Authors: Lukas Grundmann, Johannes Guth, Philip Klose, August 31, 2024
1 Definition and Relevance
Energy is omnipresent and the driving force behind our modern society and industry. Without it, progressive life is difficult to imagine. However, in times of climate crisis, the environmental balance of our global energy consumption must also be examined. A not inconsiderable proportion of global CO2 emissions, as well as other environmental impacts, are attributable to energy production and use.1 From a sustainability perspective, the use of energy therefore has great potential with regard to the green transformation. The topic is therefore highly relevant and will be examined in greater depth in this Sustainable Wiki entry. In addition to looking at the environmental impact of individual energy sources, the opportunities for companies and organizations to use or save energy more efficiently will be examined. Let’s start at the beginning: energy is defined as the “ability of a substance, body or system to perform work”.2 We use different primary energy carriers to convert them into usable energy, for example electrical or thermal energy. An important distinction must be made between two categories, which are already discussed in separate chapters in this wiki: Renewable and fossil fuels. The difference between the two lies in their availability, which is finite for fossil fuels but not for renewables.3 The energy sector accounts for 38% of global CO2 emissions, making it the number one industry1 – the importance of discussing this topic is therefore undisputed. The breakdown by sector can be seen in Figure I and underlines the importance of energy consumption and efficiency in the context of sustainability.
In the following, energy consumption and energy efficiency will therefore be examined against the background of the existing legal framework. The area of energy consumption is primarily concerned with the development of consumption and corresponding forecasts, while the efficiency perspective describes measures with which companies can identify potential and save energy. Both perspectives are framed by an assessment of the environmental impact that the generation and use of the energy required entails. The effects are serious; carbon dioxide, sulphur and nitrogen oxides in particular are emitted during the production of energy. These have a direct influence on the greenhouse effect and the formation of acid rain.4 But other factors should also be taken into account, such as the danger posed by waste products from nuclear power plants or the displacement of people from urban areas due to lignite mining in Germany.5 Coal-fired power plants also emit fine dust particles that pollute the air we breathe and, in the most severe cases, can lead to smog.6 The influences are therefore as complex as they are multi-layered. The following chapter provides information on the specific effects of energy production and consumption in companies and discusses approaches to measurability with regard to energy efficiency.
2 Sustainability Analysis
The greenhouse effect and the resulting climate change are well documented and are not discussed in depth in this wiki. However, this is due to the impact on people and nature caused by excessive energy consumption. The introduction has already highlighted the large proportion of international emissions caused by the energy sector. The consequences of climate change are therefore also the consequences of excessive energy consumption.7 Due in part to the growth of national economies and the increase in industrialization in the Global South, forecasts assume a further increase in primary energy consumption.8 It is important to distinguish between renewable and non-renewable energy sources. Renewable energy sources include geothermal energy, wind power, solar energy, hydropower and energy from biomass. The decisive factor here is that the energy sources are used without emitting greenhouse gases.9 On the other hand, coal, oil, gas and uranium are finite resources whose use is limited due to their reduced availability. In addition, excluding nuclear fuels, greenhouse gases are released during conversion into secondary energy.10
As greenhouse gases are also emitted during the production and installation of renewable energy systems, the first requirement must be to reduce energy demand in general. True to the motto: The greenest energy is that which is not consumed. The second step is to switch from fossil fuels to renewable energy sources.
The general aim is therefore to reduce the amount of energy used. How a company with a core business outside the energy sector can possibly still contribute to the success of the energy transition will also be considered below. Before focusing on greenhouse gas reduction, other negative factors in energy generation should also be considered. Generating energy from nuclear fuels produces radioactive waste that pollutes people and the environment. In addition, the half-lives of radioactive isotopes are well known.11 When mining lignite deposits in Germany, entire villages are sometimes relocated in order to mine the underlying lignite deposits.5 Added to this are the high levels of particulate matter released when burning coal to generate energy.12 These side effects are just some of the reasons to keep a distance from conventional energy sources. On the other hand, the extraction of rare earths in the production of photovoltaic systems, for example, must also be weighed up critically. Overall, the environmental impact of conventional energy sources far outweighs that of renewables.
