute the project to a quality standard.

That’s a lot of ifs for developing a successful program in this field. It will require genuine entrepreneurs to come up with business models that work. Since these business models strongly depend on the entrepreneur’s personality, their replicability in other geographies represents a challenge.