2010 EEI: Global Survey Results
Planned energy efficiency investments remain strong despite global recession, particularly among leaders in China and India.
Despite a global recession, investment levels in energy efficiency over the last twelve months have remained strong according to the 2010 Energy Efficiency Indicator (EEI).
During March and April of 2010, the Institute for Building Efficiency partnered with the International Facility Management Association (IFMA) and the American Society for Healthcare Engineering (ASHE) to conduct a survey of more than 2,800 executives and managers responsible for facilities budgets and energy use in commercial buildings across the world.
The global Energy Efficiency Indicator study is conducted annually to track the priorities, practices, investment plans, and return on investment criteria among those on the front lines of energy management in commercial buildings. While the EEI has been conducted and published in North America for the past four years, this year marks the first time a survey on this topic has been conducted across Canada, China, France, Germany, India, Italy, Poland, Spain, United Kingdom and United States.
Planned energy efficiency investments are expected to be strong in 2010, motivated primarily by concerns around cost reduction, climate change, enhancing public image, and taking advantage of government and utility incentives. Across all regions surveyed, energy management is considered a priority among building decision-makers (92 percent). Notably, respondents from India (85 percent) and China (80 percent) were more likely to consider energy management very or extremely important as compared to those in Europe (55 percent) and North America (53 percent).
Survey respondents expect energy prices to climb by 9 percent during 2010 and say that improving energy efficiency in buildings is their most important carbon emissions reduction strategy. While enthusiasm for and attention to energy efficiency remains high, leaders say capital availability is the greatest barrier to capturing the potential energy savings. 29% of those surveyed indicate that their capital budgets are insufficient to fund all projects meeting their return on investment criteria.
The 2010 Energy Efficiency Indicator (EEI) survey reached 2,882 respondents in 36 different countries. In particular, the survey targeted real estate and facilities leaders in Canada, China, France, Germany, India, Italy, Poland, Spain, United Kingdom, and the United States. The respondents included c-level executives (30%), vice presidents and general managers (36%), and facility managers (22%) from organizations ranging from small businesses to global corporations across a variety of industry sectors..
The highest number of respondents this year came from the manufacturing (12%), healthcare (12%), information and communication technology (9%), construction (7%), consulting/legal services (6%), retail (4%), and government (4%) sectors.
Energy efficiency is a strong and rising business priority
Decision-makers say that energy efficiency is rising in importance. Seventy-one percent of respondents say they are paying more attention to energy efficiency now than they were one year ago. Eighty-five percent indicate that energy efficiency is a priority in planned new construction and retrofit projects.
As depicted in Figure 2, energy management is considered at least somewhat important to over 90 percent of those surveyed across all global regions. Overall, 60 percent say that energy management is extremely or very important to their organizations. Respondents from India and China are more likely to consider energy management very or extremely important compared with those in Europe and the United States.
While motivations differ from region to region, cost savings is consistently the most important driver for energy efficiency investment
Several factors are driving organizations to pay increasing attention to energy efficiency. Cost savings is categorically the most important factor influencing energy efficiency decisions across all global regions. More than 80 percent of respondents cite cost savings as very or extremely significant, about twice as many as the next most influential factor.
After cost savings, lowering greenhouse gas emissions is the second most important motivator for energy efficiency in all regions except North America, where boosting public image and taking advantage of government and utility incentives fall higher in importance.
Existing legislation is of particularly high importance in Europe, whereas in all other regions anticipated regulation is considered more influential than legislation already in effect. This contrast is indicative of Europe’s leadership in energy and climate legislation compared to other parts of the world where legislation remains uncertain.
Executives believe energy prices will climb in 2010
It’s not surprising that energy cost is considered the most important driver. After energy prices fell with demand in many regions during 2009, 69 percent of global respondents expect energy prices to climb again during 2010. An additional 22 percent do not expect prices to change significantly, leaving only 9 percent who believe prices will decrease this year. The average expectation among all respondents is a nine percent increase in the combined price of energy over the next twelve months.