Before implementing energy management systems (see chapter 4), companies have the task of mapping the status quo of their own energy profile. Without an initial assessment, it makes no sense to implement measures. The auditing of a firm’s energy usage will be elaborated in detail in chapter 4. Companies can use various KPIs to set up a monitoring system and establish their own energy balance sheet. The overriding factor is total energy consumption, which defines all kilowatt hours consumed in a specified period, usually the fiscal year. A distinction is usually made between electrical energy and thermal energy. This key figure reflects an overarching trend in energy consumption and can be used for forecasting purposes.13 The disadvantage here is that it is difficult to compare, as it is purely an absolute figure, and the predictive power with regard to the efficiency of energy consumption is very low – high consumption can be correspondingly efficient as long as the output is correspondingly high. The efficiency indicator energy consumption per production unit can be particularly helpful in industry and manufacturing – the lower the energy consumption per unit of a good produced, the more efficient the company’s production processes are.14 It should be noted that a possible loss of quality as a result of energy savings is not reflected in the KPI. Energy intensity is another KPI that has become increasingly important, particularly as a result of increasingly mandatory ESG reporting in Europe. This puts total energy consumption in context with an economic indicator – for example, turnover or operating profit. This can be used to evaluate the development of energy consumption against the background of the economic situation.15 The key figure must be viewed critically with a view to possible fluctuations in turnover so as not to be misinterpreted. The energy efficiency index can also be useful in terms of comparability. Here, the company’s own energy consumption is compared with a benchmark such as an industry average. This allows deviations from the norm to be identified and examined in greater depth. Benchmark figures are only as good as the benchmark value. If this is distorted, outdated or simply set too low, the results are only partially consistent.
As part of the emissions analysis, the CO2 equivalents emitted by the company through energy consumption are included in the analysis in the form of Scope 2 emissions. Based on this, the emissions intensity can provide information about energy consumption as an indirect indicator. This puts the company’s emissions in relation to an economic indicator. In addition to a reduction in energy consumption, the emissions intensity also indicates a shift towards renewable energy sources and thus a reduction in greenhouse gases.16 However, this key figure does not reflect Scope 3 emissions and therefore does not provide a complete picture of the status of greenhouse gas emissions in the company. The share of renewable energies in the company’s energy mix can also be recorded. For companies with high to very high energy consumption, it can make sense to consider peak loads. A peak load is the highest energy consumption, usually within one day. Here, the load factor can be used to compare the peak load with the average energy consumption in a specified period. Minimizing peak loads is also usually more cost-effective for companies. This KPI can be used to monitor a reduction in peak loads. The cost savings result primarily from the elimination of grid load charges levied by the grid operators. The base load price is significantly lower – this is also due to the ability to plan and avoid fluctuations in the grid load.17 The load factor is not applicable in all companies and represents a major simplification. For example, peak loads can occur during periods of high demand due to operations or production, which are simply unavoidable.
As already briefly mentioned, the obligations of the European Sustainability Reporting Standards (ESRS) are changing the focus and manner of reporting. The reporting obligation begins in 2024 with the largest listed companies, with others to follow in the coming years.18 Energy saving is no longer viewed purely from a cost perspective. The positive benefits of energy efficiency measures have been known for some time, but now the reporting obligation is also bringing the sustainability component into focus.19 With the disclosure requirements of the Corporate Sustainability Reporting Directive (CSRD), companies will now come under greater scrutiny on the capital market with regard to their sustainability efforts. A reduction and greening of the energy portfolio can therefore have positive effects on the perception of the company.20 This trend will continue due to the increasing reporting obligations, including for SMEs. As already mentioned at the beginning, companies can also help to drive forward the energy transition. When the portfolio is greened, the demand for green electricity or green gas increases, while the demand for conventional energies decreases. This automatically triggers an increase in the supply of renewable energy sources, which has a positive impact.
The German company Heidelberg Materials AG (formerly: Heidelberg Cement AG) provides a best-practice example of the use of KPIs to manage energy consumption As part of its CSRD, the Group defines energy intensity in its sustainability report as energy consumption in kWh per tonne of cement produced.21 The data is recorded monthly and at production site level in order to establish an internal benchmark. At the same time, Heidelberg Materials sets its own targets for reducing energy consumption – these are compared with the current status quo within the ESG report. The transparency and clarity with which the company presents its energy balance can be used as an example for optimal integration of the energy intensity KPI. In addition to the legal requirements, this also serves the interests of stakeholders. In addition, the comprehensive preparation enables a good comparison with competitors.
3 Energy Efficiency in Business: A Key to Sustainability and Competitiveness
As mentioned before energy efficiency is a crucial key to the energy transition and to achieving a secure, affordable, and environmentally sustainable energy supply. For businesses, energy efficiency has increasingly become a competitive factor and an important part of corporate success. The adoption of energy efficiency technologies can lead to significant reductions in energy consumption, CO2-emissions, and energy costs. Rising energy prices and the growing need for cost savings now push companies across all sectors to optimize their operations. Reducing energy consumption can make a major contribution to this effort. The potential for CO2 reduction through energy efficiency measures in the economy is immense. As evolving framework conditions continue to shift, an increasing number of these measures are becoming economically attractive.22
The tightening of government environmental regulations necessitates that companies operate in an energy-efficient manner to comply with legal requirements. By adopting energy efficiency measures, companies can avoid penalties and benefit from incentives for reducing energy consumption. Thus, energy efficiency not only helps in meeting legal requirements but also offers financial advantages through government subsidies.23 To support the achievement of European energy and climate protection goals, the Energy Efficiency Act (EnEfG) was enacted in September 2023. This Act provides a cross-sectoral framework to enhance energy efficiency and incorporates key requirements from the ongoing revision of the EU Energy Efficiency Directive (EED). The EnEfG, adopted by the Bundestag, includes specific efficiency measures for the public sector and businesses, contributing significantly to Germany’s climate targets. Additionally, the EU and Germany have implemented critical energy efficiency measures, rooted in the Energy Efficiency Directive 2012/27/EU, which mandates that all companies, excluding small and medium-sized enterprises (non-SMEs), conduct an energy audit.24 Article 8 of the Energy Efficiency Directive (EED) requires Member States to promote and ensure the use of high-quality, cost-effective energy audits and energy management systems.25 Regulatory will also be discussed from a drivers and barriers perspective later on in chapter 5 Drivers and Barriers of firm action. In response to this legal framework, businesses are increasingly adopting specific management tools that align with both European and national regulations, aimed at boosting energy efficiency and supporting long-term sustainability efforts. This will be elaborated upon in the following section.
4 Processes, measures and tools for energy usage and efficiency
4.1 Management Tools for energy usage and efficiency
The need for action extends across all areas and sectors of the energy system, addressing both the supply and demand sides of energy consumption. In particular, energy management systems (EnMS) can play a crucial role in the industrial and commercial sectors by systematically identifying energy losses and inefficiencies within an organization and addressing them through more efficient energy usage. These systems not only contribute to improving energy efficiency at the organizational level but also have the potential to reduce uncertainties in energy balances. On a short-term basis, EnMS can help refine energy status reports of individual organizations. In the medium term, there is potential for EnMS to contribute to the reduction of uncertainties in national energy balances by providing more accurate and reliable data.26Initially, it is essential to assess the status quo of an organization’s energy consumption. This assessment provides the baseline necessary for implementing further measures to improve the company’s energy efficiency.