Climate legislation is expected and is viewed as both a risk and an opportunity
A significant majority of decision-makers (81 percent) believe legislation mandating energy efficiency and/or carbon reduction is likely within the next two years. Nearly half of respondents believe such legislation is very or extremely likely. Respondents view the impact of anticipated legislation in different ways. Forty-four percent view climate change legislation equally as both a risk and a business growth opportunity. Thirty-eight percent view climate legislation as more of a risk, while 18 percent view it as more of an opportunity. This split is fairly consistent across regions, with those in China and Europe more likely to consider climate legislation as a business growth opportunity.
Voluntary climate commitments are common, especially among larger organizations
Further reinforcing the fact that climate concerns are rising on leadership agendas, the survey indicates that nearly one-third of organizations surveyed globally have made public commitments to reduce their greenhouse gas emissions.
One clear trend demonstrated by the results is that larger organizations are far more likely to make such climate commitments in comparison to smaller organizations. As shown in Figure 4, 82 percent of organizations with 150,000 responding to the survey have made such commitments, whereas only 12 percent of those organizations with less than 100 employees have set such goals.
Building efficiency is the top priority for those seeking to decrease their carbon footprint
About 28 percent of those surveyed don’t know their top carbon strategy or have not yet prioritized strategies. Among those who have prioritized, a large majority point to improving energy efficiency in their buildings as their top climate solution. Thirty-four percent of those surveyed across the world say improving energy efficiency in buildings is their most important strategy for shrinking their organization’s carbon footprint. Other top strategies include installing onsite renewable energy (11%), purchasing renewable power (8%), and improving fleet efficiency (6%).
The economic recession has had a surprisingly mixed impact on efficiency investment
Business leaders have varied in their response to economic conditions. Somewhat surprisingly, as a result of the recession, 56 percent of respondents say they have invested the same or more in energy efficiency over the last 12 months compared to historical levels. Efficiency investments are a fast and low-risk way to cut operating costs.
Planned capital and operating investment in energy efficiency for 2010 is strong. Overall, 63 percent of respondents plan to make capital investments and 70 percent plan to make operating expenditures in energy efficiency improvements over the next twelve months.
As shown in Figure 6, which compares investment among leaders responsible for managing 100,000 square feet or more, the fraction planning to make efficiency investments is highest in China, followed by India, Europe and then U.S./Canada.
Access to capital constrains many organizations from making efficiency investments
While enthusiasm for and attention to energy efficiency remains high, building executives say limited capital availability (29%) is the greatest barrier to capturing the potential energy savings, followed by issues with insufficient payback (18%) and savings uncertainty (18%).
What type of financial return is sufficient for building owners? Forty-eight percent of respondents require investments to pay back in less than three years when making significant energy efficiency investments. A very small fraction (5 percent) requires a one year payback or less, while 90 percent require a ten-year payback or less. The average maximum allowable payback is 3.1 years this year.
Most organizations implemented low-hanging fruit measures, while a sizeable fraction undertook more substantial measures over the last twelve months Energy efficiency measures with low first cost and/or rapid paybacks were most likely to have been implemented by respondents over the last twelve months, including:
Switched to more efficient lighting lamps, ballasts, and/or fixtures (73%)
Educated facilities staff to save energy (64%)
Educated building occupants to save energy (62%)
Adjusted set points/schedules (49%)
Negotiated contracts with energy suppliers (35%)
In addition to these measures, a surprisingly high number of respondents undertook more significant efficiency improvement efforts last year, including:
Replacing inefficient equipment before the end of its useful life (37%)
Upgraded building controls (37%)
Installed energy saving glass in windows (32%)
Participated in demand response programs (22%)
21% installed renewable energy technology
Greatest technological improvement predicted for solar, lighting, and smart buildings
Looking ahead, global business leaders have varied expectations of technological improvement for clean energy technologies. When asked to select three technologies expected to see the greatest improvement in performance-to-price ratio over the next ten years, solar photovoltaic (46%) and lighting (46%) technologies were selected by the greatest number of respondents. Next came smart building technologies such as integrated control and demand response (33%), electric and plug-in hybrid vehicles (28%), nuclear power (19%), carbon capture and sequestration for coal plants (8%), and stationary energy storage (7%).
Watch this video for more information about the global Energy Efficiency Indicator study.