An energy audit is a process used to identify when, where, why, and how energy is consumed within a facility or building.27 This process involves a thorough review and analysis of how energy is used in a plant, building, system, or organization, with the goal of finding ways to improve energy use and identify potential savings.28 Moreover, the measures assessed during the energy audit are analysed through economic efficiency calculations. This approach aims to help companies conduct energy audits and implement energy management systems, enabling them to determine which investments are economically feasible or unfeasible within specific timeframes.29 To evaluate the current energy situation, it is crucial to have the appropriate measurement equipment. Concrete opportunities for improving energy efficiency must be identified. These requirements can only be fulfilled through engineering-based consultation within the scope of energy sector services. Overall, the energy audit standards represent a combination of auditing, measurement, analysis, and comprehensive energy consulting. The DIN EN 16247 standards can be applied within the framework of the regulation on systems for enhancing energy efficiency, particularly concerning exceptions from energy and electricity taxes in specific cases.30
The literature describes two main types of challenges: financial and non-financial aspects. Financial aspects include high investment costs, limited availability of capital, and low profitability. Non-financial aspects include limited in-house skills and expertise for identifying and implementing energy-saving projects, as well as difficulties in acquiring external expertise and a lack of time. Information-related issues include insufficient information on costs and benefits, unclear information from technology providers, challenges in assessing the risks associated with interventions, and a lack of trust in information sources.25
An energy audit according to DIN EN 16247 provides a one-time assessment of energy conditions without including the implementation or monitoring of energy-saving measures.29 Later, during the implementation of an energy management system, the focus is on substantive aspects and continuous improvements. A company’s energy performance can only be demonstrated if it is made measurable and transparent.30
Building on this, the ISO 50001 standard allows organizations to achieve sustainable energy reduction through systematic energy management, thorough documentation, and increased awareness among all involved staff .31 For companies with significant energy costs, implementing an energy management system may be worthwhile, as the higher effort and associated costs can be offset by substantial savings from improved energy efficiency and potential tax benefits.29
ISO 50001 provides a comprehensive framework that guides organizations in establishing systems and processes to improve energy efficiency. The main goal of an EnMS is to enable an organization to achieve continuous improvement in energy performance32 by identifying energy-saving potentials and adjusting technical and organizational processes to reduce emissions.29 The energy management system can be understood and implemented in practice as a complement or extension of an environmental management system.30
The implementation of ISO 50001 follows a structured approach: After assessing the companies energy usage, which can be done through an energy audit, this assessment is followed by setting energy goals and developing an action plan that outlines specific measures to improve energy efficiency. The core of the EnMS is the “Plan-Do-Check-Act” (PDCA) cycle, which ensures continuous improvement. In the “Plan” phase, energy objectives are defined, and energy performance indicators (EnPIs) are identified. The “Do” phase focuses on implementing the planned energy-saving measures. The “Check” phase involves monitoring and measuring energy performance to ensure the effectiveness of the actions. Finally, the “Act” phase consists of reviewing the results and making necessary adjustments to further enhance energy efficiency.33
The implementation of an EnMS offers organizations significant opportunities, but also presents certain challenges that must be carefully considered.
On the positive side, an EnMS can substantially improve energy efficiency by streamlining energy use, which leads to significant cost savings and a reduction in operational expenses.33 Additionally, an EnMS contributes to environmental sustainability by lowering carbon emissions and minimizing the organization’s ecological footprint.31 Compliance with energy regulations is another important benefit, as implementing an EnMS ensures adherence to regulatory standards and can result in certifications such as ISO 50001, demonstrating the organization’s commitment to responsible energy management.33 31 Furthermore, reducing energy consumption translates directly into financial savings, lowering utility costs and avoiding potential penalties for excessive energy usage. The adoption of energy-efficient practices can also enhance a company’s public image, showcasing its dedication to corporate social responsibility and appealing to environmentally conscious stakeholders.33
However, there are several challenges associated with EnMS implementation. One of the main obstacles is the initial investment, which includes costs for system setup, employee training, and potential upgrades to existing equipment and processes.31 34 The integration of an EnMS can also be complex, especially in large organizations, as it may require substantial changes to current operational practices. Additionally, the setup and ongoing maintenance of the system can be time-consuming, requiring continuous monitoring, assessment, and improvements, which may divert resources from other core business functions.31 34 Finally, the successful operation of an EnMS often necessitates technical expertise, which may involve hiring specialized personnel or contracting external consultants, further increasing the financial burden.34
In conclusion, while an EnMS provides long-term benefits such as improved energy efficiency, cost reductions, and environmental sustainability, its implementation requires careful consideration of the initial costs, complexity, and ongoing resource demands. Organizations must weigh these factors to determine whether the advantages outweigh the challenges in their specific context.28 33
A certification under DIN EN ISO 50001 or registration under EMAS satisfies the requirement for conducting an energy audit. While EMAS incorporates the management structures of DIN EN ISO 14001 and enhances environmental performance, it does not fully meet the standards of DIN EN ISO 50001. Organizations with energy use as a significant environmental factor may require only minor adjustments to align with ISO 50001, such as improvements in energy performance metrics and evaluations.35
Implementing ISO 50001 at a Turkish Cement Plant: Achieving Energy Efficiency Despite Constraints
At a cement plant in Turkey, ISO 50001 was implemented to enhance energy performance. The project began with comprehensive energy auditing to identify opportunities for reducing energy consumption. Benchmarking played a crucial role in evaluating and prioritizing potential energy-saving projects, though the initial focus was on coal energy used in the kiln.
The study examined methods for energy cost reduction, including recovering waste heat, but capital constraints often limited the practicality of such measures. Instead, optimizing the use of time-of-use electricity tariffs provided significant financial benefits by shifting energy consumption to lower-cost periods. However, sustaining these savings proved challenging for plant personnel, indicating a need for effective management tools.
ISO 50001 offered a structured approach to continuously improving energy efficiency, which was particularly valuable given the financial constraints and technological limitations faced by the plant. The cement plant was able to systematically address energy management issues, demonstrating that the standard can be highly effective in driving energy improvements even in resource-constrained environments.36
4.2 Technological Possibilities to increase Energy Efficiency
The potential for energy savings in companies is substantial. Technological solutions are available for all areas of energy supply, and even the simplest substitutions can make a significant difference. The following section outlines specific measures with considerable energy-saving potential that can enhance energy efficiency.
4.2.1 Heating
Steam systems and heating processes are major energy consumers in industry, contributing significantly to carbon emissions. Addressing energy losses in these systems through recovery, reuse, and conversion of waste energy presents a substantial opportunity for reducing emissions and enhancing economic competitiveness by lowering energy costs.37 For example, heat pumps can significantly enhance energy efficiency in businesses when integrated with district heating systems. Optimizing heating pump use in waste heat recovery can cut costs by up to 33% and emissions by 75%. This integration aligns with the core principle of district heat, which is to utilize energy that would otherwise be wasted.38
4.2.2 Installing Heat Pumps and Combined Heat and Power Systems (CHP)
Implementing CHP systems and heat pumps provides businesses with economic benefits through energy savings and cost stability, alongside environmental advantages through CO2 emission reductions, with the choice depending on specific business needs and energy price scenarios.39 Heat pumps are highly efficient, particularly in low-temperature applications (<100°C), leading to substantial energy savings. However, their economic viability is closely tied to energy prices, with rising electricity costs potentially decreasing their profitability. Conversely, CHP systems, which generate both electricity and heat simultaneously, offer a more stable financial return.39 Despite their higher initial investment, CHP systems are less sensitive to energy price fluctuations and can lead to long-term operational savings due to their enhanced energy efficiency. Heat pumps contribute significantly to reducing CO2 emissions by utilizing ambient heat, thereby decreasing the reliance on fossil fuels. This reduction in emissions helps businesses meet stringent climate targets and enhances their sustainability credentials. CHP systems also play a crucial role in reducing CO2 emissions, especially when fueled by renewable sources like biogas. By maximizing energy efficiency through the cogeneration of heat and power, CHP systems minimize fuel consumption and further reduce the carbon footprint.39
4.2.3 Lightning
Efficient lighting, especially through LED technology, significantly enhances the energy efficiency of businesses. LEDs are more efficient than traditional lighting, converting more electrical energy into light, which reduces overall energy consumption and leads to substantial cost savings. This is particularly impactful in sectors like industry, commerce, and services, where lighting represents a large share of energy use.40
LEDs also offer lower operational costs due to their longer lifespan and reduced maintenance needs compared to conventional lighting systems. Moreover, advanced lighting controls, such as smart lighting and light management systems, further optimize energy use by adjusting lighting based on occupancy and natural daylight. These systems can lead to additional energy savings and improve the workplace environment, boosting productivity and employee well-being.40
Beyond economic benefits, adopting LED lighting supports environmental sustainability by lowering carbon emissions linked to electricity generation. As businesses increasingly focus on energy efficiency and environmental responsibility, shifting to LED lighting is a key strategy. Ongoing advancements in LED technology, including improved performance and reduced costs, continue to make this transition more accessible and cost-effective for companies of all sizes.40
5 Drivers and Barriers of firm action
As chapter 3 has shown, there are many possibilities for improving energy efficiency and usage within a firm. The question, therefore, arises as to why some measures and tools have not yet been implemented in practice, and what factors are driving or hindering their implementation. Drivers are factors that accelerate the uptake of energy efficiency measures, while barriers are all factors that impede the adoption of cost-effective energy-saving measures.41
5.1 External Drivers
From a policy and regulatory perspective, several external drivers influence the adoption of energy efficient practices and technologies. In Germany, energy efficiency is considered a cornerstone of the country’s energy transition strategy.42Politicians have various tools at their disposal such as regulatory law, taxation and subsidies. The German government has implemented a combination of mandatory regulations and voluntary guidelines to promote energy efficiency across all sectors. Companies are supported through funding programs, energy consultations, and grants for implementing new technologies.42-44 As mentioned above in chapter 3, larger companies are required to implement energy and environmental management systems, as mandated by the Energy Efficiency Act (EnEfG).43,45 At the European level, the Emissions Trading System (ETS), which undergone significant changes, sets a cost on carbon emissions and by that encourages companies to adopt cleaner, more energy efficient technologies (EETs) as a cost-effective alternative to conventional methods.46,47 In addition, the European Union’s Green Deal includes several initiatives aimed at improving energy efficiency. A notable example is the Net Zero Industry Act (NZIA), which promotes the use of EETs and systems, optimizing energy use across the EU.48 Internationally, the Paris Agreement, Sustainable Development Goal 7 (affordable and clean energy) and initiatives by organizations like the IEA are drivers by influencing national and international policies.47,49,50 From an economic perspective, firms must navigate the challenges of international competition while adopting new technologies. At a macroeconomic level, studies consistently show, that GDP growth positively improves the efficiency of energy consumption.51,52 As economies expand, energy intensity typically declines, partially due to increased foreign direct investment (FDI), which helps accelerate the adoption of EETs.53,54 Several studies have also shown that a higher GDP per capita tends to improve energy efficiency across national economies.55,56 These findings suggest that economic growth and global investments are key drivers for energy efficiency on both national and global scales. From a technological perspective, global investments in research and development (R&D) have increased by 25% between 2020 and 2022, as globally listed companies prioritize energy efficiency and emissions reduction technologies. Previously, it was expected that nearly 50% of the emissions reductions needed by 2050 would rely on technologies in the prototype or demonstration phase. However, due to advancements in clean energy technologies, particularly in sectors like road transport, this estimate has been revised to 35%. The growing role of direct electrification, supported by both public and private investments, has contributed to this shift.47 Among others AI and digital technologies are driving the energy sector by optimizing production, storage, and consumption. Data-driven decision-making and predictive modeling increase efficiency.57-60 One example are smart grids, which use AI, sensors, and digital technology to maximise energy generation, transmission, and consumption while ensuring cost-effectiveness and system stability. Using historical data and weather trends, AI-powered forecasting makes predictions about energy demand, pricing and system reliability.61,62 From a social perspective societal expectation for climate responsibility are encouraging companies to adopt energy-efficient practices. Organizations that commit to climate protection gain public approval, positive media attention, and internal benefits like increased employee motivation, driving investment in sustainable practices and energy efficient technologies.63
5.2 External Barriers
As mentioned under “External Drivers” political measures and regulations at national and international levels form a framework within companies must act. These policies, designed to promote energy efficiency, can also pose significant barriers. Inconsistent policies across regions and slow implementation of regulatory standards can create uncertainty, making long-term planning difficult. Additionally, complex approval processes hinder timely investments in energy efficiency.47,64 Furthermore, research by Rosenberg et al. (2011) found that tax exemptions and levy reductions, such as those in Germany under the Environmental Tax Reform and the EU Emission Trading Scheme, reduced the incentive for manufacturing industries to invest in new measures. These exemptions also created significant disparities in energy costs, particularly among large-scale and electricity intensive companies.65 These policy-related barriers increase the complexity and financial risk of adopting technologies.47 A significant economic barrier is the split incentive problem, where the party responsible for investing in EETs, like property owners, does not benefit directly from the savings, which are instead passed on to tenants. This discourages investment, especially in rental markets.64,66,67 Another challenge is risk aversion, as businesses hesitate to invest due to uncertainties in future energy prices. Additionally, low fossil fuel prices reduce the incentive to adopt renewable energy or EETs, while declining reserves, volatile oil prices, and supply chain risks further delay the transition, as conventional energy remains a cheaper short-term option.44,47,64 The shortage of critical minerals like copper, lithium, and rare earth elements hinders electrification and the shift from fossil fuels, with supply chain risks heightened by the geographic concentration of mining and processing.47 The energy efficiency gap – the difference between the optimal and actual adoption of energy-efficient measures – further highlights economic barriers. The International Energy Agency (IEA) estimated that over half of cost-effective measures remained unadopted by 2018, due to high upfront costs and uncertain returns on investment.68 These challenges are particularly pronounced in processing-intensive sectors, where upgrading factories can be prohibitively expensive and the need for continuous production makes it difficult to justify business interruptions for upgrades. In addition, Transaction costs, which include administrative effort, time and uncertainty, can discourage firms with limited resources from making energy efficient changes, even though the potential long-term benefits are clear.67,69 Global competition and tight profit margins, as well as the ability to pass on increased costs to customers, make it even more difficult.47 Technological barriers include the high costs of adopting advanced EETs, the complexity of retrofitting existing systems, and the lack of mature solutions for energy intensive industries. These barriers prevent industries from fully realizing the potential energy savings that could be achieved through the implementation of available technologies.67,70,71
5.3 Internal Drivers
Energy efficiency is becoming an increasingly important factor for companies as energy costs make up a growing share of production expenses.72 Society’s expectations have changed, and companies can now benefit from the positive effects of energy efficiency, such as improved corporate image and higher employee satisfaction.73 Employee involvement plays a key role in this process. When employees are directly engaged in efficiency initiatives, their motivation and interest in sustainability can drive successful implementation.64 For example, a survey conducted in Australia pointed out cooperation between departments and support from management could positively influence energy efficiency efforts.70Similarly, a survey of 120 large German companies revealed that management commitment, engaged employees, and a clear corporate ethic were key factors driving sustainability related improvements.74 The German Ministry for Economic Affairs and Energy sees a decisive factor in the information available to employees and recommends the promotion of further training measures to develop digital skills, especially against the backdrop of changing occupational fields in the energy sector.75 Besides employees, customers behaviour is also a powerful internal driver. As environmental awareness grows, more consumers are making purchasing decisions based on a company’s sustainability efforts. From a financial perspective, energy efficiency directly impacts profitability. By lowering operational costs, companies can improve their financial stability and free up resources for further investments in energy-saving technologies. These continuous improvements reinforce sustainability as a critical success factor for long-term business growth.76
5.4 Internal Barriers
Organisational and technological issues can lead to internal barriers to energy efficiency. Companies may encounter resistance due to concerns about manufacturing quality or disruption. Unclear roles and planning issues complicate decision-making, while limited procurement criteria can prevent efficient purchasing. Budget constraints, particularly in small and medium-sized enterprises (SMEs), often limit the ability to invest in energy efficiency, especially when competing investments take higher priority. Short-term planning cycles further discourage long-term investments in energy-saving initiatives.64 Furthermore, the increased number of processes needed to execute energy-saving measures and the complexity of goods resulting from rapid technological advancements create obstacles for information processing and resource allocation. Businesses might find it difficult to supply the staff and knowledge needed to meet these expectations. Another common barrier is employee resistance to change, often driven by concerns about workflow disruption or exposing weaknesses in existing processes. Also the uncertainty of energy consumption data can further hinder companies’ efforts.64 According to a Australian survey, internal barriers to energy efficiency derive from lack of organisational support, limited employee autonomy, insufficient awareness and empowerment to make decisions, lack of data and measurements, and allocation of time and resources to other priorities instead of energy efficiency.70
6 Best practice examples
6.1 Swedish Steel Industry: Energy Management and Consulting Service
The Swedish steel industry, which is heavily dependent on electricity due to historically low electricity prices, faced major challenges in implementing energy efficiency measures. A study identified industry-specific barriers such as technical risks, insufficient access to capital and other investment priorities. One promising option was the use of energy service companies, which offer consulting and financing services. In addition, standardised energy management systems based on European standards, such as DIN EN 16001, have also been shown to overcome organisational barriers. Sweden also achieved positive results with long-term voluntary agreements that required companies to improve energy efficiency in return for tax relief.64
6.2 Fendt: Implementing energy management software
To meet the growing demands in energy management, companies are increasingly relying on IT-supported software. Fendt, an agricultural machinery manufacturer, exemplifies effective energy management using econ solutions’ software. The company focuses on four strategies: measuring, avoiding, reducing, and substituting energy use. Initially, Fendt used manual data collection, which lacked transparency. To address this, they adopted econ’s automated solution. Fendt now monitors energy consumption with about 540 measurement points across its main sites. The econ4 software integrates data from building and plant management systems, providing detailed reports, including energy use per tractor. This has led to significant improvements, such as reduced energy consumption during machine standby and optimized heating schedules.
Employee involvement is key, with all staff encouraged to contribute energy-saving ideas. Successful suggestions are implemented and measured for impact. In 2019, Fendt saved 900,000 kWh of energy and decreased energy use per unit produced. The econ solutions system serves as a “navigation device” for Fendt’s sustainability efforts, enabling precise energy management and optimization.77 The software is part of a funding series supported by BAFA.78
6.3 Transnet BW/ Netze BW: A Digital Solution for Efficient Grid Management
The DA/RE (Data exchange/redispatch) platform is a joint initiative by TransnetBW and Netze BW, two major energy network operators in Baden-Württemberg, Germany. The DA/RE platform addresses the growing need for grid stability in the context of Germany’s energy transition, which relies heavily on decentralised renewable energy sources like wind turbines or solar energy. DA/RE simplifies the coordination of energy through a digital, multi-cloud platform. The platform ensures energy and cost efficiency by selecting the most suitable energy providers for grid stabilisation. It addresses the challenges of large-scale data processing and IT security, resulting in improved overall collaboration among network operators.75
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